Allied Capital Invests $25.5 Million in Southeast Regional Hospice Platform.

WASHINGTON -- Allied Capital Corporation (NYSE:ALD) announced today that it has committed $25.5 million to support the acquisition of New Beacon Hospice by Regency Healthcare Group, a platform company launched by private equity group EDG Partners, LLC. Allied Capital's investment took the form of senior secured unitranche notes, a revolving credit facility and an equity co-investment. The transaction closed on June 30, 2006.

This deal is the fifteenth unitranche financing Allied Capital has closed in the past 18 months, representing aggregate unitranche commitments of over $550 million.

Regency Healthcare Group is a Medicare-certified provider of home-based hospice services with 6 hospice offices in Georgia and South Carolina. The Company was founded in 2002 with 6 patients and has grown rapidly to a census of over 240 patients as of June 2006. The company's strategy for growth is to provide high quality care, invest in staff training and education, and focus on under-served secondary markets.

New Beacon is a non-profit Medicare-certified provider of home-based hospice services, based in Birmingham, AL. The company, founded in 1979, was the first and longest running hospice program in Birmingham. Today, it serves Birmingham and 22 other counties in northeast and central Alabama, focusing on improving the quality of life for patients diagnosed with a life-limiting illness through supportive, palliative, medical, psychosocial and spiritual care. New Beacon's patient census has grown from 175 in 2001 to 570 today.

"This deal presented a great opportunity for Allied Capital to invest in an industry with strong fundamentals and attractive demographic trends," said Dan Russell, Managing Director of Allied Capital. "The combination of Regency and New Beacon makes sense and will give the combined entity a market leading position in the southeast region. We are pleased to be working again with this management team, led by CEO John Morris, as well as with the partners at EDG to build a strong business in the healthcare arena."

"The ease and speed to closing that the unitranche financing structure provided were key factors in choosing Allied Capital as our financial partner in this transaction," said Michael Gaffney, Partner of EDG Partners. "Allied Capital's knowledge of the hospice space, combined with its ability to execute efficiently contributed to the successful closing of this deal."

About Allied Capital

Allied Capital Corporation, a leading business development company with total assets of more than $4 billion, has paid regular, quarterly cash dividends to shareholders since 1963. Allied Capital invests in the American entrepreneurial economy by providing capital to companies seeking a long-term financial partner and access to managerial resources often unavailable to smaller companies. Since its IPO in 1960, Allied Capital has provided long-term debt and equity financing to thousands of middle market companies. In serving its shareholders, Allied Capital helps build middle market businesses and support American jobs. The Company's private finance portfolio includes investments in over 100 companies that generate aggregate revenues of more than $12 billion and employ more than 90,000 people.

Headquartered in Washington, DC, Allied Capital offers shareholders the opportunity to participate in the private equity industry through an investment in the Company's New York Stock Exchange-listed stock, which is traded under the symbol ALD. For more information, please visit www.alliedcapital.com, call Allied Capital investor relations toll-free at [phone], or e-mail us at [e-mail]. All media inquiries should be directed to Stan Collender of Qorvis Communications at [phone].

About EDG Partners

EDG Partners, LLC is a private equity group focused primarily on healthcare related investments. Formed in 2004, EDG's three founding partners have over 50 years of operating, acquisition and investment experience in the healthcare industry, including in the home care, hospice, diagnostic services, outsourced services and insurance markets. For more information, please visit www.edgpartners.com or contact Michael Gaffney, Managing Director at [phone].

Forward-Looking Statements

The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in Allied Capital's periodic filings with the Securities and Exchange Commission.