2008 Annual Report22000888 AAAAnnnnnnuuuaaalll RRReeppoorrtt

MISSION

SOCIALACCOUNTABILITY

CHARITABLECARE

MISSION STATEMENT

TABLE OF CONTENTS

American Baptist Homes of the West, as an expression of Christian mission, seeks

to enhance the independence, well-being and security of older people through the

provision of housing, health care and supportive services.

Our Social Responsibility ....................................................................1

A Message from the Chief Governance Officer..................................2

A Message from the President and CEO..........................................3

Cornerstone Affiliates....................................................................4

Continuing Care Retirement Communities........................................5

Affordable Housing............................................................................6

Seniority, Inc. ........................................................................................7

Social Accountability..................................................................8-11

Financial Overview..........................................................................12

Revenue and Expenses..................................................................13

Community Profiles..........................................................................14

Board of Directors............................................................................15

ABHOW Foundation....................................................................16

Senior Management....................................................................17

1

THIS TREE IS A COMMUNITY.

Listen to the life that sings among its branches. Notice the

neighborhood it nurtures in the ground below. Throughout the seasons,

the tree provides shade and sustenance, and when the wind blows, it

offers shelter from the storm. No wonder the 18th century English

physician Thomas Fuller wrote, “He that plants trees, loves others

besides himself.”

This company is a community. Listen to the life that flourishes across

our campuses. Notice the neighborhoods we nurture far and wide.

Throughout our history, we have provided quality care and services to

our residents, and we have pursued the promise of a fuller life for

every older person. This is our ministry, our social responsibility.

1

2

Three years ago the ABHOW Board of Directors adopted a model of governance that places

social responsibility at the center of our work. Dr. John Carver’s Policy Governance Model

engages the Board in defining the values that shape corporate action. But the central question

is, on whose behalf do we act?

The answer is we act on behalf of the “moral owners” of ABHOW: citizens who affirm ABHOW’s coremission. The company connects with these citizens primarily through the local boards for our continuingcare retirement communities and our affordable housing communities. These local leaders represent theirwider communities; they are in fact the voice of the moral owners we seek to serve.

In September 2007 and February 2008, the Board held special sessions with the local leaders to hear theirexpectations and aspirations for ABHOW. They offered thoughtful and inspiring responses to four questions:

Why do you want ABHOW to exist? The local leaders said ABHOW exists to provide quality housing and maintenance for a safe and secure community; to care in an excellent and ethicalway based upon ABHOW’s spiritual roots; and to be an employer of choice who positively impactsthe broader community.

What do you expect it to produce? They expect ABHOW to offer visionary thinking; to advocatefor seniors needing housing; to create a sense of community regardless of ethnicity or religiousbelief; to create environmentally friendly campuses; and to provide a sound financial foundationfor all stakeholders while staying affordable for residents and competitively attractive for employees.

Who should the beneficiaries be today? In 10 years? They said ABHOW should benefit seniorsand the disabled, employees, volunteers, family members and the broader community today plusnew generations and new locations in the future.

What benefits are of higher importance than others? The local leaders highlighted affordability,aging with dignity, compassionate services delivered with competence, and a sense of communitythat is both campus-based and beyond.

The local leaders’ comments both affirmed and challenged the organization’s commitment to socialaccountability. And the Board used these reflections to set future goals. This Annual Report shows the steps ABHOW took in 2008 to live up to the expectations and aspirations of the people we serve.

Randall L. StamperChief Governance Officer

A MESSAGE FROM THE CHIEFGOVERNANCE OFFICER

3

When the State of California granted ABHOW a corporate charter and when the federal

government declared our organization to be tax-exempt, they did so with an expectation: that

ABHOW would benefit society. Since 1949 we have embraced this social responsibility with

enthusiasm, for the roots that connect us with the greater community run deep and wide.

