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ZIEGLER INVESTMENT BANKINGTHE 2021 STATE OF NFP SENIOR LIVING & CAREMarch 2, 2021 CHHSM VIRTUAL ANNUAL GATHERINGPRESENTED BYDan HermannPresident & CEOHead of Investment BankingZieglerdhermann@ziegler.comLisa McCrackenDirectorZieglerlmccracken@ziegler.comB.C. Ziegler and Company Member SIPC & FINRAFor Institutional Use Only
ABOUT ZIEGLERZIEGLER is a privately held, national boutique investment bank, capital markets and proprietaryinvestments firm. Specializing in the healthcare, senior living and education sectors, as well as generalmunicipal and structured finance, enables us to generate a positive impact on the communities we serve.INVESTMENTBANKINGCAPITALCAPITALMARKETS ARYINVESTMENTS& FUND MNGTStrategic advisory, financing andcapital planning solutions inhealthcare, senior living andeducational sectors as well asgeneral municipal and structuredfinanceCAPITALMARKETSActive participant in municipalsales and trading including public,tax-exempt, taxable, privateplacement and preferred tradingmarketsPROPRIETARYINVESTMENTS& FUND MNGTProviding opportunities for investorsin senior living, healthcare services& technology solutions2
ZIEGLER SENIOR LIVING FINANCE PRACTICEDan Hermann SeniorPresident & CEO,Head of Investment BankingChicago, ILRich ScanlonSenior Managing DirectorSt. Petersburg, FLBrandon PowellManaging DirectorRichmond, VAAaron SchroederDirectorMilwaukee, WIAmy CastleberryManaging DirectorChicago, ILTyler SimonsSenior Vice PresidentScottsdale, AZSarkis GarabedianManaging DirectorSeattle, WAGenia WeeksSenior Vice PresidentRichmond, VAMark LandrevilleManaging DirectorMinneapolis, MNMackenzie WelchVice PresidentWest Hartford, CTWill CarneyManaging DirectorChicago, ILChad HimelDirectorWest Hartford, CTMatt MuléVice PresidentScottsdale, AZStephen JohnsonManaging DirectorChicago, ILJennifer LavelleDirectorChicago, ILJason ChoiVice PresidentChicago, ILTerry HerndonDirectorChicago, ILChristie RapplVice PresidentMinneapolis, MNTom MeyersSenior Managing DirectorChicago, ILMary MuñozSenior Managing DirectorScottsdale, AZTommy BrewerManaging DirectorRichmond, VAKeith RobertsonManaging DirectorWest Hartford, CTDaren BellDirectorSeattle, WAAdam VanucciAssociateScottsdale, AZTad MeltonManaging DirectorRichmond, VAAdam GarciaDirectorRichmond, VACaroline RobertsonAnalystChicago, ILPatrick MoranAnalystChicago, ILJohn EvansAnalystChicago, ILSENIOR LIVINGRESEARCH & DEVELOPMENTLisa McCrackenDirectorResearch & DevelopmentChicago, ILCathy OwenVice PresidentSenior Living ResearchChicago, ILSusan McDonoughCatholic Elder Care & PostAcute SpecialistChicago, IL3
ZIEGLER SENIOR LIVING BOND FINANCINGS (2020)PRECOVIDSource: Ziegler Investment Banking, as of 12/15/204
PRECOVIDZIEGLER SENIOR LIVING BANK & OTHER TRANSACTIONS (2020)Source: Ziegler Investment Banking,as of 12/16/205
ZIEGLER: DECADES OF MARKET LEADERSHIPTop Lead Managing UnderwritersSenior Living Finance Issues2015 - 2020Top Lead Managing UnderwritersSenior Living Finance Issues2020KeyBanc Capital Markets162.3TruistMillions5,244.4Truist5,100.3RBC Capital Markets1,728.4Dougherty & Company1,552.1 1,700 1,500 1,6001,436.4MillionsMillionsNote: Ranking totals include: Senior Living not-for-profit tax-exempt bond financings, and 142(d)/145(d) rental (not-for-profit and for-profit tax-exempt) bonds financings.Based on full credit given to senior manager of lead-managed underwriting principal volume for senior living transactions completednationally. Rankings and amounts through Refinitiv data as of 12/31/206 32,000 30,000 26,000 24,000 22,000 20,000 18,000 16,0001,144.7 14,000 20,000 19,000 18,000 17,000 16,000 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000Citi 2,000Wachovia699.2 0715.1Citi 1,000Northland Securities 8,000913.42,095.3UBS Securities 2,0001,008.9Dougherty & Company5,371.8Piper Sandler 0Bank of America Merrill Cain Brothers 6,0002,304.11,465.59,013.0 4,0003,007.4Cain Brothers 31,658.4Herbert J. Sims & Co.3,369.5RBC Capital Markets 1,300Ziegler4,560.5 28,000 18,600.8Truist 1,100Top Lead Managing