marketing analysis for senior community

RevisedCBREAppraisal_VenturaHillsSeniorLivingSanAntonioTX2021.pdf

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V E N T U R A H I L L S S E N I O R L I V I N G 1 2 0 7 J A C K S O N K E L L E R R O A D S A N A N T O N I O , T E X A S 7 8 2 1 3 C B R E G R O U P , I N C . F I L E : 2 0 - 9 0 1 M A - 0 5 7 4 - 1 T H E B A N K O F S A N A N T O N I O

CBRE VALUATION & ADVISORY SERVICES

APPRAISAL REPORT

V A L U A T I O N & A D V I S O R Y S E R V I C E S

Seniors Housing & Healthcare www.cbre.com/shvas

Date of Report: October 2, 2020 Daniel Partida Credit Analyst II THE BANK OF SAN ANTONIO 1900 NW Loop 410 San Antonio, TX 78213 RE: Appraisal of:

Ventura Hills Senior Living 1207 Jackson Keller Road,

San Antonio, Texas 78213 CBRE File: 20-901MA-0574-1

Dear Mr. Partida:

At your request and authorization, CBRE, Inc. has prepared an appraisal of the market value of the referenced property. This analysis is presented in the following appraisal report.

The subject, identified as Ventura Hills Senior Living, is an existing assisted living residence located at 1207 Jackson Keller Road, San Antonio, Bexar County, Texas. The 73,917 square foot improvements are situated on a 6.14-acre site. The improvements were constructed in 1999 and have a total of 97 physical units with a unit mix of 80 assisted living unit and 17 memory care units. The subject has a total operating capacity of 97 revenue units (beds), while the licensed capacity is 160 Type A assisted living beds and 31 Type B assisted living beds. As the subject’s operating capacity falls below the licensed capacity, any licensed capacity that exceeds the operating capacity may be utilized for second persons or additional companion units. As will be discussed within this report, revenue units are based on the operating capacity.

The subject also contains approximately 5.62 acres of excess land. Two buildings totaling 14,924 square feet are located on the excess land that were previously used as office space and dormitory- type housing, but are in poor condition and are not usable. These buildings are not being utilized currently and have no contributory value.

The subject is currently owned by Eagle Senior Living and operated by its internal management arm, Greenbrier Senior Living. Eagle Senior Living is a non-profit community that purchased the subject in December 2018 as part of a 17-property portfolio of former Brookdale Senior Living properties. The purchase price of all 17 assets was reported to be $224,500,000; however, an allocated purchase price to the subject was not available. The subject is the only property in Texas that is owned and operated by Eagle Senior Living, and has been operated at a loss since the time of sale. As Eagle Senior Living is a non-profit provider, they have been required by its board to dispose of the subject. The subject was listed for sale by JLL at $2,750,000, which is the agreed purchase price per the sale agreement dated July 28, 2020 between the buyer, Imagine Senior Living, LLC and the seller, Eagle Senior Living. Given our As Is value conclusion, the purchase price is below market value as the seller was motivated and in need of selling expeditiously.

Daniel Partida Date of Report: October 2, 2020 Page 2

The buyer will place its affiliated operator, Atlantis Senior Living, as management of the subject post sale. The principle of Atlantis Senior Living, James and Suzanne Denny, are experienced operators of seniors housing communities. Notably, market value is predicated on competent management.

In August 2020, following the signing of the purchase agreement, one of the subject’s buildings, a two-story structure that houses 34 assisted living units, suffered extensive water damage from a leak in the water suppression system. According to the buyer, the total dollar amount of the damage is unknown, but it could range between $1,200,000 to $1,400,000, depending on what the final insurance claim will be. The work to completely rehab the building is already underway and insurance is covering all costs for the damage. It is an extraordinary assumption that the insurance claim will cover all damage associated, and that the subject will receive all necessary approvals and permits to operate the building as an assisted living community. Also, per the scope of this assignment, it is a hypothetical condition that all repairs have been made as of the effective date.

The buyer also plans to renovate and upgrade the other buildings, including upgrading the lighting, PTAC units, flooring, signage, landscaping, and upgrading the phone and security system. The total capex for these upgrades, which are above and beyond the repairs associated with the water damage, total $300,313 according to the buyer. We have assumed a 10% profit on the cost to complete, bringing the total cost to complete to $330,344. This total cost has been deducted from the As Complete value to arrive at the As Is value conclusion.

The subject has not been efficiently managed by the current owner/operator, and has operated with an occupancy level well below market levels. Since February 2019, the earliest reporting period available following the sale in late 2018, the overall occupancy has averaged 51.0%.

As of the effective date of this report, the nation, region, and market area are impacted by the outbreak of the Novel Coronavirus (COVID-19/COVID), declared by the World Health Organization as a “Global Pandemic” on March 11, 2020. In consideration of the effects of COVID-19 on the subject’s operations, as part of this assignment, we reviewed and analyzed census activity since March 2020, as well as adjustments to operating expenses and capital markets assumptions. Furthermore, as discussed throughout this report, projections for the projected term (i.e. near, mid, or long-term) of impact on the subject’s operations was incorporated within the conclusions. The following bullets summarize notable operating datapoints at the subject since March 2020:

Operation Trend Summary: • The subject has not been impacted in its census by COVID, as occupancy fluctuated between

53.0% and 55.0% between March and August 2020 • As of the effective date, the occupancy was 51.5% • Operating expenses were elevated in recent months based on increased payroll, PPE costs,

and sanitation; however, the operator was unable to break out the exact increases • Both changes in occupancy and expenses have been more fully discussed within the body of

this report.

The subject is operating below stabilized levels with an occupancy of 52% at the time of inspection. Based on a construction period of 2 months, our As Complete date of value is November 22, 2020. Additionally, we have projected a stabilized occupancy of 90.0%, after an estimated absorption period of 24 months, resulting in an As Stabilized date of value of November 22, 2022. Note that while the As Complete and As Stabilized value scenarios are based on prospective dates, the value conclusions are stated in current dollar figures.

Daniel Partida Date of Report: October 2, 2020 Page 3

Based on the analysis contained in the following report, the market value(s) of the subject is concluded as follows:

MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion

As Is - Going Concern Fee Simple Estate September 22, 2020 $4,960,000 As Stabilized - Going Concern Fee Simple Estate November 22, 2022 $7,000,000

Excess Land Value Fee Simple Estate September 22, 2020 $1,600,000

Compiled by CBRE

Allocation of the Going Concern

The allocation of the going concern has been estimated as follows:

As Is As Complete As Stabilized September 22, 2020 November 22, 2020 November 22, 2022

Real Estate $4,414,000 $4,662,363 $5,180,406 FF & E $546,000 $546,000 $546,000 Business Value $0 $81,637 $1,273,594 Market Value of the Going Concern $4,960,000 $5,290,000 $7,000,000

Compiled by CBRE

ALLOCATION OF THE GOING CONCERN

The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter.

The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. It also conforms to Title XI Regulations and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) updated in 1994 and further updated by the Interagency Appraisal and Evaluation Guidelines promulgated in 2010.

The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non-intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof).

Daniel Partida Date of Report: October 2, 2020 Page 4

It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE, Inc. can be of further service, please contact us.

Respectfully submitted, CBRE, Inc. - VALUATION & ADVISORY SERVICES

Andy Kepchar, MAI Malcolm Coleman, MAI, AI-GRS, MRICS Vice President Managing Director Cert. Gen. Appraiser Lic. #1380208G Cert. Gen. Appraiser Lic. #1335110G Phone: 210 253 6005 Phone: 210 580 8083 Email: [email protected] Email: [email protected]

Certification

Certification We certify to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting

conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in or bias with respect to the property that is the subject of this

report and have no personal interest in or bias with respect to the parties involved with this assignment. 4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5. Our compensation for completing this assignment is not contingent upon the development or reporting of a

predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

6. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of Texas.

7. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

9. As of the date of this report, Andy Kepchar, MAI and Malcolm Coleman, MAI, AI-GRS, MRICS have completed the continuing education program of the Appraisal Institute for Designated Members.

10. Andy Kepchar, MAI has and Malcolm Coleman, MAI, AI-GRS, MRICS has not made a personal inspection of the property that is the subject of this report.

11. No one provided significant real property appraisal assistance to the persons signing this report. 12. Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc. Although

employees of other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest.

13. Andy Kepchar, MAI and Malcolm Coleman, MAI, AI-GRS, MRICS have not provided any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three- year period immediately preceding agreement to perform this assignment.

Andy Kepchar, MAI Malcolm Coleman, MAI, AI-GRS, MRICS Cert. Gen. Appraiser Lic. #1380208G Cert. Gen. Appraiser Lic. #1335110G

Subject Photographs

AERIAL VIEW Source: Google Maps

FRONT VIEW

Subject

Excess Land

Subject Photographs

iii

Front Entrance Side View

View of AL Building Under Renovation Rear View

Excess Land Retaining Wall

Subject Photographs

Vacant Building on Excess Land Vacant Building on Excess Land

Typical Hallway Dining Room

Coffee Area Kitchen

Subject Photographs

Private Dining/Meeting Room Common Area

Typical AL Unit Typical Resident Unit Bathroom

Street Scene Facing Southeast Street Scene Facing Northwest

Executive Summary

Property Name Ventura Hills Senior Living

Management Company Eagle Senior Living

Location

Assessor’s Parcel Number 348290

Property Rights Appraised Fee Simple Estate

Highest and Best Use

As If Vacant Seniors Housing

As Improved Seniors Housing

Land Area (Improved) 6.14 AC

Excess Land Area 5.62 AC

Improvements

Property Type Assisted Living Residence (ALR)

Number of Buildings 5

Number of Stories 2

Gross Building Area 73,917 SF

Year Built 1999

Condition Average

Total Units 97

Total Beds 97

Total Revenue Units 97

Estimated Exposure / Marketing Time 10 Months / 10 to 15 Months

Financial Indicators

Current Occupancy 51.5%

Stabilized Occupancy 90.0%

Estimated Lease-up Period 24 Months

Overall Capitalization Rate 7.75%

Discount Rate 9.75%

Terminal Capitalization Rate 8.25%

Stabilized Operating Data Total Rev. Unit Per RD

Effective Gross Income $3,502,576 $36,109 $109.92

Operating Expenses $2,960,577 $30,521 $92.91

Net Operating Income $542,000 $5,588 $17.01

Expense Ratio 84.53%

1207 Jackson Keller Road, San Antonio, Bexar County, Texas 78213

Executive Summary

vii

VALUATION SUMMARY Total Rev. Unit

Market Value As Is On September 22, 2020

Excess Land Value $1,520,000

Market Value As Is On September 22, 2020

Sales Comparison Approach $5,250,000 $54,124

Income Capitalization Approach $4,960,000 $51,134

Market Value As Complete On November 22, 2020

Sales Comparison Approach $5,580,000 $57,526

Income Capitalization Approach $5,290,000 $54,536

Market Value As Stabilized On November 22, 2022

Sales Comparison Approach $7,300,000 $75,258

Income Capitalization Approach $7,000,000 $72,165

Insurable Value (Replacement Cost) $6,600,000 $68,041

CONCLUDED MARKET VALUE

Appraisal Premise Interest Appraised Value

As Is - Going Concern Fee Simple Estate $4,960,000

As Complete - Going Concern Fee Simple Estate $5,290,000

As Stabilized - Going Concern Fee Simple Estate $7,000,000

Excess Land Value Fee Simple Estate $1,520,000

Compiled by CBRE

September 22, 2020

November 22, 2020

November 22, 2022

Date of Value

September 22, 2020

Allocation of the Going Concern

The allocation of the going concern has been estimated as follows:

As Is As Complete As Stabilized September 22, 2020 November 22, 2020 November 22, 2022

Real Estate $4,414,000 $4,662,363 $5,180,406 FF & E $546,000 $546,000 $546,000 Business Value $0 $81,637 $1,273,594 Market Value of the Going Concern $4,960,000 $5,290,000 $7,000,000

Compiled by CBRE

ALLOCATION OF THE GOING CONCERN

Executive Summary

viii

Extraordinary Assumptions

An extraordinary assumption is defined as “an assignment-specific assumption as of the effective date

regarding uncertain information used in an analysis which, if found to be false, could alter the

appraiser’s opinions or conclusions.” 1

• Under the As Complete and As Stabilized scenarios, our analysis makes the extraordinary assumption that the proposed renovations will be completed of similar quality and within the development timeline and budget, similar to the description within this report. The use of this extraordinary assumption may have affected the assignment results.

• In response to the COVID-19 Pandemic, in an effort to protect the resident population within the subject property, and with the Client permission, the CBRE inspection included an exterior only physical inspection of the subject property. The interior description of the subject is based on resources as described within the Improvements Analysis section of this report, and it is considered to sufficiently describe the subject in which to result in credible assignment conclusions. As such, we make the extraordinary assumption that the interior of the subject improvements is of similar condition and quality to the description within this report, and that there are not items of significant deferred maintenance. The use of this extraordinary assumption may have affected the assignment results.

Hypothetical Conditions

A hypothetical condition is defined as “a condition, directly related to a specific assignment, which is

contrary to what is known by the appraiser to exist on the effective date of the assignment results but is

used for the purposes of analysis.” 2

• It is a hypothetical condition that all renovations from the water damage have been made as of the effective date.

1 The Appraisal Foundation, USPAP, 2020-2021

2 The Appraisal Foundation, USPAP, 2020-2021

Table of Contents

Certification ................................................................................................................................ i

Subject Photographs ................................................................................................................... ii

Executive Summary .................................................................................................................... vi

Table of Contents ...................................................................................................................... ix

Introduction ............................................................................................................................... 1

Seniors Housing Industry Overview .............................................................................................. 5

Area Analysis ............................................................................................................................. 2

Neighborhood Analysis .............................................................................................................. 5

Market Analysis ......................................................................................................................... 8

Site Analysis ............................................................................................................................ 33

Improvement Analysis ............................................................................................................... 38

Zoning .................................................................................................................................... 45

Tax and Assessment Data ......................................................................................................... 46

Highest and Best Use ............................................................................................................... 48

Appraisal Methodology ............................................................................................................ 50

Excess Land Value .................................................................................................................... 51

Insurable Value (Replacement Cost) ........................................................................................... 55

Sales Comparison Approach ..................................................................................................... 57

Income Capitalization Approach ............................................................................................... 64

Cost to Achieve Stabilized Operations ....................................................................................... 97

Reconciliation of Value ........................................................................................................... 101

Allocation of the Going Concern ............................................................................................. 102

Assumptions and Limiting Conditions ....................................................................................... 109

Addenda A Comparable Data Sheets B Operating Data C Legal Description D Senior Life Report E Client Contract Information F Appraiser Qualifications G CBRE Specialty Practice Brochure

Introduction

Property Identification

• Community Name: Ventura Hills Senior Living

• Community Use: Assisted Living Residence (ALR)

• Physical Address: 1207 Jackson Keller Road, San Antonio, Bexar County, Texas

Primary Unit of Measure

The breakdown of the subject property as it relates to the set-up of units, beds, and most appropriate

unit of measurement (revenue units) is shown below. Throughout this report, the term “unit” is

intended to represent the “revenue unit” unless otherwise noted.

Units Beds Unit of

Measure Revenue

Units

Assisted Living 80 80 Beds 80 Memory Care 17 17 Beds 17

Total 97 97 97

PRIMARY UNIT OF MEASURE

Ownership and Property History

The following table summarizes the subject’s ownership history.

OWNERSHIP SUMMARY Current Owner: American Eagle Castle Hills LLC Date Purchased: December 20, 2018 Purchase Price: N/Av. - Portfolio Sale, See Comments Legal Reference: 20180248750 Pending Sale: Yes Three-year Ownership Change, Listing, or Offer: See Comments Compiled by CBRE

December 2018 as part of a 17-property portfolio of former Brookdale Senior Living properties. The

purchase price of all 17 assets was reported to be $224,500,000; however, an allocated purchase price to the subject was not available. The subject is the only property in Texas that is owned and

operated by Eagle Senior Living, and has been operated at a loss since the time of sale. As Eagle

Senior Living is a non-profit provider, they have been required by its board to dispose of the subject.

The subject was listed for sale by JLL at $2,750,000, which is the agreed purchase price per the sale agreement dated July 28, 2020 between the buyer, Imagine Senior Living, LLC and the seller, Eagle

Introduction

Senior Living. Given our As Is value conclusion, the purchase price is below market value as the seller

was motivated and in need of selling expeditiously.

We are not aware of any other sales during the prior three years or listing for sales regarding the

subject.

Premise of the Appraisal

The following table illustrates the various dates associated with the valuation of the subject, the

valuation premise(s) and the rights appraised for each premise/date:

PREMISE OF THE APPRAISAL Item Date Interest Appraised

Date of Report: October 2, 2020

Date of Inspection: September 22, 2020

Dates of Value As Is - Going Concern September 22, 2020 Fee Simple Estate

As Stabilized - Going Concern November 22, 2022 Fee Simple Estate

Compiled by CBRE

Purpose of the Appraisal

The purpose of this appraisal is to estimate the market value of the subject property.

Definition of Value

The current economic definition of market value agreed upon by agencies that regulate federal

financial institutions in the U.S. (and used herein) is as follows:

The most probable price which a property should bring in a competitive and open market under all

conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and

assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated; 2. both parties are well informed or well advised, and acting in what they consider their own best

interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements

comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or

creative financing or sales concessions granted by anyone associated with the sale. 3

3 Interagency Appraisal and Evaluation Guidelines; December 10, 2010, Federal Register, Volume 75 Number 237, Page 77472.

Introduction

Intended Use of Report

This appraisal is to be used for a new loan, and no other use is permitted.

Intended User of Report

This appraisal is to be used by The Bank of San Antonio, and no other user may rely on our report unless as specifically indicated in the report.

Intended Users - the intended user is the person (or entity) who the appraiser intends will use the results of the appraisal. The client may provide the appraiser with information about other potential users of the appraisal, but the appraiser ultimately determines who the appropriate users are given the appraisal problem to be solved. Identifying the intended users is necessary so that the appraiser can report the opinions and conclusions developed in the appraisal in a manner that is clear and understandable to the intended users. Parties who receive or might receive a copy of the appraisal are not necessarily intended users. The appraiser’s responsibility is to the intended users identified in the report, not to all readers of the appraisal report. 4

Scope of Work

The scope of the assignment relates to the extent and manner in which research is conducted, data is

gathered and analysis is applied. CBRE, Inc. completed the following steps for this assignment:

• Client • Intended use • Intended user • Type of opinion • Effective date of opinion • Relevant characteristics about the subject • Assignment conditions

Extent to Which the Property was Inspected

In response to the COVID-19 Pandemic, in an effort to protect the resident population within the

subject property, and with the Client permission, the CBRE inspection included an exterior only

physical inspection of the subject property. The interior description of the subject is based on resources

as described within the Improvements Analysis section of this report, and it is considered to provide a description of the subject interior in which to sufficiently provide credible assignment conclusions. The

buyer provided photos of the interior of the subject’s improvements.

This inspection sample was considered an adequate representation of the subject property and is the basis for our findings.

4 Appraisal Institute, The Appraisal of Real Estate, 14th ed. (Chicago: Appraisal Institute, 2013), 50.

Introduction

Type and Extent of the Data Researched

CBRE, Inc. reviewed the micro and macro market environments with respect to physical and economic

factors relevant to the valuation process. This process included interviews with regional and local

market participants, available published data, and other various resources. CBRE, Inc. also conducted regional and local research with respect to the following:

• applicable tax data • zoning requirements • flood zone status • demographics • income and expense data • comparable data

Type and Extent of Analysis Applied

CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal

methodology to arrive at a probable value indication via each applicable approach to value. The

steps required to complete each approach are discussed in the methodology section.

Data Resources Utilized in the Analysis

DATA SOURCES Item Source(s): Site Data

Size: ALTA Survey Improved Data

Gross Size/GBA: Bexar County Appraisal District Total Rev. Units & Mix: Rent Roll Area Breakdown/Use: Floor Plans No. Bldgs.: Site Plan and Physical Inspection Parking Spaces: Site Plan YOC: Bexar County Appraisal District

Economic Data Deferred Maintenance: Provided by Buyer Building Costs: N/A Income Data: Subject Financials and Market Extracted Data Expense Data: Subject Financials and Market Extracted Data

Other Licensure Requirements: ASHA State Regulatory Handbook/ State Regulatory Agency

Compiled by CBRE

Introduction

Seniors Housing Industry Overview

The seniors housing and care industry provides accommodation, an array of services, and healthcare options to the senior population. The level of services and variety of options available to the seniors

housing marketplace continues to evolve as the needs, preferences and demands of seniors and their

families change.

Seniors housing and care properties are divided into four primary categories: independent living ("IL"), assisted living ("AL"), memory care ("MC") and nursing care ("NC"). Seniors housing and care also

include continuing care retirement communities ("CCRCs"), which typically offer all care levels noted

on a single campus.

Property Types by Services Provided

The following classifications have been endorsed by LeadingAge; American Health Care Association

(AHCA); American Seniors Housing Association (ASHA); Argentum; and the National Investment

Center for the Seniors Housing & Care Industry, Inc. (NIC).

Senior Apartments (55+) and Active Adult Communities: Senior apartments or 55+ communities include for-sale single-family homes, townhomes, mobile homes, condominiums, or rental apartments with no specialized services. These properties are restricted to adults at least 55 years of age or older

who generally lead independent lifestyles. These communities may include amenities such as a clubhouse, golf course and recreational spaces. Outdoor maintenance is normally included in the

homeowner’s association or condominium fee. These properties do not have a commercial kitchen and generally do not provide meals or other services to residents.

Active adult communities are multifamily properties catering to the more lifestyle focused senior. Amenities, building design, and services offered are similar to independent living. However, services

are afforded at the request of the resident. While these properties do not have commercial kitchens, they may have the build-out to fit a commercial kitchen. Meals, activities, and transportation are not

included in the monthly rent, but can be arranged through the on-site concierge. Activities of daily living (ADL) services may also be provided through third-party home care providers.

Independent Living Communities (ILC): Independent living communities are typically offered as rental properties that provide residents access to meals and other services such as housekeeping, linen

service, transportation, beauty salon/ barber shop, and social or recreational activities, as part of their monthly fees. Such properties do not provide assistance with ADLs, such as supervision of medication,

bathing, dressing, toileting, etc. Residents of independent units may have some home health care services provided by in-house staff or an outside agency. Licensure requirements typically do not apply.

Assisted Living Residences (ALR): Assisted living residences are state regulated properties that provide similar services and amenities as independent living communities and provide supportive care from

http://www.nic.org/research/classifications.aspx

Introduction

trained employees to residents who are unable to live independently and require assistance with activities of daily living including management of medications, bathing, dressing, toileting, ambulating

and eating. Many assisted living properties include wings or floors dedicated to residents with Alzheimer’s or other forms of dementia.

An assisted living property can also specialize exclusively in memory care. These properties are identified as a memory care residence and have 24-hour support with more structured activities to

ensure safety and quality of life by trained staff members. Most of these living environments are fully secured with locked areas and allow access to outdoor walking paths or gardens. A memory care

residence is a subset of assisted living.

Nursing Care: Nursing care properties are also referred to as skilled nursing facilities (SNF) with the most need driven demand segment. These properties are the most care intensive and highly regulated segment of the seniors housing and healthcare sector. Most individuals require 24-hour nursing and

medical care. In most cases, these properties are licensed for Medicaid and Medicare reimbursement. Nursing care properties fall into two categories; Long Term Care and Post-Acute Care. Medicaid

typically is the largest payor source of long-term care properties while Medicare is the largest payor source for post-acute care properties.

Continuing Care Retirement Community (CCRCs): Continuing care retirement communities (also referred to as life-care communities) provide independent living, assisted living, and skilled nursing

options on a single campus, typically within different buildings. This arrangement allows older adults to remain in the same community with the same provider, even if their future care needs change (age-in-

place). Modern CCRCs tend to target an independent living customer seeking hospitality style amenities and services with the security of knowing that future care needs will be met. Resident

payment plans vary and include entrance fee, condo/coop and rental programs.

Shelter Activities Transport, Laundry

Meals Basic Care Services

ADL Care Services

Specialized MC

Long-Term Chonic Care

55+

Source: NIC Investment Guide

Real Estate Component Services Component

Real Estate Component

Real Estate Component Services Component

Introduction

Asset Components

Seniors housing and care properties are encumbered by businesses that require a specific mix of

tangible and intangible assets to operate effectively. The tangible or real property assets, including the land, improvements, furniture, fixtures and equipment, are obvious components of a seniors housing

and care property. Unlike other forms of income producing commercial real estate, a meaningful

component of value relates to intangible assets. The intangible components are summarized below.

Tangible Assets Intangible Assets

Furniture, Fixtures & Equipment Operating Policies & Procedures

Building Envelope Brand

HVAC & Mechanical Systems Assembled Workforce

Elevator(s) Market Relationships

Land License*

*Federal, state, and local

ASSET COMPONENTS

The seniors housing and care business model is more involved making property operations an essential component of value. This 'active management' component is correctly viewed by the market

as adding incremental risk and complexity versus the conventional commercial real estate asset

classes, which translates into higher return expectations by investors.

Introduction

Exposure/Marketing Time

Appraisal guidelines require a reasonable time-period estimate in which the subject could be brought

to market and sold. This timeframe can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the

underlying premise being the time a property would have been on the market prior to the date of

value, such that it would sell at its appraised value as of the valuation date. On a prospective basis,

the term marketing time is most often used. The marketing time is a function of price, time, and use. It is not an isolated estimate of time alone.

In consideration of these factors, we have analyzed exposure periods for comparable sales included

within the CBRE VIEW database, as well as exposure/ marketing time information via the CBRE, Inc. National Investor Survey. The following table summarizes information derived from these sources.

EXPOSURE/MARKETING TIME INFORMATION

Exposure/Mktg. (Months) Investment Type Range Average

CBRE Seniors Housing & Care

Core Assets 8.0 - 10.0 9.0

Non-Core Assets 10.0 - 15.0 12.0

CBRE Exposure Time Estimate

CBRE Marketing Time Estimate

Source: CBRE Investor Survey

10 to 15 Months

10 Months

As will be discussed within the Market Analysis section, Current Market Conditions - COVID-19 subsection, of this report, the current impact of the COVID-19 is extending marketing efforts. Current

headwinds on marketing of seniors housing assets include limited access community, reducing the

ability for property tours and collection of on-site due diligence. Current sentiment from market participants is that these conditions will extend marketing periods by an estimated 60 to 90 days.

Area & Neighborhood Analysis

Area Analysis

The dynamic nature of economic relationships within a market area has a direct bearing on real

estate values and the long-term quality of a real estate investment. The value of a property is not based on the price paid for it in the past or the cost of its creation, but on what buyers and sellers

perceive it will provide in the future. Consequently, the attitude of the market toward a property within

a specific neighborhood or market area reflects the probable future trend of that area.

Area & Neighborhood Analysis

Regional Overview

POPULATION

The subject is located in the San Antonio-New Braunfels, TX Metropolitan Statistical Area. Key information about the area is provided in the following tables.

The area has a population of 2,570,955 and a median age of 36, with the largest population group in the 20-29 age range and the smallest population in 80+ age range.

Population has increased by 428,447 since 2010, reflecting an annual increase of 1.8%. Population is projected to increase by 217,335 by 2025, reflecting 1.6% annual population growth.

2,142,508 2,570,955

2,788,290

0 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000

2010 2020 2025

POPULATION BY YEAR

100,000

200,000

300,000

400,000

0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80+

AREA POPULATION BY AGE

Source: Esri

Area & Neighborhood Analysis

INCOME

EDUCATION

EMPLOYMENT

The area includes a total of 1,140,347 employees and has a 9.7% unemployment rate. The top three industries within the area are Health Care/Social Assistance, Retail Trade and Educational Services, which represent a combined total of 35% of the population.

The area features an average household income of $80,440 and a median household income of $57,259. Over the next five years, median household income is expected to increase by 6.3%, or $723 per annum.

A total of 29.3% of individuals over the age of 24 have a college degree, with 18.5% holding a bachelor's degree and 10.8% holding a graduate degree.

$57,259

$60,874

$55,000 $56,000 $57,000 $58,000 $59,000 $60,000 $61,000 $62,000

2020 2025

MEDIAN INCOME BY YEAR

18.5%

10.8%

70.7%

POPULATION BY DEGREE

Bachelor's Degree

Graduate Degree

Other

0% 2% 4% 6% 8% 10% 12% 14% 16%

Other Services (excl Publ Adm)

Public Administration

Manufacturing

Finance/Insurance

Prof/Scientific/Tech Services

Accommodation/Food Services

Construction

Educational Services

Retail Trade

Health Care/Social Assistance

Source: Esri

Area & Neighborhood Analysis

Neighborhood Analysis

Location

The subject is located within the Castle Hills area of San Antonio and is considered a suburban location. Although the subject is located within the city of Castle Hills, a city entirely surrounded by

San Antonio, the subject has a San Antonio address. Specifically, the subject site is located along the

north side of Jackson Keller Road between Herwick Drive and Palm Circle.

Boundaries

The neighborhood boundaries are detailed as follows:

North: Interstate Highway 410 South: Basse Road East: McCollough Avenue West: West Avenue

Area & Neighborhood Analysis

Land Use & Growth Patterns

Immediate uses surrounding the subject are primarily residential uses along secondary roadways with

pockets of commercial development along primary roadways. The Castle Hills area is a mature neighborhood located within north-central San Antonio and has limited areas of vacant land. The

majority of the development with the neighborhood is 20+ years old with mostly single-family

residential neighborhoods to the north and south of the subject. Most of the commercial development

in the neighborhood is located along Jackson Keller Road, West Road, and Basse Road. There are several large-scale multifamily apartment complexes proximate to the subject along Jackson Keller

Road, with retail development located to the north near Interstate Highway 410. In addition, the LEE

high school campus is located just west of the subject.

Proximity to Healthcare Providers

The following table summarizes the area hospitals and their respective distance from the subject:

Hospital Miles From

Subject Beds

Texsan Heart Hospital 2.40 45 Kindred Hospital-San Antonio 2.95 53 Methodist Hospital 3.74 602 Methodist Children's Hospital 3.74 150 Texas Specialty Hospital 3.84 66 St Luke's Baptist Hospital 3.92 269

Source: U.S. Hospital Finder

HOSPITAL SUMMARY

Access

Primary neighborhood access is provided as follows:

Collector Streets: Herwick Drive Arterial Roadways: Jackson Keller Road, Blanco Road, West Avenue Interstates/Highways: Interstate Highway 410, US Highway 281 Other: VIA, San Antonio International Airport

Area & Neighborhood Analysis

Demographics

Selected neighborhood demographics are shown in the following table:

SELECTED NEIGHBORHOOD DEMOGRAPHICS

Ventura Hills Senior Living 1207 Jackson Keller Road

Population 2025 Total Population 59,466 225,212 503,297 2020 Total Population 58,621 219,805 486,369 2010 Total Population 57,755 213,160 461,240 2000 Total Population 57,245 212,886 456,965 Annual Growth 2020 - 2025 0.29% 0.49% 0.69% Annual Growth 2010 - 2020 0.15% 0.31% 0.53% Annual Growth 2000 - 2010 0.09% 0.01% 0.09%

Households 2025 Total Households 22,340 92,957 204,924 2020 Total Households 22,057 90,681 197,274 2010 Total Households 21,881 88,080 186,198 2000 Total Households 22,452 88,017 180,991 Annual Growth 2020 - 2025 0.26% 0.50% 0.76% Annual Growth 2010 - 2020 0.08% 0.29% 0.58% Annual Growth 2000 - 2010 -0.26% 0.01% 0.28%

Income 2020 Median Household Income $42,947 $44,006 $44,490 2020 Average Household Income $58,515 $68,094 $67,627 2020 Per Capita Income $21,959 $28,334 $27,702

2020 Pop 25+ College Graduates 8,553 48,437 108,312 Age 25+ Percent College Graduates - 2020 21.8% 32.5% 33.0%

Source: CBRE Fast Reports & ESRI

2 Miles 4 Miles 6 Miles

Area & Neighborhood Conclusion

The immediate neighborhood is supportive of the subject’s use as seniors housing. The neighborhood

contains healthcare providers that are supportive of the subject. Access to area highways, employment

centers, and shopping is good. Development has not been occurring within the subject’s neighborhood, as the neighborhood is generally fully developed. Any recent development would be

infill. The neighborhood is in a stage of balance having a favorable impact on the subject property.

Market Analysis

The market analysis forms a basis for assessing market area boundaries, supply and demand factors, and indications of financial feasibility. Primary data sources utilized for this analysis include National

Investment Center for The Seniors Housing & Care Industry (NIC), American Seniors Housing

Association (ASHA), and CBRE primary research. In analyzing the subject’s market as well as the

overall supply and demand fundamentals that impact the subject’s occupancy, the following steps have been taken:

• Seniors Housing Market Overview • Analyse Market and Submarket Trends • Delineate and Analyse the Subject’s Primary Market Area • Conduct a Penetration Analysis • Conclusion

The subject is considered a Class C investment, Assisted Living Residence as defined earlier in this report.

Seniors Housing Market Overview

The following discussion illustrates some general observations regarding the overall fundamentals of

the subject’s property type within the seniors housing sector. NIC MAP serves as a primary resource to

lenders, investors, developers and operators of seniors housing and care properties. NIC MAP reports industry specific data for 100+ metro markets in the continental United States.

This data is tracked and reported by “Primary” and “Secondary” Metro Market averages, and by

individual markets. Key metrics and property information as tracked by NIC, and summarized below:

Care Level Aggregate Majority IL Majority AL Majority NC

Occupancy 84.9% 87.4% 82.1% 80.2%

Annual Rent Growth 2.1% 2.1% 2.0% 2.4%

Quarterly Absorption -15,078 -7,129 -7,939 -37,403

Quarterly Inventory Growth 3,389 1,197 2,192 -78

Units/Beds Under Construction 40,150 19,587 20,563 2,681

Construction vs. Inventory 6.2% 5.8% 6.6% 0.5%

Inventory 648,358 337,927 310,431 576,393

Care Level Aggregate Majority IL Majority AL Majority NC

Property Count 5,102 1,433 3,669 4,094

Inventory By Care Segment 648,358 337,927 310,431 576,393

Independent Living Units 266,898 248,876 18,022 11,165

Assisted Living Units 251,010 43,398 207,612 18,445

Memory Care Units 89,540 12,396 77,144 3,790

Nursing Care Beds 40,910 33,257 7,653 542,993

Source: NIC MAP® Data Service, Q2 2020

SENIORS HOUSING KEY METRICS Q2 2020

SENIORS HOUSING PROPERTIES BY CARE TYPE

http://www.nic.org/overview/default.aspx

Market Analysis

National Seniors Housing Overview

“The effects of the COVID-19 pandemic on the seniors housing sector fully appeared in second

quarter data. Indeed, seniors housing occupancy fell to an all-time low of 84.9% in the second

quarter of 2020, a decrease of 280 basis points from the first quarter and from a year ago. As of the second quarter, occupancy was 530 basis points below its most recent peak of 90.2% in the fourth

quarter of 2014.

SENIORS HOUSING SUPPLY-DEMAND TRENDS

Net absorption was negative in the second quarter of 2020 due to a near-halt by many operators on accepting new residents and as the pace of move-outs accelerated for some operators due to the

need for higher care or possibly death. The number of occupied units decreased by 15,078, which

represented an absorption rate of -2.7% during the quarter, down 330 basis points from the prior quarter’s pace. Annual absorption was -0.5%, down 350 basis points from the prior quarter’s pace

and from a year ago.

The pace of inventory growth slowed during the second quarter increased by 3,389 units, which

represented a quarterly growth rate of 0.5%, down 40 basis points from the prior quarter and down 50 basis points from a year ago. Inventory increased by 2.8% in the past year, down 50 basis points

from the prior quarter and down 40 basis points from a year ago.

Overall construction activity was down during the second quarter of 2020. During the quarter, there were 40,150 units under construction, down 5.6% from the prior quarter. Construction represented

6.2% of existing inventory, down 40 basis points from the prior quarter.

The pace of annual rent growth decelerated during the second quarter of 2020. During the second

quarter, annual rent growth was 2.1%, down 50 basis points from the prior quarter and down 100 basis points from a year ago. The average asking rent for seniors housing was $4,308 as of the

second quarter.”5

5 NIC MAP® Data Service, Q2 2020

Market Analysis

National Assisted Living Overview

“Assisted living occupancy decreased 320 basis points from the first quarter of 2020 to a time-series

low of 82.1% in the second quarter. Occupancy is now 680 basis points below its recent high of

88.9% reached during the fourth quarter of 2014. The fall back in occupancy was largely due to the COVID-19 pandemic as operators intentionally stopped move-ins to control the spread of the virus

and move-outs accelerated.

MAJORITY ASSISTED LIVING SUPPLY-DEMAND TRENDS

Absorption was negative in the second quarter of 2020. The number of occupied units decreased by 7,939 units, which represented an absorption rate of -3.0% during the quarter, down 360 basis points

from the prior quarter’s pace and down 410 basis points from a year ago. Annual absorption was -

0.2%, down 420 basis points from the prior quarter and down 440 basis points from a year ago.

The pace of inventory growth slowed during the second quarter of 2020. Inventory grew by 2,192 units, which represented a quarterly growth rate of 0.7%, down 30 basis points from the prior quarter.

Inventory increased by 3.3% in the past year, down 40 basis points from the prior quarter and down

110 basis points from a year ago.

Construction activity was down during the second quarter of 2020. In the second quarter, there were

20,563 units under construction, down 7.2% from the prior quarter. Construction represented 6.6% of

existing inventory, down 60 basis points from the prior quarter.

The pace of annual rent growth slowed during the second quarter of 2020. During the second quarter, annual rent growth was 2.0%, down 60 basis points from the prior quarter and down 50

basis points from a year ago. The average asking rent for assisted living was $5,263 as of the second

quarter.”6

6 NIC MAP® Data Service, Q2 2020

Market Analysis

National Owners & Operators

Beyond offering residential space to the tenants of a seniors housing and care property (the "real

estate component"), the seniors housing landlord typically provides its residents an integrated service offering to address the varied needs of the property's population of seniors (the "services component").

