American Retirement Corporation Purchases JV Partner Interest and Contracts Land for Future Development.

NASHVILLE, Tenn. -- American Retirement Corporation (NYSE: ACR), a leading national provider of senior living housing and care, announced that it had purchased the interests of its joint venture partner in a 47-unit free-standing assisted living community in The Villages, Florida. In addition, the Company entered into a contract to purchase land and placed an option on an additional land parcel for the future expansion of the community into a retirement center.

With the purchase of the joint venture interest, the assisted living community is 100% owned by the company and will become consolidated in the Company's financial statements. The Company paid approximately $1.25 million to purchase the joint venture interest. In connection with the transaction, the Company recapitalized the community by entering into a $4.9 million mortgage loan with GMAC. The Company estimates that the consolidation of the community into its financial statements will add approximately $2 million in annual revenue and approximately $800,000 of annual operating contribution, with a positive pre-tax income effect of approximately $100,000 to $150,000 to its consolidated financial statements.

Additionally, the Company entered into a contract to purchase 19 acres and place under option an additional 11 acres of land adjacent to the assisted living community for the future expansion of the community into a retirement community, which would add a 60-bed skilled nursing center and 240 independent living units. A second phase of 120 additional independent living units is planned for later development.

"We're very excited about the opportunity to develop a retirement community at The Villages, Florida," said Bill Sheriff, Chairman, President and CEO of American Retirement Corporation. "Located an hour north of Orlando, The Villages has offered the finest in active adult living for over 25 years. Currently home to over 40,000 residents, The Villages is one of the fastest growing communities in Florida. Given the focus on quality living and commitment to excellence that is the hallmark of The Villages, it is natural that we expand our operations from a highly successful free-standing assisted living community into a full-service retirement center."

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 67 senior living communities in 14 states, with an aggregate unit capacity of approximately 13,300 units and resident capacity of approximately 14,900. The Company owns 18 communities, leases 43 communities, and manages six communities pursuant to management agreements.

Safe Harbor Statement

Statements contained in this press release and statements made by or on behalf of American Retirement Corporation 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 the Company's expectations for the future financial performance of the acquired community and its effect on the Company's income, and the future development of the community. These forward-looking statements may be affected by certain risks and uncertainties, including without limitation the following: (i) the Company's ability to maintain or increase occupancy at the Company's communities, (ii) the Company's ability to obtain the required regulatory and land use approvals for future development, (iii) the Company's ability to successfully pre-sell entry-fee units for new developments, (iv) the risk that the Company will be unable to improve the results of operations, increase cash flow and reduce expenses, (v) the risks associated with adverse market conditions of the senior housing industry and the United States economy in general, (vi) the risk that the Company is unable to obtain liability insurance in the future or that the costs thereof (including deductibles) will be prohibitive, (vii) the Company's ability to obtain new financing or extend and/or modify existing debt, (viii) the risk associated with the Company's significant leverage, and (ix) the risk factors described in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2004 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.