UnderwritersSenior Living Finance Issues2000 - 2020 10,000ZieglerPiper Sandler 1,200MillionsTop Lead Managing UnderwritersSenior Living Finance Issues2010 - 2020Herbert J. Sims & Co. 900 200 0 100 1,600 1,700 1,400 1,500 1,300 900 600 1,10035.1 1,200Odeon Capital 1,00035.1 700Odeon Capital 80035.6 500Northland Securities 40035.6 20037.0Northland Securities 300Stifel 037.0 100Stifel 1,000145.6 800Colliers Securities145.6 600162.3239.7178.6 12,000TruistPiper Sandler 400Colliers Securities178.6 500239.7Piper Sandler540.6 300KeyBanc Capital Markets574.1Herbert J. Sims & Co.540.6 700574.1Herbert J. Sims & Co. 1,620.3ZieglerRBC Capital Markets 1,400 1,620.3ZieglerRBC Capital Markets
ZIEGLER’S SENIOR LIVING RESEARCH, EDUCATION &THOUGHT LEADERSHIP Education––––––Annual host 12 conferences a yearRegular COVID-19 updates throughout 2020Annual Ziegler Senior Living Finance StrategyConferenceLeadingAge Ziegler National Senior Living CFOWorkshopZiegler National Senior Living Investor WorkshopSeriesSMZLF Fund Symposium ––– ––LeadingAge Ziegler 200CARF Financial Ratios and Trends Publication(Baker Tilly, CARF)Resident Contract StudyStatewide CCRC Reports Industry communication–––Surveillance updates on current creditsSupports active secondary tradingInvestor Market Research– Ziegler CCRC National Listing & ProfileClient-requested researchClient education sessionsSecondary Market Investor Research–– External research––Internal information and try Trends (e.g. CCaH, RentalCCRCs)All Senior Living FinancingsAll New Communities (start-up CCRCs)since 1990Z-NewsWhite papersZiegler CFO HotlineSM7
HIGHLIGHTS & OBSERVATIONS FROM THEPAST YEAR
KEY THEMES COVID-19: Significant variation of impact across providers– Life Plan Communities have performed the best amongvarious community types Our workforce our heroes Complexity of our business continues to increase Sector bifurcation: Stronger vs. Weaker A pressured Skilled Nursing Environment Escalation of sponsorship transition activity Technology the silver lining of COVID-19? Record low cost of capital for not-for-profit borrowers9Source: Ziegler Investment Banking
LIFE PLAN COMMUNITIES/CCRCS: PERFORMANCEDURING COVID-19 Highest occupancy,specifically NFP EFcommunities Staff turnover generallylower than otherfacility/communitytypes Strong housing marketin most marketsSource: The SeniorCare Investor, December 202010
NFP SECTOR GROWTH OBSERVATIONS Pre-COVID-19, not-for-profit (NFP) senior living growth was picking up inselect markets; some projects put on hold, others moving forward; variationacross clients and regions For-profit growth of new locations continues to be high; might slow a bitwith COVID-19, but will not stop. Private sector money remains plentiful. NFP growth through affiliation and acquisition has surpassed growththrough new development; will accelerate with COVID-19 pressures NFPs are actively reinvesting in existing campuses Expansion of the continuum with home and community-based services(HCBS) platforms (joint ventures common); interest accelerated withCOVID-1911Source: Ziegler Investment Banking
2020 LeadingAge Ziegler 200Growth: Growth of Largest 10 Systems, Combined Unit MixFROM 1990(Excludes Trinity Health Senior Communities, Ascension Senior Living, Benedictine Health System)75,000ILU70,000ALUNCBExpansions, affiliations& dispositionsAll Units65,00060,000Evolution of NFP 030,000SN Decline: Dispositions,closures, downsizing of 9900Year12Source: 2020 LeadingAge Ziegler 200 Publication (data as of 12/31/19)
2020 LEADINGAGE ZIEGLER 2002020 Rank2019 RankORGANIZATIONS THAT ARE CHHSM MEMBERS1210Retirement Housing FoundationCA4,098 2,6468416111898103436Homewood Retirement Centers Inc.MD1,873 1,134288451550005157United Church Homes, Inc.OH1,4914482737701152047272Phoebe MinistriesPA1,163370259534440009291United Church Homes and ServicesNC9535359032833000102108St. Andrew's Resources for Seniors SystemMO87737920829061212124128United Church of Christ HomesPA76626712437560204128132Benevolent Corporation Cedar CommunityWI74640922711080341167175EHM Senior SolutionsMI5291127034781322Units(as of 12/31/19)System NameStateTotalILUCommunities(as of 12/31/19)ALUNCBTotalLPCILALNH13Source: 2020 LeadingAge Ziegler 200 Publication (data as of 12/31/19)
