SENIOR HOUSING MARKET INSIGHT

Q1 2020SUPPLEMENTAL

IN THIS REPORT

03 04Introduction Demographic

Demand

06 07Senior Housing

Construction Activity

Primary & Secondary

Markets

08 09Pricing and

Capitalization Rates

Senior Housing Capitalization

Rates

10 12Senior Housing

Investment Returns

Transaction Activity by Buyer

Type

13 15COVID-19

Information and Resources

About CBRE National Senior

Housing

18CBRE Advantage

LISA WIDMIERExecutive Vice PresidentInstitutional PropertiesNational Senior HousingCapital Advisors, Inc.Investment BankingMember FINRA/SIPCCBRE | Capital MarketsT +1 858 729 9890M +1 858 952 4743

ARON WILL Vice ChairmanInstitutional PropertiesNational Senior HousingDebt & Structured FinanceCBRE | Capital MarketsT +1 713 787 1965

MITCHELL KIFFESenior Managing DirectorNational Senior HousingDebt & Structured Finance

AUSTIN SACCOFirst Vice President Institutional PropertiesNational Senior HousingDebt & Structured FinanceT +1 713 787 1952

JOSHUA HAUSFELDExecutive Vice President Institutional PropertiesNational Senior HousingDebt & Structured FinanceT +1 301 215 4102

NATIONAL SENIOR HOUSING TEAM

CORPORATE LEADERSHIP SUPPORT RESOURCE

NATIONAL SENIOR HOUSING PRIMARY CONTACTS

MATT KURONENVice President Institutional PropertiesNational Senior HousingDebt & Structured Finance

ADAM MINCBERGVice PresidentInstitutional PropertiesNational Senior HousingDebt & Structured Finance

ASHAY SHAHTransaction/Underwriting ManagerInstitutional PropertiesNational Senior HousingCBRE | Capital Markets

NATALIA MANNINGClient Services CoordinatorInstitutional Properties National Senior HousingDebt & Structured Finance

ALLIE SURGESClient Services CoordinatorInstitutional Properties National Senior HousingCBRE | Capital Markets

BRANDON WILLIAMSProduction AnalystInstitutional PropertiesNational Senior HousingDebt & Structured Finance

CYRUS PAYDARFinancial AnalystInstitutional PropertiesNational Senior HousingCBRE | Capital Markets

ALLISON FORDFinancial AnalystInstitutional PropertiesNational Senior HousingCBRE | Capital Markets

TIM ROOTVice PresidentInstitutional PropertiesNational Senior HousingDebt & Structured Finance

MICHAEL CREGANProduction AnalystInstitutional PropertiesNational Senior HousingDebt & Structured Finance

SANDY AGUILAGraphic DesignInstitutional PropertiesNational Senior HousingCBRE | Capital Markets

3 | C B R E Q 1 2 0 2 0 S H M I

3IN THIS REPORT

CBRE National Senior Housing is an industry leader in investment sales, debt originations, and investment banking within the senior housing sector. Our team has transacted more than $15.1 billion (including deals currently under contract) across the nation since 2014 through Q1 2020.

We offer a depth of expertise rarely found in the senior housing sector. Our principals, Lisa Widmier, Aron Will, Austin Sacco, and Joshua Hausfeld have 65 years of combined experience in the senior housing industry. CBRE National Senior Housing has generated over $24 billion in transaction volume since 2006. The breadth of our experience as developers, institutional investors, appraisers, and owner/ operators has given us the ability to understand a transaction from all sides.

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

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

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

• Age-restricted multifamily• Active Adult• Independent living• Assisted living• Alzheimer’s/memory care• Skilled nursing and continuum of care• Continuing care retirement communities

(rental and entry fee)• Post acute/Sub acute care

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

Introduction

4 | C B R E Q 1 2 0 2 0 S H M I

4 Senior Housing Demand is Driven by Demographic Demand

The baby boomers (post-World War II babies) began turning 65 in 2011 and by 2030, the remainder will also reach age 65 and account for approximately 21% of the total United States population. By 2050, the 65-plus age group is estimated to exceed 85.6 million, a more than 50% increase over its estimated 2020 population (56.1 million). The same figure for 85-plus group is even higher. By 2050, the 85-plus age group is estimated to exceed 18.5 million, a 177% increase over its estimated 2020 population (6.7 million). Additionally, by 2035 the 65-plus age group is estimated to be larger than the population under age 18. By 2035, there will be 78.0 million people 65 years and older compared to 76.7 million under the age of 18. The projected growth in the senior population will present many challenges to policy makers and programs by having a significant impact on families, businesses, healthcare providers and, most notably, on the demand for senior housing.1

