EXTENDICARE REIT                                                    Condensed Consolidated Earnings                       

(thousands of Canadian dollars      Three months ended     Six months ended  except per unit amounts)                 June 30               June 30     ----------------------------------------------------------------------------                                      2010       2009       2010       2009 ----------------------------------------------------------------------------Revenue                                                                     Nursing and assisted living centers                                           United States                    337,596    371,990    673,719    769,099   Canada                           122,959    118,860    241,543    233,244 Home health - Canada                38,362     38,819     77,891     74,823 Health technology services                                                 - United States                     4,139      4,794      8,285     10,245 Outpatient therapy - United States   3,758      3,505      6,694      7,236 Other                                7,557      8,631     15,073     17,593 ----------------------------------------------------------------------------                                   514,371    546,599  1,023,205  1,112,240 Operating expenses                 424,567    452,589    853,863    931,659 Administrative costs                17,505     18,917     34,484     38,836 Lease costs                          2,612      3,097      5,420      6,191 ----------------------------------------------------------------------------EBITDA (1)                          69,687     71,996    129,438    135,554 Depreciation and amortization       15,785     16,350     31,479     33,709 Accretion of asset retirement                                                obligations                           393        416        793        853 Interest expense                    22,800     24,479     45,994     50,316 Interest income                     (2,074)      (709)    (3,002)    (1,851)Loss (gain) on derivative financial                                          instruments and foreign exchange    4,505    (12,424)     1,285     (7,474)Loss from asset impairment,                                                  disposals and other items           2,580        594      2,580        337 ----------------------------------------------------------------------------Earnings from continuing                                                     operations before income taxes     25,698     43,290     50,309     59,664 ----------------------------------------------------------------------------Income tax expense (recovery)                                               Current                             11,244     14,958     22,650     25,911 Future                                 476     (1,206)    (1,475)       397 ----------------------------------------------------------------------------                                    11,720     13,752     21,175     26,308 ----------------------------------------------------------------------------Earnings from continuing                                                     operations                         13,978     29,538     29,134     33,356 Discontinued operations               (974)       706       (564)       545 ----------------------------------------------------------------------------Net earnings                        13,004     30,244     28,570     33,901 --------------------------------------------------------------------------------------------------------------------------------------------------------Basic and Diluted Earnings per Unit ($)                                     Earnings from continuing operations   0.17       0.40       0.36       0.45 Net earnings                          0.16       0.41       0.36       0.46 ----------------------------------------------------------------------------(1) Refer to discussion of non-GAAP measures.                               ----------------------------------------------------------------------------Certain 2009 figures have been revised for comparative purposes.            

                              EXTENDICARE REIT                                                 Condensed Consolidated Balance Sheets                    

(thousands of Canadian dollars, unless             June 30      December 31  otherwise noted)                                     2010             2009 ----------------------------------------------------------------------------Assets                                                                      Current assets                                                                Cash and short-term investments                  252,542          134,012   Restricted cash                                   19,322           22,361   Accounts receivable, less allowances             211,563          213,477   Income taxes recoverable                           8,500           29,314   Future income tax assets                          24,338           24,900   Other current assets                              25,017           22,187 ----------------------------------------------------------------------------                                                   541,282          446,251 Property and equipment, including construction-in                            -progress of $50,880 and $41,956, respectively    865,132          863,430 Goodwill and other intangible assets               194,883          191,514 Other assets                                       152,536          166,870 ----------------------------------------------------------------------------                                                 1,753,833        1,668,065 --------------------------------------------------------------------------------------------------------------------------------------------------------Liabilities and Equity                                                      Current liabilities                                                           Accounts payable                                  37,708           38,372   Accrued liabilities                              232,674          245,260   Accrual for self-insured liabilities              11,505           11,321   Current portion of long-term debt                 99,013           28,538 ----------------------------------------------------------------------------                                                   380,900          323,491 Accrual for self-insured liabilities                29,126           32,562 Long-term debt                                   1,157,975        1,205,494 Other long-term liabilities                         68,173           67,555 Future income tax liabilities                       75,799           79,866 ----------------------------------------------------------------------------                                                 1,711,973        1,708,968 Unitholders' equity (deficiency)                    41,860          (40,903)----------------------------------------------------------------------------                                                 1,753,833        1,668,065 --------------------------------------------------------------------------------------------------------------------------------------------------------

