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HomeMy WebLinkAbout4_JLL Market LetterJLL Valuation & Advisory Services, LLC Market Study Specialty Practice October 9, 2020 Mr. Karl D. Mittermayr George Comfort & Sons, Inc. 200 Madison Ave New York, NY 10016 Phone: 212-542-2104 Email: kmittermayr@gcomfort.com Subject: Proposed Seniors Housing Community in Rye Brook, New York -Independent Living -Assisted Living -Memory Care As you are aware, we previously conducted a Market Study for this project in 2016 and later updated it in 2017. The scope of this engagement is specific to revisiting and updating the demand estimates for each product/care segment (independent living, assisted living, and memory care). Our findings and conclusions will be reported and presented in this brief letter report format. Project Overview Plans are for the development of a seniors housing community in Rye Brook, New York. More specifically, the 17.77+/- acre site is located at 900 King Street. The site is currently improved with a 215,000+/- square foot office building and a 595- space parking lot. All structures and improvements will be completely demolished and removed prior to the development of the proposed subject. A product/care mix consisting of 156 independent living units (including 20 townhome-style units), 60 assisted living beds, and 25 memory care beds. Page 2 Proposed Seniors Housing Community - Rye Brook, NY Primary Market Area Considering population density, commuting patterns, physical and psychological barriers, and the concentration of competing communities located throughout the area, we conclude the appropriate primary market area (PMA) to be the area constrained by the following zip codes: -10504 -06831 -06830 -10573 -10580 -10528 -10543 -10804 -10709 -10583 -10605 -10606 -10601 -10607 -10523 -10603 -10604 -10577 Page 3 Proposed Seniors Housing Community - Rye Brook, NY Demand Estimates The following is our process for determining demand for the property’s Primary Market Area (PMA). The following criterion is to determine the appropriate targeted demographic by product/care type. Competitive Market Area Delineate and establish primary market area boundaries and evaluate demographics. Age Qualification Determine appropriate age ranges to establish demand. Source: Esri Need Qualification If applicable, quantify the number of seniors in need of assistance with ADLs and IADLs. Source: US Census and Alzheimer's Association Downsizers In the case of 55+ and/or independent living, quantify the number of seniors desiring to downsize. Source: The Independent Living Report and Esri Income Qualification Apply screens to filter out persons or households with income levels deemed to be too high or too low. Source: Esri Demand Estimates Apply appropriate penetration rates to the age, need, and income-qualified persons or households to determine demand. Active Adult 55+ Age Qualified (55+) 65+ Income Qualified Downsizers Preferring Retirement Communities Influence of Adult Children Independent Living Age Qualified (62+) 75+ Income Qualified Downsizers Preferring Retirement Communities Influence of Adult Children Assisted Living Age Qualified (62+) 75+ Income Qualified Need Qualified ADLs & IADLs Influence of Adult Children Memory Care Age Qualified (62+) 75+ Income Qualified Need Qualified ADLs & IADLs Specialized Memory Care Needs Influence of Adult Children Nursing Care Age Qualified (Any) 65+ Payor Source Need Qualified Skilled & Rehab Page 4 Proposed Seniors Housing Community - Rye Brook, NY Target Demographic Seniors housing communities typically have a minimum age requirement of 62, while the majority of residents are in excess of 75+ based on national research. For purposes of estimating demand in the PMA, we will use a qualifying minimum age of 75 for independent living, assisted living, and memory care. Note that specific to active adult 55+ apartments, a minimum age of 65 is typically used. Age and Income Qualification A number of operators consider $35,000 