UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2004.~~2006

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM [ ] TO . [ ]

Commission file number: 333-89312-02


Commission file number:		333-89312-02
		333-90756-03
		333-101598-03
		333-107942-05
		333-119261-27
		333-120642-27
		333-127262-45
		333-131342-56
		333-133115-61

~~ELDERTRUST~~ElderTrust ~~OPERATING~~Operating ~~LIMITED~~Limited ~~PARTNERSHIP~~Partnership

(Exact name of registrant as specified in its charter)

Delaware		23-2915846
(State or other jurisdiction)		(I.R.S. Employer Identification No.)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10350 Ormsby Park Place, Suite 300

Louisville, Kentucky

(Address of principal executive offices)

40223

(Zip Code)

(502) 357-9000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, ~~(as~~or ~~defined~~a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act). ~~Yes ¨ No x~~ (Check one):


Large accelerated filer ¨		Accelerated filer ¨		Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

ELDERTRUST OPERATING LIMITED PARTNERSHIP

FORM 10-Q

INDEX

		Page	~~Page~~
PART I—FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
		Condensed Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003	3
	Condensed Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005	3
		Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2004, the Period from February 5, 2004 through September 30, 2004, the Period from January 1, 2004 through February 4, 2004, and for the Three and Nine Months Ended September 30, 2003	4
	Condensed Consolidated Statements of Income For the Three and Six Months Ended June 30, 2006 and 2005	4
		Condensed Consolidated Statements of Cash Flows for the Period from February 5, 2004 through September 30, 2004, the Period from January 1, 2004 through February 4, 2004 and for the Nine Months Ended September 30, 2003	5
	Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2006 and 2005	5
	Notes to Condensed Consolidated Financial Statements	~~Notes to Condensed Consolidated Financial Statements~~6	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16	28
Item 4.	Controls and Procedures	17	29
PART II—OTHER INFORMATION		18
Item 6.	Exhibits ~~and Reports on Form 8-K~~	18	29

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ELDERTRUST OPERATING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30, 2004			Predecessor December 31, 2003
	June 30, 2006			December 31,2005
	(unaudited)			(audited)
	(Unaudited)			(Audited)
ASSETS
Assets:
Buildings and improvements	$	144,151		$	164,038
Real estate investments, at cost	$	139,917		$	139,754
Less – accumulated depreciation and amortization of capital leases		(3,646	)		(29,959	)
Less – accumulated depreciation		(12,825	)		(10,162	)
Land		1615,~~570~~601			1615,~~570~~601
Net real estate properties		157,075			150,649
Net real estate investments		142,693			145,193
Properties held for sale		—			4,971
Cash and cash equivalents		458			439
Cash and cash equivalents		716			25,669
Restricted cash		5,982			5,616
Restricted cash		6,665			5,447
Accounts receivable, net of allowance of $4 and $36, respectively		1,663			1,401
Accounts receivable from affiliates		—			3,538
Investment in affiliates		9,039			9,039
Other assets		~~780~~296			~~2,124~~473
Total assets	$	~~165~~160,~~236~~131		$	~~192~~162,~~398~~161
LIABILITIES AND PARTNERS’ EQUITY
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Notes payable and other debt	$	78,046		$	84,445
Debt	$	66,508		$	67,200
Note payable to affiliate		7,~~651~~798			—7,500
Liabilities associated with properties held for sale		—			2,597
Accrued interest		420			434
Accounts payable and other accrued liabilities		3,444			15,203
Accounts payable and accrued and other liabilities		3,031			3,191
Total liabilities		8977,~~141~~757			~~102~~78,~~245~~325
Partners’ equity		76,095			90,153
Partners’ capital		82,374			83,836
Total liabilities and partners’ equity	$	165,236		$	192,398
Total liabilities and partners’ capital	$	160,131		$	162,161

See ~~accompanying~~ notes to condensed consolidated financial statements.

ELDERTRUST OPERATING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~INCOME

(Unaudited)

(In thousands, except per unit amounts)

	Three MonthsEnded September 30, 2004		For the Period from February 5, 2004 to September 30, 2004			Predecessor for the Period from January 1, 2004 to February 4, 2004			Predecessor for the Three Months Ended September 30, 2003				Predecessor for the Nine Months Ended September 30, 2003
	For the Three MonthsEnded June 30,						For the Six Months Ended June 30,
Revenues:
	2006		2005				2006			2005
Rental	$	4,281	$	11,376		$	1,512		$	4,755			$	14,174
Revenues:
Interest and other income		29		83			60			59				190
Rental income	$	4,119	$	4,078			$	8,230		$	8,155
Total revenues		4,310		11,459			1,572			4,814				14,364
Interest and other income		26		11				58			21
Expenses:
Total revenues		4,145		4,089				8,288			8,176
Property operating expenses		331		828			101			314				920
Expenses:
Interest expense		1,674		4,408			549			2,070				6,193
Interest		1,273		1,299				2,547			2,597
Depreciation		1,~~643~~332		31,~~646~~327			~~487~~	2,663		~~1,459~~	2,652			~~4,373~~
General and administrative		315		958			200			1,763				2,359
Property-level operating expenses		357		366				687			697
Loss on sale of fixed assets		—		—			10			—				—
General, administrative and professional fees		251		359				550			743
Loss (gain) on debt extinguishment		—		—			8			(1,856	)			(1,856	)
Intercompany interest		150		150				298			298
Total expenses		3,~~963~~363		93,~~840~~501			~~1,355~~	6,745		~~3,750~~	6,987			~~11,989~~
Income from continuing operations		347		1,619			217			1,064				2,375
Income before discontinued operations		782		588				1,543			1,189
Income from discontinued operations		—		—			414			1,488				640
Discontinued operations		—		(37	)			—			(76	)
Net income	$	~~347~~782	$	~~1,619~~551		$	~~631~~$	1,543	$	~~2,552~~$	1,113		$	~~3,015~~
Net income allocated to Class A general partners	$	1	$	2		$	1		$	2			$	3
Net income allocated to Class A general partner	$	1	$	1			$	1		$	1
Net income allocated to Class A limited partners	$	~~345~~746	$	~~1,611~~548		$	~~628~~	1,473	$	~~2,540~~	1,108		$	~~3,000~~
Net income allocated to Class C limited partners	$	1	$	6		$	2		$	10			$	12
Net income allocated to Class C limited partner		3		2				6			4
Net income per unit:
Net income allocated to Class D limited partners		32		—				63			—
Class A general partnership unit	$	0.13	$	0.25		$	0.13		$	0.25			$	0.38
Net income per unit:
Class A limited partnership unit	$	0.04	$	0.20		$	0.08		$	0.32			$	0.38
Class A general partnership units	$	0.13	$	0.13			$	0.13		$	0.13
Class C limited partnership unit	$	0.03	$	0.19		$	0.06		$	0.32			$	0.39
Class A limited partnership units		0.09		0.07				0.09			0.14
Units used to compute per unit amount:
Class C limited partnership units		0.10		0.06				0.10			0.13
Class A general partnership units		8		8			8			8				8
Class D limited partnership units		0.09		—				0.09			—
Class A limited partnership units		8,041		8,041			8,041			7,992				7,950
Units used to compute per unit amount:
Class C limited partnership units		31		31			31			31				31
Class A general partnership units		8		8				8			8
Class A limited partnership units		8,041		8,041				8,041			8,041
Class C limited partnership units		31		31				31			31
Class D limited partnership units		345		—				345			—

See ~~accompanying~~ notes to condensed consolidated financial statements.

ELDERTRUST OPERATING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	For the Period from February 5, 2004 through September 30, 2004			Predecessor for the Period from January 1, 2004 through February 4, 2004			Predecessor for the Nine Months Ended September 30, 2003
	For the Six MonthsEnded June 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
	2006			2005
Net income	$	1,619		$	631		$	3,015
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided by operating activities:
Net income	$	1,543		$	1,113
Depreciation		3,646			484			7,694
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) loss on sale of property, plant and equipment		—			(293	)		1,777
Depreciation (including amounts in discontinued operations)		2,663			2,745
Other		(380	)		(112	)		—
Straight-lining of rental income		(257	)		(234	)
Net changes in assets and liabilities:
Other		(32	)		37
Accounts receivable and prepaid expenses		(196	)		210			(393	)
Net changes in operating assets and liabilities:
Accounts receivable from affiliates		—			—			(718	)
Increase in restricted cash		(366	)		(1,080	)
Accounts payable and accrued expenses		1,237			(636	)		(339	)
Decrease in accounts receivable and other assets		204			131
Net change in restricted cash		(1,152	)		(3	)		1,078
Increase in accounts payable and accrued and other liabilities		195			94
Other		—			799			1,293
Net cash provided by operating activities		3,950			2,806
Net cash provided by operating activities		4,774			1,080			13,407
CASH FLOWS FROM INVESTING ACTIVITIES:
CASH FLOWS FROM INVESTING ACTIVITIES:
Net investment in real estate properties		(163	)		(4	)
Purchase of real estate property		(37	)		—			(355	)
Net cash used in investing activities		(163	)		(4	)
Proceeds from sale of real estate		—			2,806			2,634
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash (used in) provided by investing activities		(37	)		2,806			2,279
Distributions to unit holders		(3,076	)		(2,909	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt		(692	)		(644	)
Cash distributions		(35,176	)		(1,293	)		(2,562	)
Net cash used in financing activities		(3,768	)		(3,553	)
Principal payments on mortgages and bonds payable		(4,365	)		(242	)		(16,306	)
Net increase (decrease) in cash and cash equivalents		19			(751	)
Issuance of note payable		7,500			—			—
Cash and cash equivalents, beginning of period		439			1,210
Issuance of partnership units		—			—			(41	)
Cash and cash equivalents, end of period	$	458		$	459
Net cash used in financing activities		(32,041	)		(1,535	)		(18,909	)
Net (decrease) increase in cash and cash equivalents		(27,304	)		2,351			(3,223	)
Cash and cash equivalents, beginning of period		28,020			25,669			7,378
Cash and cash equivalents, end of period	$	716		$	28,020		$	4,155

See ~~accompanying~~ notes to condensed consolidated financial statements.

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—ORGANIZATION

ElderTrust Operating Limited Partnership (together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us,” “our,” “ETOP” or the “Partnership”) is a limited partnership organized under the laws of the ~~state~~State of Delaware on July 30, 1997. ~~The~~We ~~Partnership~~invest ~~invests~~ in ~~senior~~seniors housing and other healthcare facilities, primarily skilled nursing facilities, assisted and independent living facilities and medical and other office buildings. ElderTrust, a Maryland real estate investment trust (“ElderTrust”), is ~~the~~our sole general partner ~~of the Partnership~~. On February 5, 2004, ElderTrust became a wholly owned direct subsidiary of Ventas, Inc. (“Ventas”), a healthcare real estate investment trust ~~(“REIT”)~~ based in Louisville, Kentucky, whose common stock is publicly traded on the New York Stock Exchange. ~~See “Note 3 — Merger of ElderTrust.”~~

As of ~~September~~ June 30, ~~2004~~2006, ~~the Partnership’s~~our consolidated assets included 18seventeen properties ~~consisting~~located ofin athree ~~diversified~~states, ~~portfolio~~consisting of nine seniors ~~assisted~~housing ~~living~~ facilities, ~~one independent living facility,~~ five skilled nursing facilities, two medical office buildings and a financial office building. ~~Fifteen~~Except ofwith ~~the~~respect ~~properties~~to ~~are~~our ~~leased~~office buildings, we lease these facilities to third-party healthcare providers, generally under “triple-net” leases, which require the tenants to pay all property-related expenses.

