A MARKET STUDY OF SENIOR LIVING AND INCOME RESTRICTED HOUSING FOR THE PROPOSED SENIOR LIVING PROJECT IN SEBASTIAN INDIAN RIVER COUNTY, FLORIDA

Transcription

1 A MARKET STUDY OF SENIOR LIVING AND INCOME RESTRICTED HOUSING FOR THE PROPOSED SENIOR LIVING PROJECT IN SEBASTIAN INDIAN RIVER COUNTY, FLORIDA PREPARED FOR MR. GERALD FRITTS EVERGREEN INTERNATIONAL 234 SHELTER VALLEY DRIVE KALISPEEL, MT BY BOYLE & DRAKE, INC th TERRACE, SUITE 202 VERO BEACH, FL INFO@BOYLEDRAKE.COM FILE # COMPLETED MAY 8, 2013

2 Real Estate Appraisers and Consultants Stephen J. Boyle, MAI Paul P. Drake, MAI, SRA State-Certified General State-Certified General Real Estate Appraiser RZ699 Real Estate Appraiser RZ TH Terrace, Suite 202 Vero Beach, FL PaulD@boyledrake.com Telephone: (772) Fax: (772) info@boyledrake.com Evergreen International 234 Shelter Valley Drive Kalispeel, Montana Re: A market study for the proposed senior living project in Sebastian, Florida. Dear Mr. Fritts: At your request, we have prepared the following market study for the proposed senior living project located in Sebastian, Florida. The intended use is to provide current market information regarding senior living and income restricted housing within the subject market area so the client can determine market rent for the proposed project. The intended user is Mr. Fritts of Evergreen International. The effective date of this analysis and conclusions was May 1, The proposed subject property is an 84 unit income restricted senior living facility. For this assignment, we researched and analyzed comparable housing facilities located throughout Indian River County and the closest, most similar facilities in St. Lucie and Brevard County. In order to accurately analyze the market, we divided the comparable properties into three main data sets: senior living apartments, income restricted apartments for all ages, and independent living apartments located at adult living facilities. We were able to collect data from a total of fourteen different projects located in the subject s market area. Current rental rates at these facilities varied largely due to what was included in the rental rate as well as the type of amenities offered at each community. Further discussion of the individual factors that affected the rental rates can be found within the following report. Overall, the market demand for an age-restricted senior living facility appears strong. Out of the senior living apartments we surveyed, three of the facilities were income-restricted, of which two were 100% occupied with waiting lists. The income restricted apartment market demand appears strong with an overall average occupancy of 95%. Additionally, the ALF communities that provided independent living units had a high average occupancy of 86%. The high occupancy rates across all of the different types of communities indicated a demand for properties like the proposed subject development.

3 Page ii Current rental rates surveyed among the comparable communities were similar to the proposed subject pricing. Senior living projects ranged from around $313 to $747 for 1/1 units and $394 to $747 for 2/2 units. Income-restricted apartments for all ages provided a similar range of around $359 to $619 for 1/1 units and $550 to $742 for 2/2 units. This is comparable to the subject s proposed price range of $363 to $699 for 1/1 units and $408 to $816 for 2/2 units. The proposed additional services appear in line with what other market participants are providing. It was difficult to determine the individual costs of the services for the comparable properties, as the facilities surveyed lumped many of the services into the base rental rate. Additionally, several of the independent living units were actually located in separate villas or cottages. Therefore, it was difficult to determine if the higher rental rates surveyed by the comparable ALF facilities were due to larger unit sizes, the additional benefits provided by being located at an adult living facility, or a combination of both. Based on the comparable facilities, however, there does appear to be a demand for such services and the lower price point proposed for the subject property will be attractive to prospective low income renters. According to CCIM s Site to Do Business demographics report, the 55+ population within a 5-mile radius of the subject property is estimated to increase from 46.9% of the population in 2010 to 51.9% of the population in In total numbers, the 55+ population is projected to increase 15% by 2017 from 13,734 in 2010 to 15,749. By comparison, the total population for the same area is projected to increase only by 3.5% over the same timeframe. In conclusion, based on the information provided by our market survey as well as the projected demographics, we believe that there is a strong demand in the local market for a development like the subject property. High occupancy rates in the current market for the competing projects as well as competitive pricing proposed for the subject s additional services are positive factors for the subject property going forward. Provided in the following pages are location maps, summary charts of our research, and a brief summary of each facility included in our analysis. It has been a pleasure to serve you in this matter. If you have any questions, please do not hesitate to ask. Respectfully submitted, BOYLE & DRAKE, INC. Stephen J. Boyle, MAI Cert Gen RZ699, Expires 11-14