Through the provision of housing, health care and supportive services, we make a unique contributionto the towns and cities where we operate retirement communities. Across 31 locations in four Westernstates, we provide charitable services the government would have to provide were it not for our work.We offer these services because it is our mission to “enhance theindependence, well-being and security of older people.” And wewelcome the public expectation of social accountability. This pub-lication is our report to those we serve.

In 2008 ABHOW provided $13.5 million of charitable services toour residents and employees and to programs in our neighborhoods.These contributions, which are tracked annually by our retirementcommunities, represent numerous community benefits, includingsubsidized housing, training opportunities for medical professionals,support groups for seniors, research projects with universities, andthe use of our facilities by other nonprofit organizations.

Of this total, $7.2 million went toward what we define as “purecharity”: any direct contribution of care and services to ABHOWresidents and employees, and any direct contribution to charities in the broader community. This purecharity exceeds the $4.5 million in tax benefits that ABHOW received in 2008 as a result of being a tax-exempt organization.

We deliver these services with passion. We take pride in our commitment to excellence, which also benefits our residents and employees as well as our neighbors. That commitment anchors and nurturesall of the achievements noted in this report.

The value of our work is magnified in difficult financial times like these. Our residents, our employees,and our neighbors face challenging circumstances. We are reminded of how essential our mission is,and we hear again an expectation: that we honor our social responsibility. It is an obligation we accept.

David B. FergusonPresident and CEO

We are reminded of how essential

our mission is, and we hear again

an expectation: that we honor our

social responsibility. It is an

obligation we accept.

A MESSAGE FROM THEPRESIDENT AND CEO

4

Created in 2003, Cornerstone Affiliates is ABHOW’s parent organization. Cornerstone extends

ABHOW’s mission to other markets by providing an organizational structure that facilitates

acquisition, development and affiliation of communities while protecting ABHOW financially.

In 2008 Cornerstone’s activities centered in Boise,Idaho, where the state’s first full-service life care community is taking shape: The Terraces at HarrisRanch. Owned by Boise Retirement Community, theproject is affiliated with ABHOW through Cornerstone.

The Terraces at Harris Ranch is currently conductingpre-sale activities in the Boise market. The Terraces willprovide residential living, assisted living, skilled nursingand memory support on a beautiful 12-acre campus.This will be ABHOW's first community to offer innovativecottage-style skilled nursing that emphasizes homelike,person-centered care.

Interest in the new community is high. More than 300 “Pioneer Members”have staked their claim, giving them priority position to take advantage ofpre-construction pricing and benefits. In 2008 a new information centeropened on the site, once part of a 2,000-acre ranch owned by Dallas Harris.The property still retains many historical landmarks from its days as a cattleranch, a lumber mill and, much earlier, a Native American winter camp. Thesite is conveniently located near shopping areas. It offers spectacular views of the Boise foothills and is just minutes away from the great fishing andwhitewater rafting of the Boise River.

The new community extends the branding of “The Terraces,” started by ABHOW in 1992 with TheTerraces of Los Gatos in Los Gatos, Calif., and continued by Cornerstone with The Terraces of Phoenix,which was redeveloped in 2005 in Phoenix, Ariz., and The Terraces at San Joaquin Gardens, which isunder construction in Fresno, Calif.

(drawing above) The Terraces at Harris Ranch, a Cornerstone Affiliates development, will be the first full-service life

care community in Idaho.

CORNERSTONEAFFILIATES

5

Residents, staff and board members of 10 of ABHOW’s owned and managed continuing care

retirement communities spent much of 2008 engaged in an accreditation process that holds

the CCRCs accountable to the highest industry standards. Administered by the Commission

on Accreditation of Rehabilitation Facilities and the Continuing Care Accreditation Commission,

the process is an opportunity to strengthen all facets of community life, including governance,

finance, health care, dining and activities. The results clearly articulate the value of each CCRC

to consumers and the wider community.

