SENIOR HOUSING 2019 YEAR-END MARKET INSIGHT NATIONAL SENIOR HOUSING IN THIS REPORT PRIMARY CONTACTS 03 04 06 LISA WIDMIER ARON WILL AUSTIN SACCO Introduction Demographic Senior Executive Vice President Vice Chairman First Vice President Institutional Properties Institutional Properties Institutional Properties Demand Housing National Senior Housing National Senior Housing National Senior Housing Capital Advisors, Inc. Debt & Structured Finance Debt & Structured Finance Supply Investment Banking CBRE | Capital Markets T +1 713 787 1952 Member FINRA/SIPC T +1 713 787 1965 CBRE | Capital Markets T +1 858 729 9890 M +1 858 952 4743

NATIONAL SENIOR HOUSING 07 08 10 General Investment Transaction TEAM Industry Returns Activity Parameters

ASHAY SHAH ADAM MINCBERG MATT KURONEN TIM ROOT Transaction/ Vice President Vice President Vice President 12 14 15 Underwriting Manager Institutional Properties Institutional Properties Institutional Properties Institutional Properties National Senior Housing National Senior Housing National Senior Housing National Senior Housing Debt & Structured Finance Debt & Structured Finance Debt & Structured Senior Occupancy Occupancy CBRE | Capital Markets Finance Housing Rates & Rent Stack Up Construction Growth Activity

CYRUS PAYDAR ALLISON FORD BRANDON WILLIAMS MICHAEL CREGAN Financial Analyst Financial Analyst Production Analyst Production Analyst Institutional Properties Institutional Properties Institutional Properties Institutional Properties 16 17 18 National Senior Housing National Senior Housing National Senior Housing National Senior Housing CBRE | Capital Markets CBRE | Capital Markets Debt & Structured Debt & Structured Finance Lease-Up Comparison Senior Finance Trends of Primary & Housing Secondary Capitalization Markets Rates

ALLIE SURGES NATALIA MANNING SANDY AGUILA Client Services Client Services Graphic Design Coordinator Coordinator Institutional Properties Institutional Properties Institutional Properties National Senior 21 22 23 National Senior Housing National Senior Housing Housing CBRE | Capital Markets Debt & Structured CBRE | Capital Markets Finance Senior Underwriting Top Senior Housing Guidelines Housing Property Types Owners CORPORATE LEADERSHIP SUPPORT RESOURCE 24 25 28 Publicly CBRE About CBRE Traded SH Research: National MITCHELL KIFFE Senior Managing Director Dominated Active Adult Senior National Senior Housing Debt & Structured Finance REITs Research Brief Housing IN THIS REPORT 3 Introduction

CBRE National Senior Housing is an industry leader in investment sales, debt originations, and investment banking. Our team has transacted more than $14.7 billion (including deals currently under contract) across the nation since 2014 through Q4 2019.

We offer a depth of expertise rarely found in the senior housing sector. Our principals, Lisa Widmier, Aron Will, and Austin Sacco have 54 years of combined experience in the senior housing industry. CBRE National Senior Housing has generated over $24 billion in transaction volume since 2006. The breadth of our experience as developers, institutional investors, appraisers, and owner/ operators has given us the ability to understand a transaction from all sides.

CBRE National Senior Housing focuses exclusively on senior housing. We provide a wide variety of services, including:

• Investment property sales • Structured debt • Investment banking/Capital raise • Valuation • General consulting

We provide investment opportunities to the marketplace across a broad spectrum of senior housing property types including:

• Age-restricted multifamily • Active Adult • Independent living • • Alzheimer’s/memory care • Skilled nursing and continuum of care • Continuing care retirement communities (rental and entry fee) • Post acute/Sub acute care

For more information about CBRE National Senior Housing, please visit our website at www.cbre.com/ nationalseniorhousing.

3 | CBRE SHMI YEAR-END 2019 Senior Housing Demand is Driven by 4 Demographic Demand

The baby boomers (post-World War II babies) began years to approximately 20.4 years. Additionally, it is turning 65 in 2011 and by 2030, the remainder will estimated that about one out of every four 65-year- also reach age 65 and account for approximately olds will live to be 90 years old, with one of every 10 21% of the total population. By 2050, expected to live past 95 years of age.2 the 65-plus age group is estimated to exceed 85.6 million, a more than 50% increase over its estimated Driving this increased life expectancy, and 2020 population (56.1 million). The same figure for consequentially average population age, is the 85-plus group is even higher. By 2050, the 85-plus advancement in public health strategy and medical age group is estimated to exceed 18.5 million, a treatment. Life expectancy in the United States has 177% increase over its estimated 2020 population (6.7 increased by approximately 30 years over the past million). Additionally, by 2035 the 65-plus age group is century, primarily due to the reduction of acute illness estimated to be larger than the population under age threats. However, an unforeseen consequence of longer 18. By 2035, there will be 78.0 million people 65 years life expectancy has been the increased prevalence of and older compared to 76.7 million under the age heart disease, cancer and other chronic diseases as the of 18. The projected growth in the senior population leading causes of death. As Americans age during the will present many challenges to policy makers and next several decades, the elderly population will require programs by having a significant impact on families, a larger number of formally trained, professional businesses, healthcare providers and, most notably, on caregivers as a direct effect of these chronic diseases, the demand for senior housing.1 which often affect independence and mobility.3

One of the primary drivers in trends for the aging Moreover, the problems facing the United States aging population is mortality rates. Survivorship rates have population can be witnessed as a global phenomenon. shown consistent improvement for many decades. In Fifty countries had a higher proportion of people aged the United States in 1972, the average life expectancy 65-plus than the United States in 2010. This number of a 65-year-old was 15.2 years. By 2017, the most is expected to increase to approximately 98 countries recent available data, this metric increased by 5.2 by 2050.1

NUMBER OF PEOPLE AGE 65 & OVER AND 85 & OVER 100 90 80 70 60 50 40

Population (millions) Population 30 20 10 0 2020 F 2025 F 2030 F 2035 F 2040 F 2045 F 2050 F 2055 F 2060 F

Population 65+ Population 85+

Source: 1) U.S. Census Bureau. (2) Social Security Administration, Retirement & Survivors Benefits: Life Expectancy Calculator, 2019. (3) Center for Disease Control and Prevention. The State of Aging and Health in America Report.

4 | CBRE SHMI YEAR-END 2019 U.S. POPULATION ESTIMATES AGE 75-PLUS

60 14.0%

50 12.0% % of Total Population 10.0% 40 8.0% 30 6.0% 20 4.0%

10 2.0%

75-Plus Population (millions) 75-Plus Population 0 0.0%

Population 75+ % of Total Population

Chart Source: U.S. Census Bureau; release date: March, 2018 and U.S. Census Bureau, Statistical Abstract of the United States: 2012. Note: “A” indicates actuals based on Census data and “F” indicates forecasted population estimates released March 2018.

A Multi-Trillion Dollar Industry

Annual United States healthcare services expenditures totaled almost $3.5 trillion in 2017. Healthcare is one of the largest line items in Federal and State Government spending. Healthcare spending is estimated to grow at an average of 5.5% per year from 2018 through 2027. Furthermore, over the same period, healthcare spending is estimated to grow 0.8% faster than GDP per year. As a result, the healthcare portion of GDP is expected to rise from 17.9% in 2017 to 19.4% by 2027.4

NATIONAL HEALTH EXPENDITURES (BILLIONS) $7,000 $6,000 $5,651 $5,345 $5,963 $5,049 $4,767 $4,502

$5,000 $4,255 $4,031 $3,823 $3,649 $3,487 $3,347

$4,000 $3,200 $3,025 $2,875 $3,000 $2,791 $2,000 $1,000 $0

Chart Source: Centers for & Services, actuals published as of 2/2019. The projections incorporate estimates of GDP and spending as of May 2017.

NATIONAL HEALTH EXPENDITURES PER CAPITA

$20,000 $16,309 $17,102 $15,527 $14,764 $14,035 $13,344

$15,000 $12,702 $12,119 $11,576 $11,174 $10,743 $10,380 $9,996 $9,517 $9,113 $10,000 $8,909

$5,000

$0

Chart Source: Centers for Medicare & Medicaid Services, actuals published as of 2/2019. The projections incorporate estimates of GDP and spending as of May 2017.

Source: (4) Centers for Medicare & Medicaid Services, National Health Expenditure Projections 2018 – 2027 https://www.cms.gov/research-statistics-data-and-systems/ statistics-trends-and-reports/nationalhealthexpenddata/downloads/forecastsummary.pdf (accessed March 20, 2019).

5 | CBRE SHMI YEAR-END 2019 6 Senior Housing Supply

NUMBER OF COMMUNITIES TOTAL UNITS/BEDS

Continuing Care Majority Continuing Care Retirement Retirement Majority Nursing Communities, Communities, Nursing Care, Care, 42.9% 7.7% 19.9% 44.1% Majority Independent Majority Living, Independent 11.0% Living, 12.7% Majority Assisted Living, Majority 38.4% Assisted Living, 23.2%

Chart Source: NIC MAP Data & Analysis Service; Q4 2019 Supply Report, All Markets.