4 Page iii COMAPARBLE PROJECT MAP ALL PROJECTS

5 Page iv SENIOR LIVING MARKET ANALYSIS Throughout the course of our research, we located four senior living apartment facilities within the subject s market area. Of these four facilities, three were income-restricted. Those facilities provide limited additional services. Considering that the subject property will feature one and two bedroom units, we focused on these types of units in our analysis. Most of the comparable properties had 1/1 or 2/2 units. Average unit sizes for the 1/1 and 2/2 units were 500 and 862 square feet, respectively. The average monthly rental rate for the 1/1 and 2/2 units were $443 and $652, respectively. This indicated a monthly per square foot rental rate of $0.91 and $0.75 for the respective units. Overall occupancy among the comparable projects ranged from 75% to 100%, with an overall average of 92%. Provided below is a summary chart of the comparable senior living projects used in our analysis. Following the summary chart is a location map of the comparable projects and a discussion of each project including the amenities and rent concessions offered in each project. When available, we also included floor plans of the individual units within the comparable projects. SENIOR LIVING FACILITY SUMMARY Project Name Unit Size Average Unit Price Price/SF Occupancy Income Restricted Studio 1/1 2/1 2/2 Studio 1/1 2/1 2/2 Studio 1/1 2/1 2/2 By the River 400 $418 $ % Yes Lexington Club $673 $747 $0.85 $0.85 N/A No River Park Place $468 $557 $0.78 $ % Yes St. Francis Manor 330 $338 $ % Yes Averages: $338 $443 $673 $652 $1.02 $0.91 $0.85 $ %

6 Page v

7 Page vi By the River is an income restricted senior living facility located at Ganga Way in Sebastian, Florida. The project consists of four separate building containing 41 units. Each building has shared dining and community rooms, with an on-site case manager and activities director. Amenities include a library, chapel, a community office and computer room, as well as community programs like yoga, bingo, arts and music classes, gardening, and day transportation. The eligibility requirements for this project are residents 62 and over, a deficiency in at least two activities of daily living, and limited income of 30% to 50% below the median income. All of the units in this project are 1/1. At the time of confirmation, the representative was unable to confirm the size of each unit. However, based on the overall size of the buildings, the units are most likely less than 400 square feet which is small for 1/1 units. The estimated size of 400 square feet was used in this analysis. Current rental rates were from $313 to $522 per month based on the levels of income for each resident. An average rental rate of $418 was used in our analysis. The rental rates include all utilities. The current occupancy rate was reported at 75%. There are currently no rental concessions offered at this project. Lexington Club is a 55+ senior living facility located at th Street in Vero Beach, Florida. The project has a total of 184 units and consists of 2/1 and 2/2 units. Amenities include a 24-hour staff, additional storage space, arts and crafts, a ballroom and billiards room, computer room, fitness center, game room, library, swimming pool, and laundry room. The 2/1 units consist of two separate floor plans with 765 and 816 square feet, or an average of 791 square feet. The 2/2 unit floor plan consists of 874 square feet. Current rental rates for the 2/1 units were from $599 to $747 per month, or an average of $673 ($0.85 per square foot). Rental rates for the 2/2 units were $747 per month, or $0.85 per square foot. The rental rates include water and sewer, trash, and basic cable. There are currently no rental concessions offered at this project. We were unable to confirm the current occupancy rate for this project as of the date of this report. Provided on the following pages are the floor plans for this project.