to be the appropriate minimum income benchmark, while others set the benchmark at $50,000 due to higher associated costs. For illustration, this chart highlights the overall income distribution reported within a recent ASHA publication. As a starting point, we will utilize a minimum income-qualifying figure of $35,000+ for assisted living and $35,000+ for independent living. However, we recognize that the total cost of residing in a facility will likely require supplemental income from other sources (children and/or other relatives) or assets to spend down, e.g., home equity. Considering the median home value within the subject’s PMA, an available equity assumption of 50%+/-, and NIC’s latest median length of stay figures, we estimate the actual potential spending power of the targeted households 75+ to be significantly higher, in turn more than offsetting any minimum income related shortfalls. Page 5 Proposed Seniors Housing Community - Rye Brook, NY Need Qualification | Assisted Living and Memory Care The U.S. Census Bureau reports that 15.4% of seniors age 75 to 79 require assistance with the activities of daily living (ADLs) and/or instrumental activities of daily living (IADLs). For seniors 80+, that dependency increases to 30.2%. Applying these assumptions to the localized PMA demographic pool (weighting of the population age 75 to 79 in comparison to the population 80+) results in current and five-year forecast figures of 24.5% and 24.2%. Cohort % Requiring Independent Size =>Assistance vs Seniors Current Year Population 75 to 79 9,757 =>15.4%vs 84.6% Population 80+15,706 =>30.2%vs 69.8% Current Year | Targeted Pool 25,463 =>24.5%vs 75.5% Five-Year Forecast Population 75 to 79 11,675 =>15.4%vs 84.6% Population 80+17,040 =>30.2%vs 69.8% Five-Year Forecast | Targeted Pool 28,715 =>24.2%vs 74.8% Source: US Census % Requiring Assistance with ADLs and IADLs Item Regarding seniors requiring memory care services, an additional adjustment is necessary. According to the Alzheimer’s Association, 17% of seniors age 75 to 84 require this specialized assistance. And specific to the population 85+, the figure is even larger at 32%. When applied to the localized demographics (weighting of the population 75 to 84 in comparison to the population 85+) results in current and five-year forecast figures of 22.2% and 24.4%. The five-year forecast is adjusted according to the state-by-state growth projections released by the Alzheimer’s Association which are displayed later in this report. The five-year growth figure indicated for the state of New York is 12.2%. Cohort % Requiring Size =>Assistance Current Year Population 75 to 84 16,655 =>17.0% Population 85+8,808 =>32.0% Current Year | Targeted Pool 25,463 =>22.2% Five-Year Forecast Population 75 to 84 19,680 =>19.1% Population 85+9,035 =>35.9% Five-Year Forecast | Targeted Pool 28,715 =>24.4% Source: Alzheimer's Association % Requiring Specialized Memory Care Assistance Item Page 6 Proposed Seniors Housing Community - Rye Brook, NY Downsizers by Choice | Active Adult 55+ and Independent Living When estimating demand for active adult 55+ and independent living product types, the prevailing home ownership percentage for the competitive market area should be considered, as well as the propensity of these downsizers to choose independent living. According to the American Seniors Housing Association’s The Independent Living Report, 59% of the downsizing seniors surveyed preferred moving into an independent living community instead of a smaller single-family residence, duplex, condominium, or conventional apartment building. And of the residents at the communities surveyed, 90% downsized from owner-occupied single-family homes. ASHA’s report detailed the reasons, motivations, hesitations, and influences impacting new residents’ decisions to move and reflect data from over 900 move-ins to independent living communities in the 100 largest cities in the United States. Because of this strong correlation, we will adjust our