Community Location in the NIC MAP Metro Markets

Total No. of Total No. of Region Communities Units/Beds LOCATION MIX (UNITS/BEDS) Northeast 3,315 478,872 Southeast 3,643 455,055 West, 19.2% Northeast, North Central 3,256 399,601 24.6%

South Central 2,232 258,275 South Central, West 3,390 380,461 13.2% Total 15,836 1,972,264 North Southeast, Note: Central, 22.8% Northeast – CT, DE, ME, MA, NH, NJ, NY, PA, RI, VT 20.2% Southeast – AL, DC, FL, GA, KY, MD, NC, SC, TN, VA, WV North Central – IA, IL, IN, MI, MN, NE, ND, OH, SD, WI South Central – AR, KS, LA, OK, TX, MO, MS West – AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY

Chart Source: NIC MAP Data & Analysis Service; Q4 2019 Supply Report, All Markets.

Existing Senior Housing Supply

There are approximately 23,500 professionally managed senior housing and nursing care communities (with 25 or more units/beds) in the United States, representing 3.04 million professionally managed units/beds nationally. The combined projected total value is $420 billion based on values reported in NIC MAP’s 5th Edition Investment Guide.5

Source: (5) MAP, NIC. “NIC Investment Guide 5th Edition.” 2018.

6 | CBRE SHMI YEAR-END 2019 7 General Industry Parameters - Pricing

SENIOR HOUSING/NURSING CARE VALUE ESTIMATED AT $420.4 BILLION

Majority Independent Continuing Care Living, 18.38% Retirement Communities, 26.0% Majority Assisted Living, 25.6% Majority Nursing Care, 26.9% Majority Memory Care, 3.1%

Chart Source: MAP, NIC. “NIC Investment Guide 5th Edition.” 2018.

Historical Value Per Unit Pricing

SENIOR HOUSING (IL/AL) PRICE PER UNIT INDEPENDENT LIVING (IL) PRICE PER UNIT $275 $275

$225 $225

$175 $175 Thousands Thousands $125 $125

$75 $75 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Median IL/AL price per unit Average IL/AL price per unit Median IL price per unit Average IL price per unit

ASSISTED LIVING (AL) PRICE PER UNIT NURSING CARE (NC) PRICE PER UNIT $275 $105 $95 $225 $85 $75 $175 $65 Thousands Thousands $125 $55 $45 $75 $35 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Median AL price per unit Average AL price per unit Median NC price per bed Average NC price per bed

Chart Source: The Seniors Housing Acquisition & Investment Report, Twenty-Fifth Edition, 2020.

7 | CBRE SHMI YEAR-END 2019 8 Senior Housing Investment Returns

The Property Index Performance Data provided by the National Council of Real Estate Investment Fiduciaries (NCREIF) indicates that reporting senior housing properties have generally outperformed the broader National Property Index (NPI) since at least 2003.

The senior housing total return for Q4 2019 was 1.40%, which includes a 0.99% income return and a 0.41% capital appreciation return. Over the past four quarters, senior housing returned 7.83% (4.41% income and 3.32% appreciation). The five-year total return of 11.93% is 324 basis points higher than the NPI return (all asset classes) of 8.69% and 378 basis points higher than the multifamily total return of 8.14%.

Over a five-year period, senior housing returns have outperformed the NPI and multifamily in total returns and income returns. The senior housing sector’s stronger performance may reflect the fact that senior housing has experienced continuous revenue and income growth, despite significant fluctuations of the general economy. CBRE National Senior Housing and CBRE Research will track first and second quarter 2020 performance metrics to determine the resiliency of senior housing relative to other asset classes during this period of economic instability caused by Covid-19. CUMULATIVE NCREIF TOTAL RETURNS The following charts compare the returns achieved by the senior NPI VS. MULTI-FAMILY VS. SENIOR HOUSING housing component, the multifamily component, and the overall index. Items shown for each quarter represent that particular 6,900 Over the last ten years, Seniors Housing returns have consistently outperformed quarter’s return, while periods showing a single year or multiple 5,900 other types of real estate. years represent the compounded annual index returns achieved 4,900 for that period. All returns are before fees. 3,900 Index SENIOR HOUSING RETURNS 2,900

Total Returns 1,900 Total Total Stabilized Total NPI Multi-Family Senior Housing 900 Q4 2019 1.65% 1.59% 1.40% Q3 2019 1.55% 1.30% 2.64% All Properties NPI Multi-Family Senior Living Stabilized Q2 2019 1.59% 1.48% 2.41% Q1 2019 1.85% 1.49% 1.17% Chart Source: NCREIF Query Tool. 4Q 2004 = 1,000. One Year Return 6.81% 5.99% 7.83% Three Year Return 7.06% 6.48% 9.92% CUMULATIVE NCREIF APPRECIATION RETURNS Five Year Return 8.69% 8.14% 11.93% NPI VS. MULTI-FAMILY VS. SENIOR HOUSING Ten Year Return 10.43% 10.73% 12.01% 2,900 Fifteen Year Return 8.21% 7.94% 12.51% 2,700 2,500 Capital (Appreciation) Returns 2,300 2,100 Total NPI Total Total Stabilized Multi-Family Seniors Housing 1,900 Index Q4 2019 0.61% 0.64% 0.41% 1,700 1,500 Q3 2019 0.49% 0.35% 1.51% 1,300 Q2 2019 0.53% 0.52% 1.34% 1,100 900 Q1 2019 0.80% 0.53% 0.03% One Year Return 2.45% 2.06% 3.32% Three Year Return 2.62% 2.51% 5.16% All Properties NPI Multi-Family Senior Living Stabilized Five Year Return 4.08% 4.00% 7.00% Chart Source: NCREIF Query Tool. 4Q 2004 = 1,000. Ten Year Return 5.15% 5.96% 6.26% Fifteen Year Return 2.91% 3.25% 6.47% Income Returns CUMULATIVE NCREIF INCOME RETURNS Total Total Stabilized NPI VS. MULTI-FAMILY VS. SENIOR HOUSING Total NPI Multi-Family Seniors Housing 2,500 Q4 2019 1.05% 0.96% 0.99% 2,400 2,300 2,200 Q3 2019 1.05% 0.94% 1.13% 2,100 2,000 1,900 Q2 2019 1.06% 0.96% 1.07% 1,800 1,700 1,600 Q1 2019 1.06% 0.96% 1.15% Index 1,500 1,400 One Year Return 4.29% 3.88% 4.41% 1,300 1,200 1,100 Three Year Return 4.36% 3.90% 4.58% 1,000 900 Five Year Return 4.47% 4.03% 4.69% Ten Year Return 5.09% 4.57% 5.50% Fifteen Year Return 5.19% 4.58% 5.78% All Properties NPI Multi-Family Senior Living Stabilized Source: NCREIF. Quarterly returns are not annualized. Chart Source: NCREIF Query Tool. 4Q 2004 = 1,000. 8 | CBRE SHMI YEAR-END 2019 9 Senior Housing Investment Returns (CONT’D)

Seniors - Yield Opportunity

Senior housing continues to provide a yield premium over conventional multifamily.

CAP RATE COMPARISONS - CONVENTIONAL MULTI-FAMILY VS. SENIOR HOUSING & NURSING CARE

US Seniors Housing & Care 5.9%

US Office 6.6%

US Retail 6.6%

US Industrial 6.3%

US Multi-Family 5.5%

Chart Source: Real Capital Analytics TrendTracker Report, Q4 2019.

Historical Multi-family and Senior Housing & Nursing Care Cap Rates

Senior housing acquisitions provide an income yield advantage over multifamily value-add acquisitions, trading at higher capitalization rates.

CAP RATE COMPARISONS - CONVENTIONAL MULTI-FAMILY VS. SENIOR HOUSING & NURSING CARE

10.00%

9.50%

9.00%

8.50%

8.00%

7.50%

7.00%

6.50%

6.00%

5.50%

5.00%

US Seniors Housing & Care US Multi-Family

Chart Source: Real Capital Analytics TrendTracker Report, Q4 2019.

9 | CBRE SHMI YEAR-END 2019 10 Transaction Activity

Decade in Review - Senior Housing Transaction Volume

DOLLAR VALUE OF PUBLICLY ANNOUNCED SENIOR HOUSING & CARE TRANSACTIONS (2001-2019)

$30 500

450

$25 Numberof Transactions 400

350 $20 300

$15 250

200 $10 150 Transaction Volume Volume (Billions) Transaction 100 $5 50

$0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Transaction Volume (Billions) Number of Transactions

Chart Source: The Seniors Housing Acquisition & Investment Report, Twenty-Fifth Edition, 2020.