8 Page vii 2/1 765 Square Feet: 2/1 816 Square Feet: 2/2 874 Square Feet:

9 Page viii River Park Place is a 62+ income restricted senior living facility located at 700 3rd Circle in Vero Beach, Florida. The project consists of 144 units total in 12 buildings, with 72 1/1 units and 72 2/2 units. Amenities include a 24-hour staff, additional storage space, arts and crafts, a ballroom and billiards room, computer room, fitness center, game room, library, swimming pool, laundry room, and planned daily activities. All of the units in this project are either 1/1 or 2/2 with square footages of 600 and 850 square feet, respectively. Current rental rates for the 1/1 units were from $333 to $603 per month, which indicates an average of $468 or $0.78 per square foot. The rates for the 2/2 units ranged from $394 to $720 per month with an average of $557 or $0.66 per square foot. The rental rates are determined based on the level of income for each resident. The rental rates include water and sewer, trash, and free transportation. There are currently no rental concessions offered at this project. The reported occupancy at this project was 100% and according to the representative has been for some time. The floor plans for this project are provided below. 1/1 600 Square Feet: 2/2 850 Square Feet:

10 Page ix St. Francis Manor is a 62+ income restricted senior living facility located at th Avenue in Vero Beach, Florida. The project consists of 98 units total in 9 buildings, all of with are studio efficiencies. Amenities include a 24-hour staff, planned daily activities, and free transportation. St. Francis Manor is unique in the fact that all of the additional funding was provided by private funding. The studio units have square footages of 282 and 377 square feet, which indicated an average of 330 square feet. Current rental rates for the units were $325 to $350, depending on the size of the unit, which indicated an average rental rate of $338 or $1.02 per square foot. The rental rates include water and sewer, and trash. There are currently no rental concessions offered at this project. The reported occupancy at this project was 100%, and according to the representative, they have been at full occupancy for over three years.

11 Page x INCOME RESTRICTED APARTMENTS MARKET ANALYSIS Throughout the course of our research, we located five income restricted apartments within the subject s market area. None of these apartment complexes were listed as age-restricted. Again, we focused on the 1/1 and 2/2 units in our analysis. All of the comparable properties featured 1/1 and 2/2 units along with 3/2 units. Average unit sizes for the 1/1 and 2/2 units were 719 and 1,040 square feet, respectively. The average monthly rental rate for the 1/1 and 2/2 units were $504 and $631, respectively. This indicated a per square foot rental rate of $0.71 and $0.61 for the respective units. Overall occupancy among the comparable projects ranged from 86% to 100%, with an overall average of 95%. Provided below is a summary chart of the comparable income restricted projects used in our analysis. Following the summary chart is a location map of the comparable projects and a discussion of each project including the amenities and rent concessions offered. When available, we also included floor plans of the individual units within the comparable projects. INCOME RESTRICTED APARTMENT SUMMARY Project Name Unit Size Average Unit Price Price/SF Occupancy 1/1 2/2 3/2 1/1 2/2 3/2 1/1 2/2 3/2 Indian River Apartments 730 1,046 1,204 $519 $609 $659 $0.71 $0.58 $ % The Fountains of I.R ,222 $560 $646 $752 $0.78 $0.67 $ % Pemberly Palms 750 1,075 1,200 $359 $590 $680 $0.48 $0.55 $ % Pelican Isles 740 1,007 1,220 $503 $605 $692 $0.68 $0.60 $ % Park at Palm Bay 655 1,110 1,332 $580 $705 $805 $0.89 $0.64 $ % Averages: 719 1,040 1,236 $504 $631 $718 $0.71 $0.61 $ %

12 Page xi

13 Page xii Indian River Apartments is an income restricted apartment complex located at th Place in Vero Beach, Florida. The project consists 180 units in 12 buildings with 1/1, 2/2, and 3/2 units. Amenities include additional storage, a fitness center, playground, clubhouse, community boat launch, laundry facility, and a swimming pool. Unit sizes are 730 and 1,046 square feet for the 1/1 and 2/2 units, respectively. Current rental rates for the 1/1 units were reported at $519 or $0.71 per square foot, and the 2/2 units were reported at $609 or $0.58 per square foot. The rental rates include water, sewer, and trash removal. The occupancy rate as of the date of this report was reported at 96%. Current concessions include no deposit required. The floor plans for the relevant unit sizes are provided below. 1/1 730 Square Feet: 2/2 1,046 Square Feet:

14 Page xiii The Fountains of Indian River is an income restricted apartment complex located at th Circle in Vero Beach, Florida. The project consists 168 units in 11 buildings and offers 1/1, 2/2, 3/2, and 4/2 units. Amenities include a basketball court, a fitness center, clubhouse, playground, laundry facility, and a swimming pool. Unit sizes are 721 and 962 square feet for the 1/1 and 2/2 units, respectively. Current rental rates for the 1/1 units were reported from $500 to $619, with an average of $560 per month or $0.78 per square foot. Current rental rates for the 2/2 units were reported from $550 to $742, with an average of $646 per month or $0.67 per square foot. The rental rates include water, sewer, pest control and trash removal. The current occupancy rate was reported at 100%. There are currently no rental concessions offered at this project. The floor plans for the relevant unit sizes are provided below. 1/1 721 Square Feet: 2/2 962 Square Feet:

15 Page xiv Pemberly Palms is an income restricted apartment complex located at 840 5th Avenue in Vero Beach, Florida. The project consists of 200 units in 17 buildings and offers 1/1, 2/2, and 3/2 units. Amenities include a sand volleyball court, a fitness center, walking trails, and a swimming pool. Unit sizes are 750 and 1,075 square feet for the 1/1 and 2/2 units, respectively. Current rental rates for the 1/1 units were reported at $359 per month, or $0.48 per square foot. Rental rates for the 2/2 units were reported at $590 per month, or $.055 per square foot. The rental rates include pest control and trash removal. The current occupancy rate was reported at 86%. Current rental concessions include half of the first month s rent on 2/2 units and first month s rent on 3/2 units. The floor plans for the relevant unit sizes are provided below (the floor plan for the 1/1 unit was not available). 2/2 1,075 Square Feet:

16 Page xv Pelican Isles is an income restricted apartment complex located at 925 Pelican Isles Circle in Sebastian, Florida. The project consists of 150 units in 11 buildings and offers 1/1, 2/2, and 3/2 units. Amenities include a computer center, a fitness center, playground, planned resident activities, DVD library, and a swimming pool. Unit sizes are 740 and 1,007 square feet for the 1/1 and 2/2 units, respectively. Current rental rates for the 1/1 units were reported at $503 per month, or $0.68 per square foot. Rental rates for the 2/2 units were reported at $605 per month, or $0.60 per square foot. The rental rates include water, sewer, pest control and trash removal. The current occupancy rate was reported at 99%. There are currently no rental concessions offered at this project. The floor plans for the relevant unit sizes are provided below. 1/1 740 Square Feet: 2/2 1,007 Square Feet:

17 Page xvi Park at Palm Bay is an income restricted apartment complex located at 1200 Hadley Circle in Palm Bay, Florida. The project consists of 234 units in 30 buildings and offers 1/1, 2/2, and 3/2 units. Amenities include onsite security patrol, basketball courts, computer center, playground, playground, fitness center, picnic area, and a swimming pool. Unit sizes are 655 and 1,110 square feet for the 1/1 and 2/2 units, respectively. Current rental rates for the 1/1 units were reported at $580 per month or $0.89 per square foot. Rental rates for the 2/2 units were reported at $705 per month or $0.64 per square foot. The rental rates include water, sewer, pest control and trash removal. The current occupancy rate was reported at 95% as of the date of this report. There are currently no rental concessions offered at this project. The floor plans for the relevant unit sizes are provided below. 1/1 655 Square Feet: 2/2 1,110 Square Feet:

18 Page xvii INDEPENDENT LIVING MARKET ANALYSIS In addition to the senior living and income restricted analysis, we also researched and analyzed adult living facilities (ALF) that also had independent living units. We did this to determine the typical market demand and cost for units that feature additional amenities and services such as housekeeping, laundry, meals, etc. Throughout the course of our research, we located five ALFs that also contained independent living units available for rent. Again, considering that the subject property features one and two bedroom units, we focused on these types of units in this analysis. Most of the comparable properties featured 1/1 and 2/2 independent living units. Average unit sizes for the 1/1 and 2/2 units were 768 and 1,345 square feet, respectively. The average monthly rental rate for the 1/1 and 2/2 units were $2,827 and $3,293, respectively. This indicated a per square foot rental rate of $3.64 and $2.49 for the respective units. Overall occupancy among the comparable projects ranged from 75% to 94%, with an overall average of 86%. Provided below is a summary chart of the comparable ALF projects used in the independent living analysis. Following the summary chart is a location map and discussion of each project including the amenities and rent concessions offered in each project. When available, we also included floor plans of the individual units within the comparable projects. We note that the unit pricing is much higher than the proposed subject pricing, however this is largely due to the size of the units as well as higher level of care available at the facilities. After the following discussion, we have also provided a brief analysis of the proposed subject pricing for additional services as well as a unit size analysis. ALF (INDEPENDENT LIVING) FACILITY SUMMARY Project Name Unit Size Average Unit Price Price/SF Occupancy 1/1 2/2 1/1 2/2 1/1 2/2 Indian River Estates 782 1,123 $3,062 $3,419 $3.92 $ % Horizon Bay 1,699 $2,995 $ % Lake Forest Park 1,152 $2,049 $ % Regency Park 668 1,622 $2,065 $4,450 $3.09 $ % The Brennity 855 1,130 $3,355 $3,550 $3.92 $ % Averages: 768 1,345 $2,827 $3,293 $3.64 $ %