One of the primary drivers in trends for the aging population is mortality rates. Survivorship rates have shown consistent improvement for many decades. In the United States in 1972, the average life expectancy of a 65-year-old was 15.2 years. By 2017, the most recent available data, this metric increased by 5.2

years to approximately 20.4 years. Additionally, it is estimated that about one out of every four 65-year-olds will live to be 90 years old, with one of every 10 expected to live past 95 years of age.2

Driving this increased life expectancy, and consequentially average population age, is the advancement in public health strategy and medical treatment. Life expectancy in the United States has increased by approximately 30 years over the past century, primarily due to the reduction of acute illness threats. However, an unforeseen consequence of longer life expectancy has been the increased prevalence of heart disease, cancer and other chronic diseases as the leading causes of death. As Americans age during the next several decades, the elderly population will require a larger number of formally trained, professional caregivers as a direct effect of these chronic diseases, which often affect independence and mobility.3

Moreover, the problems facing the United States aging population can be witnessed as a global phenomenon. Fifty countries had a higher proportion of people aged 65-plus than the United States in 2010. This number is expected to increase to approximately 98 countries by 2050.1

NUMBER OF PEOPLE AGE 65 & OVER AND 85 & OVER

0

10

20

30

40

50

60

70

80

90

100

2020 F 2025 F 2030 F 2035 F 2040 F 2045 F 2050 F 2055 F 2060 F

Population 65+ Population 85+

Popu

latio

n (m

illio

ns)

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

5 | C B R E Q 1 2 0 2 0 S H M I

$2,7

91

$2,8

75

$3,0

25

$3,2

00

$3,3

47

$3,4

87

$3,6

49

$3,8

23

$4,0

31

$4,2

55

$4,5

02

$4,7

67

$5,0

49

$5,3

45

$5,6

51

$5,9

63

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,9

09

$9,1

13

$9,5

17

$9,9

96

$10,

380

$10,

743

$11,

174

$11,

576

$12,

119

$12,

702

$13,

344

$14,

035

$14,

764

$15,

527

$16,

309

$17,

102

$0

$5,000

$10,000

$15,000

$20,000

A Multi-Trillion Dollar Industry

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

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

NATIONAL HEALTH EXPENDITURES (BILLIONS)

NATIONAL HEALTH EXPENDITURES PER CAPITA

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

U.S. POPULATION ESTIMATES AGE 75-PLUS

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

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0

10

20

30

40

50

60

Population 75+ % of Total Population

75-P

lus

Popu

latio

n (m

illio

ns)

% of Total Population

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

6 | C B R E Q 1 2 0 2 0 S H M I

6

Source: NIC MAP Construction Starts Trends (Q1 2020).

New Senior Housing Construction

With a year-over-year growth rate of 2.9% in 2020 (annualizing Q1 data), inventory growth has contracted below the 30-year average annual growth rate of 4.0%.5

The Senior Housing pipeline (rolling four quarters construction versus inventory) was 2.48% in Q1 2020, dipping 73 basis points from the 2019 average of 3.21%. In Q1 2020 there were approximately 3,481 units/beds of new construction starts for Primary and Secondary Market areas.5 The COVID-19 pandemic has caused a construction in debt to fund new construction. Q2 2020 new construction is expected to be at low levels not seen

SENIOR HOUSING INVENTORY GROWTH (ALL MARKETS)

Source: NIC MAP Data & Analysis Service, Q1 2020 Supply Report; All Markets. *2020 is YTD through Q1.

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Average = 4.0%

Inventory Growth % near 30 year lows

Gro

wth

in In

vent

ory

(%)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Majority Independent Living Majority Assisted Living Majority Nursing Care

NEW CONSTRUCTION STARTED BY QUARTER

Uni

ts

Senior Housing Construction Activity

(5) “Q1 2020 NIC Map Data Report” NIC MAP Data & Analysis Services, (Q1 2020).

7 | C B R E Q 1 2 0 2 0 S H M I

7 Comparison of Primary & Secondary MarketsRent, Construction, Absorption & Occupancy

Annual Rent Growth - Primary & Secondary MarketsThe stabilized occupancy rates for primary and secondary markets have diverged slightly in recent quarters. In Q1 2020, 50 basis points separated primary markets (89.8%) from secondary markets (89.3%). Q1 2020 Annual Rent growth moderated in both primary and secondary markets, declining to 2.4% in primary markets and 2.3% in secondary markets.

