1539 e agritopia loop gilbert, az 85296 · patrick o’sullivan. senior associate . 602-256-1422 ....

The Robinson Group | 1

The information listed above has been obtained from sources we believe to be reliable, however, we accept no responsibility for its correctness.

Senior Living Facility INVESTMENT OFFERING

Location Highlights

Minutes from 202 freeway and Mesa-Gateway Airport

Nearby to shopping center and major hospital

Property Highlights

To be built in 2011-2012 Spacious and stylish senior living State of the art building and technology

Unparalled healthcare service will be superior to that offered by competitors

Significant Demand vs. Limited Supply Turn-Key Investment

Generations at Agritopia 1539 E Agritopia Loop Gilbert, AZ 85296

$28,190,000 Exclusively Listed By:

Team Gerchick/The Robinson Group

3420 N Shea Boulevard, Suite 100

Phoenix, AZ 85028

Linda Gerchick, CCIM

Associate Broker 602-256-1415

Carrick Sears, MBA, CCIM

Senior Associate 602-256-1448

Patrick O’Sullivan

Senior Associate 602-256-1422

Offering Summary

Price: $28,190,000

122 bed facility

Price/bed: $231,000

142,563 Square Feet

Price/SF: $198

Stabilized CAP Rate 7%

Stabilized NOI: $2,250,000



Executive Summary……………………………………………………………………………3 Photographs of Site……....…………………..………………………………………..….....15 Siteplans and Map………...………………....…………………………………..……....….17 Floorplans……..…………..……………………………………………………………….….21 Sales Comparables...….……………………………………………………………….…….25 Demographics………..……….…………………………………………………………..…..27

Table of Contents



Executive Summary

Generations at Agritopia Senior Living Facility Location 1539 E Agritopia Loop Gilbert, AZ 85296. Southeast Corner of: E Agritopia Loop and South Constellation Way Major Cross Street Higley and Ray Rd. Lot Acres 5.07 Lot Square Footage 221,057 SF Proposed Facility: Rentable Square Footage 142,563 SF Total Units 118 Total Beds 122 There are THREE different pricing tiers available to the buyer: 1)Developer manages the construction and sells to buyer with HUD loan in place after construction has been completed. List Price $28,190,000 Price Per Square Foot $198 Stabilized cap rate 7.0% 2)Commit to purchase now, but buyer does not close escrow until after construction has been completed. Buyer will be able to utilize HUD loan. $4MM deposit required. List Price $27,190,000 Price Per Square Foot $191 Stabilized cap rate 7.3% 3)Buyer completes purchase now, and funds shall be escrowed with monthly progress draws during construction. Buyer pays cash or uses their own financing. Developer manages the construction. List Price $26,190,000 Price Per Square Foot $184 Stabilized cap rate 7.5%

Team Gerchick is pleased to present a planned Senior Living Facility, Generations at Agritopia. This project is fully entitled and the developer Cole Johnson will be breaking ground in late 2011, with construction handled by MT Builders. This 118-unit/122-bed assisted living residence will be located in Gilbert, Maricopa County, Arizona near the northwestern corner of Higley and Ray Roads. The residence is to offer 4 levels of care within the assisted living realm. It will be licensed in Arizona as an assisted living center. There will be 96 units/98 beds licensed as personal care, and 22 units/licensed as directed care for Alzheimer's disease and other dementia affliction. Before we tell you about the Senior Living Facility, we first want to introduce you to the community of Agritopia, which helps to frame why this facility fits so well in the overall development.

Agritopia is an integrated mixed use community comprised of a multitude of components including residential development, urban agriculture gardens, retail ventures, educational facilities, restaurants, churches, and other uses as a part of the plan. These different elements are intertwined in

such a way as to be much more like a traditional town. Neighborliness, beauty, and walkability are all a part of the design. For the residential component, there are about 460 lots divided into three phases. The first phase has 157 lots. However, there may be more than 460 "homes" in that Agritopia has some very unique zoning. You can have more than one dwelling unit on a lot. This can take the form of the main home plus a garage with an apartment unit or even a completely separate bungalow unit. The total number of dwelling units (assuming everyone bought all of the possible ones) is potentially closer to 750. The homes are modeled after homes that were built in the Phoenix area in the 1930's and 40's. We looked at the architectural styles and detail used in those vibrant neighborhoods and have adapted them to Agritopia. The four styles that we have adopted are Craftsman/California Bungalow, Spanish Revival, Arizona Ranch, and Northern European Revival (influenced by Tudor and French Revival). The homes are not authentic replicas of these homes, but capture the essence of them. The farm is established for three purposes -- to produce abundant crops and agricultural products, to be beautiful open space, and to be an educational resource. The production of the farm is used in the local restaurants and sold at The Farm Stand, primarily. The farm is not currently certified organic -- we intend to use organic practices exclusively. Joe's Farm Grill, serving the bounty of the farm, opened in October 2006. In addition, The Coffee Shop, opened September 2006. The Farm Stand opened in December of 2006.

Design Principles Principles are exceedingly important. They drive what people do and, in a project like Agritopia, mold the final product. The developers have attempted to codify the more important principles so that those of us involved in design of the subcomponents, such as th Senior Living Facility, can always refer back to them at any decision point. The following principles have guided and will continue to guide the Agritopia Community. Furthermore, we think that there are significant problems with current development, and would like to address them in our community by combining agriculture with a utopia = agritopia.