NOTE 2—BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements ~~of the Partnership and its consolidated subsidiaries~~ have been prepared in accordance with ~~accounting~~ ~~principles~~U.S. generally accepted inaccounting ~~the United States~~ principles (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management of ~~the~~our general partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results for the three- ~~months~~and six-month periods ended ~~September~~ June 30, ~~2004,~~2006 ~~the~~are ~~period~~not ~~from~~necessarily ~~February~~an 5,indication ~~2004~~of ~~through~~the ~~September~~results ~~30,~~that ~~2004~~may ~~and~~be expected for the ~~period~~year ~~from~~ending ~~January 1~~December 31, ~~2004 through February 4, 2004~~2006. ~~Operating~~The ~~results~~Condensed ~~for~~Consolidated ~~the~~Balance ~~nine~~Sheet ~~month~~as ~~period~~of ~~ended~~December 31, ~~September~~2005 ~~30,~~has ~~2004~~been ~~are~~derived ~~not~~from ~~necessarily~~our anaudited ~~indication~~consolidated offinancial ~~the~~statements ~~results that may be expected~~ for the year ~~ending~~ended December 31, ~~2004~~2005. ~~These~~The ~~financials~~accompanying ~~statements~~Condensed Consolidated Financial Statements and related notes should be read ~~together~~in conjunction with the consolidated financial statements and notes thereto ofincluded ~~the~~in ~~ETOP Predecessor~~our ~~(defined~~Annual ~~below)~~Report on Form 10-K for the year ~~ending~~ended December 31, ~~2003~~2005. ~~included~~Certain asprior anperiod ~~exhibit~~amounts tohave ~~the~~been ~~Partnership’s~~reclassified ~~Quarterly~~to ~~Report~~conform onto ~~Form~~current ~~10-Q for the quarterly~~ period ~~ended March 31, 2004~~presentation.

~~The~~We ~~Partnership~~operate ~~has~~through one ~~primary~~ reportable segment,: ~~which~~investment ~~consists of investments~~ in real estate. ~~The~~Our ~~Partnership’s~~ primary business isconsists of financing, owning and leasing healthcare-related and ~~senior~~seniors housing facilities. ~~See~~and ~~“Note~~leasing ~~4—Concentration~~or ofsubleasing ~~Credit~~those ~~Risk.”~~facilities ~~Except~~to ~~for~~third ~~the~~parties. ~~leases~~With ~~relating to~~ the ~~Partnership’s~~ ~~three~~exception ~~office buildings, all~~ of ~~the~~our ~~Partnership’s leases are triple-net leases, which require the tenants to pay all property-related expenses. Except for the three~~ office buildings, ~~the~~we ~~Partnership~~do ~~does~~ not operate ~~its~~ our facilities nor ~~does~~do itwe allocate capital to maintain ~~its~~our properties. Substantially all depreciation and interest ~~expense~~expenses reflected in the ~~Condensed~~condensed ~~Consolidated~~consolidated ~~Statements~~statements of ~~Operations~~income ~~relates~~relate to ~~the~~our ~~Partnership’s~~ investment in real estate.

~~The~~Gain ~~Partnership~~on ~~does not pay income taxes as the income or~~Sale ~~loss from the Partnership, as allocated, is includable in the respective income tax returns~~ of ~~its~~Facilities ~~partners.~~

We recognize sales of facilities only upon the closing of the transaction with the purchaser. Payments received from purchasers prior to closing are recorded as deposits and classified as other assets in the consolidated balance sheet. Gains on facilities sold are recognized using the full accrual method upon closing when the collectibility of the sales price is reasonably assured, we are not obligated to perform significant activities after the sale to earn the profit, we have received adequate initial investment from the buyer, and other profit recognition criteria have been satisfied. Gains may be deferred in whole or in part until the sales satisfy the requirements of gain recognition on sales of real estate under the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 66, “Accounting for Sales of Real Estate.”

NOTE 3—CONCENTRATION OF CREDIT RISK

As of June 30, 2006, approximately 53.5% and 35.2% of our properties, based on their original cost, were leased to or managed by Genesis HealthCare Corporation (“Genesis HealthCare”) and certain of its related entities (collectively “Genesis”) and Benchmark Assisted Living LLC and certain of its related entities (collectively “Benchmark”), respectively. Approximately 49.8% and 30.8% of our total revenues for the six months ended June 30, 2006 were derived from leases with Genesis and Benchmark, respectively.

~~ELDERTRUST~~Because ~~OPERATING~~we ~~LIMITED~~lease ~~PARTNERSHIP~~a substantial portion of our properties to Genesis and Benchmark and they are each a significant source of our total revenues, their financial condition and ability and willingness to satisfy their obligations under their respective leases and certain other agreements with us will significantly impact our revenues and our ability to service our indebtedness and to make distributions to our partners. We cannot assure you that Genesis or Benchmark will have sufficient assets, income and access to financing to enable it to satisfy its obligations under its respective leases and other agreements with us, and any inability or unwillingness on its part to do so would have a material adverse effect on our business, financial condition, results of operation and liquidity, on our ability to service our indebtedness and on our ability to make distributions to our partners.

~~NOTES~~Genesis TOHealthCare ~~CONDENSED~~is ~~CONSOLIDATED~~subject ~~FINANCIAL~~to ~~STATEMENTS~~the reporting requirements of the Securities and Exchange Commission (the “Commission”) and is required to file with the Commission annual reports containing audited financial information and quarterly reports containing unaudited interim financial information. The information related to Genesis HealthCare contained or referred to in this Quarterly Report on Form 10-Q is derived from filings made by Genesis HealthCare with the Commission or other publicly available information, or has been provided to us by Genesis HealthCare. We have not verified this information either through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you that all such information is accurate. Genesis HealthCare’s filings with the Commission can be found at the Commission’s website at www.sec.gov. We are providing this data for informational purposes only, and you are encouraged to obtain Genesis HealthCare’s publicly available filings from the Commission.

~~(Unaudited)~~ NOTE 4—DISCONTINUED OPERATIONS

~~NOTE~~In ~~3—MERGER~~October OF2005, ~~ELDERTRUST~~we completed the sale of one seniors housing facility. The operating results of this facility are presented in discontinued operations in the Condensed Consolidated Statement of Income for the three- and six-month periods ended June 30, 2005.

OnDuring ~~February 5, 2004, Ventas acquired all of~~ the ~~outstanding~~six ~~common~~months ~~shares of~~ended ~~ElderTrust in an all cash transaction valued at $184 million (the “ElderTrust Transaction”). At the close of the ElderTrust Transaction~~June 30, ~~ElderTrust had approximately $33.5 million in unrestricted and restricted cash. After transaction costs~~2006, ~~the~~we ~~net~~did ~~investment~~not ofdispose ~~the ElderTrust Transaction was approximately $160 million. Concurrent with the consummation~~ of ~~the~~any ~~ElderTrust~~operating ~~Transaction,~~assets ~~Ventas~~or ~~also~~have ~~purchased~~any ~~all~~operating ofassets ~~the~~classified ~~limited~~as ~~partnership units in the Partnership then~~ held byfor ~~third parties~~sale ~~at $12.50 per unit~~and, ~~other than 31~~therefore,~~455~~ ~~Class~~no Camounts ~~Units~~were reported in ~~the~~discontinued ~~Partnership (which remain outstanding)~~operations.

~~All~~Set ~~references~~forth tobelow ~~the~~is ~~Partnership~~a ~~prior~~summary toof ~~February~~the 5,results ~~2004~~of ~~contained~~operations ~~in these Condensed Consolidated Financial Statements refer to the activities~~ of the ~~Partnership~~ ~~prior~~facility tosold ~~February~~in 5,October ~~2004~~2005: ~~(the “ETOP Predecessor”).~~

Ventas accounted for the ElderTrust Transaction under the purchase method. As a result, the Partnership’s assets and liabilities were adjusted to reflect the fair value as of the date of the acquisition. The preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition are subject to refinement as additional valuation information is received. Ventas is in the process of computing fair values, thus, the allocation of purchase price is subject to refinement.


	For the Three Months Ended June 30, 2005			For the Six Months Ended June 30, 2005
Revenues:
Rental income	$	202		$	405
Interest and other income		21			41

Total revenues		223			446
Expenses:
Interest		196			392
Depreciation		46			93
General, administrative and professional fees		18			37

Total expenses		260			522

Discontinued operations	$	(37	)	$	(76	)

~~The~~NOTE ~~following table summarizes the assets and liabilities recorded on February~~ 5,—RELATED ~~2004~~PARTY ~~(in~~TRANSACTIONS ~~millions):~~

Land	$	17
Buildings and improvements		144
Cash and cash equivalents		28
Other assets		5
Total assets acquired		194
Notes payable and other debt		82
Accounts payable and other accrued liabilities		3
Total liabilities assumed		85
Net assets acquired		109
Less cash acquired		(28	)
Net cash paid	$	81

In accordance with our Limited Partnership Agreement, our general partner uses an allocation method for its general, administrative and professional fees and charges these to us on a quarterly basis. This allocation method is based on our total revenues in relation to the consolidated revenues of the general partner. Other direct expenses are incurred by us and expensed at the time incurred. Approximately 90.0% and 89.8% of our consolidated general, administrative and professional fees for the six months ended June 30, 2006 and 2005, respectively, related to this allocation.

The Partnership recognizes revenue as earned over the terms of the related leases, which are treated as operating leases. Such income includes periodic increases, if any, based on predetermined formulas as defined in the lease agreements. Certain leases contain provisions relating to increases in rental payments over the terms of the leases. Rental income under these leases is recognized over the term of each lease on a straight-line basis. For accounting purposes, the straight-line amount was computed from the date of acquisition, February 5, 2004.

In addition, as a result of the merger, the Partnership recorded its real estate properties at their estimated fair values as of February 5, 2004 and is depreciating them on a straight-line basis over their estimated useful lives, which is 30 years.

NOTE 4—CONCENTRATION OF CREDIT RISK

As of September 30, 2004, approximately 51.8% and 34.1% of the Partnership’s properties, based on the original cost of such properties, were operated by Genesis Health Ventures, Inc. (“Genesis”) and Benchmark Assisted Living, L.L.C. (“Benchmark”), respectively. Approximately 48.1% and 30.0% of the Partnership’s total rental revenue for the period from February 5, 2004 through September 30, 2004 was derived from leases with Genesis and Benchmark, respectively.

~~ELDERTRUST~~NOTE ~~OPERATING~~6—NOTE ~~LIMITED~~PAYABLE ~~PARTNERSHIP~~TO AFFILIATE

~~NOTES~~In TOApril ~~CONDENSED~~2004, ~~CONSOLIDATED~~we ~~FINANCIAL~~entered ~~STATEMENTS~~into a promissory note in the amount of $7.5 million with Ventas Realty, Limited Partnership, a wholly owned subsidiary of Ventas (“Ventas Realty”). Under the terms of the note, interest is paid quarterly at an annual rate of 8.0% beginning on July 1, 2004. The note has a maturity date of December 31, 2013, at which time a principal balloon payment equal to the full amount of the note is due. As of June 30, 2006, the note had an outstanding balance of $7.8 million, which included accrued but unpaid interest.