Closing US/Cdn. dollar exchange rate                1.0646           1.0510 ----------------------------------------------------------------------------

                              EXTENDICARE REIT                                                   Condensed Consolidated Cash Flows                      

                                  Three months ended      Six months ended (thousands of Canadian dollars)         June 30                June 30 ----------------------------------------------------------------------------                                   2010        2009        2010        2009 ----------------------------------------------------------------------------Operating Activities                                                        Net earnings                     13,004      30,244      28,570      33,901 Adjustments for:                                                              Depreciation and amortization  15,785      16,782      31,479      34,665   Provision for self-insured                                                   liabilities                    3,942       4,988       9,433      10,313   Payments for self-insured                                                    liabilities                   (8,536)     (4,443)    (11,659)     (7,563)  Future income taxes              (999)     (1,204)     (2,950)        391   Loss (gain) on derivative financial instruments                              and foreign exchange           4,505     (12,424)      1,285      (7,474)  Loss from asset impairment,                                                  disposals and other items      2,580         594       2,580         337   Loss (gain) from asset disposals,                                            impairment and other items from                                             discontinued operations        2,751           -       2,751      (1,426)  Other                           2,596       2,866       5,229       6,205 ----------------------------------------------------------------------------                                 35,628      37,403      66,718      69,349 ----------------------------------------------------------------------------Net change in operating assets and liabilities                                Accounts receivable            10,475       9,320       2,148      24,903   Other current assets              513         608      (2,650)     (6,002)  Accounts payable and                                                         accrued liabilities          (15,394)     (4,555)    (16,930)    (12,064)  Income taxes                   11,133      (8,345)     19,633      (4,843)----------------------------------------------------------------------------                                  6,727      (2,972)      2,201       1,994 ----------------------------------------------------------------------------                                 42,355      34,431      68,919      71,343 ----------------------------------------------------------------------------Investing Activities                                                        Growth capital expenditures      (6,901)    (12,518)    (18,517)    (25,789)Maintenance capital expenditures (5,173)     (7,917)     (9,759)    (15,241)Net proceeds from dispositions    5,482           -       5,482       9,995 Other assets                       (490)        384      (1,185)     (1,710)----------------------------------------------------------------------------                                 (7,082)    (20,051)    (23,979)    (32,745)----------------------------------------------------------------------------Financing Activities                                                        Issue of long-term debt           9,427       6,337      30,138      12,049 Repayment of long-term debt      (6,957)     (3,895)    (20,365)    (14,135)Decrease (increase) in                                                       restricted cash                  3,039     (29,482)      3,039     (29,482)Decrease in investments held                                                 for self-insured liabilities     7,950       6,536       8,278       7,091 Purchase of securities for                                                   cancellation                         -           -           -      (6,189)Distributions paid              (15,968)    (14,584)    (31,086)    (30,866)Issue of units                        -           -      82,212           - Financing costs                    (476)     (2,795)       (740)     (2,832)Other                               (95)       (330)        (95)     (1,860)----------------------------------------------------------------------------                                 (3,080)    (38,213)     71,381     (66,224)----------------------------------------------------------------------------Foreign exchange gain (loss) on cash                                         held in foreign currency         4,457      (1,704)      2,209        (851)----------------------------------------------------------------------------Increase (decrease) in cash                                                  and cash equivalents            36,650     (25,537)    118,530     (28,477)Cash and cash equivalents at                                                 beginning of period            215,892     120,144     134,012     123,084 ----------------------------------------------------------------------------Cash and cash equivalents at                                                 end of period                  252,542      94,607     252,542      94,607 --------------------------------------------------------------------------------------------------------------------------------------------------------

