REPOSITIONING FOR SUSTAINABILITY AND THE NEW CONSUMER FIFTY IS THE - PowerPoint PPT Presentation

REPOSITIONING FOR SUSTAINABILITY AND THE NEW CONSUMER

FIFTY IS THE NEW THIRTY MICHELLE JUST PRESIDENT AND CEO, BEATITUDES CAMPUS

PHASE I 2000 – 2008 Master Planning Process 199 Central Park Apartments – Phase I 124 Courtyard Apartments – Phase II Town Plaza Completion

TOWN PLAZA 2008

ALIGNING PARTNERSHIPS  Beatitudes Campus Executive Team  Beatitudes Campus Board of Directors  Sawgrass Partners  Ziegler  Orcutt Winslow  Angell Marketing

COLLABORATIVE APPROACH  Multiple plan options  Isolating the best approach

50 50 1 0 s Is Is Fiv Five e Perf erfect ect

PLAYING WITH THE NUMBERS The importance of financial planning in developing a successful project MARK STREICHER PRINCIPAL, SAWGRASS PARTNERS

MASTER PLANNING PREREQUISITES Strategic Planning Market Research Financial Analysis • Mission & Vision • Demographic, economic & • Existing debt covenants & debt • Environmental Assessment – consumer trends incurrence provisions • Competitive landscape • Debt capacity analyses Internal & External • Strategic goals to meet the • Market risks & opportunities • High-level analysis of mission & vision incremental project capacity • Preliminary project parameters, • Prioritized strategic initiatives vs. cost such as size & pricing • Detailed, multi-year financial projections

KEY DEVELOPMENT LEVERS Existing Liquidity & Debt Capacity Incremental Project Capacity Project Costs Plan of Finance

EXISTING LIQUIDITY & DEBT CAPACITY  Building Capacity to Act  Debt Covenants  Improving Current Operations

IMPROVING CURRENT OPERATIONS

INCREMENTAL CAPACITY FROM PROJECT  Density  Incremental Revenues & Expenses  Initial & Turnover Entrance Fees

INCREMENTAL CAPACITY FROM PROJECT YTD Actual Combined Combined Annualized Existing and Existing, Phase I 8/31/13 Phase I Phase I Phase II and Phase II Phase III Total Project Income available for Debt Service $ 3,230,000 $ 1,270,000 $ 4,500,000 $ 2,011,000 $ 6,511,000 $ - $ 6,511,000 Net Turnover EF received $ 2,000,000 $ 390,000 $ 2,390,000 $ 922,000 $ 3,312,000 $ - $ 3,312,000 Income available for Debt Service $ 5,230,000 $ 1,660,000 $ 6,890,000 $ 2,933,000 $ 9,823,000 $ - $ 9,823,000 Debt Service Coverage Target 1.40 1.40 1.40 1.40 1.40 1.40 1.40 Annual Debt Service $ 3,736,000 $ 1,186,000 $ 4,922,000 $ 2,095,000 $ 7,017,000 $ - $ 7,017,000 Long-term Debt Capacity $ 46,360,000 $ 14,717,000 $ 61,077,000 $ 25,997,000 $ 87,074,000 $ - $ 87,074,000 Short-Term Debt Capacity $ - $ 11,080,000 $ 11,080,000 $ 26,195,000 $ 37,275,000 $ - $ 37,275,000 Total Debt Capacity $ 46,360,000 $ 25,797,000 $ 72,157,000 $ 52,192,000 $ 124,349,000 $ - $ 124,349,000 Less: Existing Debt $ (22,028,000) $ - $ (22,028,000) $ - $ (22,028,000) $ - $ (22,028,000) Less: Financing Related Costs 18% $ (8,345,000) $ (4,643,000) $ (12,988,000) $ (9,395,000) $ (22,383,000) $ - $ (22,383,000) Incremental Project Cost Capacity $ 15,987,000 $ 21,154,000 $ 37,141,000 $ 42,797,000 $ 79,938,000 $ - $ 79,938,000 Estimated Project Costs $ - $ 30,145,000 $ 30,145,000 $ 49,142,000 $ 79,287,000 $ 4,620,000 $ 83,907,000 Excess Capacity / (Fundraising requirement) $ 15,987,000 $ (8,991,000) $ 6,996,000 $ (6,345,000) $ 651,000 $ (4,620,000) $ (3,969,000) Liquidity Existing 8/31/13 balances: Cash and cash equivalents $ 1,427,000 $ 1,427,000 $ 1,427,000 $ 1,427,000 $ 1,427,000 $ 1,427,000 $ 1,427,000 Current portion of AWUIL $ 2,034,000 $ 2,034,000 $ 2,034,000 $ 2,034,000 $ 2,034,000 $ 2,034,000 $ 2,034,000 Long-term portion of AWUIL $ 6,137,000 $ 6,137,000 $ 6,137,000 $ 6,137,000 $ 6,137,000 $ 6,137,000 $ 6,137,000 Total Existing Cash and AWUIL $ 9,598,000 $ 9,598,000 $ 9,598,000 $ 9,598,000 $ 9,598,000 $ 9,598,000 $ 9,598,000 Projected DSRF $ 3,736,000 $ 4,922,000 $ 4,922,000 $ 7,017,000 $ 7,017,000 $ 7,017,000 $ 7,017,000 Total Projected Cash and AWUIL $ 13,334,000 $ 14,520,000 $ 14,520,000 $ 16,615,000 $ 16,615,000 $ 16,615,000 $ 16,615,000 Total Long-Term Debt Outstanding $ 46,360,000 $ 61,077,000 $ 61,077,000 $ 87,074,000 $ 87,074,000 $ 87,074,000 $ 87,074,000 Projected Cash-to-Debt Ratio 29% 24% 24% 19% 19% 19% 19% Entrance Fees utilized to fund EXAMPLE Start-up Losses - 1,232,000 1,232,000 2,911,000 4,143,000 4,143,000 4,143,000