The implementation and management of these services correlates directly to the underlying value of

the real estate. The top ten seniors housing owners and management are summarized as follows:

Rank Company Headquarters Properties Units 1 Brookdale Senior Living Brentwood, TN 786 65,864

2 Welltower, Inc. Toledo, OH 645 65,141

3 Ventas, Inc. Chicago, IL 673 58,080

4 Boston Capital Boston, MA 431 32,985

5 HCP Inc. Irvine, CA 281 31,911

6 Senior Housing Property Trust Newton, MA 274 31,840

7 Colony Capital Los Angeles, CA 224 19,621

8 New Senior Investment Group New York, NY 133 15,513

9 The Evangelical Lutheran Sioux Falls, SD 81 13,927

10 Senior Lifestyle Chicago, IL 143 13,718

Source: American Seniors Housing Association

TOP 10 SENIORS HOUSING OWNERS

Rank Company Headquarters Properties Units 1 Brookdale Senior Living Brentwood, TN 994 96,026

2 LCS Des Moines, IA 130 33,883

3 Holiday Retirement Winter Park, FL 263 31,862

4 Five Star Senior Living, Inc. Newton, MA 252 29,185

5 Sunrise Senior Living, Inc. McLean, VA 260 26,982

6 Erickson Living Catonsville, MD 19 22,726

7 Atria Senior Living, Inc. Louisville, KY 179 21,512

8 Senior Lifestyle Chicago, IL 195 19,949

9 Capital Senior Living Corp. Dallas, TX 129 16,523

10 The Evangelical Lutheran Sioux Falls, SD 81 13,927

Source: American Seniors Housing Association

TOP 10 SENIORS HOUSING OPERATORS

Demand Influences

Demand for seniors housing is primarily driven by people over the age 75. As of 2010, approximately 5% of the US population, or roughly 19.0 million individuals, were aged 75 years or older. The

percentage of seniors in this age group will continue to grow at a steady pace though 2020, at which

point, the percentage of seniors in the age group is projected to grow at a much more significant rate

due to the aging of the baby boomers. According to projections provided by the United States Census Bureau, the population age 65 and older is expected to more than double between 2012 and 2060.

Market Analysis

10%

12%

14%

1980A 1990A 2000A 2010A 2015F 2020F 2025F 2030F 2035F 2040F 2045F 2050F 2055F 2060F

% o

f To ta

l Po p

u la

tio n

7 5

+ P

o p

u la

tio n

( M

ill io

n s)

Population 75+ % of Total Population

Baby boomers are defined as persons born between 1946 and 1964. As of 2012, this generation

accounted for approximate 76.4 million people, or about one-quarter of the U.S. population. The baby boomers began turning 65 in 2011. By 2029, the remainder will reach age 65 accounting for

more than 20 percent of the U.S. population.

40.3 56.4

74.1 82.3 88.0

98.2

5.5 6.7 9.1 14.6 19.0 19.7

100

120

2010A 2020F 2030F 2040F 2050F 2060F

Po p

u la

tio n

( M

ill io

n s)

Population 65+ Population 85+

By 2050, the 65-plus age group is estimated to equal 88.0 million, nearly double its current

population (48.6 million). The projected growth in this age group will present many challenges to policy makers and programs by having a significant impact on families, businesses, healthcare

providers and, most notably, the demand for senior housing.

National Capitalization Rate Trends

For H1 2020, the CBRE Valuation & Advisory Seniors Housing and Healthcare practice group

published the eighth edition of the U.S. Seniors Housing & Care Investor Survey. Since first publication in 2014, the CBRE Seniors Housing & Care Investor Survey methodology has been consistent,

resulting in a long legacy of data continuity.

Notably, this survey was conducted through February 2020, just before the economy was impacted by the COVID-19 pandemic. At the time, survey respondents had only a limited perception of the

potential adverse impact of the pandemic; COVID-19 will be more fully addressed later in this Market

Analysis section. Nevertheless, the results of this survey provide a solid benchmark of investor

Market Analysis

sentiment just before the COVID-19 outbreak in the U.S. The historical capitalization rate trends per

this survey are shown within the following graphs.

HISTORICAL CAPITALIZATION RATE TRENDS

Capitalization rates for all segments of the seniors housing industry have compressed since H1 2014.

Assisted living had the most significant change of nearly 1 percentage point (86 bps). Cap rates for

continuing care retirement/life plan communities (CCRC/LPCs) fell by 73 bps, while those for

independent living fell by 60 bps and for memory care by 56 bps. Skilled nursing capitalization rates had the flattest trendline, with compression of only 23 bps over the reporting periods.

Historical data reflected generally downward movement through H2 2017, with a short-lived uptick in

H1 2018 and H1 2019. The H1 2020 survey reflects a reversal and an across-the-board compression.

Market Analysis

Capitalization Rate & Price Per Unit Trends

Historically, capitalization rates for seniors housing properties have fallen above multifamily assets, all

else being equal, accounting for significant operational differences. In recent periods, seniors housing

transactions continue to maintain a considerable spread above traditional multifamily capitalization rates. As of Q1 2020, capitalization rate indications show a spread of 66 bps during the trailing four

quarterly periods, and 39 bps during the most recent quarter.

CAPITALIZATION RATE AND PRICING TRENDS

Source: NIC and RCA Data Compiled by CBRE

Market Analysis

Current Market Condition Considerations – COVID Impact

As discussed, the outbreak of the Novel Coronavirus (COVID-19/COVID), declared by the World

Health Organization as a “Global Pandemic” on March 11, 2020, is causing heightened uncertainty in both local and global market conditions. This pandemic has caused fluidity in the seniors housing

market conditions and resulted in reduced current, empirical market data as to potential impacts to

the seniors housing industry.

National Occupancy Trends - COVID Impact

A primary impact of COVID-19 within the seniors housing industry has been on occupancy levels. As of Q2 2020, the NIC released the updated occupancy trends for each care level. On a national

basis, this data shows downward trending median occupancy levels for each care type, at -150 bps

for IL, -300 bps for AL, -250 bps for MC, and -670 bps for SNF (NC).

SENIORS HOUSING & CARE MEDIAN OCCUPANCY TRENDS

Source: NIC MAP Q2 2020

82%

83%

84%

85%

86%

87%

88%

89%

90%

91%

92%

93%

94%

95%

96%

Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020

Independent Living Assisted Living Memory Care Skilled Nursing

I L -150 bps

AL -3 00 bps

MC -250 bps

N C -670 bps

While the overall national occupancy trends show significant declines, reductions in census levels have

fluctuated significantly by location, including regional geography and pockets considered as ‘COVID- 19 Hotspots’ as well as operator response to COVID-19 on the community level.

For further occupancy trends since March 2020, NIC reports a majority of occupancy decline was

reported to have occurred in April 2020, with reducing rates of census attrition during May and June.

The chart on the following page includes reported ‘re-absorption’ in seniors housing communities by

Market Analysis

level of care. As shown, the trough in positive occupancy rate trends was mostly between late April

and early May 2020, with significant improvements in reported census re-absorption accelerating in June 2020. These increases occupancy continued into August 2020 for both assisted living and

skilled nursing. However, during the August 2020 reporting period, respondents reported somewhat

of a deceleration in the re-absorption of independent living and memory care communities. Impacts

of COVID-19 on the subject’s local and regional level are discussed within the ‘Market Occupancy’ subsection of this report.

Source: NIC Executive Survey Insights

Current Occupancy Levels vs. One Month Prior (Month Over Month)

SHARE OF ORGANIZATIONS REPORTING INCREASED OCCUPANCY RATES

10%

15%

20%

25%

30%

35%

40%

Market Summary - COVID Impact

Throughout this ongoing pandemic, the CBRE U.S. Seniors Housing valuation practice group has

been in continuous contact with numerous market participants, working to discern any perceived

and/or quantifiable impact of COVID-19 on the seniors housing market, in real-time. Our discussions

include potential near-, mid-, and long-term influences on seniors housing community operations, capital markets, and investor sentiment. These discussions consist of a broad range of market

participants active in seniors housing, inclusive of capital markets, private capital investors,

institutional fund managers, developers, community operators, and brokers. The following bullets summarize the market discussions:

• Market participants on the investment side do not expect the economic recession to persist. They opine marginal decreases in values on a quarter-over-quarter basis could be possible but expect this to be a short-term adjustment.

Market Analysis

• Equity funds have record-levels of committed capital that must be deployed in the near term; however, they are in a ‘wait-and-see’ mode, assessing investment opportunities.

• Current market activity is showing capitalization rate fluctuations mostly range from 0 to 50 bps over pre-COVID levels for stabilized/near-stabilized communities.

• Capital markets have sizable liquidity and historically low interest rates; however, deployment of capital is somewhat constrained given the continually changing market landscape.

• Challenges in completing due diligence have continued to impact capital markets, lenders, and investors.

• Brokers indicate investors are starting to come back into the market and are getting a comfort level with virtual due diligence, although at a tepid pace.

• Brokers report that, while buyers show continued demand, access to properties has been limited to protect residents from potential spreading of COVID-19, marketing of communities will likely be extended, mostly estimated in the 60 to 90 day range. Both the buy and sell side

believe this will be short-lived and they can wait it out.

• Operators that closed community access, permitting only essential services to enter, have started to open to prospective residents in many cases. The impact of community closers

adversely impacted community census levels on aggregate.

• For skilled nursing, operators have provided somewhat mixed reports as to census; non- essential operations at hospitals have started in select locations, and these hospital discharges

have started to positively impact skilled nursing census levels.

• While cases of COVID-19 have been reported in seniors housing communities, barrowing a few exceptions, operators report quarantine efforts have been effective, with limited

advancement to the remaining resident population.

• Developers are currently planning to move forward on their projects that are ready to break ground, in most scenarios. However, there could be near term disruptions in supply chains

and construction starts could be delayed due to shelter-in-place restrictions, requiring an adjustment to budgets in next 60 days as the impact from those factors comes into focus.

• Construction lending is difficult under the current conditions. It should be noted that construction lenders are actively assessing risk for the property type on a daily basis as market data becomes available.

Overall, market participants suggest that markets are incorporating consideration for COVID-19,

working to assess potential impact on the seniors housing sector. While a majority of market participants indicated that they do not expect significant price adjustments in the near term, the

consensus is that it is too early to quantifiably opine as the impact of this pandemic. Again, please

note that these statements are as of the date of the effective date of this report; however, given the

recent rate of change in market conditions, these comments are subject to change in the near term.

Market Analysis

Submarket Trends

The National Investment Center for the Seniors Housing and Care Industry (NIC) tracks and reports

various operational and statistical data through their NIC MAP database. NIC MAP covers 140 Metropolitan Areas across the United States with the San Antonio, TX Metro being the most

comparable to the subject’s market. Performance trends and attributes of the subject’s metro market

are summarized as follows:

Period #

Properties # Rev. Units

All Properties Stabilized Absorption

Inventory Growth

# Properties

# Rev. Units

YoY Rent Growth

4Q2009 30 1,960 91.60% 91.60% -0.50% 0 0 0 0.40% 4Q2010 30 1,959 90.00% 90.00% -1.80% 0 1 32 0.30% 4Q2011 30 1,959 90.20% 90.20% 0.20% 0 1 32 2.70% 4Q2012 32 2,016 87.30% 88.20% -0.40% 17 3 179 4.20% 1Q2013 32 2,015 88.60% 89.20% 1.80% -1 4 195 4.10% 2Q2013 32 2,015 87.80% 88.10% 0.50% 0 6 311 3.80% 3Q2013 32 2,014 89.10% 89.10% 0.40% -1 6 311 4.70% 4Q2013 34 2,130 87.40% 90.30% 5.80% 116 4 192 3.10% 1Q2014 35 2,149 86.30% 89.30% 3.80% 19 3 176 3.10% 2Q2014 37 2,257 83.40% 89.60% 6.40% 108 3 207 1.10% 3Q2014 37 2,257 83.10% 88.60% 4.50% 0 5 325 0.30% 4Q2014 37 2,260 82.60% 87.40% 0.20% 3 7 466 1.50% 1Q2015 37 2,252 81.90% 85.80% -0.60% -8 8 526 1.20% 2Q2015 38 2,273 80.20% 84.70% -3.10% 21 10 639 2.40% 3Q2015 38 2,274 81.10% 84.60% -1.70% 1 12 786 -1.30% 4Q2015 41 2,516 75.60% 85.40% 2.00% 242 10 629 -0.50% 1Q2016 44 2,680 72.90% 84.20% 5.90% 164 7 465 1.70% 2Q2016 45 2,743 72.90% 80.90% 9.60% 63 7 440 1.40% 3Q2016 45 2,743 74.60% 80.60% 11.00% 0 8 456 2.90% 4Q2016 49 3,009 70.30% 81.40% 11.20% 266 5 202 1.90% 1Q2017 49 3,009 71.80% 81.10% 10.70% 0 5 202 -1.30% 2Q2017 49 3,025 72.50% 79.00% 9.70% 16 4 186 0.50% 3Q2017 51 3,164 71.00% 78.70% 9.70% 139 2 47 0.60% 4Q2017 51 3,164 73.10% 77.80% 9.40% 0 2 47 0.20% 1Q2018 52 3,211 73.30% 77.90% 8.90% 47 0 0 1.80% 2Q2018 52 3,211 74.40% 78.60% 8.90% 0 0 0 1.70% 3Q2018 52 3,211 74.70% 76.70% 6.90% 0 0 0 5.70% 4Q2018 52 3,211 75.50% 76.00% 4.80% 0 0 0 6.70% 1Q2019 52 3,211 76.10% 76.40% 3.80% 0 0 0 6.30% 2Q2019 52 3,212 77.40% 77.70% 4.20% 1 0 0 4.00% 3Q2019 52 3,211 79.80% 79.80% 6.80% -1 0 0 2.20% 4Q2019 52 3,188 79.50% 79.50% 4.60% -23 2 136 3.00% 1Q2020 52 3,256 79.10% 79.10% 5.40% 68 3 152 -1.90% 2Q2020 52 3,199 76.50% 76.50% -1.70% -57 3 152 0.80%

Source: NIC MAP; Majority AL, for San Antonio, TX

ASSISTED LIVING METRO TRENDS

Market Analysis

Primary Market Area Performance Summary

The first step in analyzing the competitive market for the subject is delineating the subject’s primary

market area (PMA). A PMA can be defined by a radius, node(s), submarket(s), zip code(s), county(s) or township(s), or any variety of such defining terms. This cohort represents where approximately 70% to

80% of the residents currently occupying the subject resided prior to moving in to the subject property.

Based on discussions with property management as well as marketing directors at comparable

properties to the subject, the subject’s primary market area is outlined in the following map.

CBRE researched all current and proposed supply within the subject’s primary market area.

Comparables 1 through 5 were profiled as rent comparables and are included in the competitive supply. Comparable 6 was not profiled as a rent comparable, but is located within the PMA and has

been included in the competitive supply.

Market Analysis

Future Supply

Future supply is one of the greatest potential impacts on a market’s balance. Hence, any properties

under construction or proposed for construction within the subject’s PMA must be identified. To do so,

data obtained by CBRE Econometric Advisers (Pipeline Reports) was researched and inquiries to local planning and zoning approval offices were conducted. There are no proposed assisted living

communities within the PMA.

Direct Competitors

In addition to the above PMA analysis, the following comparable properties have been surveyed to

identify the occupancy and rental trends within the subject’s immediate market area. Only properties offering similar services were identified as direct competition to the subject. Note communities within

as well as surrounding the subject PMA were considered, with the most comparable properties

included; these comparables will be further discussed within the Income Capitalization Approach section of this report. The comparable data is summarized in the following table:

SUMMARY OF COMPARABLE COMMUNITY RENTALS

Comp. No. Name

Occupancy Trends

Miles from Subject Base Rate AL Base Rate MC

1 The Forum at Lincoln Heights Stable 2.4 $4,299 - $5,195 $5,626 2 Brookdale Alamo Heights Stable 2.5 $2,295 - $4,100 3 Franklin Park - Alamo Heights Stable 2.5 $3,625 - $4,995 $5,995 - $6,195 4 Adante Senior Living Stable 3.0 $3,850 - $4,950 $5,400 5 The Village at Incarnate Word Stable 3.7 $3,205 - $5,211 $4,422 - $6,207

Subject $2,595 - $3,095 $4,150 - $5,150

Source: CBRE VIEW Database

Market Analysis

Subject’s Market Trends

Submarket Summary

The following table summarizes key market statistics identified by CBRE for the subject’s PMA, NIC

MAP metro market, and NIC MAP Primary or Secondary market average.

SENIORS HOUSING MARKET STATISTICS Category Subject's PMA San Antonio, TX MAP Primary Assisted Living

Average Occupancy 83.0% 76.5% 85.3%

Average Monthly Rent $4,723 $4,125 $5,364

Property Count 7 52 4,389

Inventory (Rev. Units) 551 3,199 269,455

Construction (Rev. Units) 0 152 17,229

Construction vs. Inventory 0.00% 4.80% 8.60%

Penetration 5.06% 4.20% 4.50%

Source: NIC MAP

Penetration Analysis

A penetration analysis can be performed to determine the overall market depth, as well as the

potential impact of any future supply within the subject’s defined market area. Penetration is defined

as the competitive inventory (including the subject) divided by the number of age-qualified households. There are several methodologies in calculating penetration. Though somewhat simplistic,

this method is the most widely recognized respective to the subject’s property type. Most importantly, it

represents the methodology employed by the National Investment Center for the Seniors Housing & Care Industry, therefore allowing for accurate benchmarking against other markets.

This analysis begins by identifying current and proposed competitive supply within the subject’s defined

PMA. The supply estimate is then applied to demand generators relative to the age qualified

demographics of the PMA.

Market Analysis

Supply

The following table summarizes all competitive and proposed properties located within the subject’s

PMA:

Property AL MC AL MC Subject 80 17 80 17 The Forum at Lincoln Heights * 30 28 30 28 Brookdale Alamo Heights * 96 - 96 - Franklin Park - Alamo Heights * 64 40 64 40 Adante Senior Living * 60 20 60 20 The Village at Incarnate Word * 50 24 50 24 The Meadows Assisted Living 42 42 - Total Supply 422 129 422 129 * Property utilized as a rent comparable.

Source: CBRE VIEW Database

20252020

COMPETITIVE SUPPLY SUMMARY

Barriers to Entry

Interest rates and other financing terms remain very attractive with construction levels at all-time highs.

Increased construction costs and declining occupancy levels has caused developers to take pause.

Nevertheless, all-in development costs remain well below acquisition costs of an existing property.

Hence, new development remains an attractive and feasible option for investors.

Investors and underwriters are aware of the potential for overbuilding. Underwriting requirements and

levels of due diligence are increasing. Most lenders and investors are requiring extensive market

research and a successful track record of developing and-or operating seniors housing properties to move forward.

Licensure requirements relative to the subject’s property type are present in Texas. As further detailed

later in this report, there is no moratorium on new licensure. Only the operational and staffing

requirements must be met for a property to be granted a license to operate. The availability of land for development is also limited within the subject’s general location, further restricting new development.

Market Analysis

Market Occupancy

Occupancy trends for the subject’s MSA as well as the NIC MAP Primary and Secondary Metro

Markets have been summarized. To best understand market performance within the subject’s PMA, current occupancy for all competing properties have been gathered.

Property AL MC Subject 45% 82% The Forum at Lincoln Heights 80% 79% Brookdale Alamo Heights 82% Franklin Park - Alamo Heights 91% 100% Adante Senior Living 100% 95% The Village at Incarnate Word 98% 96% The Meadows Assisted Living 80% Estimated Occupied Supply 340 118 Average Occupancy 80.5% 91.5% Avg. for Stabilized Properties 88.8% 92.9%

Source: CBRE VIEW Database

COMPETITIVE OCCUPANCY SUMMARY

Demand Analysis

Demand for seniors housing and care properties can be clearly defined by specific age cohorts,

healthcare requirements, and income levels. Future demand can be estimated by understanding

population shifts or trends relative to this defined population segment.

This section of the market analysis begins by identifying the age-qualified segment of the population.

Various methodologies suggest that consideration should be given to the “adult child” influence,

which typically result in an in-migration to the PMA as the adult child will typically bring their respective parent to a property close to their home. However, in accounting for an “adult child”

factor, out-migration must also be considered for similar reasoning.

Considering that various markets can behave differently based on locational attributes, climates, local

economies, and overall population behaviors, this analysis assumes that the typical in-migration will net out the typical out-migration. This also allows for accurate benchmarking in comparing the

subject’s market to the various data-points presented.

Population by Age Cohorts

According to the National Study of Long Term Care Providers published by the Centers for Disease

Control and Prevention (CDC) and National Center for Health Statistics (NCHS), conducted in 2016 and published February 2018, the average age of residents living in residential care communities (IL,

AL, MC) is 86.9 years. The following table illustrates the population and projected household changes

for the subject’s primary market area.

Market Analysis

SENIOR POPULATION BY AGE Ventura Hills Senior Living 1207 Jackson Keller Road 2020 Population

Total Population 58,621 219,805 486,369 Age 65 - 74 5,124 19,773 42,924 Age 75 - 84 2,955 11,096 23,295 Age 85+ 1,516 6,129 12,025

2025 Population Total Population 59,466 225,212 503,297 Age 65 - 74 5,729 21,696 47,330 Age 75 - 84 3,497 13,708 29,361 Age 85+ 1,543 6,372 12,710

% Change Total Population 1.44% 2.46% 3.48% Age 65 - 74 11.81% 9.73% 10.26% Age 75 - 84 18.34% 23.54% 26.04% Age 85+ 1.78% 3.96% 5.70%

Source: CBRE Fast Reports & ESRI

2 Miles 4 Miles 6 Miles

Considering 85+ is the average resident population age at senior living communities, it can be

assumed that residents enter these communities at earlier ages as well as later ages. Therefore, this

analysis considers the 75 to 84 and the 85+ age cohort as age-qualified demand.

Income Distributions

Income available for expenditure on housing and other consumer items is a primary factor in determining income qualified demand. The following table illustrates estimated household income

distributions for the subject’s primary market area.

Market Analysis

ESTIMATED HOUSEHOLD INCOME BY AGE

2020 Households 65-74 Years 75 - 84 Years 85+ Years - Income Less than $15,000 1,961 1,311 724 - Income $15,000 to $24,999 1,528 1,358 750 - Income $25,000 to $34,999 1,446 949 524 - Income $35,000 to $49,999 2,172 1,153 637 - Income $50,000 to $74,999 2,170 966 533 - Income $75,000 to $99,999 1,232 453 250 - Income $100,000 to $149,999 1,026 417 231 - Income $150,000 to $199,999 376 193 107 - Income $200,000 and Over 535 209 116

Total Households 12,447 7,009 3,872 Average Household Income $65,739 $54,130 n/a Median Household Income $42,603 $33,469 n/a Estimated Average Housing Value $276,923 $276,923 $276,923

2025 Households 65-74 Years 75 - 84 Years 85+ Years

- Income Less than $15,000 2,019 1,617 752 - Income $15,000 to $24,999 1,530 1,565 727 - Income $25,000 to $34,999 1,536 1,137 529 - Income $35,000 to $49,999 2,294 1,390 646 - Income $50,000 to $74,999 2,502 1,225 570 - Income $75,000 to $99,999 1,394 591 275 - Income $100,000 to $149,999 1,139 548 255 - Income $150,000 to $199,999 408 248 115 - Income $200,000 and Over 618 275 128

Total Households 13,439 8,597 3,996 Average Household Income $70,519 $58,128 n/a Median Household Income $44,582 $34,758 n/a Estimated Average Housing Value $304,998 $304,998 $304,998

Source: CBRE Fast Reports & ESRI

The immediate area surrounding the subject is projected to experience growth relative to households,

population, and income levels over the next five-year period. Foregoing any changes in competitive supply, these trends do indicate a favorable demand outlook.

Market Analysis

Penetration Analysis Conclusion

Applying the competitive supply indications to the total demand indications yields the following

penetrations rates:

2020 2025 Assisted Living Age Qualified Households (75+) 10,881 12,593 Total Supply 551 551 Indicated Penetration Rate: 5.06% 4.38%

Compiled by CBRE

MARKET PENETRATION

Penetration rates alone can have multiple meanings. To properly understand market penetration, market occupancy must also be considered. The various market types are summarized as follows:

• Low Penetration/ High Occupancy: This combination is the most favorable. The high occupancy indicates that the local population is accepting the subject’s product type with significant room for expansion. This combination also suggests a higher than typical ratio of residents emanating from outside the defined PMA, or above market net in-migration. This market suggests strong occupancy, stable rent growth, and healthy absorption for proposed properties.

• Low Penetration/ Low Occupancy: Age and income qualified seniors are either not accepting the property type or are traveling outside the defined PMA to obtain their respective needs, due to unsatisfactory product within the PMA. This combination suggests that market opportunity does exist, but will likely require additional marketing efforts to achieve a favorable stabilized occupancy level.

• High Penetration/ High Occupancy: While this combination can indicate a competitive market, it

does presume that the local population is well educated with the property type and generally receptive to the services provided. Markets displaying this combination require less marketing efforts in terms of product education, but may require more resources from a competitive market position standpoint, such as superior quality or affordable rents.

• High Penetration/ Low Occupancy: This combination is the least favorable and most likely depicts

a saturated market. Decreasing rental rates, prevalence of concessions, and less than favorable occupancy can be expected when this combination is displayed.

The subject’s primary market area is defined by comparing the PMA occupancy and penetration metrics to the respective NIC MAP market metrics as summarized below.

Market Analysis

Property Type Penetration Occupancy Penetration Occupancy Penetration Occupancy Assisted Living 4.2% 76.5% 5.1% 83.0% High High

Assisted Living 4.2% 76.5% 4.4% 83.0% High High

Source: Compiled from Various Sources

PENETRATION ANALYSIS CONCLUSION

Future Market Rating (Five Years)

Current Market Rating NIC MSA Subject PMA CBRE Market Rating

Market Analysis Conclusion

To determine market demand, CBRE employed a penetration analysis. These conclusions are further

supported by discussions with local marketing directors at comparable properties within and around

the subject’s defined market area.

Assisted Living Penetration

The independent living penetration analysis yields high penetration with high market occupancy

indicating a balanced market. While this combination can indicate a competitive market, it does

presume that the local population is well educated with the property type and generally receptive to

the services provided. Markets displaying this combination require less marketing efforts in terms of product education, but may require more resources from a competitive market position standpoint,

such as superior quality or affordable rents. Penetration is expected to decrease over the next five

years, indicating demand is anticipated to outpace competitive supply. Hence, occupancy and-or rental rates are expected to remain generally constant over the next five-year period.

Supply and Demand Conclusion

The subject’s market is balanced with the subject required to capture its proportionate share of market

demand to obtain the estimated stabilized levels. The subject offers an overall quality and amenity

package in line with the demands of the location population offered.

The location of the subject with favorable economic and population trends, along with physical and

operational attributes that meet the needs of the local population suggest that the subject will capture

the appropriate share of the market to obtain a stabilized occupancy level consistent with current market indications for stabilized properties. The subject has not been efficiently managed and would

benefit from managerial oversight at the property level.

Subject Analysis

Licensure Requirements

Licensure requirements specific to the subject’s use are summarized below. CBRE does not represent

to be legal experts regarding the subject’s adherence to the respective state guidelines. According to the state regulatory agency, the subject’s license is current and in good standing.

Market Analysis

CLASSIFICATION: Assisted Living Facilities - Type B Facility REGULATORY REFERENCES: Texas Administrative Code, Title 40, Part 1, Chapter 92 MINIMUM SIZE (UNITS): 4+ MANDATORY SERVICES: ADL Care Yes

Transportation None Laundry Yes Activities /Recreation Yes Arranging Health Related Services None Housekeeping None Medications Management Yes Monitoring Yes Other 3+ meals/day

PERMITTED SERVICES: Assistance with Medications Yes Administer Medications By licensed staff (see notes) Intermittent Nursing None Other Limited SN services permitted; temporary SN services for minor illness or injury.

REGULATED SUBJECTS: Admission Agreements Yes Resident Funds Limited Care Plan Yes Medication Storage Yes Dietary Requirements Yes Other None

ADMINISTRATOR: Education/ exam High school or equivalent (more if larger facility) Continuing Education 12 hrs/yr Availability 40 hrs/wk Other (Qualifications, etc.) 24 hr training

STAFFING LEVELS Staff; Resident Ratio None Required Hours Night shift staff immediately available/awake Licensed None Other Qualifications Direct care: 6 hrs ed./yr (1 hr behavior mgmt; 1 hr fall prevention)

MANDATORY DISCHARGE Ongoing Nursing Care Yes Danger to Self/Others Yes Unable to Evacuate Type A Facilities Restraints None Beyond Capabilities Yes Other None

PHYSICAL PLANT Maximum Occupancy/Unit 4 Size of Unit (single occupancy) Type A: 80 SF; Type B: 100 SF Size of Unit (multiple occupancy) Type A: 60 SF/bed; Type B: 80 SF/bed Toilet 1:6 residents Bath or Shower 1:10 residents Other Effective January 6, 2014, 2000 NFPA was implimented

CERTIFICATE OF NEED No LICENSING AGENCY Health and Human Services Commission MEDICAID WAIVER/ STATE PLAN Yes NOTES May request resident to remain at facility if appropriate/condition has changed

Source: American Seniors Housing Assoc., State Regulatory Handbook

STATE REGULATORY OVERVIEW

Market Analysis

Management Overview

The buyer will place its affiliated operator, Atlantis Senior Living, as management of the subject post

sale. The principle of Atlantis Senior Living, James and Suzanne Denny, are experienced operators of

seniors housing communities. The analysis and conclusions within this report assume competent management and market operations.

Absorption

The following table outlines average monthly move-ins for each property type as reported by NIC.

MOVE-IN RATES

Property Type Average Monthly Move-

ins less Move-outs

Independent Living 6.1

Assisted Living 4.8

SNF 14.3

CCRC 13.5

Source: NIC

Considering the location of the subject and conclusions stated in the market analysis, lease-up is

expected to fall below the market averages presented above. The analysis concludes 24 months for a

lease-up period, which averages 1.6 units per month.

Stabilized Occupancy Estimate

The physical occupancy for the subject is detailed in the following chart:

PHYSICAL OCCUPANCY

Year 2019 Actual 51% 2020 YTD Ann. 54% Year 2 Stabilized 95% Year 2 As Stabilized 95% CBRE Stabilized Estimate 90%

Compiled by CBRE

The subject has not been efficiently managed since it’s sale in late 2018, and has trailed the market in

terms of occupancy. The subject would benefit from managerial oversite on the property levels, and

following a 24-month estimated lease up, a stabilized occupancy at levels consistent with other stabilized competitive properties in the market is considered achievable.

CBRE’s conclusion of stabilized occupancy for the subject is illustrated in the following table. This

estimate considers physical and economic market factors.

Market Analysis

OCCUPANCY CONCLUSIONS

AL MC

NIC MAP - Primary/ Secondary Markets 85.3% 85.3% NIC MAP - Subject MSA 76.5% 76.5% Primary Market Area (All Properties) 80.5% 91.5% Primary Market Area (Stabilized Only) 88.8% 92.9% Subject's Current Occupancy 45.0% 82.4% CBRE Estimated Stabilized Occupancy 90.0% 90.0% Lease-up Period 24 Months 24 Months

Compiled by CBRE

The vacancy estimate above represents physical occupancy based on resident days while the weighted average vacancy represents economic vacancy based on potential gross income (PGI) attributable to

each component. Any disparity between the two figures is due to the differing levels of rent for the

subject’s care levels.

The concluded occupancy was applied to the subject’s unit mix to derive a weighted average

economic vacancy, as detailed below:

WEIGHTED AVERAGE ECONOMIC VACANCY Care Level % of Total PGI Vacancy Assisted Living 73.9% x 10.0% = 7.4% Memory Care 26.1% x 10.0% = 2.6% Indicated Weighted Average Vacancy (Rounded) 10.0%

Compiled by CBRE

Based on the market analysis, the subject’s PMA shows positive indicated demand. Additionally, in our

discussions with representatives at nearby, direct competitors, occupancies are reported to be in line or above the MSA as a whole, with the exception of the subject. The CBRE stabilized occupancy

conclusion places primary weight on the market data.

Conclusion

The subject benefits from its location within the market. The improvements are well designed for their respective use and offer amenities that are commensurate with the demands of the local population.

The data presented throughout the market analysis indicates that operating levels projected for the

subject are achievable. The subject’s census has not been negatively impacted by COVID, and it can reasonably be estimated that there could be pent up demand following COVID.

Site Analysis

ALTA SURVEY

Site Analysis

FLOOD MAP

Site Analysis

The following chart summarizes the salient characteristics of the subject site.

SITE SUMMARY

Physical Description Gross Site Area 11.76 Acres 512,410 Sq. Ft. Net Site Area 6.14 Acres 267,603 Sq. Ft. Primary Road Frontage Jackson Keller Road Excess Land Area 5.62 Acres Surplus Land Area None Shape Topography Zoning District Flood Map Panel No. & Date 48029C0245G 29-Sep-10 Flood Zone Zone X (Unshaded)

Comparative Analysis Access Visibility Functional Utility Traffic Volume Adequacy of Utilities Landscaping Drainage

Utilities Adequacy Water Yes Sewer Yes Natural Gas Yes Electricity Yes Telephone Yes Mass Transit Yes

Other Yes No Unknown Detrimental Easements X Encroachments X Deed Restrictions X Reciprocal Parking Rights X Common Ingress/Egress X

Source: Various sources compiled by CBRE

Provided

Irregular Moderate Slope C

Good Adequate Adequate

Good

SAWS Provider

Assumed adequate Adequate Assumed adequate

VIA

SAWS CPS CPS

The excess land acreage was provided to us by the buyer. Per a representative of the buyer: “the size

of the vacant land is an estimate based on the 2018 appraisal plus the estimated size of the land from google earth on the main campus side behind the buildings.”

Site Analysis

Adjacent Properties

The adjacent land uses are summarized as follows:

North: Single-Family Residential South: Single-Family Residential East: Single-Family Residential West: High School

The adjacent properties are conforming to the neighborhood and are complementary to the specific use of the subject.

Flood Zone

According to flood hazard maps published by the Federal Emergency Management Agency (FEMA),

the site is within Zone X (Unshaded). FEMA defines the subject’s respective zone flood zone(s) as follows:

Zones C and X (unshaded) are flood insurance rate zones used for areas outside the 0.2- percent-annual-chance floodplain. No Base Flood Elevations (BFEs) or depths are shown in this zone, and insurance purchase is not required.

Conclusion

The site is well located and affords good access and visibility from roadway frontage. The size of the

site is typical for the area and use, and there are no known detrimental uses in the immediate vicinity. There are no known factors that are considered to prevent the site from development to its highest and

best use, as if vacant, or adverse to the existing use of the site.

Improvement Analysis

FLOOR PLANS

Improvement Analysis

In response to the COVID-19 Pandemic, in an effort to protect the resident population within the subject property, and with the Client permission, the CBRE inspection included an exterior only

physical inspection of the subject property. The interior description of the subject is based on the

following resources:

• Interior photographs (listed below) as provided by buyer:

o Entry/lobby, common areas, dining areas, commercial kitchen, activity room, and a sample of resident rooms.

• Individual unit floor plans and a community floor plan was provided by the buyer.

• Condition and Quality: The opinion of the subject condition and quality is based on the observation of the provided photographs and floor plans.

Notably, the provided interior resources are considered to provide a description of the subject interior

in which to sufficiently provide credible assignment conclusions. As such, we make the extraordinary

assumption that the interior of the subject improvements is of similar condition and quality to the description within this report.

The following chart shows a summary of the improvements.

SUMMARY OF IMPROVEMENTS

Breakdown by Care Level GBA NRA Units Beds Year Built Condition Assisted Living 62,047 SF 35,065 SF 80 80 1999 Average Memory Care 11,870 SF 7,523 SF 17 17 1999 Average

Total/ Average: 73,917 SF 42,588 SF 97 97 1999 Average

Fully Sprinklered Yes Construction Class

Site Coverage Land-to-Building Ratio Floor Area Ratio (FAR) Development Density Functional Utility

Source: Compiled by CBRE

D - Wood frame, floor and structure; considered combustible

Typical for the subject's specific use

13.8% 3.62 : 1 0.28 15.8 Rev. Units/Acre

Layout of Improvements

The improvements consist of three rectangularly shaped buildings. The two assisted living buildings

are two stories each and contain lobby area with office and reception areas. One assisted living building contains the main commercial kitchen and dining area, while the other contains more

common space such as beauty shop, snack area, activity room, living room, and sun room. The one-

story memory care building contains a central common dining/activity space located adjacent to a warming kitchen. A summary of the unit mix is included below:

Improvement Analysis

ASSISTED LIVING UNIT MIX

Unit Type No.

Beds No.

Units Revenue

Units Percent of

Total Unit Size (SF)

Range Studio 66 66 66 68.0% 340 - 485 1 Bedroom 14 14 14 14.4% 560

Total/Average: 80 80 80 82.5% 438

Source: Various sources compiled by CBRE

MEMORY CARE UNIT MIX

Unit Type No.

Beds No.

Units Revenue

Units Percent of

Total Unit Size (SF)

Range Studio 17 17 17 17.5% 315 - 570

Total/Average: 17 17 17 17.5% 443

Source: Various sources compiled by CBRE

Conformity

The State of Seniors Housing Survey published by ASHA (American Seniors Housing Association)

reports the following design trends for the subject property type:

Average AL AL/MC Subject Total Rev. Units Lower Quartile 30 51 --- Average 59 89 97 Upper Quartile 106 135 --- GBA (SF) 36,550 61,570 73,917 Common Area (SF) 16,776 46% 30,016 49% 31,330 42% Average Unit Size (SF) 392 382 439

Source: State of Seniors Housing Annual Report

CONFORMITY OF IMPROVEMENTS

In comparison, the subject’s improvements are generally considered to conform to overall design trends for similar property types.

Description of Improvements

Construction Class: D - Wood frame, floor and structure; considered combustible.

The construction components are assumed to be in working condition and adequate for the building.

Foundation: The foundations are assumed to be of adequate load-bearing capacity to support the improvements.

Ground Floor: Concrete slab on compacted fill.

Improvement Analysis

Roof Cover: Pitched roofing system consisting of built-up assemblies with a shingle

cover.

Flooring: The common areas have commercial grade carpeting with laminate or

ceramic tile flooring. The commercial kitchen has a quarry tile floor. The

resident units have carpet in the living and bedroom areas with sheet

vinyl tile in the bathrooms.

Exterior Walls: The exterior walls consist of stone veneer and stucco with decorative

trim. The building contains double-pane aluminum frame windows.