New Senior Housing Construction & Absorption

The pace of total inventory growth in Q1 2020 expanded relative to Q4 2019, specifically in the majority independent living and majority assisted living segments as investment capital remains focused on Class A, high margin facilities. Nursing care continues to contract as low-to-negative margins and regulatory uncertainty disincentivizes new construction and poorly performing operators are consolidated into larger brands. However, highly-stabilized occupancies and absorption levels across primary and secondary markets demonstrate that demand is not faltering, and new units will not be vacant for long.

Sources: NIC MAP® Data Service, Primary & Secondary Markets (Q1 2020). NIC MAP® Data Service Primary & Secondary Markets New Supply & Occupancy (Q1 2020).

INVENTORY GROWTH BY QUARTER

-4,000

-2,000

0

2,000

4,000

6,000

8,000

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Majority IL Majority AL Majority NC

NEW SUPPLY & OCCUPANCY

44%Absorption

47%Absorption

45% Absorption68%

Absorption

99%Absorption

93%Absorption

0%

20%

40%

60%

80%

100%

120%

140%

0

5,000

10,000

15,000

20,000

25,000

30,000

2015 2016 2017 2018 2019 2020

New Units Absorbed Units % Absorption % Stabilized Occupancy

Uni

ts

Occupancy &

Absorption %

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

88.6%

88.8%

89.0%

89.2%

89.4%

89.6%

89.8%

90.0%

90.2%

Q2 2019 Q3 2019 Q4 2019 Q1 2020

Occ

upan

cy (

%)

NIC MAP Primary Markets NIC MAP Secondary Markets

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Q2 2019 Q3 2019 Q4 2019 Q1 2020

NIC MAP Primary Markets NIC MAP Secondary Markets

Uni

ts

8 | C B R E Q 1 2 0 2 0 S H M I

8

Historical Value Per Unit Pricing

MajorityMemory Care, 3.1%

MajorityAssisted Living, 25.6%

MajorityIndependent Living, 18.38%

SENIOR HOUSING/NURSING CARE VALUE ESTIMATED AT $420.4 BILLION

Source: MAP, NIC. “NIC Investment Guide 5th Edition.” 2018. Note: “NIC Investment Guide 6th Edition.” with 2019 data will be published fall 2020.

Continuing Care Retirement Communities,26.0%

Majority Nursing Care, 26.9%

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

$75

$125

$175

$225

$275

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Median IL/AL price per unit Average IL/AL price per unit

SENIOR HOUSING (IL/AL) PRICE PER UNIT

Thou

sand

s

ASSISTED LIVING (AL) PRICE PER UNIT

$75

$125

$175

$225

$275

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Median AL price per unit Average AL price per unit

Thou

sand

s

$75

$125

$175

$225

$275

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Median IL price per unit Average IL price per unit

INDEPENDENT LIVING (IL) PRICE PER UNIT

Thou

sand

s

$35

$45

$55

$65

$75

$85

$95

$105

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Median NC price per bed Average NC price per bed

NURSING CARE (NC) PRICE PER UNIT

Thou

sand

s

Pricing and Capitalization Rates

9 | C B R E Q 1 2 0 2 0 S H M I

9The table below summarizes the results of CBRE’s U.S. Senior Housing & Care Cap Rate Survey for thefirst half of 2020. The survey revealed that senior housing capitalization rates have decreased since thesurvey for the first half of 2019. The spread changes range from -40 to 10 basis points for ClassA properties and from -70 to 0 basis points for Class B and C properties, depending on the respectivelevel of care and core versus non-core locations.

Spreads by investment class also changed from the first half of 2019 and now show more fluctuationbetween Classes B to C and A to C. The change from the first half of 2019 for the spread fromClass A to Class B properties decreased for most property types, except for core CCRC properties. Thespreads between core and non-core assets were largest for independent living and assisted living communities, which indicates that location remains a key element in determining the capitalization rate. Survey respondents reported that the most attractive investment opportunities are in independent living

Summary of Capitalization Rates Spring 2020 Survey

Source: CBRE Seniors Housing Cap Rate Survey H1 2020. Change from H1 2019 Survey.