targeted independent senior demographic pool downward by the area’s prevailing home ownership percentage – as well as apply an adjustment for the seniors’ preferences towards independent living upon downsizing. Influence of Adult Children Children and/or other relatives of seniors generally play a significant role in the placement of a senior in a seniors housing facility. Market areas where there are large concentrations of persons in the 45 to 64 age group can often support a significantly larger supply of seniors housing than would be indicated through analysis of seniors already residing in the area. This is because in- migration of seniors into markets with large adult child populations is common, as the elderly are often relocated to a facility near the home of their adult children or other relative. JLL’s experience with surveying and touring seniors housing communities nationally indicates that the decision for a senior to move into a community is primarily made by their adult child. Additionally, in many markets, more than 50% of the residents are brought in from outside of a given submarket by adult children that live inside the submarket. The ratio of adult children in comparison to households 75+ within the PMA is 1.3. This is significantly lower than the metro-wide figure of 3.2. This is an indication that the PMA is currently an aging in place market that in turn is not expected to experience a significant level of in-migration since there are a limited number of adult children that will influence their parents residing elsewhere to move into the area. For the current year, assuming a ratio of adult children to households 75+ in line with the metro, the adjusted pool is estimated at 10,290. Looking five years forward, the ratio is expected to be 1.1 for the PMA in comparison to 2.6 for the metro. Assuming a ratio in line with the metro results in an adjusted forecasted pool of 11,757. Item Current Year Five-Year Forecast Change Adult Children (ages 45 to 64)20,911 19,160 -1,751 Households 75+16,257 17,853 1,596 Ratio of Adult Children to HHs 75+ 1.3 1.1 -0.21 Metro Comparison 3.2 2.6 -0.56 Targeted Households 75+6,570 7,310 740 Times Average Household Size 1.6 1.6 0.04 Adjusted Population 75+ Pool 10,290 11,757 1,467 Ratio of Adult Children to HHs 75+ Page 7 Proposed Seniors Housing Community - Rye Brook, NY Demand Reconciliation These two demographic groups, age and income qualified households 75+ and adult children, will be utilized in the derivation of demand for independent living, assisted living, and memory care. Note that the two demographic groups will provide two separate indications of demand. We will then consider each one to derive our demand conclusion. In-Place Households 75+ Influence of Adult Children Page 8 Proposed Seniors Housing Community - Rye Brook, NY Demand Estimates by Product/Care Type The estimated number of persons or households for each of the targeted demographic groups for a number of time periods, and the indicated demand for each period based upon the applicable market penetration rates are shown in the following table(s). Independent Living Demand for independent living is calculated in the table. Demand Estimate for Independent Living Item 2020 2021 2022 2023 2024 2025 2030 Total Population 75+25,463 26,113 26,634 27,050 27,383 28,715 32,382 % Not Requiring Assistance | Independent Seniors 75.8% 75.8% 75.8% 75.9% 75.9% 76.0% 76.2% Divided by Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Pool of Households 75+ Not Requiring Assistance 12,315 12,570 12,772 12,933 13,060 13,565 14,943 % of Homeowners 62.9% 62.7% 62.6% 62.5% 62.4% 62.1% 61.3% % of Preferring Independent Living 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% Targeted Households 75+ | Independent Living 4,569 4,651 4,717 4,768 4,809 4,969 5,403 % of Income Qualified Households 55.7% 55.7% 55.7% 55.7% 55.7% 55.7% 55.7% Demand Estimate | In-Place Households 75+2,544 2,590 2,626 2,655 2,678 2,767 3,009 Total Households 45-64 | Adult