In strengthening its CCRCs, ABHOW creates an evengreater asset for the towns and cities where it operates.In 2008 the company took additional steps to improvethe delivery of services by completing the implementa-tion of PointClickCare, a web-based long-term caresoftware program that enables staff to manage clinical and financial information on demand. TwoCalifornia CCRCs, Pilgrim Haven in Los Altos and SanJoaquin Gardens in Fresno, joined Judson Park of Des Moines, Wash., in embracing Masterpiece Living, a holistic health and lifestyle program. And SanJoaquin Gardens, Judson Park, and The Terraces ofPhoenix launched My Choice, a card-based dining program that gives residents flexible dining dollars thatthey can use across the campus, much like a universitymeal plan.

The dedication to improvement paid off in 2008. Judson Park, San Joaquin Gardens, and Valle Verde in Santa Barbara, Calif., received superior performance results on their Department of Health surveys.Aging Services of California honored ABHOW with a Quality First award for the company’s rigorousinternal audit to track policy and regulatory compliance across all levels of care. In addition to theseaccolades, the CCRC division celebrated the opening of The Sound View Apartment Homes at JudsonPark, a 64-apartment addition to the 45-year-old community.

(top photo) Judson Park in Des Moines, Wash., completed a major expansion of the 45-year-old community in

2008. (above) More ABHOW communities embraced Masterpiece Living, a holistic program that emphasizes

physical, social, spiritual, and intellectual health through a variety of activities, including stimulating classes such

as those offered by Pilgrim Haven in Los Altos, Calif.

CONTINUING CARERETIREMENTCOMMUNITIES

6

Deep community roots continued to nurture the growth of ABHOW’s affordable housing division

in 2008. Strong relationships with local organizations and municipalities led to new development,

and a tradition of excellence in community operations brought accolades from regulatory bodies

and industry groups.

ABHOW secured more than $27 million in fundingcommitments, including the largest HUD grant inthe fiscal year, a $13.8 million award for ValleyVista, a 105-apartment community in San Ramon,Calif., that is being developed in partnership withthe highly respected nonprofit Satellite Housing,Inc., of Berkeley, Calif. ABHOW was one of onlythree recipients of HUD 202 funding in the stateof Washington, receiving a $5.5 million grant forGood Shepherd Gardens, a 40-apartment commu-nity co-sponsored by Good Shepherd BaptistChurch in Lynnwood, Wash., and developed inpartnership with Seattle-based Beacon Development.

Valley Vista and Good Shepherd Gardens both secured planning approvals to begin construction in early2009. Elsewhere, ABHOW won the right to develop a community in Tacoma, Wash., began constructionon Kelly Ridge in South Lake Tahoe, Calif., and completed construction of Hillcrest Gardens in Daly City,Calif., bringing the total number of affordable housing communities in operation to 20, with four morein development.

ABHOW communities consistently garnered impressive audit ratings from HUD and the CaliforniaHousing Finance Agency. Four California communities completed extensive resident surveys and receivedhigh satisfaction marks: Broadmoor Plaza in San Leandro, Casa de la Vista and Fern Lodge in Redlands,and Manila Terrace in Los Angeles.

A total of 17 division team members, primarily administrators and occupancy specialists, received theprestigious Certified Professional of Occupancy designation from the National Affordable HousingManagement Association. And team members were sought out to provide industry leadership in AgingServices of California, Tenderloin Neighborhood Development Corporation, Tacoma Housing Consortium,and the Affordable Housing Management Association of Northern California, Nevada and Hawaii.

(top photo) Hillcrest Gardens in Daly City, Calif., opened in 2008, with 40 apartments and spectacular views of the

San Francisco Bay. (drawing above) ABHOW received federal funding for Good Shepherd Gardens, a 40-apartment

community planned for Lynnwood, Wash.

AFFORDABLE HOUSING

7

Seniority, Inc. plays an important role in helping ABHOW honor its social obligations. As

ABHOW’s subsidiary sales, marketing, management and consulting firm, Seniority shares

ABHOW’s mission with communities and organizations throughout the United States.

