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SECURITIES AND EXCHANGE COMMISSION</font></div>
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8-K</font></div>
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to Section 13 or 15(d) of</font></div>
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Securities Exchange Act of 1934</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 36pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">Date of report (Date of earliest event
reported):</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;&#160;December 30,
2008</font></font></div>
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CORPORATION</font></div>
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298-2909</font></div>
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pursuant to Rule&#160;13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</font></font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item&#160;1.02</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Termination
      of a Material Definitive Agreement.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 30, 2008, Emeritus Corporation (the "Company") repaid the $15.2 million
outstanding principal balance of a mortgage loan with General Electric Capital
Corporation (GECC) secured by three communities that were acquired by the
Company in 2005.&#160;&#160;The debt was scheduled to mature in November
2012.&#160;&#160;Interest accrued at the fixed rate of 6.95% per
annum.&#160;&#160;The loan required monthly payments of principal and interest,
based on a 25-year amortization.&#160;&#160;There was no penalty related to the
early termination of this mortgage.&#160;&#160;The Company repaid this mortgage
with proceeds from the refinancing transaction described in Item 2.03
below.</font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item&#160;2.03</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Creation
      of a Direct Financial Obligation or an Obligation under an Off-Balance
      Sheet Arrangement of a Registrant.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 30, 2008, the Company announced that it had refinanced or amended the
terms of $115.7 million of mortgage debt secured by 20 communities, including
the payoff of certain loans with GECC, as described in Item 1.02 of this report,
and $36.3 million of new mortgage debt with Capmark Bank (Capmark) through a
Freddie Mac credit facility.&#160;&#160;A summary of the transactions is as
follows:</font></div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Capmark
      debt of $76.0 million (Capmark HCPI) was reduced to $71.1million from
      proceeds of the Freddie Mac Credit Facility, the maturity date was
      extended from September 2009 to January 2012, and the interest rate was
      modified;</font></div>
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    <div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of
      an additional $16.8 million of Capmark debt (Capmark Fretus), $12.5
      million was secured by three communities and was refinanced with the
      Freddie Mac Credit Facility.&#160;&#160;The interest rate on the remaining
      mortgage of $4.3 million was
modified;</font></div>
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    <div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Three
      mortgages with GECC totaling $15.2 million were refinanced with the
      Freddie Mac Credit Facility;</font></div>
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      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      interest rate on a $7.7 million mortgage with GECC covering one community
      was modified; and</font></div>
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      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
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            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
      proceeds from the Freddie Mac Credit Facility refinancing of $2.4 million,
      plus cash from Emeritus, were used to pay down the Capmark HCPI debt by an
      additional $2.7 million.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The net
effect of this refinancing is to increase long-term debt by approximately $1.0
million, extend maturity dates to January 2012 and beyond, move four communities
from short-term variable rate debt to long-term fixed rate debt, increase first
year principal payments by $3.0 million, and increase annual interest expense by
approximately $3.0 million, of which approximately $976,000 relates to a change
in the LIBOR floor on $72.7 million of variable rate debt.&#160;&#160;The
Company incurred approximately $930,000 in financing costs related to this debt
restructuring.&#160;&#160;A detailed description of the related transactions
follows.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Capmark HCPI</font>.&#160;&#160;The
Company had $76.0 million of variable rate mortgage debt with Capmark that was
secured by 12 communities purchased in August 2007 from Health Care Property
Investors, Inc.&#160;&#160;This debt was due to mature in September
2009.&#160;&#160;The interest rate on this debt was based on monthly LIBOR plus
1.7%, with payments of interest only over the two-year term.&#160;&#160;On
December 30, 2008, the Company paid $4.9 million principal balance on this debt
related to one community using proceeds from the Freddie Mac Credit Facility
discussed below, paid an additional $2.7 million principal amount on the Capmark
HCPI loan primarily from cash proceeds of the Freddie Mac Credit Facility, and
extended the maturity date on the balance of $68.4 million to January 2012,
secured by 11 communities.&#160;&#160;Interest now accrues at a variable rate on
the remaining balance of $68.4 million at monthly LIBOR plus 4.0%, with a LIBOR
floor of 2.5%.&#160;&#160;Since current monthly LIBOR is below the floor of
2.5%, the interest rate at closing was 6.5%.&#160;&#160;In addition to monthly
payments of accrued interest, monthly principal payments of $250,000 are due
during the first year, increasing to $500,000 per month in year two and $667,000
per month for each subsequent year until maturity.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Capmark
Fretus</font>.&#160;&#160;Additionally, the Company had $16.8 million of
variable rate mortgage debt with Capmark secured by four communities which was
due to mature in March 2012.&#160;&#160;The loan originated in February 2007
