Capital Senior Living Increases Its Merger Consideration to ILMS.

DALLAS--(BUSINESS WIRE)--Aug. 2, 1999--

Capital Senior Living Corporation (NYSE:CSU), one of the country's largest developers and operators of senior living communities, announced today that it has increased its merger consideration to the shareholders of ILM Senior Living, Inc. and ILM II Senior Living, Inc. from $170,000,000 to $172,000,000 total aggregate cash consideration. The parties have agreed to amend the merger agreements, which were announced February 8, 1999, to provide shareholders of ILM Senior Living and ILM II Senior Living the option to receive in the separate mergers all cash consideration or to receive cash and up to 35% in the form of 8% convertible trust preferred securities issued by an affiliate of the Company. The amended merger agreements will be subject to approval by the Board of Directors of each party.

"We are pleased to increase the amount of consideration and give the ILM Senior Living and ILM II Senior Living shareholders the option to receive cash or a combination of cash and trust originated preferreds," stated James A. Stroud, Chairman of the Company. "We believe the proposed separate mergers are in the best interest of the shareholders of Capital and ILM Senior Living and ILM II Senior Living as it creates a win-win situation of increased resident revenues to Capital and provides liquidity to the ILM Senior Living and ILM II Senior Living shareholders."

ANTICIPATED CLOSING DATE

"We have managed the ILM properties since August of 1996, and the integration will be minimal since the on-site employees are existing Capital employees," stated Lawrence A. Cohen, Chief Executive Officer. "The Amendment will be added to the documents already filed with the Securities and Exchange Commission. We anticipate closing the mergers in the second half of 1999 following approval of the appropriate parties."

ABOUT THE COMPANY

The Company is one of the country's largest developers and operators of senior living communities. The Company currently operates 36 communities in 18 states with a capacity of approximately 6,000 residents. The Company currently has 34 communities under construction or development, which will have a capacity of approximately 5,000 residents, including 27 new Waterford Communities with a capacity of approximately 3,800 residents. The Company is currently negotiating terms for additional sites. The Company is also expanding 10 existing communities to accommodate approximately 600 residents. Upon completion of these developments and expansions, the Company is expected to increase its capacity to approximately 11,600 residents. The Company's operating philosophy emphasizes a continuum of care, which integrates independent living, assisted living and personal care to provide residents with the opportunity to age in place.

The forward-looking statements in this release are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to, the Company's ability to find suitable acquisition properties at favorable terms, financing, licensing, business conditions, risks of downturns in economic condition generally, and satisfaction of closing conditions such as those pertaining to licensure. These and other risks are detailed in the Company's reports filed with the Securities and Exchange Commission.