In its 11th year, Seniority extended its reach across the senior livingindustry with new management contracts in Arizona, Oregon, Texas,and Oklahoma. Seniority built upon its sales success with existingclients, including Holly Creek, a Colorado continuing care retirementcommunity that celebrated the opening of its second phase in 2008.And the firm grew its development consulting services, securing a con-tract for expansion of Immanuel Lutheran Communities’ campus inKalispell, Mont.

Seniority advances the learning of senior living sales professionalsthrough twice-yearly national conferences. Furthermore, the firm cultivatesmarketing disciplines among medical and social services professionalsthrough specialized training for skilled nursing and memory supportcenters. Increasingly, organizations look to Seniority for such expertise.

Lutheran Life Communities, for example, signed its third sales and marketing contract with Seniority in 2008, adding St. Paul’s House of Chicago, an assisted living and skilled nursing center, to the othercommunities Seniority serves: Pleasant View in Ottawa, Ill., and Wittenberg Village in Crown Point, Ind.

As demographics shift and new markets open, Seniority takes on an “R&D” function for ABHOW.Seniority brings new knowledge and resources to ABHOW through the firm’s innovations in systemsand its experience in leading-edge communities, such as the Japanese-focused Kokoro Assisted Living in San Francisco and Nikkei Senior Gardens, an Arleta, Calif., community that welcomes its first residentsin 2009.

Moreover, Seniority continues to partner with ABHOW and Cornerstone Affiliates in the expansion ofexisting communities and development of new sites. In 2008 Seniority provided sales management servicesfor The Sound View Apartment Homes at Judson Park in Des Moines, Wash., and initiated the Priority Clubfor an expansion at Valle Verde in Santa Barbara, Calif. Seniority also provided oversight sales services andexpertise for The Terraces at San Joaquin Gardens in Fresno, Calif., The Terraces at Harris Ranch in Boise,Idaho, Las Ventanas in Summerlin, Nev., and The Terraces of Phoenix in Phoenix, Ariz.

(top right photo) Seniority is providing sales and marketing services to three Midwest campuses of Lutheran Life

Communities. (photo above) The firm is assisting Japanese-focused communities in San Francisco and Arleta, Calif.

SENIORITY, INC.

8

SOCIAL ACCOUNTABILITY

• A retirement community provides free flu shots to seniors in the wider area.

• An employee earns his college degree through the company’s educational assistance program.

• A widow who has outlived her family and her financial resources is able to remain in her

community because of the company’s benevolent support.

These examples of charitable care and community service are multiplied every day across the ABHOWsystem. They are the natural activities of an organization whose mission is “to enhance the independence,well-being and security of older people through the provision of housing, health care and supportiveservices.” Since its founding in 1949, ABHOW has defined its work as charitable ministry. And it haspursued its mission not only in its retirement communities but in the wider towns and cities where thecompany operates.

This charitable ministry is ABHOW’s social responsibility as a nonprofit corporation. ABHOW receives atax exemption from the federal government because it provides charitable services that the governmentwould otherwise have to provide. As such, ABHOW has an obligation to demonstrate its charitablenature and to measure the community benefits that it provides. But the company recognizes that socialaccountability is simply the right thing to do.

Annually, ABHOW documents its social accountability. Community executive directors and administratorskeep records of their charitable care and community service programs, and they submit this informationto the corporate compliance officer. In 2008 ABHOW provided benefits to residents, employees andtheir wider communities in the following areas:

9

• Participation in Medicare and managed care programs with associated contractual allowances and reductions from published rates;

• Payment for resident services not reimbursed under Medicaid;

• Direct benevolence to residents;

• Research with other organizations, such as universities;

• Professional education, such as training for doctors, nursesand employees;

• Religious and other services for nonresidents;

• Referral, outreach and support group services to nonresidents;

• Subsidized housing and meals, such as Meals on Wheels, for nonresidents;

• Resident and employee volunteer services;

• Use of community facilities by other nonprofit groups or organizations;

• Community-building and leadership services; and

• Community health and supportive services.