with the purchase of 24 communities from Fretus Investors, LLC and, after a
modification in 2008, had a variable interest rate based on monthly LIBOR plus
2.8%, with a LIBOR floor of 3.0%.&#160;&#160;On December 30, 2008, the Company
paid $12.5 million principal balance on this debt related to three communities
from proceeds of the Freddie Mac Credit Facility discussed below.&#160;&#160;The
remaining debt of $4.3 million is secured by one community.&#160;&#160;Interest
now accrues at</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
variable rate on the remaining balance of $4.3 million at monthly LIBOR plus
4.0%, with a LIBOR floor of 2.5%.&#160;&#160;The original maturity date of March
2012 is unchanged.&#160;&#160;Since the current monthly LIBOR is below the floor
of 2.5%, the interest rate at closing was 6.5%.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">GECC
Modification</font>.&#160;&#160;The GECC mortgage secured by three communities
described above in Item 1.02 was cross-collateralized with a GECC mortgage of
$7.7 million at a fixed rate of 7.23% due to mature in July 2013.&#160;&#160;The
mortgage, originated in July 2006 in the amount of $8.0 million, was secured by
one community, and provided for monthly payments based on a 25-year
amortization.&#160;&#160;The $7.7 million mortgage was amended to increase the
interest rate to a fixed rate of 9.23% with no change in the maturity date or
amortization period.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Freddie Mac Credit
Facility</font>.&#160;&#160;The GECC mortgage secured by three communities and
the two Capmark loans secured by four communities, as described above, were
refinanced with new Capmark mortgage debt that was sold to Freddie
Mac.&#160;&#160;The $36.3 million debt is secured by the aforementioned seven
communities.&#160;&#160;Interest accrues on this new mortgage debt at a fixed
rate of 6.05% and the loans mature in December 2018.&#160;&#160;Monthly payments
of interest only are due during the first 24 months and, thereafter, monthly
principal and interest payments in the amount of $218,820 are
required.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
9.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Financial
Statement <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">and</font>
Exhibits.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibits</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit
No.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Description</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
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            <td style="WIDTH: 108pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;99.1</font></font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">Press Release dated December 30,
      2008, EMERITUS REFINANCES MORTGAGE DEBT</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">.</font></font></div>
            </td>
          </tr>
      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURE</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31, 2008</font></div>
            </td>
            <td valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">EMERITUS
      CORPORATION</font></div>
            </td>
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            <td valign="bottom" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
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      </font></td>
            <td valign="bottom" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
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            <td valign="bottom" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="bottom" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:</font></div>
            </td>
            <td align="left" valign="bottom" width="39%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      Raymond R. Brandstrom</font></div>
            </td>
          </tr>
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            <td valign="bottom" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="39%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Raymond
      R. Brandstrom</font></div>
            </td>
          </tr>
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            <td valign="bottom" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Vice President-Finance, Chief&#160;&#160;Financial Officer and
      Secretary</font></div>
            </td>
          </tr>
          <tr>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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TO EXHIBITS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit
No.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Description</font></font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;99.1</font></font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">Press Release dated December 30,
      2008, EMERITUS REFINANCES MORTGAGE
DEBT.</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br></body>
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esc8krefimtgdebt1208.htm
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C.  20549
____________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of report (Date of earliest event
reported):
December 30,
2008
EMERITUS
CORPORATION
(Exact
name of registrant as specified in charter)
Washington
1-14012
91-1605464
(State
      or other jurisdiction of incorporation)
(Commission
      File Number)
(IRS
      Employer Identification No.)
3131
Elliott Avenue, Suite 500
Seattle,
Washington 98121
(Address
of principal executive offices) (Zip Code)
(206)
298-2909
(Registrant's
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 1.02
Termination
      of a Material Definitive Agreement.
On
December 30, 2008, Emeritus Corporation (the "Company") repaid the $15.2 million
outstanding principal balance of a mortgage loan with General Electric Capital
Corporation (GECC) secured by three communities that were acquired by the
Company in 2005.  The debt was scheduled to mature in November
2012.  Interest accrued at the fixed rate of 6.95% per
annum.  The loan required monthly payments of principal and interest,
based on a 25-year amortization.  There was no penalty related to the
early termination of this mortgage.  The Company repaid this mortgage
with proceeds from the refinancing transaction described in Item 2.03
below.
Item 2.03
Creation
      of a Direct Financial Obligation or an Obligation under an Off-Balance
      Sheet Arrangement of a Registrant.