Class A Class B Class C

Low (%)

High (%)

Average (%)

Change (bps)

Low (%)

High (%)

Average (%)

Change (bps)

Low (%)

High (%)

Average (%)

Change (bps)

Core

Active Adult 3.00% 6.00% 4.40% 0 3.00% 6.00% 5.20% 0 4.00% 7.00% 6.30% 0

IL 4.00% 8.00% 5.50% 10 4.00% 8.00% 6.30% -10 5.00% 9.00% 7.30% -40AL 4.00% 8.00% 5.90% -20 4.00% 8.00% 6.60% -50 6.00% 10.00% 8.30% -20MC 5.00% 9.00% 6.90% -10 5.00% 9.00% 7.60% -10 6.00% 10.00% 8.60% -40NC 10.00% 14.00% 11.10% -20 10.00% 14.00% 12.00% -20 11.00% 15.00% 13.30% -30CCRC/LPC 6.00% 10.00% 7.20% -10 6.00% 10.00% 8.00% 0 7.00% 11.00% 9.20% -10

Non-Core

Active Adult 3.00% 6.00% 5.00% 0 4.00% 7.00% 5.90% 0 5.00% 8.00% 6.90% 0

IL 5.00% 9.00% 6.40% -10 5.00% 9.00% 7.10% -10 6.00% 10.00% 8.20% -30AL 5.00% 9.00% 6.70% -20 5.00% 9.00% 7.20% -40 6.00% 10.00% 8.40% -50MC 5.00% 9.00% 7.20% -20 5.00% 9.00% 7.70% -40 6.00% 10.00% 8.70% -50NC 10.00% 14.00% 11.70% -40 10.00% 15.00% 12.40% -40 11.00% 15.00% 13.60% -70CCRC/ LPC 6.00% 10.00% 7.70% -20 6.00% 10.00% 8.20% -40 7.00% 11.00% 9.30% -50

Investment Class Spreads (bps)

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

Core

Active Adult 80 0 110 0 190 0

IL 80 -20 100 -30 180 -50AL 70 -30 170 30 240 0MC 70 0 100 -30 170 -30NC 90 0 130 -10 220 -10CCRC/ LPC 80 10 120 -10 200 0

Non-Core

Active Adult 90 0 100 0 190 0

IL 70 0 110 -20 180 -20AL 50 -20 120 -10 170 -30MC 50 -20 100 -10 150 -30NC 70 0 120 -30 190 -30CCRC/ LPC 50 -20 110 -10 160 -30

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

A Change B Change C Change

Active Adult 60 0 70 0 60 0

IL 90 -20 80 0 90 10AL 80 0 60 10 10 -30MC 30 -10 10 -30 10 -10NC 60 -20 40 -20 30 -40CCRC/LPC 50 -10 20 -40 10 -40

Capitalization Rates

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

The senior housing total return for Q1 2020 was 0.79%, which includes a 1.16% income return and a -0.37% capital appreciation return. Over the past four quarters, senior housing returned 7.43% (4.42% income and 2.91% appreciation). The five-year total return of 11.17% is 314 basis points higher than the NPI return (all asset classes) of 8.03% and 352 basis points higher than the multifamily total return of 7.66%.

Over a five-year period, senior housing returns have outperformed the NPI and multifamily in total returns and income returns. The senior housing sector’s stronger performance may reflect the fact that senior housing has experienced continuous revenue and income growth, despite significant fluctuations of the general economy. CBRE National Senior Housing and CBRE Research will track first and second quarter 2020 performance metrics to determine the resiliency of senior housing relative to other asset classes during

SENIOR HOUSING RETURNS

this period of economic instability caused by Covid-19.

The following charts compare the returns achieved by the senior housing component, the multifamily component, and the overall index. Items shown for each quarter represent that particular quarter’s return, while periods showing a single year or multiple years represent the compounded annual index returns achieved for that period. All returns are before fees.

Source: NCREIF Query Tool. 2Q 2005 = 1,000.

CUMULATIVE NCREIF TOTAL RETURNS NPI VS. MULTI-FAMILY VS. SENIOR HOUSING

900

1,900

2,900

3,900

4,900

5,900

6,900

All Properties NPI Multi-Family Senior Living Stabilized

Over the last ten years, Seniors Housing returns have consistently outperformed other types of real estate.

Inde

x

Source: NCREIF Query Tool. 2Q 2005 = 1,000.

CUMULATIVE NCREIF APPRECIATION RETURNS NPI VS. MULTI-FAMILY VS. SENIOR HOUSING

900

1,100

1,300

1,500

1,700

1,900

2,100

2,300

2,500

2,700

All Properties NPI Multi-Family Senior Living Stabilized

Inde

x

Source: NCREIF Query Tool. 2Q 2005 = 1,000.

