CapeCanaveralSeniorHousingMarketStudy(16oct08)-1.pdf

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Senior Housing Market Feasibility Analysis Report

Cape Canaveral (Orlando), Florida Marketing Area

Entry-Fee Independent Living Facility New Construction Demand Analysis

Rental Independent Living Facility New Construction Demand Analysis

Rental Assisted Living Facility New Construction Demand Analysis

Rental Dementia Care Assisted Living New Construction Demand Analysis

180 Pages/41,161 Words

Prepared For: Danny P. Ringdahl

750 North Atlantic Avenue, Suite #1209

Cocoa Beach, Florida 32931

Prepared By: Rainmaker Marketing Corporation, Inc.

15519 Dawnbrook Drive

Houston, Texas 77068-1919

281.537.1200

www.rainmakermarketing.com/

October 2008 – March 2009

NOTICE This report is the copyrighted intellectual property of Rainmaker Marketing Corporation, Inc. and is intended for the party unto which it has been delivered and is not for release without the prior written consent of Rainmaker Marketing Corporation, Inc. This document may not be reproduced or retransmitted, in any form (written, oral and/or electronic) without the prior written consent of Rainmaker Marketing Corporation, Inc.

http://www.rainmakermarketing.com/�

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Summary Report Findings 1

Rainmaker Marketing Corporation, Inc. (“Rainmaker”, “Consultant” or “RMC”) 2 conducted a market feasibility analysis (the “Report”) pertaining to a local sub-market 3 and proposed development site located in the Cape Canaveral, Florida area during the 4 month of October, 2008 and covering a five (5) year forecast period. The Report is 5 assumed to have a shelf life of approximately six (6) months, thus requiring an update 6 and new survey beyond March of 2009. 7

1. The Consultant’s recommended configuration would be for a community comprised 8 of 90 units of rental ALCF housing and 30 units/beds of rental ALZ/ALCF housing 9 having an Extended Congregate Care license (highest care programming level). This 10 recommendation is not based upon highest and best use, but on the program that may 11 in fact be able to take advantage of the competitive challenges the marketing area 12 presents. The Consultant found strong support for all types of senior housing 13 properties based upon the available demographic information and competitive 14 circumstances in the market. The only limitations facing the senior housing market 15 would be those affecting the entirety of the housing market and national economy. 16

2. The expected starting occupancy of the property will be 10% of total capacity for a 17 rental program and 100% pre-leased for entry-fee senior housing undertaken in 18 phases should the Client elect to develop an entry-fee program. 19

3. The expected lease-up rate of the property will be: 20

3.1.Entry-Fee ILF – 6 to 8 units per month (net of turnover losses). 21

3.2.Rental ILF – 4 to 6 units per month (net of turnover losses). 22

3.3.Rental ALCF – 3 to 4 units per month (net of turnover losses). 23

3.4.Rental ALZ/ALCF – 2 to 3 units per month (net of turnover losses). 24

4. The expected maximum sustainable operating occupancy of the property will be: 25

4.1.Entry-Fee ILF: 98% to 100% (year-round occupancy average – reflects pre-sold 26 inventory). 27

4.2.Rental ILF: 95% to 98% (year-round occupancy average). 28

4.3.Rental ALCF: 92% to 95% (year-round occupancy average). 29

4.4.Rental ALZ/ALCF: 95% to 98% (year-round occupancy average). 30

5. The smallest living unit will be an efficiency apartment of 525 square feet in the 31 ALZ/ALCF, while the largest recommended unit will be a two-bedroom apartment of 32 795 square feet in the ALCF unit. A total of five (5) basic unit size recommendations 33 are itemized in this Report. 34

6. Routine Revenue Projections. The routine revenue projections for the property are: 35

6.1.First Twelve Months of Operations: $2,334,700 to $2,549,420 (note spreadsheet 36 above). 37

6.2.Second Twelve Months of Operations: $4,524,451 to $4,983,677. 38

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6.3.Third Twelve Months of Operations & Thereafter: $5,171,067 to $5,685,718. 1

Report Certifications & Merchantability 2

This analysis was prepared using senior housing industry benchmarks, means and 3 methods with respect to the quantification of the market potential for to-be-built senior 4 housing communities by Rainmaker Marketing Corporation on a standard fee-for-5 services commission basis. No part of the contract for the production and payment for 6 services pursuant to this feasibility study was contingent upon the outcome of the 7 feasibility study. 8

Rainmaker Marketing Corporation makes no representations as to the use and/or 9 merchantability of the materials presented herein as to any certain use. The use of these 10 materials for the purposes of planning the development of new senior housing 11 communities is limited due to the impact of the decisions made by the Client as to the 12 scope of the pending senior housing program that are expected to diverge from the 13 conclusions and recommendations presented herein. 14

Liability Disclosures 15

Some of the material contained herein was based on third-party information. As such, the 16 information provided herein is subject to change without notice. Said change could result 17 in an adverse impact on projected cash flows, earnings and funding requirements of the 18 proposed commercial real estate development project that are beyond the scope of this 19 report to assess and/or verify. Rainmaker Marketing Corporation cannot assume 20 responsibility and/or liability for the accuracy of the material provided by others 21 contained herein, which is beyond the reasonable control of Rainmaker Marketing 22 Corporation. This information is also time sensitive in that conditions observed in the 23 marketing area of the proposed Project will undoubtedly change with the passage of time. 24 Accordingly, the findings of this Market Analysis should be considered invalid after a 25 period of six (6) months. 26

Document Notes 27

The production of this Report is predicated upon a presentation of the collected 28 information in terms of how this information may in fact impact the proposed 29 development of a new senior housing community. The data is presented in the following 30 formats: 31

Technical Discussion. All aspects of the market feasibility analysis are presented in 32 a written technical report format. 33

Charts & Graphics. In addition to the technical discussion, the Consultant utilized 34 charts, spreadsheets, pictures and other graphic elements to better illustrate certain 35 report details and findings. 36

Spreadsheet Differentiation. This document includes certain spreadsheets that may 37 look essentially similar, but are in fact computational presentations of information 38 based upon defined catchment areas. In order to help the reader differentiate these 39 spreadsheets from one another, the following color coding is used: 40

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o Purple Spreadsheets. All spreadsheets having this purple color are 1 spreadsheets based upon an assumed 30-Minute Drive-Time Primary 2 Marketing Area. 3

o Green Spreadsheets. All spreadsheets having this green color are 4 spreadsheets based upon an assumed 20-Minute Drive-Time Primary 5 Marketing Area. 6

o Blue Spreadsheets. All spreadsheets having this blue color are 7 spreadsheets based upon an assumed 10-Minute Drive-Time Primary 8 Marketing Area. 9

Cross-References. An index, table of contents, table of exhibits and appendix are 10 provided for the purposes of quick reference. 11

Document Numbering. All numbering is sequential in nature for each heading of 12 the Report. This means the numbering for all ordered lists under a specific heading 13 is done in a sequential order and resets under the next heading. Each page of the 14 report’s main body includes line numbering (again, for the purposes of quick 15 reference). 16

Bibliography Page. This document includes a bibliography page for the purposes of 17 providing citations to external data sources of various types that were collected in 18 the process of completing the Report. 19

For the purposes of developing this presentation, the following assumptions are made: 20

Trending. All demographics analyses provided herein are predicated upon a 21 straight-line method of forecasting the growth of certain cohorts. 22

Methodologies. In general, the Consultant (Rainmaker Marketing Corporation) 23 sought to replicate the means, methods and resources that would be available to the 24 Consultant, should the Consultant’s personnel have been actually seeking placement 25 for a family member in the marketing area supporting the proposed project site. 26

Data. All data utilizes constitutes data that was gleaned in the process of the 27 market feasibility study itself, or statistical data which is used for the purposes of 28 more accurately identifying the pool of qualified cohorts who may be seeking senior 29 housing of the type being proposed by the client. 30

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Table of Contents SUMMARY REPORT FINDINGS............................................................................................................. 2 REPORT CERTIFICATIONS & MERCHANTABILITY ...................................................................... 3 LIABILITY DISCLOSURES...................................................................................................................... 3 DOCUMENT NOTES.................................................................................................................................. 3 TABLE OF CONTENTS............................................................................................................................. 5 TABLE OF EXHIBITS................................................................................................................................ 6 THE CONSULTANT, CLIENT & REPORT.......................................................................................... 11

THE CLIENT & THE OWNER’S PROGRAM.................................................................................................. 11 THE REPORT............................................................................................................................................. 12 THE FORECAST PERIOD ............................................................................................................................ 13

THE PROPOSED PROJECT, SITE, SITE ENTITLEMENTS & MARKET GEOGRAPHY .......... 13 THE PROPOSED PROJECT SITE .................................................................................................................. 14 SITE INVESTMENT INCENTIVE ENTITLEMENTS ANALYSIS ........................................................................ 18

THE ANALYSIS, SCOPE OF WORK, MEANS, METHODS & DATA SOURCES.......................... 19 SCOPE OF WORK....................................................................................................................................... 19 ANALYSIS MEANS, METHODS & DATA SOURCES..................................................................................... 19

Analysis Methodologies Employed ..................................................................................................... 21 THE DEMOGRAPHICS ANALYSIS, INITIAL DEMAND ANALYSIS & RELATED MATTERS 24

THE MARKETING AREA BASELINE DEMOGRAPHICS ANALYSIS................................................................ 24 Population........................................................................................................................................... 24 Households.......................................................................................................................................... 32 Families .............................................................................................................................................. 34 Household Income , Wealth & Disposable Incomes ........................................................................... 39 Housing Market Indicators ................................................................................................................. 54 Seniors Age 55+ Market Indicators & Demographic Information ..................................................... 65

THE SENIOR HOUSING NEW CONSTRUCTION GROSS DEMAND ANALYSIS................................................ 67 Entry-Fee Independent Living Facility Initial New Construction Demand Analysis.......................... 68 Rental Independent Living Facility Initial New Construction Demand Analysis................................ 74 Rental Assisted Living Facility Initial New Construction Demand Analysis ...................................... 76 Rental Dementia Care Assisted Living Facility Initial New Construction Demand Analysis............. 80

FINDINGS OF INITIAL NEW CONSTRUCTION GROSS DEMAND ANALYSES ................................................. 84 THE FIELD INVESTIGATION............................................................................................................... 86 COMPETITIVE FACILITIES COMPENDIUMS ............................................................................... 108 CONCLUSIONS OF FIELD INVESTIGATION.................................................................................. 114 THE RECONCILED NEW CONSTRUCTION DEMAND ANALYSIS............................................ 117

Entry-Fee ILF Net Buildable Demand Analysis ............................................................................... 118 Rental ILF Net Buildable Demand Analysis ..................................................................................... 122 Rental ALCF Net Buildable Demand Analysis ................................................................................. 125 Rental ALZ/ALCF Net Buildable Demand Analysis ......................................................................... 128

CONSULTANT’S CONCLUSIONS & RECOMMENDATIONS....................................................... 133 INDEX..................................................................................................................................................... 148

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GLOSSARY.............................................................................................................................................. 150 APPENDIX ............................................................................................................................................... 152 BIBLIOGRAPHY .................................................................................................................................... 180

Table of Exhibits EXHIBIT 1: PROJECT PRIMARY MARKETING AREA SITE MAP........................................................................ 16 EXHIBIT 2: MARKETING AREA TRAFFIC COUNTS SPREADSHEET................................................................... 17 EXHIBIT 3: PROJECT SITE CENSUS TRACT MAP............................................................................................. 18 EXHIBIT 4: TOTAL POPULATION BY AGE GROUP; 30-MINUTE DRIVE-TIME PMA........................................ 25 EXHIBIT 5: TOTAL POPULATION BY AGE GROUP; 20-MINUTE DRIVE-TIME PMA........................................ 26 EXHIBIT 6: TOTAL POPULATION BY AGE GROUP; 10-MINUTE DRIVE-TIME PMA........................................ 27 EXHIBIT 7: 2008 PMA ZIP CODE POPULATION DENSITY ANALYSIS THEMATIC MAP ................................... 28 EXHIBIT 8: 2008 POPULATION DISTRIBUTION BY AGE GROUP (30-MINUTE DRIVE-TIME PMA).................. 29 EXHIBIT 9: 2008 POPULATION DISTRIBUTION BY AGE GROUP (20-MINUTE DRIVE-TIME PMA).................. 30 EXHIBIT 10: 2008 POPULATION DISTRIBUTION BY AGE GROUP (10-MINUTE DRIVE-TIME PMA)................ 31 EXHIBIT 11: TOTAL COUNTY RESIDENT POPULATION: BREVARD COUNTY, FLORIDA 1990 - 2030 ............... 31 EXHIBIT 12: DETAILED AGE PROFILE – HOUSEHOLD SIZE HIGHLIGHTED (30-MINUTE DRIVE-TIME PMA) . 32 EXHIBIT 13: DETAILED AGE PROFILE – HOUSEHOLD SIZE HIGHLIGHTED (20-MINUTE DRIVE-TIME PMA) . 33 EXHIBIT 14: DETAILED AGE PROFILE – HOUSEHOLD SIZE HIGHLIGHTED (10-MINUTE DRIVE-TIME PMA) . 33 EXHIBIT 15: MARKETING AREA FAMILY DEMOGRAPHICS SPREADSHEET ..................................................... 34 EXHIBIT 16: FAMILY HOUSEHOLDS ANALYSIS – YEAR 200 DECENNIAL CENSUS (30-MINUTE DRIVE-TIME

PMA) .................................................................................................................................................. 35 EXHIBIT 17: FAMILY HOUSEHOLDS ANALYSIS – YEAR 200 DECENNIAL CENSUS (20-MINUTE DRIVE-TIME

PMA) .................................................................................................................................................. 35 EXHIBIT 18: FAMILY HOUSEHOLDS ANALYSIS – YEAR 200 DECENNIAL CENSUS (10-MINUTE DRIVE-TIME

PMA) .................................................................................................................................................. 36 EXHIBIT 19: YEAR 2000 DECENNIAL CENSUS OF HOUSEHOLD INCOMES BY AGE (30-MINUTE DRIVE-TIME

PMA.................................................................................................................................................... 37 EXHIBIT 20: YEAR 2000 DECENNIAL CENSUS OF HOUSEHOLD INCOMES BY AGE (20-MINUTE DRIVE-TIME

PMA.................................................................................................................................................... 38 EXHIBIT 21: YEAR 2000 DECENNIAL CENSUS OF HOUSEHOLD INCOMES BY AGE (10-MINUTE DRIVE-TIME

PMA.................................................................................................................................................... 39 EXHIBIT 22: 2008 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER; 30-MINUTE DRIVE-TIME PMA........... 41 EXHIBIT 23: 2008 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER; 20-MINUTE DRIVE-TIME PMA .......... 42 EXHIBIT 24: 2008 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER; 10-MINUTE DRIVE-TIME PMA .......... 43 EXHIBIT 25: 2013 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER; 30-MINUTE DRIVE-TIME PMA .......... 44 EXHIBIT 26: 2013 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER; 20-MINUTE DRIVE-TIME PMA........... 45 EXHIBIT 27: 2013 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER; 10-MINUTE DRIVE-TIME PMA........... 46 EXHIBIT 28: 2008 MEDIAN HOUSEHOLD INCOME BY ZIP CODE THEMATIC MAP OF PMA ........................... 47 EXHIBIT 29: 2013 PROJECTED MEDIAN HOUSEHOLD INCOME BY ZIP CODE THEMATIC MAP OF PMA ......... 48 EXHIBIT 30: HOUSEHOLD NET WORTH PIE CHART: 30-MINUTE DRIVE-TIME PMA..................................... 49 EXHIBIT 31: HOUSEHOLD NET WORTH PIE CHART: 20-MINUTE DRIVE-TIME PMA..................................... 50 EXHIBIT 32: HOUSEHOLD NET WORTH PIE CHART: 10-MINUTE DRIVE-TIME PMA..................................... 51 EXHIBIT 33: DISPOSABLE INCOME BY AGE OF HOUSEHOLDER (30-MINUTE DRIVE-TIME PMA) .................. 52 EXHIBIT 34: DISPOSABLE INCOME BY AGE OF HOUSEHOLDER (20-MINUTE DRIVE-TIME PMA) .................. 53 EXHIBIT 35: DISPOSABLE INCOME BY AGE OF HOUSEHOLDER (10-MINUTE DRIVE-TIME PMA) .................. 54 EXHIBIT 36: SINGLE-FAMILY HOUSING SALES BY YEAR: BREVARD & INDIAN RIVER, FLORIDA COUNTIES 55 EXHIBIT 37: CONDOMINIUM HOUSING SALES BY YEAR: BREVARD & INDIAN RIVER, FLORIDA COUNTIES.. 56 EXHIBIT 38: NOMINAL & REAL (2007) SINGLE-FAMILY HOUSING SALE PRICES; BREVARD & INDIAN RIVER,

FLORIDA COUNTIES ............................................................................................................................. 57

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EXHIBIT 39: NOMINAL & REAL (2007) CONDOMINIUM HOUSING SALE PRICES; BREVARD & INDIAN RIVER, FLORIDA COUNTIES ............................................................................................................................. 58

EXHIBIT 40: MEDIAN SALE PRICE HISTORY OF SINGLE-FAMILY HOMES – NOMINAL & REAL PRICES FOR BREVARD & INDIAN RIVER, FLORIDA COUNTIES................................................................................. 59

EXHIBIT 41: MEDIAN SALE PRICE HISTORY OF CONDOMINIUMS – NOMINAL & REAL PRICES FOR BREVARD & INDIAN RIVER, FLORIDA COUNTIES..................................................................................................... 60

EXHIBIT 42: MEAN ASSESSED VALUE OF HOUSING INVENTORY – BREVARD & INDIAN RIVER COUNTIES, FLORIDA (2006)................................................................................................................................... 61

EXHIBIT 43: MEDIAN ASSESSED VALUE OF HOUSING INVENTORY – BREVARD & INDIAN RIVER COUNTIES, FLORIDA (2006)................................................................................................................................... 61

EXHIBIT 44: MEAN UNADJUSTED VALUE OF HOUSING INVENTORY – BREVARD & INDIAN RIVER COUNTIES, FLORIDA (2006)................................................................................................................................... 61

EXHIBIT 45: MEDIAN UNADJUSTED VALUE OF HOUSING INVENTORY – BREVARD & INDIAN RIVER COUNTIES, FLORIDA (2006)................................................................................................................. 61

EXHIBIT 46: OWNER-OCCUPIED HOUSING UNITS ANALYSIS (30-MINUTE DRIVE-TIME PMA)..................... 62 EXHIBIT 47: OWNER-OCCUPIED HOUSING UNITS ANALYSIS (20-MINUTE DRIVE-TIME PMA)..................... 63 EXHIBIT 48: OWNER-OCCUPIED HOUSING UNITS ANALYSIS (10-MINUTE DRIVE-TIME PMA)..................... 64 EXHIBIT 49: AGE 55+ BASELINE POPULATION DEMOGRAPHICS INFORMATION/PROJECTIONS (30-MINUTE

DRIVE-TIME MARKET BOUNDARY)..................................................................................................... 65 EXHIBIT 50: AGE 55+ BASELINE POPULATION DEMOGRAPHICS INFORMATION/PROJECTIONS (20-MINUTE

DRIVE-TIME MARKET BOUNDARY)..................................................................................................... 66 EXHIBIT 51: AGE 55+ BASELINE POPULATION DEMOGRAPHICS INFORMATION/PROJECTIONS (10-MINUTE

DRIVE-TIME MARKET BOUNDARY)..................................................................................................... 67 EXHIBIT 52: ENTRY-FEE ILF GROSS DEMAND ANALYSIS SPREADSHEET (30-MINUTE DRIVE-TIME PMA).. 69 EXHIBIT 53: ENTRY-FEE ILF GROSS DEMAND ANALYSIS SPREADSHEET (20-MINUTE DRIVE-TIME PMA).. 70 EXHIBIT 54: ENTRY-FEE ILF GROSS DEMAND ANALYSIS SPREADSHEET (10-MINUTE DRIVE-TIME PMA).. 71 EXHIBIT 55: RENTAL ILF GROSS DEMAND ANALYSIS SPREADSHEET (30-MINUTE DRIVE-TIME PMA) ....... 73 EXHIBIT 56: RENTAL ILF GROSS DEMAND ANALYSIS SPREADSHEET (20-MINUTE DRIVE-TIME PMA) ....... 74 EXHIBIT 57: RENTAL ILF GROSS DEMAND ANALYSIS SPREADSHEET (10-MINUTE DRIVE-TIME PMA) ....... 75 EXHIBIT 58: RENTAL ALCF GROSS DEMAND ANALYSIS SPREADSHEET (30-MINUTE DRIVE-TIME PMA)... 77 EXHIBIT 59: RENTAL ALCF GROSS DEMAND ANALYSIS SPREADSHEET (20-MINUTE DRIVE-TIME PMA)... 78 EXHIBIT 60: RENTAL ALCF GROSS DEMAND ANALYSIS SPREADSHEET (10-MINUTE DRIVE-TIME PMA)... 79 EXHIBIT 61: RENTAL ALZ/ALCF GROSS DEMAND ANALYSIS SPREADSHEET (30-MINUTE DRIVE-TIME

PMA) .................................................................................................................................................. 81 EXHIBIT 62: RENTAL ALZ/ALCF GROSS DEMAND ANALYSIS SPREADSHEET (20-MINUTE DRIVE-TIME

PMA) .................................................................................................................................................. 82 EXHIBIT 63: RENTAL ALZ/ALCF GROSS DEMAND ANALYSIS SPREADSHEET (10-MINUTE DRIVE-TIME

PMA) .................................................................................................................................................. 83 EXHIBIT 64: SAND POINT TYPICAL ONE-BEDROOM UNIT ............................................................................. 97 EXHIBIT 65SAND POINT TYPICAL ONE-BEDROOM SUITE.............................................................................. 98 EXHIBIT 66: CEDAR CREEK LIFE CENTER ONE-BEDROOM UNIT FLOOR PLAN............................................ 101 EXHIBIT 67: CEDAR CREEK LIFE CENTER TWO-BEDROOM UNIT FLOOR PLAN ........................................... 102 EXHIBIT 68: CEDAR CREEK LIFE CENTER TWO-BEDROOM UNIT FLOOR PLAN ........................................... 103 EXHIBIT 69: ILF PROGRAM COMPENDIUM OF UNITS & RATES ................................................................... 109 EXHIBIT 70: ILF OCCUPANCY & UNIT COUNTS COMPENDIUM ................................................................... 110 EXHIBIT 71: ALCF & ALZ/ALCF UNIT COUNTS & PRICES COMPENDIUM ................................................ 111 EXHIBIT 72: ALCF & ALZ/ALCF OCCUPANCY & STAFFING COMPENDIUM.............................................. 112 EXHIBIT 73: ALCF & ALZ/ALCF COMPENDIUM OF SERVICES & AMENITIES............................................ 113 EXHIBIT 74: PROJECT REVENUE PROJECTIONS SPREADSHEET..................................................................... 115 EXHIBIT 75: ENTRY-FEE ILF NET BUILDABLE DEMAND ANALYSIS SPREADSHEET (30-MINUTE DRIVE-TIME

PMA) ................................................................................................................................................ 119 EXHIBIT 76: ENTRY-FEE ILF NET BUILDABLE DEMAND ANALYSIS SPREADSHEET (20-MINUTE DRIVE-TIME

PMA) ................................................................................................................................................ 120

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EXHIBIT 77: ENTRY-FEE ILF NET BUILDABLE DEMAND ANALYSIS SPREADSHEET (10-MINUTE DRIVE-TIME PMA) ................................................................................................................................................ 121

EXHIBIT 78: RENTAL ILF NET BUILDABLE DEMAND ANALYSIS SPREADSHEET (30-MINUTE DRIVE-TIME PMA) ................................................................................................................................................ 122



EXHIBIT 81: RENTAL ALCF NET BUILDABLE DEMAND ANALYSIS SPREADSHEET (30-MINUTE DRIVE-TIME PMA) ................................................................................................................................................ 125



EXHIBIT 84: RENTAL ALZ/ALCF NET BUILDABLE DEMAND ANALYSIS SPREADSHEET (30-MINUTE DRIVE-TIME PMA) ....................................................................................................................................... 129



EXHIBIT 87: BASELINE POPULATION DEMOGRAPHICS................................................................................. 152 EXHIBIT 88: PROJECTED GROWTH OF MARKETING AREA HOUSEHOLDS; 2000 – 2013 BAR CHART (30-

MINUTE DRIVE-TIME PMA).............................................................................................................. 152 EXHIBIT 89: PROJECTED GROWTH OF MARKETING AREA HOUSEHOLDS; 2000 – 2013 BAR CHART (20-

MINUTE DRIVE-TIME PMA).............................................................................................................. 153 EXHIBIT 90: PROJECTED GROWTH OF MARKETING AREA HOUSEHOLDS; 2000 – 2013 BAR CHART (10-

MINUTE DRIVE-TIME PMA).............................................................................................................. 153 EXHIBIT 91: DETAILED AGE PROFILE SPREADSHEET (30-MINUTE DRIVE-TIME PMA)............................... 155 EXHIBIT 92: DETAILED AGE PROFILE SPREADSHEET (20-MINUTE DRIVE-TIME PMA)............................... 156 EXHIBIT 93: DETAILED AGE PROFILE SPREADSHEET (10-MINUTE PMA) ................................................... 157 EXHIBIT 94: HOUSEHOLD FINANCIAL EXPENDITURES SPREADSHEET (30-MINUTED DRIVE-TIME PMA) ... 158 EXHIBIT 95: HOUSEHOLD FINANCIAL EXPENDITURES SPREADSHEET (20_MINUTE DRIVE-TIME PMA)...... 159 EXHIBIT 96: HOUSEHOLD FINANCIAL EXPENDITURES SPREADSHEET (10-MINUTE DRIVE-TIME PMA)...... 160 EXHIBIT 97: SINGLE-FAMILY SALES BY PRICE & YEAR – BREVARD & INDIAN RIVER, FLORIDA COUNTIES

.......................................................................................................................................................... 161 EXHIBIT 98: CONDOMINIUM SALES BY PRICE & YEAR – BREVARD & INDIAN RIVER, FLORIDA COUNTIES 162 EXHIBIT 99: 2008 DISTRIBUTION OF OWNER-OCCUPIED HOUSING UNITS BY VALUE PIE CHART (30-MINUTE

DRIVE-TIME AREA PMA).................................................................................................................. 163 EXHIBIT 100: 2008 DISTRIBUTION OF OWNER-OCCUPIED HOUSING UNITS BY VALUE PIE CHART (20-MINUTE

DRIVE-TIME AREA PMA).................................................................................................................. 163 EXHIBIT 101: 2008 DISTRIBUTION OF OWNER-OCCUPIED HOUSING UNITS BY VALUE PIE CHART (10-MINUTE

DRIVE-TIME AREA PMA).................................................................................................................. 164 EXHIBIT 102: RENTAL ALCF DEMAND SPREADSHEET – UPPER RANGE LIMIT (30-MINUTE DRIVE-TIME

PMA) ................................................................................................................................................ 165 EXHIBIT 103: RENTAL ALZ/ALCF DEMAND SPREADSHEET – UPPER RANGE LIMIT (30-MINUTE PMA) ... 166 EXHIBIT 104: ALCF DEMAND SPREADSHEET – LOWER LIMIT (30-MINUTE DRIVE-TIME PMA) ................ 167 EXHIBIT 105: ALZ/ALCF DEMAND SPREADSHEET – LOWER LIMIT (30-MINUTE DRIVE-TIME PMA) ....... 168 EXHIBIT 106: RENTAL ALCF DEMAND SPREADSHEET – UPPER RANGE LIMIT (20-MINUTE DRIVE-TIME

PMA) ................................................................................................................................................ 169 EXHIBIT 107: RENTAL ALZ/ALCF DEMAND SPREADSHEET – UPPER RANGE LIMIT (20-MINUTE DRIVE-TIME

PMA) ................................................................................................................................................ 170 EXHIBIT 108: RENTAL ALCF DEMAND SPREADSHEET – LOWER RANGE LIMIT (20-MINUTE DRIVE-TIME

PMA) ................................................................................................................................................ 171

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EXHIBIT 109: RENTAL ALZ/ALCF DEMAND SPREADSHEET – LOWER RANGE LIMIT (20-MINUTE DRIVE-TIME PMA) ....................................................................................................................................... 172

EXHIBIT 110: RENTAL ALCF DEMAND SPREADSHEET – UPPER RANGE LIMIT (10-MINUTE DRIVE-TIME PMA) ................................................................................................................................................ 173

EXHIBIT 111: RENTAL ALZ/ALCF DEMAND SPREADSHEET – UPPER RANGE LIMIT (10-MINUTE DRIVE-TIME PMA) ................................................................................................................................................ 174

EXHIBIT 112: RENTAL ALCF DEMAND SPREADSHEET – LOWER RANGE LIMIT (10-MINUTE DRIVE-TIME PMA) ................................................................................................................................................ 175

EXHIBIT 113: RENTAL ALZ/ALCF DEMAND SPREADSHEET – LOWER RANGE LIMIT (10-MINUTE DRIVE-TIME PMA) ....................................................................................................................................... 176

EXHIBIT 114: LIHTC & SECTION 8 SUBSIDIZED HOUSING – BREVARD COUNTY, FLORIDA........................ 177

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The Report Consultant, Client & Project

Forecast Period, Means & Methods

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The Consultant, Client & Report 1

This report was prepared by Rainmaker Marketing Corporation, Inc. (“Rainmaker”). 2 Rainmaker is a senior housing development consulting company that specializes in the 3 production of capital finance reports and due diligence documents including market 4 feasibility studies, financial feasibility studies, business plans, capital funding plans and 5 property due diligence reports of various kinds. Rainmaker has been engaged in the 6 senior housing consulting business since 1993. In the intervening years, Rainmaker has 7 completed hundreds of market feasibility studies essentially similar to the reporting set 8 forth herein for new construction senior housing projects valued (in the aggregate) in the 9 billions of dollars. Rainmaker has prepared reports for projects located throughout the 10 continental United States, Canada, the Caribbean Basin and Mexico. Rainmaker utilizes 11 a proprietary market analysis approach designed to provide what could be reasonably 12 considered to be a conservative estimate of the potential future demand for the various 13 types of market-based senior housing programs. 14

The Client & the Owner’s Program 15 The proposed senior housing development program is sponsored by Puerto Del Rio, LLC 16 of Cape Canaveral, Florida (the “Client”). The Client is a duly constituted limited 17 liability company authorized to contract business in the State of Florida. The main 18 offices of the Client are located at the proposed project site along the west side Astronaut 19 Boulevard, approximately 300 feet north of the junction of Astronaut Boulevard and 20 Imperial Boulevard in Cape Canaveral, Florida. 21

The Client is seeking to obtain capital expense financing for the development, 22 construction, marketing, sales and ongoing operations of a proposed senior housing 23 community (on a for-profit basis) for the benefit of the equity security holders of the 24 Client (altogether, the “Owner’s Program”). 25

The expectation for the market (the initial proposal) is for a congregate care facility 26 development program that includes independent living, assisted living and dementia care 27 programming. The Consultant’s analysis for the proposed Project was undertaken based 28 upon an analysis of all major housing groups in the senior housing industry class – entry-29 fee continuing care retirement communities, entry-fee retirement (not life care) 30 communities, rental independent living communities, standard assisted living care 31 communities and specialty dementia care units licensed at the assisted living level in 32 accordance with the requirements of the State of Florida. 33