HVAC: All common areas contain central cooling and heating while resident rooms have PTAC units.

Plumbing: The plumbing system is assumed to be adequate for the existing use and

in compliance with local law and building codes.

Electrical: The electrical system is assumed to be in good working order and adequate for the building.

Security: Resident call systems in all the resident living areas and bathrooms, as

well as emergency back-up lighting system.

Utilities

The subject operations indicate that management is responsible for all utilities including electricity,

water and sewer costs. The individual units are separately wired for phone and cable services with the

tenants paying these costs.

Fire Protection

The subject property is wet sprinklered. It is assumed the improvements have adequate fire alarm

systems, fire exits, fire extinguishers, fire escapes and other fire protection measures to meet local fire

marshal requirements. CBRE, Inc. is not qualified to determine adequate levels of safety & fire

protection, whereby it is recommended that the client/reader review available permits, etc. prior to making a business decision.

Improvement Analysis

Project Amenities

Property and unit amenities for the subject property are summarized below:

• Community Dining Room • Private Dining Room • Other Dining Venues (Bistro) • Game Room • Arts & Craft Room • Library/Computer Center • Hair Salon • Media Room

• Elevator Access to all Areas • Laundry Facilities • Wellness Center • Resident Storage • Mail Room • Outside Patios/Walking Areas • Enclosed Courtyard in Memory Care

The following are the individual living unit amenities and features are being offered at the subject:

• 24-Hour Emergency Response System • Individual Air Controls • Window Treatments • Private Baths • Showers with a Seat and Grab Bars and/or

Tub/Shower Combination

• Kitchenettes (AL units) • Ample Closet Space • Basic Cable Television Access

Parking and Drives

The subject appears to feature adequate surface parking, including reserved handicap spaces. All

parking spaces and vehicle drives are asphalt paved and considered to be in good condition.

Landscaping

Landscaping is in good condition and well maintained.

Functional Utility

The floor plans are considered to feature functional layouts and the layout of the overall project is considered functional in utility.

ADA Compliance

The client/reader’s attention is directed to the specific limiting conditions regarding ADA compliance.

Furniture, Fixtures and Equipment

Additional personal property including all common area furniture, as well as all equipment required to operate the subject property are typically included in the sale of a seniors housing property. These

items are in good condition.

Improvement Analysis

Environmental Issues

CBRE, Inc. is not qualified to detect the existence of any potentially hazardous materials such as lead

paint, asbestos, urea formaldehyde foam insulation, or other potentially hazardous construction materials on or in the improvements. The existence of such substances may affect the value of the

property. This analysis assumes that any hazardous materials that may cause a loss in value do not

affect the subject.

Cost to Complete (Capital Expenditures)

During this assignment we were provided a budget for the cost to complete a renovation of the

subject, as recapitulated within the following chart.

SUMMARY OF COST TO COMPLETE Planned CapEx $300,313

Subtotal $300,313 Plus: Profit @ 10% $30,031

Total Cost to Complete $330,344

Source: Buyet

In addition to the cost to complete, a profit (entrepreneurial incentive) line item, based on a

percentage of cost, has been added to account for the time, effort, and cost of capital associated with

undertaking this project. This cost to complete estimate will be deducted from each approach to conclude the As Is value for the subject.

Economic Age and Life

CBRE, Inc.’s estimate of the subject improvements effective age and remaining economic life is

depicted in the following chart:

ECONOMIC AGE AND LIFE

Actual Age 21 Years Effective Age 15 Years MVS Expected Life 55 Years Remaining Economic Life 40 Years Accrued Physical Incurable Depreciation 27.3%

Compiled by CBRE

The overall life expectancy is based upon our on-site observations and a comparative analysis of

typical life expectancies reported for buildings of similar construction as published by Marshall and Swift, LLC, in the Marshall Valuation Service cost guide. While CBRE, Inc. did not observe anything to

suggest a different economic life, a capital improvement program could extend the life expectancy.

Improvement Analysis

Conclusion

The improvements are considered to be functional in design and consistent with current design trends

for the subject’s respective property type. These improvements are expected to maximize the highest and best use of the site.

Zoning

ZONING MAP

Subject

Zoning

The following chart summarizes the subject’s zoning requirements.

ZONING SUMMARY Current Zoning C Legally Conforming Yes Uses Permitted Zone C, Low Rise Apartment District, allows for single-

family and multifamily housing including seniors housing. Ability to be Restored Without Permit Yes Zoning Change Not likely

Source: Planning & Zoning Dept.

It is recommended that local planning and zoning personnel be contacted regarding more specific

information that might be applicable to the subject.

Tax and Assessment Data

The subject’s market value, assessed value, and taxes are summarized below, and do not include any furniture, fixtures and equipment.

AD VALOREM TAX INFORMATION Assessor's Market Value 2020 CBRE Year 1 348290 $6,865,380

Subtotal $6,865,380 $6,865,380

Assessed Value @ 100% 100% Total Assessed Value $6,865,380 $6,865,380

General Tax Rate (per $100 A.V.) 2.529500 2.529500

Total Taxes $173,660 $173,660

Source: Assessor's Office

As the subject is currently owned by a non-profit, it is tax exempt and does pay a small amount in

Payment in Lieu of Taxes (PILOT) taxes. In 2019, current ownership paid $17,637 in PILOT taxes. As

the subject will be owned and operated by a for-profit, we have estimated taxes based on the full assessment of the subject per the Bexar County Assessor, and the most recent tax rate given the

subject’s location.

Ad valorem taxing authorities having jurisdiction over the subject include Bexar County, San Antonio

River Authority, Alamo Community College, University Health System, City of Castle Hills, and Northeast ISD. In Texas, real property is assessed at either 100% of market value or at a rate that is

equal and uniform to the property’s most comparable competitors. The effective date of the appraisal

is January 1 of the assessment year, with ad valorem taxes paid in arrears in January for the previous year. Property owners are notified of the proposed values in May of that tax year, and property

owners have the right to protest the value with the Appraisal Review Board by June 2, or 30 days after

receiving notice of the proposed property value. There are no delinquent property taxes encumbering

the subject.

Tax Comparables

CBRE, Inc. has reviewed the real estate tax information for comparable properties in the subject’s

respective taxing district. The following table summarizes the comparables employed for this analysis:

Tax and Assessment Data

AD VALOREM TAX COMPARABLES Tax Comparable The Forum at Lincoln Heights Brookdale Alamo Heights Franklin Park - Alamo Heights CBRE Stabilized Address 311 West Nottingham Drive 855 E Basse Road 230 West Sunset Road Estimate County Bexar County Bexar County Bexar City/ Town San Antonio San Antonio San Antonio

Year Built 1989 1998 2016 1999 No. Rev. Units 258 142 221 97

Tax Year 2020 2020 2020 2020 Total Assessed Value $21,200,000 $6,600,000 $40,500,000 $6,865,380 AV Per Rev. Unit $82,171 $46,479 $183,258 $70,777

Source: Assessor

Conclusion

The total taxes for the subject have been estimated as $173,660 for the base year of our analysis,

based upon an assessed value of $6,865,380 or $70,777 per unit. This is within the range of the tax

comparables and is considered reasonable given the current full assessment for the subject per Bexar

County.

Highest and Best Use

In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are:

• legally permissible; • physically possible; • financially feasible; and • maximally productive.

The highest and best use analysis of the subject is discussed on the following pages.

As If Vacant

Legally Permissible

The legally permissible uses were discussed in the Site Analysis and Zoning Sections.

Physically Possible

The subject is adequately served by utilities, and has an adequate shape and size, sufficient access,

etc., to be a separately developable site. There are no known physical reasons why the subject site would not support any legally probable development (i.e. it appears adequate for development).

Existing structures on similar sites provide additional evidence for the physical possibility of

development.

Financially Feasible

Potential uses of the site include various multifamily and seniors housing uses as previously detailed in the zoning analysis. The determination of financial feasibility is dependent primarily on the relationship

of supply and demand for the legally probable land uses versus the cost to create the uses. As

discussed in the market analysis of this report, the subject’s seniors housing market is generally stabilized. Development of new seniors housing properties has occurred in the past few years. These

factors indicate that it would be financially feasible to complete a new seniors housing project if the

site acquisition cost was low enough to provide an adequate developer’s profit.

Maximally Productive

The final test of highest and best use of the site as if vacant is that the use be maximally productive, yielding the highest return to the land. In relation to the various uses permitted, the subject’s location

is most viable for seniors housing. Surrounding uses are complementary in nature. Hence, in the case

of the subject as if vacant, the analysis has indicated that a new seniors’ housing project would be

most appropriate.

Highest and Best Use

Conclusion: Highest and Best Use As If Vacant

Based on the information presented above and contained in the market and neighborhood analysis,

the highest and best use of the subject as if vacant would be the development of a seniors housing project in the near term. More specifically, the subject would be developed at a density that would

maximize the allowable unit or bed count under current zoning code. Our analysis of the subject and

its respective market characteristics indicate the most likely buyer, as if vacant, would be an investor

(land speculation) or a developer.

As Improved

Legally Permissible

The site has been improved with a seniors’ housing development that is a legal, conforming use.

Physically Possible

The layout and positioning of the improvements are considered functional for seniors housing use.

While it would be physically possible for a wide variety of uses, based on the legal restrictions and the

design of the improvements, the continued use of the property for seniors housing users would be the most functional use.

Financially Feasible

The financial feasibility of a seniors housing community is based on the amount of rent which can be

generated, less operating expenses required to generate that income; if a residual amount exists, then

the land is being put to a productive use. Based upon the income capitalization approach conclusion, the subject is producing a positive net cash flow and continued utilization of the improvements for

seniors housing purposes is considered financially feasible.

Maximally Productive

The maximally profitable use of the subject as improved should conform to neighborhood trends and be consistent with existing land uses. Although several uses may generate sufficient revenue to satisfy

the required rate of return on investment and provide a return on the land, the single use that

produces the highest price or value is typically the highest and best use. As shown in the applicable

valuation sections, buildings that are similar to the subject have been acquired or continue to be used by seniors housing owners/tenants. These comparables would indicate that the maximally productive

use of the property is consistent with the existing use as a seniors housing community.

Conclusion: Highest and Best Use As Improved

The highest and best use of the property as improved, is consistent with the existing use as a seniors housing development.

Appraisal Methodology

In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available.

Cost Approach

The cost approach is based on the proposition that the informed purchaser would pay no more for the

subject than the cost to produce a substitute property with equivalent utility. This approach is particularly applicable when the property being appraised involves relatively new improvements that

represent the highest and best use of the land, or when it is improved with relatively unique or

specialized improvements for which there exist few sales or leases of comparable properties.

Sales Comparison Approach

The sales comparison approach utilizes sales of comparable properties, adjusted for differences, to indicate a value for the subject. Valuation is typically accomplished using physical units of comparison

such as price per square foot, price per unit, price per floor, etc., or economic units of comparison

such as gross rent multiplier. Adjustments are applied to the physical units of comparison derived from the comparable sale. The unit of comparison chosen for the subject is then used to yield a total value.

Income Capitalization Approach

The income capitalization approach reflects the subject’s income-producing capabilities. This

approach is based on the assumption that value is created by the expectation of benefits to be derived in the future. Specifically estimated is the amount an investor would be willing to pay to receive an

income stream plus reversion value from a property over a period of time. The two common valuation

techniques associated with the income capitalization approach are direct capitalization and the

discounted cash flow (DCF) analysis.

Methodology Applicable to the Subject

In valuing the subject, the sales comparison and income capitalization approaches are applicable and

have been utilized. The cost approach is not applicable in the estimation of market value due to the

age of the improvements. It is further recognized that the cost approach is not utilized by market participants in estimating market value.

Excess Land Value

The following map and table summarize the comparable data used in the valuation of the subject site. A detailed description of each transaction is included in the addenda.

SUMMARY OF COMPARABLE LAND SALES (EXCESS LAND) Actual Sale Adjusted Sale Size Size Price

No. Property Location Type Date Price Price 1 (Acres) (SF) Per SF

1 9999 USAA Boulevard, San Antonio, Texas

Sale Apr-18 $5,311,136 $5,311,136 15.24 663,637 $8.00

2 13803 Red Maple Wood, San Antonio, Texas

Sale Nov-18 $404,890 $404,890 1.33 57,856 $7.00

3 2726, 2727, & 2742 Danbury Street, San Antonio, Texas

Sale Mar-19 $2,000,000 $2,000,000 5.65 246,027 $8.13

4 3611 West Loop 410, San Antonio, Texas

Sale Jul-20 $550,000 $550,000 1.25 54,450 $10.10

Subject 1207 Jackson Keller Road, San Antonio, Texas

--- --- --- --- 5.62 244,807 ---

1 Transaction amount adjusted for cash equivalency and/or development costs (where applicable) Compiled by CBRE

Transaction

Excess Land Value

The sales utilized represent the best data available for comparison with the subject. These sales were

chosen based upon use, condition and quality, date of transaction, and location. Considering the size of the seniors housing market, comparable sales outside the subject’s direct market were selected.

CBRE did attempt to select comparables located in markets with similar economic attributes as the

subject.

Discussion/Analysis of Land Sales

Land Sale One

The upward market conditions (time) adjustment reflects the improved market conditions since date of sale. The upward adjustment for size reflects this comparable's inferior feature with respect to its

larger size resulting in a lower price point due to the economies of scale gained with larger purchases.

The adjustment for location was warranted due to the property's location in a high barrier market with favorable income levels and demographic growth. Therefore, a downward adjustment was judged

proper for this comparable. Overall, this comparable was deemed superior in comparison to the

subject and a downward net adjustment was warranted to the sales price indicator.

Land Sale Two

The upward market conditions (time) adjustment reflects the improved market conditions since the date of sale. The downward adjustment for size reflects this comparable's superior feature with respect

to its smaller size resulting in a higher price point due to the economies of scale lost with smaller

purchases. In terms of corner, this comparable was judged superior due to superior visibility and

access and received a downward adjustment for this characteristic. The adjustment for location was warranted due to the property's location in a high barrier market with favorable income levels and

demographic growth. Therefore, a downward adjustment was judged proper for this comparable.

Overall, this comparable was deemed superior in comparison to the subject and a downward net adjustment was warranted to the sales price indicator.

Land Sale Three

The upward market conditions (time) adjustment reflects the improved market conditions since the

date of sale. A downward adjustment was applied to this comparable for its superior frontage

attribute when compared to the subject, based upon the location on a major thoroughfare with high traffic count and visibility. Overall, this comparable was deemed superior in comparison to the

subject and a downward net adjustment was warranted to the sales price indicator.

Excess Land Value

Land Sale Four

The downward adjustment for size reflects this comparable's superior feature with respect to its smaller

size resulting in a higher price point due to the economies of scale lost with smaller purchases. In

terms of corner, this comparable was judged superior due to superior visibility and access and received a downward adjustment for this characteristic. A downward adjustment was applied to this

comparable for its superior frontage attribute when compared to the subject, based upon the location

on a major thoroughfare with high traffic count and visibility. Overall, this comparable was deemed superior in comparison to the subject and a downward net adjustment was warranted to the sales

price indicator.

Summary of Adjustments

Based on our comparative analysis, the following chart summarizes the adjustments warranted to each comparable.

LAND SALES ADJUSTMENT GRID (EXCESS LAND)

Comparable Number 1 2 3 4 Subject Transaction Type Sale Sale Sale Sale --- Transaction Date Apr-18 Nov-18 Mar-19 Jul-20 --- Actual Sale Price $5,311,136 $404,890 $2,000,000 $550,000 ---

Adjusted Sale Price 1 $5,311,136 $404,890 $2,000,000 $550,000 ---

Size (Acres) 15.24 1.33 5.65 1.25 5.62 Size (SF) 663,637 57,856 246,027 54,450 244,807 Price ($ PSF) $8.00 $7.00 $8.13 $10.10 Property Rights Conveyed 0% 0% 0% 0% Financing Terms 1 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% Market Conditions 5% 5% 5% 0% Subtotal $8.40 $7.35 $8.54 $10.10 Size 5% -10% 0% -10% Shape 0% 0% 0% 0% Corner 0% -10% 0% -10% Frontage 0% 0% -10% -10% Topography 0% 0% 0% 0% Location -10% -10% 0% 0% Zoning/Density 0% 0% 0% 0% Utilities 0% 0% 0% 0% Highest & Best Use 0% 0% 0% 0% Total Other Adjustments -5% -30% -10% -30% Value Indication for Subject $7.98 $5.14 $7.68 $7.07

1 Transaction amount adjusted for cash equivalency and/or development costs (where applicable) Compiled by CBRE

Excess Land Value

Conclusion

The comparables indicate an unadjusted range of $7.00 to $10.10 per SF with an adjusted range of

$5.14 to $7.98 per SF. The adjusted average indication of $6.97 per SF represents an approximate - 16.11% difference from the unadjusted average.

The comparables are generally similar in terms of location and use. Hence, a price per SF indication

consistent with the overall average of the range is most appropriate for the subject. The following

table presents the valuation conclusion:

CONCLUDED EXCESS LAND VALUE

$ PSF Subject SF Total

$5.14 x 244,807 = $1,258,309 $7.98 x 244,807 = $1,953,561

Indicated Value: $1,600,000

$ PSF $6.54

Less: Demolition Costs ($82,082)

Indicated Value $1,517,918

Indicated Value (Rounded) $1,520,000

(Rounded $ PSF) $6.21

Compiled by CBRE

Two buildings totaling 14,924 square feet are located on the excess land that were previously used as

office space and dormitory-type housing, but are in poor condition and are not usable. These

buildings are not being utilized currently and have no contributory value. Demolition costs have been

estimated at $5.50 per SF per MVS, resulting estimated demolition costs of $82,082.

Insurable Value (Replacement Cost)

Insurable value is defined as follows:

1. the value of an asset or asset group that is covered by an insurance policy; can be estimated by deducting costs of noninsurable items (e.g., land value) from market value.

2. value used by insurance companies as the basis for insurance. Often considered to be replacement or reproduction cost plus allowances for debris removal or demolition less deterioration and noninsurable items. Sometimes cash value or market value, but often entirely a cost concept. 7

3. a type of value for insurance purposes. 8

CBRE, Inc. has followed traditional appraisal standards to develop a reasonable calculation based

upon industry practices and industry-accepted publications such as the Marshall Valuation Service. The methodology employed is a derivation of the cost approach and is not reliable for insurable value

estimates. Actual construction costs and related estimates can vary greatly from this estimate.

The insurable value estimate presented herein is intended to reflect the value of the destructible portions of the subject, based on the replacement of physical items that are subject to loss from

hazards (excluding indestructible items such as basement excavation, foundation, site work, land value

and indirect costs). In the case of the subject, this estimate is based upon the base building costs

(direct costs) as obtained via the Marshall Valuation Service handbook, with appropriate deductions.

This analysis should not be relied upon to determine proper insurance coverage, as only consultants

considered experts in cost estimation and insurance underwriting are qualified to provide an insurable

value. It is provided to aid the client/reader/user as part of their overall decision-making process, and no representations or warranties are made by CBRE, Inc. regarding the accuracy of this estimate. It is

strongly recommended that other sources be utilized to develop any estimate of insurable value.

7 Marshall & Swift/Boeckh, LLC, Marshall Valuation Service, (Los Angeles: Marshall & Swift/Boeckh, LLC, 2010), Sec 3, p 2.

8 Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010), 102.

Insurable Value (Replacement Cost)

INSURABLE VALUE (REPLACEMENT COST) CONCLUSION

Primary Building Type: Height per Story: 9' Effective Age: Number of Buildings: 3 Condition: Gross Building Area: 73,917 SF Number of Revenue Units Average Unit Size: 439 SF Number of Stories: Average Floor Area: #VALUE!

MVS Sec/Page 0 0 0 Sec 12 / Pg 20 Sec 12 / Pg 20 Quality/Bldg. Class 0 0 0 Average / D Average / D Building Component 0 0 0 Memory Care Assisted Living Component Sq. Ft. 0 SF 0 SF 0 SF 11,870 SF 62,047 SF Base Square Foot Cost $0.00 $0.00 $0.00 $123.00 $123.00

Square Foot Refinements Heating and Cooling $0.00 $0.00 $0.00 In Base In Base Sprinklers $0.00 $0.00 $0.00 $3.20 $2.55 Elevator Deduction $0.00 $0.00 $0.00 ($1.47) $0.00 Subtotal $0.00 $0.00 $0.00 $124.73 $125.55

Height and Size Refinements Number of Stories Multiplier 0.00 0.00 0.00 1.00 1.00 Height per Story Multiplier 0.00 0.00 0.00 1.00 1.00 Floor Area Multiplier 0.00 0.00 0.00 1.02 0.98 Subtotal $0.00 $0.00 $0.00 $127.22 $123.04

Cost Multipliers Current Cost Multiplier 0.00 0.00 0.00 0.98 0.98 Local Multiplier 0.00 0.00 0.00 0.82 0.82

Final Square Foot Cost $0.00 $0.00 $0.00 $102.24 $98.87

Base Component Cost $0 $0 $0 $1,213,561 $6,134,844

Base Building Cost (via Marshall Valuation Service cost data) $7,348,405 Insurable Exclusions 10.00% of Total Building Cost ($734,841)

Insurable Value (Replacement Cost) Indication $6,613,565

Rounded $6,600,000

Value Per Rev. Unit $68,041

Compiled by CBRE

1 and 2 97

Assisted Living Residence 15 YRS Average

Sales Comparison Approach

The following map and table summarize the comparable data used in the valuation of the subject. A detailed description of each transaction is included in the addenda.

SUMMARY OF COMPARABLE SALES

Year Year No. Actual Sale Adjusted Price Per NOI Per No. Name Type Date Built Renovated Rev.

U i Price Sale Price 1 Rev. Unit 1 Occ. Rev. Unit OAR

1 Grandview of Westover Hills, San Antonio, Texas

Sale Mar-19 2014 99 $5,600,000 $5,980,000 $60,404 49% $6,060 10.03%

2 The Village at Valley Creek, Denton, Texas

Sale Apr-19 2009 46 $5,350,000 $5,350,000 $116,304 57% $8,648 7.44%

3 Courtyard Estates of Peoria, Peoria, Illinois

Sale Jul-19 1970 2011 100 $8,200,000 $8,200,000 $82,000 91% $5,858 7.14%

4 Brookdale Wellington and Bethany, Wellington, Kansas

Sale Nov-19 1993 2016 52 $4,400,000 $4,400,000 $84,615 87% $8,866 10.48%

5 Cadence Aurora, Aurora, Colorado

Sale Aug-20 1999 99 $10,500,000 $10,500,000 $106,061 55% $5,049 4.76%

Subj. Pro

Forma

Ventura Hills Senior Living, San Antonio, Texas

--- --- 1999 97 --- --- --- 90% $5,588 ---

1 Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable) Compiled by CBRE

Transaction

Sales Comparison Approach

Given the finite amount of properties in this sector, single-asset arm’s length transfers remain limited

relative to other property types. Recognizing the impact of a property’s operating attributes on pricing, it is appropriate to utilize comparable properties exemplifying similar operational margins to

accurately interpret pricing metrics employed by market participants. To do so, a more regional

search was performed with comparables chosen based on care level provided, operating metrics at

time of sale, and condition of the property. The sales utilized represent the best data available for comparison with the subject.

Analysis of Improved Sales

Improved Sale One

Grandview of Westover Hills is an assisted living and memory care community situated in a suburban

location. The improvements were constructed in 2014 and are in good condition. This community has an overall census of 49% at the time of sale. The buyer purchased the property based on an

operational value-add strategy. At sale, the property was operated by Senior Care Centers, who filled

for bankruptcy in late 2018. The community was inefficiently managed and the seller, a national REIT,

wished to exit the market. The buyer placed Silverpoint Senior Living to operate the property post acquisition. The stabilized data was provided via the buyer and includes market-level management

and reserve. The community was purchased based on a blended cap rate and purchase price per

unit. The buyer spent $380,000 in capex post sale to update the building and replace HVAC units.

The downward market conditions (time) adjustment reflects the declining market conditions since the

date of sale. In terms of age/condition, this comparable was judged superior due to its newer year of

construction superior condition of the improvements and received a downward adjustment for this

characteristic. Overall, this comparable was deemed superior in comparison to the subject and a downward net adjustment was warranted to the sales price indicator.

Improved Sale Two

This comparable represents the sale of a 40-unit, 46-bed stand alone memory care facility located

along Brinker Road in Denton, Texas. The residence was built on a 3.67-acre site in 2009 as an

Autumn Leaves brand property. The operator struggled to maintain stabilized occupancy due to new supply in the surrounding areas. According to a representative of the owner, the property was sold for

a transaction price of $5,350,000, or $116,304 per revenue unit. The price implies an OAR of

7.44% based on trailing income in place at 70% average occupancy. Net operating income is down from approximately $1,000,000 annually in 2014 and 2015.

The downward market conditions (time) adjustment reflects the declining market conditions since the

date of sale. The downward adjustment for location reflects this comparable's superior feature with

respect to the location in a high barrier market with favorable income levels and demographic growth. In terms of age/condition, this comparable was judged superior due to its newer year of construction

Sales Comparison Approach

and superior condition of the improvements and received a downward adjustment for this

characteristic. Overall, this comparable was deemed superior in comparison to the subject and a downward net adjustment was warranted to the sales price indicator.

Improved Sale Three

This comparable represents the sale of Courtyard Estates of Peoria, a 100-bed assisted living

residence located in Peoria, Illinois. According to the buyer, the actual purchase price was $8.2

million or approximately $82,000 per unit. Based on the buyer's pro forma, this is reflective of a 9.98% capitalization rate. The OAR based on T-12 income in place was 7.14%. The asset purchase

agreement was signed April 2, 2019 by and between Peoria 23, LLC “Buyer” and Petersen Health

Systems, INC “Seller.” This supportive living community was openly marketed by a national brokerage

firm.

The downward market conditions (time) adjustment reflects the declining market conditions since the

date of sale. Overall, this comparable was deemed superior in comparison to the subject and a

downward net adjustment was warranted to the sales price indicator.

Improved Sale Four

This comparable represents the sale of two assisted living communities. Brookdale Wellington is

located in Wellington, KS, operates with 26 units, and was built in 1994 with a renovation in 2016.

Brookdale Bethany is located in Bethany, OK, operates with 26 units, and was built in 1993 with a

renovation in 2016. Both buildings are similar in style and are in good condition. The properties are located in a suburban areas with good visibility and access with favorable access to healthcare

providers. Amenities and services offered are consistent with the competitive markets. The properties

sold for a total of $4,400,000 on November 13, 2019, or $84,615 per revenue unit. Occupancy at the time of sale was 87% with the buyer purchasing the property based on an operational value-add.

Midwest Health assumed management of the property post acquisition, and re-branded the

communities as Homestead of Wellington and Bethany. Pricing was based on a net operating income

of $461,041, or $8,866 per revenue unit, for an overall capitalization rate 10.48% and EGIM of 1.84. The analysis is based on trailing 12 operations and include market level management fees and

replacement reserves

The downward market conditions (time) adjustment reflects the declining market conditions since the date of sale. Overall, this comparable was deemed superior in comparison to the subject and a

downward net adjustment was warranted to the sales price indicator.

Sales Comparison Approach

Improved Sale Five

Cadence Aurora is an assisted living and memory care community situated in a suburban location.

The improvements were constructed in 1999 and are in good condition. This community has an

overall census of 55% at the time of sale. The buyer purchased the property based on an operational value-add strategy. The property was formerly operated by Brookdale, with Cadence taking over

operations post sale and rebranding at Cadence Aurora. The community was operating at below

stabilized occupancy levels at the time of sale, and the buyer sees potential upside operationally.

The downward adjustment for location reflects this comparable's superior feature with respect to the

location in a high barrier market with favorable income levels and demographic growth. Overall, this

comparable was deemed superior in comparison to the subject and a downward net adjustment was

warranted to the sales price indicator.

Consideration for COVID-19

As discussed within the Market Analysis section, the COVID-19 pandemic has impacted the seniors

housing market, with reported value diminution of between 0% and 10%, from pre-COVID levels for

stabilized/near stabilized assets. Each comparable sold prior to any quantifiable adverse impact from the pandemic and, thus, an adjustment to each comparable is warranted. In consideration of

increases in the cost of capital, expectant near-term fluctuations in cashflows, and an overall increase

in risk perception, we have applied a downward adjustment of 5% for market conditions to each

comparable. This results in a downward adjustment of 5.0% to Comparables 1 through 4 and no adjustment to Comparable 5 given it is a post-COVID sale.

Summary of Adjustments

The sales comparison approach utilizes sales of comparable properties, adjusted for differences, to

indicate a value for the subject. Valuation is typically accomplished using physical units of comparison such as price per square foot, price per unit, price per floor, etc., or economic units of comparison

such as gross rent multiplier. Adjustments are applied to the physical units of comparison derived from

the comparable sales. The unit of comparison chosen for the subject is then used to yield a total

value. Economic units of comparison are not adjusted, but rather analyzed as to relevant differences, with the final estimate derived based on the general comparisons. Based on a comparative analysis,

the following chart summarizes the adjustments warranted to each comparable.

Sales Comparison Approach

COMPARABLE SALES ADJUSTMENT GRID

Comparable Number 1 2 3 4 5 Subj. Pro

Transaction Type Sale Sale Sale Sale Sale --- Transaction Date Mar-19 Apr-19 Jul-19 Nov-19 Aug-20 --- Year Built 2014 2009 1970 1993 1999 1999 Year Renovated 2011 2016 No. Units 99 46 100 52 99 97 Adjusted Sale Price 1 $5,980,000 $5,350,000 $8,200,000 $4,400,000 $10,500,000 --- Price Per Rev. Unit 1 $60,404 $116,304 $82,000 $84,615 $106,061 --- Occupancy 49% 57% 91% 87% 55% 90% NOI Per Rev. Unit $6,060 $8,648 $5,858 $8,866 $5,049 $5,588 OAR 10.03% 7.44% 7.14% 10.48% 4.76% --- Adj. Price Per Rev. Unit $60,404 $116,304 $82,000 $84,615 $106,061 Property Rights Conveyed 0% 0% 0% 0% 0% Financing Terms 1 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% Market Conditions (Time) -5% -5% -5% -5% 0% Subtotal - Price Per Rev. Unit $57,384 $110,489 $77,900 $80,385 $106,061 Location 0% -5% 0% 0% -15% Project Size 0% 0% 0% 0% 0% Age/Condition -5% -15% 0% 0% 0% Quality of Construction 0% 0% 0% 0% 0% Avg. Unit Size 0% 0% 0% 0% 0% Project Amenities 0% 0% 0% 0% 0% Parking 0% 0% 0% 0% 0% Other 0% 0% 0% 0% 0% Total Other Adjustments -5% -20% 0% 0% -15%

Indicated Value Per Rev. Unit $54,515 $88,391 $77,900 $80,385 $90,152

1 Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable) Compiled by CBRE

Price Per Unit Comparison

After applied gross adjustments of -10.00% to 25.00%, the adjusted average of all comparables representing an approximate -14.83% difference over the unadjusted average. The adjusted indicated

value range for the sales is from $54,515 to $90,152 per unit, with an average of $78,268 per unit.

Comparables 1, 3, and 5 were the most representative of the subject in terms of operating performance, while Comparables 1 and 3 best represent the subject in terms of location.

Sales Comparison Approach

Effective Gross Income Multiplier Analysis

As the above analysis is heavily dependent on the net operating income of a property, the EGIM can

be applied to a property’s gross income and is therefore less dependent upon an accurate estimation of net operating income.

The EGIM analysis compares the subject’s income characteristics with those of the comparable

properties and develops a multiplier that is appropriate for the subject. Based on our analysis, we

have concluded to an appropriate EGIM as follows:

EFFECTIVE GROSS INCOME MULTIPLIER ANALYSIS

Sale No. Occupancy OER EGIM

5 55% 83.26% 3.52 3 91% 81.44% 2.60 2 57% 80.91% 2.57 4 87% 80.75% 1.84 1 49% 70.00% 2.99

Subj. 90% 84.53% 2.00

Compiled by CBRE

For seniors housing assets, there is typically an inverse relationship between the EGIM and OER.

However, these sales are not directly following this inverse relationship. Given the range of OER and EGIM for the comparable sales, CBRE has selected and EGIM toward the lower end of the range.

Sales Comparison Approach Conclusion

In completing this analysis, CBRE contacted various market participants that include specialty brokers

and national investors of well-known seniors housing investment funds. These participants all indicated that in pricing the subject property, primary weight would be placed on the in-place cash flow with the

applied risk based on the amount of historical operations supporting the respective cash flows. It was

further indicated that comparable sales would be utilized as a secondary measure. These participants advised that when selecting comparable sales for the subject, a regional search should be employed

to appropriately account for comparable operations respective to the subject property.

The following table presents the estimated value for the subject as indicated by the sales comparison

approach. The average of the two indications (paired sales and EGIM) was utilized.

Sales Comparison Approach

SALES COMPARISON APPROACH

Paired Sales Total Rev. Units X Value Per Rev. Unit = Value

97 X $78,268 = $7,592,036

EGIM EGI X ANALYSIS = Value

$3,502,576 X 2.00 = $7,005,153

VALUE CONCLUSION

Indicated Stabilized Value $7,298,595

Rounded $7,300,000 Lease-Up Discount -$1,715,000 Indicated As Complete Value $5,583,595 Rounded $5,580,000 Estimated Cost to Complete -$330,344 Indicated As Is Value $5,253,250 Rounded $5,250,000 Value Per Rev. Unit $54,124

Compiled by CBRE

The cost to complete allocation has been discussed previously in this report. The lease-up discount

applied above is detailed at the conclusion of the income approach.

Income Capitalization Approach

The following map and table summarize the comparable data used in the valuation of the subject. A description of each comparable property survey is included in the addenda.

Comp. Property Name Year LOC Community Second

No. and Location Built Total AL MC Overall AL MC AL MC $/Month Fee Res. Fee

1 1989 258 30 28 82% 80% 79% $4,299 $5,626 $330 $1,500 $400 $5,195 $880 $800

2 1998 142 96 80% 82% $2,295 $250 $1,500 $500 $4,100 $1,200

3 2016 221 64 40 88% 91% 100% $3,625 $5,995 $400 $2,000 $750 $4,995 $6,195 $1,200 $1,500

4 2011 230 60 20 100% 100% 95% $3,850 $5,400 $250 $1,500 $575 $4,950 $2,000 $2,000 $900

5 1988 293 50 24 96% 98% 96% $3,205 $4,422 $1,500 $5,211 $6,207

Subject 1999 97 80 17 52% 45% 82% $2,595 $4,150 $100 $1,750 $1,000 $3,095 $5,150 $900 $2,000

Source: CBRE VIEW Database

Census Base Rent ($/Month)

Ventura Hills Senior Living 1207 Jackson Keller Road, San Antonio, Texas

SUMMARY OF COMPARABLE RENTALS

Rev. Units

The Forum at Lincoln Heights 311 West Nottingham Drive, San Antonio, Texas

Brookdale Alamo Heights 855 E Basse Road, San Antonio, Texas

Franklin Park - Alamo Heights 230 West Sunset Road, San Antonio, Texas

Adante Senior Living 2739 Cembalo Boulevard, San Antonio, Texas

The Village at Incarnate Word 4707 Broadway Street, San Antonio, Texas

Income Capitalization Approach

Comparable properties have been surveyed to identify the occupancy and rental trends within the

subject’s immediate market area. Competitive properties were identified within the subject’s defined primary market area whereas comparable properties located outside the defined PMA were

supplemented as needed.

Analysis of Rent Comparables

Rent Comparable One

This comparable is a good quality independent, assisted, and memory care community with a 50-bed

skilled nursing facility. The improvements were constructed in 1989 and are in good condition, as the campus was renovated in 2016. The property is located in a suburban area and affords good visibility

and access with favorable access to healthcare providers. Amenities and services offered are

consistent to the local market. The property is managed by Five Star Senior Living, a national operator of seniors housing communities. Occupancy was reported average for the property. Assisted living

and memory care rents are based on an a base plus level-of-care structure with levels of care ranging

from $330 to $880. Management is also charging a community fee of $1,500 and a second

resident fee of $400 to $800. The community is well-established and has a good reputation.

Rent Comparable Two

This comparable is a good quality assisted living community with an attached skilled nursing facility.

The improvements were constructed in 1998 and are in good condition. The property is located in a

suburban area and affords excellent visibility and access with favorable access to healthcare

providers. Amenities and services offered are consistent to the local market. The property is managed by Brookdale Senior Living, a national operator of seniors housing communities. Occupancy was

reported average for the property. Assisted living rents are based on a base plus level-of-care structure

with levels of care ranging from $250to $1,200. Management is also charging a community fee of $1,500 and a second resident fee of $500.

Rent Comparable Three

This comparable is an excellent quality independent and assisted living community. The improvements

were constructed in 2016 and are in excellent condition. The property is located in a suburban area

and affords good visibility and access with favorable access to healthcare providers. Amenities and services offered are superior to the local market. The property is managed by Franklin Park, a local

operator of seniors housing communities. Assisted living rents are based on a base plus level-of-care

structure with levels of care ranging from $400 to $1,200. Memory care rents are based on an all-

inclusive structure. Management is also charging a community fee of $2,000 and a second resident fee of $850 for IL, $750 for AL, and $1,500 for MC.

Income Capitalization Approach

Rent Comparable Four

This comparable is an excellent quality independent and assisted living community. The improvements

were constructed in 2011 and are in good condition. The property is located in a suburban area and

affords excellent visibility and access with favorable access to healthcare providers. Amenities and services offered are superior to the local market. The property is managed by Sagora Senior Living, a

national operator of seniors housing communities. Occupancy was reported average for the property.

Management reported a wait list with strong demand. Assisted living rents are based on a base plus level-of-care structure with levels of care ranging from $400 to $2,000. Memory care rents are based

on an all-inclusive less incontinence fees. Management is also charging a community fee of $1,500

to $2,000 and a second resident fee of $900 for AL and $575-$900 for IL. The facility was renovated

in 2017 and has a strong reputation in the community.

Rent Comparable Five

This comparable is a rental CCRC that offers independent living, assisted living, memory care, and a

skilled nursing facility located in a suburban area. Amenities and services offered are consistent with

the local market. The property is managed by The Village of the Incarnate Word, a local non-profit operator. Management reported a wait list with strong demand for all care levels. Assisted living and

memory care rents are based on an all-inclusive structure. This community has a strong reputation

and typically operates near fully capacity.

