Prepared For: Seth Walker SRI Management, LLC 2528 ...

Prepared For: Seth Walker SRI Management, LLC 2528 Barrington Circle, Suite 2 Tallassee, FL 32308

Project Number CH578GGMH October 19, 2018

Danter and Associates, LLC National Leaders in Real Estate Research

2760 Airport Drive | Suite 135 Columbus, OH 43219 614.221.9096

QUICK REPORT

The Quick Report is a preliminary demand analysis including a demographic evaluation of statistics and characteristics of a selected area to determine whether a full market study of an area's potential ability to support additional senior housing is justified. All information is gathered via the phone and Internet; no site visit has been made. This report is not intended for any other usage, including submission for financing.

We have based our report on a preliminary Site Effective Market Area (EMA) for the site located at 2110 South Washington Avenue in Titusville, Florida. A description of the Site EMA can be found on page 3. The selected information is based on profiles of similar areas for comparable assisted-living and memory care developments.

All unit totals should be considered unconfirmed.

A. SUMMARY OF FINDINGS ? ASSISTED LIVING/MEMORY CARE

Based on the results of the preliminary demand analysis, there appears to be a deficit or unmet demand for a total of up to 282 assisted-living units and a deficit of 182 memory care units in the Titusville EMA submarket a base rents of $4,000 for assisted-living and $5,000 for memory care when considering pipeline product.

SUMMARY

Facilities Units Beds Beds Over $3,500 (base) (Surplus)/Deficit

Assisted-living

Site EMA

Distribution of Units

3

Sleeping Room

137

Studio

157

One-Bedroom

115

Two-Bedroom

282

Total

Site EMA

90 47 137

Memory Care

Facilities Units Beds Beds Over $4,500 (base) (Surplus)/Deficit

Site EMA 1 24 30 18

182

Year Opened

Prior to 1990 1990 ? 1999 2000 ? 2009 After 2009

Total

Site EMA 1 2 3

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Our preliminary analysis for the market potential of senior housing development in Titusville, Florida is based on an identification and analysis of preliminary Site Effective Market Area (EMA) demographic and economic characteristics.

The EMA principle is a concept developed by Danter and Associates, LLC to delineate the support that can be expected for a proposed development.

A Site EMA is the smallest specific geographic area expected to generate 60% to 70% of the support for that development. This methodology has significant advantages because it considers existing natural and manmade boundaries and socioeconomic conditions. The preliminary Site EMA has been established in part based upon a preliminary analysis of mobility patterns, existing hard boundaries (i.e., rivers and freeways), and changes in neighborhood demographic composition, as well as an analysis of existing assisted-living facilities.

The preliminary Site EMA is bounded by Main Street, Australian Way, Walkabout Way, Latimar Street, Brockett Road, Hammock Road and Galaxy Lane to the north, the Indian River to the east, Fay Boulevard and Interstate 95 to the south and Interstate 95, Fox Lake Road, Fox Lake, South Lake and Turpentine Road to the west.

Our research did not identify any planned or proposed properties in the Site EMA.

One additional property advertises itself as assisted-living. Titusville Towers is owned by the Titusville Housing Authority and operates as low income housing with available services. Residents must meet Section 8 income guidelines. The property is not competitive with market-rate private pay product and has not been included in the supply/demand analysis which follows.

A full study would identify the competitive position of existing properties and determine a definitive market area from which the site can expect to attract the majority of its support, as well as clarifying the amount of support which could be expected from outside the market area. Adjusting for external support, once identified, could reduce the above surplus/deficit analysis totals substantially.

A market conditions section provides an overview of the pertinent market characteristics. A detailed inventory list, area map, and demographics are available following page 6 of this report. A detailed distribution of the key demand sections follows.

Households age 75 and older with income of $50,000 and greater are expected to increase 38.8% in the Site EMA area between 2018 and 2023. This compares with 44.6% for the state of Florida and 36.9% nationwide.

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I. PRELIMINARY DEMAND ANALYSIS

The preliminary demand analysis includes 7 key sections:

1. Population requiring assistance with Activities of Daily Living (ADL) 2. Population with Alzheimer's/Dementia 3. Age- and Income-appropriate households 4. Age- and Asset-appropriate households 5. Total Income- and Asset-appropriate households 6. Income- and Asset-appropriate persons requiring assistance with ADLs 7. Surplus/deficit analysis

1. POPULATION REQUIRING ASSISTANCE

Total 2018 Population (Age 75+) Affliction Rate Total Afflicted Population

SITE EMA 7,482 X 9.5% 711

2. POPULATION WITH ALZHEIMER'S/DEMENTIA

Total 2018 Population (Age 65 ? 74) Affliction Rate Afflicted Population (Age 65 ? 74)

Total 2018 Population (Age 75 ? 84) Affliction Rate Afflicted Population (Age 75 ? 84)

Total 2018 Population (Age 85+) Affliction Rate Afflicted Population (Age 85+)

Total 2018 Alzheimer's/Dementia Institutionalization Rate Total Alzheimer's/Dementia persons requiring specialized housing

SITE EMA 9,360 X 2.8% 262

5,399 X 15.6%

842

2,083 X 34.5%

719

1,823 X 25%

456

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3. INCOME-APPROPRIATE HOUSEHOLDS