The State of Florida licenses all senior housing facilities from independent living through 34 assisted living and on to intermediate and skilled nursing facilities. Unlike most states, 35 Florida has multiple levels of certification for assisted living facilities that allow these 36 properties to more closely conform with the continuum of care envelope so as to reduce 37 new resident confusion as to the nature of the services the facility may in fact provide. 38 These levels of assisted living facility care licensure are: 39

1. Standard Assisted Living Facility License (standard assisted living). A facility 40 having this licensure may provide the following: 41

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1.1.Individual supervision with all Activities of Daily Living (ADLs). 1

1.2.Total assistance with up to one i(1) ADL. 2

1.3.Medication administration, injections included. 3

2. Limited Nursing Service License (“LNS”). In addition to the Standard ALF 4 provisions, a community licensed at this level may offer: 5

2.1.Nursing assessments. 6

2.2.Treatments including: eye/ear flushes, dressing changes, colostomy care, catheter 7 care, glucose monitoring, some orthopedic care, urine testing, stool removal 8 therapies. 9

3. Extended Congregate Care (ECC). In addition to the LNS provisions, a community 10 licensed at this level may offer: 11

3.1.Total assistance with up to four (4) ADLs. 12

3.2.Treatments including: tube feedings, IV therapy, advanced ostomy care, Stage II 13 pressure sore care, amputation/fracture care, preventive and palliative skin care 14 and TED hose care. 15

When combined with home health care services and hospice care services, these 16 additional levels of licensure allow today’s senior community developer and 17 owner/operator provide a full continuum of services to future residents so as to allow the 18 facility to operate a health care oriented services program that does not have to include 19 the risks, increased liabilities and other costs of operating a skilled nursing facility for the 20 purposes of providing aging-in-place for residents and/or an alternative to the life care 21 approach to senior housing facility operations and capital financing. This will have an 22 important effect on the prospects of the emerging community, should the Client seek to 23 provide some type of care continuum as a result of the findings of this Report. 24

The Report 25 This document (the “Report”) has been prepared at the direction of the Client for the 26 purposes of confirming (or repudiating, as the case may be) the demand for the 27 construction of new senior housing living facilities on one (1) contiguous parcel of land 28 located within the Cape Canaveral area of Florida. This document was prepared pursuant 29 to a fee-for-services agreement that stipulated the compensation paid to the Consultant 30 would not be tied to any specific findings or recommendations. This report includes a 31 total of 180 pages and contains approximately 41,158 words. The Report is organized 32 into eight (8) basic sections: 33

1. Front Cover & Summary. Quick reference as to certain highlighted conclusions and 34 recommendations. 35

2. Document Notes, Liability Disclosures, Table of Contents & Table of Exhibits. 36 Document management and navigation information (see discussion on pages 3 37 through 6). 38

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3. Report Summary. Summary of the key program information (see discussion on pages 1 11 through 21). 2

4. The Demographics Analysis. The initial demand analysis and demographic 3 information (see discussion on pages 24 through 84). 4

5. Field Investigation. Investigation into competing senior housing communities located 5 within the geographical primary marketing area of the proposed project site (see 6 discussion on pages 86 through 114). 7

6. Final Demand Analysis. A reconciliation of the initial demand analysis to reflect the 8 competitive conditions of the market not clearly discernable from the demand 9 analysis itself (see discussion on pages 117 through 133). 10

7. Final Conclusions, Recommendations & Opinions. The Consultant’s 11 recommendations, analysis conclusions and opinion regarding expected market 12 conditions (see discussion on pages 133 through 148). 13

8. Index & Appendix. Document navigation and raw data used in the completion of the 14 Consultant’s Scope of Work (see pages 148 through 180). 15

The Forecast Period 16 For the purposes of this Report, the Analysis covers the annual period ending December 17 31, 2008 through December 31, 2013 (the “Forecast Period”). With respect to 18 demographic forecasts of certain population groupings, the Consultant used a straight-19 line trend method of determining interim year values within the body of the Analysis and 20 each projection where each intervening year is equal to the sum of the previous year’s 21 sum plus an amount equal to 1/5th of the sum of the end year value and the start year 22 value. 23

The Proposed Project, Site, Site Entitlements & Market Geography 24

This Report specifically addresses the rental senior housing services industry’s status for 25 the proposed project development site and certain outlying areas of the Orlando, FL 26 CBSA. The report further examines the following specific sub-groups: 27

Entry-Fee Independent Living Facility New Construction Demand. The entry-fee 28 independent living facility new construction demand analysis was undertaken as a 29 result of the Consultant’s analysis of the proposed project site’s geographical primary 30 marketing area. The proposed Project Site is capable of supporting an entry-fee 31 community at the Independent Living Facility (“ILF”) housing level that includes 32 assisted living and dementia care assisted living accommodations. 33

Rental Independent Living Facility New Construction Demand. The rental 34 independent living facility new construction demand analysis was undertaken as a 35 result of the Consultant’s analysis of the proposed Project Site (which is quite small) 36 and suited for a limited development program based upon its size. Accordingly, the 37 development of entry-fee senior living at the Independent Living Facility (“ILF”) 38 would not be justified due to the size and scale these types of facilities generally 39

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require. The proposed Project Site is capable of supporting a small rental community 1 at the ILF housing level. 2

Rental Assisted Living Facility New Construction Demand. As with the Rental 3 ILF New Construction Demand Analysis the proposed Project Site is also capable of 4 supporting a small to medium-sized Assisted Living Care Facility (“ALCF”) 5 development program. 6

Rental Dementia Care Assisted Living Facility New Construction Demand. As 7 with the rental ALCF New Construction Demand Analysis (above), the proposed 8 Project Site is also capable of supporting a full-sized dementia care facility licensed at 9 the ALCF level. The dementia care program approach is represented in the 10 spreadsheets as “ALZ/ALCF” (i.e.: “Alzheimer’s Assisted Living Care Facility”) 11

Combination Program. The proposed Project Site is also capable of hosting a 12 combination program of assisted living and dementia care. Accordingly, combination 13 facilities (also called “congregate living facilities” – facilities offering multiple levels 14 of care) will be examined in terms of their efficacy. 15

The Proposed Project Site 16 The proposed project site is better described as a vacant tract of land comprising some 3 17 to 10 acres located along the west side Astronaut Boulevard, approximately 300 feet 18 north of the junction of Astronaut Boulevard and Imperial Boulevard in Cape Canaveral, 19 Florida and held in fee simple estate by the Client (the “Project Site”). Accordingly, the 20 market feasibility study will be based upon the projected primary marketing area 21 catchment geography. For the purposes of this Report, the term “primary marketing 22 area” shall refer to that geographical area, within which the proposed Project is expected 23 to capture at least 75% of its total routine sales revenues on an ongoing basis. In the case 24 of senior housing, the geographical primary marketing area (“PMA”) is routinely 25 assumed to be an area that extends from the site nexus outward based upon an assumed 26 drive-time not to exceed 60-minutes. This measure is considered to be “elastic” in that, 27 the more urban a market in fact is, the more likely it is that this marketing area geography 28 will be reduced from the 60-minute level. In point of fact, the 60-minute drive time area 29 would only apply to very rural markets under most conditions, thus mandating a smaller 30 marketing area geography without any consideration being given to quality of care issues 31 that would tend to create a larger marketing area where there is no pre-existing supply of 32 care providers. Any consideration would first accrue to the benefit of existing properties 33 that have proven to be of value to the consumer, than to any “branded” care program that, 34 in the minds of consumers, surpass expectations such as is the case with so-called “legacy 35 healthcare facilities” – facilities with national recognition such as Cleveland Clinic, Mayo 36 Clinic, M.D. Anderson Cancer Center and the like. The smallest drive-time marketing 37 area would tend to be around an area encompassing a 20-minute drive-time boundary. 38 The 20-minute is the standard with 30-minute and 10-minute drive-time areas being used 39 as “outliers” to bracket this assumption and provide additional comparative insight into 40 the potential market demand for new senior housing construction. For the purposes of 41 projecting the impact of competition upon the proposed Project, the 30-minute drive-time 42

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bounded geographical catchment area is used to define the competitive conditions of the 1 senior housing marketing area. 2

The Consultant utilizes a series of drive-time assumptions in order to gauge the depth of 3 senior housing demand that includes the following: 4

30-Minute Drive Time Area. This is an area extending out a distance equal to 30-5 minutes in non-peak travel time. This is based upon the assumption that Adult 6 Children Households are generally willing to travel up to 60 minutes (non-peak 7 travel time) to routinely visit a family member placed in a senior housing property 8 in areas where the penetration of senior housing may be reasonably described as 9 “under-served”. For the purposes of creating a demand analysis that may be 10 considered to be a generally conservative assessment of the average opinion of the 11 average opinion of the market potential for new senior housing construction 12 demand, the Consultant’s market analysis process limits the marketing area 13 geography to no more than a 30-minute drive time area. This area will include all 14 of the current facilities expected to be the source of the supply of senior housing 15 that must be (theoretically) filled to 100% capacity before there is any allocation 16 available to support new construction programs at the proposed Project Site. The 17 Consultant’s experience has shown that as long as the penetration rate required to 18 fill the proposed Project is 15% of net buildable demand or less, then the proposed 19 Project and proposed Project Site would be considered to be acceptable for the 20 purposes of sustaining development and acquiring capital financing. All 21 spreadsheets utilizing 30-minute drive-time marketing area bounded information 22 have purple colored spreadsheet shading in this Report. 23

20-Minute Drive Time Area. The 20-minute drive-time area is that area extending 24 from the site that can be reached by using the surface transportation network. The 25 20-minute drive-time area is considered to be the most conservative measure that is 26 routinely used to quantify new construction demand for senior housing. If the net 27 buildable demand is sufficient, on an ongoing basis, to fully secure the lease-up of 28 all competing facilities – and the proposed Project – then the market would be 29 considered to be a marketing area that exhibits strong entrenched demand for senior 30 housing. All spreadsheets utilizing 20-minute drive-time marketing area bounded 31 information have green color-coded areas and bars in this Report. 32

10-Minute Drive Time Area. An analysis at this level is used to quantify the 33 demand in terms of a penetration rate expectation that is 15% or less. If the demand 34 analysis shows a penetration rate of 15% or less in order to fully lease-up the 35 proposed Project, then the market would be considered to be a market that has 36 exceptional entrenched senior housing demand. This well-entrenched demand 37 would be expected to also attract additional new construction programs that must be 38 factored into the demand analysis. Accordingly, the 10-Minute Drive-Time Area 39 Marketing Area computation would require that at least 25% of the gross demand 40 pool be reserved for competing facility construction programs. All spreadsheets 41 utilizing 10-minute drive-time marketing area bounded information blue color-42 coded borders and shading in this Report. 43

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Exhibit 1: Project Primary Marketing Area Site Map 1

2 The site map indicates the largest primary marketing area geography (the “Primary 3 Marketing Area”) suggests a marketing area that is better described as: 4

On the northern edge an area bordered by Florida State Highway 46 in Mims; and 5

On the western edge an area bordered by Florida State Highway 528 in Wedgefield; 6 and 7

On the southern edge an area bordered by Palm Shores, just south of Florida State 8 Highway 404; and 9

On the eastern edge an area bordered by the Atlantic Ocean. 10

The next site issue requiring an initial read was that of traffic counts as the traffic density 11 affects the senior housing market. A site must have sufficient traffic counts to support 12 the development, but not so much traffic that the constant drone of highway traffic (or air 13

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traffic in neighborhoods bounded by airports) disturbs the residents. The Consultant’s 1 experience has shown that senior housing projects can be reasonably expected to benefit 2 if the traffic is between 15,000 to 30,000 vehicles per day. This was then cross-checked 3 against the neighborhood traffic map to determine the likely traffic patterns. 4

Exhibit 2: Marketing Area Traffic Counts Spreadsheet 5

6 The maximum observed traffic was at N. Atlantic Avenue (highlighted in yellow) was 7 measured as 40,500 vehicles per day. The minimum observed traffic count was on 8 Ridgewood Avenue at Washington Avenue as 188 vehicles in 1998. The Astronaut 9 Boulevard (at State A1A) was measured at 32,000 vehicles per day (purple bands). The 10 site frontage should be oriented on AIA and Astronaut Boulevard and the expected traffic 11 is right in the senior housing “sweet spot” curve previously noted. 12

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Site Investment Incentive Entitlements Analysis 1 The proposed Project Site was analyzed by the Consultant in terms of certain federal and 2 state investment incentive entitlements. In order to undertake the analysis the proposed 3 Project Site’s census tract number had to be identified so it could be compared to 4 database entries provided by the Community Development Financial Institution’s Fund 5 (“CDFI” – note map exhibit below). The census tract number (120090686.00) is based 6 upon the compilation of the following codes: 7

State Code (numbered in alphabetical order): 12 8

County Code (also numbered in alphabetical order): 009 9

The Tract Code: 0686.00 10

Exhibit 3: Project Site Census Tract Map 11

12 The Consultant then ran the resulting census tract coded through the CDFI database to 13 find programs the tract would be qualified to participate in based upon location only. 14 These programs include the following: 15

New Markets Tax Credits: Not Qualified. 16

Bank Enterprise Awards: Not Qualified. 17

The next phase of the analysis was to determine if any type of Enterprise Zone, 18 Empowerment Zone or related credit and/or program would be supporting the proposed 19 Project. The Consultant reviewed the appropriate materials and interviewed Sarah 20 McGrady, an economic development expert with the City of Cocoa (the city “next door”) 21 and determined there is no Empowerment Zone or Enterprise Zone for Cape Canaveral. 22

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The Analysis, Scope of Work, Means, Methods & Data Sources 1

The goal of this Report is to provide an analysis of the potential demand for the 2 construction of new senior housing living units within the Cape Canaveral, Florida area 3 based upon consideration being afforded to the population demographic information of 4 the underlying marketing area and the expected impact of existing senior housing 5 properties in terms of lease-up potential, revenue price points and certain operating 6 expenses (the “Analysis”). The Analysis was undertaken pursuant to defined scope of 7 work with means, methods and data sources identified hereinbelow. 8

Scope of Work 9 Rainmaker Marketing Corporation was retained by the Client to perform a defined body 10 of work pertaining to the Client’s proposed new construction program of senior housing 11 (the “Scope of Work”). The Scope of Work was limited to those tasks set forth in the 12 consulting services agreement dated August 12, 2008 by and between Rainmaker 13 Marketing Corporation and Puerto Del Rio, LLC. The Scope of Work includes the 14 following tasking: 15

1. Obtaining demographic information that will be analyzed in terms of the proposed 16 Owner’s Program. 17

2. Obtaining property information pertaining to competing properties located within the 18 geographical PMA of the proposed Project Site and analyzing this information to 19 develop a more accurate profile of what must be included in the proposed Project in 20 terms of services, amenities, features, costs, operating programs and related data. 21

3. Creating an analysis of the net buildable demand for new senior housing facility 22 construction based upon the demographic information obtained from commercial data 23 vendors and the analysis of competing properties. 24

4. Prepare a final report (this document) providing all conclusions and opinions 25 pertaining to the emerging project’s profile, the sufficiency of which, would allow the 26 Client to undertake a financial feasibility analysis predicated upon the market 27 intelligence set forth in this document. 28

Analysis Means, Methods & Data Sources 29 For the purposes of conducting the market feasibility analysis the following data sources 30 were accessed: 31

1. Data Sources. The following data sources were utilized in the production of this 32 report: 33

1.1. Bureau of the Census (www.census.gov/ - demographic data) 34

1.2. Bureau of Labor Statistics (www.bls.gov/ - demographic data) 35

1.3. Elderweb (www.elderweb.com/ - facility listings) 36

1.4. Community Development Financial Institutions Fund (www.cdfifund.gov/ - 37 entitlements information, demographic data and census track mapping) 38

http://www.census.gov/�

http://www.bls.gov/�

http://www.elderweb.com/�

http://www.cdfifund.gov/�

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1.5. ESRI (www.ersi.com/ - demographic data) 1

1.6. One Senior Place (www.oneseniorplace.com/ - facility listings and information) 2

1.7. Florida Housing Data Clearinghouse (http://flhousingdata.shimberg.ufl.edu/ - 3 demographic data) 4

1.8. Google (www.google.com/ - mapping services, facility locations, information 5 and reference) 6

1.9. LookSmart (www.looksmart.com/ - information reference) 7

1.10. Florida Enterprise Zone (www.floridaenterprisezones.com – entitlement 8 information) 9

1.11. Ask.Com (www.ask.com/ - information reference) 10

1.12. SeniorHousingNet (www.seniorhousingnet.com/ - facility listings) 11

1.13. Claritas (www.claritas.com/ - demographic data) 12

1.14. State of Florida (www.fl.gov/ - facility listings, regulatory information) 13

1.15. Orlando Regional Realtor Association – Multiple Listing Services, Inc. 14 (www.orlrealtor.com – housing industry information) 15

1.16. City of Cape Canaveral (http://www.myflorida.com/cape/ - demographic 16 data) 17

1.17. Central & Southern Florida Alzheimer’s Association 18 (http://www.alz.org/cnfl/ ). 19

1.18. Senior Lifestyles (www.seniorlifestyles.com/ - facility listings) 20

1.19. Facilities – various senior housing facilities were contacted and surveyed. 21

2. Data Sets. The Consultant used Block Group aggregated cohort groupings obtained 22 from third-party data bank vendors in each instance. The various sub-set variables 23 are based upon: estimates for the Year 2007, forecasts for the Year 2013 and were 24 developed by the vendor(s) supplying the data for this Analysis. All estimates and 25 forecasts are based on the decennial census with updates using various demographics 26 reporting tools and models for subsequent years. This analysis included a 27 compendium of the following statistical elements: 28

2.1. Total 2000 Population Records by Age Group; and 29

2.2. 2008 Estimated Population Records by Age Group; and 30

2.3. 2013 Forecast of Population Records by Age Group; and 31

2.4. Total 2000 Housing Unit Records by Age Group; and 32

2.5. 2008 Estimated Housing Unit Records by Age Group; and 33

2.6. 2013 Forecast of Housing Unit Records by Age Group; and 34

2.7. Total 2000 Household Records by Age Group; and 35

http://www.ersi.com/�

http://www.oneseniorplace.com/�

http://flhousingdata.shimberg.ufl.edu/�

http://www.google.com/�

http://www.looksmart.com/�

http://www.floridaenterprisezones.com/�

http://www.ask.com/�

http://www.seniorhousingnet.com/�

http://www.claritas.com/�

http://www.fl.gov/�

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2.8. 2008 Estimated Household Records by Age Group; and 1

2.9. 2013 Forecast of Household Records by Age Group; and 2

2.10. 2000 Average Household Income Records by Age Group; and 3

2.11. 2008 Estimated Average Household Income Records by Age Group; and 4

2.12. 2013 Forecast of Average Household Income Records by Age Group; and 5

2.13. 2000 Median Households Income Records by Age Group; and 6

2.14. 2008 Estimated Median Household Income Records by Age Group; and 7

2.15. 2013 Forecast of Median Household Income Records by Age Group. 8

2.16. 2008 Estimated Household Net Worth by Age Group; and 9

2.17. 2008 Estimated Average Household Net Worth by Age Group; and 10

2.18. 2008 Estimated Average Household Disposable Income by Age Group; 11 and 12

2.19. 2008 Estimated Household Disposable Income by Age Group. 13

The unabridged version of this document includes an Appendix section with copies of 14 these data reports. 15

Analysis Methodologies Employed 16 For the purposes of this report, the analysis methodologies utilized included the 17 following: 18

1. Market Modeling. The market was modeled using standardized datasets supplied by 19 commercial vendors. These datasets include estimates for 2007/2008 and projections 20 for 2013 that were used as the beginning values and ending values and the interim 21 values were based upon a straight-line trend analysis approach where the intervening 22 year values are assumed to be based upon the formula interim year (i) equal end-year 23 value minus beginning year value divided by 5, and added to each successive year. 24

2. Demand Modeling. Each new construction demand model spreadsheet used the 25 following methodologies: 26

2.1.Universe of Records. This screen reduced the entire universe of population 27 records to those records that correspond to the likely age of the resident upon 28 admission that also have sufficient household incomes to theoretically support 29 residency in the given program. This issue is more fully discussed in the 30 corresponding demand model technical discussion. 31

2.2.Disability Screen. The initial pool of cohorts is then reduced to reflect the impact 32 of resident disability to undertake self-care activities, lifestyle activities or the 33 statistical likelihood the cohort will have a heavily dementing disorder (in the case 34 of dementia care programming). This issue is more fully discussed in the 35 corresponding demand model technical discussion. 36

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2.3.Adult Children. The next level reflects the impact of adult children within the 1 marketing area that have sufficient economic means to help support a frail elderly 2 family member in a facility within the marketing area. This issue is more fully 3 discussed in the corresponding demand model technical discussion. 4

2.4.Competition. This is the Consultant’s most important screen, as it reduces the 5 pool of cohorts based upon the assumption that all licensed units/beds in the 6 marketing area must first be filled to 100% operating capacity before any 7 allocation would be made available for a new construction project. This issue is 8 more fully discussed in the corresponding demand model technical discussion. 9

3. Compendium Calculations. Information pertaining to all qualified competing 10 facilities and used to create a median and average market profile concerning the 11 proposed Project. This information was provided by facility providers. 12

13

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The Demographics Analysis Population Demographics Indicators

Initial Analysis of New Construction Demand By Industry Sub-Group

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The Demographics Analysis, Initial Demand Analysis & Related 1 Matters 2

The Consultant undertook a multi-step analysis of the marketing area surrounding the 3 proposed Project Site (the “Demographics Analysis”). The Demographics Analysis 4 included a “baseline” analysis that attempts to paint a portrait of the overall health and 5 growth potentials for the geographical PMA and includes: 6

1. an analysis of population trends, household formation trends, family formation trends, 7 household income, household wealth and household disposable income trends; and 8

2. an analysis of housing market indicators, retail marketplace indicators, employment 9 indicators and health care services indicators and senior market indicators. 10

Once the initial baseline demographic trends have been reported, the next step was to 11 create demographic analysis of the senior market that included: 12

3. an analysis of the demand for senior housing new living unit construction at the entry-13 fee independent living facility level; and 14

4. an analysis of the demand for senior housing new living unit construction at the rental 15 independent living facility level; and 16

5. an analysis of the demand for senior housing new living unit construction at the rental 17 assisted living facility level; and 18

6. an analysis of the demand for senior housing new living unit construction at the rental 19 dementia care assisted living facility level. 20

The Marketing Area Baseline Demographics Analysis 21 The first step in the demographics analysis is to determine the basic trends that may have 22 an impact on the proposed Project’s future operations within the geographical primary 23 marketing area. This analysis is undertaken in terms of the following demographic 24 datasets: 25

Population Indicators 26

Households Indicators 27

Families Indicators 28

Household Incomes & Wealth Indicators 29

Housing Market Indicators 30

Senior Market Indicators 31

Each of these dataset reports and analyses are more fully described in the following sub-32 headings. 33

Population 34 The population of a given area is not typically static in nature. A given geographical 35 area’s population is either growing or shrinking. The direction of population growth is 36

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often an indicator of the overall health of a given market because in-migration happens 1 because there is something intrinsically attractive about a given area and markets shrink 2 (out-migration) because there is something fundamentally unattractive about a given area. 3 Furthermore, the proposed Project will have to have access to a pool of unskilled, semi-4 skilled and skilled labor in order to be successful. The growth of the population is 5 typically directly reflected in the growth of the labor pool. 6

Exhibit 4: Total Population By Age Group; 30-Minute Drive-Time PMA 7

8

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With respect to the general population demographics spreadsheets, the following 1 information provides an insight into the overall health of the marketing area: 2

1. 30-Minute Drive-Time Marketing Area Population Indicators. The population within 3 this marketing area was recorded as 234,038 for the decennial 2000 census, is 4


6

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estimated to be 271,387 for 2008 and 295,867 in 2013. The 1.74% annual growth 1 rate for the 2008 – 2013 forecast period suggests a healthy and continuing population 2 growth within the overall market area. 3


5

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2. 20-Minute Drive-Time Marketing Area Population Indicators. The population within 1 this marketing area was recorded as 130,140 for the decennial 2000 census, is 2 estimated to be 143,022 for 2008 and 153,436 in 2013. The 1.41% annual growth 3 rate for the 2008 – 2013 forecast period is not as strong as that measured at the 30-4 Minute Drive-Time bounded market. This growth rate is still indicative of continuing 5 growth in the market area. 6

3. 10-Minute Drive-Time Marketing Area Population Indicators. The population within 7 this marketing area was recorded as 36,549 for the decennial 2000 census, is 8 estimated to be 40,737 for 2008 and 43,695 in 2013. The 1.41% annual growth rate 9 for the 2008 – 2013 forecast period is the same as the 20-Minute Drive-Time bounded 10 market. 11

4. Population Aging. When it comes to the development of senior housing, the older the 12 population, the better for the market opportunity. Those values were reported as 13 follows: 14

4.1.30-Minute Drive-Time Area. The Median Population Age was reported as 41.3 15 years for the decennial 2000 census, growing to 45.1 years estimated for 2008 and 16 projected to continue to grow to 46.7 years by the end of 2013. In the opinion of 17 the Consultant that this trend favors the development of the proposed Project. 18

Exhibit 7: 2008 PMA Zip Code Population Density Analysis Thematic Map 19

20

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4.2.20-Minute Drive-Time Area. The Median Population Age was reported as 40.7 1 years for the decennial 2000 census, growing to 44.1 years estimated for 2008 and 2 projected to continue to grow to 45.6 years by the end of 2013. In the opinion of 3 the Consultant that this trend also favors the development of the proposed Project. 4

4.3.10-Minute Drive-Time Area. The Median Population Age was reported as 46.2 5 years for the decennial 2000 census, growing to 49.7 years estimated for 2008 and 6 projected to continue to grow to 51.2 years by the end of 2013. In the opinion of 7 the Consultant that this trend strongly favors the development of the proposed 8 Project. 9

Exhibit 8: 2008 Population Distribution By Age Group (30-Minute Drive-Time PMA) 10

2008 Population Distribution by Age: 30-Minute Drive-Time PMA

< 5 5.1% 5-19

16.9%

20-24 5.5%

25-34 9.7%

35-44 12.7%

45-54 16.1%

55-64 13.5%

65+ 20.5%


< 5 5.1% 5-19

16.9%

20-24 5.5%

25-34 9.7%

35-44 12.7%

45-54 16.1%

55-64 13.5%

65+ 20.5%

11 The next series of analyses pertains to the distribution of population by age groups. 12 Generally speaking, a senior housing development program may only be considered to be 13 viable in markets where the Total Age 65+ Population is equal to 10% of the total 14 population or more. The findings of the Consultant in this regard are reflected in the pie 15 chart exhibits (Note Exhibit 8 through Exhibit 10 – above and below): 16

5. 30-Minute Drive-Time Area. The estimated 2008 Age 65+ Population exceeds the 17 10% measure and provides solid confirmation of the potential market viability of 18 some type of senior housing development program (20.50% of Total 2008 Population 19 is estimated to be Age 65+). 20

6. 20-Minute Drive-Time Area. The estimated 2008 Age 65+ Population exceeds the 21 10% measure by a respectably wide margin and provides solid confirmation of the 22 potential market viability of some type of senior housing development program 23 (19.30% of Total 2008 Population is estimated to be Age 65+). 24

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7. 10-Minute Drive-Time Area. The estimated 2008 Age 65+ Population exceeds the 1 10% measure by a very wide margin and provides solid confirmation of the potential 2 market viability of some type of senior housing development program (26.50% of 3 Total 2008 Population is estimated to be Age 65+). 4

The Consultant’s conclusions regarding the initial population dataset analyses include: 5

8. Total 2008 Population is consistent with markets that have provided strong support 6 for senior housing development projects in the past. 7

9. Total Projected 2013 Population shows acceptable growth across the board and that is 8 consistent with markets that have provided strong support for senior housing 9 development projects in the past. 10



< 5 5.1% 5-19

16.8%

20-24 6.2%

25-34 10.3%

35-44 12.9%

45-54 16.3%

55-64 13.1%

65+ 19.3%


< 5 5.1% 5-19

16.8%

20-24 6.2%

25-34 10.3%

35-44 12.9%

45-54 16.3%

55-64 13.1%

65+ 19.3%

12 10. Population Density. The population density across Brevard County (note Exhibit 7, 13

above) is consistent with an expected concentration near the travel lanes out to the 14 coastal islands (including Merritt Island). 15

16


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2008 Population by Age: 10-Minute Drive-Time PMA

< 5 4.0% 5-19

12.8%20-24 4.8%

25-34 9.1%

35-44 11.6%45-54

16.4%

55-64 15.2%

65+ 26.1%

2008 Population by Age: 10-Minute Drive-Time PMA

< 5 4.0% 5-19

12.8%20-24 4.8%

25-34 9.1%

35-44 11.6%45-54

16.4%

55-64 15.2%

65+ 26.1%

2 3

Exhibit 11: Total County Resident Population: Brevard County, Florida 1990 - 2030 4

5 11. The countywide growth patterns are consistent with a marketing area that would be 6

expected to exhibit entrenched demand with facility occupancies hovering near full 7 capacity with waiting lists at newer and better-operated facilities at all levels (note 8 Exhibit 11, above). 9

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Households 1 Households provide the market analysis process with insights as to the prevalence of one-2 person and two-person households in the age groups that are most likely to require group 3 quarters housing such as is found in senior housing communities today. The smaller the 4 household size growth, the more likely the marketing area will be to support senior 5 housing new construction programs and projects. Ideally, the Average Household Size 6 should be less than 3.25 for the current year and contracting over the Forecast Period. 7 This would indicate that one-person and two-person households are the most prevalent 8 and those households are the ones (statistically speaking1) that are most likely to require 9 group quarters housing such as is found in senior housing projects. 10

The growth of the total amount of households within a given marketing area is also 11 indicative of a healthy, expanding market that is consistent with other markets that have 12 successfully supported new housing construction at the senior housing level. The Total 13 Households, Average Household Size and growth rates for each marketing area were 14 recorded as follows: 15

1. 30-Minute Drive-Time Bounded Marketing Area (note Exhibit 12, below). The Total 16 Year 2000 Households was reported as 97,089, while the estimated Total Year 2008 17 Households were reported as 113,428 and the projected Total Year 2013 Households 18 were reported as 124,343. The expected growth rate for new households projected 19 for the 2008 – 2013 forecast period is a healthy 1.85% per annum. The Year 2000 20 Average Household Size was recorded as 2.36, while the estimated Year 2008 21 Average Household Size was recorded as 2.35 and the projected Year 2013 Average 22 Household Size was recorded as 2.34. This is consistent with a market that 23 demonstrates a strong measure of support for senior housing development due to the 24 number of senior households. 25

Exhibit 12: Detailed Age Profile – Household Size Highlighted (30-Minute Drive-Time 26 PMA) 27

28 2. 20-Minute Drive-Time Bounded Marketing Area (note Exhibit 13, below). The Total 29

Year 2000 Households was reported as 54,542, while the estimated Total Year 2008 30 Households were reported as 60,477 and the projected Total Year 2013 Households 31 were reported as 65,272. The expected growth rate for new households projected for 32 the 2008 – 2013 forecast period is 1.54% per annum. The Year 2000 Average 33

