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      8K Fretus Financing Feb 2007
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      </div>U.S. SECURITIES AND EXCHANGE COMMISSION</div>
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      D.C. 20549</strong></font></div>
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      8-K</strong></font></div>
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      REPORT</strong></font></div>
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      to Section 13 or 15(d) of</strong></font></div>
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      Securities Exchange Act of 1934</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      report (Date of earliest event reported):</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
      February 28, 2007</strong></font></div>
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      CORPORATION</strong></font></div>
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      Elliott Avenue, Suite 500</font></div>
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      Washington 98121</font></div>
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      of principal executive offices) (Zip Code)</font></div>
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      298-2909</font></div>
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      telephone number, including area code)</font></div>
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      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:</font></div>
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      Written
      communications pursuant to Rule&#160;425 under the Securities Act (17 CFR
      230.425)</font></div>
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      Soliciting material pursuant to Rule&#160;14a-12 under the Exchange Act (17 CFR
      240.14a-12)</font></div>
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      Pre-commencement communications pursuant to Rule&#160;14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))</font></div>
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      Pre-commencement communications pursuant to Rule&#160;13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))</font></div>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item&#160;1.02</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Termination
      of a Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      February 28, 2007, Emeritus Corporation (the &#8220;Company&#8221;) filed a current report
      under Form 8-K, Item 1.01 announcing the Company&#8217;s entry into a Purchase and
      Sale Agreement dated February 22, 2006, for the purchase of Fretus Investors
      LLC
      ("Fretus"), the owner of 24 assisted living facilities consisting of 1,651
      units
      located in six states. Pursuant to the Master Lease described below, the Company
      operated these facilities as assisted living and memory care communities for
      seniors. On February&#160;28, 2007, the Company consummated the transaction and
      purchased 100% of the outstanding membership interests in Fretus. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of this acquisition, the Master Lease Agreement dated October 1, 2002
      ("Master Lease"), among various subsidiaries and affiliates of Fretus and
      Emeritus Properties-NGH, L.L.C. and ESC-NGH, L.P., subsidiaries of the Company,
      was terminated effective as of February 28, 2007. The Master Lease had an
      initial term of 10 years and was renewable for two successive five year terms
      at
      our option. The base rent under the Master Lease was variable and was equal
      to
      the debt service on the Fretus's outstanding senior mortgage indebtedness
      secured by the properties, with a maximum annual base rent of approximately
      $7.2
      million. The Fretus senior mortgage debt accrued interest at the London
      Interbank Offering Rate (LIBOR) plus 2.65%. The Company's annual base rent
      approximated the maximum base rent as of the termination date. In addition
      to
      the base rent, the lease also provided for percentage rent equal to a percentage
      (ranging from 7% to 8.5%) of gross revenues in excess of a specified threshold.
      The amount of additional rent expense for the year ended December 31, 2006,
      was
      $766,000, for total rent of approximately $7.9 million for the year ended
      December 31, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      purchase agreement, the purchase price for the membership interests of Fretus
      is
      incorporated in this Item 1.02 by reference to Item 2.03 below..</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item&#160;2.03</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Creation
      of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
      Arrangement of a Registrant.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      Purchase and Sale Agreement referred to in Item 1.02 above, the purchase price
      for the membership interests of Fretus was approximately $143.0 million plus
      closing costs, of which approximately $53.0 million was paid in cash and $90.0
      million was outstanding mortgage debt assumed by the Company, which was
      refinanced in conjunction with this transaction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Capmark
      Finance, Inc. ("Capmark") provided fixed rate mortgage financing of
      $132.0&#160;million and variable rate mortgage financing of $8.0&#160;million,
      pursuant to an Amended and Restated Loan Agreement dated February 28, 2007,
      by
      and among the 24 Fretus communities, Fretus Investors LLC, Emeritus Corporation
      and Capmark (the "Capmark Loan Facility"). Under the Capmark Loan Facility,
      the
      fixed rate loan has a term of five years and bears interest at 6.55% per annum
      (with a 1% exit fee payable when the debt is repaid, unless refinanced by
      Capmark), with monthly interest-only payments for two years and, thereafter,
      monthly payments of principal and interest based on a 25-year amortization,
      with
      the remaining balance due in full in February 2012. The variable rate loan
      has a
      term of three years with interest at 30-day LIBOR plus 1.8%, with the same
      exit
      fee terms and payment schedule as for the fixed component. The interest rate
