B.C. Ziegler and Company | Member SIPC & FINRA

NFP SENIOR LIVING SECTOR UPDATE

Rich Scanlon

Senior Managing Director

(312) 596-1572 (o)

(727) 560-3655 (c)

rscanlon@ziegler.com

Brandon Powell

Managing Director

(804) 793 8499 (o)

(804) 402 7684 (c)

bpowell@ziegler.com

PRESENTED BY

ZIEGLER INVESTMENT BANKING

May 12, 2020 | 2:00 PM ET / 1:00 PM CT

2

A REVIEW OF ZIEGLER COVID-19 WEBINARS

Webinar Date Speakers

Borrower Preparedness Call March 18 Ziegler: Dan Hermann, Adam Buchanan

Guests: Sean Kelly (Kendal), Andy McDonald (HumanGood), John

Kotovsky (LSS), Torsten Hirche (Transforming Age), Steve Fleming

(Well-Spring), Katie Sloan (LeadingAge)

Cares Act Overview: Focus on

Paycheck Protection Program

April 1 Zeigler: Tommy Brewer, Tad Melton, Amy Castleberry, Adam Garcia

NFP Senior Living & Care

Sector Update, COVID-19

April 22 Ziegler: Dan Hermann, Kevin Strom, Rich Scanlon, Adam

Buchanan, Lavinia Criswell, Lisa McCracken

Guest: John Spooner (Greystone)

The Latest on Stimulus

Packages Impact on Non-

Profit Senior Living Providers

April 23 Zeigler: Tommy Brewer, Tad Melton, Amy Castleberry, Adam Garcia

NFP Senior Living & Care

Sector Update, COVID-19

May 6 Ziegler: Dan Hermann, Kevin Strom, Rich Scanlon, Adam

Buchanan, Lavinia Criswell, Lisa McCracken

Guest: Lisa Legeer (GlynnDevins)

Financial Markets & Sector

Update Webinar

May 14 Ziegler: Dan Hermann, Kevin Strom, Rich Scanlon, Adam

Buchanan, Lavinia Criswell, Lisa McCracken

3

NFP SENIOR LIVING COVID-19 TRACKING

• Ziegler focused on identifying COVID-19 status among NFP Senior

Living communities, particularly Life Plan Communities

– Roughly 1,500 NFP Life Plan Communities nationally and 66 in Texas

Source: Ziegler Investment Banking, May 11, 2020

Note: Only those communities who explicitly state “no cases” are coded as “no” in the Ziegler COVID-19 tracking

363

257

722

13 16 27

0

100

200

300

400

500

600

700

800

Yes-At least 1 confirmed case Explicit "No" Unknown

Axis

Title

Confirmed Resident or Staff Cases in the Not-For-Profit Life Plan Community?

National

Texas

4

NFP SENIOR LIVING COVID-19 TRACKING

• NFP Life Plan Communities with a Positive COVID-19 Case

– Communities with heavy SN and AL generally have higher numbers

• Widespread testing in future will likely have an impact as well

Source: Ziegler Investment Banking, May 5, 2020

>50 Positive, 2.7%

25-49 Positive, 6.4%

10-24 Positive, 15.1%

<10 Positive, 75.8%

Number of Positive Cases (includes residents and staff)

Note: Figures are preliminary are will very likely go up as Ziegler continues its research and updates reporting numbers

5

NFP SENIOR LIVING: ADDITIONAL STAFF WAGES AND

BENEFITS DURING COVID-19

Source: Ziegler CFO HotlineSM, April 2020

3.2%

4.6%

13.2%

13.6%

18.6%

38.2%

43.6%

49.6%

49.6%

82.3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Free parking (if applicable)

Transportation services

Expanded overtime pay

Increase in base pay

Childcare services (stipend, free onsite, etc.)

Additional PTO and paid sick leave

Bonus pay

Free meals (for staff and/or family)

Flexible work schedules

Ability to work from home (for certain positions)

Additional Benefits & Compensation AdjustmentsDuring COVID-19 Crisis

6

PAYROLL PROTECTION PROGRAM LOANS

• For Round 1 of $349 billion, Ziegler tracked 84 senior living providers (not

all of whom had public debt outs.) that applied for $195mm+ in PPP loans

thru 45+/- banks (Truist = 15)

• Round 2 ($310 billion) approved by Congress two weeks ago

• Accurate record keeping and adherence to PPP requirements are critical to

minimize potential for loans not to be “forgiven” as borrowers anticipate

– Borrowers should review carefully the required certification that “current

economic uncertainty makes this loan request necessary to support the ongoing

operations of the Applicant.”