On
December 30, 2008, the Company announced that it had refinanced or amended the
terms of $115.7 million of mortgage debt secured by 20 communities, including
the payoff of certain loans with GECC, as described in Item 1.02 of this report,
and $36.3 million of new mortgage debt with Capmark Bank (Capmark) through a
Freddie Mac credit facility.  A summary of the transactions is as
follows:
·
Capmark
      debt of $76.0 million (Capmark HCPI) was reduced to $71.1million from
      proceeds of the Freddie Mac Credit Facility, the maturity date was
      extended from September 2009 to January 2012, and the interest rate was
      modified;
·
Of
      an additional $16.8 million of Capmark debt (Capmark Fretus), $12.5
      million was secured by three communities and was refinanced with the
      Freddie Mac Credit Facility.  The interest rate on the remaining
      mortgage of $4.3 million was
modified;
·
Three
      mortgages with GECC totaling $15.2 million were refinanced with the
      Freddie Mac Credit Facility;
·
The
      interest rate on a $7.7 million mortgage with GECC covering one community
      was modified; and
·
Net
      proceeds from the Freddie Mac Credit Facility refinancing of $2.4 million,
      plus cash from Emeritus, were used to pay down the Capmark HCPI debt by an
      additional $2.7 million.
The net
effect of this refinancing is to increase long-term debt by approximately $1.0
million, extend maturity dates to January 2012 and beyond, move four communities
from short-term variable rate debt to long-term fixed rate debt, increase first
year principal payments by $3.0 million, and increase annual interest expense by
approximately $3.0 million, of which approximately $976,000 relates to a change
in the LIBOR floor on $72.7 million of variable rate debt.  The
Company incurred approximately $930,000 in financing costs related to this debt
restructuring.  A detailed description of the related transactions
follows.
Capmark HCPI
.  The
Company had $76.0 million of variable rate mortgage debt with Capmark that was
secured by 12 communities purchased in August 2007 from Health Care Property
Investors, Inc.  This debt was due to mature in September
2009.  The interest rate on this debt was based on monthly LIBOR plus
1.7%, with payments of interest only over the two-year term.  On
December 30, 2008, the Company paid $4.9 million principal balance on this debt
related to one community using proceeds from the Freddie Mac Credit Facility
discussed below, paid an additional $2.7 million principal amount on the Capmark
HCPI loan primarily from cash proceeds of the Freddie Mac Credit Facility, and
extended the maturity date on the balance of $68.4 million to January 2012,
secured by 11 communities.  Interest now accrues at a variable rate on
the remaining balance of $68.4 million at monthly LIBOR plus 4.0%, with a LIBOR
floor of 2.5%.  Since current monthly LIBOR is below the floor of
2.5%, the interest rate at closing was 6.5%.  In addition to monthly
payments of accrued interest, monthly principal payments of $250,000 are due
during the first year, increasing to $500,000 per month in year two and $667,000
per month for each subsequent year until maturity.
Capmark
Fretus
.  Additionally, the Company had $16.8 million of
variable rate mortgage debt with Capmark secured by four communities which was
due to mature in March 2012.  The loan originated in February 2007
with the purchase of 24 communities from Fretus Investors, LLC and, after a
modification in 2008, had a variable interest rate based on monthly LIBOR plus
2.8%, with a LIBOR floor of 3.0%.  On December 30, 2008, the Company
paid $12.5 million principal balance on this debt related to three communities
from proceeds of the Freddie Mac Credit Facility discussed below.  The
remaining debt of $4.3 million is secured by one community.  Interest
now accrues at
a
variable rate on the remaining balance of $4.3 million at monthly LIBOR plus
4.0%, with a LIBOR floor of 2.5%.  The original maturity date of March
2012 is unchanged.  Since the current monthly LIBOR is below the floor
of 2.5%, the interest rate at closing was 6.5%.
GECC
Modification
.  The GECC mortgage secured by three communities
described above in Item 1.02 was cross-collateralized with a GECC mortgage of
$7.7 million at a fixed rate of 7.23% due to mature in July 2013.  The
mortgage, originated in July 2006 in the amount of $8.0 million, was secured by
one community, and provided for monthly payments based on a 25-year
amortization.  The $7.7 million mortgage was amended to increase the
interest rate to a fixed rate of 9.23% with no change in the maturity date or
amortization period.
Freddie Mac Credit
Facility
.  The GECC mortgage secured by three communities and
the two Capmark loans secured by four communities, as described above, were
refinanced with new Capmark mortgage debt that was sold to Freddie
Mac.  The $36.3 million debt is secured by the aforementioned seven
communities.  Interest accrues on this new mortgage debt at a fixed
rate of 6.05% and the loans mature in December 2018.  Monthly payments
of interest only are due during the first 24 months and, thereafter, monthly
principal and interest payments in the amount of $218,820 are
required.
Item
9.01                      Financial
Statement
and
Exhibits.
(d)
Exhibits
Exhibit
No.
Description
99.1
Press Release dated December 30,
      2008, EMERITUS REFINANCES MORTGAGE DEBT
.
[The rest
of this page is intentionally left blank]
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
December
      31, 2008
EMERITUS
      CORPORATION
By:
/s/
      Raymond R. Brandstrom
Raymond
      R. Brandstrom
Executive
      Vice President-Finance, Chief  Financial Officer and
      Secretary
INDEX
TO EXHIBITS
Exhibit
No.
Description
99.1
Press Release dated December 30,
      2008, EMERITUS REFINANCES MORTGAGE
DEBT.