In recent years ABHOW has sought to measure the dollar value of its charitable care and community service in order to show the relationship between benefits the company provides against the tax benefits it receives as a result of being a tax-exempt organization.

(photos from left, beginning opposite page):Hideko Parker, a resident of Mount RubidouxManor in Riverside, Calif., teaches origami atthe local library, an annual festival, and a nearbyuniversity. She serves on Riverside’s InterculturalRelations Council and acts as an interpreterwhen delegations from her native Japan visitthe city.

Community service is nothing new for LarryMarks, a resident of Piedmont Gardens inOakland, Calif. He served for 27 years on theski patrol at resorts in the Sierras. Today, hepolishes silver for the Oakland Museum’s whiteelephant sale.

Carol Baccaro, of Casa de Redwood inRedwood City, Calif., helps fill and distributegrocery bags from the food bank. “The gratifi-cation of doing for other people means a lotat this time in my life,” she says.

Residents of The Terraces of Los Gatos in LosGatos, Calif., are prepared to take care of their community in the event of a disaster. TheCommunity Emergency Response Team, whichincludes, from left, Dr. Bob Jelinek, coordina-tor Paul Barrish and Madelyn Furze, drawsupon the expertise of residents and coordi-nates its activities with the town of Los Gatos.

10

In 2008 ABHOW provided $13.5 million of charitable and discounted care and communityservice. Of that total, $7.2 million was for “purecharity,” which ABHOW defines as “any directcontribution to care and services to ABHOW residents and employees, and any direct contri-bution to community-based charities within thebroader community.” Estimated tax benefitsreceived in 2008 equaled $4.5 million. So thecompany’s social accountability activities farexceeded the tax benefits received. Moreover,the pure charity provided represented 160 percentof those tax benefits received.

Most of ABHOW’s charitable care is delivered infour areas. First of all, the company makes adjust-ments to Medicare and third-party managed carecontracts when these government and insuranceentities do not fully reimburse ABHOW for thepublished price of services provided to residents.In 2008 Medicare and managed care adjustmentstotaled $2.3 million and $3.2 million, respectively.

Second, ABHOW participates in the Medicaid program, which does not fully reimburse ABHOW for thecost of services provided to residents. In 2008 Medicaid contractual allowances totaled $3.4 million.

Third, ABHOW supports private-pay residents by offering discounts from full contractual rates. These discounts include such items as permanent level of care transfer discounts, below-market discounts on certain apartments, SurePay program participation credits, Health Center free day credits, and basic medical credits for doctor and hospital Medicare deductibles. In 2008 these subsidized allowancestotaled $1.2 million.

Finally, ABHOW provides outright benevolence to residents who can no longer afford their care. In 2008benevolent care equaled $832,000.

ABHOW communities provided charitable services to their broader communities in the following areas:community health and support services ($198,000); meeting space for nonprofit organizations($122,000); volunteer time, resources and expertise ($824,000); community-building and leadershipservices ($285,000); community benefit operations ($10,000); subsidized community housing/meals($5,000); and other services ($152,000).

Pilgrim Haven residents and their neighbors in Los Altos,Calif., received valuable health information for free at thecommunity's annual health fair Sept. 25, 2008. More than140 attendees received health screens for bone density,blood pressure, blood sugars, and body mass index.Rosemary Resch, director of resident services and well-ness, gave resident Leonard Cherry a health test.

SOCIAL ACCOUNTABILITY

11

In addition to subsidized allowances to residents, adjustments toMedicaid services and direct benevolence to residents, ABHOW’spure charity includes free services delivered to residents, such ashealth screenings, transportation, and food ($127,000 in 2008),educational assistance for employees ($83,000 in 2008), andgrants to retirement communities ($67,000 in 2008). In the widercommunities where ABHOW operates, pure charity takes the form of volunteer hours donated by staff and residents (valued at $890,000 in 2008) and direct contributions of cash, food,donated goods and other charitable services to other nonprofitorganizations and supportive services for people in need($208,000 in 2008).