Income Capitalization Approach

Operating Summary

As shown in the following table, we were provided the trailing calendar year reporting period for 2019 (2019 reporting period is the 12

months ending January 2020) as well as the year-to-date operating data (July) which has been annualized for valuation purposes. Additionally, we were provided the buyers pro forma through stabilization. Note that during the absorption periods, the budget utilizes annual revenue

escalations of 3.0% and annual expense escalations of 3.0%; as such, we have included the subject’s budgeted ‘Stabilized’ operating period

(Year 2), as well as trended these figures to today’s dollars, or ‘As Stabilized’, for comparison purposes. Please note that the revenue breakout

between assisted living and memory care was not provided for the historic reporting periods nor in the pro forma provided by the buyer.

Income Capitalization Approach

Subject Rental Information

The following table shows the subject’s unit mix and quoted rental rates.

SUBJECT RENTAL INFORMATION No. No. Unit Revenue Rev. Unit Quoted

Type Units Beds Size (SF) Units Occ. $/Rev. Unit Assisted Living

Studio 66 66 340 - 485 66 45% $2,595 - $2,895 1 Bedroom 14 14 560 14 43% $3,095

Memory Care Studio 17 17 315 - 570 17 82% $4,150 - $5,150

Total/Average: 97 97 439 97 52%

Compiled by CBRE

The following chart summarizes the subject’s rental rate structure, including care plan type, second resident (person) fee, and community fee:

SUBJECT RENTAL STRUCTURE

Care Level Care Plan Type Second Resident Fee Community Fee Assisted Living Levels Yes Yes Memory Care All-Inclusive No Yes

Source: Property Management

Operating Revenue Analysis

Market Rent Estimate

In order to estimate the market rates, the subject unit types have been compared with similar units and

care levels. While independent living rents are typically all inclusive, assisted living and memory care units are often rented under various rental structures. These structures range from all inclusive, base

rent plus additional charges for activity of daily living (ADL) services charged by level, or base rent plus

additional charges for ADL services charged a la carte. In order to get an accurate understanding of

the subject market position, the comparable rents have been adjusted accordingly.

Subsidized Rents

All units within the subject property are private pay.

Income Capitalization Approach

Assisted Living

SUMMARY OF COMPARABLE RENTALS ASSISTED LIVING STUDIO UNITS

Comparable Base $/Mo. Plan Type ADL $/Mo. Adj. $/Mo. Brookdale Alamo Heights $2,295 - $2,985 Levels $250 - $1,200 $2,545 - $4,185 Subject (Quoted Rent) $2,595 - $2,895 Levels $100 - $900 $2,695 - $3,795 Subject (Concluded Mkt.) $2,650 Levels $500 $3,150 The Village at Incarnate Word $3,205 - $4,380 All-Inclusive $3,205 - $4,380 Franklin Park - Alamo Heights $3,625 Levels $400 - $1,200 $4,025 - $4,825 Adante Senior Living $3,850 Levels $400 - $2,000 $4,250 - $5,850 The Forum at Lincoln Heights $4,299 - $5,195 Levels $330 - $880 $4,629 - $6,075

Compiled by CBRE

SUMMARY OF COMPARABLE RENTALS ASSISTED LIVING 1 BEDROOM UNITS

Comparable Base $/Mo. Plan Type ADL $/Mo. Adj. $/Mo. Subject (Quoted Rent) $3,095 Levels $100 - $900 $3,195 - $3,995 Subject (Concluded Mkt.) $3,200 Levels $500 $3,700 Brookdale Alamo Heights $3,200 - $4,100 Levels $250 - $1,200 $3,450 - $5,300 The Village at Incarnate Word $4,066 - $5,148 All-Inclusive $4,066 - $5,148 Adante Senior Living $4,150 - $4,250 Levels $400 - $2,000 $4,550 - $6,250 Franklin Park - Alamo Heights $4,350 - $4,550 Levels $400 - $1,200 $4,750 - $5,750

Compiled by CBRE

The subject’s quoted rental rates are within the adjusted range indicated by the rent comparables.

Recognizing the subject’s quality and location in relation to the comparables, it is appropriate that the

subject’s rent fall at the lower end of the range.

Memory Care

SUMMARY OF COMPARABLE RENTALS MEMORY CARE STUDIO UNITS

Comparable Base $/Mo. Plan Type ADL $/Mo. Adj. $/Mo. Subject (Quoted Rent) $4,150 - $5,150 All-Inclusive $4,150 - $5,150 Subject (Concluded Mkt.) $4,575 All-Inclusive $4,575 Adante Senior Living $5,400 Levels $250 - $500 $5,650 - $5,900 The Forum at Lincoln Heights $5,626 Levels $330 - $880 $5,956 - $6,506 Franklin Park - Alamo Heights $5,995 All-Inclusive $5,995 The Village at Incarnate Word $6,207 All-Inclusive $6,207

Compiled by CBRE

The subject’s quoted rental rates are below the adjusted range indicated by the rent comparables. Recognizing the subject’s quality and location in relation to the comparables, it is appropriate that the

subject’s rent fall below the range. The comparables are all either newer memory care communities

(Adante, The Forum, Franklin Park) or offer a higher acuity memory care component (The Village at

Incarnate Word). The concluded rents have been cross checked with the actual rents received per the most recent rent roll.

Income Capitalization Approach

Rent Adjustments

Rent adjustments can be necessary to account for differences in rental rates applicable to different

units within similar floor plans due to items such as location within the property and care provided. However, this analysis utilizes the weighted average rental rates, considering this variance. Thus, no

rent adjustments are required.

Rent Roll Analysis

The subject’s rent roll has been analyzed and is summarized below.

Subject Asking Most

Recent Avg. T-6 Mo.

Avg. Min. Max. LOC Avg. Avg. T-6 Mo.

Avg. Min. Max. Assisted Living Studio $2,595 - $2,895 8/19/2020 $2,621 $2,595 $1,495 $4,248 $519 $2,863 $2,862 $1,495 $4,248 1 Bedroom $3,095 7/23/2020 $3,186 $3,095 $2,195 $4,149 $250 $3,269 $3,095 $2,195 $4,149 Memory Care Studio $4,150 - $5,150 7/23/2020 $4,337 $4,576 $3,100 $5,574 #DIV/0! $4,337 $4,576 $3,100 $5,574

Source: Property Rent Roll

RENT ROLL ANALYSIS

Total Revenue CollectedBase Contract Rent Collected

The rent roll analysis serves as a crosscheck to the estimate of market rent for the subject. The

collections shown on the rent roll include rent premiums and/or discounts.

LOSS TO LEASE ANALYSIS Total Total

Revenue Component Monthly Rent Annual Rent 50 Occupied Rev. Units at Contract Rates $158,446 $1,901,352 47 Vacant Rev. Units at Market Rates $134,725 $1,616,700 97 Total Rev. Units @ Contract Rent $293,171 $3,518,052 97 Total Rev. Units @ Market Rent $297,475 $3,569,700

Indicated Loss-to-Lease 1.4%

Compiled by CBRE

The variation between the total annual rent reflected in the rent roll analysis and the market rent

conclusion is due to older leases that do not reflect recent increases in rental rates.

Potential Rental Income Conclusion

Within this analysis, potential rental income is estimated based upon the forward-looking market

rental rates over the next twelve months. This method of calculating rental income is most prevalent in

the local market and is consistent with the method used to derive overall capitalization rates from the

comparable sales data.

Market Rent Conclusions

The following chart shows the market rent conclusions for the subject:

Income Capitalization Approach

Revenue Monthly Rent Annual Rent Annual Unit Type Units $/Rev. Unit PRI $/Rev. Unit Total

Assisted Living Studio 66 $2,650 $174,900 $31,800 $2,098,800 1 Bedroom 14 $3,200 $44,800 $38,400 $537,600

Memory Care Studio 17 $4,575 $77,775 $54,900 $933,300

97 $3,067 $297,475 $36,801 $3,569,700

Compiled by CBRE

MARKET RENT CONCLUSIONS

Concessions

Based on our analysis of the subject’s rent roll, discussions with subject management, and discussions

with marketing directors at comparable properties, concessions were reported to be prevalent in the local market. Typical concessions range from waiving the community fee or offering one-month’s free

rent. These concessions were considered in concluding a market rent for each of the subject’s unit

types.

Level of Care Income

A summary of level of care fees collected by the subject as well as CBRE’s stabilized projections are

presented below:

LEVEL OF CARE FEES

Year Total $/Rev. Unit $/ RD 2019 Actual $212,188 $2,188 $11.86 2020 YTD Ann. $103,099 $1,063 $5.43 Year 2 Stabilized $226,395 $2,334 $6.75 Year 2 As Stabilized $219,801 $2,266 $6.55 CBRE Stabilized Estimate $216,000 $2,227 $6.78

Compiled by CBRE

Level of care fees for the subject range from $100 to $900 with level of care fees in the market

ranging from $250 to $2,000, supporting management’s level of care charges. In review of the subject’s rent roll, these fees are being collected. CBRE concluded to an average level of care fee of

$500 per month for assisted living.

According to the 2016 National Health Interview Survey published by the U.S. Department of Health and Human Services, 64% of assisted living residents require assistance with at least one ADL.

However, the pricing at the subject is such that approximately 50% of the assisted living residents are

charged at least one level of care. The annual revenue indicated in the table above was derived by applying the concluded level of care fees to the respective units, then adjusting for the ADL utilization

(50%) and vacancy.

Income Capitalization Approach

Second Resident Fees

Second resident fees are prevalent in the market, whereby couples are charged for double occupancy.

The subject’s second resident revenue for this source is summarized below.

SECOND RESIDENT FEES

Year Total $/Rev. Unit $/ RD 2019 Actual -$27,500 -$284 -$1.54 2020 YTD Ann. $31,586 $326 $1.66 Year 2 Stabilized $31,680 $327 $0.94 Year 2 As Stabilized $30,757 $317 $0.92 CBRE Stabilized Estimate $30,240 $312 $0.95

Compiled by CBRE

Second resident fees currently charged in the market range from $400 to $1,500 per month, with

management charging a second resident fee $1,000 of per month. Given concessions on second

resident fees are typical we have concluded at a second resident fee of $700.

Standard double occupancy typically ranges from 1.05 to 1.20; this range generally varies by acuity, with an inverse relationship between community acuity and double occupancy prevalence. By applying

the concluded second resident fee of $700 for the subject to an average double occupancy ratio of

1.05, and adjusting for vacancy, an annual revenue for this source is indicated, as reported in the table above.

Community Fee

It is common for seniors housing properties to charge a one-time community fee at move-in. Property

management is charging a community fee for all residents. The subject’s community fee collections for

this source reported below:

COMMUNITY FEES

Year Total $/Rev. Unit $/ RD 2019 Actual $24,750 $255 $1.38 2020 YTD Ann. $47,630 $491 $2.51 Year 2 Stabilized $28,000 $289 $0.83 Year 2 As Stabilized $27,184 $280 $0.81 CBRE Stabilized Estimate $24,488 $252 $0.77

Compiled by CBRE

The market indicated range of $1,500 to $2,000 and the subject’s community fee is quoted at

$1,750 to $2,000. Since full or partial waiver of community fees is typically the first and most

common form of concession to be offered, we have considered the current level of concessions in the market within our community fee projection, which we estimate a reasonable average community fee

at the subject is $500.

Income Capitalization Approach

The recent The State of Seniors Housing 2018 report notes median, annual resident turnover rates as

follows: • 37.4% for independent living • 41.7% for independent and assisted living • 54.1% for assisted living facilities • 56.1% for facilities with assisted living and memory care • 21.5% for all CCRCs (excluding skilled nursing beds)

Given the subject’s use, we have utilized an annual turnover ratio of 56.1%, or 49 unit rollovers per year (occupied beds x 56.1%) based on CBRE’s stabilized estimate. The annual revenue for this

source can be estimated by applying the indicated unit turnover to the estimated community fee as

indicated in the table above.

Other Income

Other income includes ancillary services such as guest meals, late fees, medication management, and other add on services. A summary of the other income fees collected by the subject as well as CBRE’s

stabilized projections are presented below:

OTHER INCOME

Year Total $/Rev. Unit $/ RD 2019 Actual $121,241 $1,250 $6.78 2020 YTD Ann. $79,838 $823 $4.21 Year 2 Stabilized $19,782 $204 $0.59 Year 2 As Stabilized $19,206 $198 $0.57 CBRE Stabilized Estimate $19,119 $197 $0.60

Compiled by CBRE

Other income includes guest meals, medication fees, pet fees, and salon revenue.

Vacancy

The subject’s estimated stabilized occupancy rate was previously discussed in the market analysis. The

concluded occupancy was applied to the subject’s unit mix in order to derive a weighted average

vacancy, as detailed below:

WEIGHTED AVERAGE ECONOMIC VACANCY Care Level % of Total PGI Vacancy Assisted Living 73.9% x 10.0% = 7.4% Memory Care 26.1% x 10.0% = 2.6% Indicated Weighted Average Vacancy (Rounded) 10.0%

Compiled by CBRE

Income Capitalization Approach

As mentioned, the above vacancy estimate represents weighted average economic vacancy based on

potential gross income (PGI) attributable to each component while the below vacancy indications are based on physical occupancy calculated on a resident day basis. Any disparity between the two figures

is due to the differing levels of rent for the subject’s care levels. The subject’s average vacancy is

detailed as follows:

VACANCY

Year 2019 Actual 49.5% 2020 YTD Ann. 46.4% Year 2 Stabilized 5.2% Year 2 As Stabilized 5.2% CBRE Stabilized Estimate 10.0%

Compiled by CBRE

Effective Gross Income The following table summarizes the projected gross rental and effective gross rental revenue for the subject:

Occupancy Care Level / Payor Annual AMR PRD (Rounded) Annual % of Total PRD Assisted Living $2,636,400 $2,746 $74.46 90% $2,372,760 74% 74.46 Memory Care $933,300 $4,575 $26.36 90% $839,970 26% 26.36

Total / Average $3,569,700 $3,067 $100.82 90% $3,212,730 100.82

Source: Compiled by CBRE

CONCLUDED RENTAL REVENUE SUMMARY Potential Gross Rental Income Net Rental Income

The subject’s effective gross income is detailed below which includes all revenue sources detailed in

this analysis.

EFFECTIVE GROSS INCOME

Year Total $/Rev. Unit % Change 2019 Actual $2,015,984 $20,783 --- 2020 YTD Ann. $2,169,072 $22,362 8% Year 2 Stabilized $3,767,206 $38,837 74% Year 2 As Stabilized $3,657,481 $37,706 -3% CBRE Stabilized Estimate $3,502,576 $36,109 -4%

Compiled by CBRE

The CBRE Stabilized estimate is slightly below management’s stabilized projections given the lower

estimated occupancy level. As detailed throughout this report, market data was extracted and utilized

in determining these estimates. Overall, the concluded effective gross income estimated by CBRE

being well supported by market extracted indications.

Income Capitalization Approach

Operating Expense Analysis

Expense Comparables

The following chart summarizes expenses obtained from recognized industry publications and/or

comparable properties.

EXPENSE COMPARABLES

Comparable

Expense Year GBA (SF) Year Built

Unit Type: Rev. Units Res. Days Rev. Units Res. Days Rev. Units Res. Days Assisted Living 91 24,917 179 47,465 43 14,800 Memory Care 0 0 43 13,457 13 4,570

Total 91 24,917 222 60,922 56 19,370

Effective Gross Income $27,920 $101.97 $24,230 $88.29 $39,740 $114.89

Expenses %/ EGI $/Rev. Unit $/RD %/ EGI $/Rev. Unit $/RD %/ EGI $/Rev. Unit $/RD

Real Estate Taxes 3.25% $908 $3.32 4.23% $1,026 $3.74 1.50% $598 $1.73 Property Insurance 2.01% 561 2.05 3.98% 965 3.52 1.38% $549 1.59 Utilities 5.23% 1,461 5.34 5.33% 1,291 4.71 3.00% $1,191 3.44 Administrative & General 23.12% 6,455 23.57 10.25% 2,483 9.05 12.56% $4,991 14.43 Marketing 5.87% 1,639 5.98 5.18% 1,255 4.57 4.87% $1,935 5.59 Resident Care 14.08% 3,932 14.36 21.08% 5,107 18.61 15.53% $6,173 17.85 Culinary Services 11.74% 3,277 11.97 12.81% 3,104 11.31 10.85% $4,311 12.46 Laundry & Housekeeping 2.71% 757 2.76 2.64% 640 2.33 1.27% $505 1.46 Repairs & Maintenance 4.86% 1,356 4.95 7.14% 1,731 6.31 3.01% $1,195 3.45 Programming 2.16% 602 2.20 2.52% 612 2.23 2.04% $810 2.34 Payroll Taxes & Benefits 8.83% 2,464 9.00 8.13% 1,970 7.18 6.72% $2,670 7.72

Operating Expenses 83.85% $23,412 $85.50 83.31% $20,186 $73.56 62.72% $24,927 $72.07

Management Fees (as % of EGI) 0.0% 0.0% 5.0% Full Time Employee/ RD 0.45

² The median total differs from the sum of the individual amounts.

Source: CBRE VIEW Database

1974 1990 2000 50,054 125,097 33,833

2017 Actual 2017 Actual 2018 Actual

1 2 3

CBRE’s analysis and estimates of stabilized operating expenses for the subject is presented in the

following section. Operating financials for the subject as provided by property management were considered. The property financials were juxtaposed with the market extracted operating expense data

summarized above. In analyzing operating data relative to the subject’s property type, the “per

resident day” indicator is considered the most accurate indicator.

COVID-19 Operating Expense Considerations

Expense levels have been impacted by COVID-19 for seniors housing properties. Though the level of the impact varies by region and property type, expenses have increased since early March 2020. The

following discussion is based on conversations with market participants as well as in review of

hundreds of property operations.

Staffing expenses increased since early March from surge pay, hazard pay, temporary staffing, and

other stipends, although the impact on the overall operations have been offset by several factors. In

our discussions with operators, there is generally a consensus that while certain expenses, particularly

Income Capitalization Approach

payroll expenses, have increased in recent months, the increase is not anticipated to be permanent.

Some operators are reporting that the increase in payroll expenses has fallen back to pre-COVID levels, while other operators report that payroll expenses remain elevated. The consensus among

operators is that elevated payroll expenses levels are not expected to be permanent. While staffing

expenses have increased since early March 2020, from surge pay, hazard pay, temporary staffing,

and other stipends, the impact on the overall operations have been offset by several factors. Some operators report that the existing staffing has crossed departments, filling various new needs, and that,

while payroll increases are common for certain staff, the overall effect is a net zero on total payroll

costs. The Payroll Protection Program has also offset increased expenses for operators that have qualified. The PPP loans are reported to be a net-positive by some operators. Operators report that

increased monthly payroll expenses are budgeted at between $50 and $200/unit, with an expected

time horizon ranging from 0 to 12 months, not expected to be significant long term.

Operators report that expenses levels for PPE, testing kits, and sanitation have increased since March 2020. Reported figures vary by property type and region, but these costs are mostly reported to range

from $50 to $300 per unit on a monthly basis. Notably, these increased operational expenses, have

outpaced any offset from declines in census levels, resulting in elevated expenses on a per resident day basis. These elevated expenses are generally expected to extend into the mid-term, or through the

end of 2020. Investors and operators also report that property and liability insurance expenses are

expected to increase through 2020. Additionally, dietary costs are elevated for some operators given

increased meat costs caused by disruptions in supply chain. Operators also report that food delivery to individual resident units has elevated dietary supply costs.

Long-term expectations for changes in operating expenses are not currently quantifiable. Potentially,

however, elevated PPE and sanitation costs in the longer term are not likely to have significant impacts on overall operations. Potential increased regulatory requirements on a State or Federal level as well

as elevated liability insurance, for example, pose a potential risk for increased expenses into

perpetuity. However, in our discussions with market participants, this potential threat is not quantifiable, and not currently included within investment underwriting. The general consensus among

market participants is that short-term elevated expenses are not expected to remain long-term,

particularly for high-quality, experienced operators.

Income Capitalization Approach

Real Estate Taxes

The real estate taxes for the subject were previously discussed. The subject’s expense is detailed as

follows:

REAL ESTATE TAXES

Year Total $/Rev. Unit $/ RD 2019 Actual $17,688 $182 $0.99 2020 YTD Ann. $56,797 $586 $2.99 Year 2 Stabilized $90,804 $936 $2.71 Year 2 As Stabilized $88,159 $909 $2.63 Expense Comparable 1 N/A $908 $3.32 Expense Comparable 2 N/A $1,026 $3.74 Expense Comparable 3 N/A $598 $1.73 CBRE Stabilized Estimate $173,660 $1,790 $5.45

Compiled by CBRE

Our conclusion is based on the analysis and discussion as presented within the Taxes and Assessment

Data section. Note that this line item includes real property tax only, with the subject’s personal

property tax included under the Administrative & General expense line item.

Property Insurance

Property insurance expenses typically include fire and extended coverage and owner’s liability coverage. The subject’s expense is detailed as follows:

PROPERTY INSURANCE

Year Total $/Rev. Unit $/ RD 2019 Actual $120,694 $1,244 $6.75 2020 YTD Ann. $88,449 $912 $4.66 Year 2 Stabilized $61,146 $630 $1.82 Year 2 As Stabilized $59,365 $612 $1.77 Expense Comparable 1 N/A $561 $2.05 Expense Comparable 2 N/A $965 $3.52 Expense Comparable 3 N/A $549 $1.59 CBRE Stabilized Estimate $76,475 $788 $2.40

Compiled by CBRE

Insurance is a property specific expense and, therefore, we have placed primary weight on the

reported figures for our conclusion. The CBRE Estimate concludes above the buyers pro forma, as property insurance is a line item expected to increase post COVID. The historic operating periods

rolled in other line items into property insurance such as benefits and umbrella insurance.

Income Capitalization Approach

Utilities

Utility expenses include electricity, natural gas, water and sewer. The subject’s expense is detailed as

follows:

UTILITIES

Year Total $/Rev. Unit $/ RD 2019 Actual $128,545 $1,325 $7.19 2020 YTD Ann. $145,304 $1,498 $7.66 Year 2 Stabilized $160,968 $1,659 $4.80 Year 2 As Stabilized $156,280 $1,611 $4.66 Expense Comparable 1 N/A $1,461 $5.34 Expense Comparable 2 N/A $1,291 $4.71 Expense Comparable 3 N/A $1,191 $3.44 CBRE Stabilized Estimate $146,577 $1,511 $4.60

Compiled by CBRE

Like insurance expenses, utilities are a highly, property specific expense and we have placed primary

weight on the reported figures for our conclusion.

Administrative & General

Administrative expenses typically include legal costs, accounting, telephone, supplies, furniture, temporary help and items that are not provided by off-site management. The subject’s expense is

detailed as follows:

ADMINISTRATIVE & GENERAL

Year Total $/Rev. Unit $/ RD 2019 Actual $313,602 $3,233 $17.53 2020 YTD Ann. $358,881 $3,700 $18.91 Year 2 Stabilized $416,107 $4,290 $12.40 Year 2 As Stabilized $403,988 $4,165 $12.04 Expense Comparable 1 N/A $6,455 $23.57 Expense Comparable 2 N/A $2,483 $9.05 Expense Comparable 3 N/A $4,991 $14.43 CBRE Stabilized Estimate $382,374 $3,942 $12.00

Compiled by CBRE

Income Capitalization Approach

Marketing

Marketing expenses typically include all costs associated with the promotion of the subject, including

advertisements in local publications, trade publications, yellow pages, et cetera. The subject’s expense

is detailed as follows:

MARKETING

Year Total $/Rev. Unit $/ RD 2019 Actual $208,614 $2,151 $11.66 2020 YTD Ann. $196,631 $2,027 $10.36 Year 2 Stabilized $102,354 $1,055 $3.05 Year 2 As Stabilized $99,373 $1,024 $2.96 Expense Comparable 1 N/A $1,639 $5.98 Expense Comparable 2 N/A $1,255 $4.57 Expense Comparable 3 N/A $1,935 $5.59 CBRE Stabilized Estimate $95,594 $986 $3.00

Compiled by CBRE

The historic periods display marketing costs well above market levels, and it appears that line items ‘referral fees’ and ‘Leads’ totaled over $100,000 in 2020. The CBRE Estimate concludes at a similar

level to the buyer pro forma.

Resident Care

One of the more costly items involved in operating the subject property is resident care services. In

addition to departmental employees, this category includes supplies and drugs, as well as medical and therapy fees necessary for operation. The nurse's aides are on duty 24 hours a day during all

shifts, and also perform light housekeeping duties, serve meals, and provide personal care assistance

to the residents. The subject’s expense is detailed as follows:

RESIDENT CARE

Year Total $/Rev. Unit $/ RD 2019 Actual $735,827 $7,586 $41.14 2020 YTD Ann. $776,953 $8,010 $40.94 Year 2 Stabilized $1,028,396 $10,602 $30.64 Year 2 As Stabilized $998,442 $10,293 $29.75 Expense Comparable 1 N/A $3,932 $14.36 Expense Comparable 2 N/A $5,107 $18.61 Expense Comparable 3 N/A $6,173 $17.85 CBRE Stabilized Estimate $946,376 $9,756 $29.70

Compiled by CBRE

Income Capitalization Approach

As discussed, Seniors Housing operators have reported increasing in staffing costs, mostly nursing

care payroll, since early March 2020. These elevated expenses include surge pay, hazard pay, temporary staffing, and other stipends. Examples of resident care staffing increases are as follows:

• A regional operator with 2,500+/- units estimates an additional $120/unit/month on for hourly workers were spent since March and have budgeted payroll increases through June.

• A regional operator with 2,000+/- units has spent an additional $75/unit/month on payroll related expenses. This increase is temporary and is not included in the budget.

• Regional operator with 1,500+/- units have paid roughly $100/unit/month in staffing incentives through May 2020. They estimate that all payroll expenses will be covered by PPP

and it will ultimately benefit their bottom line.

Operators report that increased monthly payroll expenses are budgeted at between $50 and

$200/unit, with an expected time horizon ranging from 0 to 12 months, not expected to be significant

long term.

In addition to the elevated payroll, the operators report that expenses levels for PPE and testing kits have increased since March. These expenses mostly fall under Examples of supply increases from

COVID-19 are as follows:

• A regional skilled nursing operator with approximately 1,000 beds estimates $50/resident/month has been spent on additional supplies.

• A regional seniors housing operator with 1,500+/- units estimates $125/unit/month has been spent on PPE and testing kits since March.

• A regional operator showed a line item for PPE costs, supplies, and equipment in April 2020 at $45/resident/month.

It should be noted that overall increases have occurred while occupancy has declined at most

communities. These costs are generally assumed to go past the near term, and have been budgeted

through 2020 for most operators. It is unclear given the uncertainly of the pandemic if these increased

costs will be permanent. While there may be future legislative impacts from the state or federal level, it is not currently known if this is a certainty.

The CBRE Estimate concludes at a similar level to the buyer pro forma and above the comparables

given the higher staffing required as a result of the layout of the subject (3 separate buildings).

Income Capitalization Approach

Culinary Services

Another significant departmental expense in the operation of a seniors housing property is the dietary

department, which provides food service for the residents, guests, and employees. High quality food

and service is a priority consideration in properties such as the subject. The subject’s expense is detailed as follows:

CULINARY SERVICES

Year Total $/Rev. Unit $/ RD 2019 Actual $371,464 $3,830 $20.77 2020 YTD Ann. $308,872 $3,184 $16.27 Year 2 Stabilized $415,787 $4,286 $12.39 Year 2 As Stabilized $403,676 $4,162 $12.03 Expense Comparable 1 N/A $3,277 $11.97 Expense Comparable 2 N/A $3,104 $11.31 Expense Comparable 3 N/A $4,311 $12.46 CBRE Stabilized Estimate $385,560 $3,975 $12.10

Compiled by CBRE

Laundry & Housekeeping

Housekeeping and Laundry expenses include the cost of supplies and miscellaneous expenses, uniforms, and linens. The subject’s expense is detailed as follows:

LAUNDRY & HOUSEKEEPING

Year Total $/Rev. Unit $/ RD 2019 Actual $42,464 $438 $2.37 2020 YTD Ann. $46,575 $480 $2.45 Year 2 Stabilized $43,631 $450 $1.30 Year 2 As Stabilized $42,361 $437 $1.26 Expense Comparable 1 N/A $757 $2.76 Expense Comparable 2 N/A $640 $2.33 Expense Comparable 3 N/A $505 $1.46 CBRE Stabilized Estimate $41,424 $427 $1.30

Compiled by CBRE

Income Capitalization Approach

Repairs & Maintenance

Repairs and maintenance expenses typically include all outside maintenance service contracts and the

cost of maintenance and repairs supplies. Landscaping and security expenses typically include all

outside landscaping and grounds maintenance service contracts and the cost of landscaping supplies, as well as security services. Trash related expenses are also included in this line item. The subject’s

expense is detailed as follows:

REPAIRS & MAINTENANCE

Year Total $/Rev. Unit $/ RD 2019 Actual $232,029 $2,392 $12.97 2020 YTD Ann. $202,602 $2,089 $10.67 Year 2 Stabilized $195,029 $2,011 $5.81 Year 2 As Stabilized $189,348 $1,952 $5.64 Expense Comparable 1 N/A $1,356 $4.95 Expense Comparable 2 N/A $1,731 $6.31 Expense Comparable 3 N/A $1,195 $3.45 CBRE Stabilized Estimate $178,441 $1,840 $5.60

Compiled by CBRE

Programming

Programming includes all expenses associated with resident activities, social services, and scheduled

transportation.

PROGRAMMING

Year Total $/Rev. Unit $/ RD 2019 Actual $122,072 $1,258 $6.83 2020 YTD Ann. $59,746 $616 $3.15 Year 2 Stabilized $98,066 $1,011 $2.92 Year 2 As Stabilized $95,209 $982 $2.84 Expense Comparable 1 N/A $602 $2.20 Expense Comparable 2 N/A $612 $2.23 Expense Comparable 3 N/A $810 $2.34 CBRE Stabilized Estimate $89,221 $920 $2.80

Compiled by CBRE

Income Capitalization Approach

Payroll Taxes & Benefits

Payroll expenses typically include all payroll and payroll-related items for all directly employed

administrative personnel. Not included are the salaries or fees for off-site management firm personnel

and services. The subject’s expense is detailed as follows:

PAYROLL TAXES & BENEFITS

Year Total $/Rev. Unit $/ RD 2019 Actual $223,227 $2,301 $12.48 2020 YTD Ann. $236,344 $2,437 $12.45 Year 2 Stabilized $256,279 $2,642 $7.64 Year 2 As Stabilized $248,815 $2,565 $7.41 Expense Comparable 1 N/A $2,464 $9.00 Expense Comparable 2 N/A $1,970 $7.18 Expense Comparable 3 N/A $2,670 $7.72 CBRE Stabilized Estimate $235,797 $2,431 $7.40

Compiled by CBRE

As a check of reasonableness, payroll taxes and benefits typically ranges between 15% and 25% of the Total Employee Payroll for similar facilities and our conclusion, which falls around 14.9% of the

total payroll expenses, is supported by this range.

Payroll Allocation Summary

As noted, the detailed operating summary and conclusions for each department does include payroll

expenses. The following table summarizes the subject’s payroll expenses, the CBRE stabilized estimate, and juxtaposes this information with the comparable set. The following payroll expenses have already

been included in each departmental expense estimate.

PRD PRD PRD PRD Min. Max. Avg. Administration $5.42 $8.31 $8.06 $8.00 $4.54 $17.79 $9.68 Advertising 3.08 1.90 1.84 1.80 1.32 3.42 2.11 Culinary 9.27 5.03 4.88 4.90 6.15 6.42 6.29 Laundry & Housekeeping 2.02 1.12 1.09 1.10 1.28 2.37 1.74 Resident Care 39.17 30.28 29.40 29.40 14.25 18.12 16.63 Maintenance 4.12 2.63 2.55 2.50 0.84 1.45 1.20 Programming 2.47 2.16 2.10 2.10 0.96 1.99 1.51 Total Employee Payroll $65.54 $51.43 49.93 $49.80 $34.74 $43.95 $39.16

Payroll Taxes 7.25 4.41 4.28 4.20 2.78 4.23 3.39 Benefits 5.20 3.22 3.13 3.20 4.40 4.77 4.58

Total $77.99 $59.06 $57.34 $57.20 $41.92 $52.95 $47.12

Source: Compiled by CBRE

2020 YTD Ann. Year 2 Stabilized Year 2 As Stabilize Expense Comps.(PRD)

PAYROLL SUMMARY

CBRE Estimate

Income Capitalization Approach

Management’s payroll expenses are above the range of comparable set given the higher staffing

model in the resident care department.

Operating Expenses

Total operating expense, exclusive of management fees and reserves, are summarized below along with the respective comparable data:

OPERATING EXPENSES

Year Total $/Rev. Unit $/ RD 2019 Actual $2,516,226 $25,940 $140.69 2020 YTD Ann. $2,477,154 $25,538 $130.51 Year 2 Stabilized $2,868,567 $29,573 $85.47 Year 2 As Stabilized $2,785,016 $28,712 $82.98 Expense Comparable 1 N/A $23,412 $85.50 Expense Comparable 2 N/A $20,186 $73.56 Expense Comparable 3 N/A $24,927 $72.07 CBRE Stabilized Estimate $2,751,498 $28,366 $86.35

Compiled by CBRE

The CBRE estimate is slightly above the range of the expense comparables and is slightly above the

buyer pro forma, as the buyer pro forma estimated a lower real estate tax and lower property

insurance estimate with a higher overall occupancy. Overall, the CBRE Stabilized Estimate is

considered to be well supported by the comparable data presented as well as reported operating trends reported for the subject property.

As an additional check of reasonableness, we looked to the implied expense ratios, prior to

adjustments for management and reserves. The comparables provide an expense ratio range of 62.7% to 83.9%. Overall, the subject’s indicated expense ratio, of 78.6%, falls within the comparable

range as well as is consistent with the subject’s reporting periods, providing further support for the

operating expenses conclusion.

Management Fee

Management expenses are typically negotiated as a percentage of collected revenues (i.e., effective gross income). As reported in the 2018 SOSH report, management fees currently charged in the

market range from 3.5% to 6.5% depending upon a wide assortment of attributes ranging from size,

location, etc. When considering the subject’s operations and physical features, we conclude an

appropriate management expense is 5.00%.

Income Capitalization Approach

Reserves for Replacement

Reserves for replacement have been estimated based on market parameters with an indicated range

of $250 to $550 per unit for comparable properties. Based on discussions with market participants

conducting property condition assessments, a wide range of reserves are reported. Mr. Sorenson, a Senior Managing Director with CBRE assessment services reported that the average level of reserves

required based on his detailed review of hundreds of properties is approximately $350 per revenue

unit. A reserve replacement of $350 per unit has been applied to CBRE’s pro forma.

Total Operating Expense Conclusion

The concluded operating expenses inclusive of management fees and replacement reserves are summarized as follows:

ADJUSTED OPERATING EXPENSES

Year Total $/ RD % Change 2019 Actual $2,679,295 $149.81 --- 2020 YTD Ann. $2,615,191 $137.79 -2% Year 2 Stabilized $3,090,877 $92.09 18% Year 2 As Stabilized $3,001,840 $89.44 -3% CBRE Stabilized Estimate $2,960,577 $92.91 -1%

Compiled by CBRE

The CBRE Stabilized operating expense is slightly above the total operating expenses indicated by the

buyer pro forma on a per resident day basis proforma. It is well supported by the market comparables.

Net Operating Income Conclusion

The subject’s net operating income is detailed as follows:

ADJUSTED NET OPERATING INCOME

Year Total $/ RD % Change 2019 Actual -$663,311 -$37.09 --- 2020 YTD Ann. -$446,119 -$23.50 -33% Year 2 Stabilized $676,329 $20.15 -252% Year 2 As Stabilized $655,641 $19.53 -3% CBRE Stabilized Estimate $542,000 $17.01 -17%

Compiled by CBRE

As the revenue, occupancy, and individual operating expense line items are supported by the historical and market data, the corresponding net operating income is considered to be well

supported.

Income Capitalization Approach

In addition to the above analysis, we have incorporated consideration for the indicated operating

margin, based on the net operating income (EBITDAR) as a test of reasonableness. As shown within the following table, on a national basis, operating margins for AL/MC are reported to range between

15.3% and 39.9% with a median of 28.7% Overall, the CBRE revenue and expense conclusion have

a corresponding operating margin of 15.5%; this indication is at the lower end of the range of the

market data which is considered reasonable given the concluded rents are at the lower end of the market given the age and amenity package at the subject.

For Profit Communities Only IL IL/AL IL/AL/MC AL (no MC) AL/MC CCRC

Lower Quartile 26.8% 16.7% 18.1% 13.8% 15.3% 7.6%

Median 39.1% 33.0% 33.2% 29.3% 28.7% 24.7%

Upper Quartile 48.8% 45.2% 43.0% 41.0% 39.9% 44.5%

Source: ASHA, 2018 State of Seniors Housing Report

OPERATING MARGINS BY COMMUNITY TYPE (EBITDAR/TOTAL REVENUES)

Note: Properties are ranked by operating margin. Each quartile represents the weighted average of all properties falling in that rank while the median reflects the average of the 5th and 6th deciles.

Income Capitalization Approach

Direct Capitalization

Direct capitalization is a method used to convert a single year’s estimated stabilized net operating

income into a value indication. The following subsections represent different techniques for deriving an overall capitalization rate for direct capitalization.

Comparable Sales

The overall capitalization rates (OARs) confirmed for the comparable sales analyzed in the sales

comparison approach are as follows:

COMPARABLE CAPITALIZATION RATES Sale Sale Price

Sale Date $/Rev. Unit Occupancy OAR 1 Mar-19 $60,404 49% 10.03% 2 Apr-19 $116,304 57% 7.44% 3 Jul-19 $82,000 91% 7.14% 4 Nov-19 $84,615 87% 10.48% 5 Aug-20 $106,061 55% 4.76%

Indicated OAR: 90% 7.14%-10.48%

Source: CBRE VIEW Database

Comparable 5 was not given weight given the sale occurred with the community operated at below

stabilized occupancy and the buyer purchasing on the upside potential.

Income Capitalization Approach

Published Investor Surveys

The results of the most recent investor surveys are summarized in the following chart.