1. Reduce Physical Barriers to Relationships - To the greatest extent possible, we would like to eliminate those things that tend to isolate people. Such barriers include: block walls, overly wide streets, uninviting streetscapes, lack of porches or other social space, garage doors on the streets, lack of usable parks, and speeding traffic. We'll also do things that favor pedestrians over cars. While we need cars, walking and visiting is more apt to build a relationship than driving around.

2. Reduce Social/Economic Barriers to Relationships - In many suburbs, neighborhoods tend to become uniform in their demographics. For example, a neighborhood might be characterized as a starter home, family, "yuppie", or a retirement neighborhood. This is largely a function of a limited offering of home sizes and prices being offered in a neighborhood. We would endeavor to offer a broader range of floor plans and prices so as to create a more diverse neighborhood.

3. Promote Sharing - We think that it is beneficial to share pools, parks, and other public space versus everyone having their own pool and large yard. It encourages personal interaction and saves families time (in maintenance) and money. People will be able to have their own pool, but the community pool makes doing so less of a necessity. Sharing is also good when it comes to organizations. It is better for the schools and the community center to share parking and sports facilities rather than each having their own. This saves each organization money and is much more efficient in terms of land use.

4. Promote a Simpler Life - It is our desire to do what we can to reduce the stresses of modern life. Time is a precious commodity. If we encourage sharing, make homes more maintenance free, have easy pedestrian access to most of a resident's needs, and encourage people to buy only as much house as they need, we can help in this area.

5. Promote the Formation of a True Neighborhood - By doing the previous things, we believe that we can set the stage for the development of a rich, vibrant neighborhood. In addition, we plan to create numerous "meeting places" such as mini-parks, paths, a community center, a coffeehouse, and so on . Their purpose is to create places where people can informally "hang out" and converse. Ultimately, however, we can only set the stage. The residents themselves will be the ones to make it a real neighborhood.

6. Choose Style and Beauty over Size and Sizzle - We think that people know style and beauty when they see it. Homes of earlier times were developed using classic rules of proportion, design, and detail. Today, size and "sizzle" (features that attract a buyer, but are just for show) seem to be sought after. We intend to use classic measures of beauty and proportion throughout the project, rejecting oversized and poorly designed buildings and homes.

7. Honor Agriculture - Due to urbanization, many people do not have a thorough understanding of plant life and the production of food crops. There is something therapeutic and very satisfying about gardening and farming. We intend to preserve some of the farming heritage of Gilbert and offer our residents an opportunity to live with a farm, to enjoy it, and to learn from it.

8. Create a Balanced Project - It should be possible for a person to work, live, shop, send kids to school, exercise, dine, and play within the project. Obviously, we can't have everything on 171 acres, but we will try to create a very balanced place. It will not be a pla that is divided up into a bunch of individual uses, rather it will be seamlessly woven togeth like many of the older communities.

Absorption. We estimate that the 122 beds will reach a 93 percent occupancy level (113 beds) within 14 months of opening, given a strong marketing program. This averages 5 beds per month for assisted living/independent living and 4 beds for special care and Alzheimer’s-dementia care. Targeted Residents. The property will serve seniors with 4 levels of care: • 74 units will be for assisted living of which at least 25 percent of the beds (19) beds will be available to individuals who can live independently, but seek a supportive environment. The remaining units (55 units) will be for those who have chronic physical ailments that require support help. These units will not be segregated from the independent living units, but instead will be among and interchangeable with them. • A 22-unit/24—bed section will target those in need of special care. Residents will include those with mild to moderate dementia and other such special needs. They will benefit from special programming, which is not typically available in the assisted living sections. • A 22-unit/24 bed section will be for those requiring a secured Alzheimer's/dementia care because of advanced memory loss and tendency to wander. Project Description, Units, Amenities and Services Building. The project will be a midrise building with two sections. One will have the assisted living/independent living units. The other wilt have the special care and secured memory care units. There will be a central lobby area with amenities off the lobby. The lobby will lead to each of the two sections. Private/Semi-private Units. The assisted living and independent living section will have all private units. The special care and assisted living sections each will have 20 private units and 2 semi-private units or an aggregate of 44 beds.

Units. The units for each type of care will be sufficiently sizable and larger than the competitors. Many are sized to attract couples, as increasingly more are moving into assisted living residences. The units will be pre—wired for cable and internet and have individually controlled thermostats. They also will have emergency response systems, among other design features tailored to older persons. Some will have balconies, which we suggest should be designed amply to avoid accidents.

Private Semi-PrPersonal Care License Assisted living/independent living 1/ 74 0 74 60% Special care for the frail 20 2 24 20%Drected Care License Secured Alzheimer's/dementia 20 2 24 20%

Total 114 4 122 100%1/ Up to 25 percent of the units can be occupied by independent living residents.

Type of Care

Table 1 Units/Beds by Type of Care

Units Total # Beds

% of Beds by Care

• The 74 assisted living/independent living units will be 588 sq. ft. for a studio, 710 sq. ft. to 991 sq. ft. for one-bedroom units and 1007 sq. ft. for two—bedroom, two-bath units. All units will have a kitchen (refrigerator, stove and sink). • The special care and Alzheimer‘s/dementia care units will have 40 units at 398 sq. ft. and 4 units at 597 sq. ft. The largest units will be suitable for semi-private occupancy. Amenities. The amenities reflect state-of-the art features. There will be a theater with surround sound, a fitness center, library, laundry facility on each floor, activity centers and a private dining room. Walking paths and an adjacent community center will be an extension of the Generations interior amenities. Services. The services meet expectations in today’s assisted living residences: personal care services, scheduled van transportation, weekly housekeeping, room service when necessary, and scheduled activities.