1 Health Data On Older Americans: 1992, CDC.

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Household Size was recorded as 2.31, while the estimated Year 2008 Average 1 Household Size was recorded as 2.30 and the projected Year 2013 Average 2 Household Size was recorded as 2.29. This finding is also consistent with a market 3 that demonstrates a strong measure of support for senior housing development due to 4 the number of senior households. 5


8 10-Minute Drive-Time Bounded Marketing Area (note Exhibit 14, below). The 9

Total Year 2000 Households was reported as 17,518, while the estimated Total 10 Year 2008 Households were reported as 19,747 and the projected Total Year 2013 11 Households were reported as 21,321. The expected growth rate for new households 12 projected for the 2008 – 2013 forecast period is 1.55% per annum. The Year 2000 13 Average Household Size was recorded as 2.06, while the estimated Year 2008 14 Average Household Size was recorded as 2.04 and the projected Year 2013 15 Average Household Size was recorded as 2.03. This is consistent with a market 16 that demonstrates a strong measure of support for senior housing development due 17 to the number of senior households, but would be considered a small market 18 population due to the geographical limitations of the barrier islands. 19


22 The Consultant’s analysis of the household demographic data supports the following 23 conclusions: 24

3. Household Formation/Growth. All three (3) marketing area geographies are expected 25 to continue to grow over the Forecast Period. This is a solid harbinger of market 26

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support and the Consultant expects the new construction demand analysis (see 1 discussion starting on page 67). 2

4. Average Household Size. All three (3) marketing area geographies are projected to 3 experience a continued shrinkage in the Average Household Size. This finding is 4 consistent with a marketing area that is dominated by seniors and this hypothesis is 5 supported by the findings relative to the average age of the population and 6 concentration of seniors aged 65 and older (see discussion above under the 7 “Population” sub-heading). 8

Families 9 Households are made up of “Family Households” and “Non-Family Households”. 10 Family Households are those households where all of the members are related by blood 11 or marriage. Non-Family Households are households where there is only one (1) 12 respondent or the household members are not related by blood or marriage. One (1) of 13 the demographic datasets of interest to senior housing developers (and therefore; 14 consultants such as the Consultant) is the number of non-family households where there 15 is a single householder aged 65 or older because, statistically, these households are at the 16 highest relative risk for requiring group quarters housing such as would be found in a 17 senior housing community. 18

The Consultant’s analysis is founded on the assumption that the household family 19 composition that was surveyed in the Year 2000 decennial census will remain unchanged 20 over the 2008 – 2013 Forecast Period. This is an industry-wide assumption (i.e.: an 21 industry benchmark) that is frequently used as the basis for creating a demand analysis 22 for senior housing new construction programs. The Consultant’s actual experience has 23 shown that these estimates and projections can vary quite widely, rendering their use 24 rather limited – an anecdotal analysis that would not be the basis for a final market 25 assessment as this benchmark frequently overstates the demand. 26

Exhibit 15: Marketing Area Family Demographics Spreadsheet 27

28 The most interesting demographic variables are those pertaining to the Average Family 29 Size. By restricting the analysis to Family Households, this approach, more or less, 30 overstates the true Average Family Size because one-person households are actually not 31 classified as family households. 32

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Exhibit 16: Family Households Analysis – Year 200 Decennial Census (30-Minute 1 Drive-Time PMA) 2

3 Of equal importance is the analysis of household living status where the status of the 4 householder is classified as “Householder Living Alone” for those Households Aged 65+ 5 as these households are the most likely to require group quarters housing such as is 6 commonly found in senior housing projects. The challenge here is that actual 7 measurement of household composition only occurs in the decennial census. This means 8 the analyst must assume these conditions will not experience any great change over the 9 course of time. In this particular case, the measurement was almost ten years ago. As a 10 result of this realization, the Consultant uses these measurements as part of the anecdotal 11 market analysis approach that is consistent with measuring the results of the new 12 construction demand analysis. 13


16

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More specifically, the demographic datasets analyzed by the Consultant included the 1 following 2

1. 30-Minute Drive-Time PMA. There were approximately 3,172 Households Aged 3 65+ where the householder was classified as Male, Living Alone by the Year 2000 4 decennial census and 7,500 Households Aged 65+ were classified as Female Living 5 Alone, by the same Year 2000 decennial census (note Exhibit 16, above). 6


9 2. 20-Minute Drive-Time PMA. There were approximately 1,932 Households Aged 10

65+ where the householder was classified as Male, Living Alone by the Year 2000 11 decennial census and 4,246 Households Aged 65+ were classified as Female Living 12 Alone, by the same Year 2000 decennial census (note Exhibit 17, above). 13

3. 10-Minute Drive-Time PMA. There were approximately 767 Households Aged 65+ 14 where the householder was classified as Male, Living Alone by the Year 2000 15 decennial census and 1,608 Households Aged 65+ were classified as Female Living 16 Alone, by the same Year 2000 decennial census (note Exhibit 18, above). 17

Once the raw numbers are established, the next step is to analyze them in terms of 18 creating a demand model by which the new senior housing living unit construction might 19 be measured, to wit: 20

1. First, extrapolate the total number of households surveyed in the Year 2000 decennial 21 census. For the 30-Minute Drive-Time PMA the Total Households Aged 65+ was 22 reported as 44,282, while the Year 2000 Total Households Aged 65+ for the 20-23 Minute Drive-Time Area PMA was surveyed to be 23,269 households. Finally, the 24 Year 2000 decennial census found the 10-Minute Drive-Time PMA Total Households 25 Aged 65+ to be 8,770 households. 26

2. Next, compute the sum of Total Households Living Alone (both sexes). For the 30-27 Minute Drive-Time PMA the Year 2000 Total Households Living Alone (non-family 28

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households) was surveyed to be 10,672 (24.10% of all Year 2000 Households Aged 1 65+), while the 20-Minute Drive-Time Year 2000 Total Households Living Alone 2 was surveyed to be 6,177 (26.55% of all Year 2000 Households Aged 65+) and the 3 10-Minute Drive-Time Year 2000 Total Households Living Alone was surveyed to be 4 2,375 (27.08% of all Year 2000 Households Aged 65+). 5

Exhibit 19: Year 2000 Decennial Census of Household Incomes By Age (30-Minute 6 Drive-Time PMA 7

8 3. Next, compute the Total Age 65+ Households that are also income qualified for 9

residence in a senior housing community because senior housing is a private pay 10 business where – by and large – consumers pay the costs (and not insurers, including 11 the state and federal governments). For the purposes of completing an initial 12 analysis, the minimum qualifying income is assumed to be $50,000 per annum. The 13 Year 2000 Total Households Aged 65+ with Household Incomes of $50,000+ was 14 8,847 (31.36% of all Aged 65+ Households) for the 30-Minute Drive-Time PMA, 15 6,592 (43.70% of all Aged 65+ Households) for the 20-Minute Drive-Time PMA and 16 1,778 (31.49% of all Aged 65+ Households) for the 10-Minute Drive-Time PMA. 17

4. Next, the resulting quotients are multiplied by Householder’s Living Alone quotients 18 to derive a total that is considered to be the demand for new senior housing 19 construction: 20

4.1.30-Minute Drive-Time PMA: 31.36% of households multiplied by 24.10% of 21 households (income qualified multiplied by living status qualified) equals 7.55%. 22

4.2.20-Minute Drive-Time PMA: 43.70% of households multiplied by 26.55% of 23 households equals 11.60%. 24

4.3.10-Minute Drive-Time PMA: 31.49% of households multiplied by 27.08% of 25 households equals 8.52%. 26

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3 5. Next, take the results and project those over the Year 2008 estimated datasets and 4

Year 2013 projected datasets to determine the total number of qualified households in 5 the housing demand pool/cohort grouping: 6

5.1.30-Minute Drive-Time PMA (note Exhibit 22 on page 41): 34,712 households 7 multiplied by 7.55% equals 2,621 qualified households. 8

5.2.20-Minute Drive-Time PMA (note Exhibit 23 on page 42): 17,538 households 9 multiplied by 11.06% equals 2,034 qualified households. 10

5.3.10-Minute Drive-Time PMA: (note Exhibit 24 on page 43): 6,767 households 11 multiplied by 8.52% equals 576 qualified households. 12

6. Next, reduce the pool of qualified households to reflect the disability rates pertaining 13 to the various types of housing. These rates provide a means of further defining the 14 market in terms of those with the most urgent need for the various types/classes of 15 senior housing. These disability rates (20.7% average for ILF, 15.7% average for 16 ALCF and 18.4% for Alzheimer’s/Dementia ALCF housing): 17

6.1.30-Minute Drive-Time PMA: gross demand of 542 units for ILF, 411 units for 18 ALCF and 430 units for ALZ/ALCF. 19



7. Finally, reduce the qualified pool of households to those that can be reasonably 24 expected to be captured by a fully-capitalized and professionally managed senior 25 housing project. The penetration rate should not exceed the average cold-call closing 26 ratio of marketing representatives in the industry – an amount that can be charitably 27

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said to not exceed 10%. Accordingly, the net demand for new senior housing using 1 this anecdotal methodology was: 2



7.3.10-Minute Drive-Time PMA: gross demand of 12 units for ILF, 9 units for ALCF 7 and 10 units for ALZ/ALCF. 8


11 The Consultant’s conclusions regarding the impact of Family and Non-Family 12 Households on the demand for new construction senior housing inventory were: 13

8. Family growth trends appear to be favorable for the development of new senior 14 housing development programs. 15

9. There is anecdotal evidence suggesting demand does in fact exist to support the 16 construction of new senior housing facility living units at the ILF, ALCF and 17 ALZ/ALCF levels. 18

Household Income , Wealth & Disposable Incomes 19 Household income – including disposable income and household wealth – are of critical 20 importance in terms of understanding the potential depth of entrenched demand a given 21 senior housing development project may in fact be able to command to its own 22 advantage. Household incomes are important because the fuel that powers the senior 23 housing industry is funding from the consumers – what are called ‘private payors’. In the 24 last 15 years the senior housing industry has bared witness to a gradual increase in the 25 number of seniors entering the senior housing/long-term health care continuum who have 26 private insurance that provides a defined benefit, allowing seniors to maintain a portion 27

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of their estate for their own benefit. Having said that, private family funds make up the 1 vast majority of payors in the senior housing system with Medicare and Medicaid only 2 really impacting the long-term care side of the business (including Intermediate Care 3 Facilities {“ICFs”}, Skilled Nursing Facilities {“SNFs”} and hospitals). The senior 4 housing industry is fueled – at least in the near-term window – by a private-payor client 5 base that needs to be clearly understood in terms of potential market support. 6

In addition, a broad analysis of the overall wealth of the proposed Project Site’s PMA is 7 called for to identify any unusual trends or potential areas of alarm, the sufficiency of 8 which would result in an immediate recommendation to abandon the market. The 9 Consultant’s analysis of the household income data that most directly affects this Report 10 included an analysis of senior households and adult children households, to wit: 11

1. Current Senior Household Payors. Seniors aged 65 and older that would be qualified 12 (theoretically) for residency must have sufficient income to offset the costs of 13 residency. Initially, the assumptions are broad-based because the rest of the analysis 14 is dependent, in part, upon the findings of the field investigation which will not be 15 undertaken unless the initial demand analysis (see discussion starting on page 67) 16 shows enough entrenched demand so as to warrant additional investigation of the 17 market opportunity. The analysis of the current payors is important in order to 18 determine if the property will in fact have the opportunity to lease-up all available 19 living units/beds. 20

2. Adult Children Households. Adult children (households Aged 45 to 64) frequently 21 make the decision regarding placement of an elder, especially when the placement of 22 the elder necessitates an expenditure on the part of these adult children households. 23 Furthermore, the adult children households represent the next crop of residents to be 24 harvested from a given field (i.e.: marketing area), so the relative income levels and 25 wealth characteristics must be given due consideration and weighting in the demand 26 model. 27

The Consultant’s attempt at answering these queries includes an analysis of the following 28 demographic elements: 29

3. Adult Children Household Income (current year and forecasted year). This would 30 include those Households Aged 45 to 64 with incomes of at least $100,000 per annum 31 for rental housing programs and household incomes of $150,000 or more for entry-32 fee housing programs. These are further divided into Households Aged 45-54 and 33 Households Aged 55-64 – both of which with incomes above $100,000 with breaks 34 for the $150,000 income level reporting threshold. 35

4. Senior Household Incomes (current and forecasted year). This would include those 36 Households Aged 65 and older aggregated in the 65-69, 70-74, 75-79, 80-84 and 85+ 37 households for the various housing demand models. 38

The analysis resulted in the following findings: 39

5. Household Incomes. Household Incomes demonstrate a market that has strong 40 growth characteristics that are consistent with other markets where senior housing has 41

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been developed and leased-up to full capacity operations. The key household income 1 demographics include: 2

5.1.Adult Children Households – With Household Incomes of $100,000 or more 3 include: 4

5.1.1. 30-Minute Drive-Time PMA Cohorts: 5

5.1.1.1. Households Aged 45-54. Households Aged 45-54 with Incomes of 6 $100,000+ reported 2,974 households at the Year 2000 decennial 7 census, are estimated to be 6,226 for 2008 and are forecasted to be 8 9,293 for 2013. The 2013 forecast suggests the number of qualifying 9 households is expected to grow at an average annual rate of 613 10 households for each intervening year. 11


Exhibit 22: 2008 Household Income by Age of Householder; 30-Minute Drive-Time 18 PMA 19

20 5.1.2. 20-Minute Drive-Time PMA Cohorts: 21


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Exhibit 23: 2008 Household Income By Age of Householder; 20-Minute Drive-Time 7 PMA 8

9 5.1.3. 10-Minute Drive-Time PMA Cohorts: 10

5.1.3.1. Households Aged 45-54. Households Aged 45-54 with Incomes of 11 $100,000+ reported 557 households at the Year 2000 decennial census, 12 are estimated to be 1,106 for 2008 and are forecasted to be 1,530 for 13 2013. The 2013 forecast suggests the number of qualifying households 14 is expected to grow at an average annual rate of 85 households for each 15 intervening year. 16

5.1.3.2. Households Aged 55-64. Households Aged 55-64 with Incomes of 17 $100,000+ reported 518 households at the Year 2000 decennial census, 18 are estimated to be 842 for 2008 and are forecasted to be 1,703 for 19 2013. The 2013 forecast suggests the number of qualifying households 20 is expected to grow at an average annual rate of 128 households for 21 each intervening year. 22

5.2.Adult Children Households – With Household Incomes of $150,000 or more 23 include (entry-fee housing computations): 24


5.2.1.1. Households Aged 45-54. Households Aged 45-54 with Incomes of 26 $150,000+ reported 806 households at the Year 2000 decennial census, 27

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are estimated to be 1,709 for 2008 and are forecasted to be 2,955 for 1 2013. The 2013 forecast suggests the number of qualifying households 2 is expected to grow at an average annual rate of 249 households for 3 each intervening year. 4


7 5.2.1.2. Households Aged 55-64. Households Aged 55-64 with Incomes of 8

$150,000+ reported 778 households at the Year 2000 decennial census, 9 are estimated to be 1,793 for 2008 and are forecasted to be 3,375 for 10 2013. The 2013 forecast suggests the number of qualifying households 11 is expected to grow at an average annual rate of 316 households for 12 each intervening year. 13





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5.2.3.1. Households Aged 45-54. Households Aged 45-54 with Incomes of 1 $150,000+ reported 154 households at the Year 2000 decennial census, 2 are estimated to be 312 for 2008 and are forecasted to be 521 for 2013. 3 The 2013 forecast suggests the number of qualifying households is 4 expected to grow at an average annual rate of 42 households for each 5 intervening year. 6

5.2.3.2. Households Aged 55-64. Households Aged 55-64 with Incomes of 7 $150,000+ reported 185 households at the Year 2000 decennial census, 8 are estimated to be 312 for 2008 and are forecasted to be 700 for 2013. 9 The 2013 forecast suggests the number of qualifying households is 10 expected to grow at an average annual rate of 58 households for each 11 intervening year. 12

5.3.Senior Households – the building blocks of the various demand model analyses 13 are aggregated in different groups. Senior Households Aged 65+ with Household 14 Incomes of $50,000 or more include: 15

5.3.1. 30-Minute Drive-Time PMA Senior Household Cohorts w/Incomes of 16 $50,000+: 17

5.3.1.1. Households Aged 65-69. Households Aged 65-69 with Incomes of 18 $50,000+ are estimated to be 4,518 for 2008 and are forecasted to be 19 6,620 for 2013. The 2013 forecast suggests the number of qualifying 20 households is expected to grow at an average annual rate of 420 21 households for each intervening year. 22



$50,000+ are estimated to be 3,919 for 2008 and are forecasted to be 27 5,169 for 2013. The 2013 forecast suggests the number of qualifying 28

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households is expected to grow at an average annual rate of 250 1 households for each intervening year. 2



5.3.1.5. Households Aged 80+. Households Aged 80+ with Incomes of 13 $50,000+ are estimated to be 4,470 for 2008 and are forecasted to be 14 6,979 for 2013. The 2013 forecast suggests the number of qualifying 15 households is expected to grow at an average annual rate of 502 16 households for each intervening year. 17



25 5.3.2. 20-Minute Drive-Time PMA Senior Household Cohorts w/Incomes of 26

$50,000+: 27

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23 5.3.2.5. Households Aged 80+. Households Aged 80+ with Incomes of 24

$50,000+ are estimated to be 2,003 for 2008 and are forecasted to be 25 3,175 for 2013. The 2013 forecast suggests the number of qualifying 26 households is expected to grow at an average annual rate of 234 27 households for each intervening year. 28

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Exhibit 28: 2008 Median Household Income By Zip Code Thematic Map of PMA 6

7 5.3.3. 10-Minute Drive-Time PMA Senior Household Cohorts w/Incomes of 8

$50,000+: 9

5.3.3.1. Households Aged 65-69. Households Aged 65-69 with Incomes of 10 $50,000+ are estimated to be 824 for 2008 and are forecasted to be 11 1,122 for 2013. The 2013 forecast suggests the number of qualifying 12 households is expected to grow at an average annual rate of 60 13 households for each intervening year. 14

5.3.3.2. Households Aged 70-74. Households Aged 55-64 with Incomes of 15 $50,000+ are estimated to be 728 for 2008 and are forecasted to be 898 16

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for 2013. The 2013 forecast suggests the number of qualifying 1 households is expected to grow at an average annual rate of 34 2 households for each intervening year. 3

Exhibit 29: 2013 Projected Median Household Income by Zip Code Thematic Map of 4 PMA 5


$50,000+ are estimated to be 613 for 2008 and are forecasted to be 752 8 for 2013. The 2013 forecast suggests the number of qualifying 9 households is expected to grow at an average annual rate of 28 10 households for each intervening year. 11


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5.3.3.5. Households Aged 80+. Households Aged 80+ with Incomes of 1 $50,000+ are estimated to be 939 for 2008 and are forecasted to be 2 1,429 for 2013. The 2013 forecast suggests the number of qualifying 3 households is expected to grow at an average annual rate of 98 4 households for each intervening year. 5


The Consultant’s conclusion is that sufficient numbers exist within the PMA of the 11 proposed Project Site to warrant additional analysis. 12

6. PMA Household Income Distribution. The next area of analysis is on the distribution 13 of incomes in the area for the purposes of determining the relative wealth of the 14 overall area in which the proposed Project’s operations and marketing are expected to 15 generate no les than 75% of its ongoing operating revenues. The Median Household 16 Income is a handy barometer of the relative wealth of the area. The analysis focuses 17 on tracking growth patterns of the Median Household Income on a zip code basis 18 with the geographical marketing area boundaries overlaid on the map. As shown in 19 Exhibit 28 (page 47) and Exhibit 29 (above), the Median Household Income spread in 20 the area is expected to increase dramatically over the Forecast Period, providing 21 additional anecdotal evidence supporting the development of senior housing within 22 the 30-Minute Drive-Time PMA. 23

Exhibit 30: Household Net Worth Pie Chart: 30-Minute Drive-Time PMA 24

Chart Presentation of Estimated Household Net Worth: 30-Minute Drive-Time Marketing Area PMA

21,919, 20%

7,636, 7%

4,679, 4%

6,171, 5%

6,190, 5%

10,012, 9%14,173, 12%

20,749, 19%

14,058, 12%

7,841, 7%

< $15,000 $15,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999

$100,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 +

Chart Presentation of Estimated Household Net Worth: 30-Minute Drive-Time Marketing Area PMA

21,919, 20%

7,636, 7%

4,679, 4%

6,171, 5%

6,190, 5%

10,012, 9%14,173, 12%

20,749, 19%

14,058, 12%

7,841, 7%

< $15,000 $15,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999

$100,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 + 25

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7. Household Net Worth. The distribution of net economic resources controlled by 1 households within the respective geographical catchment areas is another point of 2 anecdotal evidence that is used to determine the viability of a given marketing area. 3 The key demographics include: 4

7.1.Household Net Worth: 30-Minute Drive-Time PMA – a total of 31% of 5 households have a net worth exceeding $250,000, with almost 20% of households 6 reporting a net worth of greater than $500,000 (note Exhibit 30, above). 7

7.2.Household Net Worth: 20-Minute Drive-Time PMA – a total of 31% of 8 households have a net worth exceeding $250,000, with approximately 15% of 9 households reporting a net worth of greater than $500,000 ( note Exhibit 31 on 10 page 50). 11

7.3.Household Net Worth: 10-Minute Drive-Time PMA – a total of 38% of 12 households have a net worth exceeding $250,000, with approximately 20% of 13 households reporting a net worth of greater than $500,000 (note Exhibit 32 on 14 page 51). 15

The Consultant believes these findings provide anecdotal evidence of economic 16 resources sufficient to support the development and ongoing operations of a new 17 senior housing program. 18


Chart Presentation of Household Net Worth: 20-Minute Drive-Time PMA

14,892, 25%

4,853, 8%

2,822, 5%

3,455, 6%3,299, 5%5,010, 8%

6,975, 12%

9,673, 16%

6,178, 10%

3,320, 5%

< $15,000 $15,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999

$100,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 +


14,892, 25%

4,853, 8%

2,822, 5%

3,455, 6%3,299, 5%5,010, 8%

6,975, 12%

9,673, 16%

6,178, 10%

3,320, 5%

< $15,000 $15,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999

$100,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 + 20

8. Disposable Income. At the core of the discussion and analysis is the ability to pay for 21 room and board, health care and maintenance of the senior’s lifestyle and daily living 22 activities. Disposable Income measures the after-tax financial resources of 23

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households within a given geographical marketing area on a current year estimation 1 basis. The key findings include: 2

8.1.30-Minute Drive-Time PMA was measured in terms of the Household Disposable 3 Income for Adult Children and Senior Households and provide the following data 4 points: 5

8.1.1. Adult Children Households were estimated to have 7,648 Current Year 6 (2008) Households with Disposable Incomes above $100,000. This level of 7 income accumulation provides anecdotal evidence of support for new senior 8 housing living unit programs over the Forecast Period and beyond. The 9 Median Household Disposable Income registered values in the mid-$50K 10 range for both the 45-54 and 55-64 age group household classes. The 11 Average Household Disposable Incomes were estimated in the high-$60Ks 12 range. Both levels provide additional anecdotal evidence of entrenched 13 support for new senior construction programs. 14



4,680, 23%

1,415, 7%

767, 4%

968, 5%

986, 5%1,357, 7%

2,135, 11%

3,497, 18%

2,544, 13%

1,397, 7%

< $15,000 $15,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999

$100,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 +


4,680, 23%

1,415, 7%

767, 4%

968, 5%

986, 5%1,357, 7%

2,135, 11%

3,497, 18%

2,544, 13%

1,397, 7%

< $15,000 $15,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999

$100,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 +

16 8.1.2. Current Year (2008) Senior Household Disposable Income demographics 17

showed 6,565 Households Aged 65+ having incomes of $75,000 or more, 18 while 3,333 Households Aged 75+ are estimated to have disposable 19 household incomes of $75,000 or more. The Median Household Income for 20 Households Aged 65-74 was estimated at $40,347, while the Average 21 Household Income for Households Aged 65-74 was estimated at $56,183. 22 The Median Household Income for seniors aged 75+ was estimated at 23 $36,359, while the Average Household Income for seniors aged 75+ was 24

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estimated at $51,094. The Average Household Income values provide a 1 strong indication of underlying market support at (or near) the levels 2 necessary to support residency at a private pay, market rate senior housing 3 facility. 4


8.2.1. Adult Children Households were estimated to have 3,429 Current Year 8 (2008) Households with Disposable Incomes above $100,000. As with the 9 30-Minute Drive-Time PMA, these values measured at the 20-Mintue Drive-10 Time PMA provide strong anecdotal evidence. The Median Household 11 Disposable Income registered values in the high-$40K to low-$50K range 12 for both the 45-54 and 55-64 age group household classes. The Average 13 Household Disposable Incomes were estimated in the high-$60Ks range. 14 Both levels provide additional anecdotal evidence of entrenched support for 15 new senior construction programs. 16

Exhibit 33: Disposable Income by Age of Householder (30-Minute Drive-Time PMA) 17

18 8.2.2. Current Year (2008) Senior Household Disposable Income demographics 19

showed 2,819 Households Aged 65+ having incomes of $75,000 or more, 20 while 1,426 Households Aged 75+ were estimated to have disposable 21 household incomes of $75,000 or more on a Current Year (2008) basis. The 22 Median Household Income for Households Aged 65-74 was estimated at 23 $36,503, while the Average Household Income for Households Aged 65-74 24 was estimated at $50,712. The Median Household Income for seniors aged 25 75+ was estimated at $32,572, while the Average Household Income for 26 seniors aged 75+ was estimated at $47,080. The Average Household 27 Income values provide an indication of the underlying market support at (or 28 near) the levels necessary to support residency at a private pay, market rate 29

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senior housing facility that is almost on par with the larger 30-Minute Drive-1 Time PMA. 2


8.3.1. Adult Children Households were estimated to have 1,442 Current Year 6 (2008) Households with Disposable Incomes above $100,000. The 7 Consultant believes this level of market support is consistent with other 8 senior housing markets where larger senior housing projects (i.e.: CCRCs) 9 were able to command continuing market support. The Median Household 10 Disposable Income registered values in the mid-$50K range for both the 45-11 54 and 55-64 age group household classes. The Average Household 12 Disposable Incomes were estimated in the high-$60Ks range, crossing into 13 the low-$70Ks range. These demographic points suggest the immediate 14 neighborhood surrounding the proposed Project Site is a high-income area 15 and high-income areas are where senior housing developers would be 16 expected to generate strong sales revenues as seniors seek comfort and 17 safety that larger incomes can command. 18

8.3.2. Current Year (2008) Senior Household Disposable Income demographics 19 showed 1,185 Households Aged 65+ having incomes of $75,000 or more, 20 while 586 Households Aged 75+ are estimated to have disposable household 21 incomes of $75,000 or more. The Median Household Income for 22 Households Aged 65-74 was estimated at $39,638, while the Average 23 Household Income for Households Aged 65-74 was estimated at $54,314. 24 The Median Household Income for seniors aged 75+ was estimated at 25 $35,793, while the Average Household Income for seniors aged 75+ was 26 estimated at $48,830. 27


29

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In summary, the findings of the Consultant relative to household income, disposable 1 income and net worth were: 2

9. Household Income Findings. Senior households exhibit significant evidence of 3 having sufficient economic resources to support residency in the proposed Project. 4 Adult Children Household Incomes also provided evidence of underlying long-term 5 market support for a new construction program. 6


8 10. Household Net Worth Findings. The measurements of Household Net Worth at the 9

Adult Children and Senior Household levels are consistent with those findings 10 pertaining to other markets that have (historically) demonstrated strong market 11 support for new housing construction and the senior housing level. 12

Housing Market Indicators 13 The most difficult indicators to judge are the housing market indicators. This is due to 14 the current housing market crisis that has spawned a host of market failures. Markets that 15 were heretofore thought to be bulletproof when it came to downturns are now 16 experiencing contractions in both sales and the median sales price. One of these markets 17 is the Florida Gold Coast; the market where this proposed Project is slated to be built. 18 Having said that, the Consultant’s review must provide some measure of a forecast and 19 base it upon such evidence as can be collected and reasonably verified. 20

Of all the demographic information (indicators) reviewed by the Consultant, the Housing 21 Market Indicators were the indicators that are the cause of the greatest level of concern as 22 this may point to a confidence issue in the market. Consumer confidence plays a large 23 role in the buying decision-making process on a both a broad economic basis, as well as 24 having a telling role in the senior housing marketplace. 25

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Exhibit 36: Single-Family Housing Sales By Year: Brevard & Indian River, Florida 1 Counties 2

3 The Housing Market Indicator’s analysis focused on the following data elements: 4

1. Single-Family Housing Sales. A historical analysis of single-family housing unit 5 sales within the PMA (note Exhibit 36, above). Single-Family Housing Sales posted 6 consistent gains in the earlier part of this decade, but the market has steadily 7 deteriorated (note the sales over the past few years). 8

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Exhibit 37: Condominium Housing Sales By Year: Brevard & Indian River, Florida 1 Counties 2

3 2. Condominium Housing Sales. As with the single-family housing sales, the same 4

information was collected pertaining to condominium housing sales (note Exhibit 37, 5 above). 6

3. Single-Family Housing Sales Prices. Data on nominal and real housing sales prices 7 was collected for the single-family housing market in the Brevard and Indian River 8 Counties. The findings of this data shows a slight slippage in the sales prices in 2006 9

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that would be expected to continue to trend downward over the 2007 to 2009 market 1 window. Furthermore, housing sales price data provides an indication of the potential 2 underlying market support for pricing entry-fee senior housing. The resident senior 3 population is expected to have a considerable amount of wealth in the form of equity 4 in their house and these funds form the basis of residency for many seniors seeking an 5 entry-fee senior housing program experience. Accordingly, the pricing expectations 6 would be predicated upon an average entry-fee price to be in the range of plus or 7 minus 15% of the average single-family housing sale price for the marketing area. 8

Exhibit 38: Nominal & Real (2007) Single-Family Housing Sale Prices; Brevard & 9 Indian River, Florida Counties 10

11 4. Condominium Housing Sales Prices. Data on nominal and real housing sales prices 12

was collected for the condominium housing market in the Brevard and Indian River 13 Counties (note Exhibit 39, below). The findings of this dataset show no slippage in 14 pricing for condominium units in the Brevard market while the Indian River County 15 market showed slight declines in value. As with the single-family housing based 16 entry-fee analysis, the condominium sales price also provides an indication as to the 17

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support for this segment of the senior housing new construction marketplace. The 1 findings in this area show that the real price of housing (inflation adjusted) in the 2 condominium marketplace for Brevard County has continued to increase while the 3 condominium marketplace for Indian River County has started to contract. The 4 Consultant’s expectation is for these values to fall over the near-term (next 15 to 18 5 month period) window until the national economy recovers and the local housing 6 market recovers. 7

Exhibit 39: Nominal & Real (2007) Condominium Housing Sale Prices; Brevard & 8 Indian River, Florida Counties 9

10 5. Median Single-Family Housing Sales Prices. The Median Housing Sales Price also 11

provides anecdotal evidence as to where the “sweet spot” exists in the housing 12 market. The Median Sales Price data for Brevard and Indian River Counties shows 13 very strong growth for Brevard County and Indian River County over the course of 14 the 2000 to 2006 reporting periods (housing prices almost doubling in this reporting 15 period – note Exhibit 40, below). The latest reporting period data suggests the 16 expectation (given the current market conditions on a national basis vis-à-vis housing 17 credit markets contractions) would be for a retrenchment of single-family housing 18 sales prices over the same 12 to 15 month near-term window before momentum can 19 be reasonably expected to rebound. Single-family housing median price was reported 20

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as $224,868 for Brevard County and $239,546 for Indian River County for 2006; 1 versus $118,622 and $133,659 for Brevard and Indian River Counties, respectively in 2 2000. These marketing areas show intrinsic long-term market support stretching back 3 to 1990 and would be expected to continue once the sub-prime crisis abates and 4 housing sales return to what would have been considered to be “normal levels”. 5

6. Median Condominium Housing Sales Prices. The Median Condominium Housing 6 Sales Prices for Brevard County and Indian River County were recorded at $188,477 7 (Brevard) and $205,298 (Indian River – note Exhibit 41 on page 60). As with the 8 Single-Family Median Housing Sales Prices, the Median Condominium Housing 9 Sales Prices have almost doubled since the Year 2000 decennial census with $99,647 10 and $119,099 for Brevard and Indian River Counties, respectively2. 11

Exhibit 40: Median Sale Price History of Single-Family Homes – Nominal & Real 12 Prices for Brevard & Indian River, Florida Counties 13

14 7. New Construction Housing Values Analysis. The final leg in the housing value 15

determination matrix pertains to the assessed housing values provided by the 16 respective counties for new construction sales. These measurements include the 17

2 - Note Exhibit 97 and Exhibit 98 provide additional ancillary information pertaining to housing values by year starting on page 162 of the Appendix.