SENIOR HOUSING TRANSACTION VOLUME BY QUARTER

4.5

4.0 Q1 '17, $3.94 Q3 '19, $3.50 3.5 Q3 '17, $3.06 3.0 Q1 '18, $2.69 Q4 '18, $2.45 Q4 '19, $3.10 2.5 Q3 '18, $2.30 Q2 '19, $2.48 2.0

Transaction Volume Volume (Billions) Transaction 1.5 Q2 '18, $1.67 Q1 '19, $1.75 Q4 '17, $1.33 1.0 Q2 '17, $1.14

0.5

0.0 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19

Chart Source: Real Capital Analytics TrendTracker Report, Q4 2019.

10 | CBRE SHMI YEAR-END 2019 11Transaction Activity by Buyer Type

U.S. Based Senior Housing & Care Transaction Activity by Buyer Type

Cross-Border (Internationally Based) Private Equity A buyer is defined as “cross-border” if the buyer or “Private equity,” as an investor type, refers to companies major capital partner is not headquartered in the country whose control is in private hands and whose business where the property is located. An increasing number is primarily geared toward operating, developing, or of firms have subsidiaries accessing capital in multiple investing in commercial real estate. This includes private countries. A firm may have two headquarters locations equity joint ventures, commingled funds, and high net for the purposes of the pie chart analysis. For example, worth family offices. Deutsch Bank (DB Real Estate) is assumed to be based in Germany for deals outside of the United States while their Public Listed/REITs acquisitions within the United States are assumed to be Companies and or funds traded on open public markets made via its domestic headquartered subsidiary, RREEF. whose business is primarily geared toward investing in and or operating or developing commercial real estate. Institutional These include REITs, REOCs, and publicly-listed funds. “Institutional” refers to an investor, such as a bank, insurance company, retirement fund, hedge fund, or User/Other mutual fund, that is financially sophisticated and makes Users of commercial property for specific purposes; large investments, often held in very large portfolios of business users, government, educational or religious investments. institutions that own real estate for their own use.

SENIOR HOUSING TRANSACTION ACTIVITY BY BUYER TYPE — U.S. BASED SENIOR HOUSING & CARE PROPERTIES

100% 1.0% 1.6% 1.6% 1.7% 1.8%

31.1% 35.4% 35.4% 80% 41.7% 43.4% 60% 19.3% 26.5% 40% 51.8% 32.1% 26.3% Buyer % 9.8% 36.8% 20% 31.4% 19.9% 26.0% 6.4% 6.9% 5.1% 4.5% 2.4% 0% 2015 2016 2017 2018 2019 Cross-Border Institutional RE IT/Listed Private User/Other

Chart Source: Real Capital Analytics, Q4 2019.

As the graph above illustrates, since 2016 there has been a clear trend in the mix of investors in the senior housing and care transaction market. During this period, private equity buyers (including dedicated senior housing funds, opportunity funds, and commingled funds with core plus and value-add investment objectives) have become increasingly active in the marketplace.

During 2019:

• Private equity buyers (43.4%) and REIT buyers (26.3%) have accounted for 69.7% of all transaction activity in 2019 so far. • Institutional buyers, such as banks, insurance companies, retirement (pension) funds, hedge funds and mutual funds, have continued to be less active compared to their peak in 2016, accounting for 26.0% of the transaction volume in 2019. • Cross-border buyers accounted for just 2.4% of transaction activity. However, multinational investment platforms from Europe, Asia, and the Middle East are actively seeking investments in U.S.-based senior housing.

11 | CBRE SHMI YEAR-END 2019 12 Senior Housing Construction Activity

With a year-over-year growth rate of 2.9% in 2019, inventory growth has contracted below the 30-year average annual growth rate of 4.2%.6

The Senior Housing pipeline (rolling four quarters construction versus inventory) averaged 4.17% during 2018 and lowered to 3.07% in 2019 for Primary and Secondary Markets. New Senior Housing construction activity averaged 6,329 units/beds per quarter in 2019. In Q4 2019 there were approximately 5,356 units/ beds of new construction starts for Primary and Secondary Market areas.6

SENIOR HOUSING INVENTORY GROWTH (ALL MARKETS) 12.00%

10.00% Inventory Growth % at 30 year lows 8.00%

6.00% Average = 4.2% 4.00% Growth in Inventory (%)

2.00%

0.00%

Chart Source: NIC MAP Data & Analysis Service, Q4 2019 Supply Report; All Markets.

New Senior Housing Construction

NEW CONSTRUCTION STARTED BY QUARTER 8,000 7,000 6,000 5,000 Units 4,000 3,000 2,000 1,000 0

Majority Independent Living Majority Assisted Living Majority Nursing Care

Chart Source: NIC MAP Data Service & Analysis, Primary & Secondary Markets (Q4 2019). Source: (6) “Q4 2019 NIC Map Data Report” NIC MAP Data & Analysis Services, (Q4 2019).

12 | CBRE SHMI YEAR-END 2019 13 Senior Housing Construction Activity (CONT’D)

The chart below compares various supply and demand The United States population is not the only thing metrics for the 10 NIC MAP MSAs with the most IL and getting older. 52% of the existing IL inventory is over AL units under construction during Q4 2019. Despite 20 years of age with 43% already over the age of 25 concerns of overbuilding, new construction units in years. Of the existing AL inventory, 37% is over 20 years these 10 MSAs account for more than a third (40.7%) of old. While it would be inaccurate to assume that all all units under construction in majority IL communities. of this older product has become “unusable”, a large Similarly, for the majority AL community product percent may already be effectively functionally obsolete type, the development pipeline is disproportionately considering the rate at which technology changes. From concentrated within these MSAs, which represent a layout, design, building code, supportive science and 37.4% of the units currently under construction. Both aesthetic standpoint, the standard of Senior Housing construction as a percent of inventory and average product required to care for our aging population has occupancies for each of these MSAs generally indicate changed tremendously from five years ago, let alone healthy organic growth rather than oversupply. the strides made in the last two decades. Furthermore, Construction as a percent of inventory stood at only 6.1% supporting the idea of current construction trends for majority IL communities and at 6.2% for majority AL representing organic growth is the fact that the pace communities in Q4 2019 across Primary & Secondary of construction starts has continued to decline in recent Markets. Considering both future population demand quarters. This typically indicates a natural correction indicators and the age of the current inventory, these to the market. Despite total unit inventory witnessing figures are relatively modest. According to ESRI, the the largest increase during the last five years in Q4 United States 75-plus population is estimated to grow 2016, the quarter also saw one of the largest number by 21.2% over the next five years. If only a portion of of units absorbed. More recently, 2019 saw impressive this figure translates to actual prospective residents with 99% absorption while stabilized occupancies and a viable income stream, the Senior Housing industry is rental growth remained consistent. These dynamics facing a severe shortage of inventory. demonstrate conscious industry growth rather than a construction pandemic.

SENIOR HOUSING TOP 10 METROS - CONSTRUCTION 3,500 100.0% 90.0% 3,000 80.0% 2,500 70.0% 60.0% Units 2,000 50.0% Units 1,500 40.0%

1,000 30.0% 20.0% 500 10.0% 0 0.0%

Construction Units Occupancy Penetration Construction vs. Inventory

Chart Source: NIC MAP Data & Analysis Service, Q4 2019 Supply Report; All Markets.

13 | CBRE SHMI YEAR-END 2019 Occupancy Rates & Average 14 Monthly Rent Growth As this graph of the historical occupancy rates for early 2015, the amount of decline is modest—only a stabilized communities shows, Q4 2019 Senior Housing few percentage points—and that the rates for all four occupancy rates for the primary market benchmark market segments have been quite consistent over time continued to hover around their rolling four-quarter and remain high. The fact that occupancy rates have averages. remained so high during a time when the new supply of senior housing has continued to increase speaks to the • The Independent living market segment reported growing demand for senior housing and the strength of the highest rate (92.0%) recovering from a slight the market. decline that occurred in 2018. • Assisted living (89.1%) increased negligibly from its 94.0% Q3 2019 level (89.0%). 92.0%

• Memory care (87.3%) reverted to the rolling four- 90.0% quarter mean (87.4%) after a slight uptick in Q3 2019. 88.0% • Nursing care (86.6%) continued its slow, downward 86.0% trajectory, decreasing by thirty basis points since Stabilized Occupancy (%) 84.0%

Q1 2019. 82.0%

It is important to note that even though the occupancy rates for assisted living, memory care, and nursing Independent Living Assisted Living Memory Care Nursing Care care have declined since their peaks in late 2014 and Chart Source: NIC MAP® Data Service, Primary Markets (Q4 2019).

Occupancy vs. Average Monthly Rent Growth The graphs below compare the average stabilized occupancy rates and the average monthly rent (AMR) growth for each care segment. The aggregated senior housing annual rent growth has remained generally consistent over time and averaged 2.8% in Q4 2019. Nursing care rent growth faltered slightly at 2.6% in Q4 2019, 10 basis points below the prior four-quarter average rate of 2.7%.