Rate Determination and Range of Fees. The Generations proposed assisted living fees are achievable in its market place. They will provide a competitive edge over one of the Generations two competitors, Sunrise at Gilbert. The other competitor — Emeritus at Gilbert — has fees similar to Generations.

The unit mix by type of care (targeted groups) and unit size (sq.ft.) is shown in the table below.

Type of Care Unit Mix and Floor Plan # Units Beds Square Feet (SF)Assisted living & Studio A 9 9 588 sfIndependent living 1/ 1-bedroom, 1-bath w/balcony B 28 28 710 sf + balcony @ 118 sf

1-bedroom, 1-bath C 3 3 710 sf1-bedroom, 1-bath D 12 12 689 sf1-bedroom, den w/balcony E 2 2 894 sf + balcony @ 87 sf1-bedroom, den w/balcony E1 2 2 986 sf + balcony @ 87 sf1-bedroom, den w/balcony E2 2 2 991 sf + balcony @ 87 sf2-bedroom, 2-bath, balcony F 16 16 1007 sf + balcony @ 101 sf

Subtotal 74 74

Special care frail Studio, 1-bath G1 12 12 398 sfStudio, 1-bath G2 8 8 398 sfStudio, Companion H 2 4 597 sf

Subtotal 22 24

Alzheimer's/ Studio, 1-bath G1 20 20 398 sfDementia care Studio companion H 2 4 597 sf

Subtotal 22 24

Total units/beds 118 122

Table 2 Unit Mix by Type of Care and Unit Size

* Units with balconies are indended for independent living.

• Independent Living. The Generations fees for independent living are $2950 and $3250 for 1-bedroom units, and $3550 for 2-bedroom units. • Assisted Living. For assisted living the Generations fees are $2995 for studio units, $3595 for 1-bedroom units and $3595 for 2-bedroom units. As stated, these fees are lower than the key competitor — Sunrise at Gilbert, which charges a basic fee of $3042 to $4563 for similar basic services. The Generations charges for higher levels of care also are competitive. They range from $295 for level 1; $595 for level 2; $995 for level 3; and $1495 for level 4. In contrast, Sunrise charges levels of care that ranges from $882 to $1947 plus fees from $304 to $609 monthly for medicine management and fees from $212 to $395 monthly for incontinence care. The other competitor- Emeritus at Gilbert - charges are similar to Generations for similar services. its basic fee ranges from $3100 to $3600 monthly plus $375 to $1175 for levels of care. • Special Care and Secured Memory care. The Generations fees for special care and secured dementia care will be $4795 monthly and include all levels of care. Fees for the two semi-private rooms will be $3895 monthly and include all care. The Generations private unit fees are considerably less than its sole competitor — Sunrise at Gilbert —- when factoring in charges by levels of care. Sunrise at Gilbert's semi-private unit fees reflect a concession; they are reduced to $4300 monthly for all care except the highest level of care, which is $760 monthly.

Type of Care Unit Mix #Assisted living Beds Private CommentsFloor plan A Studio 9 $2,995Floor plan B 1-bedroom, 1-bath w/balcony 28 $3,595Floor plan C 1-bedroom, 1-bath 3 $2,950 independ. livingFloor plan D 1-bedroom, 1-bath 12 $3,595Floor plan E 1-bedroom, 1-bath, den w/balcony 2 $3,250 independ. livingFloor plan E1 1-bedroom, 1-bath, den w/balcony 2 $3,595Floor plan E2 1-bedroom, 1-bath, den w/balcony 2 $3,595Floor plan F 2-bedroom, 2-bath w/balcony 16 $3,550 independ. living

74Special care Frail Semi-privateFloor plan G1, G2 Studio, 1-bath 20 $4,795Floor plan H Studio, 1-bath, companion suite 4 ----- $3,895

24Memory careFloor plan G1, G2 Studio, 1-bath 20 $4,795Floor plan H Studio, 1-bath, companion suite 4 ----- $3,895

24

Total beds 1221/ Services in independent living will be fewer than in assisted living.

Table 3Fees by Type of Care

Monthly Basic Fee

Location and Neighborhood Description. The Generations 5.07-acre location is highly marketable, as it is in the Phoenix suburban town of Gilbert and centered within the 450-home Agritopia master planned development. The Agritopia development itself is well known, moderate to upscale and deemed a desirable place to live. Its many attributes include two popular dining establishments, a 15-acre organic farm, a school with grades K-12, and community clubhouse. Agritopiers residential neighborhoods are designed as "new urbanism" to foster interaction among residents. Another marketable feature for Generations is Agritopia’s auxiliary dwelling units. Homeowners are allowed to build an 800 sq. ft. home on their lot, which many have done for a frail parent or parents. Such homeowners are a referral source for Generations. Agritopia’s surrounding neighborhoods are residential, but dotted with convenience stores and medical offices. Access. While the location is situated in the far eastern part of Gilbert, it is easily accessed from the Santan Freeway (Highway 202) and a network of multiple crossroads. Proximity to Services. Significant services are plentiful. A shopping center with a supermarket and medical offices is at the corner of Higley and Ray Roads, and within one-fourth mile of Generations Site. A new hospital is within 2 miles of Generations Site. The Market Area Definition We define the market area as the town of Gilbert and the town of Queen Creek. From the Site it extends 4 miles north, 7 miles south, 2.5 miles east, and 6 miles west. In defining the market area we considered driving time and Gilberts’ many cross roads plus highways that provide easy access to the Site. We also considered the two competitors in Gilbert, which generate most of their residents from Gilbert or their family members live in Gilbert.