                              EXTENDICARE REIT                                                   Financial and Operating Statistics                     

                                     Three months ended    Six months ended                                                 June 30             June 30 ----------------------------------------------------------------------------(amounts in Canadian dollars, unless                                         otherwise noted)                        2010      2009      2010      2009 ----------------------------------------------------------------------------

Earnings from Continuing Operations (millions)                              United States (US$)                     $11.8     $20.7     $22.9     $25.8 ----------------------------------------------------------------------------United States                           $12.1     $24.8     $23.6     $31.1 Canada                                    1.9       4.7       5.5       2.2 ----------------------------------------------------------------------------                                        $14.0     $29.5     $29.1     $33.3 --------------------------------------------------------------------------------------------------------------------------------------------------------Net Earnings (millions)                                                     United States (US$)                     $10.8     $21.4     $22.3     $26.3 ----------------------------------------------------------------------------United States                           $11.2     $25.5     $23.1     $31.7 Canada                                    1.9       4.7       5.5       2.2 ----------------------------------------------------------------------------                                        $13.1     $30.2     $28.6     $33.9 --------------------------------------------------------------------------------------------------------------------------------------------------------U.S. Skilled Nursing Center Statistics                                       Percent of Revenue by Payor Source (same-facility basis, excluding prior     period settlement adjustments)                                             Medicare (Parts A and B)                33.3%     34.1%     33.1%     34.4% Managed Care                             9.5       9.6       9.5       9.5 ---------------------------------------------------------------------------- Skilled mix                             42.8      43.7      42.6      43.9  Private/other                            9.0       9.4       9.1       9.3 ---------------------------------------------------------------------------- Quality mix                             51.8      53.1      51.7      53.2  Medicaid                                48.2      46.9      48.3      46.8 ----------------------------------------------------------------------------                                        100.0     100.0     100.0     100.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- Average Daily Census by Payor Source (same-facility basis)                  Medicare                               2,342     2,385     2,334     2,441  Managed Care                             802       797       808       802 ---------------------------------------------------------------------------- Skilled mix                            3,144     3,182     3,142     3,243  Private/other                          1,425     1,518     1,427     1,516 ---------------------------------------------------------------------------- Quality mix                            4,569     4,700     4,569     4,759  Medicaid                               9,440     9,490     9,498     9,513 ----------------------------------------------------------------------------                                       14,009    14,190    14,067    14,272 -------------------------------------------------------------------------------------------------------------------------------------------------------- Average Revenue per Resident Day by Payor Source (excluding prior period     settlement adjustments) (US$)                                              Medicare Part A only                $ 457.74  $ 454.38  $ 457.40  $ 451.03  Medicare (Parts A and B)              499.77    497.31    499.87    492.07  Managed Care                          415.60    417.72    412.75    415.12  Private/other                         223.73    215.17    224.59    213.52  Medicaid                              179.79    172.06    179.60    172.10  Weighted average                      252.63    245.14    252.02    244.88 ----------------------------------------------------------------------------Average Occupancy (excluding managed centers) (same-facility basis)         U.S. skilled nursing centers             86.9%     88.3%     87.2%     88.8%U.S. assisted living centers             78.3      82.6      78.3      82.6 Canadian centers                         98.3      97.9      98.1      97.8 ----------------------------------------------------------------------------Average US/Cdn. dollar exchange rate   1.0277    1.1672    1.0338    1.2062 ----------------------------------------------------------------------------

                              EXTENDICARE REIT                                                Supplemental Information - FFO and AFFO                   

The following table provides a reconciliation of EBITDA to Funds from       Operations (FFO), Distributable Income (DI) and Adjusted Funds from         Operations (AFFO) for the periods ended June 30, 2010 and 2009.(1)          