INDEPENDENT LIVING 4.0% ASSISTED LIVING 4.0% 94% 94% Y 3.5% Y - 3.5% - t t - 92% 92% - Y Growth(%) 3.0% 3.0% Y Growth(%) 90% 90% 2.5% 2.5% 88% 2.0% 88% 2.0% 86% 1.5% 86% 1.5% Occupancy (%) Occupancy (%) 84% 1.0% 84% 1.0% 82% 0.5% 82% 0.5% 80% 0.0% 80% 0.0%

Stabilized Avg Occupancy Avg AMR Y-t-Y Growth Stabilized Avg Occupancy Avg AMR Y-t-Y Growth MEMORY CARE NURSING CARE 4.0% 94% 4.0%

Y 94% 3.5% Y - 3.5% - t t 92% - -

Y Growth(%) 92% 3.0% 3.0% Y Growth(%) 90% 90% 2.5% 2.5% 88% 2.0% 88% 2.0% 86% 1.5% 86% Occupancy (%) 1.5% Occupancy (%) 84% 1.0% 84% 1.0% 82% 0.5% 82% 0.5% 80% 0.0% 80% 0.0%

Stabilized Avg Occupancy Avg AMR Y-t-Y Growth Stabilized Avg Occupancy Avg ADR Y-t-Y Growth

Chart Source: NIC MAP Data & Analysis Service Q4 2019 Summary.

14 | CBRE SHMI YEAR-END 2019 How Does Occupancy Stack Up 15 With Other Property Types?

Senior housing occupancy has remained relatively consistent and has historically fluctuated between 87% and 90%.

COMPARISON OF OCCUPANCY SENIOR HOUSING VS. OTHER COMMERCIAL PROPERTY TYPE

100.0%

95.0%

90.0%

85.0%

80.0%

75.0%

70.0%

65.0%

60.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Office Occupancy Retail Occupancy Multi-family Occupancy

Hotel Occupancy Seniors Housing Occupancy

Chart Source: Seniors Housing source is NIC MAP® Data Service; Retail, Office and Multi-family source is Mortgage Bankers Association Quarterly Data Book; HotelNewsNow Newswire May 2019 US Hotel Performance Data. *Q3 2019

15 | CBRE SHMI YEAR-END 2019 16 Lease-Up Trends

MEDIAN OCCUPANCY OF INDEPENDENT LIVING CARE SEGMENTS Median senior housing lease- up trends for newly-constructed communities are illustrated in the charts to the left. According to research prepared by NIC MAP and published in the NIC Investment Guide 5th Edition, the median newly- constructed independent living care segments reach a median occupancy of 84% approximately eight quarters after opening. Assisted living and memory care segments both reach a median of 89% occupancy eight quarters after opening.

MEDIAN OCCUPANCY OF ASSISTED LIVING CARE SEGMENTS

MEDIAN OCCUPANCY OF MEMORY CARE SEGMENTS

Chart Sources: NIC MAP® “NIC Investment Guide 5th Edition.” 2018.

16 | CBRE SHMI YEAR-END 2019 Comparison of Primary & Secondary Markets 17Rent, Construction, Absorption & Occupancy

Annual Rent Growth - Primary & Secondary Markets The stabilized occupancy rates for primary and secondary markets have diverged slightly in recent quarters. In Q4 2019, 40 basis points separated primary markets (90.0%) from secondary markets (89.6%). Q4 2019 also experienced annual rent growth taper to an extent in both primary and secondary markets, declining to 2.8% in Primary Markets and 2.6% in Secondary Markets.

SENIOR HOUSING STABILIZED OCCUPANCY SENIOR HOUSING AMR Y-T-Y GROWTH

4.0% 90.2% 90.0% 3.5% 89.8% 3.0% 89.6% 2.5% 89.4% 2.0% 89.2% 1.5% 89.0%

Occupancy (%) 1.0% 88.8% 0.5% 88.6% 0.0% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2019

NIC MAP Primary Markets NIC MAP Secondary Markets NIC MAP Primary Markets NIC MAP Secondary Markets

New Senior Housing Construction & Absorption

The pace of total inventory growth in Q4 2019 slowed relative to Q3 2019 but has seen continued expansion in the majority independent living and majority assisted living segments as investment capital remains focused on Class A, high margin facilities. Nursing care continues to contract as low-to-negative margins and regulatory uncertainty disincentivizes new construction and poorly performing operators are consolidated into larger brands. However, high stabilized occupancies and absorption levels across Primary and Secondary Markets demonstrate that demand is not faltering, and new units will not be vacant for long.

INVENTORY GROWTH BY QUARTER NEW SUPPLY & OCCUPANCY

10,000 45% 47% 30,000 Absorption 99% Absorption 68% Absorption140% 8,000 44% 25,000 Absorption Occupancy & Absorption % 142% Absorption 120% 6,000 Absorption

4,000 20,000 100% 80% 2,000

Units 15,000 Units 60% 0 10,000 40% -2,000 5,000 20% -4,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0 0% 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2014 2015 2016 2017 2018 2019

Majority Independent Living Majority Assisted Living Majority Nursing Care New Units Absorbed Units % Absorption % Stabilized Occupancy

Chart Sources: NIC MAP® Data Service, Primary & Secondary Markets (Q4 2019). NIC MAP® Data Service Primary & Secondary Markets New Supply & Occupancy (Q4 2019).

17 | CBRE SHMI YEAR-END 2019 18 Senior Housing Capitalization Rates

Senior Housing aggregate capitalization rates continued their downward trend in 2019, due to a combination of factors that include lower borrowing costs, lower equity return requirements, new investment from a larger variety of capital allocators, overall higher quality of communities sold, and lower perceived risk of operational and investment headwinds for the industry in the future. Typically, independent living is the only acuity segment that will sell for sub-6% capitalization rates, pricing that reflects the lower levels of care needed, less intensive operational requirements, and lower resident turnover than other acuity types. Increasingly, however, assisted living communities have begun trading at sub-6% or even sub-5% capitalization rates, demonstrating the intense interest that the overall seniors housing industry has received from investors looking for additional yield in their portfolios. In 2019, 40% of all seniors housing communities that transacted were traded at a 6.0% cap rate or below. In 2018 this metric was 26%. Generally speaking, the capitalization rates reflected in the chart below are after a management fee and before a capital replacement reserve and NOI is based on the trailing 12-month period before the sale or year-to-date actuals annualized. The average and median capitalization rates below are unweighted and the average unit weighted capitalization rate weights each transaction’s capitalization rate based on its number of units. Consistent with prior years, the average unit weighted capitalization rate in 2019 (6.7%) was lower than the unweighted average capitalization rate (7.4%).

12.0%

11.0%

10.0%

9.0%

8.0% Capitalization Rates 7.0%

6.0%

Average Cap Rate Median Cap Rate Average Unit Weighted Cap Rate

Chart Source: The Seniors Housing Acquisition & Investment Report, Twenty-Fifth Edition, 2020.

Summary of Investment Q4 2019 The table below, prepared by Real Capital Analytics in collaboration with the National Investment Center for Seniors Housing & Care, summarizes investment activity for the Senior Housing and Nursing Care sectors for the 12 and three-month periods ending December 31, 2019. Capitalization rates below include both capitalization rates and lease yields.

SENIOR HOUSING NURSING CARE TOTAL Actual YOY Chg Actual YOY Chg Actual YOY Chg Volume ($M) past 12 months $10,617.8 14% $4,723.1 -16% $15,341.0 3% Q4 '19 $3,076.5 16% $720.9 -23% $3,797.3 6% # Props past 12 months 551 -25% 485 -24% 1,036 -25% Q4 '19 126 -15% 90 -23% 216 -18% Total Units/beds past 12 months 55,824 -8% 58,082 -32% 113,906 -22% Q4 '19 15,722 6% 10,197 -32% 25,919 -13% Price per unit/bed past 12 months $175,913 -2% $76,202 -3% $125,725 -1% Q4 '19 $197,348 1% $72,698 27% $150,924 20% Avg Cap Rate past 12 months 5.9% -103 bps 10.4% -173 bps 6.2% -151 bps Q4 '19 7.1% 50 bps - - 7.1% 13 bps

Chart Source: RCA-NIC US Quarterly Report Q4 2019.

18 | CBRE SHMI YEAR-END 2019 19 Senior Housing Capitalization Rates (CONT’D)

Summary of Capitalization Rates Spring 2019 Survey The table below summarizes the results of CBRE’s U.S. Senior Housing & Care Cap Rate Survey for the first half of 2019. The survey revealed that senior housing capitalization rates have increased since the survey for the second half of 2018. The spread changes range from -10 to 20 basis points for Class properties and from 0 to 50 basis points for Class B and C properties, depending on the respective level of care and core versus non-core locations.