ABHOW’s commitment to social accountability is integral to its vision to “hold the trust of its constituencyby keeping its promises.” All of the company’s charitable activities spring from a belief in the sacrednessof human life and a philosophy which underscores that ABHOW exists for and is responsible to thecommunities it serves.

ABHOW’s commitment to social

accountability is integral to

its vision to “hold the trust

of its constituency by keeping

its promises.”

SOCIAL ACCOUNTABILITY

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

Community BenefitsProvided

Pure CharityBenefits Provided

Tax BenefitsReceived

2007

2008

2007

2008

2007

2008

Community Benefits Provided and Received

Charitable Benefits to Residentsand Employees - 2008

Charitable Benefits to Broader Community - 2008

Third-Party Adjustments to Medicaid 75%Direct Benevolence to Residents 19%Other Charitable Benefits to Residents and Employees 6%

Community Health & Supportive Services 12%Use of Retirement Community 8%Other Benefits to the Community at Large 10%Volunteer Service 51%Community Benefit OperationsActivities 1%Community-Building & Leadership 17%Subsidized Community Housing/Meals 1%

12

FINANCIAL OVERVIEWAmerican Baptist Homes of the West

and Combined Affiliates

Assets Sept. 30, 2008 Sept. 30, 2007

(in thousands)

Cash and marketable securities $110,203 $124,661

Accounts and notes receivable 9,614 8,166

Prepaid expenses, deposits and other current assets 1,478 1,949

Restricted cash and marketable securities 68,313 84,049

Land, buildings and equipment, net 198,340 165,332

Other assets 20,892 20,901

Total $408,840 $405,058

Liabilities and Net Assets

Accounts payable and accrued expenses $ 23,850 $ 24,444

Notes and bonds payable 221,301 213,251

Deferred revenue from investment contract 4,053 4,267

Trusts and annuities 3,605 4,163

Retirement liabilities 4,700 4,463

Other liabilities 1,836 1,051

Deferred revenue from entrance fees 126,061 113,673

Net assets 23,434 39,746

Total $408,840 $405,058

Combined Balance Sheet

13

American Baptist Homes of the West and Combined AffiliatesREVENUE AND EXPENSES

Total Revenue by Lines of Business Total Expenses by Lines of Business

FY 2008 FY 2007Affordable Housing 2.5% 2.5%

Foundation 0.8% 2.1%Seniority 2.8% 2.5%

Home Office 2.9% 4.5%CCRCs 91.0% 88.4%

$143,468 $143,326

FY 2008 FY 2007Investment Income 0.0% .1%

Ancillary and Other Services 5.8% 5.7%

Amortization of Entrance Fees 12.5% 13.1%Monthly Fees 81.7% 81.1%

$130,364 $126,456

FY 2008 FY 2007Employee Costs 48.5% 46.6%

Supplies and Purchased Services 12.4% 12.8%

Ancillary Services 5.6% 5.4%Marketing and

Advertising 2.2% 2.2%Utilities 4.5% 4.7%

Insurance 1.3% 1.5%Other Operating 10.5% 10.6%

Depreciation 11.0% 11.6%Mortgage Interest 4.0% 4.6%

$121,092 $115,829

FY 2008 FY 2007Affordable Housing 3.2% 3.4%

Foundation 1.4% 1.6%Seniority 2.9% 2.8%

Home Office 5.7% 2.5%CCRCs 86.8% 89.7%

$141,169 $128,923

Total CCRC Revenue Total CCRC Expenses

Total CCRC Operating Revenue and Reoccupancy Fees by Year(in thousands)

Net reoccupancy feesOperating revenues, all CCRCs

150

125

100

75

50

25

02005

135,760

23,004

112,756

2006 2007

142,435

21,718

120,717

147,053

20,739

126,314

2008

148,094

17,730

130,364

2004

125,510

20,388

105,122

14

New Community Development Apartments/SuitesABHOW Tacoma-Salishan, Tacoma, WA (Affordable Housing) 55Good Shepherd Gardens, Lynnwood, WA (Affordable Housing) 40Kelly Ridge, South Lake Tahoe, CA (Affordable Housing) 33Nikkei Senior Gardens, Arleta, CA (Seniority) 79The Terraces at Harris Ranch, Boise, ID (Cornerstone) 256Valley Vista, San Ramon, CA (Affordable Housing) 105Total 568

* Employee numbers expressed as full-time equivalents (FTE).