~~(Unaudited)~~ NOTE 7—CONDENSED CONSOLIDATING INFORMATION

~~There~~We ~~can~~and becertain noof ~~assurance~~our ~~that~~direct ~~Genesis~~ and ~~Benchmark~~indirect ~~will~~wholly owned subsidiaries (the “ETOP Subsidiary Guarantors”) have ~~sufficient~~provided ~~assets~~full and unconditional guarantees, ~~income~~on a joint and ~~access~~several tobasis ~~financing~~with Ventas and certain of Ventas’s direct and indirect wholly owned subsidiaries, of the obligation to ~~enable~~pay ~~them~~principal and interest with respect to ~~satisfy~~each ~~obligations~~series ~~under~~of ~~their~~senior ~~respective~~notes ~~leases~~issued by Ventas Realty and Ventas Capital Corporation (collectively, the “Ventas Issuers”), both wholly owned subsidiaries of Ventas. The ~~inability~~aggregate orprincipal ~~unwillingness~~amount of senior notes outstanding as of ~~Genesis~~June 30, or2006 ~~Benchmark~~was to$1.1 ~~satisfy~~billion. ~~its~~Certain ~~obligations~~of ~~under~~our ~~its~~other ~~lease~~subsidiaries ~~could~~(the “ETOP Non-Guarantor Subsidiaries”) have anot ~~material~~provided the guarantee of the senior notes and therefore are not directly obligated ~~adverse~~with ~~effect~~respect onto the ~~business~~senior notes. Contractual and legal restrictions, ~~financial~~including ~~condition~~those contained in the instruments governing certain of the ETOP Non-Guarantor Subsidiaries’ outstanding indebtedness, ~~results~~may under certain circumstances restrict our ability to obtain cash from the ETOP Non-Guarantor Subsidiaries for the purpose of ~~operations~~satisfying ~~and~~our ~~liquidity~~debt service obligations, including our guarantee of payment of principal and interest on the ~~Partnership~~senior notes. Additionally, orwe and the ~~Partnership~~ETOP Subsidiary Guarantors have guaranteed Ventas Realty’s ~~ability~~$500 tomillion ~~service~~senior ~~its~~unsecured ~~indebtedness~~revolving credit facility and ~~other~~certain ~~obligations~~of the ETOP Subsidiary Guarantors’ properties are subject to mortgages.

~~NOTE~~CONDENSED ~~5—DISCONTINUED~~CONSOLIDATING ~~OPERATIONS~~BALANCE SHEET

~~Under~~As ~~Statement~~ of ~~Financial Accounting Standards No. 144~~June 30, ~~“Accounting for~~2006 the Impairment or Disposal of Long Lived Assets,” the Partnership is required to reclassify from continuing operations to discontinued operations the results of operations from any property that is disposed of or is classified as held for sale and where the Partnership will not have significant continuing involvement.

During the period from February 5, 2004 through September 30, 2004, the Partnership did not dispose of any assets or have any operating assets classified as held for sale, and therefore no amounts were reported in discontinued operations for such period. Set forth below is a summary of the results of operations for the facilities that were classified in discontinued operations for the period from January 1, 2004 through February 4, 2004 and for the three and nine months ended September 30, 2003 (in thousands):


(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Assets
Net real estate investments	$	55,131		$	87,562	$	—		$	142,693
Cash and cash equivalents		—			458		—			458
Restricted cash		—			5,982		—			5,982
Equity in affiliates		80,821			15		(80,836	)		—
Investment in affiliates		9,039			—		—			9,039
Other assets		585			1,374		—			1,959

Total assets	$	145,576		$	95,391	$	(80,836	)	$	160,131

Liabilities and partners’ capital
Liabilities:
Debt	$	418		$	66,090	$	—		$	66,508
Intercompany		(5,150	)		5,150		—			—
Note payable to affiliate		7,798			—		—			7,798
Accrued interest		1			419		—			420
Accounts payable and accrued and other liabilities		102			2,929		—			3,031

Total liabilities		3,169			74,588		—			77,757
Total partners’ capital		142,407			20,803		(80,836	)		82,374

Total liabilities and partners’ capital	$	145,576		$	95,391	$	(80,836	)	$	160,131

	ETOP Predecessor
	For the Period from January 1, 2004 through February 4, 2004			Three Months Ended September 30,2003			Nine Months Ended September 30, 2003
Rental revenue	$	45		$	3,276		$	9,982
Interest income		—			1			4
Other income		335			—			(5	)
Total revenue		380			3,277			9,981
Interest expense		18			1,478			4,520
Depreciation		—			1,121			3,408
Property operating expense		—			—			24
General and administrative		2			50			190
Loss (gain) on sale of fixed assets		62			(241	)		1,818
Gain on extinguishment of debt		(116	)		(619	)		(619	)
Total expenses		(34	)		1,789			9,341
Income from discontinued operations	$	414		$	1,488		$	640

NOTE 6—BORROWING ARRANGEMENTS

ET Sub-Woodbridge, L.P., a direct subsidiary of the Partnership, is the obligor under the debt documents secured by the Woodbridge property (the “Woodbridge Bonds”). An event of default has existed under the Woodbridge Bonds since 2002. The event of default is the result of the failure of ET Sub-Woodbridge, L.P. to maintain a debt service coverage ratio of at least 1.00:1.00 on the compliance date. The Partnership believes that the bondholders of the Woodbridge Bonds (the “Bondholders”) have the right to call the Woodbridge Bonds at any time as a result of the event of default at 103% of par. The Partnership has not received a formal waiver from the Trustee with respect to such event of default. However, the Partnership believes that the Bondholders have instructed the Trustee not to take action on the event of default at this time. The next compliance date with respect to the Woodbridge Bonds is December 31, 2004, and the Partnership expects to continue to be in default at that time. The Woodbridge Bonds have a current outstanding principal balance of $9.2 million. The Woodbridge Bonds are prepayable on August 1, 2005 at 103% of par.

~~ELDERTRUST~~CONDENSED ~~OPERATING~~CONSOLIDATING ~~LIMITED~~BALANCE ~~PARTNERSHIP~~SHEET

~~NOTES~~As TOof ~~CONDENSED~~December 31, ~~CONSOLIDATED~~2005 ~~FINANCIAL STATEMENTS~~

(Unaudited)


(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Assets
Net real estate investments	$	56,201		$	88,992	$	—		$	145,193
Cash and cash equivalents		1			438		—			439
Restricted cash		26			5,590		—			5,616
Equity in affiliates		80,390			15		(80,405	)		—
Investment in affiliates		9,039			—		—			9,039
Other assets		508			1,366		—			1,874

Total assets	$	146,165		$	96,401	$	(80,405	)	$	162,161

Liabilities and partners’ capital
Liabilities:
Debt	$	424		$	66,776	$	—		$	67,200
Intercompany		(4,804	)		4,804		—			—
Note payable to affiliate		7,500			—		—			7,500
Accrued interest		3			431		—			434
Accounts payable and accrued and other liabilities		174			3,017		—			3,191

Total liabilities		3,297			75,028		—			78,325
Total partners’ capital		142,868			21,373		(80,405	)		83,836

Total liabilities and partners’ capital	$	146,165		$	96,401	$	(80,405	)	$	162,161

OnCONDENSED ~~April~~CONSOLIDATING ~~26,~~STATEMENT ~~2004,~~OF ~~the~~INCOME Partnership issued a promissory note (the “Note”) in the amount of $7.5 million to Ventas Realty, Limited Partnership, a wholly owned direct subsidiary of Ventas. Under the terms of the Note, interest is paid quarterly at an annual rate of 8.0% beginning on July 1, 2004. The Note has a maturity date of December 31, 2013, at which time a principal balloon payment equal to the full amount of the Note is due.

~~NOTE~~For ~~7—RESTRUCTURING~~the ~~AGREEMENTS~~three months ended June 30, 2006

On August 11, 2003, the Partnership entered into a Master Agreement (the “Crozer/Genesis Agreement”) with Genesis and Crozer/Genesis Eldercare Limited Partnership (“Crozer”). Under the terms of the Crozer/Genesis Agreement, the Partnership restructured its leases for the Partnership’s facilities known as Pennsburg Manor, Chapel Manor and Belvedere to extend such leases to 2015 (with one 10-year renewal option) and make certain other changes thereto, including, but not limited to, elimination and return of the security deposits, the addition of a lease coverage ratio test of at least 1.25:1.00 and the addition of a lease guaranty by Genesis with respect to each of such leases. Genesis HealthCare Corporation replaced Genesis as the guarantor of these leases. Simultaneously with the restructuring of the Partnership’s Pennsburg Manor lease, the Partnership was paid a one-time payment by Genesis in the amount of $2.5 million in exchange for a $0.7 million per year reduction in the annual rent on the Pennsburg Manor property reflected in the restructured lease.


(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Revenues:
Rental income	$	1,431		$	2,688		$	—	$	4,119
Equity loss in affiliates		(30	)		—			30		—
Interest and other income		—			26			—		26

Total revenues		1,401			2,714			30		4,145
Expenses:
Interest		10			1,263			—		1,273
Depreciation		534			798			—		1,332
Property-level operating expenses		—			357			—		357
General, administrative and professional fees		103			148			—		251
Intercompany interest		(28	)		178			—		150

Total expenses		619			2,744			—		3,363

Net income (loss)	$	782		$	(30	)	$	30	$	782

On September 8, 2003, the Partnership entered into a definitive Master Agreement with Genesis (the “Genesis Agreement”) pursuant to which annual rent under the modified leases on the Partnership’s Heritage Woods and Sanatoga Court properties was reduced by $0.7 million and terms of the leases were extended through 2012 in exchange for a cash payment of approximately $2.6 million.

On September 8, 2003, the Partnership entered into a purchase and sale agreement (the “Benchmark Agreement”) with Genesis Eldercare Partnership of New England, L.P. (“NDNE”). Under the terms of the Benchmark Agreement, the Partnership received $5.0 million in exchange for various lease modifications. Under the Benchmark Agreement, NDNE assigned its leasehold interests in the Cabot Park, Cleveland Circle, North Andover and Vernon Court properties to separate Benchmark affiliates, aggregate annual rents under the leases were reduced by $1.4 million per year and terms of the leases were extended to 2013. Additionally, the Benchmark tenants have the option to acquire the Cabot Park, Cleveland Circle and North Andover properties on the fifth and tenth lease anniversary dates and upon the occurrence of certain other events and an option to acquire the Vernon Court property at any time during the lease term. The leases (other than the Vernon Court lease) have limited guarantees equal to one year’s rent provided by a significant investor in Benchmark.

Cash received for all lease modifications was recorded by the ETOP Predecessor as deferred revenue in accounts payable and other accrued liabilities on the Condensed Consolidated Balance Sheet with the intent of amortizing it as rental revenue over the life of the leases. In conjunction with the accounting treatment of the ElderTrust Transaction, the deferred revenue of the ETOP Predecessor was adjusted to zero.

NOTE 8—DISTRIBUTIONS

The Partnership paid a total cash distribution of $1.3 million to its partners on February 4, 2004. During the period from February 5, 2004 through September 30, 2004, the Partnership paid cash distributions of $35.2 million to its general partner, ElderTrust.

NOTE 9—CONDENSED CONSOLIDATING INFORMATION

The Partnership, which is a greater than 99% owned indirect subsidiary of Ventas, and certain of the Partnership’s direct and indirect wholly owned subsidiaries (the “ETOP Subsidiary Guarantors”), together with Ventas and certain of Ventas’s other direct and indirect wholly owned subsidiaries, have provided full and unconditional guarantees (the “Guarantee”), on a joint and several basis, of the obligation to pay principal and

~~ELDERTRUST~~CONDENSED ~~OPERATING~~CONSOLIDATING ~~LIMITED~~STATEMENT ~~PARTNERSHIP~~OF INCOME

~~NOTES~~For TOthe ~~CONDENSED~~three ~~CONSOLIDATED~~months ~~FINANCIAL~~ended ~~STATEMENTS~~June 30, 2005

(Unaudited)


(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Revenues:
Rental income	$	1,418		$	2,660		$	—	$	4,078
Equity loss in affiliates		(142	)		—			142		—
Interest and other income		1			10			—		11

Total revenues		1,277			2,670			142		4,089
Expenses:
Interest		9			1,290			—		1,299
Depreciation		534			793			—		1,327
Property-level operating expenses		—			366			—		366
General, administrative and professional fees		149			210			—		359
Intercompany interest		(3	)		153			—		150

Total expenses		689			2,812			—		3,501

Income (loss) before discontinued operations		588			(142	)		142		588
Discontinued operations		(37	)		—			—		(37	)

Net income (loss)	$	551		$	(142	)	$	142	$	551

~~interest~~CONDENSED ~~with~~CONSOLIDATING ~~respect~~STATEMENT toOF ~~the~~INCOME 8 3/4% Senior Notes due 2009 ($174 million aggregate principal amount of which was outstanding as of September 30, 2004), the 9% Senior Notes due 2012 ($192 million aggregate principal amount of which was outstanding as of September 30, 2004) and the 6 5/8% Senior Notes due 2014 ($125 million aggregate principal amount of which was issued on October 15, 2004) (collectively, the “Senior Notes”) issued by Ventas Realty, Limited Partnership and Ventas Capital Corporation (collectively, the “Ventas Issuers”), wholly owned subsidiaries of Ventas. The Partnership has other subsidiaries (“ETOP Non-Guarantor Subsidiaries”) that have not provided the Guarantee of the Senior Notes of the Ventas Issuers and are therefore not directly obligated with respect to the Senior Notes.