Spreads by investment class also changed from the second half of 2018 and now show more fluctuation between Classes A to B and A to C. The change from the second half of 2018 for the spread from Class A to Class B properties increased for most property types, except for non-core nursing care. The spreads between core and non-core assets were largest for independent living communities, which indicates that location remains a key element in determining the capitalization rate. Survey respondents reported that the most attractive investment opportunities are in independent living followed by assisted living. Active adult has also gained considerable interest

Class A Class B Class C Change Change Change Low High Average Low High Average Low High Average (bps) (bps) (bps) Core IL 4.00% 8.00% 5.40% 0 5.00% 8.00% 6.40% 20 6.00% 10.00% 7.70% 20 AL 5.00% 8.00% 6.10% -10 6.00% 9.50% 7.10% 0 6.00% 10.50% 8.50% 10 MC 5.00% 9.50% 7.00% 0 6.00% 9.50% 7.70% 0 7.00% 11.00% 9.00% 10 NC 9.00% 14.00% 11.30% 0 9.50% 14.50% 12.20% 0 12.00% 15.00% 13.60% 0 CCRC 6.00% 10.00% 7.30% 0 6.00% 10.50% 8.00% 0 7.00% 12.00% 9.30% 0

Non- IL 5.00% 9.00% 6.50% 0 6.00% 10.00% 7.20% 0 7.00% 11.00% 8.50% 20 Core AL 5.50% 9.00% 6.90% 10 6.00% 10.00% 7.60% 0 7.00% 11.00% 8.90% 20 MC 6.00% 10.00% 7.40% 0 7.00% 11.00% 8.10% 10 8.00% 11.00% 9.20% 10 NC 10.00% 14.00% 12.10% 20 11.00% 16.00% 12.80% 0 13.00% 16.00% 14.30% 50 CCRC 6.00% 10.00% 7.90% 10 7.00% 11.00% 8.60% 10 8.00% 12.00% 9.80% 40

Investment Class Spreads (bps) Location Spreads (Core Vs. Non-Core in bps)

A-B Change B-C Change A-C Change A Change B Change C Change

Core IL 100 20 130 0 230 20 IL 110 0 80 -20 80 0 AL 100 10 140 10 240 20 AL 80 20 50 0 40 10 MC 70 0 130 10 200 10 MC 40 0 40 10 20 0 NC 90 0 140 0 230 0 NC 80 20 60 0 70 50 CCRC 70 0 130 0 200 0 CCRC 60 10 60 10 50 40

Non- IL 70 0 130 20 200 20 Core AL 70 -10 130 20 200 10 MC 70 10 110 0 180 10 NC 70 -20 150 50 220 30 CCRC 70 0 120 30 190 30

Source: CBRE Seniors Housing Cap Rate Survey H1 2019. Change from H2 2018 Survey. The H2 2019 Survey will be published in April 2020.

19 | CBRE SHMI YEAR-END 2019 20 Senior Housing Capitalization Rates (CONT’D)

Summary by Product Type The following survey reflects the knowledge and collaboration of CBRE Research, Capital Markets and Valuation & Advisory professionals who provided their estimation of capitalization rate ranges based on recent interactions with active investors in their market. Core and non-core classifications are based upon the perception of each respondent and represent their assessment of multiple factors including physical plant and market area characteristics.

STABILIZED PROPERTY ACQUISITIONS STABILIZED PROPERTY ACQUISITIONS

PROPERTY CLASS/ H2 2019 CLASS/ SECTOR PROPERTY TYPE SECTOR H2 2019 (%) TYPE SEGMENT (%) SEGMENT

AA 5.21 Infill A 4.64 B 5.02 A 5.99 CBD C 5.68 Multi-family B 6.89 Suburban A 4.89

C 8.66 B 5.26 Office C 5.96 AA 6.24 Luxury 7.01 A 7.00 Full-Service 7.76 Suburban CBD B 8.21 Select-Service 8.00 Economy 9.22 C 9.62 Hotel Luxury 7.61 A 4.89 Full-Service 8.28 Suburban Industrial All B 5.80 Select-Service 8.50 Economy 9.76 C 7.87 IL 5.40 A 5.94 AL 6.10 Neighborhood/ Core MC 7.00 Community B 7.37 (Class A Avg.) Center NC 11.30 C 9.19 Senior CCRC 7.30 Retail A 7.21 Housing* IL 6.50

Power B 8.43 AL 6.90 Non-Core MC 7.40 C 9.98 (Class A Avg.) NC 12.10 High Street A 4.78 CCRC 7.90

Chart Source: CBRE Research: CBRE North America Cap Rate Survey Second Half 2019. *Note: Senior Housing figures come from CBRE Research U.S. Seniors Housing & Care Investor Survey and rendsT Report H1 2019.

20 | CBRE SHMI YEAR-END 2019 21 Senior Housing Property Types

Senior housing can be classified according to the level of healthcare services provided.

Multi-Family Congregate Care Healthcare Senior Independent Assisted Living Memory Care Nursing Care Apartments Living Similar to Units do not have Similar to Most units do not have Units resemble hotel apartments but has a full kitchen, only apartments but may a full kitchen, only dorm rooms and many commercial kitchen, dorm room size Building Facility have special access room size refrigerator and rooms have shared dining room, and refrigerator and and common area microwave. Many units are occupancy without additional common microwave. Many designs. studios. private bathrooms. area amenities. units are studios.

Ideal Building Size 100 to 250 Units 100 to 150 Units 80+ Units 24 - 36 Units 120 Beds (70 Units)

Included with assisted Resident Entry Age (1) 55-75 75 - 84 (avg. 80.6) 75-85 (avg. 87) 80-90 living

Percent Revenue from Included with assisted 0% 45% 65% 75% Services (2) living

Restaurant-style Independent living services Assisted living Assisted living dining, social plus assistance with bathing, services plus special services plus Typical Services Organized social activities, weekly eating and dressing; behavior/memory administration of Provided activities. housekeeping, medication reminders (no care, secured access medications. 24 hour laundry, and administration of medicine). only. care. transportation.

Average Length of 5 to 12 Years 2.0 to 5.3 years 1.2 to 2.9 years 0.9 to 2.2 years 30 Days to 2 Years Stay (3)

Average Monthly Rent (4) N/A $3,319 $5,091 $6,709 $334

Trailing 44 Quarter Avg. Stabilized Occupancy N/A 90.3% / 92.0% 90.0% / 88.7% 89.6% / 87.6% 87.9% / 86.5% / Avg. Current Quarter Stabilized (4) Occupancy

Total Units/Beds in N/A 419,009 414,787 140,305 891,481 Inventory (4)

Number of Units/Beds N/A 24,237 25,117 11,344 4,723 Under Construction (4)

Construction vs. N/A 5.8% 6.1% 8.1% 0.5% Inventory (4)

Penetration Rate of 75+ 5.9% IL / Included with assisted N/A 5.4% 10.0% Households (5) (6) 4.2% CCRC living

Notes:

(1) IL Data-”Retirement Living Communities: How They Are Changing the Way People Retire,” Senior Homes, accessed October 15, 2015 http://www.seniorhomes.com/p/ retirement-living-communities/. AL Data- Centers for Disease Control and Prevention, Residents Living in Residential Care Facilities: United States, 2010 Christine Caffrey, Manisha Sengupta, Eunice Park-Lee, Abigail Moss, and Lauren Harris-Kojetin, NCHS data brief, no 91. Hyattsville, MD: National Center for Health Statistics. 2012., http:// www.cdc.gov/nchs/data/databriefs/db91.pdf (accessed October 15, 2015).

(2) “A Case for Investment: Seniors Housing” NIC MAP Data & Analysis Service (September 2009).

(3) “The State of Seniors Housing 2019.” (Table 8.2) ASHA American Seniors Housing Association (2019).

(4) NIC MAP® Data Service, Primary & Secondary Markets.

(5) NIC MAP® Data Service.

(6) Ibid. Note: Penetration rate equals inventory divided by the number of households headed by an individual at least 75 years old

21 | CBRE SHMI YEAR-END 2019 22 Underwriting Guidelines Because senior housing is a hybrid between multi-family and hotel property types, there is an added complexity to the underwriting process. Unlike office, multi-family, industrial and retail, simple ARGUS or other canned models are not conventionally used. Rather, customized Excel models are developed — adding time and complication to the process. Below are standard assumptions that are often incorporated into underwriting models as well as questions that underwriters should consider. These assumptions reflect the current environment.