THE NFP GROWTH MINDSET Notable growth mindset heading into COVID-19 With exception of expansion projects, multi-sites more aggressive intheir growth plansNFP Senior Living Growth Plans in the Next2 Years (Time Comparison)70%60%NFP Senior Living Growth Plans in theNext 2 Years (Multis. Vs Single Sites)70%64%55%60%50%50%40%40%30%26% 27%25%28%22%20%14%30%10%0%0%End of August 2020Source: Ziegler CFO HotlineSM, March & August 202051%42%35%34%21%20%20%10%Early March 202058%9%Multi-SitesSingle-SitesSource: Ziegler CFO HotlineSM, August 202014
GROWTH FROM THE PRIVATE SECTOR Even with aslowdown due toCOVID-19, FPowners andoperators remainbullish on thesector Most growth in theform of IL/AL/MC;rentalcommunities Overall decline innursing homes* Excludes CCRCsSource: NIC MAP Data Service www.nic.org/nic-map15
SECTOR CONSOLIDATION & DISPOSITIONS Roughly 55% have been dispositions to the for-profit sector Increase in closures in recent years (10% of total)Cumulative Totals (2010-2020) by # of Transactions & # of 92020Market-Rate CommunitiesIn processNote: Includes market-rate communities; excludes government subsidized; The ELGSS community count is also excluded from thecommunity count (represents 160 communities); Source: Ziegler Investment Banking 12/31/202016
OUTLOOK FOR 2021: WHAT DOES A POSTCOVID ERA LOOK LIKE?
DEMOGRAPHICS: THE TREND THAT HAS NOT CHANGEDU.S. Population 75 (2016-2050)60,000,000The 75 age cohort will grow by another 24million people through the year unity for existing NFPs togrow with pace of 582059018Source: U.S. Census Bureau, data released September 2018
YOUR FUTURE RESIDENT Pent up demand?– Demand on caregivers As residents have put-off moving into a community, similar patterns willemerge as seen during last recession:– Incoming residents will be more frail, older– Length of stay will be reduced– Turnover will be greater Higher demand for transparent communication, enhanced safetymeasures and clinical capabilities Skilled area will be most pressured, but still in demand– Caregiving ratio (aging caregivers; Boomers without children; divorcedBoomers)– Chronic health statistics among Boomers19Source: Ziegler Investment Banking
POPULATION MIGRATION IN THE U.S. Nearly 16 million people havemoved during the pandemic Urban density has turned intoa negative Outmigration from many ofthe country’s most expensivecities A number of temporaryhousing moves have becomepermanent Low-income, homeless inurban and rural areas lesslikely to have these options20Source: U.S. Postal Service data & MyMove, November 2020
GROWTH FROM THE PRIVATE SECTOR Investors remain bullish on thesector, particularly withIL/AL/MC communities Funds are already beingpooled to acquire distressedproperties coming out ofCOVID-1921Source: Seniors Housing News Industry Survey, November 22, 2020
CONSOLIDATION & DISPOSITIONS Growing complexities of operating in the senior living & careenvironment will drive ongoing consolidation Financial pressures C-Suite retirements; leadership burnout Inability to be competitive on the workforce front Will vary regionally and across markets Strategic mergers and affiliations will continueNFP Life Plan Communities: Multi-Site vs. 3.9%55.1%57.9%61.0%2009201220162020% Multi-Site% Single-Site22Source: Ziegler Investment Banking
2021 OUTLOOK FOR LIFE PLAN COMMUNITIES: STABLE“What to watch” Operating costs remainpressured Residential real estateremains healthy M&A activity on the rise Capital investment to meetnew market demandsSource: Fitch Ratings, December 9, 202023
THE VALUE PROPOSITION“Protecting the well-being of this population must form thefoundation of everything from building design to daily operations,with hospitality-whether extravagant or more bare-bones- layered ontop.” Tim Mullaney, Senior Housing News, January 2, 2021HospitalityLife PlanCommunityValuePropositionQualityCareNot necessarily tied toa specific setting orlevel of care24