19 Page xviii

20 Page xix Indian River Estates is a senior living development located at 2250 Indian Creek Boulevard in Vero Beach, Florida. The project consists of multiple phases and buildings including apartment units as well as townhome and villa units. One of the most recent phases completed is the West Phase. This phase includes 246 apartment units that offer studio, 1/1, 2/2, and 3/2 units. Amenities include a 24-hour staff, additional storage space, arts and crafts, a ballroom and billiards room, computer room, fitness center, game room, library, swimming pool, and laundry room. This project is unique in the fact that it offers a life care contract that requires a significant up front entrance fee with regular monthly maintenance fees. The contract essentially guarantees coverage of living care for residents for the entire remainder of their lives. Entrance fees for the 1/1 units are $103,399 and increase to $185,900 for the 2/2 apartments. Additional residents in each individual unit also increase the entrance fee by $25,000 per resident. Monthly maintenance fees range from $2,062 for 1/1 apartments to $2,419 for 2/2 apartments. Additional residents in the units increase the monthly maintenance fee by $1,500 per resident. Future residents may also rent the units on an annual trial basis known as the preview life care plan. This essentially consists of an annual lease of the units at a significantly higher monthly maintenance fee. The representative reported that the preview lease rates were approximately $1,000 more, or $3,062 and $3,419 for the 1/1 and 2/2 units, respectively. It is noted that we used this figure in our analysis. Unit sizes for the 1/1 units are 735 and 848 square feet, with an average of 782. Unit sizes for the 2/2 units are 1,030 and 1,215 square feet, with an average of 1,123. This indicated an average per square foot rate of $3.92 and $3.04 for the 1/1 and 2/2 units, respectively. The rental rates include all expenses and amenities offered at the community. There are currently no rental concessions offered at this project, however there are incentives for the life care contract that includes up to a 35% discount from the entrance fee. Current occupancy rates for the entire community were reported at 87%. We were unable to confirm the occupancy rates for just the apartment community. Provided on the following pages are the floor plans for the 1/1 and 2/2 units for this project.

21 Page xx 1/1 715 Square Feet: 1/1 848 Square Feet: 2/2 1,030 Square Feet: 2/2 1,215 Square Feet:

22 Page xxi Horizon Bay is an adult care facility/independent senior living facility located at th Street in Vero Beach, Florida. The project consists of 98 ALF units with an additional 9 independent living 2/2 cottages. Amenities include a 24-hour staff, private and community dining rooms, heated swimming pool, library, community rooms, dining services, daily physical therapy exercise sessions, and a billiards room. The cottages also include a garage and fireplace. The only units that are classified as independent living are the 2/2 cottages which are separate from the main facility. These units are 1,699 square feet and currently rent for $2,995 per month or $1.76 per square foot. The rental rates include all utilities, meals, as well as the community amenities and transportation. According to the community representative, the rental concessions vary month to month so they were unable to report a typical concession. Current occupancy rates for the independent living cottages were reported at 80%. Provided below is the floor plan for the independent living cottages. 2/2 1,699 Square Feet:

23 Page xxii Lake Forest Park is an adult care facility/independent senior living facility located at 2909 South 25th Street in Fort Pierce, Florida. The project consists of 127 units, which are mostly ALF and Memory Care units with 59 independent living 2/2 villas. The villas are located in 26 duplex and triplex buildings. The project amenities include a 24-hour staff, full-service dining room, swimming pool, salon/barber parlor, clubhouse, and a laundry room. The villas also include a garage and screened porch. The only units that are classified as independent living are the 2/2 villas which are separate from the main facility. These units are 1,152 square feet and currently rent from $1,799 to $2,296 per month, or an average of $2,049 per month. The rental rates include all utilities, meals, as well as the community amenities and transportation. Residents are responsible for cable and phone expenses. There were no rent concessions reported at the time of confirmation. Current occupancy rates for the independent living villas were reported at 92%. Provided below is a floor plan for the independent living villas. 2/2 1,152 Square Feet:

24 Page xxiii Regency Park is an independent senior living facility located at 910 Regency Square in Vero Beach, Florida. The project consists of 171 apartment units in two buildings and 42 villa units in 21 duplex buildings. Amenities include a library, salon and spa, ballroom, movie theatre, fitness center, clubhouse, business center, dining venues, swimming pool, daily transportation and activities. The apartment units feature 4 different 1/1 floor plans and 5 different 2/2 floor plans. The 1/1 units range in size from 668 to 935 square feet. The 2/2 units range in size from 930 to 1,622 square feet. We were quoted prices for the smallest and largest of the units. The 668 square foot 1/1 unit is currently at a monthly rental rate of $2,063, or $3.09 per square foot. The 1,622 square foot 2/2 unit is currently at a monthly rental rate of $4,450, or $2.74 per square foot. The rental rates include all utilities, one meal a day, weekly linen laundry, community amenities and transportation. Residents are responsible for premium cable and phone expenses. There were no rent concessions reported at the time of confirmation. Current occupancy rates for the apartments were reported at around 94%. Provided below is a floor plan for the two units used in our analysis. 1/1 668 Square Feet: 2/2 1,622 Square Feet:

25 Page xxiv The Brennity at Vero Beach is an ALF/independent senior living facility located at th Lane in Vero Beach, Florida. The project consists of 120 apartment units in 2 buildings as well as additional villas/cottage style homes. Amenities include a 24-hour onsite staff, fitness room, beauty/barber shop, indoor heated therapy pool, outdoor swimming pool and cabana, library, multimedia room, golfing, bar & café, and daily activities and transportation. The development features 1/1, 2/2 and 3/2 units. The 1/1 units are 855 square feet in size and are currently renting for $3,355 per month, or $3.92 per square foot. The 2/2 units are 1,130 square feet in size and are currently renting for $3,550 per month, or $3.14 per square foot. The rental rates include all utilities, meals, weekly linen laundry, housekeeping, a free golf membership, room service, medication management, and community amenities and transportation. Residents are responsible for premium cable and phone expenses. The representative reported that concessions vary from month to month, and was unable to report on a typical concession. Current occupancy rates for the apartments were reported at around 75%. Provided below is a floor plan for the 1/1 and 2/2 units. 1/1 855 Square Feet: 2/2 1,130 Square Feet:

26 Page xxv ADDITIONAL SERVICES ANALYSIS Project Name ALF (INDEPENDENT LIVING) SERVICES SUMMARY Laundry Housekeeping Meals Transportation Medication Assistance Planned Activities Indian River Estates X X X X X X Horizon Bay X X X X Lake Forest Park X X X X X Regency Park X X X X X X The Brennity X X X X X X Subject Property X X X X X X As shown above, most of the ALFs offer services similar to what the proposed subject will provide. We were unable to determine individual costs, however based on what the current subject pricing it appears reasonable with the total rent provided by the comparable properties. To indicate this, we have provided below a chart of the subject s proposed additional services costs and the total rent with additional services (please note for the purpose of comparison, in this analysis we utilized proposed market rental rate for the subject, rather than the proposed average tax credit rental rate. We then added the proposed additional services for the subject). SUBJECT PRICING - SERVICES Unit Type 1/1 2/2 Base Rent $700 $872 Additionial Services Laundry $95 $95 HouseKeeping $175 $175 Meals $356 $356 Transportation $85 $85 Medication Assistance $45 $45 Social Services/Enter. $80 $80 Total Rate w/ Services: $1,536 $1,708 Even with the additional services included, the proposed full market rate still falls well below that provided by the comparable independent living units. This is most likely due to the independent units being located within ALF communities as opposed to just senior living apartments, as well as the fact that two of the comparable projects featured larger villa/cottage-style units as opposed to apartment units. Based on the information provided, the current pricing of additional services in the proposed subject development appears reasonable.