Assumptions based on Community / Market Conditions

Current Occupancy Condition Strong Good Fair / Poor Occupancy > 95% Lease-down to 95% Lease-down to 93% Lease-down to 90% <> 90-95% Lease-up to 94% Lease-up/down to 92% Lease-up/down to 90% < 90% (Initial Community Lease-up) Lease-up to 92% Lease-up/down to 92% Lease-up/down to 90% <> 80% - 90% (Not initial lease-up) Lease-up to 92% Lease-up to 90% Lease-up/down to 85% <> 70% - 80% (Not initial lease-up) Lease-up to 85% Lease-up to 80% Lease-up/down to 75% <> 60% - 70% (Not initial lease-up) Lease-up to 75% Lease-up to 70% Stabilize at current < 60% (Not initial lease-up) Stabilize at current Stabilize at current Stabilize at current Lease-Up/Down Net Units/Beds Per Month < 90% (Initial Community Lease-up) 4 3 2 <> 80% - 90% (Not initial lease-up) 3 2 1 <> 70% - 80% (Not initial lease-up) 3 2 1 <> 60% - 70% (Not initial lease-up) 3 2 1 < 60% (Not initial lease-up) 3 2 1 Rate Assumptions(1) Yr. 1 Yr. 2 Yr. 3 Yr. 4> Yr. 1 Yr. 2 Yr. 3 Yr. 4> Yr. 1 Yr. 2 Yr. 3 Yr. 4> Current Rates 4.5% 4.5% 4.5% 4.0% 4.0% 4.0% 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% Street Rates 5.0% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 4.5% 3.5% 3.5% 3.5% 3.5% < 60% (Initial lease-up) 0.0% 2.5% 5.0% 5.0% 0.0% 2.0% 3.5% 4.0% 0.0% 0.0% 2.0% 3.5%

Occupancy Assumptions(2) P&L or Rent Roll Always use current rent roll if the data is trusted. Independent Living - 37 months; Assisted Living - 22 months; Memory Care - 17 months and Nursing Care - 12 Rollover months. Other Revenue Assumptions Care Revenue Based on actual 12 month trend; 5.0% per year increase assumed thereafter. 6 month trend New Resident Fee Use actual admission fee rate (no increase) and model this as number of new resident times fee. N/A Second Resident Fee Based on actual 12 month trend; 4.0% per year increase assumed thereafter. 6 month trend Other Revenue Based on actual 12 month trend; 4.0% per year increase assumed thereafter. 6 month trend Expense Assumptions

Normal Operating Expenses Tied to occupancy; stabilized at 3.5%. 12 month trend

Core Expenses Tied to occupancy; stabilized at 4.0% 12 month trend

Utilities Tied to occupancy; stabilized at 3.5%. 12 month trend

Obtain current quote or base on in-place policy coverage and then grow 3.5% per year Insurance (GL & Property) N/A thereafter.

Based on current tax bill; increase 3.5% per year thereafter or as state / county dictates based Property taxes N/A on fixed annual increases or reassessment triggered by sale.

Management Fees 5.0% of Revenue. N/A

Capital Expenditures $300 to $500 / unit per year; dependency upon age of building. N/A

Notes:

(1) CBRE’s generalized assumptions for communities located in Primary and Secondary markets. However, specific assumptions depend on specific circumstances of each community.

(2) ASHA State of Seniors Housing 2019, Table 8.2.

22 | CBRE SHMI YEAR-END 2019 23 Top Ten Senior Housing Owners

RANK COMPANY OWNERSHIP UNITS/BEDS PROPERTIES

1 Welltower Public -> WELL 72,881 735

2 Ventas, Inc. Public -> VTR 58,903 671

3 Public -> BKD 55,236 672

4 Boston Capital Corporation Private 29,987 428

5 Senior Housing Properties Trust Public -> SNH 29,856 266

Healthpeak Properties (formerly 6 Public -> PEAK 25,749 228 known as HCP Inc.)

7 Colony Capital, Inc. Public -> CLNY 19,137 220

The Evangelical Lutheran Good 8 Non-Profit 15,914 142 Samaritan Society

9 New Senior Investment Group Public -> SNR 15,516 133

10 Senior Lifestyle Private 13,898 142

Source: “ASHA 50 Report” ASHA: American Seniors Housing Association, (as of January 30, 2020).

Senior Housing Management Companies

• This is a highly fragmented (“cottage industry”) market.

• The top 10 senior housing providers control 30.8% of the IL/AL/MC total supply.

• The average size of the top 50 providers is only 12,124 units per provider compared to an average of 33,708 for the top 10.

• Seven providers in the top 10 are publicly traded companies.

23 | CBRE SHMI YEAR-END 2019 Publicly Traded Senior Housing Dominated 24 REITs and Companies

The senior housing/healthcare publicly traded providers’ total market capitalization is approximately $53.96 billion as of April 1, 2020 with a total enterprise value of $98.32 billion.

Close Close 52-Week Range Trailing Enterprise Stock Stock Annual Dividend 52-Week Market Cap Company Ticker (1) (1) (2) Value Price Price Dividend Date Change (1) (1) 4/1/20 (1) High Low 4/1/20 (1) (3) 12/31/19 4/1/20 Yield

CareTrust REIT CTRE 20.63 13.19 6.09% 4/15/2020 -36.66% 25.54 7.16 1.41B 1.95B

Healthpeak Properties PEAK 34.47 21.29 N/A 2/28/2020 -23.63% 37.93 18.63 12.06B 18.50B

LTC Properties LTC 44.77 27.43 7.38% 3/31/2020 -32.21% 53.04 24.49 1.23B 1.92B

National Health Investors NHI 81.48 41.88 8.48% 5/8/2020 -36.72% 91.12 31.37 2.21B 2.21B

New Senior Investment Group SNR 7.65 2.14 20.31% 3/27/2020 -53.71% 8.35 1.72 252.78M 1.81B

Omega Healthcare Investors OHI 42.35 24.54 10.02% 2/14/2020 -29.15% 45.22 13.33 6.02B 11.13B

Sabra Health Care REIT SBRA 21.34 9.62 16.48% 2/28/2020 -42.89% 24.95 5.55 2.24B 4.60B

Ventas VTR 57.74 22.95 11.83% 4/14/2020 -57.33% 75.40 13.35 9.99B 22.30B

Welltower WELL 81.78 40.60 7.60% 2/28/2020 -40.75% 93.17 24.27 18.80B 33.90B

Total $53.96B $98.32B

Notes: (1) Data pulled by Yahoo! Finance who pulls from multiple sources or calculates internally. Data is for 52-weeks ending 04/01/2020. (2) Market Cap is an intraday value derived by taking outstanding shares multiplied by the current share price. Shares outstanding is taken from the most recently tiled quarterly or annual report and Market Cap is calculated using shares outstanding. (3) Enterprise Value is a market-based measure of a company’s value and is generally equal to Market Cap plus debt minus total cash and cash equivalents.

Chart Source: Yahoo! Finance

24 | CBRE SHMI YEAR-END 2019 25 CBRE Research - Special Report on Active Adult

FIGURE 2: SENIORS HOUSING INVESTMENT PREFERENCE - % Key Takeaways SELECTING ACTIVE ADULT AS BEST SENIORS HOUSING SEGMENT FOR INVESTMENT • Active adult housing has gained tremendous % market and investor appeal in recent years. • CBRE’s latest Senior Housing & Care Investor 25 21.7 18.6 Survey found that 22% of respondents believe 20 active adult offers the best investment opportunity, three times the response four years ago. 15 11.0 • Defining active adult housing is problematic; many 10 7.7 6.4 terms are used for similar lifestyle seniors living product. Adding further complication, many terms 5 used within the industry are not necessarily the 0 same used for consumers. H2 2015 H1 2016 H1 2017 H1 2018 H1 2019 • CBRE defines active adult housing as purpose- built multifamily rental housing for younger Chart Source: CBRE Research, CBRE Valuation & Advisory Services, Q2 2019. Seniors Housing & Care Investors Surveys. seniors. It has a heavy emphasis on community space and activities. It can almost be thought of as “independent living unbundled.” their current homes (age in place). However, given the Active Adult Research Series large size of the baby boom (74.5 million), if even only a small percentage of the cohort chooses some form of Active adult is one of the hottest specialty housing seniors housing, that will create significant increases in products today. Consumer and investor demand demand for lifestyle seniors housing including active adult. are both rising rapidly. Over 40% of baby boomers are 65+ years old; the oldest turns 73 in 2019. This Research Brief is the first of a series of papers on Older boomers are in active adult's entry target the active adult sector. The series will define the product, ages—late 60s to mid 70s. Active Adult is often provide perspectives on its recent and future growth, marketed to younger seniors, but the average explain the demographics behind the demand potential, age of active adult residents is about 74 years. examine market performance in the sector, identify leading Most seniors in the target age range will remain in companies active in the space and much more.

FIGURE 1: MULTIFAMILY - SENIORS HOUSING SPECTRUM

Lifestyle Healthcare Orientation/Services Transport, Meals Basic Care ADL Care Specialized Long-Term Shelter Activities Laundry Included Services Services*** Memory Care Chronic Care

Multifamily Conventional Multifamily  ------

Hybrid/ Active Adult, Etc.* Bridge   ** ** - - - -

Independent Living     - - - -

Traditional Assisted Living       - - Seniors Housing Memory Care        -

Skilled Nursing Care        

Source: CBRE Research, NICMAP ® Data Service. *Represents wide variety of lifestyle housing for seniors as shown on Figure 3. **These services and others often contracted out, some of activities also contracted out. ***ADL = activities of daily living.

