NIC Regional SymposiumMarch 8, 2011

Opening General Session Hyatt Regency Century Plaza, Los Angeles, CA

New Opportunities, New Realities: What is in Your Play Book?

By: Coach Thompson

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Objective: Provide examples of winning Strategies prepared

by seasoned Seniors Housing Players based on Coach Thompson’s forecast of playing Field

Conditions.

Coach Thompson

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Seniors Housing field conditions for 2011 & 2012.

Coach Thompson

Insert Speaker Company LogoMarc Thompson, CRE, Thesis

2

SH Occupancy and Rent GrowthSH Occupancy and Rent Growth

Source: NIC MAP3

SH Occupancy Landscape has ChangedSH Occupancy Landscape has Changed

Source: NIC MAP4

Seniors Housing vs Commercial RESeniors Housing vs Commercial RE

Source: NIC MAP; MBAA; PPR5

SH Supply Will Be Less of a Hurdle After 1Q11SH Supply Will Be Less of a Hurdle After 1Q11

Source: NIC MAP

New supply is not expected to meet 2012 and 2013 demand.

6

SH Construction TrendsSH Construction Trends

Source: NIC MAP

New supply is not expected to meet demand in 2012 and 2013.

7

SH Metro Level Declines are Far and WideSH Metro Level Declines are Far and Wide

© National Investment Center for the Seniors Housing & Care Industry | www.NICMAP.org

1Q07 to 4Q09 Seniors Housing Occupancy Changes; basis points, MAP 31

Construction of senior housing projects can be supported in poor performing Map 31 markets.

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SH Non Performing Loans (%)SH Non Performing Loans (%)

Percent of Non-performing Seniors Housing Loans

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

Source: NIC MAP

Credit quality remains relatively very good. The first defaults were by SH operators that expanded too aggressively resulting in loan defaults and foreclosures. Now, lenders are seeing smaller operators defaulting on loans

Compared to CRE at over 9% non-performing, SH has relatively performed well.

9

Coach Thompson’s forecast of field conditions for players for 2011 & 2012.

Coach Thompson

Insert Speaker Company LogoMarc Thompson, CRE, Thesis

10

Coach Thompson’s Main Points for Winning on the Field in 2011 & 2012! (Page ONE)

• Field conditions are forecasted to be more challenging.

• Aggregate real estate de-leveraging and loss trends are expected to continue through 2015.

• Well capitalized banks will continue to lend to well capitalized players with demonstrated recurring cash flow and high liquidity (cash) reserves.

Coach Thompson

Insert Speaker Company LogoMarc Thompson, CRE, Field Condition Forecast

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Coach Thompson’s Main Points for Winning on the Field in 2011 & 2012! (Page TWO)

• As a player, prepare a winning playbook strategy that;

• generates the highest yield from existing portfolios.

• once a player is well capitalized grows business by buying distressed communities or developing new communities.

• grows business by attracting new third-party management contracts with Tenants-in-Common groups, private equity, or REIT owners.

Coach Thompson

Insert Speaker Company LogoMarc Thompson, CRE, Field Condition Forecast

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All Star Players:

• Paul W. Dendy, President, Milestone Retirement Communities

• Fee Stubblefield, President and CEO, The Springs Living, LLC

• Aaron Koelsch, CEO, Koelsch Senior Living

Insert Speaker Company Logo

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Coach Thompson

Offensive strategies for your 2011 playbook?• Running Back Off tackle (Construction & Lease-Up)

• The long bomb (Acquisitions: Non-Competitive Bids)

• The Power Sweep (Repositioning a poor performing asset)

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Coach Thompson

Defensive strategies for your 2011 playbook?• Stunts (Structure Strategies: Non-Recourse)

• Prevent (Keeping Lenders and Regulators from disrupting Business)

• Do not let “Field Conditions” such as Capital Markets and the Economy make you defensive.

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Questions!

• What has been each of your same store year over year performance been in terms of occupancy, rental rate growth, expense containment, and employee turn-over compared from 2009 to 2010?

• What have you all learned these past two challenging economic years about operating seniors housing properties?

• How has your perspective changed (if you dare) in regards to capital market participants (Commercial Banks, Financial Companies, GSE’s), these past two years.

• Any questions from the audience?

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