      on
      the variable rate mortgage financing was 7.12% on the closing date. The
      indebtedness outstanding under the Capmark Loan Facility may be accelerated
      under customary circumstances, including payment defaults. The indebtedness
      outstanding under the Capmark Loan Facility is secured by the real property
      and
      all other tangible and intangible assets used in the operation of the 24
      communities. The loan requires annual capital expenditures of at least $300
      per
      unit, or approximately $495,000, for maintenance of the properties.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      conjunction with the Fretus transaction, CP&#8217;02 Pool LLC an entity in which
      Daniel R. Baty, the Company&#8217;s chairman of the board and chief executive officer,
      has a financial interest, provided $18.0 million of additional financing to
      the
      Company pursuant to a loan agreement dated as of February 28, 2007, by and
      among
      the Company </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
      CP&#8217;02
      Pool LLC. Approximately $5.0 million of this additional financing was used
      to
      fund the remaining portion of the Fretus acquisition, which included
      approximately $2.0 million in transaction costs. This additional financing
      is
      currently unsecured, matures in February 2009, bears interest at 9.0% per annum,
      and is payable in monthly installments of interest-only. The loan may be repaid,
      in whole or in part, at any time without penalty.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      8.01</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
      Events</strong></font></div>
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      Company issued a press release on February 28, 2007, announcing the consummation
      of the Fretus acquisition. A copy of the press release is being furnished as
      Exhibit 99.1 to this Current Report on Form 8-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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      No.</u></strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description</u></strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: -108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
      Release dated February 28, 2007, EMERITUS ANNOUNCES PURCHASE OF 24
      COMMUNITIES.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[The
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; 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; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <tr>
            <td align="left" valign="bottom" width="38%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March
                6, 2007</font></div>
            </td>
            <td align="left" valign="bottom" width="17%">&#160;</td>
            <td valign="bottom" width="39%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EMERITUS
                CORPORATION</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="38%">&#160;</td>
            <td align="left" valign="bottom" width="17%">&#160;</td>
            <td align="left" valign="bottom" width="39%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="38%">&#160;</td>
            <td align="right" valign="bottom" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; 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 thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;/s/
                <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Raymond
                R. Brandstrom</font></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="38%">&#160;</td>
            <td align="left" valign="bottom" width="17%">&#160;</td>
            <td align="left" valign="bottom" width="39%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Raymond
                R. Brandstrom</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="38%">&#160;</td>
            <td align="left" valign="bottom" width="17%">&#160;</td>
            <td align="left" valign="bottom" width="39%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
                President of Finance, Chief Financial Officer</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="38%">&#160;</td>
            <td align="left" valign="bottom" width="17%">&#160;</td>
            <td align="left" valign="bottom" width="39%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
                Secretary</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INDEX
      TO EXHIBITS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Exhibit
      No.</u></strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: -108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><a href="ex991pressreleasepurch24comm.htm"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></a><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="ex991pressreleasepurch24comm.htm">Press
      Release dated February 28, 2007,
      EMERITUS ANNOUNCES PURCHASE OF 24 COMMUNITIES</a>.</font></div>
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{"company-data": {"conformed-name": "EMERITUS CORP\\WA\\", "cik": "0001001604", "assigned-sic": "8050", "irs-number": "911605464", "state-of-incorporation": "WA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-14012", "film-number": "07674578"}, "business-address": {"street1": "3131 ELLIOTT AVENUE", "street2": "SUITE 500", "city": "SEATTLE", "state": "WA", "zip": "98121", "phone": "2062982909"}, "mail-address": {"street1": "3131 ELLIOTT AVE STE 500", "city": "SEATTLE", "state": "WA", "zip": "98121"}}
8K Fretus Financing Feb 2007
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):
February 28, 2007
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
      February 28, 2007, Emeritus Corporation (the "Company") filed a current report
      under Form 8-K, Item 1.01 announcing the Company's entry into a Purchase and
      Sale Agreement dated February 22, 2006, for the purchase of Fretus Investors
      LLC
      ("Fretus"), the owner of 24 assisted living facilities consisting of 1,651
      units
      located in six states. Pursuant to the Master Lease described below, the Company
      operated these facilities as assisted living and memory care communities for
      seniors. On February 28, 2007, the Company consummated the transaction and
      purchased 100% of the outstanding membership interests in Fretus.