25 | CBRE SHMI YEAR-END 2019 CBRE Research - Special Report on (CONT’D) 26 Active Adult FIGURE 4: SENIORS LIFESTYLE HOUSING* - SHARED CHARACTERISTICS Category Characteristics Investor Interest in Active Adult Rises Active, healthy, younger seniors, even sometimes empty- nesters in their 50s. Average age: late 60s through mid Increased investor interest is evident in CBRE's "Seniors Target Market 70s. Most residents retired, but not all. Factors behind (Consumer) consumers' choice to select this housing predominantly Housing & Care Investor Surveys." The Summer 2019 "lifestyle," not related to healthcare or ability to care for survey revealed that 22% of respondents—all from one self or spouse/partner. the traditional seniors housing industry—believe that Wide array of activities offered, both those which management organizes and ones organized by active adult offers the best investment opportunity Community, residents. Many activities are social and focus on among the different types of traditional seniors Activities bringing residents together. Building a sense of housing products and active adult. The response is community important. up sharply from 7.7% only four years ago. Emphasis on active living which is incorporated into Active design, amenity options and programming. In addition, traditional multifamily investors (and developers) see active adult as an extension of Simpler lifestyle including ability for traveling seniors multifamily and a product type with significant Lock ‘n’ Leave to "lock and leave" their homes, minimal home maintenance, etc. investment and yield opportunity. No healthcare or healthcare-related services provided No Healthcare (although sometimes properties are networked to Housing for Younger Seniors healthcare providers). Limited services. "Unbundled" or "à la carte" services. Services usually more similar to conventional multifamily Active adult is one of many kinds of housing designed Services than independent living. However, management may for younger seniors or housing where seniors are have contract agreements with service providers to provide services (e.g., Lyft). Often residents will provide the predominant residents. Active adult can be services to one another (free or for fee). considered a subset of a broad category of "lifestyle" Designs commonly include features which would be seniors housing (meaning no healthcare services are useful for aging residents such as minimal or no stairs, Product Design wider doors that could accommodate a wheelchair provided). (down the road), etc. Most new development by for-profit developers by both Independent living is also considered "lifestyle," but seniors housing specialists and increasingly multifamily is a separate category of housing primarily because Development developers. (Owners of existing assets are both for-profit and non-profit.) Many affordable programs for seniors it is considered a traditional seniors housing product housing. and because it provides communal dining as part of the fees to live in the community. Source: CBRE Research, Q3 2019. *Excluding independent living.

FIGURE 3: SENIORS LIFESTYLE HOUSING* - PRODUCT NAMES AND BASIC DISTINGUISHING TRAITS

Term/Type Comments Seniors Generic term for any rental multifamily housing catering to or restricted to seniors. Not necessarily purpose-built for seniors. NIC** uses Apartments both "seniors apartments" and "55+ seniors apartments" as generic terms for all rental seniors housing. Often used for any kind of lifestyle seniors housing (excluding independent living). Sometimes used in reference to multifamily, but most 55+ 55+ communities are for-sale single-family housing communities. Could be manufactured home communities also (typically homes owned, land leased). "62+" has a much more restricted usage and is used predominantly only in reference to communities with specific requirements of 62+ occupants being 62 or older. Also, age-targeted. Terms used broadly to represent a wide-array of seniors lifestyle housing. Usually refers to multifamily, but sometimes Age-Qualified, used for single-family communities. Terms sometimes used interchangeably with "active adult," but active adult has a tighter definition Age-Restricted (see below). Active Lifestyle, Terms often used in marketing. Could include any of the type of lifestyle housing catering to younger seniors, but usually connotes Active Living multifamily. It's one way to avoid the term "seniors" in marketing. Purpose-built multifamily rental. Industry generally sees it as a new, emerging concept. Typically newer and somewhat upscale, though Active Adult more affordable product exists. Often designed for possible conversion to independent living (flex space that could be converted to a commercial kitchen and dining hall). Independent Living “Light” Informal term sometimes used for active adult by both industry and for consumers.

Source: CBRE Research, Q3 2019. *Excluding independent living. Note that terminology usage remains in flux. **National Investment Center for Seniors Housing & Care.

26 | CBRE SHMI YEAR-END 2019 CBRE Research - Special Report on 27 Active Adult (CONT’D)

Investor Interest in Active Adult Rises

For both industry and consumers, the terminology is FIGURE 5: ACTIVE ADULT DEFINING CHARACTERISTICS confusing and often not consistent. There is a blending of concepts at different communities. The confusion is not product resident profile - caters to surprising given the long list of common characteristics multifamily, rental younger seniors (late 60s-mid 70s) as outlined in Figure 4. purpose built active, healthy seniors Figure 3 provides some of the different prevailing types of seniors lifestyle housing and different terms used in mostly relatively new usually above-average income* the industry. But these are not hard and fast definitions, private sector development programming and both terminology and product offerings are evolving. emphasis on shared amenity space mgmt organizes array of activities

What is Active Adult? resident led activities encouraged sense of “community” evolves Understanding active adult starts with positioning it in the housing spectrum (Figure 1), and distinguishing it Source: CBRE Research, Q3 2019. *Most of the new product caters to upper- from other similar housing product (Figure 3), a much middle income residents, though there are more affordable communities as well. more difficult task.

Active adult is blurring the line between conventional multifamily and independent living. It is not considered Developers and operators of active adult communities either, nor is it part of the traditional seniors housing are trying to create a new product appealing to baby spectrum. However, prospective active adult residents boomers ("not my parents' retirement home"), a product often comparison shop conventional multifamily or that emphasizes an active lifestyle and simpler way of independent living communities. Moreover, active adult living. Therefore one of the principal differences between is attracting investor and developer interest from both active adult and independent living is the emphasis on traditional seniors housing and conventional multifamily the active living programming and recreational facilities companies (and the broader real estate investment (e.g., aerobics classes). This focus has much less emphasis world). in independent living in part due to independent living residents being older—the average age is the mid 80s and The principal differences between active adult and rising. conventional multifamily is the greater attention to community space and to activities. While some The other principal difference between active adult and multifamily communities do have organized activities, independent living is that the latter offers full meal service they play a minimal role. In design, active adult and and the former does not (hence, independent living comes multifamily are quite similar, expect for more square at a much higher price point). Additionally, independent footage given to community space. However, many active living communities offer more services than active adult. adult communities are designed for possible evolution to Often with active adult, these services are contracted out independent living. or "unbundled."

Active adult management also arranges for many resident One of the challenges of active adult communities, however, services, more than conventional multifamily. Active adult is aging residents. As residents age, programming and rents are usually at a premium to comparable multifamily services may need to change or the residents may need communities due to higher operating expenses (from to change—both possibly problematic. Many active adult more programming). Active adult lease-ups are usually properties are being designed so they could be converted much slower than conventional multifamily, though to independent living communities in the future. The key retention is reportedly higher. Prospective active adult element is having flex space that could be converted to residents visit a property several times before leasing, dining and a commercial kitchen. Individual unit designs and the leasing decision process is further slowed if a also need to include features which make them adaptable home sale is involved. for older seniors.

27 | CBRE SHMI YEAR-END 2019 About CBRE National Senior Housing - 28 Our National Presence

CBRE has assembled a fully

integrated team with the WA ME experience, expertise, and MT ND

successful track record OR MN VT NH ID WI NY necessary to structure and SD MA execute a transaction to WY MI CT RI IA PA NE meet the client’s objectives. NV NI OH MD IN DE UT IL CO WV VA KS MO CA KY

NC TN AR NM OK 45 States AR SC AL GA MS 920+ Communities TX LA

121,500+ Units/Beds FL

CBRE National Senior Housing Offices: San Diego, States where CBRE Team Members have CBRE Senior Housing & Care Valuation & Advisory Houston, and Boston conducted business Services Offices

INVESTMENT SALES DEBT TRANSACTIONS TRANSACTIONS SINCE 2014 SINCE 2014 $7.4B+ $7.3B+ From 2014 to Q4 2019 principals From 2014 to Q4 2019 CBRE of the CBRE National Senior National Senior Housing has Housing team completed more completed over $7.3 billion than $7.4 billion in senior housing in debt transaction volume. investment sales, investment banking, and leasing transactions spanning across multiple states.

COMPLETED IN 2019 DEBT ORIGINATIONS $2.2B+ TOP 2 CBRE National Senior CBRE National Senior Housing was ranked Top Two Senior Housing Housing closed over $2.2 Originator in the nation from 2010 through 2016 and was the #1 billion in investment sales Senior Housing/Age Restricted Originator in the U.S. in 2013 and and debt transactions 2014 and #2 in 2015. The team has originated $4.2 billion in debt across the U.S. in 2019. transactions over the past four years. CBRE is the largest agency originator (Fannie/Freddie) in the nation, with more than $18 billion of loan volume in 2017, and has been Freddie Mac’s #1 Seller Servicer from 2009 to 2017.