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Mean (Average) Assessed Housing Values, the Median Assessed Housing Values, the 1 Mean (Average) Unadjusted Housing Values and the Median Unadjusted Housing 2 Values to wit: 3

7.1.Mean Assessed Housing Values of $144,803 and $230,550 were recorded for 4 Brevard and Indian River Counties (respectively) in 2006, while Mean Assessed 5 Housing Values of $159,961 and $222,055 were recorded for condominium 6 housing units in 2006 for Brevard and Indian River Counties, respectively (see 7 Exhibit 42, below. 8

7.2.Median Assessed Housing Values of $116,240 and $129,000 were recorded for 9 Brevard and Indian River Counties (respectively) in 2006, while Median Assessed 10 Housing Values of $116,200 and $140,250 were recorded for condominium 11 housing units in 2006 for Brevard and Indian River Counties, respectively (see 12 Exhibit 43, below). 13

Exhibit 41: Median Sale Price History of Condominiums – Nominal & Real Prices for 14 Brevard & Indian River, Florida Counties 15

16

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7.3.Mean Unadjusted Housing Values of $223,054 and $306,874 were recorded for 1 Brevard and Indian River Counties (respectively) in 2006, while Mean 2 Unadjusted Housing Values of $195,337 and $258,106 were recorded for 3 condominium housing units in 2006 for Brevard and Indian River Counties, 4 respectively (see Exhibit 44, below). 5

Exhibit 42: Mean Assessed Value of Housing Inventory – Brevard & Indian River 6 Counties, Florida (2006) 7

8 7.4.Median Unadjusted Housing Values of $182,660 and $180,215 were recorded for 9

Brevard and Indian River Counties (respectively) in 2006, while Median 10 Unadjusted Housing Values of $200,000 and $179,290 were recorded for 11 condominium housing units in 2006 for Brevard and Indian River Counties, 12 respectively (see Exhibit 45, below). 13

Exhibit 43: Median Assessed Value of Housing Inventory – Brevard & Indian River 14 Counties, Florida (2006) 15

16 Exhibit 44: Mean Unadjusted Value of Housing Inventory – Brevard & Indian River 17

Counties, Florida (2006) 18

19 Exhibit 45: Median Unadjusted Value of Housing Inventory – Brevard & Indian River 20

Counties, Florida (2006) 21

22 The final area of housing market indicators is the distribution of owner-occupied housing 23 units. The distribution of owner-occupied housing units provides a final anecdotal 24 measure pertaining to the values of the units that may be developed, marketed and 25 operated on an ongoing basis. The greater the percentage of owner-occupied housing 26 units in the range of $300,000 or greater, the more likely there will be underlying market 27 support for the proposed Project. 28

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The Consultant’s analysis of the owner-occupied housing inventory provides the 1 following demographic information3 gleaned from a cross-checked data vendor4: 2

8. 30-Minute Drive-Time PMA demographic data includes the Year 2000 decennial 3 census that found 66.8% of all 109,117 housing units in this PMA were owner-4 occupied (some 72,921 housing units), while the Current Year (2008) estimate finds 5 that 67.2% of all 130,856 units (87,920 units - a slight increase over Year 2000 6 reported values) in this PMA are owner-occupied, with a projection that 66.2% of all 7 144,485 housing units will be owner-occupied in 2013 (note Exhibit 46, below). 8

Exhibit 46: Owner-Occupied Housing Units Analysis (30-Minute Drive-Time PMA) 9

10

3 - Note Exhibit 99, Exhibit 100 and Exhibit 101 providing a pie chart delineation of owner-occupied housing starting on page 163 of the Appendix. 4 ESRI.com.

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14 In conclusion, the Consultant’s analysis of the housing market indicators provide for the 15 following findings and conclusions: 16

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11. General Findings. The historical indicators would lead to the conclusion the PMA 1 shows strong housing development support. This is handicapped by lagging data that 2 does not take into account the impact of the sub-prime market disaster and/or the 3 banking disaster facing money center banks (and their customers) on Wall Street. 4 The market shows vacancy rates in the housing stocks that are alarming and would be 5 expected to impact sales (slowing absorption for new construction programs, thus 6 necessitating higher than typical working capital requirements to lease-up a given 7 property). 8


10 12. Housing Values. Future housing values are expected to remain in stasis over the 11

Forecast Period ending with increases that are statistically insignificant. What is 12 significant was the run-up in housing values between the Year 2000 decennial census 13 and the Current Year (2008) estimates. The percentage of houses having values 14 greater than $300,000 rose from approximately 2.50% of the housing stock in 2000, 15 to approximately 30% in 2008. The median and average home values almost doubled 16

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in that period of time. These findings would suggest the market continues to 1 command strong price support if it were not for the projected Year 2013 values with 2 no appreciable increase in the inventory of housing units valued at $300,000 or more. 3 Assessed housing values show strong growth over the 2000 to 2006 reporting period, 4 but would be expected to continue to taper off (as demonstrated in the spreadsheets 5 and technical discussion hereinabove). 6

13. Housing Sales. Housing sales appeared to be strong with good price support up to the 7 current year window where activity has dropped off. As with the other indicators, the 8 impact of the sub-prime mortgage market disaster is not figured in and would require 9 the Consultant to take notice of the potential impact of these events and factor in 10 additional working capital at the financial feasibility level. 11

Seniors Age 55+ Market Indicators & Demographic Information 12 Before the new construction demand analyses were prepared, an initial analysis of the 13 key demographic elements of the senior housing market were reviewed and reported 14 upon as these findings help to “frame the discussion” in terms of where it leads the 15 analysis and what issues may require additional investigation in order to resolve on some 16 level. The key elements reviewed include: 17

1. Total Population Age 55+. The Total Population Aged 55+ provides a measurement 18 of potential demand using the “rule of thumb” 1.00% senior housing industry market 19 penetration benchmark for New Construction Gross Demand. Historically, the larger 20 these pools of prospects are, the more likely there will be sufficient near-term and 21 long-term demand for senior housing and related services programs once the impact 22 of planned, proposed and current facility programs are netted out of the transaction. 23

Exhibit 49: Age 55+ Baseline Population Demographics Information/Projections (30-24 Minute Drive-Time Market Boundary) 25

26 2. Percentage of Householders Aged 55+. The percentage of Householders Aged 55+ 27

provides anecdotal evidence as to the potential demand for new senior housing 28 construction programs on a long-term basis (beyond the 5-year Forecast Period) that 29

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may be captured by the future facility. Historically, those markets that have more 1 than 40% are also those markets that provide strong, long-term market support for 2 senior housing properties. 3

3. Median Age. Historically, markets that have proven to have sufficient demand to 4 support new senior housing construction programs are also those markets where the 5 Median Age of Householders is expected to increase over time, with those markets 6 showing Median Ages greater than 40 years-old being those that would be expected 7 to exhibit higher levels of entrenched demand. 8

Accordingly, these demographic elements were reviewed for the 30-Minute, 20-Minute 9 and 10-Minute PMA areas and the following values were reported: 10

4. 30-Minute Drive-Time PMA. The Total Population Aged 50+ was reported as 11 85,563 for the Year 2000 decennial census, while the Current Year (2008) Total 12 Population Aged 50+ was estimated at 113,639 and the 5-Year (2013) Total 13 Population Aged 50+ was projected to grow to 133,379. The Percentage of 14 Householders Aged 55+ was reported as 44.6% for the Year 2000 decennial census, 15 while the Current Year (2008) Percentage of Householders Aged 55+ was estimated 16 to be 48.9%. The 5-Year (2013) Percentage of Householders Aged 55+ was 17 projected to be 51.9%. The Median Age of the population for the Year 2000 18 decennial census was reported as 41.3 years, while the Current Year (2008) Median 19 Age of the population was estimated to be 45.1 years and the 5-Year (2013) Median 20 Age of the population was projected to be 46.7 years for this marketing area (note 21 Exhibit 49, above). 22


25 5. 20-Minute Drive-Time PMA. The Total Population Aged 50+ was reported as 26

45,811 for the Year 2000 decennial census, while the Current Year (2008) Total 27 Population Aged 50+ was estimated at 57,650 and the 5-Year (2013) Total Population 28 Aged 50+ was projected to be 66,710. The Percentage of Householders Aged 55+ 29 was reported as 43.0% for the Year 2000 decennial census, while the Current Year 30

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(2008) Percentage of Householders Aged 55+ was estimated to be 47.2%. The 5-1 Year (2013) Percentage of Householders Aged 55+ was projected to be 50.4%. The 2 Median Age of the population for the Year 2000 decennial census was reported as 3 40.7 years, while the Current Year (2008) Median Age of the population was 4 estimated to be 44.1 years and the 5-Year (2013) Median Age of the population was 5 projected to be 45.6 years for this marketing area (note Exhibit 50, above). 6

6. 10-Minute Drive-Time PMA. The Total Population Aged 50+ was reported as 7 16,120 for the Year 2000 decennial census, while the Current Year (2008) Total 8 Population Aged 50+ was estimated at 20,143 and the 5-Year (2013) Total Population 9 Aged 50+ was projected to be 22,712. The Percentage of Householders Aged 55+ 10 was reported as 48.6% for the Year 2000 decennial census, while the Current Year 11 (2008) Percentage of Householders Aged 55+ was estimated to be 53.2%. The 5-12 Year (2013) Percentage of Householders Aged 55+ was projected to be 55.8%. The 13 Median Age of the population for the Year 2000 decennial census was reported as 14 46.2 years, while the Current Year (2008) Median Age of the population was 15 estimated to be 49.7 years and the 5-Year (2013) Median Age of the population was 16 projected to be 51.2 years for this marketing area (note Exhibit 51, below). 17


20 The Consultant’s conclusions relative to the overall health of the seniors market is that 21 the demographics information demonstrates sufficient new construction demand potential 22 to warrant an in-depth demand model analysis. 23

The Senior Housing New Construction Gross Demand Analysis 24 An initial population assessment was conducted (the “Initial Gross Demand Analysis” or 25 “Gross Demand Analysis”) for the purposes of determining whether or not the potential 26 demand for senior housing living unit construction in the geographical primary marketing 27 area of the proposed Project site may exist in quantities sufficient to support the proposed 28 owner’s program. 29

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The computation of future new senior housing unit construction is based upon an 1 understanding of the market forces that serve to bring seniors to retirement living 2 projects. Obviously, these seniors represent a specific residency profile, to wit: 3

1. Age 75+ Households with Income of $50,000 per annum or more. While household 4 income does not have a direct causal relationship with the propensity for requiring 5 institutional housing accommodations, the senior housing industry is, by and large, a 6 private-payor based system. This means household income will become an important 7 part of the analysis because the household (or the household’s adult children) will be 8 the source of payment and not the state or federal government (as is the case with the 9 Medicaid Waiver Program or FHA/HUD Section 202 Program). The expectation of 10 residents having the economic resources required to sustain residency at a senior 11 housing project may in fact include those senior households with incomes of less than 12 $50,000 (where the Adult Children provide additional funding support for the senior), 13 the fact remains that a conservative and sober analysis will discount this impact at the 14 onset and then reconcile the demand generated by senior households wherein Adult 15 Children funding may in fact be provided once the market has been reasonably 16 adjusted in terms of the primary market cohorts. Age is the other ingredient that is 17 important. For the most part, the likelihood of a senior household requiring senior 18 housing – as it is being considered in this analysis – increases as the senior’s age 19 increases. 20

2. Resident Disability: residency candidates will have a statistical likelihood to have a 21 disability that dramatically increases the householder’s risk for requiring 22 institutional/group quarters housing of the type commonly associated with new senior 23 housing development programs at the independent living, assisted living and 24 dementia care assisted living levels. 25

3. Adult Children: as alluded to above, there is a propensity to create in-migration into 26 the PMA of the proposed Project Site due to wealthy Adult Children Households 27 relocating a senior family member to a facility nearby. This is also a means based 28 assessment that is limited to households having sufficient income to theoretically help 29 defer costs of care and housing. 30

Entry-Fee Independent Living Facility Initial New Construction Demand 31 Analysis 32

The Entry-Fee Independent Living Facility Initial New Construction Demand Analysis 33 (the “ILF Entry-Fee Gross Demand Analysis”) has to take into account the issue of 34 projected primary cohort household net worth, as the entry-fee price points are, more or 35 less, dependent upon the projected household net worth for these dwellers. 36

An analysis of household net worth is important because most seniors will seek to 37 convert the housing unit equity into cash by disposing of the housing unit and then 38 applying a portion of the proceeds to the payment of their Project entry-fee. Accordingly, 39 the ILF Entry-Fee Gross Demand Analysis equates the demand for new entry-fee senior 40 housing living unit construction in terms of both the income required for residency 41

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qualification at the independent living level and then create a pricing matrix based upon 1 the assumed net worth analysis of the market. 2

Historically, senior housing developers have utilized the entry-fee mechanism as a means 3 for dramatically increasing construction phase cash flows (i.e.: profits earned prior to 4 completion of construction and development operations being a driver for developers and 5 owner/operators alike). The general assumption was to concentrate on the higher-end 6 senior households and seek to garner the highest possible entry-fees for the community – 7 a process typically referred to as “creaming” or “cherry picking” senior housing markets. 8 This approach to the entry-fee product has been used for the past 30 years and now there 9 no longer exists (in most major markets) a ready supply of senior households willing to 10 pay an entry-fee in excess of $500,000 (adjusted for geographical area, with Cape 11 Canaveral =100). Accordingly, Rainmaker estimates the future market demand for entry-12 fee senior housing based upon an analysis of the housing values and average net worth of 13 qualified senior households residing within the geographical primary marketing area of 14 the proposed Project Site. The goal of this approach is to size the potential for entry-fee 15 housing sales based upon the average entry-fee being equal to 90% of the average 16 housing unit value within the primary marketing area. In the case of the proposed 17 Project, these findings are analyzed and reported upon in the Field Investigation. 18

Exhibit 52: Entry-Fee ILF Gross Demand Analysis Spreadsheet (30-Minute Drive-19 Time PMA) 20

21

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The initial demand computations for entry-fee independent living facility new 1 construction demand are based upon a defined screening process (described in general, 2 hereinabove commencing on page 67): 3


6 1. Screen Number 1 - Age & Income Qualified Households in Primary Marketing Area. 7

Senior housing is a market-driven industry that provides residency based upon the 8 ability to pay on the part of the perspective resident. Historically, seniors have been 9 willing to expense 70% to 80% of their household income on their room and board 10 costs. This means the qualifying income must be based upon the total expected 11 routine and ancillary charges divided by 0.70 or 0.80 and then rounded to the next 12 closest household income based counts. Initially, the Consultant assumed the 13 qualifying income would be $50,000 per annum, supporting a monthly expense of 14 $3,000 to $3,333 per month for facility lodging, meals, utilities and incidentals. Once 15 the field survey is complete, the demographics analysis will be calibrated according 16 to the expected pricing in the market. Independent living is a consumer choice and 17 not necessarily a necessity. This means the senior has to have a reason to move to the 18 property and the income to sustain that residency for the foreseeable future. The 19 reasoning is based on the fundamental concept that, as age increases, the risk a given 20 senior has for requiring group housing of the independent living class also increases. 21 Accordingly, the age definition is limited to those groups that have a statistical 22 likelihood of requiring independent living residency due to the householder requiring 23 support for IADLs (see below). 24

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2. Screen Number 2 - IADL Disability/Age/Income Qualified Households in Primary 1 Marketing Area. IADL disability rates used in this screen are for those age/income 2 qualified households that are statistically likely to require assistance with IADLs each 3 day. The Centers For Disease Control5 (“CDC”) estimate the need for assistance with 4 IADLs on the basis of two (2) strata that are of interest to this Report: 5

2.1.Age Group 65-74: 6.5% of a given senior population will require residency each 6 year. 7

2.2.Age Group 75+: 20.6% of a given senior population will require residency each 8 year. 9


12 3. Screen Number 3 - Increases Due to Adult Children Referrals - Secondary Marketing 13

Area. The demand for entry-fee senior housing is a business (historically speaking) 14 driven by the ability of a senior to readily convert the equity in their home into cash 15 to pay the entry-fee and provide an income stream sufficient to offset the monthly 16 cost of care and housing. In many cases, the entry-fee is paid out of the senior’s 17 estate with the financial assistance of the Adult Children. The Consultant has found 18 that this additional demand is quite limited and a sober assessment should use a 19 benchmark of 1.00% of Adult Children Households having an income sufficient to be 20

5 “Health Data On Older Americans: April 2005”, Center For Disease Control.

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able to help offset the entry-fee requirement. This would suggest limiting the Adult 1 Children Household pool of additional cohorts to those having current year incomes 2 of $150,000 or more. 3

Once these initial screens have been completed, the demand for new senior housing unit 4 construction can be reported at a Gross Demand level only because the impact of recent 5 market entrants (new facilities brought online in the last 12 to 18 months plus those that 6 can be identified as likely additional entrants) and changes in the demand pool due to 7 resident turnover must be theoretically accounted for and used to reduce the Gross 8 Demand pool to the Net Demand Pool (the pool of cohorts after adjusting for changes in 9 the supply of housing units in the marketing area). The process required for assessing the 10 impact of senior housing unit supplies requires the completion of the field investigation. 11

The resulting analysis was undertaken based upon the three (3) PMA geographies and 12 provides the following conclusions: 13

4. 30-Minute Drive-Time PMA. The projected Gross Demand for new senior housing 14 construction at the independent living level where there is an assumed entry-fee to be 15 included was found to be: 16

4.1.For the year ending Dec-09 – a total of 2,348 units. 17





The Consultant’s experience has shown this level of demonstrated support to be 22 consistent with a strong market having entrenched demand for new construction at 23 this housing class. This level of market (i.e.: the 30-Minute Drive-Time PMA) is the 24 most likely geography within which the proposed Project can be expected to draw at 25 least 75% of its routine revenues. 26







The Consultant’s experience has shown this level of demonstrated support to be 35 consistent with a strong market having entrenched demand for new construction at 36 this housing class and – at this level of geography – demonstrates a demand that is 37 likely to draw additional competitors to the market over the Forecast Period. 38

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6.1.For the year ending Dec-09 – a total of 732 units. 4





The Consultant’s experience has shown this level of demonstrated support to be 9 consistent with a market having entrenched demand for new construction at this 10 housing class. 11

The Consultant’s initial demand analysis of the gross demand for new entry-fee 12 independent living facility housing construction demonstrates sufficient demand to 13 warrant additional analysis. 14

Exhibit 55: Rental ILF Gross Demand Analysis Spreadsheet (30-Minute Drive-Time 15 PMA) 16

17

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Rental Independent Living Facility Initial New Construction Demand 1 Analysis 2

The initial demand computations for rental independent living facility new construction 3 demand (the “ILF Rental Gross Demand Analysis”) are based upon a defined screening 4 process that is essentially similar to that of the entry-fee gross demand analysis: 5

1. Screen Number 1 - Age & Income Qualified Households in Primary Marketing Area. 6 The qualifying income must be based upon the total expected routine and ancillary 7 charges divided by 0.70 or 0.80 and then rounded to the next closest household 8 income based counts. As with the entry-fee housing analysis, the Consultant assumed 9 the qualifying income would be $50,000 per annum, supporting a monthly expense of 10 $3,000 to $3,333 per month for facility lodging, meals, utilities and incidentals. As 11 with the entry-fee program analysis, the senior has to have a reason to move to the 12 property and the income (householder requiring support for IADLs). 13


16 2. Screen Number 2 - IADL Disability/Age/Income Qualified Households in Primary 17

Marketing Area. IADL disability rates used in this screen are the same as those in the 18 entry-fee gross demand analysis: 19

2.1.Age Group 65-74: 6.5% of a given senior population will require residency each 20 year. 21

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2.2.Age Group 75+: 20.6% of a given senior population will require residency each 1 year. 2

3. Screen Number 3 - Increases Due to Adult Children Referrals - Secondary Marketing 3 Area. The Adult Children Household pool of additional cohorts is modified to reflect 4 those having current year incomes of $100,000 or more versus the $150,000+ income 5 required for entry-fee housing. 6

As with the entry-fee analysis, once these rental independent living facility new 7 construction initial screens have been completed, the demand for new senior housing unit 8 construction can be reported at a Gross Demand level only because the impact of recent 9 market entrants. 10


13 The resulting analysis provides the following conclusions: 14

4. 30-Minute Drive-Time PMA. The projected Gross Demand for new senior housing 15 construction at the rental independent living level was found to be: 16





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The Consultant’s experience has shown this level of demonstrated support to be 2 consistent with a very strong market having entrenched demand for new construction 3 at this housing class. 4







The Consultant’s experience has shown this level of demonstrated support to be 12 consistent with a strong market having entrenched demand for new construction at 13 this housing class and – at this level of geography – demonstrates a demand that is 14 likely to draw additional competitors to the market over the Forecast Period. 15







The Consultant’s experience has shown this level of demonstrated support to be 23 consistent with a market having sufficient entrenched demand to support new 24 construction at this housing class. 25

The Consultant’s initial demand analysis of the gross demand for new rental independent 26 living facility housing construction demonstrates sufficient demand to warrant additional 27 analysis. 28

Rental Assisted Living Facility Initial New Construction Demand Analysis 29 The Rental Assisted Living New Construction Gross Demand Analysis (the “ALCF 30 Gross Demand Analysis”) is a demographics based analysis of the potential demand for 31 new senior housing construction at the assisted living class level. As with the ILF Entry-32 Fee Gross Demand Analysis and ILF Rental Gross Demand Analysis, the ALCF Gross 33 Demand Analysis is based upon the analysis of the following demographic elements: 34

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Exhibit 58: Rental ALCF Gross Demand Analysis Spreadsheet (30-Minute Drive-Time 1 PMA) 2

3 1. Age & Income Qualified Households in Primary Marketing Area. As with the ILF 4

Analysis, the assumption of income qualification was set at the $50,000 Household 5 Income level for all households in the analysis. The householder age is the key issue 6 in terms of a determination of the most likely number of households that can be 7 included in the pool of income qualified cohorts. 8

2. ADL Disability Rate Adjusted Age/Income Qualified Cohorts. In assisted living, the 9 primary tool for predicting the likely pool of residency candidates is the statistical 10 likelihood the senior will require assistance from another person in order to perform 11 Activities of Daily Living (or “ADLs”) as determined in long-term studies conducted 12 by the Centers For Disease Control (“CDC”) and Center For Vital Health Statistics6 13 that provide a range of corresponding disability rates. These disability rates are most 14 pronounced in seniors aged 65 and older and become the next level of the analysis 15 process, to wit: 16

6 Summary Health Statistics for the U.S. Population: Health Interview Survey, 2003; Series 10, Volume 224, April 2005.

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3 2.1.The most recent findings demonstrate a range of values that correspond to the 4

arithmetic mean and the upper and lower values that correspond to the 95% 5 confidence interval. Accordingly, the Consultant used the Mean value for the 6 purposes of this initial analysis, but the measurement at both the Upper 95% 7 Confidence Interval and the Lower 95% Confidence Interval are set forth in the 8 Appendix Section (note spreadsheet exhibits starting on page 165). This approach 9 provides a range of findings that can be used by the developer to calibrate 10 expectations based upon the operating environment found at that time (i.e.: in 11 marketing areas where significant competition or an economic recession are 12 taking place, the expectations for lease-up can be based upon the Lower 95% 13 Confidence Interval, while moderate times allow for the use of the Mean value 14 and strong economic operating environments and a lack of competition would 15 suggest using the 95% Upper Confidence Interval). 16

2.1.1. Age 65-74 (2.74% to 5.16% - 4.00% Mean: 4.00% Selected). 17

2.1.2. Age 75-84 (6.02% to 10.19% - 8.1% Mean: 8.10% Selected). 18

2.1.3. Age 85+ (13.80% to 25.48% - 19.6% Mean: 19.60% Selected). 19

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3. Adult Children. As noted in the previous analyses, the impact of Adult Children 1 Households with high incomes is also prevalent in the assisted living class of housing 2 and the 1.00% benchmark is applied to the Adult Children Households with Current 3 Year Household Incomes of $100,000 or more. 4

The resulting analysis provided for the following gross demand projections: 5

4. 30-Minute Drive-Time PMA. The projected Gross Demand for new senior housing 6 construction at the rental assisted living level was found to be: 7







15

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The Consultant’s experience has shown this level of demonstrated support to be 1 consistent with a strong market having substantial entrenched demand for new 2 construction at this housing class. 3







The Consultant’s experience has shown this level of demonstrated support to be 11 consistent with a market having entrenched demand for new construction at this 12 housing class. 13


6.10. For the year ending Dec-09 – a total of 287 units. 16





The Consultant’s experience has shown this level of demonstrated support to be 21 consistent with a market having significant entrenched demand for new construction 22 at this housing class. 23

The Consultant’s conclusion is that sufficient Gross Demand for new senior housing 24 construction at the assisted living level does in fact exist to justify additional analysis. 25

Rental Dementia Care Assisted Living Facility Initial New Construction 26 Demand Analysis 27

The Rental Alzheimer’s Assisted Living Facility Gross Demand Analysis (the “Rental 28 ALZ/ALCF Gross Demand Analysis”) is being undertaken to provide a measure of the 29 potential demand for the provision of housing, personal care and lifestyle services for 30 those persons who suffer from Alzheimer’s Disease or another heavily dementing 31 disorder at the assisted living licensure class because – in the State of Florida – skilled 32 nursing facility development is controlled by the Certificate Of Need (“CON”) process 33 and not subject to market/private-pay consumer considerations. 34

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Exhibit 61: Rental ALZ/ALCF Gross Demand Analysis Spreadsheet (30-Minute Drive-1 Time PMA) 2

3 As with the Rental ALCF Gross Demand Analysis, the Rental ALZ/ALCF Gross 4 Demand Analysis is provided for the purposes of an initial measurement of the new 5 construction demand market to ascertain if sufficient demand appears to exist so as to 6 warrant additional analysis. The Rental ALZ/ALCF Gross Demand Analysis is 7 predicated upon the following screens: 8

1. Screen Number 1 – Age & Income Qualified Households in Primary Marketing Area. 9 As with the ILF Analysis, the assumption of income qualification was set at the 10 $50,000 Household Income level for all households in the analysis. The householder 11 age is the key issue in terms of a determination of the most likely number of 12 households that can be included in the pool of income-qualified cohorts. The 13 Consultant’s review of the latest statistics suggest using stratified groupings of 14 seniors aged 70 and older. 15

2. Screen Number 2 - Heavy Dementia/Age/Income Qualified Households in Primary 16 Marketing Area. In dementia assisted living care, the primary tool for predicting the 17 likely pool of residency candidates is the statistical likelihood the senior has 18 Alzheimer’s Disease (“AD”) or another dementing disorder that necessitates a 19

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structured living environment. These disability rates7 are most pronounced in seniors 1 aged 70 and older and become the next level of the analysis screening process that 2 included Upper 95% Confidence Interval and Lower 95% Confidence Interval 3 spreadsheets for the final demand analysis (see spreadsheets starting on page 166): 4


7 2.1.Age 71-79 (2.61% to 7.32% - 4.97% Mean: 4.97%). The Consultant elected to 8

use the 4.97% mean finding as the basis for the demand analysis. 9

2.2.Age 80+ (19.28% to 29.11% - 24.19% Mean: 24.19%). As with the above, the 10 Consultant used the 24.19% mean as the basis for the demand analysis. 11

3. Adult Children. As noted in the previous analyses, the impact of Adult Children 12 Households with high incomes is also prevalent in the assisted living class of housing 13 and the 1.00% benchmark is applied to the Adult Children Households with Current 14 Year Household Incomes of $100,000 or more. 15

The resulting analysis provided for the following gross demand projections: 16

7 Prevalence of Dementia in the United States: The Aging, Demographics and Memory Study: Neuroepidemiology 2007.

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4. 30-Minute Drive-Time PMA. The projected Gross Demand for new senior housing 1 construction at the rental dementia assisted living level was found to be: 2






The Consultant’s experience has shown this level of demonstrated support to be 8 consistent with a strong market having substantial entrenched demand for new 9 construction at this housing class. 10


13 5. 20-Minute Drive-Time PMA. The projected Gross Demand for new senior housing 14

construction at the rental dementia assisted living level was found to be: 15




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These values are consistent with markets that, in the past, have demonstrated support 3 for the development of additional dementia care units. 4

6. 10-Minute Drive-Time PMA. The projected Gross Demand for new senior housing 5 construction at the rental dementia assisted living level was found to be: 6






The findings at the 10-Minute Drive-Time PMA show a market that has sufficient 12 demand to warrant additional development – even at this constricted PMA that has 13 been provided solely for the purposes of generating a comparative analysis. 14

Findings of Initial New Construction Gross Demand Analyses 15 In summary, the findings of the Consultant relative to the Initial New Construction Gross 16 Demand Analyses are: 17

1. Entry-fee ILF Gross Demand – the demographics suggest a very high level of 18 demand relative to the most likely geographical marketing area; the 30-Minute Drive-19 Time PMA. 20

2. Rental ILF Gross Demand – the demographics suggest a very high level of demand 21 relative to the most likely geographical marketing area; the 30-Minute Drive-Time 22 PMA. 23

3. Rental ALCF Gross Demand – the demographics suggest a strong level of demand 24 relative to the most likely geographical marketing area; the 30-Minute Drive-Time 25 PMA. 26

4. Rental ALZ/ALCF Gross Demand – the demographics suggest a strong level of 27 demand relative to the most likely geographical marketing area; the 30-Mintue Drive-28 Time PMA. 29