                                    Three months ended     Six months ended                                           June 30               June 30    ----------------------------------------------------------------------------(thousands of Canadian dollars                                               unless otherwise noted)              2010       2009       2010       2009 ----------------------------------------------------------------------------EBITDA from continuing                                                       operations                         69,687     71,996    129,438    135,554 Depreciation for furniture, fixtures,                                        equipment and computers            (5,580)    (5,983)   (11,033)   (12,049)Interest expense, net              (20,726)   (23,770)   (42,992)   (48,465)----------------------------------------------------------------------------                                    43,381     42,243     75,413     75,040 Current income tax expense (2)     (11,244)   (15,448)   (22,650)   (26,911)----------------------------------------------------------------------------FFO (continuing operations)         32,137     26,795     52,763     48,129 Amortization of financing costs      2,184      2,841      4,353      5,365 Principal portion of government                                              capital funding payments              615        574      1,226      1,150 ----------------------------------------------------------------------------DI (continuing operations)          34,936     30,210     58,342     54,644 Additional maintenance capital                                               expenditures (3)                      407     (1,934)     1,274     (3,192)----------------------------------------------------------------------------AFFO (continuing operations)        35,343     28,276     59,616     51,452 AFFO (discontinued operations)(4)      302      1,161        731      2,362 ----------------------------------------------------------------------------AFFO                                35,645     29,437     60,347     53,814 --------------------------------------------------------------------------------------------------------------------------------------------------------Per Basic Unit ($)                                                          FFO (continuing operations)          0.393      0.367      0.658      0.660 AFFO (continuing operations)         0.431      0.388      0.743      0.706 AFFO                                 0.435      0.404      0.752      0.738 ----------------------------------------------------------------------------Per Diluted Unit ($)                                                        FFO (continuing operations)          0.365      0.340      0.620      0.618 AFFO (continuing operations)         0.390      0.349      0.676      0.639 AFFO                                 0.393      0.362      0.684      0.666 ----------------------------------------------------------------------------Distributions declared              17,346     15,317     34,019     30,602 Distributions declared per unit ($) 0.2100     0.2100     0.4200     0.4200 ----------------------------------------------------------------------------Basic weighted average number of                                             units (thousands)                  82,576     72,914     80,221     72,913 Diluted weighted average number                                              of units (thousands)               96,389     86,727     94,034     86,733 ----------------------------------------------------------------------------

1. "EBITDA", "funds from operations", "distributable income" and "adjusted     funds from operations" are not recognized measures under GAAP and do not    have a standardized meaning prescribed by GAAP. Refer to the discussion     of non-GAAP measures.                                                    2. Excludes current tax with respect to the loss (gain) from derivative        financial instruments, foreign exchange, asset impairment, disposals and    other items that are excluded from the computation of AFFO.              3. Represents total facility maintenance capital expenditures less             depreciation for furniture, fixtures, equipment and computers already       deducted in determining DI.                                              4. The impact of discontinued operations reduces FFO, DI and AFFO by the       same amount.                                                             ----------------------------------------------------------------------------


Reconciliation of Cash Provided by   Three months ended    Six months ended   Operating Activities to DI & AFFO       June 30               June 30 ----------------------------------------------------------------------------(thousands of Canadian dollars)       2010       2009       2010       2009 ----------------------------------------------------------------------------Cash provided by operating                                                   activities                         42,355     34,431     68,919     71,343 Add (Deduct):                                                               Net change in operating assets                                               and liabilities                    (6,727)     2,972     (2,201)    (1,994)Current tax expense on gain or loss                                          from derivative financial instruments,                                      foreign exchange, asset impairment,                                         disposals and other items             (12)      (490)       (12)     1,250 Net provisions and payments for                                              self-insured liabilities            4,594       (545)     2,226     (2,750)Depreciation for furniture, fixtures,                                        equipment and computers            (5,580)    (5,983)   (11,033)   (12,049)Principal portion of government                                              capital funding payments              615        574      1,226      1,150 Other                                   (7)       412        (52)        56 ----------------------------------------------------------------------------DI                                  35,238     31,371     59,073     57,006 Additional maintenance capital                                               expenditures                          407     (1,934)     1,274     (3,192)----------------------------------------------------------------------------AFFO                                35,645     29,437     60,347     53,814 --------------------------------------------------------------------------------------------------------------------------------------------------------