ASSISTED-LIVING (Age 75+) Total Households (Age 75+) Average Private Monthly A/L Rate Minimum Rent/Income Ratio Minimum Income Total Income-Appropriate Households (Age 75+)

ALZHEIMER'S/DEMENTIA Average Private Monthly Alzheimer's Rate Minimum Rent/Income Ratio Minimum Income (Rounded Up) Total Income-Appropriate Households (Age 75+)

4. ASSET-QUALIFIED HOUSEHOLDS

ASSISTED-LIVING (Age 75+) Minimum Rent/Asset Ratio Minimum Term (Years) Minimum Assets Needed Asset-Appropriate Households (Age 75+) Percent of Asset-Appropriate Households NOT Income-Qualified Estimated Asset-Appropriate Households

ALZHEIMER'S/DEMENTIA (Age 75+) Minimum Rent/Asset Ratio Minimum Term (Years) Minimum Assets Needed (Rounded) Asset-Appropriate Households (Age 75+) Percent of Asset-Appropriate Households NOT Income-Qualified Estimated Asset-Appropriate Households

5. INCOME- AND ASSET-QUALIFIED HOUSEHOLDS

ASSISTED-LIVING Total Income-/Asset-Qualified Households Share Of Households Age 75+

ALZHEIMER'S/DEMENTIA Total Income-/Asset-Qualified Households Share Of Households Age 75+

SITE EMA 4,903 $4,000 80%

$60,000 1,208

SITE EMA $5,000 80% $75,000 772

SITE EMA 80% 3

$180,000 3,374 X 40% 1,350

SITE EMA 80% 3

$225,000 3,090 X 40% 1,236

SITE EMA 2,557 52.2%

SITE EMA 2,008 41.0%

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6. INCOME- AND ASSET-QUALIFIED HOUSEHOLDS REQUIRING ASSISTANCE

ASSISTED-LIVING Afflicted Population (Age 75+) Share Age-/Income-/Asset-Qualified Households Total Target Assisted-Living Market

SITE EMA 711

52.2% 371

ALZHEIMER'S/DEMENTIA Population with Alzheimer's/Dementia Share Age-/Income-/Asset-Qualified Households Total Target Memory Care Market

SITE EMA 456

41.0% 187

7. SURPLUS/DEFICIT ANALYSIS

DEMAND Target Population Base Vacancy Factor Total Demand

SITE EMA

ASSISTED- MEMORY

LIVING

CARE

371

187

+ 7.0% + 7.0%

397

200

SUPPLY

Total Inventory (beds)

157

30

Total Beds at or Above Target Rent (Competitive Supply)

115

18

(SURPLUS)/DEFICIT

282

182

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B. SUMMARY OF FINDINGS ? INDEPENDENT LIVING

Based on a telephone survey of area independent-living properties, the ratio of age/income-/health-qualified households to existing and proposed product is excellent and we believe the area merits additional study.

Independent-Living

Site

EMA

Facilities

1

Units

56

Base rent analyzed

$2,800

Age-/health-/income-qualified persons

1,630

Ratio of comp. units to support

3.4%

Ratio of comp. units plus site (100 units)

9.6%

Distribution of Units

Site EMA

Studio

-

One-Bedroom

40

Two-Bedroom

16

Three-Bedroom

-

Total 56

Year Opened

Prior to 1990 1990-1999 2000-2009 After 2009

Total

Site EMA

1 1

INDEPENDENT-LIVING

According to our interviews with EMA area officials, there are no independent-living properties proposed within the Site EMA.

There is one independent-living property in the area. Brookdale Titusville contains 56 cottage units. We have considered all of their units to be competitive

Our analysis indicates that the existing independent-living market (56 units) has a ratio of units to health-/age-/income-qualified persons of 3.4% at a base rent of $2,800. This is an excellent ratio of existing units to support base.

Adding 100 units at the subject site would increase this ratio to 9.6%. This is an excellent ratio of product to qualified support.

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The following table illustrates our independent-living rating scale:

RATIO OF UNITS TO SUPPORT

Less than 15.0% 15.0% to 19.9% 20.0% to 24.9% 25.0% to 29.9% 30.0% or Greater

RATING

Excellent Very Good

Good Fair Poor

We believe that the site area merits additional study.

Our rating scale typically produces a higher ratio than many analysis systems. Following are some reasons why:

We analyze only households age 75+, as they are the most likely demographic to enter independent-living. Other systems analyze a larger 65+ universe.

We qualify households not only by age and income but also by health. Persons with Alzheimer's/dementia or who need assistance with activities of daily living (ADLs) are better served in a long-term care environment and we have excluded them from the IL support pool. Many analyses do not make this adjustment.

Although we consider the EMA to provide up to 70% of support, in order to be conservative we have not adjusted our support component to include out-of-EMA support.

We also do not include asset-qualified households in our demand ratios. Our source of net worth data (ESRI) does not distribute net worth by source. While net worth often includes a home, which may be sold prior to IL occupancy, it also includes stocks, bonds, pensions, and other investments which may be generating household income. In order to provide the most conservative analysis, we have based our demand figures on income-qualified households only.

A full study would identify the competitive position of existing properties and determine a definitive market area from which the site can expect to attract the majority of its support, as well as clarifying the amount of support which could be expected from outside the market area. Adjusting for external support, once identified, could reduce the above ratios substantially.

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