As
      a
      result of this acquisition, the Master Lease Agreement dated October 1, 2002
      ("Master Lease"), among various subsidiaries and affiliates of Fretus and
      Emeritus Properties-NGH, L.L.C. and ESC-NGH, L.P., subsidiaries of the Company,
      was terminated effective as of February 28, 2007. The Master Lease had an
      initial term of 10 years and was renewable for two successive five year terms
      at
      our option. The base rent under the Master Lease was variable and was equal
      to
      the debt service on the Fretus's outstanding senior mortgage indebtedness
      secured by the properties, with a maximum annual base rent of approximately
      $7.2
      million. The Fretus senior mortgage debt accrued interest at the London
      Interbank Offering Rate (LIBOR) plus 2.65%. The Company's annual base rent
      approximated the maximum base rent as of the termination date. In addition
      to
      the base rent, the lease also provided for percentage rent equal to a percentage
      (ranging from 7% to 8.5%) of gross revenues in excess of a specified threshold.
      The amount of additional rent expense for the year ended December 31, 2006,
      was
      $766,000, for total rent of approximately $7.9 million for the year ended
      December 31, 2006.
Under
      the
      purchase agreement, the purchase price for the membership interests of Fretus
      is
      incorporated in this Item 1.02 by reference to 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.
Under
      the
      Purchase and Sale Agreement referred to in Item 1.02 above, the purchase price
      for the membership interests of Fretus was approximately $143.0 million plus
      closing costs, of which approximately $53.0 million was paid in cash and $90.0
      million was outstanding mortgage debt assumed by the Company, which was
      refinanced in conjunction with this transaction.
Capmark
      Finance, Inc. ("Capmark") provided fixed rate mortgage financing of
      $132.0 million and variable rate mortgage financing of $8.0 million,
      pursuant to an Amended and Restated Loan Agreement dated February 28, 2007,
      by
      and among the 24 Fretus communities, Fretus Investors LLC, Emeritus Corporation
      and Capmark (the "Capmark Loan Facility"). Under the Capmark Loan Facility,
      the
      fixed rate loan has a term of five years and bears interest at 6.55% per annum
      (with a 1% exit fee payable when the debt is repaid, unless refinanced by
      Capmark), with monthly interest-only payments for two years and, thereafter,
      monthly payments of principal and interest based on a 25-year amortization,
      with
      the remaining balance due in full in February 2012. The variable rate loan
      has a
      term of three years with interest at 30-day LIBOR plus 1.8%, with the same
      exit
      fee terms and payment schedule as for the fixed component. The interest rate
      on
      the variable rate mortgage financing was 7.12% on the closing date. The
      indebtedness outstanding under the Capmark Loan Facility may be accelerated
      under customary circumstances, including payment defaults. The indebtedness
      outstanding under the Capmark Loan Facility is secured by the real property
      and
      all other tangible and intangible assets used in the operation of the 24
      communities. The loan requires annual capital expenditures of at least $300
      per
      unit, or approximately $495,000, for maintenance of the properties.
In
      conjunction with the Fretus transaction, CP'02 Pool LLC an entity in which
      Daniel R. Baty, the Company's chairman of the board and chief executive officer,
      has a financial interest, provided $18.0 million of additional financing to
      the
      Company pursuant to a loan agreement dated as of February 28, 2007, by and
      among
      the Company
and
      CP'02
      Pool LLC. Approximately $5.0 million of this additional financing was used
      to
      fund the remaining portion of the Fretus acquisition, which included
      approximately $2.0 million in transaction costs. This additional financing
      is
      currently unsecured, matures in February 2009, bears interest at 9.0% per annum,
      and is payable in monthly installments of interest-only. The loan may be repaid,
      in whole or in part, at any time without penalty.
Item
      8.01
Other
      Events
The
      Company issued a press release on February 28, 2007, announcing the consummation
      of the Fretus acquisition. A copy of the press release is being furnished as
      Exhibit 99.1 to this Current Report on Form 8-K.
Item
      9.01
Financial
      Statement
and
Exhibits.
(d)
Exhibits
Exhibit
      No.
Description
99.1
Press
      Release dated February 28, 2007, EMERITUS ANNOUNCES PURCHASE OF 24
      COMMUNITIES.
[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.
March
                6, 2007
EMERITUS
                CORPORATION
By:
/s/
Raymond
                R. Brandstrom
Raymond
                R. Brandstrom
Vice
                President of Finance, Chief Financial Officer
and
                Secretary
INDEX
      TO EXHIBITS
Exhibit
      No.
Description
99.1
Press
      Release dated February 28, 2007,
      EMERITUS ANNOUNCES PURCHASE OF 24 COMMUNITIES
.