– SBA will audit any company taking out more than $2.0mm from the PPP before

that loan is forgiven

– New guidelines for PPP certification as well as safe harbor date for PPP loan

repayment is May 14th

Source: Ziegler Investment Banking

7

NFP LIFE PLAN COMMUNITIES: REVENUE, EXPENSE

PRESSURES

• Providers are adapting

– LPC marketing has adapted to move in restrictions and virtual

marketing events

• Ziegler does not expect significant amount of DSRF draws or defaults in

monthly payments to the Trustee unless LPC operations impacted deep

into Q3

• Sector “payment defaults to date” – “headline news”

• Covenants that are being monitored

– Temporary Debt - Marketing, Occupancy, CCOL

– L/T Debt – Rate and Liquidity Covenants

Source: Ziegler Investment Banking

8

COVID-19 TOPICS FOR DISCUSSION WITH INVESTORS

• Actual virus case statistics and safety protocols:

– General (cases of both residents and staff, deaths)

– Operations related (preparedness, staffing, supplies)

• Sales and Occupancy:

– Census related (current admissions status for each level of care)

– Local senior living marketplace

• New Projects / Construction, if applicable

– Project Related (ILU sales status)

– Construction related (progressing or stalled, opening dates, move in, etc.)

• Financial:

– Balance Sheet (virus impact on unrestricted liquidity)

– Investment portfolio mix

– Bank relationships and lines of credit, if needed

– Government Entity Support/ CARES Act

• Paycheck Protection Program (PPP) application status, what portion expected to be forgiven

• Accounting treatment of PPP funds (debt, not grant)

• Potential need for investor waivers/consents related to Additional Indebtedness covenant

• Loan impact on financial ratios (DCOH, DSCR, NOM, etc.).

Source: Ziegler Credit & Surveillance, May 5, 2020

9

($14,000,000)

($12,000,000)

($10,000,000)

($8,000,000)

($6,000,000)

($4,000,000)

($2,000,000)

$0

$2,000,000

$4,000,000

Jan-2019

Feb-2019

Mar-2019

Apr-2019

May-2019

Jun-2019

Jul-2019

Aug-2019

Sep-2019

Oct-2019

Nov-2019

Dec-2019

Jan-2020

Feb-2020

Mar-2020

Apr-2020

In/Outflows ($000s)

ALL MUNICIPAL BOND FUNDS: INFLOWS/OUTFLOWS

All Municipal Bond Funds

Weekly Inflows/Outflows

Source: Lipper Data Service, as of 05/01/20

Muni funds report

net cash outflows

totaling $996M

10

COVID-19 IMPACT ON NEW PROJECT PLANNING

Interest Rate History (2010 YTD – Weekly)

Source: Ziegler Investment Banking as of 05/01/2020

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

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/01

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/20

30-YR NR NewCampus

30-YR NR-Institutional

30-YR "BBB"

MMD 30-YR "AAA"

11

0.00

2.00

4.00

6.00

8.00

10.00

12.00

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0

LIBOR (1 Month)

VARIABLE INTEREST RATES

RISK AND REWARD

10-Year Average

1-MO LIBOR: 2.92%

10-Year Average

1-MO LIBOR: 5.20%10-Year Average

1-MO LIBOR: 0.74%

Source: Ziegler Investment Banking, as of 5/1/20

0.33%

Time Period

Average 1 Mo.

LIBOR

70% Average

of LIBOR

1990-2000 5.20% 3.64%

2000-2010 2.92% 2.04%

2010-2020 0.74% 0.52%

12

BANK LENDING ENVIRONMENT

• Bank activity in not-for-profit senior living varies by region and by

institution

– We continue to see some deals get done in certain markets

– Others have pulled term sheets and are hitting the pause button;

some observations of COVID-19 pricing premiums

• Banks are currently spread thin with processing PPP loans

• Many banks are focusing on existing relationships

• Mixed appetite for new construction

• We anticipate that banks will continue to be active lenders coming out

of the COVID-19 crisis

Source: Ziegler Investment Banking

13

ZIEGLER ONGOING RESOURCES

• Summary documents on the CARES Act

• Links to key sources of information

• Webinars that Ziegler has hosted for various audiences re: COVID-19

• Z-News updates

https://www.ziegler.com/covid-19/

B.C. Ziegler and Company | Member of SIPC & FINRA

QUESTIONS?