CUMULATIVE NCREIF INCOME RETURNS NPI VS. MULTI-FAMILY VS. SENIOR HOUSING

9001,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,2002,3002,4002,500

All Properties NPI Multi-Family Senior Living Stabilized

Inde

x

Total ReturnsTotal NPI Total

Multi-FamilyTotal StabilizedSenior Housing

Q1 2020 0.74% 0.93% 0.79%

Q4 2019 1.65% 1.59% 1.40%

Q3 2019 1.55% 1.30% 2.64%

Q2 2019 1.59% 1.48% 2.41%

One Year Return 5.64% 5.40% 7.43%

Three Year Return 6.74% 6.33% 9.23%

Five Year Return 8.03% 7.66% 11.17%

Ten Year Return 10.45% 10.82% 11.97%

Fifteen Year Return 7.89% 7.62% 12.42%

Capital (Appreciation) ReturnsTotal NPI Total

Multi-FamilyTotal Stabilized Seniors Housing

Q1 2020 -0.30% -0.02% -0.37%

Q4 2019 0.61% 0.64% 0.41%

Q3 2019 0.49% 0.35% 1.51%

Q2 2019 0.53% 0.52% 1.34%

One Year Return 1.33% 1.50% 2.91%

Three Year Return 2.32% 2.38% 4.54%

Five Year Return 3.47% 3.55% 6.29%

Ten Year Return 5.22% 6.10% 6.25%

Fifteen Year Return 2.64% 2.97% 6.44%

Income ReturnsTotal NPI Total

Multi-FamilyTotal Stabilized Seniors Housing

Q1 2020 1.04% 0.95% 1.16%

Q4 2019 1.05% 0.96% 0.99%

Q3 2019 1.05% 0.94% 1.13%

Q2 2019 1.06% 0.96% 1.07%

One Year Return 4.27% 3.86% 4.42%

Three Year Return 4.34% 3.89% 4.54%

Five Year Return 4.45% 4.00% 4.67%

Ten Year Return 5.03% 4.53% 5.47%

Fifteen Year Return 5.15% 4.55% 5.72%Source: NCREIF. Quarterly returns are not annualized.

Senior Housing Investment Returns Exceed Other Asset Classes10

1 1 | C B R E Q 1 2 0 2 0 S H M I

11

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

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

Seniors - Yield Opportunity

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

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

Source: Real Capital Analytics TrendTracker Report, Q1 2020.

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

9.50%

10.00%

US Seniors Housing & Care US Multi-Family

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

Source: Real Capital Analytics TrendTracker Report, Q1 2020.

5.4%

6.2%

6.6%

6.6%

6.1%

US Multi-Family

US Industrial

US Retail

US Office

US Seniors Housing & Care

Senior Housing Investment Returns (CONT’D)

1 2 | C B R E Q 1 2 0 2 0 S H M I

12Cross-Border (Internationally Based) A buyer is defined as “cross-border” if the buyer or major capital partner is not headquartered in the country where the property is located. An increasing number of firms have subsidiaries accessing capital in multiple countries. A firm may have two headquarters locations for the purposes of the pie chart analysis. For example, Deutsch Bank (DB Real Estate) is assumed to be based in Germany for deals outside of the United States while their acquisitions within the United States are assumed to be made via its domestic headquartered subsidiary, RREEF.

Institutional“Institutional” refers to an investor, such as a bank, insurance company, retirement fund, hedge fund, or mutual fund, that is financially sophisticated and makes large investments, often held in very large portfolios of investments.

Private Equity“Private equity,” as an investor type, refers to companies whose control is in private hands and whose business is primarily geared toward operating, developing, or investing in commercial real estate. This includes private equity joint ventures, commingled funds, and high net worth family offices.

Public Listed/REITsCompanies and or funds traded on open public markets whose business is primarily geared toward investing in and or operating or developing commercial real estate. These include REITs, REOCs, and publicly-listed funds.

User/OtherUsers of commercial property for specific purposes; business users, government, educational or religious institutions that own real estate for their own use.

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

6.2%

6.3% 4.4% 2.6% 2.8%

33.3% 30.9%20.2% 28.1%

2.8%

26.5% 26.0%31.2% 22.1%

40.8%

32.5% 35.3% 42.5% 45.2% 53.6%

1.5% 1.6% 1.7% 2.0% 0.0%

0%

20%

40%

60%

80%

100%

2016 2017 2018 2019 2020 YTD

Buye

r %

Cross-Border Institutional REIT/Listed Private User/Other

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

Source: Real Capital Analytics, Q1 2020. Note: 2020 YTD is through Q1.

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

The trend has been especially evident during Q1 2020:

• Private equity buyers (53.6%) and REIT buyers (40.8%) have accounted for 94.4% of all transaction activity in 2020 so far.