Children 20,911 20,561 20,211 19,860 19,510 19,160 17,556 Ratio of Adult Children to Households 75+1.3 1.2 1.2 1.2 1.1 1.1 0.9 Application of Metro Ratio / Benchmark 3.2 3.1 2.9 2.8 2.7 2.6 2.2 Potential Net In-Migration/Out-Migration Pool of Households 75+ 6,570 6,725 6,877 7,025 7,169 7,310 8,133 Times Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Adjusted Population 75+ Pool 10,290 10,590 10,876 11,148 11,407 11,757 13,432 % Not Requiring Assistance with ADLs and IADLs 75.8% 75.8% 75.8% 75.9% 75.9% 76.0% 76.2% Divided by Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Pool of Households 75+ Not Requiring Assistance 4,977 5,098 5,215 5,330 5,441 5,554 6,198 % of Homeowners 62.9% 62.7% 62.6% 62.5% 62.4% 62.1% 61.3% % of Downsizers Preferring Independent Living 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% Targeted Households 75+ | Independent Living 1,846 1,886 1,926 1,965 2,003 2,034 2,241 % Income Qualified 55.7% 55.7% 55.7% 55.7% 55.7% 55.7% 55.7% Demand Estimate | Influence of Nearby Adult Children 1,028 1,050 1,072 1,094 1,115 1,133 1,248 Weight given to household indication 50% 50% 50% 50% 50% 50% 50% Weight given to adult child influence 50% 50% 50% 50% 50% 50% 50% Demand Conclusion | Independent Living 1,786 1,820 1,849 1,875 1,897 1,950 2,128 Year The two indicated demand estimates are independent of the other. In this case, our conclusion is weighted 50% to the demand indication based on in-place households 75+ and 50% to the demand indication based on the potential influence of nearby adult children (i.e., in- migration/out-migration). Page 9 Proposed Seniors Housing Community - Rye Brook, NY Assisted Living Demand for assisted living is calculated in the table. Demand Estimate for Assisted Living 2020 2021 2022 2023 2024 2025 2030 Total Population 75+25,463 26,113 26,634 27,050 27,383 28,715 32,382 % Requiring Assistance with ADLs and IADLs 24.5% 24.5% 24.4% 24.4% 24.3% 24.2% 23.8% Divided by Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Pool of Households 75+ Requiring Assisted Living or Memory Care 3,988 4,056 4,110 4,152 4,186 4,317 4,674 Minus % with Memory Care Needs -22.2% -22.6% -23.0% -23.3% -23.5% -24.4% -26.8% Targeted Households 75+ | Assisted Living 3,103 3,138 3,166 3,187 3,203 3,265 3,423 % Income Qualified 69.7% 70.2% 70.5% 70.8% 71.0% 71.8% 74.0% Demand Estimate | In-Place Households 75+2,164 2,202 2,232 2,255 2,274 2,346 2,533 Total Households 45-64 | Adult Children 20,911 20,561 20,211 19,860 19,510 19,160 17,556 Ratio of Adult Children to Households 75+1.3 1.2 1.2 1.2 1.1 1.1 0.9 Application of Metro Ratio / Benchmark 3.2 3.1 2.9 2.8 2.7 2.6 2.2 Potential Net In-Migration/Out-Migration Pool of Households 75+ 6,570 6,725 6,877 7,025 7,169 7,310 8,133 Times Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Adjusted Population 75+ Pool 10,290 10,590 10,876 11,148 11,407 11,757 13,432 % Requiring Assistance with ADLs and IADLs 24.5% 24.5% 24.4% 24.4% 24.3% 24.2% 23.8% Divided by Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Pool of Households 75+ Requiring Assistance 1,612 1,645 1,678 1,711 1,744 1,768 1,939 Minus % with Memory Care Needs -22.2% -22.6% -23.0% -23.3% -23.5% -24.4% -26.8% Targeted Households 75+ | Assisted Living 1,254 1,273 1,293 1,313 1,334 1,337 1,420 % Income Qualified 69.7% 70.2% 70.5% 70.8% 71.0% 71.8% 74.0% Demand Estimate | Influence of Nearby Adult Children 874 893 911 929 947 960 1,051 Weight given to household indication 50% 50% 50% 50% 50% 50% 50% Weight given to adult child influence 50% 50% 50% 50% 50% 50% 50% Demand Conclusion | Assisted Living 1,519 1,547 1,571 1,592 1,610 1,653 1,792 Item Year The two indicated demand estimates are independent of the other. In this case, our conclusion is weighted 50% to the demand indication based on in-place households 75+ and 50% to the demand indication based on the potential influence of nearby adult children (i.e., in- migration/out-migration). Page 10 Proposed Seniors Housing Community - Rye Brook, NY Memory Care Demand