Extendicare REIT Calls Lawsuit Claims False and Misleading

Extendicare Real Estate Investment Trust ("Extendicare REIT" or "Extendicare") (TSX: EXE.UN) today said claims made in a lawsuit filed August 21, 2008, in Washington State Court in Seattle, against Extendicare Homes, Inc. and Fir Lane Terrace Convalescent Center, Inc., two wholly owned U.S. based subsidiaries of Extendicare REIT, are false and misleading. Extendicare REIT also says it will vigorously defend against the lawsuit in court.

"We appear to be the latest in a long list of nursing home providers targeted by the same lawyer who previously filed a series of similar class-action style lawsuits in California," said Tim Lukenda, President and CEO. "These lawsuits also alleged that nursing home providers falsely advertised the quality of care they provided to residents. While this lawyer has not been successful in proving such allegations in a court of law, we understand the previous cases have resulted in settlements. Many providers in the California suits were undoubtedly forced to settle these cases rather than fight the allegations and prove them to be false because of the costs of litigation," Lukenda said.

"We intend to vigorously and successfully defend this lawsuit and discourage these lawyers from trying to recreate their California experience in Washington State," said Lukenda. "The allegations made by these lawyers are incorrect and misleading and are clearly designed to maximize the potential recovery of attorneys' fees rather than benefit residents."

Extendicare says it is remains committed to continuing to provide quality care and services to its residents as it defends the inflammatory allegations in this baseless lawsuit.

About Us

Extendicare REIT, through its wholly owned subsidiaries, is a major provider of short and long-term care services for seniors in North America. We operate 268 nursing and assisted living facilities in North America, with capacity for approximately 30,300 residents. As well, we offer medical specialty services such as subacute care and rehabilitative therapy services in the United States, and home health care services in Canada, and employ approximately 38,100 people in North America.

Extendicare facilities have won numerous awards for quality over the years, including four facilities that were recently recognized for quality achievement by receiving the Step 1 National Quality Award presented by the American Health Care Association. These awards are modeled after the criteria of the Malcolm Baldridge National Quality Award.

Forward-looking Statements

Information provided by Extendicare REIT from time to time, including this release, contains or may contain forward-looking statements concerning anticipated financial events, results, circumstances, economic performance or expectations with respect to Extendicare REIT and its subsidiaries, including its business operations, business strategy, and financial condition. Forward-looking statements can be identified because they generally contain the words "expect", "intend", "anticipate", "believe", "estimate", "plan" or "objective" or other similar expressions. Forward-looking statements reflect management's beliefs and assumptions and are based on information currently available, and Extendicare REIT assumes no obligation to update any forward-looking statement. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Extendicare REIT to differ materially from those expressed or implied in the statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on Extendicare REIT's forward-looking statements. Further information can be found in the disclosure documents filed by Extendicare REIT with the securities regulatory authorities, available at www.sedar.com and on Extendicare REIT's website at www.extendicare.com.