Number of Community Housing Apartments/SuitesResidential Living 2,017Assisted Living 492Health Center 749Special Care 73Affordable Housing 1,608Total 4,939

Continuing Care Retirement Communities Residents Employees*

Grand Lake Gardens, Oakland, CA 86 28Judson Park, Des Moines, WA 289 182Piedmont Gardens, Oakland, CA 324 192Pilgrim Haven, Los Altos, CA 165 108Plymouth Village, Redlands, CA 287 159Rosewood, Bakersfield, CA 224 152San Joaquin Gardens, Fresno, CA 314 209The Terraces of Los Gatos, Los Gatos, CA 303 156Valle Verde, Santa Barbara, CA 386 188Total 2,378 1,374

Owned Affordable Housing Communities Residents EmployeesBroadmoor Plaza, San Leandro, CA 76 2Casa de la Vista, Redlands, CA 75 6Fern Lodge, Redlands, CA 62 2Harbor View Manor, Tacoma, WA 165 9Hillcrest Gardens, Daly City, CA 51 2Judson Terrace Lodge, San Luis Obispo, CA 32 1Oak Knolls Haven, Santa Maria, CA 39 1Tahoe Senior Plaza, South Lake Tahoe, CA 46 2Total 546 25

Managed Affordable Housing Communities Residents EmployeesAllen Temple Arms I, Oakland, CA 77 4Allen Temple Arms II, Oakland, CA 51 1Allen Temple Gardens III, Oakland, CA 50 2Allen Temple Manor IV, Oakland, CA 24 2Bellflower Friendship Manor, Bellflower, CA 162 9Bellflower Oak Street Manor, Bellflower, CA 30 1Casa de Redwood, Redwood City, CA 146 5E.E. Cleveland Manor, Oakland, CA 53 2Judson Terrace, San Luis Obispo, CA 109 6Manila Terrace, Los Angeles, CA 99 2Mount Rubidoux Manor, Riverside, CA 185 10Pacific Meadows, Carmel Valley, CA 230 10Total 1,216 54

Management Contracts Residents EmployeesLas Ventanas, Las Vegas, NV 233 144Kokoro Assisted Living, San Francisco, CA (Seniority) 56 29Oak Hill Senior Living, Las Vegas, NV (Seniority) 65 22The Terraces, Phoenix, AZ 343 180Cedar Creek, Madera, CA (Seniority) 82 48Sun Grove Resort Village, Peoria, AZ (Seniority) 99 31Total 878 454

Totals Residents EmployeesContinuing Care 2,378 1,374Affordable Housing (including Home Office) 1,762 87ABHOW Home Office and Foundation 0 56Contract CCRCs 576 324Seniority, Inc. 302 146Total 5,018 1,987

COMMUNITY PROFILES

15

BOARD OF DIRECTORS

Mr. Randall L. StamperChief Governance Officer

Mr. Bruce LaycookVice Chairman

Dr. Donald BurgessMr. Leon L.GeanSecretary

Dr. Samuel S. Chetti Mr. Arthur C. Christman, Jr. Mr. Stephen Elliott Mr. Hector M. Gonzalez

Ms. James Ella James

Dr. Joel P. Martin

Mr. Donald N. Jones Mrs. Gloria P. Marshall Ms. Julie Michaels

Dr. Marcia J. Patton Ms. Phyllis Stuewig Ms. Margaret Weitkamp

16

The Foundation celebrated its 40th anniversary in 2008. Seeded with a single gift of $50,000, the Foundationhas grown to over $40 million. Despite the yearlong decline in the financial markets, donors gave generously. The uncertainty of the banking industry created demand for the guaranteed income of the Foundation’s charitable gift annuities. More new annuities were written in 2008 than in any previous year, providingABHOW residents lifetime income at significant rates, tax benefits, and the joy of helping their neighbors.