for memory care is calculated in the table. Demand Estimate for Memory Care 2020 2021 2022 2023 2024 2025 2030 Total Population 75+25,463 26,113 26,634 27,050 27,383 28,715 32,382 % Requiring Assistance with ADLs and IADLs 24.5% 24.5% 24.4% 24.4% 24.3% 24.2% 23.8% Divided by Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Pool Households 75+ Requiring Assisted Living or Memory Care 3,988 4,056 4,110 4,152 4,186 4,317 4,674 % with Memory Care Needs 22.2% 22.6% 23.0% 23.3% 23.5% 24.4% 26.8% Targeted Households 75+ | Memory Care 885 918 944 966 983 1,052 1,251 % Income Qualified 69.7% 70.2% 70.5% 70.8% 71.0% 71.8% 74.0% Demand Estimate | In-Place Households 75+617 644 666 683 698 756 926 Total Households 45-64 | Adult Children 20,911 20,561 20,211 19,860 19,510 19,160 17,556 Ratio of Adult Children to Households 75+1.3 1.2 1.2 1.2 1.1 1.1 0.9 Application of Metro Ratio / Benchmark 3.2 3.1 2.9 2.8 2.7 2.6 2.2 Potential Net In-Migration/Out-Migration Pool of Households 75+ 6,570 6,725 6,877 7,025 7,169 7,310 8,133 Times Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Adjusted Population 75+ Pool 10,290 10,590 10,876 11,148 11,407 11,757 13,432 % Requiring Assistance with ADLs and IADLs 24.5% 24.5% 24.4% 24.4% 24.3% 24.2% 23.8% Divided by Average Household Size 1.6 1.6 1.6 1.6 1.6 1.6 1.7 Pool of Households 75+ Requiring Assistance 1,612 1,645 1,678 1,711 1,744 1,768 1,939 % with Memory Care Needs 22.2% 22.6% 23.0% 23.3% 23.5% 24.4% 26.8% Targeted Households 75+ | Assisted Living 358 372 386 398 409 431 519 % Income Qualified 69.7% 70.2% 70.5% 70.8% 71.0% 71.8% 74.0% Demand Estimate | Influence of Nearby Adult Children 249 261 272 282 291 309 384 Weight given to household indication 50% 50% 50% 50% 50% 50% 50% Weight given to adult child influence 50% 50% 50% 50% 50% 50% 50% Demand Conclusion | Memory Care 433 452 469 482 494 533 655 Item Year The two indicated demand estimates are independent of the other. In this case, our conclusion is weighted 50% to the demand indication based on in-place households 75+ and 50% to the demand indication based on the potential influence of nearby adult children (i.e., in- migration/out-migration). Segment Growth Memory care facilities are normally licensed the same as standard assisted living facilities. Furthermore, it is relatively easy for facilities to begin or cease providing specialized memory care since the physical plant requirements are not significantly different and the license is not different. According to the Alzheimer’s Association, there are approximately 491,000 people age 65 or older that will develop Alzheimer’s disease in the United States in 2020. Also, the Alzheimer’s Association provided the following data regarding projected change by state for those residents with Alzheimer’s disease. Page 11 Proposed Seniors Housing Community - Rye Brook, NY Percentage Increase Percentage Increase State 2020 2025 2020-2025 State 2020 2025 2020-2025 District of Columbia 8.9 9 1.1 Montana 22 27 22.7 Alabama 96 110 14.6 Nebraska 35 40 14.3 Alaska 8.5 11 29.4 Nevada 49 64 30.6 Arizona 150 200 33.3 New Hampshire 26 32 23.1 Arkansas 58 67 15.5 New Jersey 190 210 10.5 California 690 840 21.7 New Mexico 43 53 23.3 Colorado 76 92 21.1 New York 410 460 12.2 Connecticut 80 91 13.8 North Carolina 186 210 16.7 Delaware 19 23 21.1 North Dakota 15 16 6.7 Flonda 580 720 24.1 Ohio 220 250 13.6 Georgia 150 190 26.7 Oklahoma 67 76 13.4 Hawaii 29 35 20.7 Oregon 69 84 21.7 Idaho 27 33 22.2 Pennsylvania 280 320 14.3 Illinois 230 260 13.0 Rhode Island 24 27 12.5 Indiana 110 130 18.2 South Carolina 95 120 26.3 Iowa 66 73 10.6 South Dakota 18 20 11.1 Kansas 55 62 12.7 Tennessee 120 140 16.7 Kentucky 75 86 14.7 Texas 400 490 22.5 Louisiana 92 110 19.6 Utah 34 42 23.5 Maine 29 35 20.7 Vermont 13 17 30.8 Maryland 110 130 18.2 Virginia 150 190 26.7 Massachusetts 130 150 15.4 Washington 120 140 16.7 Michigan 190 220 15.8 West Virginia 39 44 12.8 Minnesota 99 120 21.2 Wisconsin 120 130 8.3 Mississippi 57 65 14.0 Wyoming 10 13 30.0 Missouri 