~~Contractual~~For ~~and legal restrictions, including those contained in~~ the ~~instruments~~six ~~governing~~months ~~certain~~ended ~~of the ETOP Non-Guarantor Subsidiaries’ outstanding indebtedness~~June 30, ~~may~~2006 under certain circumstances restrict the Partnership’s ability to obtain cash from the ETOP Non-Guarantor Subsidiaries for the purpose of satisfying the debt service obligations of the Partnership, including the Partnership’s guarantee of payment of principal and interest on the Senior Notes.

The following summarizes the unaudited condensed consolidating information for the Partnership and the ETOP Predecessor as of September 30, 2004 and December 31, 2003 and for the three months ended September 30, 2004, the period from February 5, 2004 through September 30, 2004, the period from January 1, 2004 through February 4, 2004 and for the three and nine months ended September 30, 2003, respectively:


(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Revenues:
Rental income	$	2,853		$	5,377		$	—	$	8,230
Equity loss in affiliates		(52	)		—			52		—
Interest and other income		—			58			—		58

Total revenues		2,801			5,435			52		8,288
Expenses:
Interest		17			2,530			—		2,547
Depreciation		1,069			1,594			—		2,663
Property-level operating expenses		—			687			—		687
General, administrative and professional fees		218			332			—		550
Intercompany interest		(46	)		344			—		298

Total expenses		1,258			5,487			—		6,745

Net income (loss)	$	1,543		$	(52	)	$	52	$	1,543

CONDENSED CONSOLIDATING BALANCE SHEET

As of September 30, 2004

(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Assets
Total net real estate properties	$	58,881		$	98,194	$	—		$	157,075
Cash and cash equivalents		33			683		—			716
Restricted cash		138			6,527		—			6,665
Equity in affiliates		82,493			15		(82,508	)		—
Other assets		244			536		—			780
Total assets	$	141,789		$	105,955	$	(82,508	)	$	165,236
Liabilities and partners’ equity (deficit)
Liabilities:
Notes payable and other debt	$	438		$	77,608	$	—		$	78,046
Intercompany		(4,038	)		4,038		—			—
Note payable to affiliate		7,651			—		—			7,651
Accounts payable and other accrued liabilities		107			3,337		—			3,444
Total liabilities		4,158			84,983		—			89,141
Total partners’ equity (deficit)		137,631			20,972		(82,508	)		76,095
Total liabilities and partners’ equity (deficit)	$	141,789		$	105,955	$	(82,508	)	$	165,236

~~ELDERTRUST~~CONDENSED ~~OPERATING~~CONSOLIDATING ~~LIMITED~~STATEMENT ~~PARTNERSHIP~~OF INCOME

~~NOTES~~For TOthe ~~CONDENSED~~six ~~CONSOLIDATED~~months ~~FINANCIAL~~ended ~~STATEMENTS~~June 30, 2005

(Unaudited)


(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Revenues:
Rental income	$	2,837		$	5,318		$	—	$	8,155
Equity loss in affiliates		(259	)		—			259		—
Interest and other income		1			20			—		21

Total revenues		2,579			5,338			259		8,176
Expenses:
Interest		18			2,579			—		2,597
Depreciation		1,069			1,583			—		2,652
Property-level operating expenses		—			697			—		697
General, administrative and professional fees		304			439			—		743
Intercompany interest		(1	)		299			—		298

Total expenses		1,390			5,597			—		6,987

Income (loss) before discontinued operations		1,189			(259	)		259		1,189
Discontinued operations		(76	)		—			—		(76	)

Net income (loss)	$	1,113		$	(259	)	$	259	$	1,113

~~ETOP~~CONDENSED ~~PREDECESSOR~~CONSOLIDATING ~~COMPANY~~STATEMENT ~~CONDENSED~~OF ~~CONSOLIDATING~~CASH ~~BALANCE SHEET~~FLOWS

AsFor ofthe ~~December~~six 31months ended June 30, ~~2003~~2006

(In thousands)	ETOP ~~and ETOP Subsidiary Guarantors~~andETOPSubsidiaryGuarantors			~~ETOP Non-Guarantor Subsidiaries~~	ETOP Non-GuarantorSubsidiaries			~~Consolidated Elimination~~	Consolidated Elimination		Consolidated
Assets
Net cash provided by operating activities	$	1,248			$	2,702			$	—	$	3,950
Total net real estate properties	$	59,193		$	91,456			$	—		$	150,649
Net cash used in investing activities		—				(163	)			—		(163	)
Property held for sale		4,971			—				—			4,971
Net cash used in financing activities		(1,249	)			(2,519	)			—		(3,768	)
Cash and cash equivalents		24,848			821				—			25,669
Net increase (decrease) in cash and cash equivalents		(1	)			20				—		19
Restricted cash		673			4,774				—			5,447
Cash and cash equivalents at beginning of period		1				438				—		439
Accounts receivable from affiliated entities		9,801			(6,263	)			—			3,538
Cash and cash equivalents at end of period	$	—			$	458			$	—	$	458
Equity in affiliates		52,481			5				(52,486	)		—
Other assets		963			1,161				—			2,124
Total assets	$	152,930		$	91,954			$	(52,486	)	$	192,398
Liabilities and partners’ equity (deficit)
Liabilities:
Notes payable and other debt	$	3,964		$	80,481			$	—		$	84,445
Liabilities associated with property held for sale		2,597			—				—			2,597
Accounts payable and other accrued liabilities		9,036			6,167				—			15,203
Total liabilities		15,597			86,648				—			102,245
Total partners’ equity (deficit)		137,333			5,306				(52,486	)		90,153
Total liabilities and partners’ equity (deficit)	$	152,930		$	91,954			$	(52,486	)	$	192,398

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the three months ended September 30, 2004

(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination			Consolidated
Revenues:
Rental	$	1,416		$	2,865		$	—		$	4,281
Equity earnings in affiliates		448			—			(448	)		—
Interest and other income		2			27			—			29
Total revenues		1,866			2,892			(448	)		4,310
Expenses:
Property operating expenses		—			331			—			331
General and administrative		111			204			—			315
Depreciation		677			966			—			1,643
Interest expense		160			1,514			—			1,674
Intercompany interest		(93	)		93			—			—
Total expenses		855			3,108			—			3,963
Net income (loss)	$	1,011		$	(216	)	$	(448	)	$	347

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ETOP PREDECESSOR COMPANY CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the three months ended September 30, 2003

(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Revenues:
Rental	$	1,607		$	3,148	$	—		$	4,755
Interest and other income		1,387			29		(1,357	)		59
Equity earnings in affiliates		3,059			—		(3,059	)		—
Total revenues		6,053			3,177		(4,416	)		4,814
Expenses:
Property operating expenses		—			314		—			314
General and administrative		1,699			64		—			1,763
Depreciation		574			885		—			1,459
Interest expense		538			1,532		—			2,070
Intercompany interest		113			287		(400	)		—
Gain on debt extinguishment		(1,856	)		—		—			(1,856	)
Total expenses		1,068			3,082		(400	)		3,750
Income from continuing operations		4,985			95		(4,016	)		1,064
Income from discontinued operations		531			—		957			1,488
Net income (loss)	$	5,516		$	95	$	(3,059	)	$	2,552

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the period from February 5, 2004 through September 30, 2004

(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination			Consolidated
Revenues:
Rental	$	3,775		$	7,601		$	—		$	11,376
Interest and other income		1,620			—			(1,620	)		—
Equity earnings in affiliates		11			72			—			83
Total revenues		5,406			7,673			(1,620	)		11,459
Expenses:
Property operating expenses		—			828			—			828
General and administrative		408			550			—			958
Depreciation		1,418			2,228			—			3,646
Interest expense		388			4,020			—			4,408
Intercompany interest		(377	)		377			—			—
Total expenses		1,837			8,003			—			9,840
Net income (loss)	$	3,569		$	(330	)	$	(1,620	)	$	1,619

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ETOP PREDECESSOR COMPANY CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the period from January 1, 2004 through February 4, 2004

(In thousands)	ETOP and ETOP Subsidiary Guarantors		ETOP Non-Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Revenues:
Rental	$	507	$	1,005	$	—		$	1,512
Interest and other income		113		10		(63	)		60
Equity earnings in affiliates		201		—		(201	)		—
Total revenues		821		1,015		(264	)		1,572
Expenses:
Property operating expenses		—		101		—			101
General and administrative		182		18		—			200
Depreciation		192		295		—			487
Interest expense		40		509		—			549
Intercompany interest		37		26		(63	)		—
Loss on sale of fixed assets		10		—		—			10
Loss on debt extinguishment		8		—		—			8
Total expenses		469		949		(63	)		1,355
Income from continuing operations		352		66		(201	)		217
Income from discontinued operations		414		—		—			414
Net income (loss)	$	766	$	66	$	(201	)	$	631

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ETOP PREDECESSOR COMPANY CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the nine months ended September 30, 2003

(In thousands)	ETOP and ETOP SubsidiaryGuarantors			ETOP Non-Guarantor Subsidiaries		Consolidated Elimination			Consolidated
Revenues:
Rental	$	4,818		$	9,356	$	—		$	14,174
Interest and other income		4,353			96		(4,259	)		190
Equity earnings in affiliates		1,223			—		(1,223	)		—
Total revenues		10,394			9,452		(5,482	)		14,364
Expenses:
Property operating expenses		—			920		—			920
General and administrative		2,160			199		—			2,359
Depreciation		1,743			2,630		—			4,373
Interest expense		1,593			4,600		—			6,193
Intercompany interest		558			860		(1,418	)		—
Gain on debt extinguishment		(1,856	)		—		—			(1,856	)
Total expenses		4,198			9,209		(1,418	)		11,989
Income from continuing operations		6,196			243		(4,064	)		2,375
Income from discontinued operations		(2,284	)		—		2,924			640
Net income (loss)	$	3,912		$	243	$	(1,140	)	$	3,015

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the ~~period~~six ~~from~~months ~~February~~ended ~~5, 2004 through September~~ June 30, ~~2004~~2005

(In thousands)	ETOP ~~and ETOP Subsidiary Guarantors~~andETOPSubsidiaryGuarantors			ETOP Non-~~Guarantor Subsidiaries~~GuarantorSubsidiaries			~~Consolidated Elimination~~ConsolidatedElimination		Consolidated
Net cash provided by operating activities	$	2,~~964~~346		$	~~1,810~~460		$	—	$	42,~~774~~806
Net cash used in investing activities		—			(374	)		—		(374	)
Cash flows from financing activities:
Net cash used in financing activities		(2,383	)		(1,170	)		—		(3,553	)
Principal payments on mortgages and bonds payable		(3,507	)		(858	)		—		(4,365	)
Net decrease in cash and cash equivalents		(37	)		(714	)		—		(751	)
Issuance of note payable		7,500			—			—		7,500
Cash and cash equivalents at beginning of period		37			1,173			—		1,210
Cash distributions		(34,076	)		(1,100	)		—		(35,176	)
Cash and cash equivalents at end of period	$	—		$	459		$	—	$	459
Net cash used in financing activities		(30,083	)		(1,958	)		—		(32,041	)
Net decrease in cash and cash equivalents		(27,119	)		(185	)		—		(27,304	)
Cash and cash equivalents, beginning of period		27,152			868			—		28,020
Cash and cash equivalents, end of period	$	33		$	683		$	—	$	716