TECHNOLOGY ACCELERATED The need to invest in and adopt technology hasonly increased during COVID-19 pandemicZIEGLER LINK AGE FUNDS25
TECHNOLOGY – TELEHEALTH IN 2021 Telehealth expansion: telemedicine will not be used inisolation Screen-mediated virtual appointments is not sufficient toadvance in post-COVID world Other technologies will be needed to augment telehealth– Wearables– Remote patient monitoring– Artificial intelligence “The future state of telemedicine is a world in which caredelivered by phone or video will become predictive andpersonalized, rather than reactive.”Source: Healthcare IT News, December 31, 202026
GROWTH OF HCBS PLATFORMS COVID-19 has stimulated increased interest togrow HCBS platforms About 50% of NFPs have some type of HCBSplatform (fairly steady across the years) Common area for joint venturesHome CareHome ources: Ziegler Investment Banking; 2020 LeadingAge Ziegler 200; Ziegler CFO Hotline, November 2020
ADDITIONAL OBSERVATIONS Choice (when, where, how) will become the new normal– Activities, dining, procurement of services– Design (for residents and staff)– Staffing (flexible shifts; alternative models) On-demand economy has a role in the senior living & care sector Robust wellness models that focus on prevention will help define themodel moving forward– Bringing healthcare to the senior (specialists, primary care)– Future residents will likely be older, more frail28Source: Ziegler Investment Banking
ADDITIONAL OBSERVATIONS (CONT.) Virtual sales & marketing approaches are here to stay Social isolation can have dramatic negative consequences Technology has a role in nearly everything Capital forecast:– Predicted that borrowing rates will remain very attractive in 2021,particularly for strong credits– May see the return of advanced refundings with newadministration29Source: Ziegler Investment Banking
CLOSING REMARKSB.C. Ziegler and Company Member of SIPC & FINRA
ZIEGLER ONGOING RESOURCEShttps://www.ziegler.com/covid-19/ Summary documents on the CARESAct (PPP updates, Main Streetlending program)Links to key sources of informationWebinars that Ziegler has hosted forvarious audiences re: COVID-19Z-News updates31
CFO Workshop will bevirtual in 2021Planning for an in-person gatheringfor Finance Strategy Conference32
QUESTIONS?B.C. Ziegler and Company Member of SIPC & FINRA
DISCLAIMERSInvestment banking, capital markets and proprietary investment services offered through B.C. Ziegler and Company. FHA mortgagebanking services are provided through Ziegler Financing Corporation which is not a registered broker/dealer. Ziegler FinancingCorporation and B.C. Ziegler and Company are affiliated and referral fees may be paid by either entity for services provided.This presentation is designed to provide accurate information regarding the subject matter covered. It is provided for informationalpurposes only with the understanding that the material contained herein does not constitute legal, accounting, tax, or other professionaladvice. Although information which may be contained in this presentation has been obtained from sources which we believe to bereliable, we do not guarantee that it is accurate or complete and any such information may be subject to change at any time. Theinformation presented and discussed is based on a newly enacted Federal program, and as such, many questions and provision aresubject to change.34
ABOUT ZIEGLERZiegler is a privately-held investment bank, capital markets and proprietary investments firm A registered broker dealer with SIPC &FINRA Ziegler provides its clients with capital raising, strategic advisory services, equity & fixed-income trading and researchFounded in 1902, Ziegler specializes in the healthcare, senior living and educational sectors as well as general municipal finance35
– LeadingAge Ziegler 200 – CARF Financial Ratios and Trends Publication (Baker Tilly, CARF) – Resident Contract Study – Statewide CCRC Reports Industry communication – Z-News – White papers – Ziegler CFO HotlineSM Internal information and research – Ziegler CCRC National Listing &