• Institutional buyers, such as banks, insurance companies, retirement (pension) funds, hedge funds and mutual funds, have continued to be less active compared to their peak in 2016, accounting for only 2.8% of the transaction volume in 2020.

• Cross-border buyers accounted for just 2.8% of transaction activity. However, multinational investment platforms from Europe, Asia, and the Middle East are actively seeking investments in U.S.-based senior housing.

Transaction Activity by Buyer Type

1 3 | C B R E Q 1 2 0 2 0 S H M I

13

There’s little clarity to be gained from the pandemic so far. But for Lisa Widmier, she sees the opportunity plain as day.

She’s made senior living a focus of her 30-year commercial real estate career, having been involved in over $12 billion worth of senior housing investment property, capital sourcing and investment banking, and consulting.

Although the commercial estate industry is still determining the depth of impact from Covid-19, the pandemic has made one thing clearer when it comes to the senior housing market.

“It is separating the good operators from the not-so-good operators,” said Widmier, executive vice president of CBRE’s senior housing capital markets practice and its investment banking practice.

While the industry will certainly have to deal with fallout from the pandemic, Widmier believes it’s still a resilient asset class for investors. Over the past five years, the 11.93% return for senior living investments has outperformed the broader National Property Index of 8.69% and the 8.14% return from multifamily investments, according to the latest available data from CBRE.

Demographics have played a major role in attracting investors thanks to the aging baby boomer generation. Today the over-85 population is expected to grow by more than 177% from 2020-2050, according to the U.S. Census.

But it’s absorption — the rate of available real estate that’s leased — that may be the strongest indicator of demand for senior living. In 2019, the absorption rate of the 25,000 new units that were delivered across the U.S. was 99% — meaning nearly all of the units were immediately leased to residents, said Widmier, citing CBRE research.

Interest from prospective residents waned over the past three months for St. Louis-based Provision Living, an operator of assisted living and memory care. The company — which operates seven communities in Missouri, including a new one

set to open this summer in Washington — said none of its residents died due to Covid-19 and the only resident to test positive has since recovered, according to President Todd Spittal.

It’s used the pandemic period to improve the way leaders communicate and deploy technology to help employees better learn the behaviors and risk patterns of residents, including spotting early signs of coronavirus symptoms. The company also transformed the “restaurant-style” dining at its facilities into a delivery model within three days, Spittal said.

Today, Provision Living is seeing near pre-pandemic levels of interest for its services, underscoring the need for senior care, he said.

Covid-19 was the “ultimate stress test for both the industry and those who operate in it,” Spittal said. “(But) the last three months have been a real validation of our business model.”

Widmier’s belief in the continued health of the senior living market comes from personal experience.

Her 85-year-old parents haven’t left their house since the pandemic began, and they’ve been “paying a fortune” for special delivery services. They’re lonely, she said, and are considering moving to a senior living community themselves.

“If we don’t have proper health care, it can shut down the economy,” Widmier said. “That’s why (senior living) is hot and will continue to be.”

— Steph Kukuljan, Reporter, St. Louis Business Journal

Link to full article here.

COVID-19 Information and Resources

Could Senior Living be more in Demand after COVID-19?

St. Louis Business Journal originally reported this piece on June 4, 2020.

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14Links to Resources & Articles

CBRE COVID-19

NIC COVID-19 Resources Center

NIC Intra-Quarterly Snapshot April 2020

CDC COVID-19 Center

“Senior Communities Needed More Than Ever in COVID-19 Era” The News Tribune Op-Ed

Argentum Coronavirus Preparation and Response Toolkit

National Real Estate Investor COVID-19 “Bleak Outlook for the Seniors Housing Sector in the Near Term”

The Senior Care Investor “The Media Stills Gets It All Wrong”

COVID-19 Information and Resources (CONT’D)

1 5 | C B R E Q 1 2 0 2 0 S H M I

15CBRE has assembled a fully integrated team with the experience, expertise, and successful track record necessary to structure and execute a transaction to meet the client’s objectives.

930+ Communities124,500+ Units/Beds

45 States

CBRE Senior Housing & Care Valuation & Advisory Services Offices

CBRE National Senior Housing Offices: San Diego, Houston, and Boston

States where CBRE Team Members have conducted business

From 2014 to Q1 2020 CBRE National Senior Housing has completed over $7.7 billion in debt transaction volume.