PROJECT COSTS  Hard & Soft Costs  New Construction vs. Renovation  Duration, Phasing & Escalation  New Revenue Streams vs. Reinvestment

BREAKDOWN OF PROJECT USES OF FUNDS Categor gory Low High Median an Construction 39% 64% 52% 52% Land & Related 0% 12% 4% Design & Engineering 1% 7% 2% FF&E 1% 9% 3% Contingency 1% 7% 3% Marketing 1% 8% 4% Development Fees 0% 11% 4% Prefinance Capital Return 0% 7% 2% Other 0% 5% 2% Total Project Related 64% 87% 76% 76% Funded Interest & Fees 6% 17% 12% Debt Service Reserve Funds 2% 9% 6% Working Capital & Operating Reserves 0% 24% 3% 3% Costs of Issuance 2% 4% 3% Total Financing & Other Costs 13% 36% 24% 24% EXAMPLE

PLAN OF FINANCE  Existing Liquidity & Debt Capacity  Project-Related Borrowing  Fundraising

COMPARISON OF FINANCING STRUCTURES

FINANCIAL TOOLS  Debt Capacity Analysis  Project Planner Model  In-Depth Financial Projections

PROJECT PLANNER CCRC XXX Project Planner Unit Configuration Inflation Independent Living Unit Turnover Independent Living Cottages 20 Independent Living Apartments 120 Revenues 3.00% First Year Stable 5% Assisted Living 40 Expenses 3.00% Skilled Nursing 30 Entrance Fees 3.00% Total 210 Operating margin percentage ON Project Development Levers FTEs per 55% FALSE or OFF Operations 100 residents Other 41% Revenues Annual 45 Wgt. Avg. Total 25% Operating Cash Cash Operating Wgt. Avg. MSF Revenues # of FTEs Salary Salary Benefits Percentage Costs Available Margin Independent Living $ 2,400 $ 4,032,000 - Assisted Living $ 4,600 $ 2,208,000 - Skilled Nursing $ 5,500 $ 1,980,000 - Total $ 8,220,000 88 $27,000 $ 2,381,400 $ 595,350 $ 1,637,213 $ 3,606,038 $ 3,370,200 Entrance Fees Average Entrance Fee Wgt. Avg. Entrance Fee Entrance Fee 95% 77% Initial E.F as a percentage Including Equity Home Value Percentage Entrance Fee Plan Pool Occupancy Debt Repayment Liquidity of Project Costs Contribution 400,000 100% 400,000 90% refund plan $ 56,000,000 $ 53,200,000 $ 40,964,000 $ 12,236,000 76.25% 76.25% Pre-Finance Capital Circulation / 0% Marketing Costs 10% Project Costs Wgt. Avg Common Total Cost per Construction 20% Per ILU Unit Subtotal Land Return of Total sq. ft. Percentage Sq. Ft. Sq. Ft. Costs Soft Costs 18,000 Project Costs Purchase 13% Project Costs Independent Living Cottages 1,600 5% 33,600 $130 $4,368,000 $873,600 $360,000 $5,601,600 5,601,600 Independent Living Apartments 1,200 25% 180,000 $140 $25,200,000 $5,040,000 $2,160,000 $32,400,000 32,400,000 Assisted Living 400 25% 20,000 $200 $4,000,000 $800,000 - $4,800,000 4,800,000 Skilled Nursing 300 25% 11,250 $220 $2,475,000 $495,000 $2,970,000 2,970,000 Common Spaces 80,000 33% 80,000 $250 $20,000,000 $4,000,000 $24,000,000 24,000,000 324,850 $173 $56,043,000 $11,208,600 $2,520,000 $69,771,600 $4,000,000 $959,031 $74,730,631 100% Financing Assumptions Total Project 20% Total Uses Total Short-Term Long-Term Interest Maximum Annual Equity Costs Financing Costs of Funds Borrowing Bonds Bonds Rate Debt Service Contribution $74,730,631 $14,946,126 $89,676,757 $89,676,757 $ (40,964,000) $48,712,757 6.00% $3,538,929 $0 Debt Service Coverage Ratio Target Metrics Cash Used for Working Capital Interest Income Funds Available for Debt Service 4,934,194 Initial Liquidity $ 12,236,000 Total Cash and AWUIL 15,163,129 Maximum Annual Debt Service 3,538,929 Percent Used for Working Capital 5% Interest Earnings 5.00% DSCR 1.39 1.30 Remaining Liquidity $ 11,624,200 Interest Income 758,156 Cash-to-Debt Ratio Turnover Entrance Fees Cash 11,624,200 Stabilized IL Occupancy 114.00 Debt Service Reserve Fund 3,538,929 Units Turning Over 5.70 Total Cash and AWUIL 15,163,129 Average Net Entrance Fees/Unit $100,000 Total Long-Term Debt $48,712,757 Net Turnover Entrance Fees $570,000 EXAMPLE Cash-to-Debt 0.31 0.30

DISCOVER WHERE YOU ARE IN THE REPOSITIONING PROCESS AND HOW TO USE ELEMENTS OF A MARKET STUDY IN DEVELOPING A DESIGN AND MASTERPLAN STRATEGY NEIL TERRY PARTNER, ORCUTT WINSLOW

THE CHALLENGE  Improving 50 year-old buildings

FINDING NEW OPPORTUNITIES Available land as part of either:  Acquired Property  Obsolete Product

FINDING NEW OPPORTUNITIES Available land as part of either:  Acquired Property  Obsolete Product

FINDING NEW OPPORTUNITIES Available land as part of either:  Acquired Property  Obsolete Product