120 130 8.3 Created from data provided to the Alzheimer's Association by Weuve et al. Projected Number with Alzheimer's (in thousands) Projections of Total Numbers of Americans Age 65+ with Alzheimer's by State Projected Number with Alzheimer's (in thousands) Page 12 Proposed Seniors Housing Community - Rye Brook, NY As shown in the figures above, between 2020 and 2025, every state and region across the county is expected to experience increases of at least 6.7% in the numbers of people with Alzheimer’s due to increases in the proportion of the population 65 and older. Page 13 Proposed Seniors Housing Community - Rye Brook, NY Comparison of Supply and Demand Independent Living The table summarizes the key metrics and penetration rate(s) for independent living: •Our analysis shows that the PMA has an undersupply of independent living in the current year. The penetration rate based on supply is calculated to be 2.3%. While this is slightly higher than the metro-wide figure of 1.7%, it is important to note that the targeted household penetration figure for the PMA is actually 11.0%. •Atria Rye Brook, which consists of 166 independent living units, is planning to transition into a licensed assisted living facility. Since opening in 2004, the community has offered its aging in place residents personal care services via a third-party home health provider. So, transitioning fully into assisted living is an indication that the facility is likely a strategy to retain the majority of its current resident base in an effort to limit vacancy levels and turnover rates. For purposes of this analysis, these 166 units have been removed from the competitive independent living supply and instead added to the assisted living inventory. •Upon delivery of the proposed subject’s 156 independent living units in 2022, the market is forecast to continue to have excess unmet demand, with additional penetration levels ranging from 7.8% to 8.1% by the outer years of the forecast. Key Metrics and Penetration Rate(s) for Independent Living Item 2020 2021 2022 2023 2024 2025 2030 Metro Metrics | Inventory Penetration Total Households 75+ within Metro 862,199 888,415 914,632 940,848 967,065 993,281 1,144,292 Influence of Nearby Adult Children 2,744,251 2,716,119 2,687,988 2,659,856 2,631,725 2,603,593 2,470,144 Ratio of Adult Children to Households 75+3.2 3.1 2.9 2.8 2.7 2.6 2.2 Supply | Independent Living 14,742 15,096 15,458 15,829 16,209 16,598 18,688 Annual Inventory % Increase 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% Inventory Penetration % (Supply / HHs 75+)1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.6% PMA Supply Metrics | Inventory Penetration In-Place Households 75+ within PMA 16,257 16,576 16,832 17,036 17,199 17,853 19,606 Influence of Nearby Adult Children 20,911 20,561 20,211 19,860 19,510 19,160 17,556 Ratio of Adult Children to Households 75+1.3 1.2 1.2 1.2 1.1 1.1 0.9 Supply | Independent Living 548 382 382 538 538 538 538 Additions / Subtractions to Supply -166 0 156 0 0 N.A. N.A. Inventory Penetration % (Supply / HHs 75+)2.3% 2.3% 3.2% 3.2% 3.1% 3.0% 2.7% Variance PMA versus Metro 0.6% 0.6% 1.5% 1.5% 1.5% 1.3% 1.1% PMA Demand Estimate | Household Penetration Demand | Independent Living 1,786 1,820 1,849 1,875 1,897 1,950 2,128 Targeted Household Penetration % (Demand / HHs 75+)11.0% 11.0% 11.0% 11.0% 11.0% 10.9% 10.9% Supply | Independent Living (Existing plus Pipeline)382 382 538 538 538 538 538 Excess Unmet Demand | Independent Living 1,404 1,438 1,311 1,337 1,359 1,412 1,590 Unmet Targeted Penetration % (Unmet Demand / HHs 75+)8.6% 8.7% 7.8% 7.8% 7.9% 7.9% 8.1% Year Page 14 Proposed Seniors Housing Community - Rye Brook, NY Assisted Living The table summarizes the key metrics and penetration rate(s) for assisted living: •Our analysis shows that the PMA has an undersupply of assisted living in the current year. The penetration rate based on supply is calculated to be 4.3%. This is higher than the metro-wide figure of 2.5% but well below the