$7.7B+

DEBT TRANSACTIONS SINCE 2014

CBRE National Senior Housing was ranked Top Two Senior Housing Originator in the nation from 2010 through 2016 and was the #1 Senior Housing/Age Restricted Originator in the U.S. in 2013 and 2014 and #2 in 2015. The team has originated $4.2 billion in debt transactions over the past four years. CBRE is the largest agency

originator (Fannie/Freddie) in the nation, with more than $18 billion of loan volume in 2017, and has been Freddie Mac’s #1 Seller

Servicer from 2009 to 2017.

DEBT ORIGINATIONS

TOP 2CBRE National Senior

Housing closed over $2.2 billion in investment sales

and debt transactions across the U.S. in 2019.

$2.2B+COMPLETED IN 2019

WA

OR

CA

AR NM

NV

UTCO

KS

TX

OK

ID

MT ND

MN

IA

WI

IL

MO

AR

LA

MS

IN

KY

TN

AL GA

SC

NC

VA

PANI

MD DE

RICTMA

ME

NHNY

VT

WV

FL

NE

SDWY MI

OH

From 2014 to Q1 2020 principals of the CBRE National Senior

Housing team completed more than $7.4 billion in senior housing

investment sales, investment banking, and leasing transactions spanning across multiple states.

$7.4B+

INVESTMENT SALES TRANSACTIONS SINCE 2014

About CBRE National Senior Housing - Our National Presence

1 6 | C B R E Q 1 2 0 2 0 S H M I

Today’s complex and constant changing market environments require special solutions. CBRE SH Team Members consistently achieve the highest sale price/best debt terms in the industry for their Clients.

RECENT PORTFOLIO SALES TRANSACTIONS

RECENT SINGLE ASSET SALES TRANSACTIONS

The Fountains Portfolio $640.0 millionNational Portfolio(11 states)3,637 IL/AL/MC and Entry Fee CCRC units/bedsClient was Fountains Senior Living Holdings, LLC

Brightview II $363,500,000 National Portfolio (3 States)1,117 IL/AL/MC units/bedsClient was an Affiliate of The Shelter Group

The Garden Empire Portfolio $307,500,000 NJ and NY933 IL/AL/MC units/bedsClient was an Affiliate of The Carlyle Group

Brightview I $498,500,000 National Portfolio(5 States)1,584 IL/AL/MC units/bedsClient was Affiliate of Prudential Real Estate Investors

Programmatic Equity Raise $300,000,000 National PortfolioClient was LCS

Sunwest Managed Portfolio $364,250,000 National Portfolio(11 states) 3,054 IL/AL/MC and CottagesClient was Sunwest

Mid-Atlantic Portfolio$186.2 millionGreater Baltimore, Maryland (5) and Greater Washington, D.C. (2)526 AL/MC unitsClient was an affiliate of Harrison Street

CCRC Portfolio$186,500,000Dallas, TX1,104 unitsClient was LCS

Five Allegro Communities$172,500,000FL and KY 705 IL/AL/MC/NC units/bedsClient was Almanac Realty

MorningStar 4 PackConfidentialCO, IA, NM and OR415 IL/AL/MC unitsClient was Confluent

Vintage Portfolio $1.29 billionNorthern and Southern CA (21) and Western WA (1)3,054 IL/AL/MC unitsClient was Vintage Senior Living and their private investors

The Maestro Portfolio $921,000,000Alberta and Quebec, Canada8,206 IL/AL/MC units/bedsClient was Maestro Funds

Sunwest Portfolio $1.29 billionNational Portfolio11,096 IL/AL/MC units/bedsClient was The Blackstone Group

Parker Senior LivingConfidentialParker, CO191 IL/AL/MC units/bedsClient was Faestel Properties

Sunrise of Severna$72,000,000Severna Park, MD156 IL/AL/MC unitsClient was Sunrise Senior Living

Meadowbrook$60,000,000Agoura Hills, CA156 IL/AL/MC unitsClient is Confidential

The Village at Arboretum$72,000,000Austin, TX172 IL unitsClient was BayNorth/Bridgewood JV

The Village of Tanglewood$66,850,000Houston, TX188 IL unitsClient was BayNorth/Bridgewood JV

Class A IL/AL Community $77,000,000Scottsdale, AZ216 IL/AL units/bedsClient was Affiliate of Prudential Real Estate

Watermark at Logan Square$72,500,000Philadelphia, PA463 IL/AL/MC/SNF unitsClient was Watermark Retirement

Renaissance on Peachtree $78,600,000Atlanta, GA229 IL/AL units/bedsClient was The Carlyle Group and Formation Development

CBRE NATIONAL SENIOR HOUSING REPRESENTATIVE INVESTMENT PROPERTY TRANSACTIONS - 2015 FORWARD

The Village 2 Pack$76,000,000Dallas and Houston, TX224 IL/AL/MC unitsClient was HSRE/Bridgewood