27 Page xxvi PROJECT SIZE AND OCCUPANCY ANALYSIS Provided below is a summary chart of all of the comparable projects and their respective number of units and occupancy rates. We excluded Horizon Bay from this analysis because it was a smaller development that only had 9 independent living cottages. The total number of units in the remaining projects ranged from 41 to 246 units, with an average of 153 units. Occupancy rates ranged from 75% up to 100% with an overall average occupancy of 92%. The proposed subject development of 84 units falls within the range provided by the comparable properties but is substantially smaller than the average size of 153 units. Following this chart we have provided an overall summary page of all of the comparable projects unit sizes and rental rates, as well as an analysis of the unit sizes. COMPARABLE PROJECTS UNIT SUMMARY Project Name Number of Units Occupancy Rate Number of Occupied Units By the River 41 75% 31 Lexington Club 184 N/A N/A River Park Place % 144 St. Francis Manor % 98 Indian River Apartments % 173 The Fountains of I.R % 168 Pemberly Palms % 172 Pelican Isles % 149 Park at Palm Bay % 222 Indian River Estates % 214 (West Phase) Lake Forest Park (Villas) 59 92% 54 Regency Park (Apts.) % 161 The Brennity % 90 Averages: % 140 Totals: 1,995 1,675 *Horizon Bay was not included in this analysis

28 Page xxvii SUMMARY OF UNIT SIZES AND MONTHLY RENTS SENIOR LIVING FACILITY SUMMARY Project Name Unit Size Average Unit Price Price/SF Occupancy Studio 1/1 2/1 2/2 Studio 1/1 2/1 2/2 Studio 1/1 2/1 2/2 By the River 400 $418 $ % Lexington Club $673 $747 $0.85 $0.85 N/A River Park Place $468 $557 $0.78 $ % St. Francis Manor 330 $338 $ % Averages: $338 $443 $673 $652 $1.02 $0.91 $0.85 $ % INCOME RESTRICTED APARTMENT SUMMARY Project Name Unit Size Average Unit Price Price/SF Occupancy 1/1 2/2 3/2 1/1 2/2 3/2 1/1 2/2 3/2 Indian River Apartments 730 1,046 1,204 $519 $609 $659 $0.71 $0.58 $ % The Fountains of I.R ,222 $560 $646 $752 $0.78 $0.67 $ % Pemberly Palms 750 1,075 1,200 $359 $590 $680 $0.48 $0.55 $ % Pelican Isles 740 1,007 1,220 $503 $605 $692 $0.68 $0.60 $ % Park at Palm Bay 655 1,110 1,332 $580 $705 $805 $0.89 $0.64 $ % Averages: 719 1,040 1,236 $504 $631 $718 $0.71 $0.61 $ % ALF (INDEPENDENT LIVING) FACILITY SUMMARY Project Name Unit Size Average Unit Price Price/SF Occupancy 1/1 2/2 1/1 2/2 1/1 2/2 Indian River Estates 782 1,123 $3,062 $3,419 $3.92 $ % Horizon Bay 1,699 $2,995 $ % Lake Forest Park 1,152 $2,049 $ % Regency Park 668 1,622 $2,065 $4,450 $3.09 $ % The Brennity 855 1,130 $3,355 $3,550 $3.92 $ % Averages: 768 1,345 $2,827 $3,293 $3.64 $ %

29 Page xxviii UNIT SIZE AND RENTAL RATE CONCLUSION The income restricted apartments indicated an average unit size of 719 square feet for the 1/1 units and 1,040 square feet for the 2/2 units, with an average monthly rental rate of $0.71 and $0.61 per square foot. The proposed sizes of the subject units are 700 and 1,100 square feet, The proposed average income restricted rent for the subject is $531 per month or $0.76 per square foot for the 1/1 units, and $612 per month or $0.56 per square foot for the 2/2 units. Both the proposed unit sizes and monthly rents appear reasonable based on the income restricted comparable apartments. However, for the senior living income restricted (SLIR) apartments, the average size of the 1/1 and 2/2 units was 500 and 862 square feet, respectively. This indicated that the size of the proposed subject units may be too large for the SLIR market. We also note that the proposed average income restricted rent for the subject s 1/1 units is $531 per month, or $0.76 per square foot. This appears high when compared with the average SLIR rental rate of $443 per month, or $0.91 per square foot (due to the smaller comparable unit size of 500 square feet). The proposed rental rate for the subject s 2/2 units of $612 per month, or $0.56 per square foot is below the SLIR market average rent of $652 per month, or $0.75 per square foot. We also note that the proposed full market rental rate of $700 and $872 for the subject s 1/1 and 2/2 units is reasonable when compared to market-oriented rental rates for senior living projects.