28 | CBRE SHMI YEAR-END 2019 CBRE NATIONAL SENIOR HOUSING REPRESENTATIVE INVESTMENT PROPERTY TRANSACTIONS - 2015 FORWARD Today’s complex and constant changing market environments require special solutions. CBRE SH Team Members consistently achieve the highest sale price/best debt terms in the industry for their Clients.

RECENT PORTFOLIO SALES TRANSACTIONS Sunwest Portfolio Vintage Portfolio The Maestro Portfolio $1.29 billion $1.29 billion $921,000,000 National Portfolio Northern and Southern CA (21) Alberta and Quebec, Canada 11,096 IL/AL/MC units/beds and Western WA (1) 8,206 IL/AL/MC units/beds Client was The Blackstone Group 3,054 IL/AL/MC units Client was Maestro Funds Client was Vintage Senior Living and their private investors

The Fountains Portfolio Brightview I Programmatic Equity Raise $640.0 million $498,500,000 $300,000,000 National Portfolio National Portfolio National Portfolio (11 states) (5 States) Client was LCS 3,637 IL/AL/MC and Entry Fee 1,584 IL/AL/MC units/beds CCRC units/beds Client was Affiliate of Prudential Client was Fountains Senior Living Real Estate Investors Holdings, LLC

Sunwest Managed Portfolio Brightview II The Garden Empire Portfolio $364,250,000 $363,500,000 $307,500,000 National Portfolio National Portfolio (3 States) NJ and NY (11 states) 1,117 IL/AL/MC units/beds 933 IL/AL/MC units/beds 3,054 IL/AL/MC and Cottages Client was an Affiliate of The Client was an Affiliate of The Client was Sunwest Shelter Group Carlyle Group

CCRC Portfolio Mid-Atlantic Portfolio MorningStar 4 Pack $186,500,000 $186.2 million Confidential Dallas, TX Greater Baltimore, Maryland CO, IA, NM and OR 1,104 units (5) and Greater Washington, 415 IL/AL/MC units Client was LCS D.C. (2) Client was Confluent 526 AL/MC units Client was an affiliate of Harrison Street

Five Allegro Communities Kronos FL 2 Pack $172,500,000 Confidential FL and KY Jacksonville & Stuart, FL 705 IL/AL/MC/NC units/beds 263 units Client was Almanac Realty Client was Kronos

RECENT SINGLE ASSET SALES TRANSACTIONS

MorningStar at RidgeGate Parker Senior Living Renaissance on Peachtree Confidential Confidential $78,600,000 Denver, CO Parker, CO Atlanta, GA 224 IL/AL/MC units 191 IL/AL/MC units/beds 229 IL/AL units/beds Client was AEW Client was Faestel Properties Client was The Carlyle Group and Formation Development

Class A IL/AL Community Watermark at Logan Square Sunrise of Severna $77,000,000 $72,500,000 $72,000,000 Scottsdale, AZ Philadelphia, PA Severna Park, MD 216 IL/AL units/beds 463 IL/AL/MC/SNF units 156 IL/AL/MC units Client was Affiliate of Prudential Client was Watermark Retirement Client was Real Estate

The Village at Arboretum The Village of Tanglewood Meadowbrook $72,000,000 $66,850,000 $60,000,000 Austin, TX Houston, TX Agoura Hills, CA 172 IL units 188 IL units 156 IL/AL/MC units Client was BayNorth/ Client was BayNorth/Bridgewood Client is Confidential Bridgewood JV JV

29 | CBRE SHMI YEAR-END 2019 RECENT SINGLE ASSET SALES TRANSACTIONS (CONT’D)

Woodhaven MorningStar of Littleton The MorningStar Portfolio $57,000,000 $45,500,000 $45,000,000 Conroe, TX Littleton, CO Colorado Springs, CO 157 IL/AL/MC units 85 AL/MC units 112 AL/MC units Client was Padua Realty Client was PREI/MSL JV Client was Confluent Develop- ment/MorningStar Senior Living

St. Andrew’s Village Kennewick Campus The Solana Horsham $42,500,000 $40,500,000 $31,500,000 Aurora, CO Kennewick, WA Greater Philadelphia, PA (Greater Denver) 138 IL/AL/MC units 76 AL/MC units 246 CCRC units/beds Client was Bourne Financial Client was CSH/Formation-Shel- Client was RSF Partners bourne Partners JV

Cappella of Grand Junction Confidential Grand Junction, CO 66 AL/MC units Client was Confluent Senior Living

RECENT DEBT TRANSACTIONS

The Fountains Portfolio The Ranger Portfolio Large National Portfolio $410,000,000 $348,592,000 (Confidential) National Portfolio (11 states) National Portfolio $238,250,00 3,637 IL/AL/MC and Entry Fee 2,528 IL/AL/MC units National Portfolio CCRC units/beds Client was Formation Capital 1,702 IL/AL/MC/SNF units Client was Watermark Retirement and NorthStar Realty Finance & NorthStar Realty Finance

LCS Portfolio CA Senior Living Portfolio DiNapoli Portfolio $120,000,000 $104,000,000 $91,840,000 Various Locations Various Locations Various Locations, CA 1,104 IL/AL/MC/SNF units 85 AL & 155 MC units 568 IL/AL/MC units Client was LCS/Aspect Client was Venture and a Global Client was DiNapoli Capital Investment Manager Partners

The Belmont Village Portfolio The Fountains Portfolio The Bonaventure Portfolio Confidential Supplemental $72,466,000 Thousand Oaks, CA and Scottsdale, $75,401,000; $485MM+ Combined Washington and Oregon AZ Various Locations 453 IL/AL units 275 AL/MC units 3,484 IL/AL/MC/SNF units Client was Belmont Village & Blue Client was NorthStar REalty Finance/ Client was NorthStar Realty Moon Capital Partners The Freshwater Group Finance

The Springs at Lake Oswego The Virginian The Bristal Portfolio $66,400,000 $65,200,000 $62,832,000 Lake Oswego, OC Fairfax, VA Huntington, NY (Portland MSA) 306 CCRC units 118 AL units 216 IL/AL/MC units Client was Focus Healthcare Client was The Engel Burman Client was Harrison Street/The Group and Harrison Street Real SPrings Living Estate Capital

The Springs Living Portfolio The Seattle Portfolio Village of Southampton $61,000,000 $60,020,000 Confidential Wilsonville & Carmen Oaks, OR Seattle MSA (4 properties) Houston, TX 294 AL/MC units 368 IL/AL units 204 IL/AL/MC Client was The Springs Living Client was The Carlyle Group Client was Bridgewood/Harrison and Capitol Seniors Housing Street

Arbor Terrace Portfolio $50,525,000 Atlanta MSA 236 IL/AL/MC units Client was Arcapita

30 | CBRE SHMI YEAR-END 2019 31CBRE Advantage

CBRE Cap, the investment banking business of CBRE, provides independent M&A advisory, acts as a global placement agent, actively trades real estate LP secondary interests, and advises institutions on real estate investments. Lisa Widmier has been integrated into this practice to provide specialized investment banking services to clients in the senior housing industry.

Portfolio Public Valuation/Fairness Sales M&A Opinions

Recapitalizations Financing

Comingled Buyside Fund Raising Advisory

INVESTMENT BA NKING Joint Ventures Restructuring

Direct Portfolio Secondary Tra ding Sales

The CBRE platform uniquely combines the critical components for a successful outcome.

Highly Experienced Investment Banking Team CBRE offers an experienced senior investment banking team with expertise in all forms of capital raising and advisory. Our knowledge base provides the background to structure an opportunity properly and react to change.

World Leading Asset Level Expertise CBRE is a leader in real estate, senior housing, and local market knowledge. This allows us to leverage expertise encompassing all aspects of real estate and to evaluate, underwrite, and position assets and industry fundamentals to optimize outcomes.

Global Capital Distribution CBRE has the market presence to access providers of real estate capital in all of the major markets around the world. This capability is enhanced by constant investor dialogue, global infrastructure, and a strong product pipeline, which enables us to utilize live market intelligence to align investment capital targeted investment opportunities.

31 | CBRE SHMI YEAR-END 2019 Today’s complex and constantly changing market environments require special solutions. The professionals at CBRE have the experience, knowledge, connections and track record to provide you with the best solutions in the marketplace and the ability and determination to execute those solutions.

Investment Brokerage | Structured Debt | Investment Banking Consulting Services | Valuation | Asset Management

4301 La Jolla Village Dr., Suite 3000, La Jolla, CA 92122 Please visit our website at cbre.com/nationalseniorhousing