Demographics The market area increased significantly in population — by 100,000 - since 2000 in keeping with Phoenix’s outgrowth to the suburbs. In 2009 the population is estimated at 217,367. However, the age 65 and older represent 5.2 percent, which is a small percentage relative to the state of Arizona where this age group represents over 13 percent of the total population. The age group 55-69 is relatively large and growing. This group reflects the adult children who relocate a parent and/or influence their parents‘ assisted living choice. These households with at least $75,000 in annual income increased from 6,356 in 2009 to 10,359 in 2014, reflecting a 63 percent increase over 5 years. Current Inventory and Occupancy Levels Generations will have 2 competitors in Gilbert. Sunrise at Gilbert opened in October 2008 and now has 3 levels of care: a 77-unit independent living section, 50-bed assisted living section, and 26-bed secured Alzheimer’s/dementia care section. As stated, fees are significantly higher than the Generations. However, it is offering concessions by reducing fees for some units. The assisted living section is 76 percent occupied and its secured Alzheimer’s/dementia section is 69 percent occupied. Its relatively low occupancy may be contributed to its somewhat high fees and problems at its headquarters, which are widely publicized. The other competitor is Emeritus at Gilbert, which has 40 beds and is 93 percent occupied with 3 vacant beds. Opening in 1999 it does not offer a secured memory care section. It also needs cosmetic upgrading. The current owner — Emeritus Senior Living, LLC — purchased and started managing the property in January 2010. There are two other properties that we identify for pricing comparison purposes, but not as competitors. They are located proximate to, but outside our defined market area. Their draw primarily is from the city of Chandler. The properties are the 99-unit Solterra Senior living and the 117-unit Village at Ocotillo. Both are located in the city of Chandler about 12 miles from the Subject. Solterra Senior Living was converted from independent living to assisted living and since August 2009 is under the same ownership and management as Generations. Thus, it will be a referral source for Generations. The Village at Ocotillo is independent living but licensed to provide assisted living services in the apartments. It provides assisted living services on an a la carte basis. Alternatives to Assisted Living Residences The viable alternative to assisted living in Gilbert is home care. Many agencies serve the area. Their fees are considerably higher when contracted on a 24·hour basis. They are lower when contracted for a few hours and days per week. The area's homemaker agencies provide nonmedical care, such as grooming, bathing, meal preparation, medicine dispensing, escort service, among other personal care services at an hourly rate that at the least is $282 for a 24- hour day and $8,578 monthly. There is no convenient adult day care center for Gilbert residents. Group homes, which have 10 or fewer residents, lack the Generations scope of services.

Pipeline In the market area there is one proposed property in the early planning stage. The Gilbert planning office approved a 136-bed property with plans for 7 residential group home style buildings with services for independent living, assisted living, memory care, and behavioral care. At this time, we are unaware of unit sizes, units per service, and targeted populations (age and income). The planning office does not have such information; the proposed owner and developer would not reveal information. Thus far, there is no development time schedule. Plans submitted to the planning office were returned to the developer’s architect for revisions on May 27, 2010. (Status on June 25 to July 6, 2010,) Unmet Demand Estimates (Market Potential) Assisted Living. For assisted living market potential consists of age 75 and older frail single- person households and non-householders (people living with a family member other than a spouse or a non-relative). The group will have at least $30,000 in annual income. Those with less than $50,000 in annual income will have at least $20,000 annually to spend down. This is reasonable, given the area’s home prices of at least $175,000. Some prospective residents are likely to have family or other help, as shown in a 2009 national study on assisted living. Special Care and Secured Dementia Care.

For special care and secured Alzheimer’s/dementia care market potential consists of those in the mild to advanced stages of dementia with at least $40,000 in annual income. The group includes the age 65 and older households and non-householders. Individuals with less than $60,000 in annual income will have assets to spend down. (Studies show that spend down is commonplace among residents in assisted living facilities).

Unmet Demand is as follows: Frail individuals 2009 2011 2014

Capture Rate Analysis The capture rates reflect the proportion of market demand that Generations must attract to fill its beds. Our capture rates are based on market demand less supply divided into the Generations beds. We deem 25 percent a favorable capture rate, given that we reduce the demographics to frail seniors and to those in the mid to advanced stages of dementia and Alzheimer‘s disease. We factor in Generations at a 93 percent occupancy level. We factor in the competition at a 95 percent occupancy level.

Assisted living 254 287 338 Special care/ Secured memory care 149 185 240

Assisted Living: The capture rates are favorable but barely when relying solely on market demand from our defined market area. They are 25.4 percent in 2011 and 22.0 percent in 2014. They are favorable when considering that 20 percent of the beds (11 beds) will be filled from outside the market area. The capture rates are 20.4 percent in 2011 and 16.3 percent in 2014. This situation is realistic since the competitors have residents that relocated to Gilbert because of family members in living the town.