5. The findings suggest that, should the Client elect to move forward with the 30 development of new senior housing living units, there should be the expectation for 31 strong additional competition to enter the marketplace over the course of the Forecast 32 Period due to these favorable demographic analysis findings. This would suggest a 33 final reconciled demand analysis would limit its penetration rate to no more than 15% 34 of the total net demand computation as a means of creating additional safety and 35 conservatism in the development program. 36

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Field Investigation Analysis of Competing Facilities

Identification of Existing, Planned & Proposed Competitive Facilities

Competitive Compendiums Analysis

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The Field Investigation 1

The second phase of the Analysis is actually an investigation of the competitive 2 conditions existing and forecasted to occur in the Primary Marketing Area of the Client’s 3 Project. 4

As the term implies, the Consultant’s personnel to interviewed, analyzed and reported 5 upon conditions in the market. The central thesis of this investigation (the “Field 6 Investigation”) is determining the status of competition based upon a blind shopping test 7 at each facility and services provider. This provides the most realistic analysis of the 8 competitive state of affairs based upon the assumption the team member is seeking 9 placement for an elder in the type of facility being inspected or service being offered (in 10 other words, incognito). 11

Since the consumer is the ultimate arbitrator of success for any facility in the senior 12 housing industry, it is only logical that the information presented to consumers be the 13 basis for determining the nuances of the competitive market. 14

The Field Investigation centers on facility-based services providers that are and/or are 15 assumed to be competitive with the proposed Project. These include existing Assisted 16 Living, Alzheimer’s Assisted Living, Independent Living, Continuing Care Retirement 17 Community and congregate living facilities located within the Primary Marketing Area of 18 the proposed Project. In addition, and to the extent they could be identified, interviews 19 and information was collected for planned and proposed projects that may in fact be 20 competitive with the proposed Project. 21

The resulting information was analyzed both in terms of the Client’s Program and in 22 terms of the Demand Analysis. 23

The Competitive Facilities is limited in its scope to the following conditions: 24

1. Size. Generally, facilities having fewer than 25 beds were not considered to be 25 competitive and were eliminated from on site consideration by the field team. 26 However, entrants into the market were tabulated for deduction from the Demand 27 Analysis. 28

2. Type. Hospital based beds were not included in the compendium, as were large scale 29 nursing care facilities that offered Assisted Living programming as a minor adjunct to 30 their main focus (nursing care). 31

3. Payer Classification. All facilities that sought compensation for services and 32 residency primarily from Medicare or Medicaid were eliminated from the matrix due 33 to dissimilarities in program and service. 34

4. Location. All facilities located more than 15 miles from the nexus of the Primary 35 Marketing Area of the Project were generally eliminated due to lack of impact (too 36 far away).The methodology used in the Competitive Facilities Investigation generally 37 conformed with the pre-screening based upon location. Using state listings of 38 licensed facilities, all facilities were computer plotted that resided within the Primary 39 Marketing Area zip codes at the 30-minute drive-time boundary. All facilities were 40 eliminated from the compendium that were outside of this area. These listings were 41

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also cross-checked against listings found in Yellow Pages and other advertisements 1 for facilities that may be competitive, as well as announcements for upcoming 2 facilities. This process ultimately resulted in the following initial list of 30 existing 3 facilities that needed to be given due consideration and grouped according to their 4 program area (bold-faced type entries denote properties included in this analysis): 5

4.1. Angel Guardian Assisted Living. 280 Bahama Dr. Merritt Island, FL 32952. 6 (321) 223-8371. License/Certification: #10561, Assisted Living. Capacity: 8 7 Beds/Units. This property was judged to not be of the type that would be 8 considered to be directly competitive with the proposed Project under 9 consideration. Accordingly, this facility was eliminated from consideration, but 10 the total bed counts were included in the demand analysis under the “changed in 11 competitive supply” line item. 12

4.2. Autumn House. 7999 Spyglass Hill Rd., Viera, FL 32940. (321) 242-1006. 13 License/Certification: #9049, Assisted Living. Capacity: 60 Beds/Units. This 14 property is an Alzheimer’s/dementia specialty care facility that is over 25 miles 15 away from the proposed Project Site (and therefore not directly competitive save 16 by virtue of its specialty care services). This property’s bed count was included 17 in the competitive compendium. 18

4.3. Banana River Villas. 1275 N. Banana River Drive, Merritt Island, FL 32952. 19 (321) 392-4448. Capacity 6 Beds/Units starting at $3,925 per month. This 20 property was judged to not be of the type that would be considered to be directly 21 competitive with the proposed Project under consideration. Accordingly, this 22 facility was eliminated from consideration, but the total bed counts were included 23 in the demand analysis under the “changed in competitive supply” line item. 24

4.4. The Brookshire. 85 Bulldog Blvd, Melbourne, FL 32901. (321) 984-7966. 25 License/Certification: #7354, Assisted Living. Capacity: 125 Beds/Units. This 26 property is too far away from the proposed Project Site to be considered 27 competitive with the proposed Project and was subjected to more detailed 28 analysis. 29

4.5. Buena Vida Estates, 2129 W New Haven Ave, W. Melbourne, FL 32904. (321) 30 724-0060. (www.buenavidaestates.org). Programs Offered: Apartment Living, 31 Assisted Living, Continuing Care Retirement Community, Retirement Living 32 Facility, Skilled Nursing Facility. Capacity: 150 units. This property is too far 33 away from the proposed Project to be considered competitive and was eliminated 34 from consideration. 35

4.6. Carolina Care Assisted Living Facility. 2460 Kathi-Kim St, Cocoa, FL 32926. 36 (321) 449-9639. License/Certification: #9426, Assisted Living. Capacity: 8 37 Beds/Units. This property was judged to not be of the type that would be 38 considered to be directly competitive with the proposed Project under 39 consideration. Accordingly, this facility was eliminated from consideration, but 40 the total bed counts were included in the demand analysis under the “changed in 41 competitive supply” line item. 42

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4.7. Carriage House Assisted Living Facility. 1832 Country Club Dr., Titusville, FL 1 32780. (321) 383-3531. License/Certification: #10800, Assisted Living. 2 Capacity: 8 Beds/Units. This property was judged to not be of the type that 3 would be considered to be directly competitive with the proposed Project under 4 consideration. Accordingly, this facility was eliminated from consideration, but 5 the total bed counts were included in the demand analysis under the “changed in 6 competitive supply” line item. 7

4.8. Casual Country Living. 4801 Mango Ave., Cocoa, FL 32926. (321) 632-9622. 8 License/Certification: #10167, Assisted Living. Capacity: 6 Beds/Units. This 9 property was judged to not be of the type that would be considered to be directly 10 competitive with the proposed Project under consideration. Accordingly, this 11 facility was eliminated from consideration, but the total bed counts were included 12 in the demand analysis under the “changed in competitive supply” line item. 13

4.9. Cedar Creek Life Center. 4270 Judith Ave., Merritt Island, FL 32953. 14 (321) 454-7768. License/Certification: #10541, Assisted Living. Capacity: 15 78 Beds/Units. This property was considered competitive with the proposed 16 Project and was subjected to more detailed analysis. 17

4.10. Century Oaks. 4001 Stack Blvd., Melbourne, FL 32901. (321) 722-4440. 18 License/Certification: #10095, Assisted Living. Capacity: 25 Beds/Units. This 19 property is over an hour’s drive from the proposed Project Site and would 20 therefore not be considered to be directly competitive with the proposed Project 21 under consideration. Accordingly, this facility was eliminated from 22 consideration. 23

4.11. Courtenay Oaks. 1100 S Courtenay Pkwy., Merritt Island, FL 32952. 24 (321) 452-1233. License/Certification: #7476, Assisted Living. Capacity: 11 25 Beds/Units. This property was judged to not be of the type that would be 26 considered to be directly competitive with the proposed Project under 27 consideration. Accordingly, this facility was eliminated from consideration, but 28 the total bed counts were included in the demand analysis under the “changed in 29 competitive supply” line item. 30

4.12. Forever Care. 4685 Lee Street, Cocoa, FL 32926. (321) 806-4120. 31 License/Certification: Assisted Living. Capacity: 5 Beds/Units. This property 32 was judged to not be of the type that would be considered to be directly 33 competitive with the proposed Project under consideration. Accordingly, this 34 facility was eliminated from consideration, but the total bed counts were included 35 in the demand analysis under the “changed in competitive supply” line item. 36

4.13. Friends at Home. 3680 Canaveral Groves Blvd., Cocoa, FL 32926. (321) 37 631-4005. License/Certification: #9640, Assisted Living. Capacity: 15 38 Beds/Units. This property was judged to not be of the type that would be 39 considered to be directly competitive with the proposed Project under 40 consideration. Accordingly, this facility was eliminated from consideration, but 41 the total bed counts were included in the demand analysis under the “changed in 42 competitive supply” line item. 43

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4.14. Ginny's Place. 1198 Auburn Lakes Dr., Rockledge, FL 32955. (321) 258-1 2351. License/Certification: #11161, Assisted Living. Capacity: 6 Beds/Units. 2 This property was judged to not be of the type that would be considered to be 3 directly competitive with the proposed Project under consideration. Accordingly, 4 this facility was eliminated from consideration, but the total bed counts were 5 included in the demand analysis under the “changed in competitive supply” line 6 item. 7

4.15. Hibiscus Court. 540 E Hibiscus Blvd., Melbourne, FL 32901. (321) 951-8 1050. License/Certification: #9309, Assisted Living. Capacity: 78 Beds/Units. 9 This property is located too far away from the proposed Project Site to be 10 considered competitive with the proposed Project and was eliminated from any 11 further analysis. 12

4.16. Jacob's Ladder Family Assisted Living. 946 Brunwick Ln., Rockledge, 13 FL 32955. (321) 745-6063. License/Certification: #11180, Assisted Living. 14 Capacity: 3 Beds/Units. This property was judged to not be of the type that 15 would be considered to be directly competitive with the proposed Project under 16 consideration. Accordingly, this facility was eliminated from consideration, but 17 the total bed counts were included in the demand analysis under the “changed in 18 competitive supply” line item. 19

4.17. Lilac House. 1770 S Lilac Cir., Titusville, FL 32796. (321) 449-9639. 20 License/Certification: #11050, Assisted Living. Capacity: 9 Beds/Units. This 21 property was judged to not be of the type that would be considered to be directly 22 competitive with the proposed Project under consideration. Accordingly, this 23 facility was eliminated from consideration, but the total bed counts were included 24 in the demand analysis under the “changed in competitive supply” line item. 25

4.18. Open Arms with Love. 6205 Balboa St., Cocoa, FL 32927. (321) 632-26 4955. License/Certification: #10685, Assisted Living. Capacity: 4 Beds/Units. 27 This property was judged to not be of the type that would be considered to be 28 directly competitive with the proposed Project under consideration. Accordingly, 29 this facility was eliminated from consideration, but the total bed counts were 30 included in the demand analysis under the “changed in competitive supply” line 31 item. 32

4.19. Our House Assisted Living Facility. 315 Wainai Dr., PO Box 541421, 33 Merritt Island, FL 32953. (321) 449-9639. License/Certification: #9061, 34 Assisted Living. Capacity: 6 Beds/Units. This property was judged to not be of 35 the type that would be considered to be directly competitive with the proposed 36 Project under consideration. Accordingly, this facility was eliminated from 37 consideration, but the total bed counts were included in the demand analysis 38 under the “changed in competitive supply” line item. 39

4.20. Palace Retirement Home. 965 S Florida Ave., Rockledge, FL 32955. 40 (321) 639-0004. License/Certification: #7949, Assisted Living. Capacity: 28 41 Beds/Units. This property is a motel that was converted in 1993 into low-cost 42 assisted living with rents ranging from $1,800 for semi-private occupancy to 43

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$2,200 per month for a private bedroom. The unit sizes and program limitations 1 were judged to not be competitive with the type of new construction program 2 being considered by the Client and was therefore eliminated from a more detailed 3 analysis. 4

4.21. Palm Cottages of Rockledge. 3821 Sunnyside Ct., Rockledge, FL 5 32955. (321) 633-1819. License/Certification: #9987, Assisted Living. 6 Capacity: 98 Beds/Units. This property was considered competitive with the 7 proposed Project and was subjected to more detailed analysis. 8

4.22. The Palms at Norwood. 325 Norwood St., Merritt Island, FL 32953. 9 (321) 426-5505. License/Certification: #11011, Assisted Living. Capacity: 6 10 Beds/Units. This property was judged to not be of the type that would be 11 considered to be directly competitive with the proposed Project under 12 consideration. Accordingly, this facility was eliminated from consideration, but 13 the total bed counts were included in the demand analysis under the “changed in 14 competitive supply” line item. 15

4.23. The Place at Merritt Island. 535 Crockett Blvd., Merritt Island, FL 16 32953. (321) 454-2363. License/Certification: #8975, Assisted Living. 17 Capacity: 95 Beds/Units. This property was considered competitive with the 18 proposed Project and was subjected to more detailed analysis. 19

4.24. Riverview Retirement Center. 4470 S Washington Ave., Titusville, 20 FL 32780. (321) 383-2125. License/Certification: #7358, Assisted Living. 21 Capacity: 25 Beds/Units. This property was considered competitive with the 22 proposed Project and was subjected to more detailed analysis. 23

4.25. Sand Pointe Senior Living. 1800 Harrison St., Titusville, FL 32780. 24 (321) 383-6000. License/Certification: #5758, Assisted Living. Capacity: 70 25 Beds/Units. This property was considered competitive with the proposed 26 Project and was subjected to more detailed analysis. 27

4.26. Sherwood House. 2465 E Sherwood Cir., Cocoa, FL 32926. (321) 449-28 9639. License/Certification: #10775, Assisted Living. Capacity: 6 Beds/Units. 29 This property was judged to not be of the type that would be considered to be 30 directly competitive with the proposed Project under consideration. Accordingly, 31 this facility was eliminated from consideration, but the total bed counts were 32 included in the demand analysis under the “changed in competitive supply” line 33 item. 34

4.27. Smiles & Loving Care. 1065 Garden Rd., Merritt Island, FL 32952. (321) 35 454-4624. License/Certification: #8648, Assisted Living. Capacity: 6 36 Beds/Units. This property was judged to not be of the type that would be 37 considered to be directly competitive with the proposed Project under 38 consideration. Accordingly, this facility was eliminated from consideration, but 39 the total bed counts were included in the demand analysis under the “changed in 40 competitive supply” line item. 41

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4.28. Southland Suites of Melbourne. 2680 Croton Rd., Melbourne, FL 32935. 1 (407) 255-5443. License/Certification: #8885, Assisted Living. Capacity: 80 2 Beds/Units. This property is too far away from the proposed Project Site to be 3 considered competitive and was eliminated from further analysis. 4

4.29. The Town Square in Viera, 1700 Wuesthoff Dr., Melbourne, FL 32940. 5 (321)255-6030. License/Certification: #8134, Assisted Living. Capacity: 120 6 Beds/Units. This property is too far away from the proposed Project Site to be 7 considered competitive and was eliminated from further analysis. 8

4.30. Tropical Living Club. 2935 N Tropical Trail, Merritt Island, FL 32953. 9 (239) 770-2629. License/Certification: #10860, Assisted Living. Capacity: 6 10 Beds/Units. This property was judged to not be of the type that would be 11 considered to be directly competitive with the proposed Project under 12 consideration. Accordingly, this facility was eliminated from consideration, but 13 the total bed counts were included in the demand analysis under the “changed in 14 competitive supply” line item. 15

The process also found five (5) new development programs being undertaken accounting 16 for 900 units of new senior housing construction that consists of up to 526 new entry-fee 17 ILF housing units, 115 rental ILF housing units, 205 standard assisted living housing 18 units and 54 Alzheimer’s/dementia care assisted living housing units. The properties 19 identified by the Consultant include: 20

6. Water Song Project. Susan Frederick (Sales) and Shelly Lockhart (Executive 21 Director) were interviewed separately. This property is slated to open in March of 22 2009 and consists of 120 free-standing single-family home “cottages” (1,669 square 23 feet to 2,489 square feet), 118 multifamily configured “villas” (883 square feet to 24 1,410 square feet), 24 “enhanced living” ILF apartments, 48 standard one-bedroom 25 assisted living facility units (683 and 831 square foot units) licensed at the ECC level 26 and 24 dementia assisted living facility beds (private occupancy bedrooms/shared 27 common areas) in a secured multifamily arrangement. While the ILF portion of the 28 property is slated to open in March, the ALCF program is expected to open in May 29 and the ALZ/ALCF program is expected to open in June. As of the date of the 30 Report, sales have been strong with 15 cottages already reserved and “about 30 31 villas” – meaning somewhere between 25 and 30 villas have been reserved in 32 advance of the planned opening of model units in November. The property is owned 33 by a for-profit chain that specializes in campus-style congregate living facilities, 34 operating 10 properties throughout the Southeast (headquarters in Charlotte, NC). 35 This property utilizes a 60% or 90% refundable entry-fee structure (entry-fees 36 ranging from $133,000 to more than $436,000) and offers a deferred payment 37 arrangement of up to 75% of the entry-fee while the pending sale of the home is made 38 by the future resident. Monthly rental fees start at $2,135 and range as high as 39 $2,750) with one (1) meal included and all the usual basic services. This property 40 does not require a resident to enter via the entry-fee level. The property consists of 41 48 acres with retention ponds and lakes as the main viewable amenity, with the 42 property being surrounded by four (4) major country clubs and golf facilities (each 43

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cottage unit comes with its own golf cart). This property will be directly competitive 1 with the proposed Owner’s Program and the housing units were incorporated into the 2 housing demand analyses for each class of housing. 3

7. City of Cocoa 115-Unit Senior Housing Program. This is a low-income senior 4 housing project that includes bundled supportive services to help poor elderly 5 householders maintain their independent status within the community. This program 6 is on hold due to a lack of funding being received by the City of Cocoa from the U.S. 7 Department of Housing & Urban Development (“HUD”). This development program 8 would not be considered competitive with the proposed Project due to the fact these 9 seniors would not be expected to have the financial resources necessary to sustain 10 residency, but the units were added to the inventory in the interest of creating a 11 conservative demand model for the benefit of the Owner’s Program of the Client. 12

8. Principal Senior Living Assisted Living Program. This is an established chain of 13 high-quality, private pay assisted living and dementia assisted living care facilities 14 operated by an experienced and well-capitalized company having a 10-year track 15 record of success. This property will consist of up to 55 beds of assisted living and 16 dementia care (split between approximately 20 beds of ALZ/ALCF and the remaining 17 35 beds to be ALCF). This property has approved development plans and will have a 18 competitive assisted living program. 19

9. Route 50 Assisted Living Project. Another group has approvals for 74 beds of 20 assisted living and 10 beds of dementia care at the assisted living level. This property 21 will be located about one mile south of Route 50 on Route 1. Construction is 22 expected to begin in the near-term and this property is expected to be directly 23 competitive with the proposed Project. 24

10. Sciascia Development Group Project. The final group is headed by a commercial real 25 estate developer (David Sciascia) who has a fully-entitled site within 7 miles of the 26 proposed Project Site that can support up to 540 units of ILF housing. The group’s 27 intentions are to develop an entry-fee CCRC on the property. This proposed property 28 is expected to be developed in phases over a period of 36 to 48 months with a total of 29 240 ILF units, 48 ALCF units and 20 ALZ/ALCF units based upon current 30 information. The Consultant has had extensive discussions with the group regarding 31 their plans and is of the opinion this project will in fact move forward. 32

The review process included the following functions: 33

Initial Facility Screening. All facilities advertising services within the Primary 34 Marketing Area received an initial review. The facility’s advertising was confirmed 35 and information regarding the facility was elicited for future comparison. 36

Compendium Development. From the information gathered in the field, a 37 compendium for each facility type and classification (physical plant, operations & 38 marketing) is developed for review and consideration. The key issues and 39 assumptions are: 40

o Occupancy Compendium Limitations. The Occupancy Compendium 41 contains anecdotal evidence based upon claims made by property 42

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personnel. There is no way of substantiating these claims and the result 1 would be highly speculative in nature. Accordingly, the Consultant 2 assumed the functional “economic occupancy” to be approximately 95% 3 for rental housing programs and 100% for entry-fee housing. 4

o Living Unit Compendium Limitations. The Living Unit Compendium 5 contains representations made by the various properties as to the size of 6 living units. The actual size of the living units would require that every 7 living unit on the property be inspected and measured. This is beyond the 8 scope of reasonable expectation for a consumer to undertake, therefore; 9 the representations by the various properties are taken at face value. 10

o Staffing Patten Compendium Limitations. The Staffing Pattern 11 Compendium contains representations made by the various properties as 12 to the staffing of their facilities. An actual analysis of the staffing patterns 13 would require the Consultant to remain on the premise for a 48-hour 14 period (a Friday and Saturday so as to provide analysis of weekday and 15 weekend staffing for each shift – morning, evening and night) at each 16 facility. This is unrealistic to assume any property would allow this 17 behavior of a consumer and would automatically question the validity of 18 the claim the information was being sought about a given property for the 19 purposes of placing a senior at the property. 20

These limitations are common limitations and the analysis and conclusions are limited to 21 these qualifications in their entirety by reference hereinabove. The senior housing 22 product types under consideration include the following: 23

1. A continuing care retirement community (or “CCRC” as they are commonly referred 24 to in the senior housing industry) is a property that offers a combination of care 25 programming at multiple levels. Historically, Florida is the state where CCRCs are 26 most commonly found. The advent of the life care industry owes its troubled heritage 27 to CCRC programs originating in Florida markets. The advent of the entry-fee 28 approach to creating retirement lifestyle environments also owes its heritage to the 29 Florida market. While life care programs create significant risks and require a much 30 stronger working capital requirement on the part of the developer, entry-fee CCRCs 31 that do not include the life care approach offer the opportunity to develop a major 32 asset (projects having development budgets greater than $20 million) while 33 leveraging out the vast majority of the market risk exposure a senior housing 34 development program would otherwise have. Today’s development programs are 35 using more and more sophisticated capital financing tools in order to create a final 36 funding solution, to wit: 37

1.1.Condominium Investment Plans. This is the creation of a condominium 38 association plan for the sole purposes of obtaining investment capital in exchange 39 for the granting of a specific set of air rights and a business deal regarding the 40 sharing of routine rental revenues – and not the sale of housing stock, per se (for 41 future dwellers). Consumer protection laws require the developer to hold the 42 sales deposits until the tail-end of the development period and this limits the plan 43

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to being sized to match the capital expenses for the last month of the development 1 period, but these funds can be of critical importance and the buyers are able to 2 purchase their ownership interest at a cost that is less than the total development 3 cost and receive a return based upon an agreed upon holding period with a “look-4 back/make-whole” approach. 5

1.2.Tenants-In-Common Syndication Plans (“TIC Plans”). TIC Plans are another 6 level of investment capital that can be applied to the capital funding structure as 7 additional equity funds that do not necessarily result in a significant level of 8 opportunity dilution for the developer. TIC plan funds are not regulated the same 9 way as condominium plan programs, thus giving a higher degree of application 10 flexibility when it comes to deciding how much can be raised and how it can be 11 applied. One of the most important uses of the TIC plan approach is to over-fund 12 the equity requirement and thereby induce the lender to make the loan on a non-13 recourse basis. 14

2. Continuing Care Retirement Communities – with and without life care contract 15 services. 16

2.1.Buena Vida Estates (non-profit): 2129 W New Haven Ave, W. Melbourne, FL 17 32904. (www.buenavidaestates.com) Contact: Debbie Williams, Retirement 18 Counselor (321.724.0060). This property claims it is the only CCRC operating in 19 Brevard County, Florida. This property is not located within the geographical 20 PMA and would not be – under normal circumstances – included in the 21 compendium. This property is included because of the amount of information the 22 property has provided and the type of program even though the property is outside 23 the proposed Project Site’s geographical PMA. The information regarding the 24 programs and attributes of this property may provide guidance as to the market’s 25 expectations regarding any CCRC program the Client may wish to undertake. 26 This property offers a combination of efficiency, one-bedroom and two-bedroom 27 units. Entry fees range from $97,000 to $314,000 and are non-refundable after 28 the resident has a tenure of 50 months. The property offers a 75% refundable plan 29 for an additional premium over the basic entry-fees. Monthly ILF rates start at 30 $1,470 (efficiency unit, single occupancy) and increase to $4,142 per month 31 (luxury two-bedroom Grand w/Den, double occupant). The property also boasts 32 an assisted living unit, skilled nursing unit and a dementia care unit. This is a life-33 care property offering a total of nine (9) floor plans for the independent living 34 program ranging in size from 397 square feet (studio efficiency) to 1,468 square 35 feet (two-bedroom w/den). The vesting program for the refundable entry fee 36 being reduced to 75% over the course of the resident’s first 13 months of 37 residency. The independent living program is operating at full capacity with most 38 unit classes having a waiting list. The property’s assisted living program has 16 39 private apartments with an additional 32 units assisted living units being 40 developed and 16 dementia assisted living apartments being developed. 41

2.1.1. The property offers the following amenities: 42

2.1.1.1. Walking Paths 43

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2.1.1.2. Covered Parking 1

2.1.1.3. Private Dining 2

2.1.1.4. Game & Card room 3

2.1.1.5. Shuffleboard Court 4

2.1.1.6. Heated Pool 5

2.1.1.7. Mezzanine Area w/Fireplace 6

2.1.1.8. Waterview Lounge 7

2.1.1.9. Billiards Room 8

2.1.1.10. Library & Computer Stations 9

2.1.1.11. General Store w/Ice Cream Shop 10

2.1.1.12. Banking Services (“twig” branch) 11

2.1.1.13. Hair Salon/Barber Shop 12

2.1.1.14. Activity Rooms 13

2.1.1.15. Thrift Store 14

2.1.1.16. Craft Rooms 15

2.1.2. Living Unit Features & Amenities. The ILF program living units offer the 16 following standard features and amenities: 17

2.1.2.1. Wireless Internet 18

2.1.2.2. Cable TV 19

2.1.2.3. Pre-Wired Telephone Jacks 20

2.1.2.4. Climate Controlled Interior Storage 21

2.1.2.5. Wireless Call System 22

2.1.2.6. Partial Emergency Power 23

2.1.2.7. Ceramic Tile in Baths, Kitchen & Patio 24

2.1.2.8. Private Screened Lanai 25

2.1.2.9. Stackable Washer & Dryer 26

2.1.2.10. Premium Kitchen Appliances 27

2.1.3. Competitive Issues. A new entrant into the market may be able to 28 compete against this property by: 29

2.1.3.1. Unit Sizes. New construction projects have the advantage of being 30 able to introduce larger living unit sizes and construction-based 31 amenities that cannot be easily negated by the owner/operator of this 32

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property. A hurricane proof facility construction program (insulated 1 concrete form/poured-in-place concrete construction). 2

2.1.3.2. Entry-Fee. A fully refundable entry-fee approach would allow for 3 a higher entry-fee basis. This property offers a 98% refundable fee 4 plan on certain units, a 75% refundable entry-fee structure and a non-5 refundable entry-fee structure on the older units. This property has 6 entry-fees of up to $300,000 (subject to certain upcharges, some of 7 which are not clearly defined) and a fully refundable plan of up to 8 $400,000 would be very competitive in the eyes of consumers. 9

2.1.3.3. Location. This property has a water view and the proposed Project 10 would also have a water view. A tower construction approach for the 11 proposed Project would provide a view that this property cannot match. 12

3. Congregate Living Communities. Congregate living communities offer a 13 combination of living programs that create a continuum of care program that attempts 14 to equate the living experience found at entry-fee communities at a much lower rate. 15 Typically, these properties have fewer physical amenities and their services programs 16 are limited by licensure status. Having said that, today’s Florida senior housing 17 community operator can now rely upon home health care providers and hospice care 18 providers in order to provide an aging-in-place program that allows the resident to 19 remain a resident at a given property once the property can no longer legally provide 20 for all of the health care needs of the resident. This fundamental shift creates 21 opportunity for rental retirement communities to compete directly against entry-fee 22 CCRCs and maintain resident occupancy rates that are on par with the CCRCs. Most 23 congregate communities in the compendium were found to be offering some form of 24 independent living and assisted living (standard assisted living and/or dementia care 25 assisted living units). 26

3.1.Sand Point, 1800 Harrison Street, Titusville, FL 32780. 321.383.6000. Contact: 27 Angela Giddings, Sales & Marketing Director. This property is operated by 28 Brookdale Senior Living, one of the industry’s biggest chain owner/operators 29 (www.brookdaleliving.com). This property offers independent living and assisted 30 living apartments; 123 independent living apartments and 70 assisted living 31 apartments. The independent living program starts with one-bedroom living units 32 offered at $2,225 per month and two-bedroom units for $2,441 per month. 33 Property has a community fee of $2,750 and requires a $1,000 fee for second 34 person living. The property also requires deposits ($500) for smokers and pets. 35 Property also assesses a fee of $30 per month for cable TV and fees for long 36 distance telephone ranging from $15 to $30. Property also has an assisted living 37 program offering two (2) different levels of assisted living care (multiple licensee) 38 starting at $3,200 per month for a 605 square foot one-bedroom “cottage” (that is 39 not a cottage, but an apartment) and topping out at $4,100 per month for a corner 40 802 square foot suite in the higher care program area (ECC license with 312 and 41 624 square foot suites). Property currently has two (2) openings in the ILF 42 program area and three (3) openings in the ALCF program area. Staffing for the 43

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ALCF program is seven (7) care personnel on the day shift, five (5) on the 1 evening shift and four (4) on the night shift. 2

Exhibit 64: Sand Point Typical One-Bedroom Unit 3

4 3.1.1. The property offers the following amenities and services: 5

3.1.1.1. Exercise program. 6

3.1.1.2. Scheduled activity programs. 7

3.1.1.3. Scheduled transportation. 8

3.1.1.4. One meal per day (independent living). 9

3.1.1.5. Weekly housekeeping. 10

3.1.2. The independent living program includes the following unit amenities and 11 services: 12

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3.1.2.1. Wall-to-wall carpeting. 1

3.1.2.2. Window covering. 2

3.1.2.3. Individual controlled HVAC. 3

3.1.2.4. Fully-equipped kitchen with oven, range, hood refrigerator, washer 4 and dryer. 5

Exhibit 65Sand Point Typical One-Bedroom Suite 6

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3.1.2.5. Emergency call system. 1

3.1.2.6. Cable hook-up. 2

3.1.2.7. Tub/shower combination. 3

3.1.2.8. Ceiling fans. 4

3.1.2.9. Private screened-in porch. 5

3.1.3. The assisted living program includes the following unit amenities and 6 services: 7

3.1.3.1. Three (3) meals per day and snack program. 8

3.1.3.2. Weekly housekeeping and laundry service. 9


3.1.3.4. Emergency response system. 11

3.1.3.5. Structured activity program. 12

3.1.4. Other notes. This property shows fairly well. The documentation and 13 sales presentation focused on selecting company-owned services for 14 medication/pharmacy services, home health services and personal care 15 products. The Consultant believes the property may in fact be violating the 16 Safe Harbor regulations set forth by the Office of Inspector General, 17 Department of Health & Human Services regarding self-dealing. The 18 property claims it currently has only “one or two” openings in the ILF 19 program and “one or two openings in assisted living” though which program 20 was carrying openings was not made clear to the Consultant. 21

