Continuum Health Care Inc. announces commencement of development of Drayton Valley and Camrose Facilities

Continuum Health Care Inc.is pleased to announce that it and its wholly-owned subsidiary, Continuum Health Care Holdings Ltd. ("Holdings"), have commenced the financing, planning, development and marketing of a 68-unit seniors supportive living facility in Drayton Valley, Alberta (the "Drayton Valley Facility"), together with Vantage West Development Corp. ("Vantage") and Sunrise Village (Drayton) Joint Venture ("Drayton Joint Venture"). Continuum and Holdings have also commenced the financing, planning, development and marketing of a 122-unit designated assisted living and supportive living facility in Camrose, Alberta , together with Vantage and Sunrise Village Joint Venture . Vantage is owned by three of the directors of Continuum, namely Patrick Hovan, Peter Allan and Evan Welbourn. Continuum has received regulatory approval from the TSX Venture Exchange and shareholder approval at Continuum's last annual general meeting held on June 13, 2008 for theses non-arm's length transactions.

The lands to be developed for the Drayton Valley Facility are to be owned by a joint venture between Vantage and Eldercare (Drayton) Limited Partnership. The joint venture is called the Sunrise Village (Drayton) Joint Venture ("Drayton Joint Venture"). The general partner of the Eldercare (Drayton) Limited Partnership is Evan Welbourn, a director of Continuum. The Drayton Joint Venture will own the Drayton Valley Facility through a trustee company, Sunrise Village (Drayton) Holdings Ltd. (the "Trustee") The respective interests of Vantage and Eldercare (Drayton) Limited Partnership, as the joint venturers, will be determined based upon their respective contributions to the Drayton Joint Venture.

The Drayton Valley Facility shall be developed under a Project Management Agreement between Vantage and the Trustee, which covers the planning, design, procurement and construction management services to be completed by Vantage for a specified fee of $236,693.00.

Under an exclusive Option Agreement, Vantage will grant to Holdings an option to acquire Vantage's interest in the Drayton Joint Venture in consideration for a loan of funds made by Holdings to Vantage under a separate Loan Agreement described below. As additional consideration for the Option Agreement, Continuum will provide guarantees on the construction financing for the Drayton Valley Facility. The term of the option will be 48 months. The right of Holdings to exercise the option is contingent upon occupancy of the Drayton Valley Facility being at or above 85% for three consecutive months. The price payable by Holdings for the exercise of the option is the aggregate of the actual cost contributed by Vantage to the Drayton Joint Venture, plus five (5%) percent of the total of all capitalized costs of the Drayton Valley Facility, less the principal amounts advanced to Vantage from Holdings pursuant to the Loan Agreement described below. Should the option be exercised, Holdings would replace Vantage as a participant in the Drayton Joint Venture.

Under a Loan Agreement, an amount up to $1, 396,508.00 is to be advanced by Holdings to Vantage to assist with the capital cost of the Drayton Valley Facility. The loan is to be funded by Holdings from the grant provided to Holdings by the Alberta Government through Alberta Seniors and Community Supports, under the Affordable Supportive Living Initiative ("ASLI"). Interest will accrue under the Loan Agreement at the rate of 6% per annum, and become due on the earlier of four years from the date of the Loan Agreement or thirty days following the date of exercise of the option under the Option Agreement. Should the option be exercised by Holdings, the principal amount owing by Vantage to Holdings under the Loan Agreement would be subtracted from the exercise price of the option and such would constitute repayment by Vantage, and any accrued interest otherwise owing by Vantage under the Loan Agreement would be forgiven.

Under a Facility Management Agreement between Continuum and the Trustee, Continuum shall be the sole and exclusive managing agent of the Drayton Valley Facility and shall also provide marketing and lease-up services. The Trustee will pay to Continuum a fee of $5,666.67 per month until date the first tenant occupies a unit in the Drayton Valley Facility, not to exceed $68,000 in the aggregate. In addition, during the five year term of the Facility Management Agreement, the Trustee will pay Continuum 5% of the total revenue from all of the Drayton Valley Facility's operating departments per month (the "gross revenue"), as well as 5% of net revenue (gross revenue less operating expenses) per year.

As the development of the Drayton Valley Facility proceeds, it is contemplated that further financing will be required by the Drayton Joint Venture and will be guaranteed by the joint venture parties and by Continuum.

The lands to be developed for the Camrose Facility are to be owned by a joint venture between Vantage and Eldercare (Camrose) Limited Partnership. The joint venture is called the Sunrise Village (Camrose) Joint Venture ("Camrose Joint Venture"). The general partner of the Eldercare (Camrose) Limited Partnership is Evan Welbourn, a director of Continuum. The Camrose Joint Venture will own the Camrose Facility through a trustee company, Sunrise Village (Camrose) Holdings Ltd. (the "Trustee"). The respective interests of Vantage and Eldercare (Camrose) Limited Partnership, as the joint venturers, will be determined based upon their respective contributions to the Camrose Joint Venture.

The Camrose Facility shall be developed under a Project Management Agreement between Vantage and the Trustee, which covers the planning, design, procurement and construction management services to be completed by Vantage for a specified fee of $412,250.00.