Special Care and Alzheimer’s/Dementia Care:

Absorption Estimates

We group together special care and Alzheimer’s/dementia care, as both groups reflect special needs. The capture rates are favorable at 20.6 percent in 2011 and 15.4 percent in 2014, given that 20 percent of the beds (9 beds) will be filled from outside the market area. If all beds were to be filled by residents from the market area, the capture rates show 25.6 percent in 2011 and 18.9 percent in 2014. There is little competition for secured dementia care in the town of Gilbert and in the city of Chandler, as well.

Assisted Living. We estimate that the Generations 74 assisted living/independent living will reach a 93 percent occupancy level (69 beds) within 14 months or at an average rate of 5 units per month, net of turnover. We take into account Generations pricing, its desirable location within the Agritopia mixed-use development, management and marketing skills, as evident at the owner's Solterra Senior Living facility. We also factor in the Phoenix economy, which while recovering was hit hard during recession. In turn, this may slow lease up somewhat. Special Care-Alzheimer’s/Dementia Care.

We estimate that the Generations 44 beds and Alzheimer’s/dementia beds will reach a 93 percent occupancy level (41 beds) 10 months or at an average occupancy rate of 4 units per month, net of turnover. Again, using Solterra Senior Living as a benchmark for the owner’s management and marketing purposes. The secured dementia section had 60 percent units committed for occupancy after opening June 14, 2009. We also factor in Sunrise at GiIbert’s relatively low occupancy secured memory care section; however, this property recently reduced its fees significantly which is likely to expedite Lease—up. We also consider that special care units because they are not typical in assisted living residences may be somewhat difficult to market.

Turnover Rates We estimate turnover at 30 percent the first year and 40 percent annually. These rates are confirmed in national studies. Qualitative Assessment of Demand We feel Generations is well-conceived and highly marketable. It should achieve steady occupancy, given its competitive fees, location within the master-planned mixed-development, unit sizes, and amenities. While Agritopia is located toward the eastern edge of the town of Gilbert rather than centered within the town, the Site is easily accessible through highways and crossroads that rarely are congested. In our defined market area, demand is sufficient. But, it is not abundant. Capture rates for each type of care are favorable, but not overwhelmingly. Thus, marketing is key. Marketing should target all age groups throughout the area, especially the age 50 and older group that can refer a parent to Generations. Such awareness will be expedited by Generations being integrated into the Agritopia development, which is frequented, well known and respected. Marketing should reach the town of Gilbert as well as the neighboring cities of Chandler and Mesa. Many assisted living properties in these cities lack the Generations scope of services and style.

At the same time the Generations section for special care units is a relatively new concept within assisted living buildings, Such placement can be perceived as a stigma; families plus residents themselves may prefer assisted living in lieu of special care. This may be a marketing issue to be addressed. The Generations fees are reasonable and competitive, but still might bring "sticker shock" to many. Again, marketing is key. Costs can be delineated and compared to alternative care solutions.

Subject Photographs

Tellatin, Short & Hansen, Inc.

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COMPARABLE FACILITY SALES MAP

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Tellatin, Short & Hansen, Inc.

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Direct Sales Comparison Summary Adjustment Grid

Sale Number One Two Three Four Five

Name Sunrise of Eastover Morningstar Kensington Green Lake Village & Place Robbins/Forge Hill

Address Charlotte, NC Littleton, CO Southbury, CT Venice/Port Charlotte, FL Acton/Franklin, MA

ZIP Code 28211 80127 6488 34292 / 33948 01718 & 02038 Averages Subject

Sale Data:

Sale Date Feb-10 May-09 Jan-10 Mar-10 Apr-10 Nov-10

Total Sale Price $8,850,000 $25,300,000 $17,199,000 $12,400,000 $43,000,000 $21,349,800

Net Adjusted Price (A) $9,170,000 $25,300,000 $18,419,000 $13,180,000 $43,000,000 $21,813,800 $25,370,000

Property Data:

Number of Units (B) 86 85 120 184 177 130 118

Typical Full Occupancy 91 85 120 184 193 135 122

Gross Building Area 60,263 71,080 104,955 145,426 144,122 105,169 145,391

GBA per Unit 701 836 875 790 814 803 1,232

Effective Age at the Time of Sale 1998 2006 2000 1998 2000 2000 2010

Overall Building Condition Average Excellent Excellent Avg / Good Good Average

Land Area (Acres) 3.54 3.13 7.58 9.82 7.98 6.41 5.07

Economic Data:

Occupancy Rate 93.0% 92.4% 70.0% 90.0% 97.4% 88.6% 94.4%

Private-Pay / Quality Mix 100.0% 100.0% 100.0% 95.8% 95.3% 98.2% 100.0%

Effective Gross Income $3,990,035 $5,048,072 $5,200,000 $7,382,664 $10,504,060 $6,424,966 $6,341,121

Operating Expenses $3,134,481 $3,062,638 $3,700,000 $6,121,556 $6,943,380 $4,592,411 $3,949,507

Net Operating Income $855,554 $1,985,434 $1,500,000 $1,261,108 $3,560,680 $1,832,555 $2,391,615

Revenue Per Occupied Unit / Per Month $4,157 $5,359 $5,159 $3,715 $5,077 $4,693 $4,745