OVERALL CAPITALIZATION RATES Investment Type OAR Range Average

NIC Seniors Housing --- - --- 7.80%

Realty Rates Investor Survey Assisted Living --- - --- 8.24%

CBRE Seniors Housing Investor Survey Standard Assisted Living

Class B: Core Locations 6.00% - 10.00% 7.23% Class B: Non-Core Locations 6.00% - 11.00% 7.72% Class C: Core Locations 7.00% - 11.00% 8.74% Class C: Non-Core Locations 7.00% - 12.00% 8.98%

Assisted Living/ Memory Care Class B: Core Locations 6.00% - 10.00% 7.59% Class B: Non-Core Locations 6.00% - 11.00% 7.85% Class C: Core Locations 7.00% - 11.00% 8.85% Class C: Non-Core Locations 7.00% - 12.00% 9.00%

Indicated OAR: 7.25%-8.50%

Source: CBRE, RealtyRates.com, NIC

Band of Investment

The band of investment technique has been utilized as a crosscheck to the foregoing techniques. The Mortgage Interest Rate and the Equity Dividend Rate (EDR) are based upon current market yields for

similar investments. With consideration of impacts from the COVID-19 pandemic, the following

changes have been noted to the lending environment since March 2020:

• Max Loan-to-Values have decreased by 5% to 10%

• Minimum DSCR requirements have increased by around 10%

• Interbank lending rates have decreased, but the floating rates have expanded by 50 to 100 bps, netting to an increase of 25 to 75 bps

• Agency lenders (Fannie/Freddie) are still active; however, these agencies have significantly increased up-front reserves, increasing the cost of borrowed capital

• Life companies have reduced exposure to seniors housing lending, while conventional lending via commercial banks has become more selective in their lending. Debt funds and

CMBS are less active.

Income Capitalization Approach

• Most lenders are on “pause” due to the inability to price risk, a change from the ample liquidity in the market pre-COVID

Noting the above post-COVID lending environment, the following Band of Investment analysis is

summarized within the following chart:

BAND OF INVESTMENT Mortgage Interest Rate 3.75% Mortgage Term (Amortization Period) 30 Years Mortgage Ratio (Loan-to-Value) 70% Mortgage Constant (monthly payments) 0.05557 Equity Dividend Rate (EDR) 13%

Mortgage Requirement 70% x 0.05557 = 0.03890 Equity Requirement 30% x 0.13000 = 0.03900

100% 0.07790

Indicated OAR: 7.80%

Compiled by: CBRE

COVID-19 Capitalization Rate Considerations

As discussed within the Market Analysis section of this report, market participants opine capitalization rate fluctuations include a range of no change (or 0 bps) up to an increase of up to 100 bps on the

buy side; notably, transactional data is not currently available to support an adjustment. The factors

that have been identified as impacting these rates are as follows:

• In the valuation model, near through long-term impacts on census levels have been incorporated and, thus, are not included within the capitalization rate conclusion.

• Similar to occupancy levels, a majority of elevated operating expenses have been incorporated within the cash flow conclusions. However, long-term elevated expenses,

including potential increased regulatory requirements and/or liability insurance, etc. is not

quantifiable, and has been considered in the selection of the overall capitalization rate selection.

• Disruptions in capital markets, with increased borrowing costs, as discussed

• Overall increased perception of risk due to market uncertainty

Capitalization rate fluctuations can vary based on location (core versus non-core, COIVD ‘Hot Spot’,

etc.) and asset class (A, B or C), with best-in-class properties falling at the lower end of the range, and value-add properties falling at the high end. These fluctuations track with the 0% to 10% value

diminution identified and described with the Sales Comparison section of this report.

Limited transactional data is currently available to support an adjustment and market expectations are

based on hundreds of interviews conducted with buyers, sellers, operators, brokers, and capital

Income Capitalization Approach

markets professionals active in the Seniors Housing and Care sector. If the COVID-19 Pandemic

continues to impact the overall economy beyond the near term, capitalization rates may be adversely impacted. Notably, overall market sentiment is that, in the long term, the expectation is for overall

capitalization rates to return to pre-COVID-19 levels, as the perception of risk is reduced due to

improvement in market clarity.

Capitalization Rate Conclusion

The following chart summarizes the OAR conclusions.

OVERALL CAPITALIZATION RATE - CONCLUSION Source Indicated OAR Comparable Sales 7.14%-10.48% National Investor Survey 7.25%-8.50% Band of Investment 7.80% CBRE Estimate 7.75%

Compiled by: CBRE

In reviewing the Capitalization Rate sources as discussed, the overall rates are stable since the transaction dates of the Comparable Sales and the publication dates of National Investor Surveys. The

Band of Investment compared the current cost of borrowing against the pre-pandemic environment,

indicating a minimal increase. To incorporate consideration for current market conditions, we have

loaded the capitalization rate conclusion by 25 bps. The capitalization rate was increased based the subject being a Class B/C property in a non-core market, for which market participants are indicating

a cap rate spread of 25 bps for cost of capital, as detailed in the preceding sections. The subject’s

Strengths/Opportunities and Weaknesses/Threats (SWOT) are considered, and outlined within the following bullets:

Strengths/ Opportunities

• Good location near medical center

• Lack of new construction of similar facilities in the local market

• Positive growth in age 75+ population and households

• Operations have had limited impact from COVID

Weaknesses/ Threats

• Lease up risk

• Older product

• Strained reputation in the market given management turnover

• Poor historic operating performance

Income Capitalization Approach

Direct Capitalization Summary

A summary of the direct capitalization at stabilized occupancy is illustrated in the following chart.

DIRECT CAPITALIZATION SUMMARY

Income Total Potential Rent Income $3,569,700 Vacancy 10.00% (356,970)

Net Rental Income 3,212,730 Level of Care Fees $216,000 Second Resident Fees 30,240 Community Fees 24,488 Other Income 19,119

Effective Gross Income 3,502,576

Expenses Real Estate Taxes $173,660 Property Insurance 76,475 Utilities 146,577 Administrative & General 382,374 Marketing 95,594 Resident Care 946,376 Culinary Services 385,560 Laundry & Housekeeping 41,424 Repairs & Maintenance 178,441 Programming 89,221 Payroll Taxes & Benefits 235,797 Management Fee 175,129 Reserves for Replacement 33,950

Operating Expenses $2,960,577 Operating Expense Ratio 84.53% Net Operating Income $542,000 OAR / 7.75% Indicated Stabilized Value $6,993,544 Rounded $6,990,000 Lease-Up Discount ($1,715,000) Indicated As Complete Value $5,278,544 Rounded $5,280,000 Estimated Cost to Complete ($330,344) Indicated As Is Value $4,948,200 Rounded $4,950,000

Compiled by CBRE

Income Capitalization Approach

Discounted Cash Flow Analysis (DCF)

The DCF assumptions concluded for the subject are summarized as follows:

SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS

General Assumptions

Start Date Sep-20 Terms of Analysis 10 Years Software Excel

Growth Rate Assumptions

Income Growth 2.50% Expense Growth 2.50% Inflation (CPI) 2.50% Real Estate Tax Growth 2.00%

Market Rates - Year 1 Average Rent ($/Rev. Unit/Yr.) $36,801 Total Operating Expenses ($/Rev. Unit/Yr.) $30,521

Occupancy Assumptions Current Occupancy 51.55% Stabilized Occupancy 90.00% Estimated Lease-up Period 24 Months

Financial Assumptions

Discount Rate 9.75% Terminal Capitalization Rate 8.25%

Other Assumptions

Cost of Sale 2.50% Capital Expenses (Deferred Maintenance) $330,344

Compiled by CBRE

General Assumptions

The DCF analysis utilizes a projection period of 10 Years. This is consistent with current investor

assumptions.

Growth Rate Assumptions

The inflation and growth rates for the DCF analysis have been estimated by analyzing the expectations

typically used by buyers and sellers in the local marketplace. Published investor surveys, an analysis of

the Consumer Price Index (CPI), as well as CBRE, Inc.'s survey of brokers and investors active in the local market form the foundation for the selection of the appropriate growth rates. The compilation is

shown in the following chart.

Income Capitalization Approach

SUMMARY OF GROWTH RATES

Investment Type Min Max Average

U.S. Bureau of Labor Statistics (CPI-U) - As of December 2019 10.4-Year Snapshot Average 1.77%

PwC Survey (4Q 2019)

Apartment (National) - Proforma Rent Change 0.00% 4.00% 2.76%

Apartment (National) - Proforma Expense Change 0.00% 3.00% 2.71%

Senior Living Valuation Services Survey (2019)

Seniors Housing Annual Growth Rate - Revenues 2.00% 5.00% 3.00%

Seniors Housing Annual Growth Rate - Expenses 2.00% 4.00% 3.00%

Seniors Housing Annual Growth Rate - General Inflation 1.00% 3.00% 2.50%

Market Participants:

Current Seniors Housing Investor / Developer Proformas 2.50% 4.50% 3.00%

Source: Compiled by CBRE

Leasing Assumptions

The previously concluded pro forma income and expenses have been utilized as the basis for Year 1 of the holding period. All subsequent years vary according to the growth rate assumptions applied to

the Year 1 estimate.

Occupancy Assumptions

The occupancy rate over the holding period is based on the subject’s estimated stabilized occupancy

rate and estimated lease-up period to achieve a stabilized occupancy position.

Vacancy, Credit Loss and Absorption

Please refer to the market analysis of this report for a detailed discussion of these elements.

Discount Rate Analysis

The results of the most recent investor surveys are summarized in the following chart.

Income Capitalization Approach

DISCOUNT RATES Investment Type Rate Range Average

RealtyRates Investor Survey - Assisted Living New Development 6.68% - 15.77% 10.48% Acquisitions 5.81% - 13.72% 9.12% Recapitalizations 6.61% - 15.61% 10.38%

Senior Housing Investment Survey Assisted Living 8.30% - 16.00% 11.20% Assisted Living/ Memory Care 8.30% - 17.00% 11.50%

CBRE Estimate 9.75%

Source: Senior Living Valuation Services & RealtyRates.com

The discount rate selected is above the average discount rate for assisted living per the RealtyRates Investor Survey and within the rate range according to the Senior Housing Investment Survey, though

below the average.

Terminal Capitalization Rate

The reversionary value of the subject is based on an assumed sale at the end of the holding period

based on capitalizing the Year 11 NOI at a terminal capitalization rate. Typically, market participants utilize a terminal capitalization rate that falls above the going-in capitalization rate (OAR); this practice

is a result of the uncertainty of future economic conditions and the natural aging of the property. The

following chart includes the reported basis point (bps) spread between the going-in capitalization rate and the terminal capitalization rate, as reported by the CBRE Seniors Housing Investor Survey.

Spreads Between Going-In Cap Rates and Reversion Capitalization Rates

Source: CBRE Investor Survey Historical Results.

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

H2 2015 H1 2016 H1 2017 H1 2018 H1 2019 H1 2020

0 - 25 bps 25 - 50 bps 50 - 75 bps 75 - 100 bps 100 - 125 bps

As shown by the CBRE Seniors Housing Investor Survey trialing data, a vast majority of market

participants utilize a terminal rate spread 25 and 100 bps; the summed percentage of respondents

Income Capitalization Approach

that utilize this range (25 – 100 bps) has been between 77.00% and 93.44% during the trailing survey

periods. For the subject, we have concluded a load factor of 50 basis points to be appropriate.

Discounted Cash Flow Conclusion

The DCF schedule(s) and value conclusions are depicted on the following page:

Income Capitalization Approach

Cost to Achieve Stabilized Operations

As the majority of this report analyzes the subject As Stabilized per the proposed completion. The respective cost to stabilize the property upon completion must be considered in order to estimate the

As Complete value. This analysis utilizes assumptions developed in the market analysis and income

capitalization approach and will be deducted as a line item from each approach in order to render an

As Complete value estimate.

As the lease up adjustment in this analysis will be used to calculate the As Complete scenario, the

lease-up calculation represents a lease-up period of 24 months, which averages 1.6 units per month,

required to stabilize the subject. During this period, the subject will incur rent loss on vacant units. The rent loss due to vacancy is straight-lined to stabilize per the concluded absorption rate.

Variable expenses make up a considerable amount of a property’s operating expenses, with one of

the larger variable expenses being staffing. However, as a property nears stabilization, a community is

typically operating at nearly full staffing operating capacity. At the subject’s current occupancy, any variation in expenses would be expected to be off-set by any increased marketing efforts. Additionally,

we have included a 10.00% profit line item to account for the entrepreneurial incentive.

LEASE UP DISCOUNT Indicated Lease-Up Discount Rounded Compiled by CBRE

$1,714,761 $1,715,000

Note that annual escalations are not applied as this is a lump-sum deduction applied to ‘stabilized’

value conclusions. Additionally, this analysis includes negative cashflows. Thus, a discount rate has

not been applied. This methodology is summarized as follows:

Income Capitalization Approach

LEASE UP DISCOUNT SCHEDULE

Month 1 2 3 4 5 6 7 8 9 10 11 12

AS-STABILIZED

Potential Rental Income $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 Loss to Lease $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Concessions $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Adjusted Rental Income $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 Vacancy (%) 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Vacancys ($) ($29,748) ($29,748) ($29,748) ($29,748) ($29,748) ($29,748) ($29,748) ($29,748) ($29,748) ($29,748) ($29,748) ($29,748) Net Rental Income $267,728 $267,728 $267,728 $267,728 $267,728 $267,728 $267,728 $267,728 $267,728 $267,728 $267,728 $267,728 Other Income $24,154 $24,154 $24,154 $24,154 $24,154 $24,154 $24,154 $24,154 $24,154 $24,154 $24,154 $24,154 Effective Gross Income $291,881 $291,881 $291,881 $291,881 $291,881 $291,881 $291,881 $291,881 $291,881 $291,881 $291,881 $291,881 Total Expenses ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) Net Operating Income $45,167 $45,167 $45,167 $45,167 $45,167 $45,167 $45,167 $45,167 $45,167 $45,167 $45,167 $45,167

AS-IS

Potential Rental Income $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 Loss to Lease (Above Market) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Concessions During Lease Up 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Adjusted Rental Income $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 Vacancy (%) 48.5% 46.9% 45.2% 43.6% 42.0% 40.4% 38.8% 37.2% 35.6% 34.0% 32.4% 30.8% Vacancys ($) ($144,137) ($139,371) ($134,605) ($129,839) ($125,072) ($120,306) ($115,540) ($110,774) ($106,007) ($101,241) ($96,475) ($91,709) Net Rental Income $153,338 $158,104 $162,870 $167,636 $172,403 $177,169 $181,935 $186,701 $191,468 $196,234 $201,000 $205,766 Other Income $13,834 $14,264 $14,694 $15,124 $15,554 $15,984 $16,414 $16,844 $17,274 $17,704 $18,134 $18,564 Effective Gross Income $167,171 $172,368 $177,564 $182,760 $187,956 $193,153 $198,349 $203,545 $208,741 $213,938 $219,134 $224,330 Total Expenses (0% Variable) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) Net Operating Income ($79,543) ($74,347) ($69,151) ($63,955) ($58,758) ($53,562) ($48,366) ($43,170) ($37,973) ($32,777) ($27,581) ($22,385)

NOI Differential $124,710 $119,514 $114,317 $109,121 $103,925 $98,729 $93,532 $88,336 $83,140 $77,944 $72,747 $67,551 Sub-Total $124,710 $119,514 $114,317 $109,121 $103,925 $98,729 $93,532 $88,336 $83,140 $77,944 $72,747 $67,551 Plus: Profit @ 10.00% $12,471 $11,951 $11,432 $10,912 $10,392 $9,873 $9,353 $8,834 $8,314 $7,794 $7,275 $6,755 Total Lease-Up Cost $137,181 $131,465 $125,749 $120,033 $114,317 $108,602 $102,886 $97,170 $91,454 $85,738 $80,022 $74,306

Income Capitalization Approach

LEASE UP DISCOUNT SCHEDULE, Cont'd.

Month 13 14 15 16 17 18 19 20 21 22 23 24

AS-STABILIZED

AS-IS

Potential Rental Income $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 Loss to Lease (Above Market) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Concessions During Lease Up 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Adjusted Rental Income $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 $297,475 Vacancy (%) 29.2% 27.6% 26.0% 24.4% 22.8% 21.2% 19.6% 18.0% 16.4% 14.8% 13.2% 11.6% Vacancys ($) ($86,942) ($82,176) ($77,410) ($72,644) ($67,877) ($63,111) ($58,345) ($53,579) ($48,812) ($44,046) ($39,280) ($34,514) Net Rental Income $210,533 $215,299 $220,065 $224,831 $229,598 $234,364 $239,130 $243,896 $248,663 $253,429 $258,195 $262,961 Other Income $18,994 $19,424 $19,854 $20,284 $20,714 $21,144 $21,574 $22,004 $22,434 $22,864 $23,294 $23,724 Effective Gross Income $229,526 $234,723 $239,919 $245,115 $250,311 $255,508 $260,704 $265,900 $271,096 $276,293 $281,489 $286,685 Total Expenses (0% Variable) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) ($246,715) Net Operating Income ($17,188) ($11,992) ($6,796) ($1,600) $3,597 $8,793 $13,989 $19,185 $24,382 $29,578 $34,774 $39,970

NOI Differential $62,355 $57,159 $51,962 $46,766 $41,570 $36,374 $31,177 $25,981 $20,785 $15,589 $10,392 $5,196 Sub-Total $62,355 $57,159 $51,962 $46,766 $41,570 $36,374 $31,177 $25,981 $20,785 $15,589 $10,392 $5,196 Plus: Profit @ 10.00% $6,235 $5,716 $5,196 $4,677 $4,157 $3,637 $3,118 $2,598 $2,078 $1,559 $1,039 $520 Total Lease-Up Cost $68,590 $62,875 $57,159 $51,443 $45,727 $40,011 $34,295 $28,579 $22,863 $17,148 $11,432 $5,716

Income Capitalization Approach

100

Conclusion of Income Capitalization Approach

The conclusions via the valuation methods employed for this approach are as follows:

As Is As Complete As Stabilized September 22, 2020 November 22, 2020 November 22, 2022

Direct Capitalization Method $4,950,000 $5,280,000 $6,990,000 Discounted Cash Flow Analysis $4,960,000 $5,290,000 $7,010,000 Reconciled Value $4,960,000 $5,290,000 $7,000,000

Compiled by CBRE

INCOME CAPITALIZATION APPROACH VALUES

Direct capitalization is typically utilized in estimating a market value for stabilized properties, the discounted cash flow analysis recognizes the changes in cash flows over the holding period of an

asset. In this case, equal emphasis has been placed on both indications in concluding a market value

for the subject. This methodology is considered to best reflect the actions of buyers and sellers

currently active in this market.

Reconciliation of Value

101

Reconciliation of Value

The value indications from the approaches to value are summarized as follows:

As Is As Complete As Stabilized September 22, 2020 November 22, 2020 November 22, 2022

Sales Comparison Approach $5,250,000 $5,580,000 $7,300,000 Income Capitalization Approach $4,960,000 $5,290,000 $7,000,000 Reconciled Value $4,960,000 $5,290,000 $7,000,000

Compiled by CBRE

SUMMARY OF VALUE CONCLUSIONS

In the sales comparison approach, the subject is compared to similar properties that have been sold

recently or for which listing prices or offers are known. The sales used in this analysis are considered comparable to the subject, and the required adjustments were based on reasonable and well-

supported rationale. In addition, market participants are currently analyzing purchase prices on

investment properties as they relate to available substitutes in the market. Therefore, the sales

comparison approach is considered to provide a reliable value indication but has been given secondary emphasis in the final value reconciliation.

The income capitalization approach is applicable to the subject since it is an income producing

property leased in the open market. Market participants are primarily analyzing properties based on their income generating capability. Therefore, the income capitalization approach is considered a

reasonable and substantiated value indicator and has been given primary emphasis in the final value

estimate.

Based on the foregoing, the market value of the subject has been concluded as follows:

MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion

As Is - Going Concern Fee Simple Estate September 22, 2020 $4,960,000 As Stabilized - Going Concern Fee Simple Estate November 22, 2022 $7,000,000

Excess Land Value Fee Simple Estate September 22, 2020 $1,600,000

Compiled by CBRE

Under the As Complete and As Stabilized scenarios, these values represent prospective values which

are based on forward-looking projections that are based on current market indications and typical underwriting witnessed by market participants as of the effective date. It is noted that the COVID-19

pandemic is causing heightened uncertainty in both local and global market conditions. Any

significant change in future market conditions that are inconsistent with the assumptions made herein could impact the opinions of market value.

Allocation of the Going Concern

102

Allocation of the Going Concern

This “going concern” value of the fee simple in the subject property includes value attributable to furniture, fixtures, and equipment (FF&E), business operation, and the real property. According to the

Uniform Standards of Professional Appraisal Practice, Standards Rule 1-2(e), it is necessary to "identify

and consider the effect on value of any personal property, trade fixtures or intangible items that are

not real property but are included in the appraisal." The subject property contains elements of all three types of values: real property, intangible items (or business value), and personal property. Hence, the

going-concern or business value must be separated from the real estate value. In doing so, this

analysis employs the lease coverage method.

Lease Coverage Analysis

A lease coverage ratio (LCR) analysis can be utilized to allocate the going concern of the fee simple interest. To calculate the real estate value component, a market derived lease coverage ratio is

applied to the concluded net operating income for the subject. The result is an indicated annual

market lease payment for the subject. Market participants utilize this method to value the real property. REITs and other buyers of seniors housing properties also utilize this methodology to

determine market rent. Hence, this method is considered to best reflect actions taken by actual market

participants in allocating business value for the subject’s property type.

For lease coverage rate selection support, we have included the following datasets. The following

chart includes lease coverage ratios as derived by seniors housing community lease transactions:

Allocation of the Going Concern

103

Property / Portfolio Type Units State NOI/Unit Lease Date Rent/Unit LCR

Oakmont of Chino Hills AL/MC 123 CA $23,593 Jul-14 $19,106 1.23

HealthLease Properties AL/NC 365 Multiple $14,041 Apr-14 $11,233 1.25

Sun City West MC 48 AZ $30,000 Apr-14 $23,077 1.30

Arbors of Winthrop AL 90 MA $23,076 May-14 $17,778 1.30

Olympia Manor NC 28 CA $16,179 Aug-14 $10,786 1.50

Holiday Portfolio IL 2,850 Multiple $13,779 Sep-14 $10,614 1.30

CareTrust REIT AL, MC 90 ID $14,847 Oct-14 $11,333 1.31

Prelude at Woodbury MC 30 MN $26,000 Jan-15 $20,000 1.30

Transitional Care Portfolio TCF 678 MD $40,165 Jun-15 $30,199 1.33

Liberty Healthcare Corp. IL/AL/NC 1,200 OH $19,583 Nov-15 $14,294 1.37

GA SNF NC 105 GA $10,679 Jan-15 $7,628 1.40

Infinity Portfolio SNF 702 TN & KY $13,394 Aug-16 $10,256 1.31

Priority Mgt. Portfolio AL/NC 568 TX $22,711 Dec-16 $15,141 1.50

West Texas SNF Portfolio SNF 519 TX $9,776 Sep-17 $6,901 1.42

Central Wisconsin SC Portfolio IL/AL/SNF 215 WI $8,691 Mar-18 $8,199 1.06

Pinnacle Senior Housing AL/MC 75 TX $22,265 Jul-18 $15,475 1.44

Colorado Springs SNF SNF 80 CO $25,116 Jul-18 $19,101 1.31

Colorado Grand SNF SNF 80 CO $36,054 Jul-18 $19,867 1.81

Arizona SNF SNF 96 AZ $30,562 Jul-18 $18,273 1.67

Missouri SNF Portfolio SNF 1,112 MO $12,520 Sep-18 $6,861 1.82

Michigan ALF Portfolio AL 162 MI $28,593 Dec-18 $23,679 1.21

St. James Place AL 22 GA $5,727 Jul-19 $4,091 1.40

Tarzana & Valley View AL 81 CA $24,586 Oct-19 $15,460 1.59

Family Initiative Residences IL/AL 38 GA $9,032 Oct-19 $6,947 1.30

Max: 1.82

Mean: 1.39

Min: 1.06

Source: Compiled by CBRE

SENIORS HOUSING LEASE COVERAGE RATIOS

For additional support for lease coverage ratios, the following dataset is comprised of lease coverage

ratios as recently reported by REITs for portfolios of assets:

Allocation of the Going Concern

104

Property / Portfolio Type Units Period Ending: LCR

WellTower REIT Seniors Portfolio IL/AL 1,656 Sep-19 1.21

WellTower REIT SNF Portfolio SNF 1,882 Sep-19 1.54

NHI REIT - Holiday Portfolio IL 2,925 Nov-18 1.25

NHI REIT - Seniors Housing Portfolio IL/AL/SNF --- Dec-19 1.08

NHI REIT - Skilled Nursing Portfolio SNF --- Dec-19 2.59

Sabra Health Care REIT SNF Portfolio SNF 33,879 Sep-19 1.24

Sabra Health Care REIT SH Portfolio IL/AL/MC 4,011 Sep-19 1.07

Ventas REIT SH Portfolio IL/AL/SNF 42,801 Sep-19 1.17

Omega REIT Core Assets SNF 6,590 Jun-19 1.30

Total Dataset Range / Mean: Max: 2.59

Mean: 1.38

Min: 1.07

Source: Compiled by CBRE

SENIORS HOUSING REIT PORTFOLIO LEASE COVERAGE RATIOS

As part of the recent CBRE Seniors Housing Investor Survey (H1 2020), market participants were

asked to opine as to lease coverage ratio expectations for each acuity level. The following dataset includes the indicated range, based on a vast majority of respondent indications; i.e. 79.5% or more

of respondents provided a lease coverage ratio expectation that falls within the indicated range.

Property Type / Care Level % of Respondents Indicated Range

Active Adult 79.5% 1.00 - 1.30

Independent Living 87.7% 1.10 - 1.50

Assisted Living 91.0% 1.20 - 1.60

Memory Care 86.2% 1.20 - 1.60

Skilled Nursing 80.0% 1.30 - 1.90

CCRC / LPC 82.9% 1.20 - 1.60

Max: 1.90

Min: 1.00

CBRE INVESTOR SURVEY LEASE COVERAGE RATIOS

Source: CBRE H1 2020 Investor Survey Results.

As shown, lease coverage ratios for seniors housing assets range from 1.06 to 2.59, with a majority of ratios ranging from 1.10 to 1.90. In consideration of the subject’s acuity level, for purposes of this

analysis, a coverage ratio of 1.55 was used. The inferred rent is assumed to be on an absolute net

basis with no expenses to the lessor. Furthermore, the market rent is based upon a long-term lease of

20+ years, which is common. These terms are common for this property type.

Allocation of the Going Concern

105

The next step is estimating an absolute net lease capitalization rate. The results of the 2019 CBRE

Healthcare Real Estate Investor & Developer Survey are summarized as follows, relative to capitalization rates for absolute net leased healthcare properties:

Absolute net transactions for seniors housing and similar (medical) net leased properties are

summarized below:

Property / Portfolio Type Units State Lease Date Sale Price Per Unit

Fee Simple Cap Rate

Leased Fee Cap Rate

Basis Point Spread

ILC Portfolio IL 3,138 Multiple Oct-13 $251,753 7.25% 6.20% 105

Confidential Transaction AL 120 WI Nov-13 $168,333 9.30% 7.75% 155

HealthLease Properties AL/NC 365 Multiple Apr-14 $135,342 10.37% 8.30% 207

Sun City West MC 48 AZ Apr-14 $333,333 9.00% 6.92% 208

Oakmont of Chino Hills AL/MC 123 CA Jun-14 $390,244 6.05% 4.90% 115

Holiday Portfolio IL 2,850 Multiple Sep-14 $192,982 7.14% 5.50% 164

CareTrust REIT AL, MC 90 ID Oct-14 $133,333 11.14% 8.50% 264

Prelude at Woodbury MC 30 MN Jan-15 $240,000 10.83% 8.33% 250

GA SNF NC 105 GA Apr-15 $79,048 13.51% 9.65% 386

Transitional Care Portfolio TCF 678 MD Jun-15 $345,133 11.64% 8.75% 289

Liberty Healthcare Corp. IL/AL/NC 1,200 OH Nov-15 $147,500 13.28% 9.69% 359

Infinity Portfolio SNF 702 TN & KY Aug-16 $105,257 12.72% 9.74% 298

Priority Mgt.Portfolio AL/NC 568 TX Dec-16 $168,838 13.45% 8.97% 448

West Texas Skilled Nursing SNF 519 TX Sep-17 $76,676 12.75% 9.00% 375

Central Wisconsin SC Portfolio IL/AL/SNF 215 WI Mar-18 $105,116 8.27% 7.80% 47

Pinnacle Senior Housing AL/MC 75 TX Jul-18 $260,000 8.56% 5.95% 261

Colorado Springs SNF SNF 80 CO Jul-18 $263,750 9.52% 7.24% 228

Arizona SNF SNF 96 AZ Jul-18 $241,042 12.68% 7.58% 510

Michigan ALF Portfolio AL 162 MI Dec-18 $345,679 8.27% 6.85% 142

Tarzana & Valley View AL 81 CA Oct-19 $283,951 8.66% 5.44% 321

Family Initiative Residences IL/AL 38 GA Oct-19 $81,579 11.07% 8.52% 255

Min: 47

Max: 510

Mean: 257

Source: Compiled by CBRE

SENIORS HOUSING NET LEASE TRANSACTIONS

Allocation of the Going Concern

106

Net leased transactions typically yield a capitalization rate ranging from 50 to 500 basis points below

the fee simple cap rate. Note that for the subject As Complete, the property will be undergoing an absorption period; thus, we have increased the capitalization rate for this scenario to account for

perceived risk associated with a lease-up period.

The final step is applying the concluded lease coverage ratio and absolute net capitalization rate to

the estimated NOI for the subject. By capitalizing the indicated annual lease payment, a leased fee value or value allocation of the real estate only is determined. The business value is the difference in

the going concern and the inferred leased fee or real property value, as summarized below.

As Is As Complete As Stabilized September 22, 2020 November 22, 2020 November 22, 2022

Concluded Stabilized NOI $542,000 $542,000 $542,000 Divided Lease Coverage Ratio 1.55 1.55 1.55 Cash Flow to the Real Estate $349,677 $349,677 $349,677 Real Estate Only Cap Rate 7.75% 7.50% 6.75% Indicated Real Estate Value $4,511,964 $4,662,363 $5,180,406

Concluded Market Value of the Going Concern $4,960,000 $5,290,000 $7,000,000 FF&E $546,000 $546,000 $546,000 Inferred Real Estate Value $4,511,964 $4,662,363 $5,180,406 Indicated Business Value -$97,964 $81,637 $1,273,594

Compiled by CBRE

LEASE COVERAGE ANALYSIS

Furniture, Fixtures and Equipment

Furniture, fixtures and equipment (FF&E) costs have been estimated in order to allocate the going

concern. In estimating costs for FF&E, numerous developers have been consulted as well as property

owners. The following table outlines budgeted FF&E in new construction.

Allocation of the Going Concern

107

Property Type # of Units $/ Unit AL/MC 68 $5,926 AL/MC 67 $7,458 AL/MC 104 $9,832 AL/MC 78 $9,615 AL/MC 70 $12,857 AL/MC 86 $7,558 AL/MC 101 $8,510 AL/MC 85 $10,659 AL/MC 52 $7,596 AL/MC 92 $9,674 AL/MC 99 $8,692 AL/MC 88 $9,545 AL/MC 106 $8,019 AL/MC 120 $8,333

Weighted Average: --- $8,903

Source: Compiled by CBRE

FF&E COST SUMMARY

Given the degree of construction and quality associated with the subject property, combined with its size, an FF&E cost estimate of $7,500 per unit, or $728,000 (rounded) is considered reasonable the

subject. Depreciation is applied below.

Based on our physical inspection of the property, the following depreciation was applied to the FF &

E, for the concluded contributory value detailed below.

Cost New per Unit $7,500 $728,000 Percentage of Units furnished with FF&E 100% Cost New of FF&E $728,000

Effective Age 2 Years

MVS Expected Life 8 Years

Remaining Economic Life 6 Years Less: Incurable Physical Deterioration 25.0%

Contributory Value of FF&E $546,000

Compiled by CBRE

FF&E VALUE ESTIMATE

Notably, for the subject As Stabilized, the property would have undergone an absorption period. However, depreciation does not typically occur in a linear fashion, and the subject would not be fully

occupied during the absorption period. Therefore, the FF&E is expected to have incurred a limited

amount of depreciation, and none is applied to the FF&E under the As Stabilized scenario.

Allocation of the Going Concern

108

Allocation of the Going Concern Conclusion

By utilizing the concluded business value detailed above, an allocation of the going concern has been

estimated as follows:

As Is As Complete As Stabilized September 22, 2020 November 22, 2020 November 22, 2022

Real Estate $4,414,000 $4,662,363 $5,180,406 FF & E $546,000 $546,000 $546,000 Business Value $0 $81,637 $1,273,594 Market Value of the Going Concern $4,960,000 $5,290,000 $7,000,000

Compiled by CBRE

ALLOCATION OF THE GOING CONCERN

Assumptions and Limiting Conditions

109

Assumptions and Limiting Conditions 1. CBRE, Inc. through its appraiser (collectively, “CBRE”) has inspected through reasonable observation the subject

property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters.

2. The report, including its conclusions and any portion of such report (the “Report”), is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purchasing power of the U.S. Dollar on such date. The Report is subject to change as a result of fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date.

3. Unless otherwise expressly noted in the Report, CBRE has assumed that: (i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or

exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company.

(ii) Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are not qualified to judge matters of an engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems.

(iii) Any proposed improvements, on or off-site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices.

(iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property.

(v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report.

(vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property.

(vii) All required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be readily obtained or renewed for any use on which the Report is based.

(viii) The subject property is managed and operated in a prudent and competent manner, neither inefficiently or super- efficiently.

(ix) The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses.

(x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property’s compliance with the ADA, notwithstanding any discussion of possible readily achievable barrier removal construction items in the Report.

(xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property nor reviewed or confirmed the accuracy of any legal description of the subject property.

Assumptions and Limiting Conditions

110

Unless otherwise expressly noted in the Report, no issues regarding the foregoing were brought to CBRE’s attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is urged to retain an expert in the applicable field(s) for information regarding such conditions.

4. CBRE has assumed that all documents, data and information furnished by or behalf of the client, property owner, or owner’s representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation, numerical street addresses, lot and block numbers, Assessor’s Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report. Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report.

5. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including without limitation any termite inspection, survey or occupancy permit.

6. All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property.

7. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections.

8. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with CBRE’s independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property.

9. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters.

10. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance.

11. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the user’s failure to become familiar with and understand the same.

12. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests.

13. The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use.

14. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report.

Assumptions and Limiting Conditions

111

15. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user.

