BUSINESS PLAN

The objective of the Fund is to acquire, improve, and manage senior living real estate assets in the United States which meet the investment criteria established by the Investment Manager. The Fund intends to invest in value-add, non-performing, under-performing, and defaulted debt where the Investment Manager can identify an upside in the rent roll resulting from the Investment Manager’s value-add approach, combined with improved property management efficiencies, implementing capital improvement plans, and from acquiring at a discount to cost.

The Fund anticipates it will hold each investment for a period of at least five years, with an emphasis on generating long-term returns by substantially enhancing property values and aggregating the properties upon sale.

■ The Partnership is targeting capital commitments (“Commitments”) of $250,000,000.

■ The portfolio is expected to benefit significantly from an aggregation premium. The sponsor believes that by buying small single assets and pooling them, a 15% premium can be achieved by institutionalizing the assets.

■ The Sponsor will finance the individual assets via agency bridge, long-term debt, or with all equity. Having executed many agency loans over the past ten years, the Sponsor is very familiar with required origination process and has developed relationships with key channel partners to facilitate this process.

■ The targeted fund life is 5 to 7 years with a mandate that all capital be returned by year 10. This hold period flexibility is meant to provide the Sponsor the ability to carry assets through a macroeconomic downturn, not requiring an exit at the bottom of the market.

After implementing capital improvement plans and creating operational efficiencies, when appropriate, Sponsor may look to utilize the 1031 exchange to reinvest capital over the 5-10 year hold if the final Fund structure allows. The Sponsor will also look to utilize Fannie’s supplemental debt to provide investors a cash out refinance to return capital where possible.

While the Sponsor will entertain a number of options for the Fund exit, the most likely scenario will be strategic sale to an institutional investor looking to benefit from the portfolio aggregation. The Sponsor believes this pooling of the properties will create a 15% premium by institutionalizing the assets.