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ETOP PREDECESSOR COMPANY CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the period from January 1, 2004 through February 4, 2004

(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Net cash provided by operating activities	$	820		$	260		$	—	$	1,080
Net cash provided by investing activities		2,806			—			—		2,806
Cash flows from financing activities:
Cash distributions		(1,293	)		—			—		(1,293	)
Principal payments on mortgages and bonds payable		(30	)		(212	)		—		(242	)
Cash used in financing activities		(1,323	)		(212	)		—		(1,535	)
Net increase in cash and cash Equivalents		2,303			48			—		2,351
Cash and cash equivalents, beginning of period		24,848			821			—		25,669
Cash and cash equivalents, end of period	$	27,151		$	869		$	—	$	28,020

ELDERTRUST OPERATING LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ETOP PREDECESSOR COMPANY CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2003

(In thousands)	ETOP and ETOP Subsidiary Guarantors			ETOP Non-Guarantor Subsidiaries			Consolidated Elimination		Consolidated
Net cash provided by operating activities	$	12,340		$	1,067		$	—	$	13,407
Net cash provided by (used in) investing activities		2,610			(331	)		—		2,279
Cash flows from financing activities:
Issuance of partnership units		(41	)		—			—		(41	)
Cash distributions		(2,562	)		—			—		(2,562	)
Principal payments on mortgages and bonds payable		(15,405	)		(901	)		—		(16,306	)
Cash used in financing activities		(18,008	)		(901	)		—		(18,909	)
Net decrease in cash and cash equivalents		(3,058	)		(165	)		—		(3,223	)
Cash and cash equivalents, beginning of period		6,906			472			—		7,378
Cash and cash equivalents, end of period	$	3,848		$	307		$	—	$	4,155

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated or except where the context otherwise requires, the terms “we,” “us,” “our,” “ETOP” and the “Partnership” and other similar terms in this Quarterly Report on Form 10-Q refer to ElderTrust Operating Limited Partnership and its consolidated subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and ~~Section~~ Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements regarding ~~the~~our expected future financial position, results of operations, cash flows, financing plans, business strategy, budgets, projected costs, capital expenditures, competitive positions, growth opportunities, expected lease income, plans and objectives of management for future operations ~~of ElderTrust Operating Limited Partnership (“ETOP” or the “Partnership”)~~ and ~~its subsidiaries and~~ statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. ~~Such~~These forward-looking statements are inherently uncertain, and security holders must recognize that actual results may differ from ~~the~~our ~~Partnership’s~~ expectations. ~~The Partnership~~We ~~does~~do not undertake a duty to update such forward-looking statements, which speak only as of the date on which they are made.

~~Actual~~Our actual future results and trends ~~for the Partnership~~ may differ materially depending on a variety of factors discussed in ~~the~~our ~~Partnership’s~~ filings with the Securities and Exchange Commission. ~~Factors that may affect the plans or results of the Partnership include, without limitation,~~ (a) the ~~ability of the Partnership’s tenants and operators, including Genesis Health Ventures, Inc. (~~“~~Genesis~~Commission”)~~, Genesis HealthCare Corporation (“Genesis HealthCare”), and Benchmark Assisted Living, L~~.~~L.C.~~ ~~(“Benchmark”)~~Factors tothat maintain the financial strength and liquidity necessary to satisfy their respective obligations and duties under the leases and other agreements with the Partnership, and their existing credit agreements, (b) the nature and extent of future competition, (c) the extent of future healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates, (d) increases in the cost of borrowing for the Partnership, (e) the ability of the Partnership’s operators to deliver high quality care and to attract patients, (i) the results of litigation affecting the Partnership, (f) changes in general economic conditions and/or economic conditions in the markets in which the Partnership may, ~~from~~affect ~~time~~our toplans ~~time, compete, (g) the ability of the Partnership to pay down, refinance, restructure, and/~~or extend its indebtedness as it becomes due, (h) the movement of interest rates, (i) the ability and willingness of the Partnership’s tenants to renew their leases with the Partnership upon expiration of the leases and the Partnership’s ability to relet its properties on the same or better terms in the event such leases expire and are not renewed by the existing tenants, and (j) the impact on the liquidity, financial condition and results ofinclude ~~operations~~without oflimitation: the Partnership’s operators resulting from increased operating costs and uninsured liabilities for professional liability claims, and the ability of the Partnership’s operators to accurately estimate the magnitude of such liabilities. Many of such factors are beyond the control of the Partnership and its management.

~~All~~• ~~references~~the toability ~~the~~and ~~Partnership~~willingness ~~prior~~of ~~to February~~our 5tenants and operators, ~~2004~~including ~~contained~~Genesis inHealthCare ~~this~~Corporation (“~~Management’s~~Genesis ~~Discussion~~HealthCare”) and ~~Analysis~~certain of ~~Financial~~its ~~Condition~~related ~~and~~entities ~~Results~~(collectively, ~~of Operations~~“Genesis”), ~~refer~~and toBenchmark ~~the~~Assisted ~~activities~~Living LLC and certain of ~~the~~its ~~Partnership~~related ~~prior~~entities (collectively, “Benchmark”) to ~~February~~meet 5,and/or ~~2004~~perform (the ~~“ETOP~~obligations ~~Predecessor”).~~ under their various contractual arrangements with us;

20• the ability of our tenants and operators to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities;

•

the nature and extent of future competition;

~~General~~• the extent of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates;

~~ETOP~~• isincreases ~~a limited partnership organized under the laws of the state of Delaware on July 30, 1997. The Partnership invests~~ in ~~senior~~our ~~housing~~cost and other healthcare facilities, primarily skilled nursing facilities, assisted and independent living facilities and medical and other office buildings. ElderTrust, a Maryland real estate investment trust (“ElderTrust”), is the sole general partner of the Partnership. On February 5, 2004, ElderTrust became a wholly owned direct subsidiary of Ventas, Inc. (“Ventas”), a healthcare real estate investment trust (“REIT”) based in Louisville, Kentucky, whose common stock is publicly traded on the New York Stock Exchange. See “Note 3—Merger of ElderTrust” of the Notes to Condensed Consolidated Financial Statements. borrowing;

As• ~~of September 30, 2004,~~ the ~~Partnership’s~~ability ~~consolidated assets included 18 properties consisting~~ of aour ~~diversified~~operators ~~portfolio~~to ofdeliver ~~nine~~high ~~assisted~~quality ~~living facilities,~~care ~~one independent living facility, five skilled nursing facilities, two medical office buildings~~ and ~~a financial office building with an aggregate carrying value of $157.1 million. The 15 healthcare properties are leased back~~ to ~~third-party~~ ~~healthcare~~attract providers, generally under triple-net leases. Skilled nursing facilities and assisted and independent living facilities comprised approximately 85% of the Partnership’s consolidated assets at September 30, 2004. patients;

As• ~~of September 30, 2004, approximately 51.8% and 34.1% of~~ the ~~Partnership’s~~ ~~properties,~~results ~~based on their original cost, were operated by Genesis and Benchmark, respectively. Approximately 48.1% and 30.0%~~ of ~~the~~litigation ~~Partnership’s~~affecting total rental revenue for the period February 5, 2004 through September 30, 2004 was derived from leases with Genesis and Benchmark, respectively. As a result of these relationships with Genesis and Benchmark, the Partnership’s revenues and ability to meet its obligations depend, in significant part, upon the ability of Genesis and Benchmark to meet their lease obligations. Any failure of Genesis or Benchmark to continue its operations and/or to continue to make lease payments to the Partnership could have a significant adverse impact on the Partnership’s operations and cash flows. us;

On• ~~February~~changes 5,in ~~2004,~~general ~~Ventas acquired~~economic ~~all~~conditions ofand/or ~~the~~economic ~~outstanding~~conditions ~~common shares of ElderTrust~~ in ~~an all cash transaction valued at $184 million (~~the ~~“ElderTrust~~markets ~~Transaction”). At the close of the ElderTrust Transaction, ElderTrust had approximately $33.5 million~~ in ~~unrestricted~~ ~~and~~which ~~restricted~~we ~~cash. After transaction costs~~may, ~~the~~from ~~net~~time ~~investment~~to ~~of the ElderTrust Transaction was approximately $160 million. Concurrent with the consummation of the ElderTrust Transaction~~time, Ventas also purchased all of the limited partnership units in the Partnership then held by third parties at $12.50 per unit, other than 31,455 Class C Units in the Partnership (which remain outstanding). compete;

21• our ability to pay down, refinance, restructure and/or extend our indebtedness as it becomes due;

•

the movement of interest rates;

•

the ability and willingness of our tenants to renew their leases with us upon expiration of the leases and our ability to relet our properties on the same or better terms in the event such leases expire and are not renewed by the existing tenants; and

•

the impact on the liquidity, financial condition and results of operations of our tenants and operators resulting from increased operating costs and uninsured liabilities for professional liability claims, and the ability of our tenants and operators to accurately estimate the magnitude of such liabilities.

Many of these factors are beyond our control and the control of our management.

Background Information

We are a limited partnership organized under the laws of the State of Delaware on July 30, 1997. We invest in seniors housing and other healthcare facilities, primarily skilled nursing facilities, assisted and independent living facilities and medical and other office buildings. ElderTrust, a Maryland real estate investment trust (“ElderTrust”), is our sole general partner. On February 5, 2004, ElderTrust became a wholly owned direct subsidiary of Ventas, Inc. (“Ventas”), a healthcare real estate investment trust based in Louisville, Kentucky, whose common stock is publicly traded on the New York Stock Exchange.

As of June 30, 2006, our consolidated assets included seventeen properties, located in three states, consisting of nine seniors housing facilities, five skilled nursing facilities, two medical office buildings and a financial office building with an aggregate net book value of $142.7 million. Except with respect to our office buildings, we lease these facilities to third-party healthcare providers, generally under “triple-net” leases, which require the tenants to pay all property-related expenses.

As of June 30, 2006, approximately 53.5% and 35.2% of our properties, based on their original cost, were operated by Genesis and Benchmark, respectively. Approximately 49.8% and 30.8% of our total revenues for the six months ended June 30, 2006 were derived from leases with Genesis and Benchmark, respectively. As a result of these relationships with Genesis and Benchmark, our revenues and ability to meet our obligations depend, in significant part, upon the ability of Genesis and Benchmark to meet their lease obligations. Any failure of Genesis and/or Benchmark to continue their operations and/or to continue to make lease payments to us could have a significant adverse impact on our operations and cash flows.

Recent Developments Regarding Government Regulation

Medicare Reimbursement; Skilled Nursing Facilities

On April 12, 2006, the Centers for Medicare and Medicaid Services (“CMS”) placed on public display a proposed rule to implement the Deficit Reduction Act of 2005. Under the proposed rule, reimbursement of uncollectible Medicare coinsurance amounts for all beneficiaries (other than beneficiaries of both Medicare and Medicaid) would be reduced from 100% to 70% for skilled nursing facility cost reporting periods beginning on or after October 1, 2005. CMS estimates that the change in the treatment of bad debt will result in a decrease in payments to skilled nursing facilities of $490 million over the five-year period from fiscal year 2006 to 2010.

The proposed rule also includes various options for classifying and weighing patients transferred to a skilled nursing facility after a hospital stay less than the mean length of stay associated with that particular diagnosis-related group. This change in methodology could affect skilled nursing facility admissions, although, we currently cannot predict what impact it will have on the liquidity or profitability of our skilled nursing facility operators.

In addition, under the proposed rule, the $1,740 annual cap on Medicare part B reimbursement for physical therapy and speech-language pathology services and the separate annual cap of $1,740 on occupational therapy would be lifted for those patients who can demonstrate medical necessity. Unless Congress takes prior action, the caps will go back into effect on January 1, 2007.