Addenda

ADDENDA

Addenda

ADDENDUM A

Comparable Data Sheets

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Addenda

ADDENDUM B

Operating Data/Sale Contract/Repair Budget

Date 8/17/2020 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% Occ % Property Ventura Hills 1 1 1 1 0 0 0 0 0 0 0 0 Increase Occupancy 92 93 94 94 94 94 94 94 94 94 94 94 0 Census 95 96 97 97 97 97 97 97 97 97 97 97 0 RPU $3,341 $3,337 $3,359 $3,359 $3,348 $3,348 $3,348 $3,348 $3,348 $3,348 $3,348 $3,348 INCOME Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total Apartment Rent 4% increase $281,554 $284,349 $289,544 $289,544 $289,544 $289,544 $289,544 $289,544 $289,544 $289,544 $289,544 $289,544 $3,461,349 Second Person $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $31,680 Level of Care $18,525 $18,720 $18,915 $18,915 $18,915 $18,915 $18,915 $18,915 $18,915 $18,915 $18,915 $18,915 $226,395 Guest Apt Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Guest Meals $375 $375 $375 $375 $375 $375 $375 $375 $375 $375 $375 $375 $4,500 Pendant Fee $612 $619 $625 $625 $625 $625 $625 $625 $625 $625 $625 $625 $7,482 Laundry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Activities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Housekeeping $325 $325 $325 $325 $325 $325 $325 $325 $325 $325 $325 $325 $3,900 Late Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Community Fee $3,000 $3,000 $3,000 $3,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $28,000 Pet Fee $325 $325 $325 $325 $325 $325 $325 $325 $325 $325 $325 $325 $3,900 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Revenue $307,357 $310,353 $315,750 $315,750 $314,750 $314,750 $314,750 $314,750 $314,750 $314,750 $314,750 $314,750 $3,767,206 EXPENSES Operations Expenses Administrative Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total Admin ED $7,532 $7,532 $7,532 $7,532 $7,532 $7,532 $7,532 $7,532 $7,532 $7,532 $7,532 $7,532 $90,389 Assisted ED $4,597 $4,597 $4,597 $4,597 $4,597 $4,597 $4,597 $4,597 $4,597 $4,597 $4,597 $4,597 $55,167 Business Office Staf $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Reception $3,556 $3,556 $3,556 $3,556 $3,556 $3,556 $3,556 $3,556 $3,556 $3,556 $3,556 $3,556 $42,671 Payroll Taxes-Total $1,412 $1,412 $1,412 $1,412 $1,412 $1,412 $1,412 $1,412 $1,412 $1,412 $1,412 $1,412 $16,940 PTO-Admin $133 $133 $133 $133 $133 $133 $133 $133 $133 $133 $133 $133 $1,600 Holiday Pay-Admin $84 $84 $84 $84 $84 $84 $84 $84 $84 $84 $84 $84 $1,003 Overtime $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Payroll Administration $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $8,400 Travel $80 $80 $80 $80 $80 $80 $80 $80 $80 $80 $80 $80 $960 Training/ Conference $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Uniforms $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Incentive Bonus $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Pre Employment Cost $77 $77 $77 $77 $77 $77 $77 $77 $77 $77 $77 $77 $927 Office Supplies $180 $180 $180 $180 $180 $180 $180 $180 $180 $180 $180 $180 $2,163 Business Leases $990 $990 $990 $990 $990 $990 $990 $990 $990 $990 $990 $990 $11,878 Computer Expenses $371 $371 $371 $371 $371 $371 $371 $371 $371 $371 $371 $371 $4,456 Postage $53 $53 $53 $53 $53 $53 $53 $53 $53 $53 $53 $53 $637 Security $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Legal $159 $159 $159 $159 $159 $159 $159 $159 $159 $159 $159 $159 $1,910 Bad Debt Write Off 1% $3,074 $3,104 $3,157 $3,157 $3,147 $3,147 $3,147 $3,147 $3,147 $3,147 $3,147 $3,147 $37,672 Bank Fees $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400 License and Fees $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $2,100 Dues and Subscriptions $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000 Accounting and Audit $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $8,400 HR Fee $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $700 $8,400 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Administrative $25,274 $25,304 $25,357 $25,357 $25,347 $25,347 $25,347 $25,347 $25,347 $25,347 $25,347 $25,347 $304,072 Health Care Wellness Directors $6,631 $6,631 $6,631 $6,631 $6,631 $6,631 $6,631 $6,631 $6,631 $6,631 $6,631 $6,631 $79,568 Care Staff $79,830 $79,830 $79,830 $79,830 $79,830 $79,830 $79,830 $79,830 $79,830 $79,830 $79,830 $79,830 $957,960 Pay Tax Clinical $7,781 $7,781 $7,781 $7,781 $7,781 $7,781 $7,781 $7,781 $7,781 $7,781 $7,781 $7,781 $93,377 PTO-Clinical $2,994 $2,994 $2,994 $2,994 $2,994 $2,994 $2,994 $2,994 $2,994 $2,994 $2,994 $2,994 $35,923 Holiday Pay-Clinical $1,876 $1,876 $1,876 $1,876 $1,876 $1,876 $1,876 $1,876 $1,876 $1,876 $1,876 $1,876 $22,512 Overtime $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Supplies $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000 RN Consult $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Health Care $100,112 $100,112 $100,112 $100,112 $100,112 $100,112 $100,112 $100,112 $100,112 $100,112 $100,112 $100,112 $1,201,341 Marketing Expenses Marketing Team $5,305 $5,305 $5,305 $5,305 $5,305 $5,305 $5,305 $5,305 $5,305 $5,305 $5,305 $5,305 $63,654 Payroll taxes-Marketing $477 $477 $477 $477 $477 $477 $477 $477 $477 $477 $477 $477 $5,729 Marketing PTO $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Holiday Pay $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Commissions $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Referral Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Website Advertising $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $26,400 Advertising $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $4,200 Supplies $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $1,800 Special Events $525 $525 $525 $525 $525 $525 $525 $525 $525 $525 $525 $525 $6,300 Travel Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Guest Meals $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Marketing $9,007 $9,007 $9,007 $9,007 $9,007 $9,007 $9,007 $9,007 $9,007 $9,007 $9,007 $9,007 $108,083 Environmental Maintenance Director $4,869 $4,869 $4,869 $4,869 $4,869 $4,869 $4,869 $4,869 $4,869 $4,869 $4,869 $4,869 $58,422 Maintenance Staff $2,060 $2,060 $2,060 $2,060 $2,060 $2,060 $2,060 $2,060 $2,060 $2,060 $2,060 $2,060 $24,720 Payroll Taxes-Environmental $624 $624 $624 $624 $624 $624 $624 $624 $624 $624 $624 $624 $7,483 PTO-Environmental $260 $260 $260 $260 $260 $260 $260 $260 $260 $260 $260 $260 $3,118 Holiday Pay-Environmental $163 $163 $163 $163 $163 $163 $163 $163 $163 $163 $163 $163 $1,954 Overtime-Environmental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Repairs Maintenance $1,545 $1,545 $1,545 $1,545 $1,545 $1,545 $1,545 $1,545 $1,545 $1,545 $1,545 $1,545 $18,540 Outside Contract $438 $438 $438 $438 $438 $438 $438 $438 $438 $438 $438 $438 $5,253 Fire Inspection/Repairs $2,781 $2,781 $2,781 $2,781 $2,781 $2,781 $2,781 $2,781 $2,781 $2,781 $2,781 $2,781 $33,372 Alarm System $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Elevator $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Land Scaping $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $2,558 $30,694 Pest Control $478 $478 $478 $478 $478 $478 $478 $478 $478 $478 $478 $478 $5,742 Maintenance Supplies $820 $820 $820 $820 $820 $820 $820 $820 $820 $820 $820 $820 $9,841 Minor Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Environmental $16,595 $16,595 $16,595 $16,595 $16,595 $16,595 $16,595 $16,595 $16,595 $16,595 $16,595 $16,595 $199,138 Dining Services Expenses Dining Services Director $5,928 $5,928 $5,928 $5,928 $5,928 $5,928 $5,928 $5,928 $5,928 $5,928 $5,928 $5,928 $71,142 Dining Services Chefs $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $97,531 Dishwasher $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Dining Services Staff $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Payroll Taxes-Dietary $1,265 $1,265 $1,265 $1,265 $1,265 $1,265 $1,265 $1,265 $1,265 $1,265 $1,265 $1,265 $15,181 PTO Dining Services $527 $527 $527 $527 $527 $527 $527 $527 $527 $527 $527 $527 $6,325 Holiday Pay Dining Services $330 $330 $330 $330 $330 $330 $330 $330 $330 $330 $330 $330 $3,964 Overtime Dining Services $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Raw Food Purchases $6.25 $18,050 $18,240 $18,430 $18,430 $18,430 $18,430 $18,430 $18,430 $18,430 $18,430 $18,430 $18,430 $220,590 Bar Supplies/Liquor $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $300 Supplies/Chemicals $451 $451 $451 $451 $451 $451 $451 $451 $451 $451 $451 $451 $5,411 Non-Food Supplies $412 $412 $412 $412 $412 $412 $412 $412 $412 $412 $412 $412 $4,944 Uniforms Dining Services $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $360 Dishes/Utensils $60 $60 $60 $60 $60 $60 $60 $60 $60 $60 $60 $60 $720 Equipment $375 $375 $375 $375 $375 $375 $375 $375 $375 $375 $375 $375 $4,500 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Dietary Expenses $35,581 $35,771 $35,961 $35,961 $35,961 $35,961 $35,961 $35,961 $35,961 $35,961 $35,961 $35,961 $430,967 Laundry and Housekeeping Housekeeping Supervisor $2,965 $2,965 $2,965 $2,965 $2,965 $2,965 $2,965 $2,965 $2,965 $2,965 $2,965 $2,965 $35,578 Housekeeping Staff $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Payroll Taxes Housekeep $267 $267 $267 $267 $267 $267 $267 $267 $267 $267 $267 $267 $3,202 PTO Housekeeping $111 $111 $111 $111 $111 $111 $111 $111 $111 $111 $111 $111 $1,334

Imagine Senior Living ImagineSeniorLivingLLC.com

Holiday Pay Housekeeping $70 $70 $70 $70 $70 $70 $70 $70 $70 $70 $70 $70 $836 Overtime Housekeeping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Uniforms Housekeeping $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $124 Supplies Housekeeping $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $5,400 Equipment-Laundry $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $360 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Housekeeping $3,903 $3,903 $3,903 $3,903 $3,903 $3,903 $3,903 $3,903 $3,903 $3,903 $3,903 $3,903 $46,833 Activities Activities Directors $5,699 $5,699 $5,699 $5,699 $5,699 $5,699 $5,699 $5,699 $5,699 $5,699 $5,699 $5,699 $68,394 Activity Team $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Memory Care Director $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 M/C Activity Team $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Payroll Tax Activities $513 $513 $513 $513 $513 $513 $513 $513 $513 $513 $513 $513 $6,155 PTO Activities $214 $214 $214 $214 $214 $214 $214 $214 $214 $214 $214 $214 $2,565 Holiday Pay Activities $134 $134 $134 $134 $134 $134 $134 $134 $134 $134 $134 $134 $1,607 Overtime Activities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Community Events $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000 Uniforms Activities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Resident Relations $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $900 Contracted Services Activities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Vehicle Lease $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000 Vehicle Expense/Fuel $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1,200 Supplies Activities $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $5,400 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Activities Expense $8,685 $8,685 $8,685 $8,685 $8,685 $8,685 $8,685 $8,685 $8,685 $8,685 $8,685 $8,685 $104,221 Utilities Electricity $6,079 $6,079 $6,079 $6,079 $6,079 $6,079 $6,079 $6,079 $6,079 $6,079 $6,079 $6,079 $72,947 Water, Trash, and Sewer $6,949 $6,949 $6,949 $6,949 $6,949 $6,949 $6,949 $6,949 $6,949 $6,949 $6,949 $6,949 $83,387 Gas $386 $386 $386 $386 $386 $386 $386 $386 $386 $386 $386 $386 $4,634 Telephone $2,748 $2,748 $2,748 $2,748 $2,748 $2,748 $2,748 $2,748 $2,748 $2,748 $2,748 $2,748 $32,973 Cable and Internet $972 $972 $972 $972 $972 $972 $972 $972 $972 $972 $972 $972 $11,661 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Utilities $17,134 $17,134 $17,134 $17,134 $17,134 $17,134 $17,134 $17,134 $17,134 $17,134 $17,134 $17,134 $205,602 Taxes and Insurance Property Tax Expense $7,567 $7,567 $7,567 $7,567 $7,567 $7,567 $7,567 $7,567 $7,567 $7,567 $7,567 $7,567 $90,804 Insurance-WC, Liability $2,747 $2,747 $2,747 $2,747 $2,747 $2,747 $2,747 $2,747 $2,747 $2,747 $2,747 $2,747 $32,960 Insurance-Property $2,349 $2,349 $2,349 $2,349 $2,349 $2,349 $2,349 $2,349 $2,349 $2,349 $2,349 $2,349 $28,186 Health Insurance $9,018 $9,018 $9,018 $9,018 $9,018 $9,018 $9,018 $9,018 $9,018 $9,018 $9,018 $9,018 $108,212 Tax Reserve, Personal, Property $398 $398 $398 $398 $398 $398 $398 $398 $398 $398 $398 $398 $4,774 Insurance - Auto $281 $281 $281 $281 $281 $281 $281 $281 $281 $281 $281 $281 $3,374 Total Taxes and Insurance $22,359 $22,359 $22,359 $22,359 $22,359 $22,359 $22,359 $22,359 $22,359 $22,359 $22,359 $22,359 $268,309 Total Expenses $238,649 $238,869 $239,113 $239,113 $239,103 $239,103 $239,103 $239,103 $239,103 $239,103 $239,103 $239,103 $2,868,567 Net Operating Income $68,708 $71,484 $76,637 $76,637 $75,647 $75,647 $75,647 $75,647 $75,647 $75,647 $75,647 $75,647 $898,639 NOI % 22.4% 23.0% 24.3% 24.3% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 23.9% NON-OPERATING EXPENSE Operator Mangment Fee 5% $15,368 $15,518 $15,787 $15,787 $15,737 $15,737 $15,737 $15,737 $15,737 $15,737 $15,737 $15,737 $188,360 Lease Payment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Operator Expense $15,368 $15,518 $15,787 $15,787 $15,737 $15,737 $15,737 $15,737 $15,737 $15,737 $15,737 $15,737 $188,360 Partnership Inter Company Loan $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 SBA Company Loan 2 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Loan Payment Operation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Loan Payments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 CAP-X Fund $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $300,000 Cash Reserves $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Partnership $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $300,000 Total Non-Operating Expense $40,368 $40,518 $40,787 $40,787 $40,737 $40,737 $40,737 $40,737 $40,737 $40,737 $40,737 $40,737 $488,360 Total Income-Total Expenses $28,340 $30,967 $35,849 $35,849 $34,909 $34,909 $34,909 $34,909 $34,909 $34,909 $34,909 $34,909 $410,279 Profit Loss $28,340 $30,967 $35,849 $35,849 $34,909 $34,909 $34,909 $34,909 $34,909 $34,909 $34,909 $34,909 $410,279 Cash Flow $28,340 $59,306 $95,156 $131,005 $165,914 $200,823 $235,733 $270,642 $305,551 $340,460 $375,369 $410,279

Jun-20 May-20 Apr-20 Mar-20 Feb-20 Jan-20 YTD

Revenue

Operating Revenue

Other Income Beauty Salon Rental $0.00 $0.00 $0.00 -$297.00 -$522.50 -$838.25 -$1,657.75 Physical Therapy Space Rental $208.00 $208.00 $208.00 $208.00 $416.00 $0.00 $1,248.00 Total Other Income $208.00 $208.00 $208.00 -$89.00 -$106.50 -$838.25 -$409.75

Total Operating Revenue $208.00 $208.00 $208.00 -$89.00 -$106.50 -$838.25 -$409.75

Room & Board AL

*Room & Board - AL Room & Board AL $83,237.78 $147,625.24 $87,113.94 $153,224.37 $143,834.73 $140,129.78 $755,165.84 Total *Room & Board - AL $83,237.78 $147,625.24 $87,113.94 $153,224.37 $143,834.73 $140,129.78 $755,165.84

Additional Services - AL Additional Resident AL $2,950.00 $2,950.00 $2,950.00 $2,949.96 $2,950.00 $1,000.00 $15,749.96 Additonal Meals / Tray Svc AL $0.00 $0.00 $0.00 -$246.80 $620.00 $0.00 $373.20 Beauty Salon AL $0.00 $0.00 $0.00 $995.00 $1,405.50 $0.00 $2,400.50 Care Level 1 AL $775.30 $1,241.33 $571.34 -$234.42 $1,823.00 $2,636.93 $6,813.48 Care Level 2 AL $4,951.00 $8,581.93 $4,999.33 $8,374.20 $9,010.69 $8,087.00 $44,004.15 Care Level 3 AL $1,550.00 $987.10 $820.00 $600.00 -$2,280.00 $2,361.29 $4,038.39 Community Fees AL $1,750.00 $0.00 $3,500.00 $875.00 $8,750.00 $0.00 $14,875.00 Guest Meals AL $0.00 $0.00 $0.00 $228.00 $1,440.00 $0.00 $1,668.00 Housekeeping AL $204.00 $204.00 $204.00 $204.00 $204.00 $204.00 $1,224.00 Medication Fee AL $3,668.67 $7,069.00 $3,842.00 $7,700.90 $7,719.00 $7,985.62 $37,985.19 Miscellaneous Resident Charge (AL) -$1,974.12 -$2,561.63 -$2,474.12 -$2,489.12 -$2,489.12 -$2,767.99 -$14,756.10 Pendant Fee AL $662.50 $403.00 $346.00 $346.00 $471.66 $359.10 $2,588.26 Pet Fee AL $0.00 $0.00 $0.00 $425.00 $0.00 $0.00 $425.00 Total Additional Services - AL $14,537.35 $18,874.73 $14,758.55 $19,727.72 $29,624.73 $19,865.95 $117,389.03

Concessions - AL Concessions - Additional Resident AL -$1,310.00 -$1,310.00 -$1,310.00 -$1,309.96 -$1,310.00 -$200.00 -$6,749.96 Concessions - Care Services AL -$3,145.00 -$3,395.00 -$3,145.00 -$3,395.00 -$1,951.90 -$3,795.00 -$18,826.90 Concessions - Community Fee AL -$1,750.00 $0.00 -$1,750.00 $0.00 $0.00 $0.00 -$3,500.00 Concessions - Rent AL $8,900.00 $6,038.49 $7,170.75 -$6,226.21 $5,708.39 $7,235.87 $28,827.29 Total Concessions - AL $2,695.00 $1,333.49 $965.75 -$10,931.17 $2,446.49 $3,240.87 -$249.57

Total Room & Board AL $100,470.13 $167,833.46 $102,838.24 $162,020.92 $175,905.95 $163,236.60 $872,305.30

Room & Board MC

*Room & Board - MC Room & Board MC $67,714.99 $6,150.00 $68,459.25 $3,543.35 $4,939.59 $13,432.37 $164,239.55 Total *Room & Board - MC $67,714.99 $6,150.00 $68,459.25 $3,543.35 $4,939.59 $13,432.37 $164,239.55

Additional Services - MC Additional Care Services MC $0.00 $0.00 -$1,434.48 $1,108.62 $380.17 $525.00 $579.31 Beauty Salon MC $0.00 $0.00 $0.00 $88.00 $34.00 $0.00 $122.00 Care Level 1 MC $1,647.00 $1,097.00 $1,747.00 $1,097.00 $1,097.00 $336.06 $7,021.06 Care Level 2 MC $3,689.00 $0.00 $3,689.00 -$551.17 $643.03 $888.00 $8,357.86 Community Fees MC $2,000.00 $0.00 $0.00 $2,000.00 $0.00 $7,500.00 $11,500.00 Guest Meals MC $0.00 $0.00 $0.00 $12.00 $132.00 $0.00 $144.00 Medication Fee MC $3,400.33 $0.00 $3,400.33 $0.00 $0.00 $0.00 $6,800.66 Miscellaneous Resident charge MC -$15.00 $0.00 -$15.00 $0.00 $0.00 $0.00 -$30.00 Pet Fee MC $0.00 $0.00 $0.00 $0.00 $0.00 $1,274.74 $1,274.74 Total Additional Services - MC $10,721.33 $1,097.00 $7,386.85 $3,754.45 $2,286.20 $10,523.80 $35,769.63

Concessions - MC Concessions - Care Level MC -$250.00 $0.00 -$250.00 $0.00 $0.00 $0.00 -$500.00 Concessions - Community Fees MC $0.00 $0.00 $0.00 $0.00 $0.00 $875.00 $875.00 Concessions - Rent MC $610.98 $1,995.00 $431.00 $1,932.00 $2,119.92 $2,196.00 $9,284.90 Total Concessions - MC $360.98 $1,995.00 $181.00 $1,932.00 $2,119.92 $3,071.00 $9,659.90

Total Room & Board MC $78,797.30 $9,242.00 $76,027.10 $9,229.80 $9,345.71 $27,027.17 $209,669.08

Total Revenue $179,475.43 $177,283.46 $179,073.34 $171,161.72 $185,145.16 $189,425.52 $1,081,564.63

Gross Profit $179,475.43 $177,283.46 $179,073.34 $171,161.72 $185,145.16 $189,425.52 $1,081,564.63

Operating Expenses

Administration -A- Payroll Business Office Director $3,653.50 $4,202.30 $4,675.60 $4,834.33 $4,131.39 $2,310.02 $23,807.14 Employee Benefits- Admin $725.30 $861.04 $1,098.55 $1,452.32 $972.14 $277.11 $5,386.46

Income Statement Ventura Hills

For the month ended 30 June 2020

Employee Uniforms - Admin $0.00 $79.83 $70.73 $79.64 $69.64 $98.52 $398.36 Employment Screenings - Admin $147.10 $82.22 $1,015.30 $795.00 $912.00 $395.90 $3,347.52 Executive Director $7,101.09 $7,101.69 $7,101.09 $7,101.69 $7,908.18 $12,175.01 $48,488.75 Executive Director Taxes / Benefits $1,535.42 $1,534.88 $1,535.43 $1,541.39 $1,704.44 $1,955.84 $9,807.40 Holiday Pay - Admin -$33.45 $501.69 $0.00 $0.00 $0.00 $247.88 $716.12 Overtime - Admin $141.34 $266.87 $904.60 $367.49 $269.06 $131.78 $2,081.14 Payroll Service Fee $1,808.11 $2,291.87 $2,352.87 $2,390.55 $2,999.40 $2,431.66 $14,274.46 Payroll Taxes - Admin $614.81 $704.96 $1,105.46 $1,044.25 $776.80 $611.02 $4,857.30 PTO/Sick Leave Wages - Admin $715.65 $612.64 $1,024.55 $74.28 $1,569.20 $819.57 $4,815.89 Receptionist/Concierge $1,786.38 $2,068.96 $4,379.24 $7,493.43 $2,388.74 $1,791.31 $19,908.06 Workers Comp - Admin $2,452.83 $2,452.83 $2,452.83 $2,452.83 $2,452.83 $2,452.83 $14,716.98 Total Administration -A- Payroll $20,648.08 $22,761.78 $27,716.25 $29,627.20 $26,153.82 $25,698.45 $152,605.58

Administration -B- Operating Expenses Bank Fees $253.92 $0.00 $0.00 $0.00 $0.00 $0.00 $253.92 Cell Phones Directors/Managers $65.00 $80.00 $135.00 $105.00 $105.00 $0.00 $490.00 Computer Software Maintenace $867.70 $1,003.75 $758.34 $939.10 $746.45 $1,159.96 $5,475.30 Copier Lease $1,056.15 $540.05 $722.66 $569.08 $1,006.81 $1,704.07 $5,598.82 Dues & Subscriptions - Admin $957.25 $958.59 $1,086.95 $2,535.55 $5,663.10 $0.00 $11,201.44 Employee Appreciation - Admin $67.93 $293.34 $116.60 $15.81 $0.00 $0.00 $493.68 Equipment & Furniture Lease - Admin $0.00 $0.00 $0.00 $0.00 $472.90 $0.00 $472.90 Food-Admin $0.00 $0.00 $43.05 $0.00 $0.00 $0.00 $43.05 Interest / Finance Charges $96.80 $1,105.71 $0.00 $0.00 $110.79 $76.77 $1,390.07 Management Company Travel $0.00 $0.00 $0.00 $1,307.58 $0.00 $454.32 $1,761.90 Meals & Entertainment - Admin $0.00 $0.00 $0.00 $0.00 $165.54 $442.38 $607.92 Office Equipment Repair $0.00 $19.47 $0.00 $0.00 $0.00 $0.00 $19.47 Office Supplies - Admin $221.98 $357.34 $237.97 $87.74 $150.92 $38.11 $1,094.06 Postage & Delivery $346.09 $23.50 $1.26 $166.49 $55.55 $105.14 $698.03 Training and Meetings - Admin $881.57 $543.55 $2,955.16 $0.00 $0.00 $0.00 $4,380.28 Total Administration -B- Operating Expe $4,814.39 $4,925.30 $6,056.99 $5,726.35 $8,477.06 $3,980.75 $33,980.84

Assisted Living -A- Payroll Bonuses - AL $100.00 $271.43 $1,028.57 $0.00 $0.00 $0.00 $1,400.00 Employee Benefits Other - AL $2,054.25 $1,386.74 $128.69 $848.07 $3,479.87 $429.11 $8,326.73 Employee Uniforms - AL $64.27 $348.44 $0.00 $175.94 $0.00 $0.00 $588.65 Employment Screenings - AL $14.83 $144.13 $31.45 $0.00 $38.55 $21.58 $250.54 Health Services Director - AL $4,986.28 $5,975.28 -$1,236.26 $4,409.34 $7,211.55 $5,051.50 $26,397.69 Holiday Pay - AL -$93.62 $1,404.23 $0.00 $0.00 $0.00 $3,315.15 $4,625.76 Overtime - AL $2,950.39 $2,948.13 $6,609.57 $6,938.57 $6,823.11 $4,462.74 $30,732.51 Payroll Taxes - AL $2,867.94 $3,639.89 $4,617.45 $4,218.46 $5,430.70 $4,934.65 $25,709.09 PTO/Sick Leave Wages - AL $903.87 $779.07 $417.49 $3,417.32 $966.84 $1,166.79 $7,651.38 Salaries & Wages AL CNA/Res Assistant $15,688.84 $16,332.94 $14,465.59 $14,701.92 $17,682.56 $14,654.02 $93,525.87 Salaries & Wages AL LPN $3,702.86 $4,525.61 $6,254.12 -$960.00 $4,800.00 $2,936.37 $21,258.96 Salaries & Wages AL Med Tech $3,947.35 $5,976.50 $17,556.77 $17,812.65 $18,074.06 $13,462.75 $76,830.08 Total Assisted Living -A- Payroll $37,187.26 $43,732.39 $49,873.44 $51,562.27 $64,507.24 $50,434.66 $297,297.26

Assisted Living -B- Operating Expenses Contract Labor - AL $0.00 $0.00 $0.00 $0.00 $9,649.59 $0.00 $9,649.59 Hazardous Waste Disposal - AL $110.00 $0.00 $0.00 $0.00 $0.00 $110.00 $220.00 Medical Supplies $183.94 $0.00 $92.38 $1,601.76 $260.77 $265.72 $2,404.57 Mileage - AL $0.00 $0.00 $0.00 $0.00 $54.42 $0.00 $54.42 Supplies - Medical/ Charged to Residents A $0.00 $0.00 $0.00 $0.00 $0.00 $120.64 $120.64 Training and Meetings - AL $0.00 $380.08 $2,280.50 $0.00 $0.00 $0.00 $2,660.58 Total Assisted Living -B- Operating Expe $293.94 $380.08 $2,372.88 $1,601.76 $9,964.78 $496.36 $15,109.80

Dining -A- Payroll Cooks $7,448.20 $7,925.37 $8,590.23 $9,796.53 $11,103.34 $8,012.61 $52,876.28 Director of Dining Service $4,716.37 $5,625.36 $5,366.02 $5,294.47 $5,509.12 $4,253.20 $30,764.54 Employee Benefits Other - Dining $1,059.20 $1,706.85 $2,017.06 $2,097.93 $2,416.28 $966.37 $10,263.69 Employment Screenings - Dining $2.91 $18.90 $10.25 $0.00 $0.00 $2.20 $34.26 Holiday Pay - Dining -$27.36 $410.46 $0.00 $0.00 $0.00 $1,308.46 $1,691.56 Overtime - Dining $21.92 $439.42 $292.34 $33.73 $25.92 $0.00 $813.33 Payroll Taxes - Dining $953.60 $1,199.18 $1,177.43 $1,447.24 $1,715.17 $1,528.24 $8,020.86 PTO/Sick Leave Wages - Dining $306.30 $1,107.32 $315.11 $250.41 $858.85 $408.26 $3,246.25 Total Dining -A- Payroll $14,481.14 $18,432.86 $17,768.44 $18,920.31 $21,628.68 $16,479.34 $107,710.77

Dining -B- Operating Expenses Contract Services - Menu $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $600.00 Dishwasher Chemicals $238.71 $50.30 $90.42 $230.16 $132.94 $276.50 $1,019.03 Dishwasher Lease $889.79 $1,779.58 $0.00 $667.27 $889.79 $8,140.92 $12,367.35 Grease Trap Cleaning $0.00 $1,093.25 $0.00 $0.00 $0.00 $843.25 $1,936.50 Kitchen Supplies $489.84 $71.44 $300.65 $237.55 $71.44 $394.25 $1,565.17 Paper & Forms-Dining $104.66 $0.00 $90.58 $57.84 $0.00 $35.76 $288.84 Paper & Plastic Supplies - Dining $68.16 $108.65 $184.46 $252.52 $120.64 $205.97 $940.40 Raw Food $7,710.20 $8,277.01 $8,253.81 $9,759.53 $5,589.72 $9,042.96 $48,633.23 Training and Meetings - Dining $0.00 $0.00 $0.00 $80.70 $0.00 $0.00 $80.70 Vendor Rebates - Dining $0.00 -$736.34 $0.00 -$382.18 $0.00 $0.00 -$1,118.52 Total Dining -B- Operating Expenses $9,601.36 $10,743.89 $9,019.92 $11,003.39 $6,904.53 $19,039.61 $66,312.70

Housekeeping -A- Payroll Employee Benefits Other - Housekeeping $2.43 $2.79 $2.63 $3.10 $1.45 -$2.05 $10.35 Employee Uniforms - Housekeeping $0.00 $0.00 $0.00 $0.00 $153.39 $207.74 $361.13 Employment Screenings - Housekeeping $0.75 $4.06 $2.35 $0.00 $0.00 $0.38 $7.54

Holiday Pay - Housekeeping -$16.29 $244.30 $0.00 $0.00 $0.00 $200.48 $428.49 Housekeepers $2,571.88 $3,040.12 $3,466.53 $3,026.78 $3,731.92 $1,821.84 $17,659.07 Overtime - Housekeeping $0.00 $0.00 $61.53 $0.00 $21.58 $0.00 $83.11 Payroll Taxes - Housekeeping $254.92 $331.18 $351.86 $367.38 $400.88 $199.81 $1,906.03 PTO/Sick Leave Wages - Housekeeping $503.32 $196.51 -$172.13 $413.11 $0.00 $0.00 $940.81 Total Housekeeping -A- Payroll $3,317.01 $3,818.96 $3,712.77 $3,810.37 $4,309.22 $2,428.20 $21,396.53

Housekeeping -B- Operating Expenses Chemicals - Housekeeping $223.56 $862.82 $747.67 $441.17 $176.14 $441.29 $2,892.65 Cleaning Supplies - Housekeeping $314.04 $0.00 $0.00 $370.97 $135.59 $399.11 $1,219.71 Total Housekeeping -B- Operating Expen $537.60 $862.82 $747.67 $812.14 $311.73 $840.40 $4,112.36

Maintenance & Repair -A- Payroll Director of Engineering $3,248.91 $3,729.19 $4,068.21 $3,587.93 $4,944.00 $3,124.92 $22,703.16 Employee Benefits Other - Maintenance $19.54 $27.72 $26.83 $27.72 $31.30 $9.97 $143.08 Employment Screenings - Maintenance $1.35 $7.91 $4.73 $0.00 $0.00 $0.94 $14.93 Engineering Tech $1,597.83 $1,992.38 $2,456.50 $2,487.76 $2,652.83 $735.69 $11,922.99 Holiday Pay - Maintenance -$6.51 $97.64 $0.00 $0.00 $0.00 $358.14 $449.27 Payroll Taxes - Maintenance $507.51 $494.89 $514.75 $582.56 $773.75 $633.82 $3,507.28 PTO/Sick Leave Wages - Maintenance $1,793.83 $649.78 $169.51 $847.29 $168.75 $277.02 $3,906.18 Total Maintenance & Repair -A- Payroll $7,162.46 $6,999.51 $7,240.53 $7,533.26 $8,570.63 $5,140.50 $42,646.89

Maintenance & Repair -B- Operating Expenses Building Repairs $2,934.65 $2,927.16 $0.00 $0.00 $0.00 $0.00 $5,861.81 Chemicals - Maintenance $0.00 $413.47 $0.00 $0.00 $0.00 $0.00 $413.47 Consultants - Maintenance $0.00 $243.26 $0.00 $0.00 $0.00 $0.00 $243.26 Contract Labor - Maintenance $0.00 $0.00 $0.00 $0.00 $389.70 $0.00 $389.70 Dues & Subscriptions - Maintenance $214.00 $107.00 $0.00 $214.00 $107.00 $0.00 $642.00 Equipment Lease Maintenance $0.00 $0.00 $0.00 $0.00 $0.00 $2,318.73 $2,318.73 Exterminating Contract $187.44 $325.13 $368.55 $187.44 $187.44 $1,455.21 $2,711.21 Fire Alarm & Fire Sprinkler R&M/Contractsv $1,906.80 $1,505.87 $1,505.87 $4,200.21 $4,484.01 $3,006.87 $16,609.63 General Maintenance Supplies -$60.97 $392.05 $713.74 $863.34 $1,178.34 $717.44 $3,803.94 Generator Service $0.00 $301.75 $0.00 $0.00 $2,320.39 $1,269.80 $3,891.94 Grounds Contract $2,481.12 $2,509.79 $2,318.73 $2,318.73 $2,427.31 $176.73 $12,232.41 Hurricane Supplies $0.00 $0.00 $0.00 $0.00 $125.00 $0.00 $125.00 Licenses & Permits Maintenance $0.00 $0.00 $1,037.34 $0.00 $0.00 $0.00 $1,037.34 Light Bulbs/Electrical Supplies $0.00 $169.67 $170.19 $196.78 $221.70 $214.43 $972.77 Mileage - Maintenance $0.00 $0.00 $0.00 $0.00 $12.18 $0.00 $12.18 Plumbing R&M $0.00 $0.00 $0.00 $0.00 $0.00 $2,200.00 $2,200.00 Plumbing Supplies $155.86 $0.00 $0.00 $0.00 $0.00 $0.00 $155.86 Roof Repair $0.00 $0.00 $133.19 $0.00 $0.00 $0.00 $133.19 Water Softner System - Supplies $501.39 $419.34 $493.93 $449.16 $456.62 $479.14 $2,799.58 Total Maintenance & Repair -B- Operatin $8,320.29 $9,314.49 $6,741.54 $8,429.66 $11,909.69 $11,838.35 $56,554.02

Marketing -A- Payroll Employee Benefits Other - Marketing $0.00 $0.00 $15.29 $93.43 $29.73 -$267.13 -$128.68 Employment Screenings - Marketing $8.32 $1.76 $3.73 $0.00 $0.00 $0.82 $14.63 Holiday Pay - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $163.59 $163.59 Marketing Director $4,450.54 $3,151.45 $2,845.76 $6,080.78 $5,178.89 $3,886.56 $25,593.98 Overtime - Marketing $0.00 $0.00 $0.00 $91.01 $0.00 $0.00 $91.01 Payroll Taxes - Marketing $473.02 $340.08 $278.14 $566.93 $524.00 $411.87 $2,594.04 PTO/Sick Leave Wages - Marketing $0.00 $131.67 $790.01 $829.51 $829.52 $293.10 $2,873.81 Sales Counselor - Marketing $116.83 $0.00 $0.00 $267.50 $0.00 $0.00 $384.33 Total Marketing -A- Payroll $5,048.71 $3,624.96 $3,932.93 $7,929.16 $6,562.14 $4,488.81 $31,586.71

Marketing -B- Operating Expenses Agency Fees $181.92 $373.60 $414.95 $346.03 $224.59 $428.08 $1,969.17 Collateral $92.50 $0.00 $0.00 $0.00 $0.00 $768.14 $860.64 Community Outreach $159.79 $0.00 $0.00 $87.57 $2.17 $0.00 $249.53 Direct Mail $0.00 $0.00 $0.00 $0.00 $0.00 $140.66 $140.66 Dues & Subscriptions - Marketing $0.00 $0.00 $477.00 $0.00 $0.00 $0.00 $477.00 Events $0.00 $0.00 $0.00 $0.00 $0.00 $133.93 $133.93 Leads/CRM $3,653.49 $3,494.07 $212.77 $5,717.65 $5,432.52 $5,169.95 $23,680.45 Paid Placement Search Marketing $640.85 $987.29 $987.29 $987.29 $987.29 $1,249.86 $5,839.87 Referral Fees $3,195.00 $0.00 $2,327.50 $5,465.00 $14,485.00 $0.00 $25,472.50 Social Media Marketing & Oversight $640.85 $987.28 $1,087.29 $987.28 $987.29 $987.29 $5,677.28 Traditional Media $0.00 $0.00 $0.00 $0.00 $510.13 $510.13 $1,020.26 Travel - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $1,760.63 $1,760.63 Travel Meals - Marketing $0.00 $0.00 $0.00 $251.05 $0.00 $0.00 $251.05 Website Hosting $234.44 $234.44 $234.44 $234.44 $234.44 $234.44 $1,406.64 Total Marketing -B- Operating Expenses $8,798.84 $6,076.68 $5,741.24 $14,076.31 $22,863.43 $11,383.11 $68,939.61

Memory Care -A- Payroll Bonuses - MC $0.00 $328.57 $221.43 $0.00 $0.00 $0.00 $550.00 Employee Benefits Other - MC $1,228.58 $1,470.32 $2,763.85 $1,637.49 $27.73 -$203.96 $6,924.01 Employment Screenings - MC $19.46 $30.12 $16.95 $0.00 $0.00 $1.84 $68.37 Holiday Pay - MC -$88.65 $1,329.68 $0.00 $0.00 $0.00 $1,095.50 $2,336.53 Memory Care Manager $0.00 $412.09 $8,241.77 $0.00 $0.00 $0.00 $8,653.86 Overtime - MC $3,335.77 $6,620.57 $2,370.64 $2,129.06 $1,935.49 $909.30 $17,300.83 Payroll Taxes - MC $1,694.22 $2,518.13 $1,810.75 $1,665.42 $1,634.92 $1,123.07 $10,446.51 PTO/Sick Leave Wages - MC $208.68 $493.75 -$347.04 $1,903.03 $225.00 $240.16 $2,723.58 Salaries & Wages MC CNA/Res Assistant $5,044.06 $6,651.29 $4,360.44 $4,064.88 $3,302.45 $3,610.18 $27,033.30 Salaries & Wages MC Med Tech $7,928.19 $8,573.60 $7,601.48 $4,081.64 $9,845.66 $4,106.74 $42,137.31

Salaries & Wages MS LPN $3,581.18 $3,977.14 $0.00 $0.00 $0.00 $0.00 $7,558.32 Total Memory Care -A- Payroll $22,951.49 $32,405.26 $27,040.27 $15,481.52 $16,971.25 $10,882.83 $125,732.62

Memory Care -B- Operating Expenses Training and Meetings - MC $1,270.29 $190.93 $0.00 $0.00 $0.00 $0.00 $1,461.22 Wellness Supplies MC $0.00 $0.00 $0.00 $0.00 $0.00 $125.00 $125.00 Total Memory Care -B- Operating Expens $1,270.29 $190.93 $0.00 $0.00 $0.00 $125.00 $1,586.22

Resident Services -A- Payroll Activities Aid - Lifestyles $4,727.77 $5,122.04 $2,571.43 $2,671.39 $2,957.25 $1,382.77 $19,432.65 Director / Manager - Lifestyles $0.00 $182.86 $1,097.14 $0.00 $0.00 -$156.32 $1,123.68 Employee Benefits Other - Lifestlyes $1.84 $1.40 $1.80 $0.00 $0.00 $516.51 $521.55 Employment Screenings - Lifestyles $1.17 $7.25 $4.13 $0.00 $23.00 $0.42 $35.97 Holiday Pay - Lifestyles -$14.23 $213.43 $0.00 $0.00 $0.00 -$697.33 -$498.13 Overtime - Lifestyles $249.89 $299.93 $340.31 $205.50 $65.25 $22.05 $1,182.93 Payroll Taxes - Lifestyles $379.70 $451.03 $385.15 $307.24 $322.80 -$87.62 $1,758.30 PTO/Sick Leave Wages - Lifestlyes $0.00 $0.00 $0.00 $0.00 $0.00 $1,231.07 $1,231.07 Salaries & Wages - Lifestyles $0.00 $0.00 $0.00 $0.00 $0.00 $858.24 $858.24 Total Resident Services -A- Payroll $5,346.14 $6,277.94 $4,399.96 $3,184.13 $3,368.30 $3,069.79 $25,646.26

Resident Services -B- Operating Expenses Contract Entertainment $157.42 $0.00 $296.98 $80.00 $80.00 $233.40 $847.80 Decorations $0.00 $0.00 $0.00 $0.00 $112.34 $0.00 $112.34 Office Supplies $0.00 $0.00 $0.00 $0.00 -$23.57 $0.00 -$23.57 Operating Supplies $322.86 $144.36 $196.83 $227.81 -$275.63 $57.60 $673.83 Total Resident Services -B- Operating Ex $480.28 $144.36 $493.81 $307.81 -$106.86 $291.00 $1,610.40