3.2.Palm Cottages of Rockledge, 3821 Sunnyside Ct Rockledge, FL 32955. 22 321.633.1819. Donna Harlow, Marketing Director. This property is a rental 23 congregate care property offering independent living (rental – not entry-fee) 24 accommodations, assisted living care accommodations and a dementia care 25 assisted living care program accommodations in a neighborhood next to the Turtle 26 Creek golf course and country club. This property consists of a series of 12-unit 27 cottages, each having its own “neighborhood” where meals are cooked and served 28 by the units own cook in the neighborhood’s kitchen. Residents have small units 29 bounded by a large common community area with attractive furnishings. 30

3.2.1. The independent living program consists of a single 12-unit cottage 31 offering all-inclusive rents of $1,650 per month. These units are essentially 32 bedrooms of 160 square feet to 205 square feet (corner units - $1,950 per 33 month) in size. This program is currently operating with one (1) vacancy. 34 The property offers the following amenities and services for this rental ILF 35 program: 36

3.2.1.1. Three (3) meals per day, cooked and served. 37


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3.2.1.4. Weekly flat linen service. 2

3.2.1.5. Basic activity program. 3

3.2.2. Property amenities and services that are at additional cost include: 4

3.2.2.1. Cable television. 5

3.2.2.2. Phone service. 6

3.2.2.3. Private dining. 7

3.2.2.4. Personal laundry. 8

3.2.2.5. Offsite activities and other social event trips. 9

3.2.3. The property’s assisted living program takes up the majority of the 10 campus space having a total of five (5) cottages and a licensed capacity of 60 11 assisted living residents. The starting rent for the ALCF program is $2,900 12 per month for the smaller unit and $3,200 for the larger, corner units. The 13 property provides a LPN to supervise the assisted living and dementia care 14 programs together with three (3) aides for the ALCF day shift, three (3) 15 aides for the ALCF evening shift and two (2) aides for the ALCF night shift. 16 The ALCF program provides the following amenities and services: 17

3.2.3.1. Three (3) meals, plus snacks. 18

3.2.3.2. Scheduled transportation for shopping and physician appointments. 19

3.2.3.3. Weekly flat linen services. 20

3.2.3.4. Housekeeping as needed. 21

3.2.3.5. Personal laundry. 22

3.2.3.6. Cueing for ADL support. 23

3.2.4. The property’s assisted living program provides the following amenities 24 and services at an additional cost: 25

3.2.4.1. Cable television. 26

3.2.4.2. Phone service. 27

3.2.4.3. Personal assistance/shopper. 28

3.2.4.4. Unscheduled transportation. 29

3.2.4.5. Offsite activities and other social event trips. 30

3.2.5. The property’s dementia care program consists of two (2) 12-unit cottages 31 providing 24 units of dementia assisted living care starting at $3,950 for the 32 smaller studio and $4,150 per month for the corner (larger) units. As with 33 the ILF and ALCF programs, the ALZ/ALCF program operates on, more or 34 less, an all-inclusive pricing basis for services. The small unit sizes would 35 suggest a lack of competitiveness in the evolving marketplace, but the 36

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property continues to report strong occupancy numbers with three (3) current 1 openings, but typically running with only one (1) opening on an ongoing 2 basis (average). The ALZ/ALCF program offers the following basic 3 services and amenities: 4

3.2.5.1. Enclosed garden/wandering path area. 5

3.2.5.2. Housekeeping as needed. 6

3.2.5.3. Resident laundry. 7

3.2.5.4. Three (3) meals per day, plus snacks. 8

3.2.5.5. Complete ADL assistance. 9

3.2.5.6. Dementia-specific activity programming. 10

3.2.5.7. Transportation as needed. 11

3.2.6. There are no effective extra services and amenities for the ALZ/ALCF 12 unit of this property other than unscheduled medical transportation. 13

3.2.7. Basis of Competition. The property bills itself as being rather “homey” 14 due to the cottage environment. The staff seems to be a bit worn out as they 15 float from cottage to cottage. This program doesn’t exactly fit into the 16 regulatory envelope and the Consultant doubts this property will have any 17 telling impact on the proposed Project’s marketing and sales program. 18

Exhibit 66: Cedar Creek Life Center One-Bedroom Unit Floor Plan 19

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3.3.Cedar Creek Life Center. This property claims to provide independent living and 1 assisted living with all services being brought into the apartment rather than 2 having seniors live in a given program area. This property has the ECC License. 3 The property offers studio/efficiency apartments (403 square feet/$2,950 per 4 month), one-bedroom apartments (503 square feet/$3,250 per month) and two-5 bedroom apartments (772 square feet/$4,600 per month). Application fee is 6 $1,750. This information is contradicted by the property’s website 7 (www.cedarcreekalf.com) information that states there are 771 square foot units 8 and 772 square foot units (note unit plans below). The property claims to provide 9 full LPN coverage for each shift (3 LPNs on day shift, 2 LPNs on evening shift 10 and 1 LPN on the night shift) supervising a total of 14 CNAs (5 on day shift, 5 on 11 evening shift and 4 on night shift) together with a dedicated activity program 12 director and a part-time assistant who is also the van driver. The property also 13 utilizes tier charges ranging from $100 per month to $450 per month based upon 14 additional support the property residents may require. There are a total of 70 15 apartments having a licensed capacity of 78 residents. The property claims to 16 have 76 residents at this time. 17

Exhibit 67: Cedar Creek Life Center Two-Bedroom Unit Floor Plan 18

19 3.3.1. The property offers the following amenities: 20

3.3.1.1. Private Diving Room 21

3.3.1.2. Security Service 22

3.3.1.3. Scheduled Transportation 23

3.3.1.4. Library 24

http://www.cedarcreekalf.com/�

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3.3.1.5. Supervised Activities Program 1

3.3.1.6. Wellness Center 2

3.3.1.7. Three Meals Daily (Monday through Saturday) and Sunday 3 Brunch (first Sunday of every month) 4

3.3.2. Each living unit comes with the following amenities and services: 5

3.3.2.1. Weekly Housekeeping 6

Exhibit 68: Cedar Creek Life Center Two-Bedroom Unit Floor Plan 7

8 3.3.2.2. Unit Maintenance 9

3.3.2.3. Individual Living Unit Thermostatic Temperature Controls 10

3.3.2.4. Flat Laundry Service 11

3.3.2.5. All Utilities (except phone) 12

3.3.2.6. 24-Hour Unit/Resident Monitoring 13

3.3.2.7. Cable Television 14

3.3.3. Additional Services included: 15

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3.3.3.1. Barber & Beauty Shop 1

3.3.3.2. Personal Laundry Service 2

3.3.3.3. Unscheduled Transportation to Medical Appointments 3

3.3.4. Basis of Competition. This property is competitive due to the following 4 issues and/or advantages: 5

3.3.4.1. This is an established property operating at near full occupancy. 6 Property representative claims there is one (1) studio apartment unit 7 and one (1) one-bedroom apartment unit available, with a pending two-8 bedroom unit that may become available in the near-term. The 9 Consultant has the impression the property representative (Nancy 10 Piakis) was not altogether honest on the number of units available. 11

3.3.4.2. This property competes by providing a higher level of nursing 12 supervision than is the norm for assisted living properties. This 13 property focuses on bringing the care into the resident’s apartment 14 instead of moving residents around as they become more frail. This is 15 a definitive trend developing in the senior housing industry and should 16 be given consideration in the proposed Owner’s Program for the 17 Project. The higher level of nursing is a definitive advantage. 18

3.3.4.3. This property also provides a minimum of additional services for 19 which a charge would otherwise be expected. The Tier Charge Plan 20 included the following schedule of charges (the basis for these 21 additional monthly assessments was not made clear to the Consultant): 22

3.3.4.3.1. $100 per month 23

3.3.4.3.2. $200 per month 24

3.3.4.3.3. $300 per month 25

3.3.4.3.4. $450 per month 26

3.3.5. Basis of Competition. This property shows fairly well and has a strong 27 staffing regimen. The Merritt Island location means this property will be 28 directly competitive due to its overall convenient location. 29

4. Independent Living Facilities. No stand-alone independent living facilities were 30 found operating in the marketing area. 31

5. Assisted Living Facilities. In the State of Florida, assisted living properties are 32 licensed at one or more levels: Standard Assisted Living License (“SAL License”), 33 Limited Nursing Services License (“LNS License”) and the Extended Congregate 34 Care License (“ECC License”). These licensure levels are intended to provide a 35 much broader range of care services that include intermediate nursing care services at 36 the ECC License level, with the use of hospice care services being used to provide 37 skilled nursing services so the property does not have to operate (and license) a 38 Skilled Nursing Facility (“SNF”), as these facilities and programs are subject to 39 government reimbursement and not market forces. In the past, this has resulted in 40

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massive cuts as the federal and state governments seek to limit their respective 1 financial exposure levels, as well as eliminating the operating risks these programs 2 require operators to sustain. 3

5.1.The Place at Merritt Island. 535 Crockett Boulevard, Merritt Island, FL. 32953. 4 321.454.2363. 84 total licensed beds (www.theplaceatmerrittisland.com). 5 Contact: Lynn Pearson, RN, BSN. This property appears to be a former Marriott 6 Senior Living property with the typical small-sized units, well-appointed interior 7 design, mature landscaping, gardens and enclosed patio areas. The property 8 claims it offers independent living and assisted living care programming but the 9 services (and residents, for that matter) suggest the independent living program is 10 independent in name only and is in fact the highest functioning assisted living 11 residents being conveniently grouped into a program called independent living for 12 marketing purposes. The property currently has a census of 81 residents. The 13 care program is staffed with a RN supervisor and LPNs on each shift. This 14 property has a full-time activity director and part-time volunteer activity aides. 15 Care attendants are staffed at the statutory required level (8 on the day shift, 7 on 16 the evening shift and 5 on the night shift). The property offers three (3) total care 17 levels with the pricing (base, base plus $9.00 a day and base plus $16.00 per day) 18 and a respite program rate ($135 per day). This property will provide furnished 19 apartments (higher rate) and offers the typical program amenities one would 20 expect from an assisted living program that include: 21

5.1.1. Living Units. The property offers a total of eight (8) floor plans ranging 22 from 327 square feet to 716 square feet: 23

5.1.1.1. Appleton Efficiency – a total of three (3) different floor plans 24 starting at 327 square feet and priced at $2,850 to $3,000. There is an 25 additional Appleton priced at $2,700, but this unit is not represented in 26 the unit plans, only the rate sheet. 27

5.1.1.2. Belmont Studio – a total of two (2) floor plans of approximately 28 370 square feet and priced at $3,150 and $3,300. 29

5.1.1.3. Carrington One-Bedroom – one (1) floor plan at $3,750 per month 30 for a 505 square foot unit. 31

5.1.1.4. Dandridge One-Bedroom – one (1) floor plan at 578 square feet 32 being offered for $4,050 per month. 33

5.1.1.5. Elmington One-Bedroom – one (1) floor plan at 716 square feet 34 being offered for $4,350 per month. 35

5.1.2. The following amenities and services are included at the base care level 36 (Level I): 37

5.1.2.1. Three (3) meals per day. 38

5.1.2.2. Managed activity program (recreational religious, educational and 39 social). 40

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5.1.2.3. All utilities. 1


5.1.2.5. Library. 3

5.1.2.6. Weekly flat linen service. 4


5.1.2.8. Medication reminders. 6

5.1.2.9. Weekly health assessment. 7

5.1.2.10. Emergency call system (in unit). 8

5.1.2.11. Onsite beauty and barber shop (extra fee for use). 9

5.1.3. The following amenities and services are included at the second care level 10 (Level II): 11

5.1.3.1. Medication administration (no injectables). 12

5.1.3.2. Bathing assistance (3x per week). 13

5.1.3.3. Cueing for meals, activities and ambulation with some assistance. 14

5.1.4. The following amenities and services are included at the third care level 15 (Level III): 16

5.1.4.1. Medication administration (injectables). 17

5.1.4.2. Continence management. 18

5.1.4.3. Daily assistance with dressing and grooming. 19

5.1.4.4. Two (2) hours of additional care staff wellness checks per day. 20

5.1.4.5. Ambulation assistance and transfer assistance. 21

5.1.5. Basis of Competition. This property competes on the basis of physical 22 appearance (good looking property with mature landscaping and excellent 23 interior appointments). Property focuses on tier charge based programming 24 that includes an ECC license. Accordingly, this congregate property 25 provides services into the units. Typical combination property that has a 26 fairly desirable location and good staffing program. 27

6. Alzheimer’s/Dementia Specialty Care Unit Assisted Living Facilities 28 (“ALZ/ALCF”). These properties and/or programs are specialty care units that, more 29 or less, provide a complete living setting for people having Alzheimer’s Disease 30 (“AD”) or another dementing disorder within a structured living program and usually 31 in a secure unit (locked unit) configuration. The Consultant found programs as small 32 as 10 units (that may be double-occupancy for as many as 20 residents) and as large 33 as 60 beds. By far, these are the most expensive senior housing programs within the 34 anticipated geographical PMA of the proposed Project Site. By and large, these 35 properties are reporting excellent occupancy rates with an average current occupancy 36

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of 98% for all facilities currently in operation. The Consultant was also able to 1 identify four (4) properties under construction that include ALZ/ALCF units and 2 services. The properties included in the compendium were: 3

6.1.Savannah Cottage of Oveido, 355 Alafaya Woods Boulevard, Oviedo, FL 32765. 4 407.359.1011, Ashley Magill, Marketing Director. This dementia care unit has 30 5 studio units with a licensed capacity for 38 residents. This property is a locked 6 unit currently running at near full capacity (35 residents, with one (1) pending 7 new resident). This property is part of a for-profit chain (Senior Living 8 Management) of senior housing properties primarily oriented to the Southeast. 9 Property uses a central day room design common to most dementia units with a 10 library, fireplace, living room area, dining room and activity rooms. Property has 11 walled exterior courtyard and patios. Property utilizes a LPN on the floor with 12 the Executive Director being a RN to supervise care planning. Property currently 13 has three (3) care attendants (CNAs) assigned to the day shift and evening shift, 14 while two (2) care attendants are assigned to the night shift. Property also has a 15 cook and server assisting with the preparation of all three (3) meals and snacks. 16 The property takes all types of dementia residents and uses hospice care and home 17 health aides to augment end-stage dementia residents. 18

6.1.1. Living units are all shared studio units offered on a semi-private or private 19 basis. Pricing starts at $2,900 for semi-private unit (200 square foot 20 bedroom with shared living area) and $3,695 for private studio residency 21 (300 square foot unit). There are currently one (1) semi-private and one (1) 22 private units available. Interview found the property typically operates at 23 near full capacity (average of 98% occupancy) until the housing market 24 crashed leaving the property operating consistently at around 92% 25 occupancy. 26

6.1.2. Care planning is based upon a points system (tier chargers) ranging from 27 $400 per month to as much as $1,250. The expectation is that the majority 28 of residents are grouped in the highest tier, providing for a combined rate 29 target of $4,945 per month for the private unit and $4,150 for semi-private 30 end-stage care program charges. Program provides laundry twice a week, all 31 housekeeping, maintenance, scheduled transportation and activity 32 programming for dementia care/low-acuity residents. This property has a 33 one-time $1,000 community fee (non-refundable) and a refundable $1,000 34 deposit. 35

6.1.3. This property also has a 60 bed standard ALCF divided into two (2) 36 separate buildings on the same campus with the ALZ/ALCF building. These 37 two (2) buildings house 24 units and 36 units, respectively. There are a total 38 of four (4) different studio plans available. The ALCF unit currently has 39 three (3) units available in the standard assisted living program. Pricing 40 ranges from $2,575 for studio/half-bath unit of 290 square feet, to $2,895 for 41 a deluxe studio with a full bath at approximately 380 square feet. The point 42 system used in the dementia unit is also used in the assisted living unit, 43

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providing a total “grossed-up” care program-based rate of $3,865 per month 1 for the smallest studio/half-bath unit and $4,145 for the large studio/full-bath 2 unit. This property has run consistently with a high occupancy rate of 98%, 3 suggesting the market is quite “tight” with entrenched demand as these 4 living unit sizes are quite small. 5

6.1.3.1. The assisted living program provides the following amenities and 6 services as a standard: 7

6.1.3.1.1. Three (3) meals and two (2) snacks per day. 8

6.1.3.1.2. Housekeeping. 9

6.1.3.1.3. Weekly flat linen service. 10

6.1.3.1.4. Scheduled transportation. 11

6.1.3.1.5. Complete ADL cueing assistance. 12

6.1.3.1.6. Activity programming (dementia specific). 13

6.1.3.2. The assisted living program provides the following amenities and 14 services at an extra cost: 15

6.1.3.2.1. Care plan management beyond cueing. If the resident requires 16 staff assistance for undertaking a given ADL, then points are 17 assessed and a new billing rate is affixed to the resident. 18

6.1.3.2.2. Activity program supplies. 19

6.1.3.2.3. Offsite excursions/trips for social activities. 20

6.1.3.2.4. Medication management. 21

6.1.3.2.5. Persona laundry. 22

6.1.3.2.6. Continence assistance. 23

Competitive Facilities Compendiums 24

Once all the information has been aggregated regarding the competition, the next step in 25 the process was to match common facility data points amongst the competing facilities 26 (at each level – independent, standard assisted and dementia assisted living). This 27 created the following databases described under the following sub-headings of this 28 section: 29

1. Property Amenities & Services Compendiums. 30

2. Living Units Compendiums. 31

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Exhibit 69: ILF Program Compendium of Units & Rates 1

2 3. Occupancy Rate Compendiums. 3

4. Rental Rate Compendiums. 4

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5. Staffing Patterns Compendiums. 1

The findings of the analysis are: 2

Exhibit 70: ILF Occupancy & Unit Counts Compendium 3

4 6. ILF Entry-Fee CCRC Programs. There are no existing entry-fee CCRCs in the PMA. 5

The Buena Vida Estates property was reviewed to provide some context to the 6 potential for this program type – given the capital market advantages this type of 7

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development program may in fact create for the benefit of the Client. Water Song 1 will be the first entry-fee CCRC in the market, but it is not scheduled to come on line 2 until mid-March of next year and is provided to contrast the statistics for this class of 3 asset, to wit: 4

Exhibit 71: ALCF & ALZ/ALCF Unit Counts & Prices Compendium 5

6 6.1.Occupancy. The Buena Vida Estates property operates at near full capacity (as 7

would be expected from this class of asset). The Water Song property claims they 8 have 50 plus reservations and the model units are not even complete as yet 9 (scheduled for next month). The median and average occupancy in the market is 10

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currently 98.17% and that is consistent with the expectations the demand analysis 1 model has generated. 2

6.2.Entry Fees. The $235,875 average and median entry-fee suggest strong price 3 point support exists for the entry-fee CCRC product and/or life care contract 4 products. 5

Exhibit 72: ALCF & ALZ/ALCF Occupancy & Staffing Compendium 6

7 6.3.Routine Rental Rates. The $2,506 average and median monthly rental rate is 8

contrasted by an upper limit rate of $3,500 per month for a three-bedroom unit. 9 This is a competitive rate base and the proposed Project should be positioned to 10 take advantage of this fact – especially when the median and average rental rate 11 for rental ILF properties are in fact less than the entry-fee pricing (instead of 12 higher than the entry-fee product which would be the norm). 13

6.4.Staffing. The existing property uses a RN supervisor and LPNs staffing each 14 shift. The staffing ratios are consistent with the average and median values for 15 the entirety of the market. 16

7. Rental ILF Program. No stand-alone rental ILF properties were found in the PMA. 17

8. Congregate Living. There are two (2) congregate living properties (Palm Cottages of 18 Rockledge and Sand Point. Cedar Creek Life Centers also offers an independent 19 living program but the Consultant was unable to resolve differences regarding the size 20 of the ILF unit due to separate representatives making separate claims about the 21

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entirety of the property, rendering the Cedar Creek Life Centers property an enigma 1 that was only given limited weighting in the Consultant’s analysis. These properties 2 are expected to be competitive with the proposed Project based upon the continuum 3 of care, pricing and physical amenities and services, to wit: 4

Exhibit 73: ALCF & ALZ/ALCF Compendium of Services & Amenities 5

6 8.1.Occupancy. All properties reported occupancies in excess of 90%, suggesting the 7

available market supply has reached maximum operating capacity and that new 8 construction would be supportable at the congregate level. 9

8.2.Routine Rental Rates. The properties show good rate support with the average 10 rate of $2,176 and median rate of $2,333 per month show good rate support, but 11 not overwhelming rate support. This finding suggests the timing of the Client’s 12 project may indeed have an impact and find higher rates based upon the 13 desirability of the location and views it would be expected to command . 14

8.3.Staffing. The staffing of the assisted living program is consistent with the rest of 15 the properties in the compendium with the Alzheimer’s units commanding the 16 highest ratios. The properties staff activity directors, but no dedicated activity 17 aide support. This could be a clear area of differentiation between the proposed 18 Project and the competition, but there would be the expectation that these 19 properties will staff aides for activities in order to remain competitive. 20

9. Assisted Living. There are 30 properties in the market with assisted living licenses. 21 Twenty-four of those properties have units of less than 20 beds (most have 6 to8 22 beds) and are not directly competitive due to the lack of program amenities and 23 services the small-scale properties would be expected to not have available due to a 24 much smaller revenue base. Most of these properties license their properties at the 25 ECC level so as to be able to provide the broadest possible range of health care 26 support services outside of the skilled nursing licensure class. There are a total of six 27

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(6) assisted living programs that would be considered – in some form or fashion – to 1 be competitive with the proposed Project, to wit: 2

9.1.Property Size. As expected, the size of the dementia care unit reflects the choices 3 of management and the results show facilities with at least 20 beds but no more 4 than 60 beds. These findings are consistent with other markets the Consultant has 5 reviewed in the past. 6

9.2.Occupancy. The compendium of properties are recording occupancies in excess 7 of 90%, indicating a mature market with entrenched demand to support it. 8

9.3.Rental Rates. Rental rate support for assisted living programming appears to be 9 strong with an average price of $3,274 and a median price of $3,421 per month. 10 Their Alzheimer’s units recorded rental rates in excess of $4,000 per month with 11 an average and median monthly rent rates over $3,600 per month. The 12 Consultant’s opinion is that the Client’s proposed Project should include an 13 assisted living unit and an Alzheimer’s unit as the market shows strong price 14 support for these programs. 15

9.4.Staffing. The staffing programs show a bit more staffing in the Alzheimer’s units 16 (9.5:1 ratios for the day and evening), but slightly less at the assisted living level. 17 These findings are consistent with a market having strong underlying support as 18 properties are not increasing staffing on the night shifts or evening shifts beyond 19 what seems to be a level that would produce around 3.15 hours per day for 20 residents in the ALZ/ALCF units and 2.1 hours per day for the ALCF units. 21

10. Alzheimer’s Assisted Living. The Consultant’s investigation found Savannah 22 Cottages to be the only free-standing Alzheimer’s program, but it is also part of a 23 larger campus that includes a standard assisted living unit and is reviewed above. 24

Conclusions of Field Investigation 25

The conclusions of the field investigation are: 26

1. Program Type: there exists strong support across the board for senior housing projects 27 in the geographical PMA. A rental ILF project would have little direct competition, 28 but would be handicapped when it came to providing a continuum of care that would 29 allow the resident to age-in-place without transfer or home health care intervention. 30 The congregate approach seems to hold weight, but the inclusion of skilled nursing 31 care would be a grave risk the Client would have to accept in terms of the cash flows 32 of that portion of the unit. The Consultant’s opinion of the local market conditions 33 find that entry-fee units are enjoying strong support, but there is already one property 34 going through the initial lease-up cycle and construction cycle. The creation of a 35 rental program would reduce the capital financing pool options, but the market seems 36 to be showing a high level of support for properties that offer assisted living and 37 dementia care. The Consultant’s recommendation is for a 90-bed assisted living 38 property program and 30-bed dementia assisted living care program in a secured wing 39 configuration. This may have an additional demand on working capital that would 40 not be at the entry-fee program level, but, cet. par., it represents the lowest risk 41 profile. 42

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Exhibit 74: Project Revenue Projections Spreadsheet 1

2 2. Price Points. The proposed Project should be priced within a narrow band around the 3

median/average routine rental price points of $2,950 to $3,141 per month (plus or 4 minus 15%) for efficiency units, $3,200 to $3,364 per month (same 15% spread) for 5 one-bedroom units, and $4,310 to $4,600 for two-bedroom units. These will have to 6 be reviewed in the financial feasibility study, but a “fully-loaded rate” (i.e.: one that 7 includes assistance with all ADLs and IADLs as part of a single rate plan) would be 8 the way to go in terms of marketing the product to the public. Having said that, a tier 9 system would also be appealing and there is ample support for tier pricing. If the tier 10 approach is to be used, then the low-side of the rental rate curve should be used for 11 pricing and there should be no more than three (3) tiers based upon the system of 12 direct employee hours multiplied by the 2.4 multiplier. This could be used to market 13 the property on the basis of having residents only pay for the exact care they receive 14 and not be subsidizing other residents who are less healthy. 15





These assumptions are assumed achievable provided the proposed Project is 21 capitalized for the marketing and sales program in the upper-quartile of all facility 22 pre-opening marketing programs and provides strong staffing ratios and competent 23 management. 24

4. Basic Services & Amenities. The subject property should offer the following 25 amenities and services as part of the basic rate plan: 26

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4.1.Three (3) meals. 1

4.2.Two (2) snacks. 2

4.3.Hydration management (both programs). 3

4.4.Continence management – cueing and hydration management for self-managed 4 continence. 5

4.5.Flat linen service (weekly). 6

4.6.Personal laundry for dementia unit. 7

4.7.Housekeeping as needed. 8

4.8.ADL cueing in assisted living unit. 9

4.9.Complete ADL support in dementia unit. 10

4.10. Structured activity programming supported with director and aides. 11

4.11. Scheduled transportation. 12

4.12. Heated swimming pool. 13

4.13. Gardens and/or gardening opportunities and programs. 14

4.14. Covered parking. 15

4.15. Medication reminders for assisted living program. 16

4.16. Complete medication management for dementia unit. 17

5. Additional Services & Amenities. The proposed Project should offer the following 18 amenities and services for an additional fee: 19

5.1.Medication management for assisted living program. 20

5.2.Continuous ADL assistance for assisted living program. 21

5.3.Feeding assistance for dementia units. 22

5.4.Unscheduled transportation (both programs). 23

5.5.Activity supplies for assisted living program. 24

5.6.Personal laundry for assisted living program. 25

5.7.Offsite trips/excursions (both programs). 26

6. Staffing. Staffing ratios for the property should be as follows: 27

6.1.ALCF Day Shift: 9.5 residents per care provider (aides plus nurses). 28

6.2.ALCF Evening Shift: 9.5 residents per care provider. 29

6.3.ALCF Night Shift 12.5 residents per care provider. 30

6.4.ALZ/ALCF Day Shift: 9 residents per care provider. 31

6.5.ALZ/ALCF Evening Shift: 9 residents per care provider. 32

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6.6.ALZ/ALCF Night Shift: 12.5 residents per care provider. 1

6.7.Additional staffing should be predicated upon the requirements of the total pool of 2 residents for each program area. ALZ/ALCF staff should be optimized with as 3 few new faces as possible. 4

7. Unit sizes. Unit sizes represent an area where a differentiation with the market may 5 be realized by simply building larger units than those currently provided by the 6 competition. The recommended unit sizes for the programs are: 7

7.1.Assisted Living. Should offer studio units, one-bedroom units and deluxe two-8 bedroom units. The square footage for these units should be 475 s.f. for the studio 9 units, 550 s.f. for the one-bedroom units and 795 s.f. for the two-bedroom units. 10

7.2.Alzheimer’s/Dementia Living Program. Should offer one-bedroom units that can 11 be single occupancy or double occupancy. These units should be at least 475 12 square feet, with a preference stated for units larger than 500 square feet. 13

8. Lease-up expectations. Assuming a 90-day, fully-funded presales program having at 14 least a 60-day advertising/media blitz run-up, should be able to generate 12 to 15 15 assisted living program residents and 10 to 12 dementia program residents as of the 16 end of the first month the proposed Project is placed in service. The net gains 17 thereafter would suggest a 2 to 4 unit gain for assisted living each month and a 2 to 3 18 bed gain for the dementia program residents. The expectation for maximum 19 sustainable occupancy would be in the mid to high 90 percentile. 20

The final count of units requires the Consultant to undertake a final demand model for the 21 purposes of projecting the size of the proposed Project. 22

The Reconciled New Construction Demand Analysis 23

As a result of the analysis of the current, planned and proposed facility data elements, the 24 following changes would be required in order to reconcile the actual market information 25 with the demand model: 26

1. Qualifying Household Incomes. The pricing of the current facilities ranges from 27 $2,500 to over $4,000 for residency in competing senior housing properties. The 28 object of the Consultant’s final demand analysis is to provide a conservative analysis 29 of the potential development program, erring on the side of caution. All of these 30 considerations required the Consultant to increase the qualifying income from 31 $50,000 per annum to $75,000 per annum under the following assumptions: 32

1.1.ILF residency candidates will spend approximately 70% to 80% of their income 33 on room, board, transportation and associated activities. This would suggest a 34 minimum qualifying income of $60,000 being required. The next closest 35 household income bracket is for households already earning $75,000 or more. 36 This assessment is a conservative estimate in that it does not include those 37 households where there will be a conversion of a portion of the household’s net 38 worth for the purposes of providing income augmentation. Accordingly, the ILF 39 Demand Model will likely under-report the true demand for new living unit 40 construction. 41

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1.2.ALCF residency candidates will spend approximately 75% to 85% of their 1 income on room, board, daily living management and lifestyle assistance. This 2 would also suggest a qualifying income of at least $60,000, so the next closest 3 bracket is the Households Earning $75,000 or more bracket and it would tend to 4 under-report demand for new construction for the same reason. 5

1.3.ALZ/ALCF residency candidates will spend approximately 75% to 85% of their 6 income on room and board per the ALCF residency requirements and for the 7 same reason the qualifying income will be Households Earning $75,000 or more. 8

2. Demand Modeling Competitive Impact. The Consultant’s initial analysis of the 9 demand for senior housing new construction potential did not reconcile the impact of 10 existing, planned and proposed senior housing communities within the respective 11 PMAs (i.e.: the Initial Gross Demand Model only resolved the demand equation to a 12 level known as “Gross Demand” and not to the level of “Net Buildable Demand” that 13 would provide for a level of demand measurement that netted out the impact on 14 demand by the routine turnover in existing communities plus the reduction in demand 15 due to new market entrants.). Accordingly, additional adjustments to the final senior 16 housing new construction demand models was undertaken, 17

Entry-Fee ILF Net Buildable Demand Analysis 18 The Entry-Fee ILF Net Buildable Demand Analysis was the final entry-fee demographics 19 analysis undertaken by the Consultant for the purposes of this Report. The Entry-Fee ILF 20 Net Buildable Demand Analysis was modified to reflect the following issues facing the 21 proposed Project: 22

1. Screen Number 1 - Age & Income Qualified Households in Primary Marketing Area. 23 As described above, the qualifying income was changed from $50,000 to $75,000 to 24 reflect the incomes required for residency in the current marketplace. 25

2. Screen Number 2 - IADL Disability/Age/Income Qualified Households in Primary 26 Marketing Area. No changes were made to this screen level; the multipliers used in 27 the initial analysis were used here as well. 28