Revenue per Unit $9,948 $23,358 $12,500 $6,854 $20,117 $14,555 $20,268

Expense Margin 78.6% 60.7% 71.2% 82.9% 66.1% 71.9% 62.3%

Price Indicators:

Gross Income Multiplier 2.14 4.63 2.48 1.61 3.99 3.01 3.78

Price Per Unit (A ÷ B) $106,628 $297,647 $153,492 $71,630 $242,938 $174,467 $215,000

Price per TFO Unit / Bed $100,769 $297,647 $153,492 $71,630 $222,798 $169,267

Effective Gross Income Multiplier 2.30 5.01 3.54 1.79 4.09 3.35 4.00

Overall Capitalization Rate 9.3% 7.8% 8.1% 9.6% 8.3% 8.6% 9.4%

Price Per Square Foot $152.17 $355.94 $175.49 $90.63 $298.36 $214.52 $174.49

Elements of Comparison and Adjustment Total Price per Unit $102,907 $297,647 $143,325 $67,391 $242,938

Property Rights Conveyed 0.0% 0.0% 0.0% 0.0% 0.0% --- ---

Excess Land Contribution 0.0% 0.0% 0.0% 0.0% 0.0% --- ---

Financing (Cash Equivalency) 0.0% 0.0% 0.0% 0.0% 0.0% --- ---

Conditions of the Sale 0.0% 0.0% 0.0% 0.0% 0.0% --- ---

Expenditures after Sale 0.0% 0.0% 0.0% 0.0% 0.0% --- ---

Absorption Cost 1.8% 0.0% 3.5% 3.1% 0.0% --- ---

Entrepreneurial Profit 1.8% 0.0% 3.5% 3.1% 0.0% --- ---

Adjustment Factor 3.6% 0.0% 7.1% 6.3% 0.0% --- ---

Net Adjusted Price $106,628 $297,647 $153,492 $71,630 $242,938 $174,467

Time and Market Conditions 1.4% 2.7% 1.4% 1.4% 1.4% ---

Net Adj Price + Time/Mkt Conditions Adj $108,092 $305,769 $155,600 $72,614 $246,275 $177,670

Qualitative Analysis

Location Comparable Comparable Comparable Comparable Comparable --- ---

Qualtity of the Improvements Comparable Superior Superior Comparable Superior --- ---

Level of Care / Risk Profile Comparable Inferior Inferior Inferior Comparable --- ---

Effective Age at Sale Vastly Inferior Comparable Vastly Inferior Vastly Inferior Vastly Inferior --- ---

Private-Pay Mix Comparable Comparable Comparable Inferior Inferior --- ---

Occupancy Rate Comparable Comparable Vastly Inferior Inferior Superior --- ---

Revenue Per Occupied Unit/Bed Inferior Superior Superior Vastly Inferior Superior --- ---

Expense Margin Vastly Inferior Comparable Vastly Inferior Vastly Inferior Inferior --- ---

Overall Qualitative Adjustment Vastly Inferior Vastly Superior Vastly Inferior Vastly Inferior Comparable ---

Qualitative Ratings are comparing the sales comparable to the subject, i.e., is the sale comparable superior or inferior to the subject.

Site MapE Agritopia Loop S, Gilbert, AZ 85296 Prepared by Linda GerchickRing: 1, 3, 5 Miles Latitude: 33.324997

Longitude: -111.724442

October 04, 2011

Made with Esri Business Analyst©2011 Esri www.esri.com/ba Page 1 of 1

Executive SummaryPrepared by Linda Gerchick

©2011 Esri 10/04/2011 Page 1 of 2

E Agritopia Loop S, Gilbert,... Latitude: 33.324997

Longitude: -111.724442Ring: 1, 3, 5 Miles

1 mile radius 3 miles radius 5 miles radius

2010 Population Total Population 11,768 79,808 225,233 Male Population 50.0% 49.5% 49.3% Female Population 50.0% 50.5% 50.7% Median Age 32.2 31.6 31.7

2010 Income Median HH Income $86,623 $85,501 $82,404 Per Capita Income $32,410 $30,563 $29,463 Average HH Income $96,619 $99,073 $93,616

2010 Households Total Households 3,699 24,936 71,731 Average Household Size 3.18 3.20 3.14

2010 Housing Owner Occupied Housing Units 71.5% 78.1% 74.1% Renter Occupied Housing Units 18.8% 12.7% 16.8% Vacant Housing Units 9.6% 9.2% 9.1%

Population 1990 Population 164 5,971 43,515 2000 Population 2,536 33,677 129,201 2010 Population 11,768 79,808 225,233 2015 Population 14,967 95,734 259,927 1990-2000 Annual Rate 31.5% 18.89% 11.5% 2000-2010 Annual Rate 16.15% 8.78% 5.57% 2010-2015 Annual Rate 4.93% 3.71% 2.91%

In the identified market area, the current year population is 225,233. In 2000, the Census count in the market area was 129,201. The rate of change since 2000 was 5.57 percent annually. The five-year projection for the population in the market area is 259,927, representing a change of 2.91 percent annually from 2010 to 2015. Currently, the population is 49.3 percent male and 50.7 percent female.