Under an exclusive Option Agreement, Vantage will grant to Holdings an option to acquire Vantage's interest in the Camrose Joint Venture in consideration for a loan of funds made by Holdings to Vantage under a separate Loan Agreement described below. As additional consideration for the Option Agreement, Continuum will provide guarantees on the construction financing for the Camrose Facility. The term of the option will be 48 months. The right of Holdings to exercise the option is contingent upon occupancy of the Camrose Facility being at or above 85% for three consecutive months. The price payable by Holdings for the exercise of the option is the aggregate of the actual cost contributed by Vantage to the Camrose Joint Venture, plus five (5%) percent of the total of all capitalized costs of the Camrose Facility, less the principal amounts advanced to Vantage from Holdings pursuant to the Loan Agreement described below. Should the option be exercised, Holdings would replace Vantage as a participant in the Camrose Joint Venture.

Under a Loan Agreement, an amount up to $2,444,310.00 is to be advanced by Holdings to Vantage to assist with the capital cost of the Camrose Facility. The loan is to be funded by Holdings from the grant provided to Holdings by the Alberta Government through Alberta Seniors and Community Supports, under the Rural Affordable Supportive Living program ("RASL"). Interest will accrue under the Loan Agreement at the rate of 6% per annum, and become due on the earlier of four years from the date of the Loan Agreement or thirty days following the date of exercise of the option under the Option Agreement. Should the option be exercised by Holdings, the principal amount owing by Vantage to Holdings under the Loan Agreement would be subtracted from the exercise price of the option and such would constitute repayment by Vantage, and any accrued interest otherwise owing by Vantage under the Loan Agreement would be forgiven.

Under a Facility Management Agreement between Continuum and the Trustee, Continuum shall be the sole and exclusive managing agent of the Camrose Facility and shall also provide marketing and lease-up services. The Trustee will pay to Continuum a fee of $8,714.28 per month until date the first tenant occupies a unit in the Camrose Facility, not to exceed $122,000 in the aggregate. In addition, during the five year term of the Facility Management Agreement, the Trustee will pay Continuum 5% of the total revenue from all of the Camrose Facility's operating departments per month (the "gross revenue"), as well as 5% of net revenue (gross revenue less operating expenses) per year.

As the development of the Camrose Facility proceeds, it is contemplated that further financing will be required by the Camrose Joint Venture and will be guaranteed by the joint venture parties and by Continuum.

Pursuant to each of these transactions, Holdings will provide a loan of funds to Vantage for the development of the facility by a joint venture in which Vantage is one of the two joint venture parties. In return, Holdings will have an exclusive option to buy out Vantage's interest in the joint venture, in certain events. Continuum will provide marketing, lease-up and facility management services for the facilities. This transaction structure is designed to protect Continuum from the majority of risks typically associated with the construction and development of seniors supportive living facilities, while allowing Continuum to maintain an exclusive right to purchase the facilities on favourable terms. Continuum also benefits by receiving a contract to provide the pre-leasing and operations management services for the facility. This structure allows Continuum to focus on its intended role as a seniors facility management company rather than as a development and construction company. The payment rates under all of the agreements will be determined based on current fair market value of the particular asset or service. These transactions are part of the Continuum's strategic plan to improve earnings and returns on common equity, and to enhance total assets by means of expanding its operations in Alberta.

Continuum owns, operates, manages and develops supportive living facilities in Alberta. It currently owns and manages, with its joint venture partners, 167 supportive living facility units in Olds, Lethbridge and Wetaskiwin. Continuum has joint venture interests in another 95 units that are currently under construction at the Wetaskiwin facility and at a project in Ponoka. The facilities under development in Drayton Valley and Camrose will add another 190 units. Continuum and its joint venture partners also plan to commence development of a 120 unit facility in High River, Alberta in the near future. These developments together will bring the total number of units managed by Continuum up to 572 Units.

Continuum is listed on the TSX Venture Exchange (TSXV-CCF) and has a total of 17,854,283 common shares outstanding, 19,529,283 fully diluted.

This press release contains forward-looking statements. More particularly, this press release contains statements concerning anticipated changes in Continuum's financial capital and anticipated development activities.

The forward-looking statements are based on certain key expectations and assumptions made by Continuum, including expectations and assumptions concerning the finalization and execution of the various transaction agreements and the ability and willingness of all of the parties to proceed with the development of the facilities as contemplated.

Although Continuum believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Continuum can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: (a) risks associated with the assisted and supportive living industry in general, (b) the ability and willingness of operators, tenants, borrowers, joint venture partners and third parties, as applicable, to meet and/or perform their obligations under various contractual arrangements with Continuum, (c) Continuum's ability to successfully implement its business strategy and its ability to identify, finance, consummate and integrate acquisitions or investments, (d) the nature and extent of future competition, (e) the extent of future or pending healthcare and assisted living regulation, (f) increases in the costs of borrowing, (g) the ability of the applicable operators and managers to deliver high quality services and to attract residents, (h) changes in general economic conditions, (i) Continuum's ability to pay down, refinance, restructure and/or extend its indebtedness as it becomes due, and (j) uncertainties resulting from potential delays or changes in plans with respect to facility development, financing or expenditures. Many of these factors are beyond the control of Continuum. Certain of these risks are set out in more detail in Continuum's filings under applicable securities laws and can be accessed at www.sedar.com.