29

{REMAINDER OF PAGE INTENTIONALLY BLANK} 30

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Exhibit 75: Entry-Fee ILF Net Buildable Demand Analysis Spreadsheet (30-Minute 1 Drive-Time PMA) 2

3 3. Screen Number 3 - Increases Due to Adult Children Referrals - Secondary Marketing 4

Area. No changes were made to the $150,000 Household Income requirement for 5 this screen. 6

4. Screen Number 4 - Less Increases Due to Competitive Additions in Market. The 7 Consultant’s approach to quantifying the potential competitive impact on the Entry-8 Fee Net Buildable Demand Analysis is represented by the development of standard 9 assisted living housing that has a higher turnover rate, thus requiring more and more 10 full-capacity independent living facility additions to satisfy the market because the 11 current crop of independent living facility units is quite limited. In the interest of 12 creating a conservative assessment of the potential demand for new entry-fee ILF 13 construction, the total assisted living market is assumed to be serviced entirely by the 14

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entry-fee facilities (instead of being shared between entry-fee and rental ILF 1 properties, which is obviously not the case). 2


5 This led to a computation based upon “Equivalent ILF Units” in the market that were 6 derived based upon the assumption of total Current Year ALCF Supply divided by 7 the assumed turnover rate (35% versus the common 25% - for added safety) that 8 includes the new ALCF Supply Beds to account for demand at competing ILF 9 properties still not identified as being directly competitive and being located within 10 the corresponding marketing area. All subsequent years were computed based upon 11 the reciprocal of each subsequent reporting period’s ALCF Supply at the reciprocal of 12 the prototypical 25% factor (divide ALCF competitive supply by 0.75). This 13 produced a much larger assumed population of new facility living units coming 14 online over the course of the Forecast Period (thereby meeting the criteria of the 15

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Consultant in terms of creating a sober and realistic assessment of the market 1 potential for this class of housing). 2


5 5. Screen Number 5 - Penetration Potential of Primary Marketing Area. The 6

Consultant’s approach was to limit the penetration rate into the Net Demand pool of 7 cohorts to 15% even though penetration rates as high as 25% are commonly used for 8 quantifying Net Buildable Demand potential. The Consultant selected the 15% 9 penetration rate because the apparent Gross Demand is so high, there is a reasonable 10 expectation this market will, cet. par., attract additional competition. 11

6. Screen Number 6 - Potential Facility Sales Pool Quantification. The final sort is 12 based upon the assumption of revenue base for the given market geography. The 13 definition of a senior housing property’s geographical primary marketing area is that 14

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geographical area from which the facility would be expected to garner at least 75% of 1 its routine sales revenues. The standards promulgated under this screen apply a more 2 stringent range of 80% to 95%. 3

Exhibit 78: Rental ILF Net Buildable Demand Analysis Spreadsheet (30-Minute 4 Drive-Time PMA) 5

6

Rental ILF Net Buildable Demand Analysis 7 Like the Entry-Fee Net Buildable Demand Analysis, the Rental ILF Net Buildable 8 Demand Analysis was contrived based upon changes resulting from the Field 9 Investigation that produced the following screens: 10

1. Screen Number 1 - Age & Income Qualified Households in Primary Marketing Area. 11 This screen was changed to age qualified households with household incomes of 12

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$75,000 or more to reflect the findings (pricing of competing properties) of the Field 1 Investigation. 2


5 2. Screen Number 2 - IADL Disability/Age/Income Qualified Households in Primary 6

Marketing Area. This screen was unchanged from the Rental ILF Gross Demand 7 Analysis. 8

3. Screen Number 3 - Increases Due to Adult Children Referrals - Secondary Marketing 9 Area. This screen was unchanged from the Rental ILF Gross Demand Analysis. 10

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3 4. Screen Number 4 - Less Increases Due to Competitive Additions in Market. This 4

measurement reflects the same findings for the Entry-Fee ILF Net Buildable Demand 5 Analysis in terms of the numbers of units of new supply expected to enter the 6 marketing area over the course of the Forecast Period(note discussion on page 118). 7

5. Screen Number 5 - Penetration Potential of Primary Marketing Area. As with the 8 Entry-Fee Net Buildable Demand Analysis the Consultant elected to limit the 9 penetration rate to 15% of the Net Demand pool(note discussion on page 118). 10

6. Screen Number 6 - Potential Facility Sales Pool Quantification. The same 11 methodology as was employed in the Entry-Fee ILF Net Buildable Demand Analysis 12 was incorporated herein (note discussion on page 118). 13

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Exhibit 81: Rental ALCF Net Buildable Demand Analysis Spreadsheet (30-Minute 1 Drive-Time PMA) 2

3

Rental ALCF Net Buildable Demand Analysis 4 The Rental ALCF Net Buildable Demand Analysis is the final computation of the 5 potential net buildable demand for standard assisted living care facility accommodations 6 in the private market. For the purposes of this Report (i.e.: a conservative analysis of the 7 potential demand for new senior housing living unit construction at the assisted living 8

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level) the following assumptions are made that bear directly on the Rental ALCF Net 1 Buildable Demand Analysis: 2


5 1. The 115-unit low-income senior project placed on hiatus by the City of Cocoa is 6

assumed to be turned into an assisted living project. For the purposes of 7 conservatively estimating the market, these units were added to the competitive 8 supply for the 20-Minute Drive-Time PMA and the 30-Minute Drive-Time PMA. 9

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2. The pending development of the Principal Senior Living 48-unit ALCF was added to 1 the competitive supply for all three (3) PMAs. 2


5 3. The pending development of the Florida Group’s proposed CCRC was considered 6

plausible and the resulting 48 units of ALCF housing were added to the competitive 7 supply for all three (3) PMAs. 8

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4. The portion of the ALCF demand that is assumed to be allocated to the ALZ/ALCF 1 program is netted out of the increase in supply. 2

The screening process for the Rental ALCF Net Buildable Demand Analysis was as 3 follows: 4

5. Screen Number 1 - Age & Income Qualified Households in Primary Marketing Area. 5 This screen was changed to age qualified households having a current year household 6 income of $75,000 or more (reflects findings of the Field Investigation). 7

6. Screen Number 2 - ADL Disability/Age/Income Qualified Households in Primary 8 Marketing Area. This screen remains unchanged from the Rental ALCF Gross 9 Demand Analysis (note discussion on page 76). 10

7. Screen Number 3 - Increases Due to Adult Children Referrals - Primary Marketing 11 Area - Secondary Cohort Profile. No change to this screen was made from the Rental 12 ALCF Gross Demand Analysis (note discussion on page 76). 13

8. Screen Number 4 - Less Increases Due to Competitive Additions in Market. The 14 result of the competitive compendiums analysis was to recognize the turnover of an 15 estimated 556 beds (at 30% per annum) plus an additional 93 units of new 16 construction. All subsequent years adjust supply to account for turnover of the 17 existing/projected supply of ALCF living units. 18

9. Screen Number 5 - Penetration Potential of Primary Marketing Area. As with the ILF 19 analyses, the penetration rate for the Rental ALCF Net Buildable Demand Analysis 20 was limited to 15% of the Net Demand for each reporting period. 21

10. Screen Number 6 - Potential Facility Size Quantification. As with the ILF analyses, 22 the more conservative 80% to 95% range of routine rental revenues was used to size 23 the new program. 24

Rental ALZ/ALCF Net Buildable Demand Analysis 25 The Rental ALZ/ALCF Net Buildable Demand Analysis represents the last of the 26 demographic-based demand models created by the Consultant. In the creation of this 27 final analysis, the following issues are highlighted for the reader’s information: 28

1. The 25 units of new construction for the Principal Senior Living facility development 29 program and an assumed 20 units of new construction owing to the “Florida Group” 30 developer were added to the existing supply of Alzheimer’s and dementia care facility 31 beds licensed at the assisted living level. 32

2. The affordability was indexed to the $75,000 household income level. 33

3. The disability rates were indexed to the Upper 95% Confidence Interval, Mean and 34 Lower 95% Confidence Interval with the Mean being represented in the body of this 35 Report and the other two (2) spreadsheets are located in the Appendix Section (note 36 spreadsheets starting on page 167). 37

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Exhibit 84: Rental ALZ/ALCF Net Buildable Demand Analysis Spreadsheet (30-1 Minute Drive-Time PMA) 2

3 The Rental ALZ/ALCF Net Buildable Demand Analysis was undertaken subject to the 4 following screens: 5

4. Screen Number 1 - Age & Income Qualified Households in Primary Marketing Area. 6 The age qualified households remained unchanged while the income qualification 7 was raised to the $75,000 Household Income for each reporting period. 8

5. Screen Number 2 - Heavy Dementia/Age/Income Qualified Households in Primary 9 Marketing Area. No changes to this screen were incorporated into the analysis. 10

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6. Screen Number 3 - Increases Due to Adult Children Referrals - Secondary Marketing 1 Area. No changes to this screen were incorporated into the analysis. 2


5 7. Screen Number 4 - Less Increases Due to Competitive Additions in Market. The total 6

competing supply reflects 150 units of new supply being added to this screen for the 7 initial reporting year. Thereafter 20% of the difference between intervening year 8 values plus 40% of the previous year’s demand are used to round out the supply 9 picture for the Rental ALZ/ALCF Net Buildable Demand computations. 10

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8. Screen Number 5 - Penetration Potential of Primary Marketing Area. As with the 1 other facility net demand analyses, the penetration rate was arbitrarily reduced to 15% 2 of Net Demand for the analysis. 3


6 9. Screen Number 6 - Potential Facility Size Quantification. As with the other final 7

analyses, the Consultant limited the facility sizing based upon a more conservative 8 revenue assessment process with the acceptable ranges being 80% to 95% of facility 9 routine rental revenues (as opposed to the 75% industry benchmark). 10

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Consultant’s Conclusions, Findings & Recommendations

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Consultant’s Conclusions & Recommendations 1

The Report substantiates the following findings and conclusions: 2

1. New Construction Demand. Rainmaker Marketing Corp. has confirmed the demand 3 for new senior housing construction in this marketing area to be strong enough to 4 support: 5

1.1.up to 587 units of moderately-priced entry-fee independent living facility (“ILF”) 6 multifamily housing units for the sum of the annual periods where the proposed 7 Project is most likely to enter the market (Dec-09 through Dec-11). All 8 subsequent years demonstrate continued strong support for additional entry-fee 9 ILF development in excess of the 587 unit program. This suggests an absorption 10 of approximately 4 to 8 units (net of turnover losses) per month. This finding is 11 tempered by the fact the housing markets remain very soft and this will likely 12 reduce demand by half of what it would otherwise be. The expected entry-fee 13 range is $133,000 to $425,000 with an expected average of between $175,000 to 14 $200,000; assuming a basic services oriented living unit and 100% refundable 15 entry-fee structure with the refund occurring after the next resident takes 16 possession of the unit. These units would be expected turnover at the rate of 10% 17 to as much as 20% per annum for the future inventory (current inventory plus 18 those 587 units of new construction identified for absorption herein) for all units 19 within the geographical primary marketing area. If an entry-fee ILF program is 20 chosen, then the program should be based upon the projected 90-day sales 21 absorption expectation (with a 90-day media blitz run-up prior to actual marketing 22 and sales commencing) as being the size of each developed building so as to limit 23 market risk exposure of the total project with the initial phase providing enough 24 critical mass to pay the costs of operations and debt service for the units and the 25 common areas building. These entry-fee multifamily units will be configured in 26 efficiency units, one-bedroom units, two-bedroom units and three-bedroom units. 27

1.2.up to 335 units of rental ILF multifamily housing units based upon an assumed 28 20% to 25% per annum turnover of the entire future ILF inventory (current 29 inventory, plus those 335 units of new construction indentified for absorption 30 herein) within the geographical primary marketing area. The lease-up expectation 31 for rental ILF multifamily units – in light of the housing market slump – 4 to 6 32 units per month (assuming a well-capitalized 90-day run-up media and marketing 33 blitz and 18 month sales curve per a FHA/HUD Section 221(d)(4) underwriting 34 requirement of no more than three (3) years to build-out and stabilize a new 35 construction property) for a total of 72 to 108 net sales. Assuming the property 36 would achieve break-even operations at around 75% occupancy, the total phase 37 development of the property would account for 96 to 144 ILF units and the 38 findings suggest the market would support multiple phases. These multifamily 39 units will be configured in efficiency units, one-bedroom units, two-bedroom 40 units and three-bedroom units. 41

1.3.up to 121 units of rental assisted living care facility (“ALCF”) multifamily 42 housing units based upon an assumed 30% to 35% per annum turnover of the 43

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entire future ALCF inventory (current/projected 124 units to 232 units of 1 inventory, plus those 121 units of new construction indentified for absorption 2 herein) within the geographical primary marketing area the Consultant is 3 projecting (30-Minute Drive-Time PMA). These multifamily units will be 4 configured in efficiency units, one-bedroom units and two-bedroom units. The 5 expectation for absorption of these new units (plus turnover losses) would in the 6 range of three (3) to four (4) units per month on a total lease-up curve not to 7 exceed 18 months to stabilize the new property. Current underwriting 8 benchmarks (i.e.: underwriting per the FHA/HUD Section 232 Loan Insurance 9 Program Guidelines) would not exceed 120 units and the Consultant believes a 10 90-bed ALCF development program would be able to, cet. par., attract sufficient 11 capital to offset the capital expense involved in bringing the proposed Project to 12 market. 13

1.4.up to 141 units8 of rental dementia/Alzheimer’s care assisted living care facility 14 (“ALZ/ALCF”) multifamily housing units based upon an assumed 30% to 40% 15 per annum turnover of the entire future ALZ/ALCF inventory (current inventory, 16 plus those 141 units of new construction indentified for absorption herein) within 17 the geographical primary marketing area. The practical limitation on dementia 18 care units is approximately 60 beds, with units of 30 beds or less being the most 19 likely configuration an owner/operator in the market would be seeking. The 20 expectation regarding lease-up should be in the range of two (2) to three (3) units 21 per month. These living units would be configured into one-bedroom single-22 occupant and double-occupant residences. The Consultant recommends the 23 ALZ/ALCF program to be a 30-bed unit (as part of the ALCF unit development 24 program above), locked unit with a second unit being brought on line once the 25 first unit is open and occupied with a waiting list in place. 26

2. Living Class Units. The ILF program should be sized to provide sufficient operating 27 income to service the capital expenses associated with the program and property 28 amenities. The ALCF program should be sized so that once the ALCF unit reaches 29 its maximum sustainable ongoing operating capacity, the ILF program resident 30 turnover provides for at least 75% of the resident turnover for the ALCF program. 31 The ALZ/ALCF program should be sized so that once the ALZ/ALCF unit reaches its 32 maximum sustainable ongoing operating capacity, the projected turnover of ALCF 33 residents would result in providing 20% of the resident turnover demand for the 34 ALZ/ALCF unit. The Consultant’s recommended configurations for an entry-fee 35 CCRC (without life care contract and without skilled nursing) would be for a 36 community comprised of 240 units of entry-fee ILF housing (the property should 37 offer the option of rental ILF housing at a higher rate to resident prospects), 48 units 38 of rental ALCF housing and 20 units of rental ALZ-ALCF housing as follows: 39

8 The findings relative to the marketing area suggest this number of beds could be supported but the practical limit for any Alzheimer’s/Dementia Care Facility is, in the experience of the Consultant, no more than 60 beds.

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2.1.Entry-Fee CCRC Program Type Recommendation: if the Client elects to pursue a 1 CCRC project, the property should be delineated into the ILF housing program 2 that has its own property amenities that are separate from the ALCF housing 3 program amenities and the ALZ/ALCF housing program amenities. The 4 ALZ/ALCF housing program should be a locked unit. This presents a problem 5 due to the size and configuration of the proposed Project Site. This presents a 6 challenge based upon the proposed Project Site configuration because the ultimate 7 development will likely be a two-tower design with the ILF program in one tower 8 and the ALCF and ALZ/ALCF health care unit in the other tower. Ideally, 9 multiple towers would be built out based upon 100% pre-sales of each tower for 10 the entry-fee component. In a single tower configuration, the property sales and 11 marketing team would have to sell out the entire 240 units (or an amount of units 12 equal to the project construction loan plus a slippage factor to cover residents who 13 do not in fact take possession of their units per their respective contracts). In 14 today’s marketplace, that would require an inordinate amount of working capital 15 to fund the marketing costs and fund the project carrying costs. For the entry-fee 16 CCRC program to work, the Project Site must allow for the development of the 17 ILF program component in phases of units with the first phase being sized so as to 18 produce (upon sell-out) enough ongoing operating revenues to pay for the 19 operation of all facets of the property’s amenities and common areas. Once the 20 property reaches a point in time wherein the routine rental income of the property 21 is sufficient to offset the operating expenses of the ALCF and ALZ/ALCF health 22 care unit – whether the health care unit is occupied by residents or not – then the 23 development and construction of the health care unit would begin. These issues 24 must be balanced in terms of the financial feasibility issues and the market risk 25 exposure issues in order to find the compromise that suits the economic tools the 26 Client has and/or would be expected to have to bear on the property development 27 program. 28

2.2.Rental CCRC Program Type Recommendation: if the Client elects to pursue the 29 rental CCRC program approach, then the limits set forth in the FHA/HUD Section 30 221(d)(4) and FHA/HUD Section 232 Loan Insurance Programs will govern the 31 transaction. The Rental CCRC Program Type would necessitate a separation of 32 the two (2) programs (into two (2) ownership entities to qualify for the loan 33 insurance programs). The number and type of living units in the ILF program 34 would be dictated by the results gleaned from the pending financial feasibility 35 study and limit the ILF program to no more than 240 units, the ALCF program to 36 no more than 60 units and the ALZ/ALCF program to no more than 30 units. 37 These individual programs should be developed in phases if the Project Site 38 conditions and configuration will allow. 39

2.3.Rental Congregate Independent Living Program Type Recommendation: if the 40 Client elects the rental ILF/ALCF congregate living approach, the property should 41 be divided into the ILF program and the ALCF program. This approach would 42 suggest the development of the ILF and ALCF programs in separate towers and 43 separate phases in order to limit the market risk exposure of the construction 44

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lender. The Consultant’s recommendations would be for no more than 240 units 1 of ILF housing being built in 60-unit phases (if Project Site conditions allow) and 2 the ALCF unit being no more than 48 beds built in two (2) phases (if Project Site 3 conditions allow) so as to minimize the market risk exposure of the construction 4 lender and reduce the call on working capital resources. This approach would 5 necessitate the development of all property amenities and common areas in the 6 first phase of development for the respective living unit programs. 7

2.4.Rental Congregate Assisted Living Program Type Recommendation: if the Client 8 elects the rental congregate living approach, the property should be devised into 9 an ALZ/ALCF program of 30 units/beds in a locked configuration. This would 10 suggest the ALCF program to be approximately 100 units – rounded to the next 11 staffing pattern multiplier (30) suggests a 90-unit/bed ALCF program supporting 12 a 20-bed ALZ/ALCF program. If at all possible (based upon Project Site issues), 13 the ALCF unit should be segregated into 30-unit configurations being built out in 14 phase with all the common area amenities for both the ALCF and ALZ/ALCF 15 program areas being built out in the first phase of development. 16

2.5.Rental ALCF Unit Program Type Recommendation: if the Client elects to pursue 17 the development of a stand-alone ALCF property, the proposed Project should not 18 exceed 120 ALCF units built in a butterfly arrangement of 30 units per phase. 19 This will increase the overall cost of construction (slightly) but would be expected 20 to dramatically reduce the construction lender’s market risk exposure and 21 potentially reduce the total working capital requirement of the property. 22

2.6.Rental ALZ/ALCF Unit Program Type Recommendation: if the Client elects to 23 pursue the development of a specialty-care dementia assisted living unit (an 24 ALZ/ALCF), the property should not exceed 60 ALZ/ALCF units and be built in 25 a butterfly configuration of two (2) phases of 30 beds or three (3) phases of 20 26 beds in order to put a stop limit in the market risk exposure the construction 27 lender would be otherwise required to endure. 28

2.7.ILF Development Program. The ILF development program should focus on a 29 phased approach based upon the limitations of the proposed Project Site and the 30 limitations dictated by sales. Ideally, the ILF program should be broken into 31 phases, with each phase of living unit development being equal to the 90-day 32 sales velocity of 18 to 24 total unit sales. The proposed Project Site does not lend 33 itself to this approach so the phasing of the proposed Project development 34 program should be cut into the smallest pieces that is practical and limit the 35 phases to no more than that required to affect a lease-up period of no more than 36 12 months per phase. Assuming the proposed Project is properly capitalized (i.e.: 37 sufficient working capital resources are available to sustain the marketing and 38 pre-sales program) and professionally managed, the expectation would be for 39 rental ILF sales providing 6 to 10 units per month (net of turnover losses). The 40 idea being that once the proposed Project phase hits an operating occupancy of 41 85%, the phase should demonstrate a positive pre-tax income. These lease-up 42 rates would be impacted by the depth of the housing market downturn and the 43

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perceived value the proposed Project presents relative to the rest of the senior 1 housing market within the geographical primary marketing area. 2

2.8.Program Unit Configurations. Unit plans should be (if at all possible) based upon 3 a flexible design for each floor of a given building so as to allow sales to continue 4 unabated by a lack of units. This means the layout would need to take into 5 account the unit sizing to create a flexible plan (e.g.: the property could be 6 designed so that a three-bedroom ILF unit is equal to an efficiency ILF unit plus a 7 large one-bedroom ILF unit and could therefore be interchangeable based upon 8 sales). The Consultant recommends the following unit class limitations: 9

2.8.1. No more than 36 units of entry-fee efficiency ILF multifamily housing; 10 and 11

2.8.2. No more than 72 units of entry-fee one-bedroom ILF multifamily housing; 12 and 13

2.8.3. No more than 144 units of entry-fee two-bedroom ILF multifamily 14 housing; and 15

2.8.4. No more than 72 units of entry-fee three-bedroom ILF multifamily 16 housing; and 17

2.8.5. No more than 48 units of rental efficiency ILF multifamily housing; and 18

2.8.6. No more than 96 units of rental one-bedroom ILF multifamily housing; 19 and 20

2.8.7. No more than 192 units of rental two-bedroom ILF multifamily housing; 21 and 22

2.8.8. No more than 96 units of rental three-bedroom ILF multifamily housing; 23 and 24

2.8.9. No more than 18 units of rental efficiency ALCF multifamily housing; and 25

2.8.10. No more than 48 units of rental one-bedroom ALCF multifamily housing; 26 and 27

2.8.11. No more than 24 units of rental two-bedroom ALCF multifamily housing; 28 and 29

2.8.12. No more than 15 units of rental efficiency ALZ-ALCF multifamily 30 housing; and 31

2.8.13. No more than 15 units of rental one-bedroom ALZ-ALCF multifamily 32 housing; and 33

3. Expected Lease-Up Rates. Assuming the construction of the proposed project 34 commences within the next six (6) months, the expected starting occupancy rates for 35 each class of living units is as follows: 36

3.1.Entry-Fee ILF. These units are all pre-sale units meaning that construction only 37 occurs when enough entry-fee living units have been sold to fill the entire 38

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building or a given phase (this is dependent upon Project Site considerations and 1 capital market considerations) to a point where a lender can be induced to fund a 2 construction loan of sufficient size to offset the costs of site infrastructure 3 development, new building construction, land and project carrying costs not 4 otherwise provided for out of the Client’s funds. The monthly pre-sale 5 expectations for each unit class as follows: 6

3.1.1. Efficiency Units: 1 to 2 units per month. 7

3.1.2. One-Bedroom Units: 1 to 3 units per month. 8

3.1.3. Two-Bedroom Units: 2 to 4 units per month. 9

3.1.4. Three-Bedroom Units: 1 to 3 units per month. 10

3.2.Rental ILF. These units are not part of an all pre-sales approach. The expectation 11 is for a well-managed 90-day pre-sales effort in advance of the property being 12 placed in service that is fully funded for a given rental program development 13 phase’s operations. The occupancy expectations for this class of multifamily 14 housing are: 15

3.2.1. Overall Occupancy Expectations: the current the downturn in the housing 16 market is expected to manifest itself in terms of lower than typical sales 17 results providing a sales range of 24 units (low-side) to 48 units (high-side) 18 for the overall ILF program. Assuming the ILF program is broken into two 19 (2) phases of 120 units per phase, this would suggest the smaller scale 20 property would be able to attain a starting month occupancy of 20% to 40%. 21 If the proposed Project Site configuration does not allow for the 22 development of the ILF property in phase, then the starting month 23 occupancy would be adjusted accordingly. The sales expectations to be as 24 follows: 25

3.2.2. Efficiency Units: a starting occupancy of 4 to 8 units with an expected 26 monthly lease-up rate of one (1) to two (2) units per month with a 27 corresponding maximum sustainable occupancy of 95% for this class of 28 living unit over the remaining course of the Forecast Period. 29

3.2.3. One-Bedroom Units: a starting occupancy of 8 to 12 units with an 30 expected monthly lease-up rate of two (2) to three (3) units per month with a 31 corresponding maximum sustainable occupancy of 95% for this class of 32 living unit over the remaining course of the Forecast Period. 33

3.2.4. Two-Bedroom Units: a starting occupancy of 8 to 16 units with an 34 expected monthly lease-up rate of two (2) to four (4) units per month with a 35 corresponding maximum sustainable occupancy of 95% for this class of 36 living unit over the remaining course of the Forecast Period. 37

3.2.5. Three-Bedroom Units: a starting occupancy of 4 to 12 units with an 38 expected monthly lease-up rate of one (1) to three (3) units per month with a 39 corresponding maximum sustainable occupancy of 95% for this class of 40 living unit over the remaining course of the Forecast Period. Once these 41

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units are sold out, the expectation would be for an increase in sales in 1 reverse order (i.e.: first the sales would increase for two-bedroom units, then 2 the sales for the one-bedroom units would be expected to increase). 3

3.3.Rental ALCF. For the CCRC programs, the lease-up of the ALCF program is not 4 subject to the pre-sale requirement because development of this part of the 5 program would not commence until there is sufficient cash flow to sustain 6 operations whether the ALCF unit is open or not. In the case of the congregate 7 living programs and the stand-alone ALCF development program the expectation 8 is for a well-managed 90-day pre-sales effort that is fully funded for a rental 9 program operation to produce the following outcomes as of the end of the first 10 month from the date this portion of the property is placed in service: 11

3.3.1. Overall Occupancy Expectations: the Consultant expects the downturn in 12 the housing market to manifest itself in terms of lower than typical sales 13 results providing a range of 12 units (low-side) to 18 units (high-side) for the 14 overall ALCF program. Assuming the ALCF program is broken into two (2) 15 phases of 24 to 30 units per phase, this would suggest the smaller scale 16 property would be able to attain a starting month occupancy of 67% to 17 100%. If the proposed Project Site configuration does not allow for the 18 development of the ALCF property in phase, then the starting month 19 occupancy would be adjusted accordingly with the sales expectations to be 20 as follows: 21

3.3.1.1. Efficiency Units: a starting occupancy of 3 to 4 units with an 22 expected monthly lease-up rate of one (1) to two (2) units per month 23 with a corresponding maximum sustainable occupancy of 95% for this 24 class of living unit over the remaining course of the Forecast Period. 25

3.3.1.2. One-Bedroom Units: a starting occupancy of 4 to 6 units with an 26 expected monthly lease-up rate of one (1) to two (2) units per month 27 with a corresponding maximum sustainable occupancy of 95% for this 28 class of living unit over the remaining course of the Forecast Period. 29

3.3.1.3. Two-Bedroom Units: a starting occupancy of 6 to 8 units with an 30 expected monthly lease-up rate of two (2) to three (3) units per month 31 with a corresponding maximum sustainable occupancy of 95% for this 32 class of living unit over the remaining course of the Forecast Period. 33

3.4.Rental ALZ/ALCF. For the CCRC programs, the lease-up of the ALZ/ALCF 34 program is not subject to the pre-sale requirement because development of this 35 part of the program would not commence until there is sufficient cash flow to 36 sustain operations whether the dementia unit is open or not. In the case of the 37 congregate living programs and the stand-alone ALZ/ALCF development 38 program the expectation is for a well-managed 90-day pre-sales effort that is fully 39 funded for a rental program operation to produce the following outcomes as of the 40 end of the first month from the date this portion of the property is placed in 41 service: 42

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3.4.1. Overall Occupancy Expectations: the Consultant expects the downturn in 1 the housing market to manifest itself in terms of lower than typical sales 2 results providing a range of 12 units/beds (low-side) to 20 units/beds (high-3 side) for the overall ALZ/ALCF program. Assuming the stand-alone 4 ALZ/ALCF program is broken into two (2) phases of 24 to 30 units per 5 phase, this would suggest the smaller scale property would be able to attain a 6 starting month occupancy of 50% to 67% per phase. If the proposed Project 7 Site configuration does not allow for the development of the ALZ/ALCF 8 property in phase, then the starting month occupancy would be adjusted 9 accordingly with the sales expectations to be as follows: 10

3.4.1.1. Efficiency Units: a starting occupancy of 4 to 6 units with an 11 expected monthly lease-up rate of one (1) to two (2) units per month 12 with a corresponding maximum sustainable occupancy of 95% for this 13 class of living unit over the remaining course of the Forecast Period. 14

3.4.1.2. One-Bedroom Units: a starting occupancy of 8 to 12 units with an 15 expected monthly lease-up rate of two (2) to three (3) units per month 16 with a corresponding maximum sustainable occupancy of 95% for this 17 class of living unit over the remaining course of the Forecast Period. 18

4. Expected Rental Rates. Expected rental rates are subjective in nature because there is 19 no reliable way (short of a complete building inspection of all living units) to 20 determine if the property is providing accurate unit size and rate information until a 21 given unit is rented. The expected schedule of rents for senior housing living units 22 include “bundled services9” of the type typically seen in each class of senior housing 23 licensure is: 24

4.1.ILF – average rate of $2,333 to $2,500 for the program with a 15% variance on 25 either side as the housing market conditions continue to change. 26

4.2.ALCF – average rate of $3,100 to $3,425 for the program with the 27 aforementioned 15% variance. 28

4.3.ALZ/ALCF – average rate of $3,800 to $4,200 for the program with the 15% 29 variance. 30

5. Expected Staffing Schedules. Staffing for the provision of basic and additional 31 services (by licensure class) of the property are expected to conform to the following 32 schedules: 33

5.1.1. Day shift activities aide: one (1) aid for each block of 60 residents for ILF, 34 one (1) aide per 45 residents for ALCF and one (1) aide per 15 residents for 35 the ALZ/ALCF unit. 36

9 The term “bundled services,” refers to a combination of lifestyle services commonly associated with each class of senior housing property that places all properties on an equal price footing. This means that basic and additional services are blended to reach a common point of reference; then, cet. par., all facility housing services programs could be compared on an “apples to apples” basis.