30 Page xxix ASSUMPTIONS AND LIMITING CONDITIONS: The certification of the appraisers is subject to the following conditions and to such other specific conditions as are set forth by the appraisers in this report. 1. Unless otherwise stated, the data appearing in this report represents the opinion of the appraiser AS OF THE DATE SPECIFIED. Demographics affected by national and local economic conditions and consequently will vary with future changes in such conditions. 3. This report covers only the property described and any information utilized is not to be construed as applicable to any other property, however similar the properties might be. 4. It is assumed that the title to the premises is good; that the legal description is correct; that the improvements are entirely and correctly located on the property described and that there are no encroachments on this property, but no investigation or survey has been made. 5. This report expresses our opinion, and employment to make this report was in no way contingent upon the reporting of predetermined value or conclusion. 6. No responsibility is assumed for matters legal in nature, nor is any opinion of title rendered. In the performance of our investigation and analysis leading to the conclusions reached herein, the statements of others were relied on. No liability is assumed for the correctness of these statements; and, in any event, the appraisers' total liability for this report is limited to the actual fee charged. 7. Neither all nor any part of the contents of this report (especially any conclusions, the identity of the appraiser or the firm with which he is connected, or any reference to the Appraisal Institute or any of its designations) shall be disseminated to the public through advertising media, public relations media, news media, sales media or any other public means of communication without our prior written consent and approval. 8. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures which would render it more or less valuable. The Appraiser assumes no responsibility for such conditions or the engineering which might be required to discover these factors.

31 Page xxx 9. Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos, polychlorinated biphenyls, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, or other environmental conditions, were not called to the attention of, nor did the appraiser become aware of such during the appraiser's inspection. The appraiser has no knowledge of the existence of such materials on or in the property unless otherwise stated. The appraiser, however, is not qualified to test for such substances or conditions. If the presence of such substances, such as asbestos, urea formaldehyde foam insulation, or other hazardous substances or environmental conditions, may affect the value of the property, the value estimated is predicated on the assumption that there is no such proximity thereto that would cause a loss in value. No responsibility is assumed for any such conditions, nor for any expertise or engineering knowledge required to discover them. 10. The Americans with Disabilities Act ("ADA") became effective January 26, The appraisers have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since the appraisers have no direct evidence relating to this issue, possible noncompliance with the requirements of the ADA in estimating the value of the property has not been considered. 11. This is a summary consulting report which is intended to comply with the reporting requirements set forth under the Uniform Standards of Professional Appraisal Practice. As such, it does not include full discussions of the data, reasoning, and analyses that were used in the process to develop the appraiser s opinion of replacement costs. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser s file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

32 Page xxxi CERTIFICATION We certify that, to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, conclusions and recommendations. 3. We have no present or prospective interest in the property that is the subject of this report; and we have no personal interest with respect to the parties involved. 4. We have no bias with respect to any property that is the subject of this report or to the parties involved with this assignment. 5. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 6. The analyses, opinions, and conclusion are developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation and the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. 7. The use of this report is subject to the requirements of the State of Florida relating to review by the Department of Professional Regulation, Real Estate Appraisal Board, and to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 8. Our compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. 9. Stephen J. Boyle, MAI and James M. Spoonhour II made a personal inspection of the subject property and no other person assisted in the preparation of this report. 10. As of the date of this report, we have completed the requirements of the continuing education program of the State of Florida and The Appraisal Institute.

33 Page xxxii 11. We have not provided any professional services related to the subject property in the past 3 years. Stephen J. Boyle, MAI Cert Gen RZ699, Expires 11-14