On August 4, 2005, CMS published a final rule under the prospective payment system for skilled nursing facilities. Pursuant to the rule, CMS, among other things, adopted a refinement to the resource utilization groups (“RUGs”) used to determine payment for beneficiaries in skilled nursing facilities which increases the number of RUGs from 44 to 53. CMS also increased the case mix index adjustment for all RUGs categories and implemented a market basket increase of 3%. The market basket increase became effective on October 1, 2005, and the RUGs refinements became effective January 1, 2006. CMS projects the overall effect of these changes in 2006 to be a 0.1% increase in aggregate Medicare payments, but within this aggregate CMS expects some facilities to have modest decreases and some to have modest increases.

In the past, CMS has updated skilled nursing facility payment rates under Medicare part A through annual rulemaking. For fiscal year 2007, CMS published a notice on July 31, 2006, providing a market basket increase of 3.1% for all part A claims effective on October 1, 2006.

Medicaid Reimbursement; Skilled Nursing Facilities

Finally, the April 12, 2006 proposed rule described above mitigates both state and federal Medicaid expenditures by establishing additional Medicaid eligibility restrictions. Collectively, these Medicaid eligibility restrictions are anticipated to reduce Medicaid payments to skilled nursing facility operators in the future. Further, President Bush’s Budget for fiscal year 2007 proposes limiting to 3% the taxes that states may impose on healthcare providers and which would qualify for federal financial participation under Medicaid. The ceiling is currently set at 6%. There is strong opposition from state governors, and it is uncertain whether the proposal will go into effect. If it does, it could have an adverse effect in certain states, although we cannot predict at this time how any such reduction would affect our skilled nursing facility operators.

At this time, we also cannot predict whether significant Medicaid rate freezes, cuts or other program changes will be adopted, and if so, by how many states or the impact of such action on our skilled nursing facility operators. However, severe and widespread rate cuts or freezes could have a material adverse effect on those operators and in turn could have an adverse effect on us.

Critical Accounting Policies and Estimates

~~The~~Our ~~preparation~~Condensed ofConsolidated ~~financial~~Financial ~~statements~~Statements have been prepared in ~~conformity~~accordance with ~~accounting~~U.S. ~~principles~~ generally accepted inaccounting ~~the~~principles, ~~United~~which ~~States~~ requires ~~management~~us to make estimates and ~~assumptions~~judgments that affect the reported amounts in ofthe ~~assets,~~financial ~~liabilities,~~statements ~~revenues~~ and ~~expenses,~~the ~~and~~ related disclosures. ~~Actual~~We ~~results~~believe ~~could~~that ~~vary~~the ~~from~~following ~~those~~critical accounting policies, among others, affect our more significant estimates and judgments used in the preparation of our financial statements.

~~The~~14 ~~Partnership’s critical accounting policies are as follows:~~

Long-Lived Assets

Investments in real estate properties are recorded at cost. The Partnership accounts for acquisitions using the purchase method. The cost of the properties acquired is allocated among tangible land, buildings and equipment and recognized intangibles based upon estimated fair values in accordance with the provisions of Statement of Financial Accounting Standards No. 141, “Business Combinations”. The Partnership estimates fair values of the components of assets acquired as of the acquisition date or engages a third party appraiser as necessary. Recognized intangibles, if any, include the value of acquired lease contracts and related customer relationships.

The Partnership’s method for determining fair value varies with the categorization of the asset acquired. The Partnership estimates the fair value of its buildings on an as-if-vacant basis, and amortizes the building value over the estimated remaining life of the building. The Partnership determines the allocated value of other fixed assets based upon the replacement cost and amortizes such value over their estimated remaining useful lives. The Partnership determines the value of land either based on real estate tax assessed values in relation to the total value of the asset, internal analyses of recently acquired and existing comparable properties within the Partnership’s portfolio or third party appraisals. The fair value of in-place leases, if any, reflects (a) above and below market leases, if any, determined by discounting the difference between the estimated current market rent and the in-place rentals, the resulting intangible asset of which is amortized to rental revenue over the remaining life of the associated lease plus any fixed rate renewal periods, if applicable, (b) the estimated value of the cost to obtain tenants, including tenant allowances, tenant improvements and leasing commissions, which is amortized over the remaining life of the associated lease, and (c) an estimated value of the absorption period to reflect the value of the rents and recovery costs foregone during a reasonable lease up period, as if the acquired space was vacant, which is amortized over the remaining life of the associated lease. The Partnership also estimates the value of tenant or other customer relationships acquired by considering the nature and extent of existing business relationships with the tenant, growth prospects for developing new business with such tenant, such tenant’s credit quality, expectations of lease renewals with such tenant, and the potential for significant, additional future leasing arrangements with such tenant. The Partnership amortizes such value, if any, over the expected term of the associated arrangements or leases, which would include the remaining lives of the related leases and any expected renewal periods.

The Partnership periodically evaluates its long-lived assets, primarily consisting of its investments in real estate, for impairment indicators. If indicators of impairment are present, the Partnership evaluates the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. The Partnership adjusts the net book value of leased properties and other long-lived assets to fair value, if the sum of the expected future cash flow or sales proceeds is less than book value. Future events could occur which would cause the Partnership to conclude that impairment indicators exist and an impairment loss is warranted.

~~The~~Long-Lived ~~Partnership~~Assets classifies the properties it is actively marketing as held for sale once both of the following conditions are met: (a) the Partnership’s general partner has approved the plan of sale and (b) the Partnership has a binding agreement with a qualified buyer which provides for no significant outstanding contingencies which could cause the transaction not to be completed in a timely manner.

~~The~~Investments ~~Partnership~~in ~~recognizes~~real estate properties ~~held~~are recorded at cost. We account for ~~sale~~acquisitions atusing the ~~lower~~purchase method of ~~their~~accounting. ~~carrying~~The ~~values~~cost orof ~~estimated~~the ~~fair~~properties ~~values~~acquired ~~less~~is ~~costs~~allocated toamong ~~sell.~~tangible ~~The~~land, ~~Partnership~~buildings ~~ceases~~and improvements ~~depreciation~~and atrecognized ~~the~~intangibles ~~time~~based upon estimated fair values in accordance with the ~~asset~~provisions isof ~~classified~~Statement asof ~~held~~Financial ~~for~~Accounting ~~sale~~Standards (“SFAS”) No. 141, ~~The~~“Business ~~Partnership segregates~~Combinations.” We estimate fair values of the ~~properties~~components ~~held~~of ~~for~~assets ~~sale~~acquired onas of the ~~Partnership’s~~acquisition ~~Consolidated~~date ~~Balance~~or ~~Sheet~~engage ~~and~~a ~~classifies~~third-party ~~their~~appraiser ~~operating~~as ~~results~~necessary. asRecognized ~~discontinued~~intangibles, ~~operations~~if onany, include the ~~Partnership’s~~value ~~Consolidated~~of ~~Statement~~acquired oflease ~~Operations~~contracts and related customer relationships.

Our method for determining fair value varies with the categorization of the asset acquired. We estimate the fair value of buildings on an as-if-vacant basis, and depreciate the building value over the estimated remaining life of the building. We determine the allocated value of other fixed assets based upon the replacement cost and depreciate such value over the estimated remaining useful lives. We determine the value of land either based on real estate tax assessed values in relation to the total value of the asset, internal analyses of recently acquired and existing comparable properties within our portfolio or third party appraisals. The fair value of in-place leases, if any, reflects (i) above and below market leases, if any, determined by discounting the difference between the estimated current market rent and the in-place rentals, the resulting intangible asset of which is amortized to rental revenue over the remaining life of the associated lease plus any fixed rate renewal periods, if applicable, (ii) the estimated value of the cost to obtain tenants, including tenant allowances, tenant improvements and leasing commissions, which is amortized over the remaining life of the associated lease, and (iii) an estimated value of the absorption period to reflect the value of the rents and recovery costs foregone during a reasonable lease-up period, as if the acquired space was vacant, which is amortized over the remaining life of the associated lease. We also estimate the value of tenant or other customer relationships acquired by considering the nature and extent of existing business relationships with the tenant, growth prospects for developing new business with such tenant, such tenant’s credit quality, expectations of lease renewals with such tenant, and the potential for significant, additional future leasing arrangements with such tenant. We amortize such value, if any, over the expected term of the associated arrangements or leases, which would include the remaining lives of the related leases and any expected renewal periods.

Impairment of Long-Lived Assets

We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations and adjust the net book value of leased properties and other long-lived assets to fair value if the sum of the expected future cash flow or sales proceeds is less than book value. An impairment loss is recognized at the time we make any such adjustment. Future events could occur which would cause management to conclude that impairment indicators exist and an impairment loss is warranted.

Revenue Recognition

~~The~~Certain ~~Partnership’s~~of ~~real~~our ~~estate~~leases ~~assets~~provide for ~~are~~periodic ~~leased~~and todeterminable ~~operators~~increases ~~primarily~~in ~~through~~base ~~long-term~~rent. ~~triple-net~~Base ~~leases.~~rental ~~These~~ revenues under these leases ~~generally~~are ~~take~~recognized on a straight-line basis over the ~~form~~term of ~~minimum~~the orapplicable ~~fixed rents~~lease. ~~Lease~~Certain ~~payments~~of ~~are~~our ~~recognized~~other asleases ~~revenue~~provide ~~when~~for ~~earned,~~an ~~based~~annual onincrease ~~the~~in ~~provisions~~rental payments ofonly ~~the~~if ~~underlying~~certain ~~leases~~revenue parameters or other contingencies are met. ~~The~~We ~~Partnership~~recognize ~~reports~~the ~~base~~increased rental revenue onunder these leases ~~using~~only if the revenue parameters or other contingencies are met, rather than on a straight-line ~~method~~ basis over the term ~~terms~~ of the ~~respective~~applicable ~~leases~~lease. ~~The~~We ~~Partnership~~recognize ~~records~~income anfrom ~~unearned~~ rent, ~~receivable~~lease ~~representing~~termination fees and other income once all of the ~~amount~~following ~~that~~criteria are met in accordance with the ~~straight-line~~Commission’s ~~rental~~Staff ~~revenue~~Accounting ~~exceeds~~Bulletin 104: (i) the ~~rent~~agreement ~~currently~~has ~~collectible~~been fully ~~under~~executed and delivered; (ii) services have been rendered; (iii) the ~~lease~~amount ~~agreements~~is fixed or determinable; and (iv) the collectibility is reasonably assured.

~~Restructuring~~15 ~~Agreements~~

On August 11, 2003, the Partnership entered into a separate Master Agreement (the “Crozer/Genesis Agreement”) with Genesis and Crozer/Genesis Eldercare Limited Partnership (“Crozer”). Under the terms of the Crozer/Genesis Agreement, the Partnership restructured its leases for the Partnership’s facilities known as Pennsburg Manor, Chapel Manor and Belvedere to extend such leases to 2015 (with one 10-year renewal option) and make certain other changes thereto, including, but not limited to, elimination and return of the security deposits, the addition of a lease coverage ratio test of at least 1.25:1.00 and the addition of a lease guaranty by Genesis with respect to each of such leases. Genesis HealthCare replaced Genesis as the guarantor of such leases. Simultaneously with the restructuring of the Partnership’s Pennsburg Manor lease, the Partnership was paid a one-time payment by Genesis in the amount of $2.5 million in exchange for the $0.7 million per year reduction in the annual rent on the Pennsburg Manor property reflected in the restructured lease.

On September 8, 2003, the Partnership entered into a definitive Master Agreement with Genesis (the “Genesis Agreement”) pursuant to which annual rent under the modified leases on Heritage Woods and Sanatoga Court properties were reduced by $0.7 million and terms of the leases were extended through 2012 in exchange for a cash payment of approximately $2.6 million.