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5.1.2. Day shift nursing hours: 0.25 hours per week in the ILF unit, 0.75 hours 1 per day for the ALCF unit and 1.00 hours per day for the ALZ/ALCF unit. 2 In addition, the care program should be supervised by a shift nurse on the 3 basis of one (1) nurse per 60 residents of the ALCF unit and ALZ/ALCF unit 4 combined. Finally, assistance beyond reminders for medications and cueing 5 for IADLs and ADLS must be dealt with based upon the care load each 6 resident represents for IADL and ADL support. This means care plans must 7 be created upon admission and updated no later than the end of a fiscal 8 quarter. 9

5.1.3. Day shift food service aides: 1 per 60 residents for ILF, 1 per 30 residents 10 for ALCF and 1 per 20 residents for ALZ/ALCF unit for serving and feeding 11 residents. 12

5.1.4. Day shift housekeeping: 14 bay equivalents per housekeeper. 13

5.1.5. Day shift maintenance: one (1) maintenance assistant per 90 multifamily 14 living units (all classes combined). 15

5.1.6. Evening shift activities aide: none. 16

5.1.7. Evening shift nursing hours: continuation of day schedule. 17

5.1.8. Evening shift food service aides: continuation of day schedule. 18

5.1.9. Evening shift housekeeping: one (1) laundry aide. 19

5.1.10. Evening shift maintenance: contract security service. 20

5.1.11. Night shift activity aide: none. 21

5.1.12. Night shift nursing hours: continuation of day schedule. 22

5.1.13. Night shift food service aides: none. 23

5.1.14. Night shift housekeeping: none. 24

5.1.15. Night shift maintenance: security service. 25

6. Expected Property Amenities & Services. The proposed project is expected to 26 provide the following: 27

6.1.Physical Property Amenities. The proposed project site lends itself to the 28 inclusion of the following physical property amenities that would be expected to 29 be present in a competitive senior housing community: 30

6.1.1. Entry-Fee ILF or CCRC. A competitively designed entry fee community 31 will be sized large enough to support to provide: 32

6.1.1.1. onsite banking 33

6.1.1.2. onsite convenience store 34

6.1.1.3. onsite tennis court 35

6.1.1.4. onsite swimming pool 36

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6.1.1.5. onsite cabana/deck party area 1

6.1.1.6. onsite gym and physical therapy suite 2

6.1.1.7. onsite movie theater 3

6.1.1.8. onsite gourmet kitchen (instructional) 4

6.1.1.9. onsite library/computer center 5

6.1.1.10. onsite card/game rooms 6

6.1.1.11. onsite craft room 7

6.1.1.12. onsite woodworking & pottery center 8

6.1.1.13. onsite hair salon/barbershop 9

6.1.1.14. onsite shuffleboard 10

6.1.1.15. onsite gardens 11

6.1.1.16. onsite activity rooms 12

In addition, the following amenities are proposed should the financial 13 feasibility analysis results indicate sufficient financial support exists to 14 develop and operate these additional amenities: 15

6.1.1.17. onsite basketball court 16

6.1.1.18. onsite limousine service 17

6.1.1.19. onsite dance hall/ballroom 18

6.1.1.20. property-owned & maintained boating/fishing craft 19

6.1.1.21. onsite travel planning center/travel agency 20

6.1.1.22. onsite café/hydration center/internet cafe (open to the public) 21

6.1.1.23. onsite deli (open to the public) 22

6.1.1.24. onsite drycleaner (open to the public) 23

6.1.1.25. onsite bookstore (open to the public) 24

6.1.1.26. onsite spa (open to the public) 25

6.1.1.27. onsite bakery (open to the public) 26

6.1.1.28. onsite gardens/garden shop (open to the public) 27

6.1.1.29. onsite child day care operation (open to the public w/subsidized 28 daycare for line employees) 29

The Consultant is of the opinion that practical imagination can be used to 30 create new venues and opportunities that can further enhance the appeal of the 31 property and be used by the marketing department to differentiate the 32 proposed Project from the existing crop of competition. The value of this 33 exercise can not be lightly put aside when it comes to creating a venue that 34

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allows for the highest rental and entry-fees to be realized. In short: the bottom 1 line may owe much of its character to this exercise. 2

6.1.2. Rental ILF or CCRC. A competitively designed rental community must 3 be sized large enough to support the following amenities: 4

6.1.2.1. onsite convenience store 5

6.1.2.2. onsite tennis court 6

6.1.2.3. onsite swimming pool 7


6.1.2.5. onsite gym and physical therapy suite 9


6.1.2.7. onsite gourmet kitchen (instructional) 11







6.1.3. Rental ALCF. A competitively designed rental community must be sized 18 large enough to support the following amenities: 19


6.1.3.2. onsite gym & PT/ST therapy suite 21








6.1.3.10. onsite hospice center 29

6.1.4. Rental ALZ-ALCF. A competitively designed rental community must be 30 sized large enough to support the following amenities: 31


6.1.4.2. onsite therapy suite 33

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6.1.4.3. onsite rummage rooms 1


6.1.4.5. onsite bakery 3



6.2.Basic & Additional Services. The geographical PMA crop of competing facilities 6 use all of the pricing structures (ala carte, tier charge and point system). All 7 facilities offer what they claim to be both Schedule of Basic Services and a 8 Schedule of Additional Services. The Consultant recommends a Schedule of 9 Basic Services that are, more or less, inclusive of the services necessary to 10 support the fundamental living requirements at each housing class level and the 11 use of an additional services schedule that reflected lifestyle improvements that, 12 would be considered by most owner/operators, to be not required to sustain a 13 resident. Tier charging should be used in both the ALCF unit and the ALZ-ALCF 14 unit based upon additional nursing staff time being sold in monthly blocks that 15 correspond to the given tier charge. Specifically, the basic and additional services 16 schedules would include: 17

6.2.1. ILF Basic Services. Apartment rent, utilities (including cable/satellite 18 television and telephone), weekly wellness check-up, weekly housekeeping, 19 weekly flat linen service, free scheduled transportation, free breakfast, 20 access to all ILF common areas, unit maintenance and wireless internet 21 access. With ILF (especially entry-fee) the concept of “nickeling and 22 diming people to death” doesn’t work well and great care should be 23 exercised in putting together this portion of the program. 24

6.2.2. ILF Additional Services. Extra meals and meal plans (2 or 3 meals per 25 day), additional housekeeping cleans (accidents), unscheduled 26 transportation, activity program charges (mainly for offsite activities), 27 personal escorts, limousine service, private dining/catering, personal 28 laundry, covered parking and valet services. 29

6.2.3. ALCF Basic Services. Apartment rent, utilities, three (3) meals per day, 30 two (2) snacks per day, hydration management program, assistance with 31 bathing, dressing and grooming, self-managed continence assistance 32 (reminders – part of hydration management program), unit maintenance, 33 weekly housekeeping, full-scope managed activities program, medication 34 reminders program, transfer assistance, scheduled transportation, weekly flat 35 linen service, wireless internet access and access to all common areas and 36 outdoor activity areas. 37

6.2.4. ALCF Additional Services. ALCF additional services would include 38 offsite activity programs, personal laundry, activity supplies (basics should 39 be provided), medication management, continence management, personal 40 assistance with shopping, personal transportation and nursing support. With 41

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the exception of activity program supplies and continence supplies, the 1 additional personal assistance should be billed to the resident as an extra. In 2 the alternative, the Consultant recommends that additional services be 3 provided on a “tier charge” basis that places residents in one of four tiers: 4

6.2.4.1. Tier One: reminders for self-management – no additional charge. 5

6.2.4.2. Tier Two: up to 15 minutes per day extra CNA assistance – 2.4 6 times CNA base pay by 30-day month (assume CNA wage rate of 7 $11.00/Hour for $198 per month). 8

6.2.4.3. Tier Three: more than 15 minutes per day to 30 minutes per day 9 extra CNA assistance - $396 per month. 10

6.2.4.4. Tier Four: more than 30 minutes per day but less than 45 minutes 11 per day extra CNA assistance - $594 per month. 12

For all additional care, the Consultant recommends the pricing on an hourly 13 basis in additional 15-minute blocks. The Consultant also recommends the 14 Client consider providing “customized activity programming support” for 15 residents under the operating theory that one-on-one activity programming 16 support would increase the resident’s satisfaction with their living experience. 17 These programs would be sold to the resident in 30-minute blocks based upon 18 the direct pay rate of the activity aide multiplied by 2.4. This is an emerging 19 trend in senior housing and providing these services in blocks would have the 20 potential of being a point of facility differentiation (marketing advantage) that 21 could be made affordable. The math could work out as follows: 22

Activity Aide Salary of $11.00/Hr. Multiplied by 2.4 Equals $26.40 23 Multiplied by 0.50 Hours Equals $13.20. Assuming the block is sold on a 24 monthly basis of 22 sessions per month, the total billing would only be 25 $290 per month extra, but the one-on-one therapy would be a potential 26 game-changer for the resident and/or the resident family. On the other 27 hand, the employment of unskilled activity workers could be absorbed into 28 the project revenue stream and “right sized” to provide help with all other 29 activities or provide the specialized help of being able to provide 12 30 sessions per weekday shift – or 264 sessions per month at $13.40 per 31 session works out to $3,484 per month at a cost (hourly wage and benefits) 32 of approximately $2,474 per month. 33

6.2.5. ALZ/ALCF Basic Services. The basic services for dementia care 34 residents would include apartment rent, utilities, three (3) meals per day, two 35 (2) snacks per day, hydration management, continence reminders, unit 36 maintenance, housekeeping as needed, medication management, personal 37 laundry, activity program access, access to gardens and secured common 38 areas, assistance with all ADLs and IADLs. 39

6.2.6. ALZ/ALCF Additional Services. The additional services at the dementia 40 care level would include personalized activity management program blocks, 41 personal transportation, family/private dining/catering, continence 42

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management (urinary and bowel), hospice services and therapy covered 1 under Medicare. 2

7. Expected Project Site Entitlements. The proposed project site was reviewed in terms 3 of the following statutory investment incentives: 4

7.1.Low-Income Housing Tax Credits (“LIHTC”). The property may be configured 5 to qualify for Low-Income Housing Tax Credits pursuant to Section 42 of the IRS 6 Code. Like many states, Florida uses a lottery system once all projects are 7 ranked. Accordingly, the Section 42 credit is not a given, while the Section 142 8 Tax-Exempt Bond Financing where the “piggy-back” credit can be utilized if the 9 Client elects to develop the property as a mixed-income project. The Consultant 10 believes the cost basis of the proposed Project would be too great to make the 11 LIHTC-based capitalization approach economically feasible. 12

7.2.New Markets Tax Credits (NMTC). The New Markets Tax Credits program 13 primarily benefits the development of retail facilities and not housing programs. 14 Should the Client elect to utilize an entry-fee property development approach, the 15 resulting usage (should the back-of-the-house services be separately organized) 16 would potentially make the property a qualified use. In addition, the NMTC 17 statute requires the site census tracts to be low-income tracts that are preapproved 18 based upon resident income levels. On this basis, the proposed Project does not 19 meet the statutory requirements. 20

8. Expected Revenues. The proposed Project should be priced within a narrow band 21 around the median/average routine rental price points of $2,950 to $3,141 per month 22 (plus or minus 15%) for efficiency units, $3,200 to $3,364 per month (same 15% 23 spread) for one-bedroom units, and $4,310 to $4,600 for two-bedroom units. These 24 will have to be reviewed in the financial feasibility study, but a “fully-loaded rate” 25 (i.e.: one that includes assistance with all ADLs and IADLs as part of a single rate 26 plan) would be the way to go in terms of marketing the product to the public. Having 27 said that, a tier system would also be appealing and there is ample support for tier 28 pricing. If the tier approach is to be used, then the low-side of the rental rate curve 29 should be used for pricing and there should be no more than three (3) tiers based upon 30 the system of direct employee hours multiplied by the 2.4 multiplier. This could be 31 used to market the property on the basis of having residents only pay for the exact 32 care they receive and not be subsidizing other residents who are less healthy. 33





END OF REPORT 39 40

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Index Glossary Appendix

Bibliography

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Index 1

10-Minute Drive Time Area .............................15

2


3


A

Adult Children Households ........................15, 41 ALCF................................................................14 ALCF Gross Demand Analysis ........................79 ALZ/ALCF.......................................................14 Alzheimer’s Assisted Living Care Facility.......14 Angel Guardian Assisted Living ......................90 Astronaut Boulevard...................................11, 14 Autumn House..................................................90 Average Family Size ........................................35 Average Household Size ..................................35

B

Banana River Villas..........................................90 Buena Vida Estates...........................................90 bundled services .............................................144

C

Cape Canaveral.................................................12 Carolina Care Assisted Living Facility.............90 Carriage House Assisted Living Facility..........91 Casual Country Living .....................................91 Cedar Creek Life Center ...............................91 Century Oaks....................................................91 Certificate Of Need...........................................83 City of Cocoa....................................................19 City of Cocoa 115-Unit Senior Housing Program

.....................................................................95 Cleveland Clinic ...............................................14 Client ................................................................11 Combination Program ......................................14 CON .................................................................83 Condominium Housing Sales ...........................58 Condominium Housing Sales Prices ................59 Condominium Investment Plans.......................97 Courtenay Oaks ................................................91 Current Senior Household Payors ....................41

D

Demand Modeling Competitive Impact .........122 Demographics Analysis....................................24

Disposable Income .......................................... 52

E

ECC License.................................................. 108 Empowerment Zone ........................................ 19 Enterprise Zone ............................................... 19 Extended Congregate Care License............... 108

F

Family Households .......................................... 35 FHA/HUD Section 202 Program..................... 71 FHA/HUD Section 221(d)(4) ........................ 139 FHA/HUD Section 232 ................................. 139 Forecast Period ................................................ 13 Forever Care .................................................... 91 Friends at Home .............................................. 91

G

Ginny's Place ................................................... 92 Gross Demand Analysis .................................. 70

H

Hibiscus Court ................................................. 92 Household Formation ...................................... 34 Household Income Findings ............................ 55 Household Net Worth...................................... 51 Household Net Worth Findings ....................... 56 Householder Living Alone .............................. 36

I

ICFs ................................................................. 41 ILF............................................................13, 137 ILF Entry-Fee Gross Demand Analysis........... 71 ILF Rental Gross Demand Analysis ................ 76 Imperial Boulevard .....................................11, 14 Initial Facility Screening ................................. 96 Initial Gross Demand Analysis ........................ 70 Intermediate Care Facilities............................. 41

J

Jacob's Ladder Family Assisted Living ........... 92

L

LIHTC ........................................................... 150 Lilac House...................................................... 92 Limited Nursing Services License................. 108 Living Unit Compendium Limitations ............ 96 LNS License .................................................. 108 Lower 95% Confidence Interval...................... 81 Low-Income Housing Tax Credits ................ 150

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M

M.D. Anderson Cancer Center .........................14 Mayo Clinic......................................................14 Median Condominium Housing Sales Prices ...61 Median Single-Family Housing Sales Prices ...60 Medicaid Waiver Program ...............................71 Merritt Island....................................................31

N

New Construction Housing Values Analysis....62 New Markets Tax Credits...............................150 NMTC ............................................................150 Non-Family Households...................................35

O

Occupancy Compendium Limitations ..............96 Open Arms with Love ......................................92 Our House Assisted Living Facility .................92 Owner’s Program .............................................11

P

Palace Retirement Home ..................................93 Palm Cottages of Rockledge ..................93, 103 Percentage of Householders Aged 55+.............69 PMA .................................................................14 PMA Household Income Distribution..............50 Population Aging..............................................29 Population Density ...........................................31 Principal Senior Living Assisted Living Program

.....................................................................95 Project Site .......................................................14 Puerto Del Rio, LLC.........................................11

R

Rental ALZ/ALCF Gross Demand Analysis ....83

Report .............................................................. 12 Riverview Retirement Center ....................... 93 Route 50 Assisted Living Project .................... 95

S

SAL License .................................................. 108 Sand Pointe Senior Living............................. 93 Sarah McGrady................................................ 18 Sciascia Development Group Project .............. 95 Sherwood House.............................................. 93 Single-Family Housing Sales .......................... 57 Single-Family Housing Sales Prices................ 58 Skilled Nursing Facilities ................................ 41 SNFs ................................................................ 41 Southland Suites of Melbourne ....................... 94 Staffing Patten Compendium Limitations ....... 96 Standard Assisted Living License.................. 108

T

Tenants-In-Common Syndication Plans .......... 97 The Brookshire ................................................ 90 The Palms at Norwood .................................... 93 The Place at Merritt Island........................... 93 The Town Square in Viera............................... 94 TIC Plans ......................................................... 97 Total Age 65+ Population................................ 30 Total Households............................................. 33 Total Population Aged 50+.............................. 69 Tropical Living Club ....................................... 94

U

Upper 95% Confidence Interval ...................... 81

W

Water Song Project.......................................... 94

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Glossary Here follows a glossary of the common terms used in the production of this Report:

Activities of Daily Living. Refers to those activities that measure a person’s ability to provide for their own daily care needs on an independent basis without assistance for certain critical self-care actvities. Quantitatively, a senior is expected to be at significant risk for placement in a group housing setting if they do not perform two (2) or more Activities of Daily Living on a routine daily basis. Activities of Daily Living include getting outside, walking 1/4th of a mile, housework, bathing, dressing/grooming and feeding one self. (see also “Instrumental Activities of Daily Living”).

ADL/ADLs. Refers to Activities of Daily Living (see above).

CCRC. Refers to Continuing Care Retirement Community (see below).

Cet. Par. Refers to the Latin term ceterus paribus – meaning “other things being equal”.

Client. Refers to Puerto Del Rio, LLC.

Competitive Compendium. Refers to a relative analysis of the various common demographic points the competitors exhibit including occupancy compendiums, rental rate compendiums, staffing pattern compendiums, amenities compendiums, services compendiums, unit size compendiums, etc.

Consultant. Refers to Rainmaker Marketing Corporation.

Continuing Care Retirement Community. Refers to a type of senior housing community where there are multiple care levels provided within the facility for the purposes of allowing a resident to remain at the facility and age in place by providing independent living, assisted living and/or skilled nursing care.

ECC. Refers to Extended Care Center (see below).

Extended Care Center. Refers to a licensure class of assisted living facilities and services within the requirements stipulated under the Florida Statutes.

IADL/IADLs. Refers to Instrumental Activities of Daily Living.

Instrumental Activities of Daily Living. Refers to those activities that measure a person’s ability for living independently (alone) within the community. Quantitatively, if a person does not perform (in cases where the person cannot or will not) two (2) or more IADLs a day, they are considered to be likely candidates for independent living facility candidacy. IADLs include telephone management, personal finance management, light housework, heavy housework, shopping and meal preparation.

PMA. Refers to Primary Marketing Area (see below).

Primary Cohort Demographic Profile. Refers to the profile of the expected consumer for the proposed Project in which all common demographic indicators are

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used to further describe the consumer for the purposes of quantifying demand, creating market and advertising materials and the expected operations of the proposed Project.

Primary Marketing Area. In commercial real estate development, the primary marketing area is defined as that geographical are within which the property is expected to source at least 75% of its total ongoing revenues. In senior housing, this typically refers to an area extending from the property out 30 minutes on the surface transportation net at non-peak travel times. The use of the drive-time delineated marketing area boundaries provides a realistic basis for assessing market based upon the assumption that family members would be willing to travel up to 30 minutes by car to routinely visit their family member. This predilection of the adult children serves to act as the primary driver in the placement decision-making process.

Project. Refers to the proposal of the Client to develop a specific commercial income-producing property in the form of a senior housing facility on a proprietary basis.

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Appendix

Exhibit 87: Baseline Population Demographics

Exhibit 88: Projected Growth of Marketing Area Households; 2000 – 2013 Bar Chart (30-Minute Drive-Time PMA)

2000 2008 2013

97,089113,428

124,343

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Year

Households: 30-Minute Drive-Time PMA

2000 2008 2013

97,089113,428

124,343

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Year


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2000 20082013

54,542

60,477

65,272

48,00050,00052,00054,00056,00058,00060,00062,000

64,000

66,000

Year


2000 20082013

54,542

60,477

65,272

48,00050,00052,00054,00056,00058,00060,00062,000

64,000

66,000

Year



2000 2008 2013

17,51819,747 21,321

0

5,000

10,000

15,000

20,000

25,000

Year


2000 2008 2013

17,51819,747 21,321

0

5,000

10,000

15,000

20,000

25,000

Year


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Exhibit 91: Detailed Age Profile Spreadsheet (30-Minute Drive-Time PMA)

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Exhibit 92: Detailed Age Profile Spreadsheet (20-Minute Drive-Time PMA)

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Exhibit 93: Detailed Age Profile Spreadsheet (10-Minute PMA)

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Exhibit 94: Household Financial Expenditures Spreadsheet (30-Minuted Drive-Time PMA)

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Exhibit 95: Household Financial Expenditures Spreadsheet (20_minute Drive-Time PMA)

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Exhibit 96: Household Financial Expenditures Spreadsheet (10-Minute Drive-Time PMA)

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Exhibit 97: Single-Family Sales By Price & Year – Brevard & Indian River, Florida Counties

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Exhibit 98: Condominium Sales By Price & Year – Brevard & Indian River, Florida Counties

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Exhibit 99: 2008 Distribution of Owner-Occupied Housing Units by Value Pie Chart (30-Minute Drive-Time Area PMA)

2008 Distribution of Owner Occupied Housing Units by Value

<$100K12.9%

$100-199K41.7%

$200-299K24.4%

$300-399K11.3%

$400-499K4.2%

$500K+ 5.6%

2008 Distribution of Owner Occupied Housing Units by Value

<$100K12.9%

$100-199K41.7%

$200-299K24.4%

$300-399K11.3%

$400-499K4.2%

$500K+ 5.6%


2008 Distribution of Owner-Occupied Housing Units by Value

<$100K17.3%

$100-199K43.6%

$200-299K19.9%

$300-399K10.2%

$400-499K4.0%

$500K+ 5.0%


<$100K17.3%

$100-199K43.6%

$200-299K19.9%

$300-399K10.2%

$400-499K4.0%

$500K+ 5.0%

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<$100K10.6%

$100-199K35.9%

$200-299K26.9%

$300-399K15.3%

$400-499K4.9%

$500K+ 6.4%


<$100K10.6%

$100-199K35.9%

$200-299K26.9%

$300-399K15.3%

$400-499K4.9%

$500K+ 6.4%

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Exhibit 102: Rental ALCF Demand Spreadsheet – Upper Range Limit (30-Minute Drive-Time PMA)

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Exhibit 103: Rental ALZ/ALCF Demand Spreadsheet – Upper Range Limit (30-Minute PMA)

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Exhibit 104: ALCF Demand Spreadsheet – Lower Limit (30-Minute Drive-Time PMA)

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Exhibit 105: ALZ/ALCF Demand Spreadsheet – Lower Limit (30-Minute Drive-Time PMA)

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Exhibit 107: Rental ALZ/ALCF Demand Spreadsheet – Upper Range Limit (20-Minute Drive-Time PMA)

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Exhibit 108: Rental ALCF Demand Spreadsheet – Lower Range Limit (20-Minute Drive-Time PMA)

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Exhibit 109: Rental ALZ/ALCF Demand Spreadsheet – Lower Range Limit (20-Minute Drive-Time PMA)

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Exhibit 111: Rental ALZ/ALCF Demand Spreadsheet – Upper Range Limit (10-Minute Drive-Time PMA)

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Exhibit 112: Rental ALCF Demand Spreadsheet – Lower Range Limit (10-Minute Drive-Time PMA)

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Exhibit 113: Rental ALZ/ALCF Demand Spreadsheet – Lower Range Limit (10-Minute Drive-Time PMA)

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Exhibit 114: LIHTC & Section 8 Subsidized Housing – Brevard County, Florida

Facilities List The following facilities were identified as offering some type of senior housing within the 30-minute drive-time PMA:

1. Alterra Clare Bridge of West Melbourne. 7199 Greensboro Dr. Melbourne, FL 32904. (407) 951-4455. License/Certification: #9766, Assisted Living. Capacity: 42 Beds/Units.

2. Alterra Sterling House of W Melbourne I. 7300 Greenboro Dr. Melbourne, FL 32904. (321)953-6464. License/Certification: #8834, Assisted Living. Capacity: 55 Beds/Units.

3. Angel Guardian Assisted Living. 280 Bahama Dr. Merritt Island, FL 32952. (321)223-8371. License/Certification: #10561, Assisted Living. Capacity: 8 Beds/Units.

4. Autumn House. 7999 Spyglass Hill Rd., Viera, FL 32940. (321)242-1006. License/Certification: #9049, Assisted Living. Capacity: 60 Beds/Units.

5. Banana River Villas. $3,950/Month. 1275 N. Banana River Drive, Merritt Island, FL 32952. (321) 392-4448. Capacity 6 Beds/Units.

6. Bethesda on Turkey Creek. 2800 Fordham Rd NE, Palm Bay, FL 32905. (321)723-3288. License/Certification: #4788, Assisted Living. Capacity: 66 Beds/Units.

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7. The Brookshire. 85 Bulldog Blvd, Melbourne, FL 32901. (321)984-7966. License/Certification: #7354, Assisted Living. Capacity: 125 Beds/Units.

8. Buena Vida Estates, 2129 W New Haven Ave, W. Melbourne, FL 32904. (321)724-0060. (www.buenavidaestates.org). Programs Offered: Apartment Living, Assisted Living, Continuing Care Retirement Community, Retirement Living Facility, Skilled Nursing Facility. Capacity: 150 units.

9. BV Assisted Living. 2127 W New Haven Avenue, W. Melbourne, FL 32904. (407)752-7009. License/Certification: #8693, Assisted Living. Capacity: 16 Beds/Units.

10. Carolina Care Assisted Living Facility. 2460 Kathi-Kim St, Cocoa, FL 32926. (321)449-9639. License/Certification: #9426, Assisted Living. Capacity: 8 Beds/Units.

11. Carriage House Assisted Living Facility. 1832 Country Club Dr., Titusville, FL 32780. (321)383-3531. License/Certification: #10800, Assisted Living. Capacity: 8 Beds/Units.

12. Casual Country Living. 4801 Mango Ave., Cocoa, FL 32926. (321)632-9622. License/Certification: #10167, Assisted Living. Capacity: 6 Beds/Units.

13. Cedar Creek Life Center. 4270 Judith Ave., Merritt Island, FL 32953. (321)454-7768. License/Certification: #10541, Assisted Living. Capacity: 78 Beds/Units.

14. Century Oaks. 4001 Stack Blvd., Melbourne, FL 32901. (321)722-4440. License/Certification: #10095, Assisted Living. Capacity: 25 Beds/Units.

15. Courtenay Oaks. 1100 S Courtenay Pkwy., Merritt Island, FL 32952. (321)452-1233. License/Certification: #7476, Assisted Living. Capacity: 11 Beds/Units.

16. Florida Assisted Living Homes. 2204 Parsons Ave., Melbourne, FL 32901. (321)953-8131. License/Certification: #11162, Assisted Living. Capacity: 6 Beds/Units.

17. Florida Shores of Melbourne ALF I. 2155 Keystone Ave., Melbourne, FL 32904. (321)726-8070. License/Certification: #7324, Assisted Living. Capacity: 9 Beds/Units.

18. Florida Shores of Melbourne II. 4060 Miami St., Melbourne, FL 32904. (321)409-0820. License/Certification: #8089, Assisted Living. Capacity: 6 Beds/Units.

19. Forever Care. 4685 Lee Street, Cocoa, FL 32926. (321) 806-4120. License/Certification: #___, Assisted Living. Capacity: 5 Beds/Units.

20. Friends at Home. 3680 Canaveral Groves Blvd., Cocoa, FL 32926. (321)631-4005. License/Certification: #9640, Assisted Living. Capacity: 15 Beds/Units.

21. Ginny's Place. 1198 Auburn Lakes Dr., Rockledge, FL 32955. (321)258-2351. License/Certification: #11161, Assisted Living. Capacity: 6 Beds/Units.

22. Hibiscus Court. 540 E Hibiscus Blvd., Melbourne, FL 32901. (321)951-1050. License/Certification: #9309, Assisted Living. Capacity: 78 Beds/Units.

http://www.buenavidaestates.org/�

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23. Jacob's Ladder Family Assisted Living. 946 Brunwick Ln., Rockledge, FL 32955. (321)745-6063. License/Certification: #11180, Assisted Living. Capacity: 3 Beds/Units.

24. Lilac House. 1770 S Lilac Cir., Titusville, FL 32796. (321)449-9639. License/Certification: #11050, Assisted Living. Capacity: 9 Beds/Units.

25. Open Arms with Love. 6205 Balboa St., Cocoa, FL 32927. (321)632-4955. License/Certification: #10685, Assisted Living. Capacity: 4 Beds/Units.

26. Our House Assisted Living Facility. 315 Wainai Dr., PO Box 541421, Merritt Island, FL 32953. (321)449-9639. License/Certification: #9061, Assisted Living. Capacity: 6 Beds/Units.

27. Palace Retirement Home. 965 S Florida Ave., Rockledge, FL 32955. (321)639-0004. License/Certification: #7949, Assisted Living. Capacity: 28 Beds/Units.

28. Palm Cottages of Rockledge. 3821 Sunnyside Ct., Rockledge, FL 32955. (321)633-1819. License/Certification: #9987, Assisted Living. Capacity: 98 Beds/Units.

29. The Palms at Norwood. 325 Norwood St., Merritt Island, FL 32953. (321)426-5505. License/Certification: #11011, Assisted Living. Capacity: 6 Beds/Units.

30. The Place at Merritt Island. 535 Crockett Blvd., Merritt Island, FL 32953. (321)454-2363. License/Certification: #8975, Assisted Living. Capacity: 95 Beds/Units.

31. Riverview Retirement Center. 4470 S Washington Ave., Titusville, FL 32780. (321)383-2125. License/Certification: #7358, Assisted Living. Capacity: 25 Beds/Units.

32. Sand Pointe Senior Living. 1800 Harrison St.,Titusville, FL 32780. (321)383-6000. License/Certification: #5758, Assisted Living. Capacity: 70 Beds/Units.

33. Sherwood House. 2465 E Sherwood Cir., Cocoa, FL 32926. (321)449-9639. License/Certification: #10775, Assisted Living. Capacity: 6 Beds/Units.

34. Silver Pine Assisted Living. 2360 Madrid Ave SE, Melbourne, FL 32909. (321) 956-8141. License/Certification: #_______, Assisted Living. Capacity: ___ Beds/Units.

35. Smiles & Loving Care. 1065 Garden Rd., Merritt Island, FL 32952. (321)454-4624. License/Certification: #8648, Assisted Living. Capacity: 6 Beds/Units.

36. Southland Suites of Melbourne. 2680 Croton Rd., Melbourne, FL 32935. (407)255-5443. License/Certification: #8885, Assisted Living. Capacity: 80 Beds/Units.

37. The Town Square in Viera, 1700 Wuesthoff Dr., Melbourne, FL 32940. (321)255-6030. License/Certification: #8134, Assisted Living. Capacity: 120 Beds/Units.

38. Tropical Living Club. 2935 N Tropical Trl., Merritt Island, FL 32953. (239)770-2629. License/Certification: #10860, Assisted Living. Capacity: 6 Beds/Units.

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39. Village Oaks at Melbourne. 1765 W Hibiscus Blvd., Melbourne, FL 32901. (407)733-7111. License/Certification: #9396, Assisted Living. Capacity: 102 Beds/Units.

Bibliography Prevalence of Dementia in the United States: The Aging, Demographics and Memory Study: Neuroepidemiology 2007.

The National Nursing Home Survey: 1999 Summary; Series 13, Volume 152, June 2002.

National Center for Health Statistics: National Health Interview Survey.

Summary Health Statistics for the U.S. Population: Health Interview Survey, 2003; Series 10, Volume 224, April 2005.

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