Households 1990 Households 47 1,571 13,632 2000 Households 832 10,242 41,933 2010 Households 3,699 24,936 71,731 2015 Households 4,701 29,961 82,550 1990-2000 Annual Rate 33.29% 20.62% 11.89% 2000-2010 Annual Rate 15.67% 9.07% 5.38% 2010-2015 Annual Rate 4.91% 3.74% 2.85%

The household count in this market area has changed from 41,933 in 2000 to 71,731 in the current year, a change of 5.38 percent annually. The five-year projection of households is 82,550, a change of 2.85 percent annually from the current year total. Average household size is currently 3.14, compared to 3.08 in the year 2000. The number of families in the current year is 57,591 in the market area.

Housing

Currently, 74.1 percent of the 78,898 housing units in the market area are owner occupied; 16.8 percent, renter occupied; and 9.1 percent are vacant. In 2000, there were 44,876 housing units - 79.3 percent owner occupied, 13.5 percent renter occupied and 7.2 percent vacant. The rate of change in housing units since 2000 is 5.66 percent. Median home value in the market area is $178,702, compared to a median home value of $157,913 for the U.S. In five years, median home value is projected to change by 1.3 percent annually to $190,641. From 2000 to the current year, median home value changed by 1.79 percent annually.

Source: U .S. Bureau of the Census, 2000 Census of Population and Housing. Esri forecasts for 2010 and 2015. Esri converted 1990 Census data into 2000 geography.

Executive SummaryPrepared by Linda Gerchick

©2011 Esri 10/04/2011 Page 2 of 2

E Agritopia Loop S, Gilbert,... Latitude: 33.324997

Longitude: -111.724442Ring: 1, 3, 5 Miles

1 mile radius 3 miles radius 5 miles radius

Median Household Income 1990 Median HH Income $32,083 $41,789 $38,745 2000 Median HH Income $72,062 $70,053 $63,167 2010 Median HH Income $86,623 $85,501 $82,404 2015 Median HH Income $100,600 $99,198 $95,624 1990-2000 Annual Rate 8.43% 5.3% 5.01% 2000-2010 Annual Rate 1.81% 1.96% 2.63% 2010-2015 Annual Rate 3.04% 3.02% 3.02%

Per Capita Income 1990 Per Capita Income $10,666 $14,270 $13,856 2000 Per Capita Income $22,993 $24,206 $23,199 2010 Per Capita Income $32,410 $30,563 $29,463 2015 Per Capita Income $36,633 $34,377 $33,125 1990-2000 Annual Rate 7.98% 5.43% 5.29% 2000-2010 Annual Rate 3.41% 2.3% 2.36% 2010-2015 Annual Rate 2.48% 2.38% 2.37%

Average Household Income 1990 Average Household Income $36,595 $49,826 $43,757 2000 Average Household Income $77,088 $80,120 $71,268 2010 Average HH Income $96,619 $99,073 $93,616 2015 Average HH Income $108,755 $111,484 $105,771 1990-2000 Annual Rate 7.73% 4.86% 5% 2000-2010 Annual Rate 2.23% 2.09% 2.7% 2010-2015 Annual Rate 2.39% 2.39% 2.47%

Households by IncomeCurrent median household income is $82,404 in the market area, compared to $54,442 for all U.S. households. Median household income is projected to be $95,624 in five years. In 2000, median household income was $63,167, compared to $38,745 in 1990.

Current average household income is $93,616 in this market area, compared to $70,173 for all U.S. households. Average household income is projected to be $105,771 in five years. In 2000, average household income was $71,268, compared to $43,757 in 1990.

Current per capita income is $29,463 in the market area, compared to the U.S. per capita income of $26,739. The per capita income is projected to be $33,125 in five years. In 2000, the per capita income was $23,199, compared to $13,856 in 1990.

Population by Employment Total Businesses 140 1,779 5,427 Total Employees 757 12,162 47,492

Currently, 93.5 percent of the civilian labor force in the identified market area is employed and 6.5 percent are unemployed. In comparison, 89.2 percent of the U.S. civilian labor force is employed, and 10.8 percent are unemployed. In five years the rate of employment in the market area will be 94.7 percent of the civilian labor force, and unemployment will be 5.3 percent. The percentage of the U.S. civilian labor force that will be employed in five years is 91.2 percent, and 8.8 percent will be unemployed. In 2000, 73.7 percent of the population aged 16 years or older in the market area participated in the labor force, and 0.1 percent were in the Armed Forces.

In the current year, the occupational distribution of the employed population is:

70.0 percent in white collar jobs (compared to 61.6 percent of U.S. employment)•14.6 percent in service jobs (compared to 17.3 percent of U.S. employment)•15.3 percent in blue collar jobs (compared to 21.1 percent of U.S. employment)•

In 2000, 81.5 percent of the market area population drove alone to work, and 4.4 percent worked at home. The average travel time to work in 2000 was 28.6 minutes in the market area, compared to the U.S. average of 25.5 minutes.

Population by EducationIn 2010, the educational attainment of the population aged 25 years or older in the market area was distributed as follows:

7.6 percent had not earned a high school diploma (14.8 percent in the U.S.)•20.9 percent were high school graduates only (29.6 percent in the U.S.)•10.8 percent had completed an Associate degree (7.7 percent in the U.S.)•23.0 percent had a Bachelor's degree (17.7 percent in the U.S.)•10.6 percent had earned a Master's/Professional/Doctorate Degree (10.4 percent in the U.S.)•

Source: U .S. Bureau of the Census, 2000 Census of Population and Housing. Esri forecasts for 2010 and 2015. Esri converted 1990 Census data into 2000 geography.