PMA’s actual targeted household penetration figure of 9.3%. •As previously discussed, Atria Rye Brook is planning to transition into a licensed assisted living facility in an effort to retain the majority of its current resident base, which has been offered third-party home health services since opening in 2004. For purposes of this analysis, these 166 units were removed from the competitive independent living supply and instead added to the assisted living inventory. •Upon delivery of the proposed subject’s 60 assisted living beds in 2022, the market is forecast to continue to have excess unmet demand, with additional penetration levels ranging from 4.9% to 5.3% by the outer years of the forecast. Key Metrics and Penetration Rate(s) for Assisted Living Item 2020 2021 2022 2022 2024 2025 2030 Metro Metrics | Inventory Penetration Total Households 75+ within Metro 862,199 888,415 914,632 940,848 967,065 993,281 1,144,292 Influence of Nearby Adult Children 2,744,251 2,716,119 2,687,988 2,659,856 2,631,725 2,603,593 2,470,144 Ratio of Adult Children to Households 75+3.2 3.1 2.9 2.8 2.7 2.6 2.2 Supply | Assisted Living 21,867 22,108 22,351 22,597 22,845 23,096 24,395 Annual Inventory % Increase 1.1%1.1%1.1%1.1%1.1%1.1%1.1% Inventory Penetration % (Supply / HHs 75+)2.5%2.5%2.4%2.4%2.4%2.3%2.1% PMA Supply Metrics | Inventory Penetration Total Households 75+ within PMA 16,257 16,576 16,832 17,036 17,199 17,853 19,606 Influence of Nearby Adult Children 20,911 20,561 20,211 19,860 19,510 19,160 17,556 Ratio of Adult Children to Households 75+1.3 1.2 1.2 1.2 1.1 1.1 0.9 Supply | Assisted Living 526 692 692 752 752 752 752 Additions / Subtractions to Supply 166 0 60 0 0 N.A.N.A. Inventory Penetration % (Supply / HHs 75+)4.3%4.2%4.5%4.4%4.4%4.2%3.8% PMA Demand Estimate | Household Penetration Total Households 75+ within PMA 16,257 16,576 16,832 17,036 17,199 17,853 19,606 Demand | Assisted Living 1,519 1,547 1,571 1,592 1,610 1,653 1,792 Targeted Household Penetration % (Demand / HHs 75+)9.3%9.3%9.3%9.3%9.4%9.3%9.1% Supply | Assisted Living (Existing plus Pipeline)692 692 752 752 752 752 752 Excess Unmet Demand | Assisted Living 827 855 819 840 858 901 1,040 Unmet Targeted Penetration % (Unmet Demand / HHs 75+)5.1%5.2%4.9%4.9%5.0%5.0%5.3% Year Page 15 Proposed Seniors Housing Community - Rye Brook, NY Memory Care The table summarizes the key metrics and penetration rate(s) for memory care: •Our analysis shows that the PMA has an undersupply of memory care in the current year. The penetration rate based on supply is calculated to be 1.2%. While this is slightly higher than the metro-wide figure of 0.7%, it is important to note that the targeted household penetration figure for the PMA is higher at 2.7%. •Atria Rye Brook is planning to transition into a licensed assisted living facility in an effort to retain the majority of its current resident base, which has been offered third-party home health services since opening in 2004. It is unknown at this time if the facility will have a dedicated memory care wing/floor. So, for purposes of this analysis, all 166 beds will be included within the assisted living inventory. •Upon delivery of the proposed subject’s 60 memory care beds in 2022, the market is forecast to continue to have excess unmet demand, with additional penetration levels ranging from 1.5% to 2.2% by the outer years of the forecast. Key Metrics and Penetration Rate(s) for Memory Care Item 2020 2021 2022 2022 2024 2025 2030 Metro Metrics | Inventory Penetration Total Households 75+ within Metro 862,199 888,415 914,632 940,848 967,065 993,281 1,144,292 Influence of Nearby Adult Children 2,744,251 2,716,119 2,687,988 2,659,856 2,631,725 2,603,593 2,470,144 Ratio of Adult Children to Households 75+3.2 3.1 2.9 2.8 2.7 2.6 2.2 Supply | Memory Care 5,644 6,033 6,450 6,895 7,371 7,879 10,999 Annual Inventory % Increase 6.9%6.9%6.9%6.9%6.9%6.9%6.9% Inventory Penetration % (Supply / HHs 75+)0.7%0.7%0.7%0.7%0.8%0.8%1.0% PMA Supply Metrics | Inventory Penetration Total