Kronos FL 2 Pack$65,000,000Jacksonville & Stuart, FL263 unitsClient was Kronos

MorningStar at RidgeGate$137,700,000Denver, CO224 IL/AL/MC unitsClient was AEW

1 7 | C B R E Q 1 2 0 2 0 S H M I

RECENT DEBT TRANSACTIONS

The Fountains Portfolio $410,000,000National Portfolio (11 states)3,637 IL/AL/MC and Entry Fee CCRC units/bedsClient was Watermark Retirement & NorthStar Realty Finance

CA Senior Living Portfolio $104,000,000Various Locations85 AL & 155 MC unitsClient was Venture and a Global Investment Manager

The Bonaventure Portfolio $72,466,000Washington and Oregon453 IL/AL unitsClient was NorthStar Realty Finance

The Bristal Portfolio $62,832,000Huntington, NY118 AL unitsClient was The Engel Burman Group and Harrison Street Real Estate Capital

Arbor Terrace Portfolio $50,525,000Atlanta MSA236 IL/AL/MC unitsClient was Arcapita

The Ranger Portfolio $348,592,000National Portfolio2,528 IL/AL/MC unitsClient was Formation Capital and NorthStar Realty Finance

The Belmont Village Portfolio ConfidentialThousand Oaks, CA and Scottsdale, AZ275 AL/MC unitsClient was Belmont Village & Blue Moon Capital Partners

The Seattle Portfolio $60,020,000Seattle MSA (4 properties)368 IL/AL unitsClient was The Carlyle Group and Capitol Seniors Housing

Village of Southampton ConfidentialHouston, TX204 IL/AL/MCClient was Bridgewood/Harrison Street

LCS Portfolio $120,000,000Various Locations1,104 IL/AL/MC/SNF unitsClient was LCS/Aspect

The Fountains Portfolio Supplemental $75,401,000; $485MM+ CombinedVarious Locations3,484 IL/AL/MC/SNF unitsClient was NorthStar REalty Finance/The Freshwater Group

The Springs at Lake Oswego $66,400,000Lake Oswego, OC(Portland MSA)216 IL/AL/MC unitsClient was Harrison Street/The SPrings Living

St. Andrew’s Village$42,500,000Aurora, CO(Greater Denver)246 CCRC units/bedsClient was RSF Partners

Cappella of Grand JunctionConfidentialGrand Junction, CO66 AL/MC unitsClient was Confluent Senior Living

Kennewick Campus$40,500,000Kennewick, WA138 IL/AL/MC unitsClient was Bourne Financial

The Solana Horsham$31,500,000Greater Philadelphia, PA76 AL/MC unitsClient was CSH/Formation-Shel-bourne Partners JV

The MorningStar Portfolio$45,000,000Colorado Springs, CO112 AL/MC unitsClient was Confluent Develop-ment/MorningStar Senior Living

Large National Portfolio (Confidential) $238,250,00National Portfolio1,702 IL/AL/MC/SNF units

DiNapoli Portfolio $91,840,000Various Locations, CA568 IL/AL/MC unitsClient was DiNapoli Capital Partners

The Virginian $65,200,000Fairfax, VA306 CCRC unitsClient was Focus Healthcare

The Springs Living Portfolio $61,000,000Wilsonville & Carmen Oaks, OR294 AL/MC unitsClient was The Springs Living

MorningStar of Littleton$45,500,000Littleton, CO85 AL/MC unitsClient was PREI/MSL JV

Woodhaven$57,000,000Conroe, TX157 IL/AL/MC unitsClient was Padua Realty

RECENT SINGLE ASSET SALES TRANSACTIONS (CONT’D)

1 8 | C B R E Q 1 2 0 2 0 S H M I

18CBRE Advantage

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

Public M&A

Portfolio Sales

Valuation/Fairness Opinions

Recapitalizations

Comingled Fund Raising

Joint Ventures

Direct Secondary Trading

Portfolio Sales

Financing

BuysideAdvisory

Restructuring

INVESTMENT BANKING

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

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

Highly Experienced Investment Banking Team

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

World Leading Asset Level Expertise

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

Global Capital Distribution

4301 La Jolla Village Dr., Suite 3000, La Jolla, CA 92122

Please visit our website at cbre.com/nationalseniorhousing

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

Today’s complex and constantly changing market environments require special solutions. The professionals at CBRE have the experience,

knowledge, connections and track record to provide you with the best solutions in the marketplace and the ability and determination to

execute those solutions.