Demographic and Income ProfileE Agritopia Loop S, Gilbert, AZ 85296 Prepared by Linda GerchickRing: 5 miles radius Latitude: 33.324997


Summary 2000 2010 2015Population 129,201 225,233 259,927Households 41,933 71,731 82,550Families 34,126 57,591 65,623Average Household Size 3.08 3.14 3.15Owner Occupied Housing Units 35,820 58,486 66,919Renter Occupied Housing Units 6,113 13,245 15,631Median Age 30.4 31.7 32.0

Trends: 2010 - 2015 Annual Rate Area State NationalPopulation 2.91% 1.87% 0.76%Households 2.85% 1.83% 0.78%Families 2.65% 1.65% 0.64%Owner HHs 2.73% 1.94% 0.82%Median Household Income 3.02% 2.85% 2.36%

2000 2010 2015 Households by Income Number Percent Number Percent Number Percent

<$15,000 1,868 4.5% 2,407 3.4% 1,731 2.1%$15,000 - $24,999 2,349 5.6% 2,671 3.7% 2,048 2.5%$25,000 - $34,999 3,562 8.5% 3,153 4.4% 2,449 3.0%$35,000 - $49,999 6,525 15.6% 7,553 10.5% 5,230 6.3%$50,000 - $74,999 11,823 28.2% 15,121 21.1% 17,182 20.8%$75,000 - $99,999 8,128 19.4% 13,345 18.6% 14,616 17.7%$100,000 - $149,999 5,720 13.7% 20,515 28.6% 28,048 34.0%$150,000 - $199,999 1,080 2.6% 3,982 5.6% 6,637 8.0%$200,000+ 823 2.0% 2,983 4.2% 4,609 5.6%

Median Household Income $63,167 $82,404 $95,624Average Household Income $71,268 $93,616 $105,771Per Capita Income $23,199 $29,463 $33,125

2000 2010 2015 Population by Age Number Percent Number Percent Number Percent

0 - 4 13,042 10.1% 23,104 10.3% 26,371 10.1%5 - 9 12,801 9.9% 21,257 9.4% 25,182 9.7%10 - 14 11,489 8.9% 19,346 8.6% 22,784 8.8%15 - 19 9,184 7.1% 15,682 7.0% 17,608 6.8%20 - 24 6,598 5.1% 11,044 4.9% 12,783 4.9%25 - 34 23,075 17.9% 34,251 15.2% 38,892 15.0%35 - 44 23,761 18.4% 39,816 17.7% 43,829 16.9%45 - 54 14,296 11.1% 30,659 13.6% 34,370 13.2%55 - 64 7,110 5.5% 16,827 7.5% 20,911 8.0%65 - 74 4,643 3.6% 7,792 3.5% 10,977 4.2%75 - 84 2,629 2.0% 4,052 1.8% 4,531 1.7%

85+ 573 0.4% 1,406 0.6% 1,690 0.7%

2000 2010 2015 Race and Ethnicity Number Percent Number Percent Number Percent

White Alone 111,998 86.7% 177,468 78.8% 196,042 75.4%Black Alone 2,911 2.3% 7,382 3.3% 10,001 3.8%American Indian Alone 900 0.7% 2,198 1.0% 2,742 1.1%Asian Alone 3,378 2.6% 7,234 3.2% 9,464 3.6%Pacific Islander Alone 165 0.1% 455 0.2% 544 0.2%Some Other Race Alone 6,444 5.0% 21,872 9.7% 29,878 11.5%Two or More Races 3,405 2.6% 8,625 3.8% 11,255 4.3%Hispanic Origin (Any Race) 15,668 12.1% 50,489 22.4% 69,244 26.6%

Data Note: Income is expressed in current dollars

October 04, 2011

©2010 Esri Page 5 of 6

Source: U.S. Bureau of the Census, 2000 Census of Population and Housing. Esri forecasts for 2010 and 2015.

Demographic and Income ProfileE Agritopia Loop S, Gilbert, AZ 85296 Prepared by Linda GerchickRing: 5 miles radius Latitude: 33.324997


AreaStateUSA

Trends 2010-2015

Population Households Families Owner HHs Median HH Income

Annual

Rat

e (i

n p

erce

nt)

32.82.62.42.2

21.81.61.41.2

10.80.60.40.2

0

20102015

Population by Age

0-4 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+

Per

cent

16

14

12

10

8

6

4

2

0

2010 Household Income

$200K+4.2%

$150K - $199K5.6%

$100K - $149K28.6%

$75K - $99K18.6%

$50K - $74K21.1%

$35K - $49K10.5%

$25K - $34K4.4%

$15K - $24K3.7%

< $15K3.4%

2010 Population by Race

White Black Am. Ind. Asian Pacific Other Two+

Perc

ent

75

70

65

60

55

50

45

40

35

30

25

20

15

10

5

0

2010 Percent Hispanic Origin: 22.4%

October 04, 2011

©2010 Esri Page 6 of 6

Source: U.S. Bureau of the Census, 2000 Census of Population and Housing. Esri forecasts for 2010 and 2015.

1539 e agritopia loop gilbert, az 85296 · patrick o’sullivan. senior associate . 602-256-1422 ....

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