Households 75+ within PMA 16,257 16,583 16,841 17,046 17,209 17,853 19,606 Influence of Nearby Adult Children 20,911 20,561 20,211 19,860 19,510 19,160 17,556 Ratio of Adult Children to Households 75+1.3 1.2 1.2 1.2 1.1 1.1 0.9 Supply | Memory Care 196 196 196 221 221 221 221 Additions / Subtractions to Supply 0 0 25 0 0 N.A.N.A. Inventory Penetration % (Supply / HHs 75+)1.2%1.2%1.3%1.3%1.3%1.2%1.1% PMA Demand Estimate | Household Penetration Demand | Memory Care 433 452 469 482 494 533 655 Targeted Household Penetration % (Demand / HHs 75+)2.7%2.7%2.8%2.8%2.9%3.0%3.3% Supply | Memory Care (Existing plus Pipeline)196 196 221 221 221 221 221 Excess Unmet Demand | Memory Care 237 256 248 261 273 312 434 Unmet Targeted Penetration % (Unmet Demand / HHs 75+)1.5%1.5%1.5%1.5%1.6%1.7%2.2% Year Page 16 Proposed Seniors Housing Community - Rye Brook, NY Conclusion / Recommendation Our analysis indicates the market to have sufficient unmet demand to support additional independent living, assisted living, and memory care at this time. Other than the proposed subject, the most notable pipeline/inventory activity is with an existing community known as Atria Rye Brook. The community consists of 166 independent living units and is planning to transition into a licensed assisted living facility. However, since opening in 2004, the community has offered its aging in place residents personal care services via a third-party home health provider. So, transitioning fully into assisted living is an indication that the facility is likely a strategy to retain the majority of its current resident base in an effort to limit vacancy levels and turnover rates. In comparison, the proposed subject, which will offer a full-continuum of care with independent living, assisted living, and memory care, will be competitively positioned in the market as it will appeal to independent seniors desiring to move into a community where they can age in place over the years as well as those in need of immediate assistance with the activities of daily living. With this structure, the independent living component will serve as a natural feeder into its complementary assisted living and memory care components. In our experience, communities offering a full continuum of care typically outperform stand-alone assisted living facilities. •There are 548 competitive independent living units within the PMA at this time. With an anticipated demand figure for 1,849 units in 2022, the transition of Atria’s 166 units over to assisted living, and the proposed subject’s 156 units, there is indicated to be excess unmet demand for an additional 1,311 units. •In regards to assisted living, there are currently 526 competitive beds within the PMA. With a demand figure for 1,571 beds in 2022, the addition of Atria’s converted 166 assisted living beds, and the proposed subject’s 60 assisted living beds, there is indicated to be excess unmet demand for an additional 819 beds. •Lastly, specific to memory care, with a total supply figure of 196 competitive beds, an estimated demand figure for 469 beds in 2022, and the proposed subject’s 25 memory care beds, there is indicated to be excess unmet demand for an additional there is forecast to be excess unmet demand for an additional 248 beds. Page 17 Proposed Seniors Housing Community - Rye Brook, NY Considering the strong growth forecast in seniors housing over the next few years, market conditions are anticipated to continually improve and strengthen. Development of the subject as proposed with 156 independent living units (including 20 townhome-style units), 60 assisted living beds, and 25 memory care beds should proceed as planned. We appreciate this opportunity to provide our advisory services to George Comfort & Sons, Inc. JLL Valuation and Advisory Services, LLC Jon Cruse, CRE, FRICS Brian L. Chandler, MAI, CRE, FRICS Executive Vice President Managing Director Telephone: 214-396-5463 Telephone: 214-396-5423 Email: jon.cruse@am.jll.com Email: brian.chandler@am.jll.com