Transportation -B- Operating Expenses Vehicle Fuel $40.00 $40.00 $0.00 $85.00 $185.00 $90.00 $440.00 Vehicle Lease - Bus & Van $0.00 $0.00 $1,287.76 $1,287.76 $0.00 $0.00 $2,575.52 Vehicle Maintenance $0.00 $1,614.10 $0.00 $0.00 $72.97 $0.00 $1,687.07 Vehicle Tag $0.00 $0.00 $0.00 $0.00 $147.79 $0.00 $147.79 Total Transportation -B- Operating Expe $40.00 $1,654.10 $1,287.76 $1,372.76 $405.76 $90.00 $4,850.38

Utilities, Insurance and Other

Insurance Insurance - Auto $159.83 $159.83 $159.83 $159.83 $159.83 $159.83 $958.98 Insurance - General/Professional Liability $3,568.40 $3,568.40 $3,568.40 $3,568.40 $3,568.40 $3,568.40 $21,410.40 Insurance - Property $3,782.12 $3,782.12 $3,782.12 $3,782.12 $3,782.12 $3,782.12 $22,692.72 Insurance - Umbrella/Excess $1,666.84 $1,666.84 $1,666.84 $1,666.84 $1,666.84 $1,666.84 $10,001.04 Total Insurance $9,177.19 $9,177.19 $9,177.19 $9,177.19 $9,177.19 $9,177.19 $55,063.14

Management Fees Management Fee $9,006.00 $7,700.00 $10,624.00 $8,309.00 $7,000.00 $7,500.00 $50,139.00 Total Management Fees $9,006.00 $7,700.00 $10,624.00 $8,309.00 $7,000.00 $7,500.00 $50,139.00

Taxes Taxes Real Estate $0.00 $2,743.50 $2,743.50 $2,743.50 $2,453.00 $17,637.32 $28,320.82 Total Taxes $0.00 $2,743.50 $2,743.50 $2,743.50 $2,453.00 $17,637.32 $28,320.82

Utilities Cable TV $916.25 $916.25 $916.25 $916.25 $996.22 $87.88 $4,749.10 Electricity $5,929.11 $5,729.29 $5,393.26 $5,582.53 $6,145.28 $5,596.90 $34,376.37 Gas $258.65 $267.24 $233.59 $381.74 $614.25 $427.46 $2,182.93 Telephone & Internet Communications $2,633.49 $4,441.67 $3,161.89 $2,097.94 $2,671.57 $535.45 $15,542.01 Trash Removal $605.50 $1,150.40 $607.35 $614.11 $1,004.89 $546.40 $4,528.65 Water & Sewer $5,749.64 $7,087.73 $6,031.65 $5,114.20 $5,343.38 $6,567.10 $35,893.70 Total Utilities $16,092.64 $19,592.58 $16,343.99 $14,706.77 $16,775.59 $13,761.19 $97,272.76

Total Utilities, Insurance and Other $34,275.83 $39,213.27 $38,888.68 $34,936.46 $35,405.78 $48,075.70 $230,795.72

Total Operating Expenses $184,575.11 $211,559.58 $213,035.08 $216,314.86 $248,207.18 $214,782.86 $1,288,474.67

Operating Income / (Loss) -$5,099.68 -$34,276.12 -$33,961.74 -$45,153.14 -$63,062.02 -$25,357.34 -$206,910.04

Other Income and Expense

Non-Operating Income/Expenses Amortization Expense -$3,158.04 -$3,158.04 -$3,158.04 -$3,158.04 -$3,158.04 -$3,158.04 -$18,948.24 Depreciation Expense -$5,317.86 -$5,317.86 -$5,317.86 -$5,317.86 -$5,317.86 -$5,317.86 -$31,907.16 Extraordinary Loss -$2,353.73 -$1,864.63 -$5,175.62 -$10,573.97 $0.00 $0.00 -$19,967.95 Interest Expense -$16,557.81 -$16,736.93 -$18,328.37 -$16,557.81 -$16,557.81 -$16,557.81 -$101,296.54 Legal Expense $0.00 -$604.50 $0.00 $0.00 $0.00 -$590.95 -$1,195.45 Vendor Rebates $0.00 $0.00 $0.00 $0.00 $0.00 $593.59 $593.59 Total Non-Operating Income/Expenses -$27,387.44 -$27,681.96 -$31,979.89 -$35,607.68 -$25,033.71 -$25,031.07 -$172,721.75

Total Other Income and Expense -$27,387.44 -$27,681.96 -$31,979.89 -$35,607.68 -$25,033.71 -$25,031.07 -$172,721.75

Net Income / (Loss) before Tax -$32,487.12 -$61,958.08 -$65,941.63 -$80,760.82 -$88,095.73 -$50,388.41 -$379,631.79

Net Income -$32,487.12 -$61,958.08 -$65,941.63 -$80,760.82 -$88,095.73 -$50,388.41 -$379,631.79

Total Comprehensive Income -$32,487.12 -$61,958.08 -$65,941.63 -$80,760.82 -$88,095.73 -$50,388.41 -$379,631.79

Income Statement Ventura Hills

For the month ended 31 December 2019 2 3

Jan-20 Dec-19 Nov-19 Oct-19 Sep-19 Aug-19 Jul-19 Jun-19 May-19 Apr-19 Mar-19 Feb-19 Total

Revenue

Operating Revenue

Other Income

Employee Meals $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $13.93 $88.07 $0.00 $0.00 $0.00 $0.00 $102.00 Late Fee AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Total Other Income -$838.25 -$91.40 -$126.75 $0.00 $0.00 $0.00 $13.93 $88.07 $0.00 $0.00 $0.00 $0.00 -$954.40

Total Operating Revenue -$838.25 -$91.40 -$126.75 $0.00 $0.00 $0.00 $13.93 $88.07 $0.00 $0.00 $0.00 $0.00 -$954.40

Room & Board AL

*Room & Board - AL

Respite Care AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $2,250.00 $2,250.00 $0.00 $0.00 $0.00 $0.00 $4,500.00 Room & Board AL $140,129.78 $136,413.32 $137,678.40 $136,396.62 $126,981.36 $141,255.80 $142,149.70 $143,232.10 $144,730.62 $146,857.03 $152,268.59 $133,997.42 $1,682,090.74 Total *Room & Board - AL $140,129.78 $136,413.32 $137,678.40 $136,396.62 $126,981.36 $141,255.80 $144,399.70 $145,482.10 $144,730.62 $146,857.03 $152,268.59 $133,997.42 $1,686,590.74

Additional Services - AL

Additional Care Services AL $0.00 $0.00 $54.00 $0.00 $0.00 $0.00 $17,105.38 $26,544.59 $29,157.06 $32,077.40 $36,700.67 -$2,357.86 $139,281.24 Additional Resident AL $1,000.00 $800.00 $1,800.00 $1,800.00 $1,800.00 $104.92 $1,938.36 $840.00 $840.00 $0.00 $0.00 $181.50 $11,104.78 Additonal Meals / Tray Svc AL $0.00 $0.00 $300.00 $300.00 $310.00 $320.00 $320.00 $310.00 $50.00 $280.00 $0.00 $0.00 $2,190.00 Beauty Salon Contra AL $0.00 $0.00 -$62.00 -$364.00 -$577.00 -$313.00 -$507.75 -$618.00 -$425.00 $0.00 $0.00 $0.00 -$2,866.75 Beauty Salon AL $0.00 $0.00 $10,331.50 $9,420.00 $10,093.50 $9,897.00 $494.00 $533.00 $985.00 $477.00 $0.00 $0.00 $42,231.00 Care Level 1 AL $2,636.93 $3,159.00 $3,821.17 $4,912.00 $4,666.10 $3,612.00 $0.00 $0.00 $0.00 $0.00 $0.00 $3,271.23 $26,078.43 Care Level 2 AL $8,087.00 $8,087.00 $8,025.00 $8,107.91 $9,077.81 $8,568.00 $49,952.72 Care Level 3 AL $2,361.29 $1,800.00 $72.79 $732.05 $623.85 $835.33 $6,425.31 Community Fees AL $0.00 $6,250.00 $1,000.00 $3,500.00 $0.00 $2,000.00 $0.00 $4,000.00 $750.00 $6,250.00 $1,000.00 $0.00 $24,750.00 Guest Meals AL $0.00 $0.00 $240.00 $0.00 $132.00 $180.00 $216.00 $0.00 $100.00 $130.00 $10.00 $0.00 $1,008.00 Guest Suite AL $0.00 $0.00 $625.00 $0.00 $0.00 $625.00 Housekeeping AL $204.00 $204.00 $204.00 $204.00 $204.00 $279.00 $0.00 $0.00 $54.00 $73.00 $0.00 $0.00 $1,426.00 Medication Fee AL $7,985.62 $9,229.65 $9,871.96 $11,300.63 $10,650.49 $13,800.33 $12,458.00 $450.00 $450.00 $60.00 $0.00 $0.00 $76,256.68 Miscellaneous Resident Charge (AL) -$2,767.99 -$3,674.12 $0.00 $0.00 $0.00 $0.00 $0.00 $1.00 $0.00 $0.00 $0.00 $0.00 -$6,441.11 Pendant Fee AL $359.10 $383.77 $510.00 $348.00 $499.53 $347.00 $347.00 $347.00 $549.00 $403.07 $378.40 $0.00 $4,471.87 Pet Fee AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $800.00 $800.00 $0.00 $0.00 $1,600.00 Rate Lock Fees AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $1,695.00 $0.00 $0.00 $1,695.00 Total Additional Services - AL $19,865.95 $26,528.33 $36,793.42 $40,260.59 $37,480.28 $39,630.58 $32,370.99 $32,407.59 $33,310.06 $42,245.47 $38,089.07 $1,094.87 $380,077.20

Concessions - AL

Concession - Rent AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$9,868.12 -$7,489.80 -$10,959.12 -$14,498.27 -$14,735.87 $0.00 -$57,551.18 Concessions - Additional Resident AL -$200.00 $0.00 -$9,573.82 -$9,595.00 -$9,618.12 -$9,618.12 -$38,605.06 Concessions - Care Services AL -$3,795.00 -$4,254.68 -$750.00 -$250.00 -$250.00 -$250.00 -$9,549.68 Concessions - Rent AL $7,235.87 $5,183.93 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$5,833.87 $6,585.93 Total Concessions - AL $3,240.87 $929.25 -$10,323.82 -$9,845.00 -$9,868.12 -$9,868.12 -$9,868.12 -$7,489.80 -$10,959.12 -$14,498.27 -$14,735.87 -$5,833.87 -$99,119.99

Total Room & Board AL $163,236.60 $163,870.90 $164,148.00 $166,812.21 $154,593.52 $171,018.26 $166,902.57 $170,399.89 $167,081.56 $174,604.23 $175,621.79 $129,258.42 $1,967,547.95

Room & Board MC

*Room & Board - MC

Room & Board MC $13,432.37 $5,995.00 $4,995.00 $4,995.00 $3,439.18 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $32,856.55 Total *Room & Board - MC $13,432.37 $5,995.00 $4,995.00 $4,995.00 $3,439.18 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $32,856.55

Total Room & Board MC $27,027.17 $9,223.00 $4,995.00 $4,995.00 $3,439.18 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $49,679.35

Total Revenue $189,425.52 $173,002.50 $169,016.25 $171,807.21 $158,032.70 $171,018.26 $166,916.50 $170,487.96 $167,081.56 $174,604.23 $175,621.79 $129,258.42 $2,016,272.90

Gross Profit $189,425.52 $173,002.50 $169,016.25 $171,807.21 $158,032.70 $171,018.26 $166,916.50 $170,487.96 $167,081.56 $174,604.23 $175,621.79 $129,258.42 $2,016,272.90

Operating Expenses

Administration -A- Payroll

Business Office Director $2,310.02 $4,611.41 $4,457.42 $4,613.27 $4,457.52 $4,426.13 $3,506.71 $4,597.68 $4,002.83 $4,539.13 $6,566.61 $1,104.52 $49,193.25 Employee Benefits- Admin $277.11 $904.84 $833.30 $861.74 $833.95 $487.96 $861.74 $833.64 $861.11 $833.34 $861.11 $138.89 $8,588.73 Employee Recruiting - Admin $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $238.00 $0.00 $0.00 $7,800.00 $0.00 $8,038.00 Employee Uniforms - Admin $98.52 $0.00 $190.12 $235.87 $0.00 $395.27 $363.32 $299.95 $485.92 $16.69 $755.61 $71.01 $2,912.28 Employment Screenings - Admin $395.90 $486.90 $690.52 $1,871.89 $198.00 $288.52 $416.57 $405.44 $498.82 $988.26 $495.00 $0.00 $6,735.82 Executive Director $12,175.01 $8,076.92 $12,115.38 $10,099.16 $6,660.90 $6,761.42 $6,661.43 $6,760.90 $6,661.43 $6,810.90 $6,661.42 $0.00 $89,444.87 Executive Director Bonus $0.00 $0.00 $0.00 $0.00 $1,700.00 $0.00 $0.00 $0.00 $150.00 $0.00 $0.00 $0.00 $1,850.00 Executive Director Taxes / Benefits $1,955.84 $819.91 $1,309.23 $1,459.31 $976.16 $802.42 $792.14 $803.63 $808.55 $791.46 $889.24 $0.00 $11,407.89 Holiday Pay - Admin $247.88 $395.08 $321.48 $0.00 $68.26 $68.26 $298.52 $49.24 $341.61 $0.00 $0.00 $0.00 $1,790.33 Overtime - Admin $131.78 $0.00 $0.00 $0.00 $0.00 $13.95 $34.57 $79.83 $35.77 $3.20 $35.33 $1.14 $335.57 Payroll Service Fee $2,431.66 $2,597.82 $2,662.16 $2,666.95 $2,386.29 $2,691.41 $2,899.30 $2,813.91 $2,868.49 $2,790.76 $3,746.19 $1,579.48 $32,134.42 Payroll Taxes - Admin $611.02 $690.77 $518.48 $544.15 $518.93 $545.00 $548.23 $548.20 $1,805.87 $3,589.02 $1,075.51 $187.10 $11,182.28 PTO/Sick Leave Wages - Admin $819.57 $807.27 $290.48 $277.22 $291.51 $583.20 $1,182.09 $47.68 $614.99 $91.30 $397.37 $91.32 $5,494.00 Receptionist/Concierge $1,791.31 $1,980.55 $1,708.22 $2,222.53 $1,966.14 $2,032.47 $2,144.52 $2,185.79 $2,172.11 $2,077.47 $3,084.99 $546.67 $23,912.77 Salaries & Wages - Hourly - Admin $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Workers Comp - Admin $2,452.83 $1,129.58 $1,129.58 $1,129.58 $1,129.58 $1,129.58 $1,129.58 $1,129.58 $1,129.58 $1,129.58 $1,129.58 $1,129.58 $14,878.21 Total Administration -A- Payroll $25,698.45 $22,501.05 $26,226.37 $25,981.67 $21,187.24 $20,225.59 $20,838.72 $20,793.47 $22,437.08 $23,661.11 $33,497.96 $4,849.71 $267,898.42

Administration -B- Operating Expenses

Bad Debt Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $141.73 $141.73 Bank Fees $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $31.17 $0.00 $31.17 Cell Phones Directors/Managers $0.00 $105.00 $70.00 $70.00 $87.50 $87.50 $140.00 $105.00 $35.00 $128.94 $100.00 $0.00 $928.94 Computer Software Maintenace $1,159.96 $1,075.02 $706.94 $1,032.38 $1,054.20 $3,280.27 $137.84 $768.48 $874.20 $982.54 $1,726.14 $1,109.90 $13,907.87 Copier Lease $1,704.07 $1,321.31 $1,897.91 $954.70 $1,466.90 $451.62 $519.35 $514.32 $617.72 $726.15 $1,330.89 $664.71 $12,169.65 Copier Maintenance & Overages $0.00 $0.00 $0.00 $186.40 $0.00 $0.00 $749.91 $0.00 $947.92 $787.38 $2,161.13 $0.00 $4,832.74 Dues & Subscriptions - Admin $0.00 $0.00 $1,040.03 $1,084.29 $1,117.49 $1,125.90 $1,319.91 $1,324.47 $316.13 $1,892.39 $5.00 $106.92 $9,332.53 Employee Appreciation - Admin $0.00 $67.57 $89.18 $24.67 $0.00 $11.44 $0.00 $29.60 $324.20 $0.00 $82.18 $212.82 $841.66 Flowers - Admin $0.00 $0.00 $0.00 $48.49 $0.00 $0.00 $48.49 Food-Admin $0.00 $0.00 $0.00 $0.00 $0.00 $10.42 $10.42 Interest / Finance Charges $76.77 $0.00 $0.00 $0.00 $216.34 $0.00 $0.00 $82.23 $82.23 $82.23 $82.23 $82.23 $704.26 Internet $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $103.86 $103.86 IT Email Services $0.00 $0.00 $0.00 $0.00 $0.00 $144.54 $0.00 $0.00 $0.00 $0.00 $0.00 $176.13 $320.67 Licenses & Permits Admin $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $709.25 $372.49 $0.00 $0.00 $1,081.74 Management Company Travel $454.32 $4,715.67 $3,851.63 $3,461.48 $1,694.42 $0.00 $2,360.09 $0.00 $0.00 $0.00 $12,000.00 $5,271.88 $33,809.49 Meals & Entertainment - Admin $442.38 $352.47 $199.45 $344.56 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $130.06 $1,468.92 Office Supplies - Admin $38.11 $0.00 $114.53 $633.94 $301.68 $735.27 $558.68 $877.64 $1,281.97 $676.51 $632.29 $0.00 $5,850.62 Postage & Delivery $105.14 $64.27 $164.06 $44.28 $247.61 $196.23 $249.27 $178.84 $486.35 $230.34 $175.29 $473.96 $2,615.64 Postage Meter - Lease Equip $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $391.28 $32.00 $290.59 $0.00 $713.87 Professional Fees Accounting $0.00 $0.00 $0.00 $0.00 $0.00 -$2,844.67 $0.00 $0.00 $336.43 $336.43 $350.93 $1,820.88 $0.00 Professional Fees Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $525.00 $0.00 $0.00 -$87.08 $437.92 Resident Relations $0.00 $0.00 $0.00 $0.00 $49.77 $86.59 $0.00 $0.00 $86.02 $0.00 $0.00 $16.17 $238.55 Training and Meetings - Admin $0.00 $0.00 $0.00 $425.00 $0.00 $0.00 $0.00 $0.00 $0.00 $4,105.20 $0.00 $0.00 $4,530.20 Total Administration -B- Operating Expenses $3,980.75 $7,701.31 $8,133.73 $8,310.19 $6,235.91 $3,285.11 $6,035.05 $3,880.58 $7,013.70 $10,352.60 $18,967.84 $10,224.17 $94,120.94

Assisted Living -A- Payroll

Bonuses - AL $0.00 $0.00 $0.00 -$32.14 $82.14 $0.00 $1,476.79 $1,148.21 $0.00 $71.43 $203.57 $0.00 $2,950.00 Employee Benefits Other - AL $429.11 $656.80 $483.22 $497.18 $486.95 -$107.93 $470.50 $676.75 $1,174.44 $1,062.24 $2,338.12 $610.22 $8,777.60 Employee Medical Insurance - AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $5,474.61 $5,474.61 Employee Recruiting - AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $68.30 $68.30 Employment Screenings - AL $21.58 $35.84 $20.10 $98.09 $0.00 $31.94 $23.31 $56.29 $79.54 $82.12 $0.00 $0.00 $448.81 Health Services Director - AL $5,051.50 $6,389.40 $576.92 -$1,368.55 $4,680.09 $4,663.20 $4,882.83 $5,034.88 $5,017.99 $4,088.74 $4,440.11 $1,790.61 $45,247.72 Holiday Pay - AL $3,315.15 $3,976.32 $2,120.42 $0.00 $548.92 $548.93 $2,133.89 $351.96 $1,827.29 $0.00 $0.00 $0.00 $14,822.88 Overtime - AL $4,462.74 $4,410.28 $5,912.54 $8,226.31 $6,568.87 $3,408.36 $4,013.03 $3,214.03 $3,372.76 $2,851.42 $8,789.35 $983.85 $56,213.54 Payroll Taxes - AL $4,934.65 $4,966.10 $4,334.74 $3,835.40 $3,332.15 $3,537.52 $4,060.80 $4,678.00 $3,992.34 $2,464.54 $6,152.82 $3,056.43 $49,345.49 PTO/Sick Leave Wages - AL $1,166.79 $1,092.86 $332.51 $976.05 $1,067.99 $1,182.22 $470.21 $1,837.03 $1,147.95 $796.10 $1,222.57 -$13,430.91 -$2,138.63 Retirement Employee Matching - AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$40.65 -$40.65 Salaries & Wages AL CNA/Res Assistant $14,654.02 $16,247.52 $20,227.02 $16,334.90 $17,984.23 $20,948.53 $20,352.24 $22,706.13 $23,140.85 $20,619.35 $27,333.54 $4,491.15 $225,039.48 Salaries & Wages AL LPN $2,936.37 $4,651.23 $5,048.78 $1,243.54 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $2,952.44 $1,752.34 $18,584.70 Salaries & Wages AL Med Tech $13,462.75 $14,418.72 $13,969.32 $18,424.09 $8,042.61 $8,302.91 $10,263.29 $13,125.08 $9,084.53 $7,236.05 $12,442.57 $2,735.04 $131,506.96 Workers Comp - AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $295.66 $295.66 Total Assisted Living -A- Payroll $50,434.66 $56,845.07 $53,025.57 $48,234.87 $42,793.95 $42,515.68 $48,146.89 $52,828.36 $48,837.69 $39,271.99 $65,875.09 $7,786.65 $556,596.47

Assisted Living -B- Operating Expenses

Consultants - AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $380.77 $0.00 $0.00 $380.77 Contract Labor - AL $0.00 $0.00 $0.00 $0.00 $8,494.05 $0.00 $9,217.92 $20,377.88 $18,394.84 $30,830.85 $4,386.33 $0.00 $91,701.87 Dues & Subscriptions - AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $105.00 $0.00 $100.00 $93.95 $298.95 EMAR $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $789.22 $789.22 $0.00 $0.00 $1,578.44 Equipment Lease - AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $1,208.41 $1,208.41 Hazardous Waste Disposal - AL $110.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $50.00 $0.00 -$282.13 -$122.13 Licenses & Permits AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Medical Supplies $265.72 $557.56 $181.13 $0.00 $202.60 $0.00 $6.50 $0.00 $0.00 $0.00 $0.00 $0.00 $1,213.51 Mileage - AL $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $206.48 $0.00 $0.00 $0.00 $0.00 $0.00 $206.48 Supplies - Medical/ Charged to Residents AL $120.64 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $1.88 $0.00 $122.52 Wellness Supplies $0.00 $0.00 $0.00 $0.00 $362.25 $87.93 $232.76 $167.19 $150.82 $1,312.33 $417.98 $55.11 $2,786.37 Total Assisted Living -B- Operating Expenses $496.36 $557.56 $181.13 $0.00 $9,058.90 $87.93 $9,663.66 $20,545.07 $19,439.88 $33,363.17 $4,906.19 $1,075.34 $99,375.19

Dining -A- Payroll

Cooks $8,012.61 $8,771.56 $9,911.03 $8,098.68 $8,141.08 $7,625.18 $7,808.64 $8,033.81 $8,509.29 $8,808.61 $13,489.72 $2,784.80 $99,995.01 Dining Room Waitstaff $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $486.24 $486.24 Director of Dining Service $4,253.20 $4,260.90 $4,113.95 $5,544.89 $5,366.01 $5,366.02 $4,042.41 $4,775.76 $5,291.52 $5,209.71 $7,328.33 $868.29 $56,420.99 Employee Benefits Other - Dining $966.37 $1,932.53 $2,069.74 $1,868.45 $2,866.20 $1,428.30 $2,602.83 $2,550.72 $2,669.10 $2,584.83 $2,670.41 $430.71 $24,640.19 Employee Uniforms - Dining $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $465.36 $465.36 Employment Screenings - Dining $2.20 $2.18 $15.57 $13.69 $0.00 $1.10 $13.12 $15.62 $8.02 $17.31 $0.00 $0.00 $88.81 Holiday Pay - Dining $1,308.46 $1,157.51 $733.80 $0.00 $201.04 $201.05 $779.00 $116.13 $730.76 $0.00 $0.00 $0.00 $5,227.75 Overtime - Dining $0.00 $0.00 $66.81 $507.04 $307.54 $33.32 $44.86 $135.93 $582.11 $36.73 $149.85 $0.00 $1,864.19 Payroll Taxes - Dining $1,528.24 $1,483.87 $1,357.76 $1,212.45 $1,170.62 $1,264.69 $1,386.50 $1,291.82 $1,177.17 $941.64 $2,324.29 $418.48 $15,557.53 PTO/Sick Leave Wages - Dining $408.26 $1,738.58 $1,646.27 $659.20 $247.20 $965.95 $2,455.68 $1,377.17 $0.00 $167.37 $975.27 $255.67 $10,896.62 Utility Workers $0.00 $83.48 $0.00 $0.00 $0.00 $1,314.15 $1,548.36 $1,103.35 $0.00 $0.00 $0.00 $0.00 $4,049.34 Total Dining -A- Payroll $16,479.34 $19,430.61 $19,914.93 $17,904.40 $18,299.69 $18,199.76 $20,681.40 $19,400.31 $18,967.97 $17,766.20 $26,937.87 $5,709.55 $219,692.03

Dining -B- Operating Expenses

China $0.00 $0.00 $82.39 $0.00 $0.00 $139.83 $0.00 $490.28 $198.70 $458.55 $0.00 $0.00 $1,369.75 Contract Services - Menu $100.00 $100.00 $100.00 $100.00 $100.00 $77.52 $79.50 $79.50 $79.50 $150.94 $141.98 $79.50 $1,188.44

Dishwasher Chemicals $276.50 $227.20 $195.62 $93.20 $491.44 $493.58 $250.58 $910.47 $0.00 $608.14 $222.04 $129.53 $3,898.30 Dishwasher Lease $8,140.92 $667.27 $0.00 $0.00 $0.00 $0.00 $887.10 $887.10 $0.00 $0.00 $0.00 $312.88 $10,895.27 Grease Trap Cleaning $843.25 $0.00 $0.00 $1,093.25 $0.00 $0.00 $1,255.73 $0.00 $0.00 $0.00 $0.00 $0.00 $3,192.23 Kitchen Equipment R&M $0.00 $148.29 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $97.44 $245.73 Kitchen Hood Service $0.00 $0.00 $0.00 $0.00 $368.05 $0.00 $368.05 Kitchen Supplies $394.25 $588.08 $101.60 $379.80 $329.39 $590.55 $477.48 $408.93 $71.44 $401.23 $542.76 $14.37 $4,299.88 Operating Supplies - Dining $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $7.62 $184.51 $0.00 $24.87 $0.00 $0.00 $217.00 Paper & Plastic Supplies - Dining $205.97 $186.00 $113.53 $64.73 $40.07 $144.39 $425.21 $145.92 $0.00 $242.50 $353.37 $0.00 $1,921.69 Raw Food $9,042.96 $9,399.45 $19,894.40 $10,656.24 $9,032.58 $12,043.78 $19,440.90 $18,974.36 $26,806.77 $31,868.95 -$14,057.63 $6,958.54 $160,061.30 Supplies - Cleaning - Dining $0.00 $0.00 $0.00 $415.68 $377.34 $915.64 $1,392.30 $358.20 $0.00 $1,066.30 $480.71 $0.00 $5,006.17 Training and Meetings - Dining $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $267.00 $0.00 $0.00 $267.00 Vendor Rebates - Dining $0.00 $0.00 $0.00 $0.00 -$406.81 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$406.81 Total Dining -B- Operating Expenses $19,039.61 $11,439.13 $20,587.51 $12,802.90 $10,332.06 $14,405.29 $24,216.42 $22,439.27 $27,156.41 $35,088.48 -$12,316.77 $7,592.26 $192,782.57

Housekeeping -A- Payroll

Employee Benefits Other - Housekeeping -$2.05 $3.94 $1.35 $1.39 $1.35 $1.21 $2.79 $3.04 $2.49 $1.69 $1.75 $0.28 $19.23 Employee Uniforms - Housekeeping $207.74 $0.00 $89.92 $51.70 $0.00 $0.00 $349.36 Employment Screenings - Housekeeping $0.38 $0.36 $2.53 $2.64 $0.00 $0.18 $1.25 $0.23 $1.90 $4.13 $0.00 $0.00 $13.60 Holiday Pay - Housekeeping $200.48 $155.29 $87.20 $0.00 $114.64 $114.64 $209.35 $33.08 $220.68 $0.00 $0.00 $0.00 $1,135.36 Housekeepers $1,821.84 $2,735.04 $2,325.67 $2,626.94 $2,508.92 $2,585.11 $3,200.55 $3,159.12 $3,218.20 $3,271.60 $3,863.27 $901.54 $32,217.80 Payroll Taxes - Housekeeping $199.81 $296.27 $203.36 $207.20 $203.83 $240.11 $344.11 $364.37 $330.28 $230.86 $440.09 $74.53 $3,134.82 PTO/Sick Leave Wages - Housekeeping $0.00 $81.75 $245.25 $81.75 $40.87 $225.68 $155.67 $261.60 $87.20 $0.00 $238.05 $0.00 $1,417.82 Total Housekeeping -A- Payroll $2,428.20 $3,272.65 $2,955.28 $2,971.62 $2,869.61 $3,166.93 $3,913.72 $3,821.44 $3,860.75 $3,508.28 $4,543.16 $976.35 $38,287.99

Housekeeping -B- Operating Expenses

Cleaning Supplies - Housekeeping $399.11 $610.27 $38.91 $236.13 $94.30 $300.61 $762.06 $0.00 $0.00 $245.94 $578.09 -$48.34 $3,217.08 Laundry Supplies $0.00 $0.00 $324.36 $0.00 $301.54 $150.78 $0.00 $0.00 $0.00 $0.00 $413.47 $0.00 $1,190.15 Operating Supplies - Housekeeping $0.00 $0.00 $0.00 $1,026.43 $638.65 $429.45 $344.11 $162.20 $555.70 $0.00 $0.00 $0.00 $3,156.54 Paper & Plastic Supplies - Housekeeping $0.00 $0.00 $0.00 $0.00 $129.33 $0.00 $129.33 Total Housekeeping -B- Operating Expenses $840.40 $928.35 $299.18 $1,262.56 $1,163.82 $880.84 $1,106.17 $162.20 $555.70 $245.94 $991.56 -$48.34 $8,388.38

Maintenance & Repair -A- Payroll

Director of Engineering $3,124.92 $3,401.16 $3,616.18 $4,138.84 $3,912.82 $4,378.97 $4,089.60 $3,318.86 $4,073.14 $4,011.43 $6,028.29 $685.71 $44,779.92 Employee Appreciation - Maintenance $0.00 $0.00 $0.00 $0.00 $16.79 $0.00 $16.79 Employee Benefits Other - Maintenance $9.97 $27.59 $37.02 $1.39 $1.35 $0.77 $1.39 $1.53 $1.75 $5.20 $7.20 $1.16 $96.32 Employment Screenings - Maintenance $0.94 $0.88 $6.34 $29.74 $0.00 $0.44 $2.01 $0.36 $11.96 $10.20 $0.00 $0.00 $62.87 Engineering Tech $735.69 $3,382.86 $2,342.72 $2,525.13 $2,349.70 $1,870.55 $1,413.89 $1,293.66 $3,271.48 $3,463.81 $3,150.61 $914.25 $26,714.35 Holiday Pay - Maintenance $358.14 $357.26 $289.56 $0.00 $84.37 $84.38 $178.29 $40.56 $349.00 $0.00 $0.00 $0.00 $1,741.56 Overtime - Maintenance $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $4.44 $119.50 $109.69 $8.48 $0.00 $242.11 Payroll Taxes - Maintenance $633.82 $613.68 $575.37 $605.94 $585.36 $552.96 $458.86 $448.90 $629.84 $485.14 $1,022.35 $181.99 $6,794.21 PTO/Sick Leave Wages - Maintenance $277.02 $824.28 $423.77 $240.14 $324.89 $377.28 $150.91 $776.91 $240.53 $0.00 $366.72 $0.00 $4,002.45 Total Maintenance & Repair -A- Payroll $5,140.50 $8,607.71 $7,290.96 $7,541.18 $7,275.28 $7,265.35 $6,294.95 $5,885.22 $8,697.20 $8,085.47 $10,583.65 $1,783.11 $84,450.58

Maintenance & Repair -B- Operating Expenses

Building Repairs $0.00 $0.00 $622.35 $125.83 $534.71 $0.00 $0.00 $1,687.61 $9,107.37 $1,307.20 $863.88 $924.37 $15,173.32 Chemicals - Maintenance $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $57.35 $0.00 $57.35 Common Area Cleaning & Repairs $0.00 $0.00 $0.00 $71.21 $0.00 $0.00 $0.00 $0.00 $0.00 $197.42 $0.00 $0.00 $268.63 Contract Labor - Maintenance $0.00 $389.70 $0.00 $1,041.33 $0.00 $0.00 $0.00 $0.00 $368.05 $551.14 $0.00 $368.05 $2,718.27 Dues & Subscriptions - Maintenance $0.00 $194.00 $97.00 $0.00 $97.00 $97.00 $97.00 $97.00 $97.00 $0.00 $0.00 $97.00 $873.00 Electrical Repair $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $45.84 $45.84 Emergency Alert / Pendants $0.00 $0.00 $0.00 $0.00 $1,505.87 $1,841.83 $3,347.70 Exterminating Contract $1,455.21 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $771.20 $811.88 $0.00 -$150.00 $2,888.29 Fire Alarm & Fire Sprinkler R&M/Contractsvs $3,006.87 $1,633.07 $2,749.96 $3,136.00 $0.00 $2,350.50 $2,825.51 $6,104.10 $1,445.71 $4,475.60 $0.00 $0.00 $27,727.32 Fire Extinguisher $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $930.95 $0.00 $0.00 $930.95 Furniture & Equip Non CapX - Maintenance $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $306.81 $150.00 $64.94 $521.75 General Maintenance Supplies $717.44 $486.90 $484.31 $948.34 $2,004.36 $1,322.29 $459.00 $1,067.00 $1,521.84 $709.29 $209.23 $551.00 $10,481.00 General R&M $0.00 $123.75 $0.00 $98.03 $0.00 $0.00 $300.41 $495.13 $1,755.17 $350.73 $0.00 $0.00 $3,123.22 Generator Service $1,269.80 $0.00 $0.00 $1,409.89 $0.00 $0.00 $0.00 $948.42 $0.00 $0.00 $0.00 $0.00 $3,628.11 Grounds Contract $176.73 $2,142.00 $2,318.73 $2,484.35 $2,318.73 $2,805.87 $2,498.15 $2,878.94 $2,318.73 $2,805.87 $7,760.47 -$1,359.00 $29,149.57 HVAC Repair $0.00 $0.00 $780.19 $2,262.38 $0.00 $1,437.26 $0.00 $2,158.32 $3,693.09 $2,493.14 $876.72 $0.00 $13,701.10 HVAC Supplies $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $1,881.36 $0.00 $0.00 $0.00 $0.00 $1,881.36 Landscaping Other (Irrigation) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $779.40 $222.93 $0.00 $1,002.33 Landscaping Seasonal Plants $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $76.51 $0.00 $101.28 $0.00 $0.00 $177.79 Licenses & Permits Maintenance $0.00 $0.00 $40.00 $0.00 $0.00 $40.00 Light Bulbs/Electrical Supplies $214.43 $114.84 $0.00 $301.35 $164.23 $163.17 $158.08 $169.89 $512.20 $2,383.07 $1,235.98 $0.00 $5,417.24 Maintenace Equipment Repair $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $8.93 $0.00 $0.00 $228.18 $0.00 $237.11 Other Maintenance $0.00 $37.35 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $421.75 $97.00 $0.00 $556.10 Painting R&M $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $663.49 $0.00 $0.00 $0.00 $663.49 Plumbing R&M $2,200.00 $0.00 $1,755.00 $4,220.00 $385.00 $0.00 $2,940.00 $0.00 $0.00 $0.00 $0.00 $0.00 $11,500.00 Plumbing Supplies $0.00 $693.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $3,600.00 $0.00 $166.27 $0.00 $4,459.27 Turnover Suites $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$631.40 $631.40 $0.00 $0.00 $0.00 $0.00 Water Softner System - Supplies $479.14 $635.63 $1,172.26 $404.42 $546.13 $531.21 $464.08 $530.35 $367.14 $411.88 $411.88 $644.43 $6,598.55 Total Maintenance & Repair -B- Operating Expenses $11,838.35 $6,773.47 $10,019.80 $16,503.13 $7,556.03 $10,549.13 $9,742.23 $17,472.16 $26,852.39 $19,037.41 $12,279.89 $1,186.63 $149,810.62

Marketing -A- Payroll

Employee Benefits Other - Marketing -$267.13 $302.80 $271.10 $504.63 $488.37 $291.68 $503.25 $489.63 $508.66 $492.26 $508.67 $82.04 $4,175.96 Employment Screenings - Marketing $0.82 $0.62 $4.31 $6.09 $0.00 $0.60 $9.99 $0.41 $3.09 $6.97 $0.00 $0.00 $32.90 Holiday Pay - Marketing $163.59 $205.09 $184.34 $0.00 $114.66 $114.66 $388.66 $29.90 $0.00 $0.00 $0.00 $0.00 $1,200.90 Marketing Director $3,886.56 $3,396.53 $4,081.39 $4,081.72 $4,950.06 $5,081.73 $3,370.71 $4,423.73 $4,311.74 $4,825.14 $6,427.00 $731.57 $49,567.88 Move-In Coordinator $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $2,546.05 $2,546.05 Overtime - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $98.49 $11.70 $0.00 $0.00 $0.00 $0.00 $0.00 $110.19 Payroll Taxes - Marketing $411.87 $440.34 $275.38 $391.78 $918.87 $761.69 $666.52 $453.47 $271.97 $263.72 $683.94 $117.10 $5,656.65 PTO/Sick Leave Wages - Marketing $293.10 $628.58 -$225.09 $1,040.94 $0.00 $0.00 $539.84 $13.17 $0.00 $0.00 $0.00 $0.00 $2,290.54 Sales Counselor - Marketing $0.00 $0.00 -$440.91 $67.55 $6,514.26 $3,311.56 $3,072.18 $1,036.83 $0.00 $0.00 $0.00 $359.68 $13,921.15 Total Marketing -A- Payroll $4,488.81 $4,973.96 $4,150.52 $6,092.71 $12,986.22 $9,660.41 $8,562.85 $6,447.14 $5,095.46 $5,588.09 $7,619.61 $3,836.44 $79,502.22