On September 8, 2003, the Partnership entered into a purchase and sale agreement (the “Benchmark Agreement”) with Genesis Eldercare Partnership of New England (“NDNE”). Under the terms of the Benchmark Agreement, the Partnership received $5.0 million in exchange for various lease modifications. Under the Benchmark Agreement, NDNE assigned its leasehold interests in the Cabot Park, Cleveland Circle, North Andover and Vernon Court properties to separate Benchmark affiliates, aggregate annual rents under the leases were reduced by $1.4 million per year and terms of the leases were extended to 2013. Additionally, the Benchmark tenants have the option to acquire the Cabot Park, Cleveland Circle and North Andover properties on the fifth and tenth lease anniversary dates and an option to acquire the Vernon Court property at any time during the lease term. The leases have limited guarantees equal to one year’s rent provided by a significant investor in Benchmark.

~~Cash~~Gain ~~received for all lease modifications was recorded by the ETOP Predecessor as deferred revenue in accounts payable and other accrued liabilities~~ on ~~the~~Sale ~~Condensed Consolidated Balance Sheet with the intent~~ of ~~amortizing~~Facilities ~~it as rental revenue over the life of the leases. In conjunction with the accounting treatment of the ElderTrust Transaction, the deferred revenue of the ETOP Predecessor was adjusted to zero.~~

We recognize sales of facilities only upon the closing of the transaction with the purchaser. Payments received from purchasers prior to closing are recorded as deposits and classified as other assets in the consolidated balance sheet. Gains on facilities sold are recognized using the full accrual method upon closing when the collectibility of the sales price is reasonably assured, we are not obligated to perform significant activities after the sale to earn the profit, we have received adequate initial investment from the buyer, and other profit recognition criteria have been satisfied. Gains may be deferred in whole or in part until the sales satisfy the requirements of gain recognition on sales of real estate under SFAS No. 66, “Accounting for Sales of Real Estate.”

Results of Operations

~~Three~~There was no material change in our revenues for the three and six months ended ~~September~~ June 30, ~~2004~~2006 from the comparable periods in 2005. The majority of our general, administrative and ~~2003~~professional fees results from the allocation of corporate expenses from our general partner. The decrease in this expense during the second quarter of 2006 and for the six-month period ended June 30, 2006 is attributable primarily to lower allocations from the general partner. There were no material changes in our other expenses from the second quarter or first six months of 2005. Discontinued operations in 2005 reflect the operating results of a seniors housing facility that was sold in October 2005.

Revenues

Rental revenues were $4.3 million and $4.8 million for the three months ended September 30, 2004 and 2003, respectively. Rental revenues attributable to Genesis totaled 48.0% and 47.1% of total rental revenues for the three months ended September 30, 2004 and 2003, respectively. Rental revenues attributable to Benchmark totaled 29.9% and 32.7% of total rental revenues for the three months ended September 30, 2004 and 2003, respectively. The decrease in rental revenues is primarily due to rent reductions under the Benchmark Agreement and Genesis Agreement as previously described.

Expenses

Interest expense, which includes amortization of deferred financing costs of $0.1 million for the three months ended September 30, 2003, was $1.7 million and $2.1 million for the three months ended September 30, 2004 and 2003, respectively. The decrease is primarily due to lower principal balances on debt during the third quarter of 2004 as compared to the comparable period in 2003.

General and administrative expenses were $0.3 million and $1.8 million for the three months ended September 30, 2004 and 2003, respectively. During the three months ended September 30, 2003, the Partnership recognized approximately $1.3 million of severance expense related to the resignation of the former chief executive officer and president of the Partnership. The decrease is also due to lower professional fees and insurance premiums during the three months ended September 30, 2004.

During the three months ended September 30, 2003, the Partnership recognized a gain of $1.9 million from the extinguishment of the debt related to the Pennsburg property.

Discontinued Operations

Discontinued operations for the three months ended September 30, 2003 represents the operating results of the following properties: Meridian 7, Harston Hall, Liberty Court, Phillipsburg, Pleasant View, Riverview Ridge and Willowbrook. The Salisbury Medical Office Building was sold during March 2003. See “Note 5—Discontinued Operations” of the Notes to Condensed Consolidated Financial Statements.

Nine months ended September 30, 2004 and 2003

The results of operations for the nine months ended September 30, 2004 include results of the ETOP Predecessor for the period from January 1, 2004 through February 4, 2004. Results for the period from February 5, 2004 through September 30, 2004 differ from the ETOP Predecessor primarily as a result of the purchase accounting adjustments recorded upon the acquisition of ElderTrust. See “Note 3—Merger of ElderTrust” of the Notes to Condensed Consolidated Financial Statements.

Revenues

Rental revenues were $12.9 million and $14.2 million for the nine months ended September 30, 2004 and 2003, respectively. Rental revenues attributable to Genesis totaled 48.0% and 46.6% of total rental revenues for the nine months ended September 30, 2004 and 2003, respectively. Rental revenues attributable to Benchmark totaled 30.1% and 32.9% of total rental revenues for the nine months ended September 30, 2004 and 2003, respectively. The decrease in rental revenues is primarily due to rent reductions under the Benchmark Agreement and Genesis Agreement as previously described.

Expenses

Interest expense, which includes amortization of deferred financing costs of $0.3 million for the nine months ended September 30, 2003, was $5.0 million and $6.2 million for the nine months ended September 30, 2004 and 2003, respectively. The decrease is primarily due to lower principal balances on debt during the first nine months of 2004 as compared to the comparable period in 2003.

Depreciation expense was $4.1 million and $4.4 million for the nine months ended September 30, 2004 and 2003, respectively. The decrease is primarily due to purchase accounting adjustments and differences in accounting treatment of real estate properties relative to that of the ETOP Predecessor.

General and administrative expenses were $1.2 million and $2.4 million for the nine months ended September 30, 2004 and 2003, respectively. During the nine months ended September 30, 2003, the Partnership recognized approximately $1.3 million of severance expense related to the resignation of the former chief executive officer and president of the Partnership.

During the nine months ended September 30, 2003, the Partnership recognized a gain of $1.9 million from the extinguishment of the debt related to the Pennsburg property.

Discontinued Operations

Discontinued operations for the nine months ended September 30, 2003 represents the operating results of the following properties: Meridian 7, Harston Hall, Liberty Court, Phillipsburg, Pleasant View, Riverview Ridge and Willowbrook. The Salisbury Medical Office Building was sold during March 2003. See “Note 5—Discontinued Operations” of the Notes to Condensed Consolidated Financial Statements.

Liquidity and Capital Resources

During the ~~nine~~six months ended ~~September~~ June 30, ~~2004~~2006, ~~the~~our ~~Partnership’s~~ principal ~~sources~~source of liquidity ~~were~~was ~~derived from~~ cash ~~flow~~flows from operations,. ~~proceeds~~We ~~from~~anticipate ~~the~~that ~~sale~~cash offlows ~~the~~from operations ~~Riverview~~will ~~Ridge~~be ~~property~~sufficient into ~~January~~fund ~~2004~~our ~~and~~business ~~cash~~operations onand ~~hand~~distributions ~~remaining~~to ~~from~~unit ~~the~~holders ~~proceeds~~for ~~received from~~ the ~~sale~~foreseeable ~~of properties in the quarter ended December 31, 2003~~future.

~~The~~We ~~Partnership~~ had cash and cash equivalents of $0.75 million and restricted cash of $6.70 million as of ~~September~~ June 30, ~~2004~~2006.

Net cash provided by operating activities was $54.90 million and $132.48 million for the ~~nine~~six months ended ~~September~~ June 30, ~~2004~~2006 and ~~2003~~2005, respectively. This ~~decrease~~increase is due primarily due to ~~decreased~~operational ~~rent~~improvements asand afavorable ~~result~~changes ofin ~~the Genesis~~operating ~~Agreement~~assets and ~~Benchmark~~liabilities ~~Agreement~~at June 30, ~~described above as well as the sale of various properties during 2003~~2006. ~~See “Note 5—Discontinued Operations” of the Notes to Condensed Consolidated Financial Statements.~~

Net cash ~~provided~~used byin investing activities was $~~2.8~~163,000 ~~million and $2.3 million~~ for the ~~nine~~six months ended ~~September~~ June 30, ~~2004~~2006 and ~~2003,~~related ~~respectively.~~solely ~~The~~to building ~~increase~~improvements infor ~~cash~~our ~~flows~~medical ~~was~~office ~~primarily~~buildings. ~~due~~Similar toinvestments ~~decreased~~of ~~capital~~$4,000 ~~expenditures~~were made during the ~~nine~~same ~~months~~period ~~ended~~in ~~September 30, 2004~~2005.

25Net cash used in financing activities was $3.8 million and $3.6 million for the six months ended June 30, 2006 and 2005, respectively. This increase is primarily the result of cash distributions to a greater number of unit holders.

Net cash used in financing activities was $33.6 million for the nine months ended September 30, 2004 compared to $18.9 million for the corresponding period in 2003. This increase is primarily the result of $36.5 million of cash distributions to partners, partially offset by proceeds of $7.5 million received from the issuance of the Note (as defined below) and lower principal payments on mortgages and bonds payable. In conjunction with the sale of the Harston Hall property, approximately $14.0 million of non-recourse debt was satisfied in full for a payment of $11.5 million during the nine months ended September 30, 2003.

ET Sub-Woodbridge, L.P., a direct subsidiary of the Partnership, is the obligor under the debt documents secured by the Woodbridge property (the “Woodbridge Bonds”). An event of default has existed under the Woodbridge Bonds since 2002. The event of default is the result of the failure of ET Sub-Woodbridge, L.P. to maintain a debt service coverage ratio of at least 1.00:1.00 on the compliance date. The Partnership believes that the Bondholders of the Woodbridge Bonds (the “Bondholders”) have the right to call the Woodbridge Bonds at any time as a result of the event of default at 103% of par. The Partnership has not received a formal waiver from the Trustee with respect to such event of default. However, the Partnership believes that the Bondholders have instructed the Trustee not to take action on the event of default at this time. The next compliance date with respect to the Woodbridge Bonds is December 31, 2004, and the Partnership expects to continue to be in default at that time. The Woodbridge Bonds have a current outstanding principal balance of $9.4 million. The Woodbridge Bonds are prepayable on August 1, 2005 at 103% of par.

On April 26, 2004, the Partnership issued a promissory note (the “Note”) in the amount of $7.5 million to Ventas Realty, Limited Partnership, a wholly owned direct subsidiary of Ventas. Under the terms of the Note, interest is paid quarterly at an annual rate of 8.0% beginning on July 1, 2004. The Note has a maturity date of December 31, 2013, at which time a principal balloon payment equal to the full amount of the Note is due.

Capital expenditures to maintain and improve the leased properties generally will be incurred by the Partnership’s tenants. Accordingly, the Partnership does not believe that it will incur any major expenditures in connection with the leased properties. After the terms of the leases expire, or in the event that the tenants are unable or unwilling to meet their obligations under the leases, the Partnership anticipates that any expenditures relating to the maintenance of leased properties for which it may become responsible will be funded by cash flows from operations or through contributions by its general partner, ElderTrust. To the extent that unanticipated expenditures or significant borrowings are required, the Partnership’s liquidity may be affected adversely.

Contractual Obligations and Commercial Commitments

The following table summarizes the effect that minimum debt (which includes principal and interest payments) and other material noncancelable commitments are expected to have on the Partnership’s future cash flow as of September 30, 2004 (in thousands):

	Payments due by Period
	Total		2004			2005		2006		2007		2008		Thereafter
Long-term debt obligations (1)	$	138,761	$	11,196	(2)	$	6,505	$	6,505	$	6,505	$	6,505	$	101,545
Operating lease obligations		530		43			173		178		136		—		—
Total	$	139,291	$	11,239		$	6,678	$	6,683	$	6,641	$	6,505	$	101,545

(1) Amounts represent contractual amounts due, including interest.

