American Retirement Corporation Buys out Lessee Interest; Updates Earnings Guidance.

NASHVILLE, Tenn. -- American Retirement Corporation (NYSE: ACR) ("ARC" or the "Company"), a leading national provider of senior living housing and care, today announced that it has entered into a definitive agreement to acquire the lessee's interest in a Denver community that the Company currently manages. Upon the closing of the purchase, the community will convert from a managed community to a leased community, and its operating results will be included in the Company's consolidated financial statements. The transaction is expected to close next week following completion of routine documentation and is expected to be accretive on a GAAP and cash basis.

"Given that we expect to be on target with analyst estimates for the first quarter and considering the number of accretive transactions that we have effected so far this year, we are increasing our full year earnings guidance to a range of $.69 to $.72 per diluted share, which is after an estimated $.12 of share-based, non-cash compensation expense. This guidance does not include the impact of potential future acquisitions," said Bill Sheriff, Chairman, President and CEO of the Company. "This accretive transaction is a good example of our ability to improve our economics through repurchase agreements, formula buyouts or negotiations to create value for our shareholders."

The Company plans to release first quarter 2006 earnings on May 4th and has scheduled a conference call on Thursday, May 4th at 11:00 a.m. ET (10:00 a.m. Central) to discuss its financial results for the first quarter of 2006.

Company Profile

American Retirement Corporation is a national senior living and health care services provider offering a broad range of care and services to seniors, including independent living, assisted living, skilled nursing and Alzheimer's care. Established in 1978, the Company believes that it is a leader in the operation and management of senior living communities, including independent living communities, continuing care retirement communities, free-standing assisted living communities, and the development of specialized care programs for residents with Alzheimer's and other forms of dementia. The Company's operating philosophy is to enhance the lives of seniors by striving to provide the highest quality of care and services in well-operated communities designed to improve and protect the quality of life, independence, personal freedom, privacy, spirit, and dignity of its residents. The Company currently operates 82 senior living communities in 19 states, with an aggregate unit capacity of approximately 15,400 units and resident capacity of approximately 17,100. The Company owns 33 communities (including 13 communities in joint ventures), leases 43 communities, and manages 6 communities pursuant to management agreements.

Safe Harbor Statement

Statements contained in this press release and statements made by or on behalf of ARC relating hereto may be deemed to constitute forward-looking information made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all statements that are not historical statements of fact and those regarding the intent, belief or expectations of the Company or its management, including, without limitation, all statements regarding expectations concerning its 2006 earnings and results of operations and 2006 share-based compensation expenses, all statements regarding the Company's expectations concerning potential acquisitions, and all statements regarding the consummation of the transaction. These forward-looking statements may be affected by certain risks and uncertainties, including without limitation the following: (i) the Company's ability to successfully complete the lessee interest acquisition, (ii) the Company's ability to improve quarterly results and increase occupancy, (iii) the risk that the Company may experience adverse changes in operating results and cash flow, (iv) the risks associated with adverse market conditions of the senior housing industry and the United States economy in general, (v) the risks associated with the Company's debt and lease obligations, (vi) the risk that the Company will be unable to locate acquisition opportunities at prices that the Company deems acceptable, and (vii) the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2005 under the caption "Risk Factors" and in the Company's other filings with the SEC. In light of the significant uncertainties inherent in the forward-looking statements included herein, the Company's actual results could differ materially from such forward-looking statements. The Company does not undertake any obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.