The 11th Annual ABHOW Foundation Golf Classic netted more than $100,000 for the Affordable HousingAssistance Grant Fund; and the 2nd Annual Salute to Affordable Housing Recognition Dinner honored BishopErnestine Reems-Dickerson, founder of E.E. Cleveland Manor, an ABHOW-managed affordable senior housingcommunity in Oakland, Calif.

Local committees continued to play an important role in the growth of the Foundation. In March the Foundationconducted its first company-wide videoconference for committees, giving participants an opportunity to hearfirsthand from Foundation financial advisors as well as to exchange best practices with each other.

Board Members: Frank Jennings, Board Chair; David B. Ferguson, CEO/Ex Officio;Enitan Adesanya, Stephen M. Annis, Louis Binick, Linda Zale

Staff: Joe Anderson, President; Leonard Kelly, Vice President; Suzette Luer, Development Coordinator

Balance Sheet (in thousands)Assets Sept. 30, 2008 Sept. 30, 2007

Cash and marketable securities $39,923 $48,740Other assets 541 290Total $40,464 $49,030

Liabilities and Net AssetsLiabilities: Managed funds and other liabilities 203 51

Due to trust beneficiaries 3,605 4,203Total liabilities 3,808 4,254Total net assets 36,656 44,776Total liabilities and net assets $40,464 $49,030

Statement of Operations and Changes in Net Assets (in thousands) Sept. 30, 2008 Sept. 30, 2007Contributions and bequests $1,241 $1,881Investment income 856 2,886

Total 2,097 4,767

Distribution to beneficiaries 1,291 1,237Contractual payments to beneficiaries 568 735Administrative and general 744 774

Total expenses 2,603 2,746Change in unrealized gains and losses on marketable securities (7,614) 2,092

(Decrease) Increase in net assets (8,120) 4,113Net assets beginning of year 44,776 40,663Net assets end of year $36,656 $44,776

Foundation Net Assets (in millions) 0

Foundation Financial Statement

$40.7 $44.8 $36.7$38.2

2006 2008200720052004

$35.4

0

10

20

30

40

50

ABHOW FOUNDATION

17

SENIOR MANAGEMENT

ABHOW’s senior leaders ensure that the strategic plan and the mission of the organization are

accomplished. The group is committed to modeling healthy leadership practices for the rest of

the company.

ABHOW is a founding member of the American Association of Homes and Services for the Aging and state associations of homes and services for the aging in California, Arizona and Washington.

Seniority, Inc. is a member of the American Seniors Housing Association and the Assisted Living Federation of America.

All nine of ABHOW’s continuing care retirement communities and one of its managed communities are accredited by the Commission on Accreditation of Rehabilitation Facilities and its Continuing Care Accreditation Commission.

President EmeritusDr. Richard E. Ice

AuditorsMoss Adams LLP, San Francisco

Management Team, Fiscal Year 2008

David B. Ferguson President and Chief Executive Officer

Pamela S. Claassen Senior Vice President, FinanceChief Financial Officer

Jeff GlazeSenior Vice President, Chief Operations Manager,Continuing Care Retirement Communities

Joseph E. Anderson President, ABHOW Foundation

M. Sloan Bentley Senior Vice President, Sales and Marketing;President, Seniority, Inc.

Terese Farkas Senior Vice President, Human Resources

David A. Grant Senior Vice President and General Counsel

Kay Kallander Senior Vice President, Strategic Planning

Ancel Romero Senior Vice President, Affordable Housing

American Baptist Homes of the WestAmerican Baptist Homes Foundation of the WestCornerstone AffiliatesSeniority, Inc.

6120 Stoneridge Mall Road, Suite 300Pleasanton, CA 94588800.222.2469www.abhow.com