(2) Includes $9.5 million, representing the full amount payable by the Partnership should the Bondholders call the Woodbridge Bonds as a result of the event of default.

As of September 30, 2004, the Partnership’s commercial commitments consisted of the following:

• The Partnership provided one letter of credit amounting to $0.5 million in connection with the Woodbridge Bonds.

• The Partnership entered into an agreement in 1998 with respect to the Cleveland Circle, Vernon Court and Cabot Park properties (collectively, the “NDNE Properties”) that allows all deductions for depreciation and low income housing tax credits (“LIHTC”) on the NDNE Properties to be allocated to the holders of the Class C (LIHTC) Units of limited partnership interest of the Partnership through 2012. The Partnership entered into an additional agreement in 2003 which modifies certain provisions of the 1998 agreement relating to these allocations of deductions for depreciation and tax credits. The 2003 agreement states that, in the event of a tax detriment acceleration event, the Partnership must promptly pay to the holders of the Class C (LIHTC) Units a penalty in an amount equal to the excess of (a) the discounted present value of the actual tax liability to the holders of the Class C (LIHTC) Units, as of December 1, 1998, discounted for the period beginning December 1, 1998 and ending on the date of the tax detriment acceleration event over (b) the actual tax liability to the holders of the Class C (LIHTC) Units, as of December 1, 1998, discounted for the period beginning December 1, 1998 and ending on December 31, 2013. A tax detriment acceleration event means any action taken by the Partnership, ElderTrust or Ventas without the consent of the holders of Class C (LIHTC) Units which prior to December 31, 2013 causes the holders of Class C (LIHTC) Units to recognize tax liability either attributable to the historical allocations to them of Partnership depreciation deductions or which constitutes a “credit recapture amount” pursuant to Section 42(j) of the Internal Revenue Code (the “Code”). Such tax detriment acceleration events include:

(1) a disposition of the NDNE Properties that results in a special allocation of taxable income to the holders of Class C (LIHTC) Units or results in a “credit recapture amount”;

(2) a termination or modification of the terms of the capital account deficit restoration obligation of the holders of Class C (LIHTC) Units that results in a special allocation of taxable income or results in the recognition of taxable income pursuant to Section 752(b) of the Code;

(3) a change in the terms or outstanding balances of the Partnership’s nonrecourse liabilities that results in a special allocation of taxable income, except where the holders of Class C (LIHTC) Units have provided bottom guarantees; and

(4) a forced disposition of all or a portion of the Class C (LIHTC) Units by the Partnership, ElderTrust or Ventas that results in a recognition of taxable income pursuant to Section 752(b) of the Code or which constitutes a “credit recapture amount.”

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~The~~We ~~following~~receive ~~discussion~~revenue ofprimarily ~~the~~by ~~Partnership’s~~leasing our ~~exposure~~assets tounder ~~various~~long-term ~~market~~triple-net ~~risks~~leases ~~contains~~in ~~“forward-looking~~which ~~statements”~~the ~~that~~rental ~~involve~~rate ~~risks~~is ~~and uncertainties.~~generally ~~These~~fixed ~~projected~~with ~~results~~annual ~~have~~escalators, ~~been~~subject ~~prepared~~to ~~utilizing~~ certain ~~assumptions~~limitations. ~~considered~~Our ~~reasonable~~bonds inpayable ~~light~~and ofsubstantially ~~information~~all ~~currently~~of ~~available~~our tomortgage ~~the~~indebtedness ~~Partnership.~~bear ~~Nevertheless,~~interest ~~because~~at offixed ~~the~~rates. ~~inherent~~We ~~unpredictability~~do not ofutilize interest ~~rates~~rate ~~as well~~swaps asor any other ~~factors,~~type ~~actual~~of ~~results~~derivative ~~could~~financial ~~differ~~instruments ~~materially~~to ~~from~~mitigate ~~those~~interest ~~projected~~rate ~~in such forward-looking information~~risk.

~~The~~For ~~Partnership’s~~fixed ~~bonds~~rate ~~payable~~debt, changes ~~and~~in ~~substantially~~interest ~~all~~rates ofgenerally affect the ~~Partnership’s~~fair ~~mortgage~~market value of the underlying indebtedness, ~~bear~~but ~~interest~~not atearnings ~~fixed~~or ~~rates~~cash flows. ~~The~~We ~~Partnership does~~generally ~~not~~cannot ~~utilize~~prepay fixed rate debt prior to maturity without premium. Therefore, interest rate ~~swaps~~risk orand ~~any~~changes in ~~other~~fair ~~type~~market ofvalue ~~derivative~~should ~~financial~~not ~~instruments~~have toa ~~mitigate~~significant ~~interest~~impact on the fixed rate ~~risk~~debt until we would be required to refinance such debt.

~~For~~16 fixed rate debt, changes in interest rates generally affect the fair market value of the underlying indebtedness, but not earnings or cash flows. The Partnership generally cannot prepay fixed rate debt prior to maturity without premium. Therefore, interest rate risk and changes in fair market value should not have a significant impact on the fixed rate debt until the Partnership would be required to refinance such debt. The book value of the Partnership’s fixed rate debt at September 30, 2004 was $85.1 million, which approximates the fair market value of such debt.

To highlight the sensitivity of the fixed rate debt to changes in interest rates, the following summary shows the impact on the fair value of the fixed rate debt of a hypothetical instantaneous change of 100 basis points (BPS) of interest rates as of September 30, 2004 (in thousands):

	Fixed Rate Debt
Book Value	$	85,108
Fair Value to the Partnership		85,108
Fair Value to the Partnership Reflecting Change in Interest Rates:
- 100 BPS	$	91,104
+100 BPS		79,657

The fair market value of the fixed rate debt is based on information provided by third parties. These sensitivity analyses are limited in that they were performed at a particular point in time and are subject to the accuracy of the various assumptions used.

The Partnership may borrow additional money with variable interest rates in the future. Increases in interest rates, therefore, would result in increases in interest expense, which could adversely affect the Partnership’s cash flow and its ability to pay its obligations.

To highlight the sensitivity of the fixed rate debt to changes in interest rates, the following summary shows the effects of a hypothetical instantaneous change of 100 basis points (BPS) in interest rates as of June 30, 2006 and December 31, 2005 (in thousands):


	Fixed Rate Debt
	As of June 30, 2006		As of December 31, 2005
Book value	$	73,590	$	74,276
Fair value		75,458		79,778
Fair value reflecting change in interest rates:
-100 BPS		79,254		84,197
+100 BPS		72,052		75,831

The fair market value of our fixed rate debt is based on current interest rates at which similar borrowings could be made by us. These sensitivity analyses are limited in that they were performed at a particular point in time and are subject to the accuracy of the various assumptions used.

We may borrow additional money with variable interest rates in the future. Increases in interest rates, therefore, would result in increases in interest expense, which could adversely affect our cash flow and our ability to pay our obligations.

ITEM 4. CONTROLS AND PROCEDURES

~~The~~Evaluation ~~Partnership carried out an evaluation, under the supervision and with the participation~~ of ~~management,~~Disclosure ~~including~~Controls ~~the Chief Executive Officer~~ and ~~the~~Procedures Chief Financial Officer of the Partnership’s general partner, of the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2004. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of the Partnership’s general partner has each concluded that the Partnership’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Partnership in this Quarterly Report on Form 10-Q is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and Form 10-Q.

NoWe ~~change~~have inestablished ~~the~~disclosure ~~Partnership’s~~controls ~~internal~~and ~~control~~procedures ~~over~~to ~~financial~~ensure ~~reporting (as~~that ~~defined~~material ininformation ~~Rules~~relating ~~13a-15(f)~~to ~~and~~us ~~15d-15(f)~~is ~~under~~timely ~~the~~communicated ~~Exchange~~to ~~Act) occurred during~~ the ~~period~~officers ~~covered~~who certify byour ~~this~~financial ~~report~~reports ~~that~~and ~~has~~to ~~materially~~other ~~affected,~~members orof isour ~~reasonably likely to materially affect~~management, ~~the~~including ~~Partnership~~ElderTrust’s ~~internal~~Board ~~control~~of ~~over financial reporting~~Trustees.

Based upon their ~~PART~~evaluation IIas of June 30, 2006, the Chief Executive Officer and Chief Financial Officer of ElderTrust, our general partner, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) ~~OTHER~~and ~~INFORMATION~~15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

~~ITEM~~Internal 6.Control ~~EXHIBITS~~Over ~~AND~~Financial ~~REPORTS~~Reporting ~~ON FORM 8-K EXHIBITS~~

Exhibit Number		Description of Document
4.1		Indenture, dated October 15, 2004 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the Partnership and the other Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Ventas’s Current Report on Form 8-K filed on October 15, 2004).
31.1		Certification of Debra A. Cafaro, President and Chief Executive Officer of ElderTrust, general partner of the Partnership, pursuant to 13a-14(a) under the Securities Exchange Act of 1934 as amended.
31.2		Certification of Richard A. Schweinhart, Chief Financial Officer of ElderTrust, general partner of the Partnership, pursuant to 13a-14(a) under the Securities Exchange Act of 1934 as amended.
32.1		Certification of Debra A. Cafaro, President and Chief Executive Officer of ElderTrust, general partner of the Partnership, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
32.2		Certification of Richard A. Schweinhart, Chief Financial Officer of ElderTrust, general partner of the Partnership, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
		Reports on Form 8-K
		None.

During the second quarter of 2006, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2917

PART II — OTHER INFORMATION

ITEM 6. EXHIBITS


Exhibit Number		Description of Document

31.1		Certification of Debra A. Cafaro, President and Chief Executive Officer of ElderTrust, general partner of the Partnership, pursuant to 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2		Certification of Richard A. Schweinhart, Chief Financial Officer of ElderTrust, general partner of the Partnership, pursuant to 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32.1		Certification of Debra A. Cafaro, President and Chief Executive Officer of ElderTrust, general partner of the Partnership, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.

32.2		Certification of Richard A. Schweinhart, Chief Financial Officer of ElderTrust, general partner of the Partnership, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~November 8~~August 14, ~~2004~~2006


ELDERTRUST OPERATING LIMITED PARTNERSHIP

By:		ELDERTRUST, its general partner

By:		/s/ Debra A. Cafaro
		Debra A. Cafaro
		President and Chief Executive Officer

By:		/s/ Richard A. Schweinhart
		Richard A. Schweinhart
		Chief Financial Officer

3019

EXHIBIT INDEX


Exhibit Number		Description of Document

31.1		Certification of Debra A. Cafaro, President and Chief Executive Officer of ElderTrust, general partner of the Partnership, pursuant to 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2		Certification of Richard A. Schweinhart, Chief Financial Officer of ElderTrust, general partner of the Partnership, pursuant to 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32.1		Certification of Debra A. Cafaro, President and Chief Executive Officer of ElderTrust, general partner of the Partnership, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.

32.2		Certification of Richard A. Schweinhart, Chief Financial Officer of ElderTrust, general partner of the Partnership, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. 1350.

Exhibit Number		Description of Document
4.1		Indenture, dated October 15, 2004 by and among Ventas Realty, Limited Partnership and Ventas Capital Corporation, as Issuers, the Partnership and the other Guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Ventas’s Current Report on Form 8-K filed on October 15, 2004).
31.1		Certification of Debra A. Cafaro, President and Chief Executive Officer of ElderTrust, general partner of the Partnership, pursuant to 13a-14(a) under the Securities Exchange Act of 1934 as amended.
31.2		Certification of Richard A. Schweinhart, Chief Financial Officer of ElderTrust, general partner of the Partnership, pursuant to 13a-14(a) under the Securities Exchange Act of 1934 as amended.
32.1		Certification of Debra A. Cafaro, President and Chief Executive Officer of ElderTrust, general partner of the Partnership, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
32.2		Certification of Richard A. Schweinhart, Chief Financial Officer of ElderTrust, general partner of the Partnership, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Filing Compare · ElderTrust Operating Limited Partnership