Marketing -B- Operating Expenses

Advertising $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $416.00 $225.00 $0.00 $0.00 $995.00 $258.98 $1,894.98 Collateral $768.14 $0.00 $0.00 $0.00 $0.00 $0.00 $168.79 $0.00 $1,865.75 $0.00 $0.00 $1,212.97 $4,015.65 Community Outreach $0.00 $37.35 $0.00 $0.00 $0.00 $260.90 $178.62 $244.33 $451.25 $0.00 $0.00 $0.00 $1,172.45 Consultants - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $4,163.24 $0.00 $0.00 $0.00 $0.00 $4,163.24 Contract Labor - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $1,900.00 $0.00 $0.00 $0.00 $1,900.00 Digital Media $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $10,227.08 $0.00 $0.00 $0.00 $0.00 $10,227.08 Direct Mail $140.66 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $2,015.80 $975.00 $0.00 $7,631.25 $10,762.71 Dues & Subscriptions - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $100.00 $0.00 $0.00 $0.00 $0.00 $0.00 $100.00 E-Mail Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Event Outreach Flyers $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $84.50 $0.00 $0.00 $0.00 $0.00 $0.00 $84.50 Events $133.93 $0.00 $134.51 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $223.93 $114.71 $0.00 $607.08 Furniture & Equip Non CapX - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $2,526.65 $203.56 $0.00 $82.25 $0.00 $0.00 $2,812.46 Leads/CRM $5,169.95 $579.57 $579.57 $896.57 $579.57 $597.00 $579.57 $436.00 $0.00 $554.15 $1,130.40 $218.75 $11,321.10 Lunch & Learn VA Seminar $0.00 $39.65 $0.00 $0.00 $0.00 $388.60 $428.25 Marketing Plan Development $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $176.19 $0.00 $0.00 $176.19 Move-In / Resident Gifts $0.00 $0.00 $0.00 $23.37 $30.44 $0.00 $53.81 Paid Placement Search Marketing $1,249.86 $5,735.95 $5,735.98 $5,735.98 $6,110.92 $6,601.60 $6,298.63 $0.00 $966.87 $966.87 $0.00 $3,093.13 $42,495.79 Premiums/Giveaways $0.00 $0.00 $0.00 $0.00 $0.00 $100.66 $100.66 Print AD Development / Updates $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Prospect Gifts/Meals $0.00 $0.00 $0.00 $0.00 $0.00 $71.60 $71.60 Public Relations $0.00 $0.00 $199.92 $19.98 $0.00 $0.00 $0.00 $104.71 $21.65 $0.00 $0.00 $0.00 $346.26 Referral Fees $0.00 $0.00 $2,800.00 $0.00 $5,950.00 $600.00 $0.00 $0.00 $0.00 $8,000.00 $0.00 $2,500.00 $19,850.00 Social Media Marketing & Oversight $987.29 $988.38 $988.37 $988.38 $988.38 $1,454.00 $1,363.48 $0.00 $635.37 $2,041.62 $0.00 $666.62 $11,101.89 Supplies - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $41.44 $7.57 $880.00 $412.98 $0.00 $0.00 $1,341.99 Traditional Media $510.13 $718.31 $622.29 $1,022.76 $112.53 $200.00 $187.55 $0.00 $0.00 $195.00 $0.00 $0.00 $3,568.57 Travel - Marketing $1,760.63 $0.00 $0.00 $0.00 $0.00 $259.60 $0.00 $0.00 $0.00 $0.00 $488.57 $0.00 $2,508.80 Travel Meals - Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $228.11 $0.00 $228.11 Website Hosting $234.44 $224.62 $234.44 $342.15 $913.83 $798.00 $223.18 $0.00 $4,282.81 $195.31 $0.00 $195.31 $7,644.09 Total Marketing -B- Operating Expenses $11,383.11 $8,323.83 $11,295.08 $9,029.19 $14,685.67 $11,331.96 $12,168.41 $15,611.49 $13,019.50 $13,823.30 $2,956.79 $15,777.01 $139,405.34

Memory Care -A- Payroll

Bonuses - MC $0.00 $0.00 $0.00 $50.00 $0.00 $25.00 $551.79 $198.21 $0.00 $0.00 $0.00 $0.00 $825.00 Employee Benefits Other - MC -$203.96 $214.73 $9.44 $11.60 $14.42 $5.21 $12.20 $34.45 $313.88 $466.31 $1,128.21 $223.92 $2,230.41 Employment Screenings - MC $1.84 $8.93 $11.02 $11.38 $0.00 $8.18 $27.20 $24.90 $6.11 $20.78 $0.00 $0.00 $120.34 Holiday Pay - MC $1,095.50 $1,383.76 $934.87 $0.00 $349.95 $349.96 $554.40 $72.87 $392.84 $0.00 $0.00 $0.00 $5,134.15 Overtime - MC $909.30 $465.19 $431.73 $1,224.61 $788.27 $1,207.60 $1,664.67 $777.09 $472.72 $555.25 $1,569.28 $311.81 $10,377.52 Payroll Taxes - MC $1,123.07 $1,355.88 $1,120.68 $1,249.31 $968.15 $1,294.00 $1,472.87 $1,120.56 $898.18 $742.39 $1,390.06 $296.81 $13,031.96 PTO/Sick Leave Wages - MC $240.16 $1,179.84 $259.01 $1,175.69 $258.73 $594.50 $0.00 $162.40 $126.71 $300.28 $656.73 $201.74 $5,155.79 Salaries & Wages MC CNA/Res Assistant $3,610.18 $3,614.80 $6,261.40 $6,412.15 $5,254.73 $5,811.45 $5,857.50 $4,631.02 $4,888.60 $7,584.26 $7,662.85 $1,320.79 $62,909.73 Salaries & Wages MC Med Tech $4,106.74 $7,607.67 $4,510.24 $4,851.29 $3,934.20 $5,815.69 $6,255.34 $5,044.90 $4,026.56 $2,151.45 $3,072.58 $931.49 $52,308.15 Salary & Wages - MC $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $5,988.00 $5,988.00 Total Memory Care -A- Payroll $10,882.83 $15,830.80 $13,538.39 $14,986.03 $11,568.45 $15,111.59 $16,395.97 $12,066.40 $11,125.60 $11,820.72 $15,479.71 $9,274.56 $158,081.05

Memory Care -B- Operating Expenses

Wellness Supplies MC $125.00 $0.00 $129.08 $0.00 $132.65 $209.82 $162.82 $168.00 $234.48 $360.00 $4.73 $0.00 $1,526.58 Total Memory Care -B- Operating Expenses $125.00 $0.00 $129.08 $0.00 $132.65 $209.82 $162.82 $168.00 $234.48 $360.00 $4.73 $0.00 $1,526.58

Resident Services -A- Payroll

Activities Aid - Lifestyles $1,382.77 $2,017.99 $1,978.36 $2,118.72 $1,784.51 $1,704.02 $1,960.73 $1,856.76 $1,813.25 $1,973.71 $2,652.21 $412.28 $21,655.31 Director / Manager - Lifestyles -$156.32 $5,923.22 $6,386.94 $6,002.67 $6,445.95 $6,442.74 $5,901.88 $6,621.42 $5,345.72 $6,261.20 $9,218.13 $1,647.36 $66,040.91 Employee Appreciation - Lifestyles $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $17.32 $0.00 $0.00 $0.00 $0.00 $17.32 Employee Benefits Other - Lifestlyes $516.51 $1,837.68 $2,469.05 $2,551.36 $2,469.08 $1,429.90 $2,551.37 $2,427.28 $2,465.03 $2,385.51 $2,305.12 $362.82 $23,770.71 Employment Screenings - Lifestyles $0.42 $1.18 $8.37 $8.77 $0.00 $0.66 $3.25 $0.59 $4.81 $10.42 $0.00 $0.00 $38.47 Holiday Pay - Lifestyles -$697.33 $1,143.21 $458.59 $0.00 $74.11 $74.11 $426.54 $43.26 $135.85 $0.00 $0.00 $0.00 $1,658.34 Payroll Taxes - Lifestyles -$87.62 $1,322.71 $670.81 $696.47 $660.22 $688.18 $690.91 $713.53 $653.40 $597.52 $1,334.64 $226.25 $8,167.02 PTO/Sick Leave Wages - Lifestlyes $1,231.07 $999.85 -$55.23 $982.91 $325.84 $775.08 $718.93 $171.97 $1,543.14 $263.37 $568.73 $49.03 $7,574.69 Total Resident Services -A- Payroll $3,069.79 $13,245.84 $11,916.89 $12,360.90 $11,759.71 $11,114.69 $12,253.61 $11,852.13 $11,961.20 $11,491.73 $16,078.83 $2,697.74 $129,803.06

Resident Services -B- Operating Expenses

Contract Entertainment $233.40 $0.00 $60.00 $115.00 $115.00 $125.00 $648.40 Decorations $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $57.98 $102.44 $0.00 $160.42 Food - Lifestyles $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $4.48 $27.79 $91.34 $116.78 $0.00 $0.00 $240.39 MC Program Engagement $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $16.34 $0.00 $0.00 $16.34 Office Supplies $0.00 $236.95 $0.00 $0.00 $91.66 $0.00 $328.61 Operating Supplies $57.60 $187.69 $43.59 $0.00 $361.41 $136.64 $145.40 $32.35 $45.47 $29.23 $0.00 $234.61 $1,273.99 Resident Activities/Entertainment $0.00 $0.00 $80.00 $139.74 $160.00 $0.00 $220.00 $288.94 $671.91 $770.62 $275.76 $168.01 $2,774.98 Special Events (Non Marketing) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $30.16 $483.26 $1.07 $0.00 $514.49 Total Resident Services -B- Operating Expenses $291.00 $444.22 $183.59 $254.74 $728.07 $261.64 $369.88 $349.08 $838.88 $1,474.21 $379.27 $402.62 $5,977.20

Transportation -A- Payroll

Drivers $0.00 $0.00 $0.00 $0.00 $0.00 $587.97 $934.06 $1,153.43 $1,142.97 $1,011.59 $1,705.05 $260.42 $6,795.49 Employment Screenings - Transportation $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.38 $0.07 $0.68 $1.47 $0.00 $0.00 $2.60 Payroll Taxes - Transportation $0.00 $0.00 $0.00 $0.00 $0.00 $63.09 $100.22 $123.77 $105.50 $65.69 $182.95 $17.62 $658.84 Total Transportation -A- Payroll $0.00 $0.00 $0.00 $0.00 $0.00 $651.06 $1,034.66 $1,277.27 $1,249.15 $1,078.75 $1,888.00 $278.04 $7,456.93

Transportation -B- Operating Expenses

Vehicle Fuel $90.00 $142.77 $45.00 $235.55 $123.85 $135.58 $126.15 $116.35 $116.85 $49.55 $120.65 $0.00 $1,302.30 Vehicle Lease - Bus & Van $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $2,342.80 $0.00 $0.00 $0.00 $0.00 $2,342.80 Vehicle Maintenance $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $163.03 $178.62 $0.00 $0.00 $37.13 $378.78 Vehicle Tag $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $179.25 $0.00 $179.25 Total Transportation -B- Operating Expenses $90.00 $142.77 $45.00 $235.55 $123.85 $135.58 $126.15 $2,622.18 $295.47 $49.55 $299.90 $37.13 $4,203.13

Utilities, Insurance and Other

Insurance $0.00 $0.00

Insurance - Auto $159.83 $264.13 $264.13 $264.13 $264.13 $264.13 $264.13 $264.13 $264.13 $264.13 $264.13 -$901.87 $1,899.26 Insurance - General/Professional Liability $3,568.40 $2,287.28 $2,287.28 $8,455.71 $8,455.71 $8,455.71 $8,455.71 $9,294.99 $9,294.99 $9,294.99 $9,294.99 $2,979.65 $82,125.41 Insurance - Property $3,782.12 $3,153.56 $3,153.56 $3,153.56 $3,153.56 $3,153.56 $3,153.56 $3,153.56 $3,153.56 $3,153.56 $3,153.56 $3,250.77 $38,568.49 Insurance - Umbrella/Excess $1,666.84 $1,080.34 $1,080.34 $1,080.34 $1,080.34 $1,080.34 $1,080.34 $1,080.34 $1,080.34 $1,080.34 $1,080.34 $1,080.34 $13,550.58 Total Insurance $9,177.19 $6,785.31 $6,785.31 $12,953.74 $12,953.74 $12,953.74 $12,953.74 $13,793.02 $13,793.02 $13,793.02 $13,793.02 $6,408.89 $136,143.74

Management Fees

Management Fee $7,500.00 $8,301.77 $7,000.00 $9,379.00 -$8,466.44 $9,019.00 $667.56 $8,281.24 $8,888.43 $12,000.00 $15,966.44 $16,771.80 $95,308.80 Total Management Fees $7,500.00 $8,301.77 $7,000.00 $9,379.00 -$8,466.44 $9,019.00 $667.56 $8,281.24 $8,888.43 $12,000.00 $15,966.44 $16,771.80 $95,308.80

Taxes

Taxes Real Estate $17,637.32 $0.00 $0.00 $0.00 $0.00 $51.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $17,688.32 Total Taxes $17,637.32 $0.00 $0.00 $0.00 $0.00 $51.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $17,688.32

Utilities

Cable TV $87.88 $87.88 $89.34 $92.06 $263.64 $0.00 $0.00 $0.00 $0.00 $1,127.86 $985.17 $1,974.48 $4,708.31 Electricity $5,596.90 $5,844.17 $6,476.33 $8,594.56 -$9,111.89 $7,707.22 $15,487.49 $7,891.50 $7,970.92 $7,479.41 $5,838.30 -$181.57 $69,593.34 Gas $427.46 $419.14 $389.65 $278.80 $233.00 $78.53 $206.16 $627.93 $218.66 $375.25 $476.13 -$155.29 $3,575.42 Telephone & Internet Communications $535.45 $3,911.15 $961.70 $5,595.90 $910.35 $2,402.37 $542.98 $3,446.23 $3,058.90 $1,466.55 $2,310.46 $614.32 $25,756.36 Trash Removal $546.40 $546.40 $546.40 $546.40 $546.40 $546.40 $546.40 $546.40 $1,092.80 $0.00 $0.00 $0.00 $5,464.00 Water & Sewer $6,567.10 $4,569.93 $6,802.26 $6,606.03 $2,300.70 $5,607.08 $3,508.12 $6,188.02 $5,000.00 $4,309.47 $4,039.88 -$122.83 $55,375.76 Total Utilities $13,761.19 $15,378.67 $15,265.68 $21,713.75 -$4,857.80 $16,341.60 $20,291.15 $18,700.08 $17,341.28 $14,758.54 $13,649.94 $2,129.11 $164,473.19

Total Utilities, Insurance and Other $48,075.70 $30,465.75 $29,050.99 $44,046.49 -$370.50 $38,365.34 $33,912.45 $40,774.34 $40,022.73 $40,551.56 $43,409.40 $25,309.80 $413,614.05

Total Operating Expenses $214,782.86 $211,484.08 $218,944.00 $228,518.13 $178,386.61 $207,423.70 $235,626.01 $258,396.11 $267,661.24 $276,618.56 $254,382.68 $98,748.77 $2,650,972.75

Operating Income / (Loss) -$25,357.34 -$38,481.58 -$49,927.75 -$56,710.92 -$20,353.91 -$36,405.44 -$68,709.51 -$87,908.15 -$100,579.68 -$102,014.33 -$78,760.89 $30,509.65 -$634,699.85

Add-Backs

Management Company Travel Expense During Transition $12,000.00 $5,271.88 $17,271.88 Travel Expense for Department Head Training in Birmingham $4,105.20 $4,105.20 IT Transition Expenses (computer setup, etc.) -$262.16 $368.48 $474.20 $582.54 $1,326.14 $709.90 $3,199.10 One-time Marketing Expenses (website setup, initial mailing, etc.) $4,668.41 $8,111.49 $5,519.50 $6,323.30 -$4,543.21 $8,277.01 $28,356.50 Total $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $4,406.25 $8,479.97 $5,993.70 $11,011.04 $8,782.93 $14,258.79 $52,932.68

NOI (Excluding Transition Costs) -$25,357.34 -$38,481.58 -$49,927.75 -$56,710.92 -$20,353.91 -$36,405.44 -$64,303.26 -$79,428.18 -$94,585.98 -$91,003.29 -$69,977.96 $44,768.44 -$581,767.17

Other Income and Expense

Unrealized Gain / (Loss) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Non-Operating Income/Expenses

Depreciation and Amortization -$8,475.90 -$22,851.63 -$22,851.63 -$22,851.63 -$22,851.63 -$22,851.63 -$22,851.63 -$22,851.63 -$22,851.63 -$22,851.63 -$22,851.63 -$22,851.63 -$259,843.83 Interest Expense -$16,557.81 -$18,559.12 -$18,559.12 -$18,559.12 -$18,559.12 -$18,559.12 -$18,559.12 -$111,354.74 $0.00 $0.00 $0.00 $0.00 -$239,267.27 Legal Expense (Acquisition & Licensing) -$590.95 -$501.67 $0.00 -$2,752.50 $0.00 $0.00 -$6,392.44 $0.00 $0.00 $0.00 -$10,237.56 Marketing Cost - Start Up $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Professional Fees - Property Tax Exemption Application $0.00 $0.00 $0.00 $0.00 -$8,277.23 $0.00 $0.00 $0.00 $0.00 $0.00 -$8,277.23 Owner Other Expense $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$1,051.29 -$1,051.29 Start Up Cost $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 -$17.17 $0.00 $0.00 -$17.17 Vendor Rebates $593.59 $0.00 $392.19 $478.19 $0.00 $0.00 $1,463.97 Total Non-Operating Income/Expenses -$25,031.07 -$41,410.75 -$41,018.56 -$41,434.23 -$41,410.75 -$44,163.25 -$49,687.98 -$134,206.37 -$29,244.07 -$22,868.80 -$22,851.63 -$23,902.92 -$517,230.38

Total Other Income and Expense -$25,031.07 -$41,675.75 -$41,084.56 -$41,434.23 -$41,410.75 -$44,163.25 -$49,687.98 -$134,206.37 -$29,244.07 -$22,868.80 -$22,851.63 -$23,902.92 -$517,561.38

Net Income / (Loss) before Tax -$50,388.41 -$80,157.33 -$91,012.31 -$98,145.15 -$61,764.66 -$80,568.69 -$118,397.49 -$222,114.52 -$129,823.75 -$124,883.13 -$101,612.52 $6,606.73 -$1,152,261.23

Add-Backs

One-time Legal Expenses Related to Acquisition & Licensing $6,392.44 $6,392.44 One-time Professional Fees Related to Prop. Tax Exemption App. $8,277.23 $8,277.23 Other Start-Up Costs $17.17 $17.17 Total $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $8,277.23 $0.00 $6,392.44 $17.17 $14,686.84

Net Income / (Loss) Excluding Transition Costs -$50,388.41 -$80,157.33 -$91,012.31 -$98,145.15 -$61,764.66 -$80,568.69 -$105,714.01 -$213,634.55 -$117,437.61 -$113,854.92 -$92,829.59 $20,865.52 -$1,084,641.71

Imagine Senior Living CAP-X Request Quantity Each Total

Paint General Areas 1 50,000$ 50,000$ Lighting Package all 3 building 1 60,000$ 60,000$ Parking Lot pot holes 4 2,000$ 8,000$ Parking Lot restriped 1 15,000$ 15,000$ P-Tac Units 20 800$ 16,000$ Apartment and Office Door Handles 110 25$ 2,750$ Apartment Rent Ready 10 1,500$ 15,000$ Apartment Flooring 20 1,500$ 30,000$ Dumpster fence repair paint 3 500$ 1,500$ Signage change all signs 1 7,500$ 7,500$ Carpet repair entry way 1 5,000$ 5,000$ Landscaping 1 25,000$ 25,000$ Apartment Refrigerators 15 150$ 2,250$ Apartment Microwaves 15 65$ 975$ Computers 16 750$ 12,000$ Phone system (internet) 2 5,000$ 10,000$ Camera System 3 3,000$ 9,000$ Steam Table 1 4,500$ 4,500$ Commercial microwave 2 800$ 1,600$ Washing Machine 1 800$ 800$ Print Website & On Line Marketing 1 20,000$ 20,000$ Contingency 53,438$ Total 300,313$

Addenda

ADDENDUM C

Legal Description

Addenda

ADDENDUM D

Senior Life Report

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management

& review

TAMR Mailing Address: P.O. Box 161926 Austin, Texas 78716-1926

512.402.0029 TotalAMR.com

September 21, 2020 Malcolm H. Coleman CBRE Valuation & Advisory Services 250 W. Nottingham Drive, Suite 115 San Antonio, TX 78209 Dear Mr. Coleman:

This letter will serve as TAMR’s engagement of your services to perform an appraisal on the following property. The specifics of the engagement, including the agreed upon fee and delivery date are listed below. The appraisal reports must be addressed to the client, but sent to TAMR, to the address shown below. Any questions pertaining to this assignment should be addressed with the client contact first. The appraisal must comply with the most recent edition of the Uniform Standards of Professional Appraisal Practice, Title XI of "FIRREA" and the 2010 Interagency Appraisal and Evaluation Guidelines. Failure to comply with any of the above requirements may result in rejection of the appraisal. In addition, payment of the fee is subject to a review of the appraisal for compliance with the above mentioned requirements. Should you experience any delays in the performance of this appraisal please notify us, in writing via e-mail, no less than five days prior to the due date. The appraisal and information gathered in the development of this appraisal are confidential information and should be treated as such.

Please note that a $100 per day fine will be imposed for reports not delivered as promised or without prior, one weeks notice of delay. Please make sure the following items are included in every report as indicated:

Photographs of the subject property, comparable improved sales and comparable rents Invoice made out to TAMR Aerial photo with the subject property outlined Supporting documents in the Addendum including, as applicable:

• Engagement Letter • Contracts • Leases • Costs • Operating Statements and Rent Rolls • Argus Input Assumptions

Any sales comparison approach should include an adjustment grid If applicable, a capitalization rate should be derived from two or more sources. Insurable replacement cost

Sincerely,

Sara Jones Oates Agent for The Bank of San Antonio Total Appraisal Management & Review

PROPERTY ADDRESS: 1207 Jackson Keller, San Antonio, TX 78213 GENERAL PROPERTY DESCRIPTION: A 89,140 sq ft assisted living facility, 97 units on 11.76 acres total, 5 acres are excess land. Proposed renovations due to water damage. LEGAL DESCRIPTION: Lot 30 Castle Hills City Block 109, Bucker Baptist Benevolence Subdivision, Castle Hills, Bexar County CONTACT PERSON FOR INSPECTION: Sharon Wang (704) 756-5914 [email protected] INTENDED USE: New loan TYPE REPORT: FKA Self-Contained Insurable Replacement Costs APPRAISAL STATUS: As if Renovated INCLUDE FF&E IN VALUE: Yes FEE: $5,900 DUE DATE: October 1, 2020 Accepted: Dated: ____________________________ ___________________

ADDRESS REPORTS TO INTENDED USER: Daniel Partida Credit Analyst II The Bank of San Antonio 1900 NW Loop 410 San Antonio, TX 78213 210.807.5587 Daniel.partida@thebankofsa .com SEND REPORTS & INVOICE TO: Lesley Morris Total Appraisal Management & Review [email protected]

REPORT DELIVERY:

1 PDF to TAMR via email

9/21/2020

mailto:[email protected]

Addenda

ADDENDUM F

Appraiser Qualifications

Andy Kepchar, MAI Vice President

Valuation and Advisory Services, Seniors Housing & Healthcare

̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶ Experience ̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶

Andy Kepchar, MAI is a Vice President for CBRE Valuation & Advisory Services and is based in San Antonio, Texas. With over 15 years of experience in seniors housing appraising, Mr. Kepchar covers the South-Central Region for the Healthcare and Seniors Housing Group. Clients he has served include a broad base of regional and national commercial banks, REITs, property owners, and operating and development companies. Mr. Kepchar also specializes in providing appraisal services for HUD-insured financing under the LEAN Program. He is a national HUD Practice Leader for the CBRE Seniors Housing & Healthcare group.

Mr. Kepchar’s experience includes the estimation of values for continuing care retirement communities (CCRCs), surgical centers, rehabilitation centers, long term acute care facilities (LTACs), independent and assisted living facilities, memory care facilities, and skilled nursing facilities. He has also worked with other asset classes including multifamily, office, and retail. Prior to joining CBRE, he worked as a senior consultant for a national seniors housing specialty firm.

̶̶̶̶̶̶ Professional Affiliations / Accreditations ̶̶̶̶̶̶

• Appraisal Institute, Designated Member (MAI) • Certified General Real Estate Appraiser in TX, OK, LA, AR, KS

̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶ Education ̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶

• University of Delaware, B.S.  Majors – Finance and Marketing  Minor - Economics

• Appraisal Institute  All courses related to becoming Certified General Appraiser  Advanced Income Capitalization  Advanced Market Analysis and Highest and Best Use  General Appraiser Report Writing and Case Studies  Advanced Concepts and Case Studies  Quantitative Analysis  General Demonstration Report – Capstone Program

T + 1 210 253 6005 M +1 717 575 3723 [email protected] 200 Concord Plaza Suite 800 San Antonio, TX 78216

• M&T Bank • Capital Funding Group • M&T Realty Capital • Welltower • Dwight Capital • CohnReznick • PNC • Cambridge Realty

Capital Companies • Cushman & Wakefield • Cedarbrook Senior

Living • Sunrise Senior Living • Silverado Senior Living • BB&T • Sims Mortgage Funding • KeyBank • Southwest Bank • Independence Bank • BBVA Compass • Interbank • Capital One Bank • Southern Bank • Popular Bank

Clients Represented

Douglas E. Oldmixon Commissioner

Texas Appraiser Licensing and Certification BoardTexas Appraiser Licensing and Certification BoardTexas Appraiser Licensing and Certification BoardTexas Appraiser Licensing and Certification Board P.O. Box 12188 Austin, Texas 78711-2188

Certified General Real Estate Appraiser

Having provided satisfactory evidence of the qualifications required by the Texas Appraiser Licensing and Certification Act, Texas Occupations Code, Chapter 1103, is authorized to use this title, Certified General Real Estate Appraiser.

Number:

Issued:

1380208

Expires: 01/31/2021

ANDREW S KEPCHAR

200 CONCORD PLAZA STE 800

SAN ANTONIO, TX 78216

Appraiser:

01/30/2019

ANDREW S KEPCHAR

TX G

You may wish to laminate the pocket identification card to preserve it.

Inquiry as to the status of this license may be made to:

Texas Appraiser Licensing and Certification Board P.O. Box 12188

Austin, Tx 78711-2188 www.talcb.texas.gov

(512) 936-3001 Fax:(512) 936-3899

Douglas E. Oldmixon Commissioner

The person named on the reverse is licensed by the Texas Appraiser Licensing and Certification Board.

Certified General Real Estate Appraiser

Number#:

Issued: Expires:

1380208

01/31/2021

Appraiser:

01/30/2019

ANDREW S KEPCHAR

TX G

MMMal

Malcolm Coleman, MAI, MRICS Managing Director, San Antonio

̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶ Experience ̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶

Malcolm Coleman is Managing Director of Valuation and Advisory Services within the South Central Region in the San Antonio office. Mr. Coleman has over thirty years of real estate appraisal and consulting experience throughout the United States and the United Kingdom with primary experience in South and West Texas.

Mr. Coleman is a designated Member of the Appraisal Institute (MAI) and Member of the Royal Institution of Chartered Surveyors (MRICS) and is licensed as a Certified General Real Estate Appraiser in the State of Texas. He has also provided expert witness testimony in the Circuit Courts – State of Texas and United States Bankruptcy Courts.

As Managing Director, Mr. Coleman leads a valuation and advisory staff in San Antonio that provides exceptional quality appraisal work and client service throughout South and West Texas. He also coordinates all activities for San Antonio including overseeing new business development, client relations and appraisal production quality control.

̶̶̶̶̶̶ Professional Affiliations / Accreditations ̶̶̶̶̶̶

• Appraisal Institute – Designated Member (MAI), Certificate No.431212 • Royal Institution of Chartered Surveyors – Member (MRICS) Certificate No.0088195 • Certified General Real Estate Appraiser, State of Texas, # 1335110

̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶ Education ̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶

• Aberdeen University, Aberdeen, Scotland, United Kingdom

̶ Bachelor of Land Economics, 1989

T + 210-580-8083 M +210-454-7920 [email protected] 250 W. Nottingham, Suite 115 San Antonio Texas 78209

• Wells Fargo • USAA • Bank of America • Frost Bank • JP Morgan Chase • BBVA • Amegy • GE • Prologis • RERC • Strasburger and Price • Capital One • LNR • Aetna • IBC Bank • Goldman Sachs • Capmark • TXDOT • Rialto • Stancorp • Green Bank • Cole Capital • Walker and Dunlop • Berkeley Point

Clients Represented

Appraiser: Malcolm Hall Coleman License #: TX 1335110 G License Expires: 07/31/2021

Douglas E. Oldmixon Commissioner

Certified General Real Estate Appraiser

Having provided satisfactory evidence of the qualifications required by the Texas Appraiser Licensing and Certification Act, Occupations Code, Chapter 1103, authorization is granted to use this title: Certified General Real Estate Appraiser

For additional information or to file a complaint please contact TALCB at www.talcb.texas.gov.

MALCOLM HALL COLEMAN 200 CONCORD PLAZA STE 800 SAN ANTONIO, TX 78216

Addenda

ADDENDUM G

CBRE Specialty Practice Brochure

Photo Credit: Balfour at Riverfront Park Used with Permission

cbre.us/shvas

SENIORS HOUSING & CARE P R A C T I C E

CBRE VALUATION & ADVISORY SERVICES

http://cbre.us/shvas

SENIORS HOUSING ADVANTAGE CBRE is the industry-leading provider of valuation and advisory services for real estate lenders, owners, investors and operators throughout the U.S.

• Active Adult • Independent Living • Assisted Living • Memory Care

• Nursing Care • CCRC/LPC • Hospice Facilities

OUR SERVICES

• Appraisals • Portfolio Valuations • Market & Feasibility Studies • HUD Sections 232 & 242 • Litigation Support

• Underwriting Due Diligence • Net Asset Valuations, per IPA • Purchase Price Allocation • Property Condition Reports • Environmental Assessments

PROPERT Y T YPES

Industry Involvement: Our leadership is active in the industry through various speaking engagements for the Appraisal Institute, NIC, ULI, NCREIF, and other industry- specific conferences. Our team holds leadership positions with ULI’s Seniors Housing Council and are on the Advisory Committee for the American Seniors Housing Association (ASHA).

Quality Control: All reports utilize a specialized format to ensure consistent methodology, content and presentation. Our reports are USPAP and FIRREA compliant.

Commitment to Service: CBRE is the world’s largest commercial real estate services firm with 449 offices in more than 60 countries. Delivering credible, client centric, on-the- ground expertise in every major market, our specialty practice has access to the largest and most sophisticated service platform in the world. As our client, so will you.

“CBRE continually exceeds our expectations with their “white glove” service and expertise. Their profound knowledge of the seniors housing and healthcare space, as well as their ability to articulate their valuation process and conclusions, has proven to be a valuable asset to our firm.”

Photo Credit: Balfour at Riverfront Park Used with Permission

CLICK HERE TO VIEW OUR SENIORS HOUSING RESEARCH

CBRE’s research platform is the largest and most comprehensive of its kind in the industry, providing leading insights on seniors housing data, trends and analysis.

22+ specialists

50 states

1,848 2018 assignments

36 2018 portfolios

6+ MAIs

$30B 2018 valuations

Top Global Real Estate Advisor for Valuation Services -Euromoney

GLOBAL RECOGNITION

Fortune 500 Company since 2008 #207 in 2018

A World’s Most Ethical Company six years in a row -Ethisphere

Top Real Estate Brand for 18 consecutive years -The Lipsey Company

SENIORS HOUSING ADVANTAGE

INDUSTRY-LEADING PERSPECTIVES

Seniors Housing Benchmarking & Portfolio Optimization

VALUATION & ADVISORY SERVICES

cbre.us/shvas

http://www.cbre.com/shvas

http://www.cbre.us/real-estate-services/real-estate-industries/healthcare-services/healthcare-valuation

http://cbre.us/shvas

CBRE VALUATION & ADVISORY SERVICES

SENIORS HOUSING & CARE PLATFORM

MT ND

NENV

TX LA

AR OK

AL GA

MIWI

MO VA

MD DE

RI MA

VT NH

Seniors Housing Specialty Location

General Valuation & Advisory Services LocationSeniors Housing Specialty Location

cbre.us/shvas

JAMES A . GR ABER, MAI Managing Director

Seniors Housing & Healthcare | Practice Leader

T +1 347 722 0225

[email protected]

View Professional Profile

Valuation & Advisory Services Location

DANIEL LINCOLN, MAI Director

Seniors Housing & Healthcare

T +1 205 582 5733

[email protected]

View Professional Profile

http://cbre.us/shvas

http://www.cbre.us/people-and-offices/james-graber

mailto:daniel.lincoln%40cbre.com?subject=

http://www.cbre.us/people-and-offices/daniel-lincoln

Allocation of the Going Concern
Certification
Subject Photographs
Executive Summary

Allocation of the Going Concern
Extraordinary Assumptions
Hypothetical Conditions

Table of Contents

Addenda

Introduction

Property Identification
Primary Unit of Measure
Ownership and Property History
Premise of the Appraisal
Purpose of the Appraisal
Intended Use of Report
Intended User of Report
Scope of Work

Extent to Which the Property was Inspected
Type and Extent of the Data Researched
Type and Extent of Analysis Applied
Data Resources Utilized in the Analysis

Seniors Housing Industry Overview

Property Types by Services Provided
Asset Components
Exposure/Marketing Time

Area Analysis

Regional Overview

Neighborhood Analysis

Location
Boundaries
Land Use & Growth Patterns

Proximity to Healthcare Providers

Access
Demographics
Area & Neighborhood Conclusion

Market Analysis

Seniors Housing Market Overview

National Seniors Housing Overview
National Assisted Living Overview

National Owners & Operators
Demand Influences
National Capitalization Rate Trends

Capitalization Rate & Price Per Unit Trends

Current Market Condition Considerations – COVID Impact

National Occupancy Trends - COVID Impact
Market Summary - COVID Impact

Submarket Trends
Primary Market Area Performance Summary

Future Supply
Direct Competitors

Subject’s Market Trends

Submarket Summary

Penetration Analysis
Supply

Barriers to Entry

Market Occupancy
Demand Analysis

Population by Age Cohorts
Income Distributions

Penetration Analysis Conclusion
Market Analysis Conclusion

Assisted Living Penetration
Supply and Demand Conclusion

Subject Analysis

Licensure Requirements
Management Overview
Absorption
Stabilized Occupancy Estimate

Conclusion

Site Analysis

Adjacent Properties
Flood Zone
Conclusion

Improvement Analysis

Layout of Improvements

Conformity
Description of Improvements

Utilities
Fire Protection
Project Amenities

Parking and Drives
Landscaping

Functional Utility
ADA Compliance
Furniture, Fixtures and Equipment
Environmental Issues
Cost to Complete (Capital Expenditures)
Economic Age and Life
Conclusion

Zoning
Tax and Assessment Data

Tax Comparables
Conclusion

Highest and Best Use

As If Vacant

Legally Permissible
Physically Possible
Financially Feasible
Maximally Productive

Conclusion: Highest and Best Use As If Vacant
As Improved

Legally Permissible
Physically Possible
Financially Feasible
Maximally Productive

Conclusion: Highest and Best Use As Improved

Appraisal Methodology

Cost Approach
Sales Comparison Approach
Income Capitalization Approach
Methodology Applicable to the Subject

Excess Land Value

Discussion/Analysis of Land Sales

Land Sale One
Land Sale Two
Land Sale Three
Land Sale Four

Summary of Adjustments
Conclusion

Insurable Value (Replacement Cost)
Sales Comparison Approach

Analysis of Improved Sales

Improved Sale One
Improved Sale Two
Improved Sale Three
Improved Sale Four
Improved Sale Five
Consideration for COVID-19

Summary of Adjustments

Price Per Unit Comparison

Effective Gross Income Multiplier Analysis
Sales Comparison Approach Conclusion

Income Capitalization Approach

Analysis of Rent Comparables

Rent Comparable One
Rent Comparable Two
Rent Comparable Three
Rent Comparable Four
Rent Comparable Five

Operating Summary
Subject Rental Information
Operating Revenue Analysis

Market Rent Estimate
Subsidized Rents
Assisted Living
Memory Care

Rent Adjustments
Rent Roll Analysis
Potential Rental Income Conclusion

Market Rent Conclusions
Concessions
Level of Care Income
Second Resident Fees
Community Fee

Other Income
Vacancy
Effective Gross Income
Operating Expense Analysis

Expense Comparables
COVID-19 Operating Expense Considerations
Real Estate Taxes
Property Insurance
Utilities
Administrative & General
Marketing
Resident Care
Culinary Services
Laundry & Housekeeping
Repairs & Maintenance
Programming
Payroll Taxes & Benefits
Payroll Allocation Summary
Operating Expenses
Management Fee
Reserves for Replacement
Total Operating Expense Conclusion
Net Operating Income Conclusion

Direct Capitalization

Comparable Sales
Published Investor Surveys
Band of Investment
COVID-19 Capitalization Rate Considerations
Capitalization Rate Conclusion
Strengths/ Opportunities
Weaknesses/ Threats

Direct Capitalization Summary
Discounted Cash Flow Analysis (DCF)

General Assumptions
Growth Rate Assumptions
Leasing Assumptions
Occupancy Assumptions
Vacancy, Credit Loss and Absorption
Discount Rate Analysis
Terminal Capitalization Rate
Discounted Cash Flow Conclusion

Cost to Achieve Stabilized Operations

Conclusion of Income Capitalization Approach

Reconciliation of Value
Allocation of the Going Concern

Lease Coverage Analysis
Furniture, Fixtures and Equipment
Allocation of the Going Concern Conclusion

Assumptions and Limiting Conditions