Available For Lease or Sale: Arcadian at Aliso

Available For Lease or Sale: Arcadian at Aliso Assisted Living & Memory Care Facility Aliso Viejo, California offering memorandum A UNIQUE SENIOR LIVING COMMUNITY IN SOUTHERN CALIFORNIA

2 Arcadian at Aliso CBRE CONTACTS Arcadian at Aliso Confidentiality Agreement Jecoah Byrnes, CCIM CA License 01915914 +1 949 725 8467 jecoah.byrnes@cbre.com Chris Bates CA License 00671391 +1 949 725 8483 chris.bates@cbre.com Jeff Carr CA License 01009600 +1 949 725 8631 jeff.carr@cbre.com This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the lease acquisition of the Property. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the Owner ), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confident nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in leasing the Property, kindly return this Memorandum to CBRE, Inc. 2013 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. www.cbre.com/arcadianataliso The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to lease the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner s obligations therein have been satisfied or waived.

Arcadian At Aliso 3 Arcadian at Aliso Executive Summary... 5 Property Description... 14 Location Overview... 20 Process and Offer Instructions... 31

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Arcadian At Aliso 5 Executive Summary

6 Arcadian at Aliso Asking Price: $11,500,000.00 Address: 24552 Pacific Park Drive, Aliso Viejo, California 92656 Number of current licensed beds: 84 Number of Potential Licensed Beds: 120 Total Square Feet: 49,184 Year Constructed: 1987 Number of Buildings: number of stories: One Three The Offering CBRE s Healthcare Group is pleased to exclusively offer the Arcadian at Aliso senior living community in Aliso Viejo, California for lease or sale. This unique opportunity will allow a growing senior housing or memory care operator with the opportunity to enter the Aliso Viejo submarket and gain market share. The Arcadian at Aliso is ideally located just off of the 73 Toll Road in Aliso Viejo, just west of Interstate 5 and only minutes to the sunny beaches of Southern California. Arcadian at Aliso offers a convenient and comfortable location for residents and their family members to come to the facility to visit loved ones. The facilitity is located in a densely populated area, close to shopping and entertainment areas, within walking distance to drugstores and grocery stores, and is easily accessible from major freeways. The primary focus of Arcadian at Aliso is to provide service of the highest quality and value in a supportive environment, promoting the health, independence and social interaction of seniors. This great location caters to those who can manage living independently and would like to live in a community of peers. Residents of Arcadian at Aliso continue to live the same lifestyle they did at home. Arcadian at Aliso offers a maintenancefree living option and often offers extensive activities, social events, and programs for their residents. The facilities offer a choice of private or shared apartments with a variety of floor plans and sizes to meet virtually any need. Some apartments are fully furnished, and all apartments can be individualized with a resident s own belongings. Apartments feature large walk-in showers with safety features or full baths, individual climate control, spacious common areas, private dining and catering services, and beautifully landscaped grounds offering an ideal setting for relaxing outdoors. Arcadian of Aliso offers a wide range of programs and services including retirement living, assisted living, short stay / respite care, and even on-site rehabilitation.

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8 Arcadian at Aliso property Highlights Strategically located in Orange County, the Arcadian at Aliso community presents an excellent opportunity for an operator to acquire a high quality asset in a highly desirable market. Ideally Situated Property Arcadian at Aliso is located in the city of Aliso Viejo, Orange County, a master planned, mixed-use community originally developed by the Mission Viejo Company. It contains a total of 6,619 gross acres of land, ranging from fairly level areas to steep sloping hillsides. The Mission Viejo Company acquired the land in 1976; at that time, it was an agricultural property with cattle grazing, ranch buildings, horseback riding, and some crop farming. California leads the United States with the highest number of elderly residents at over 4.1 million. By 2015, the elderly 65+ California population is estimated to be 5,228,000, and the 85+ population expected to exceed 764,000 in the same time period. Aliso Viejo is the newest community within the Saddleback Valley area, incorporated in July 2001. The city is generally surrounded by the city of Laguna Beach to the west, Laguna Niguel to the south, and Laguna Hills to the east and north. Aliso Viejo is generally bounded on the east and west by the Aliso/Wood Canyons Regional Park. Arcadian at Aliso s South Orange County location has good freeway access and is within reasonable commuting distance to employment areas in Orange, Los Angeles and Riverside Counties. The city is primarily residential in nature and has adequate supporting retail and commercial uses. Arcadian at Aliso is idealy situated within a location that is well positioned to capitalize on future resident demand growth as the nearby aging population expands. High Barrier to Entry Market California is generally a high barrier to entry real estate market, and that basic premise is no different within the senior living asset category. Land and entitlement costs have proven challenging to overcome even for some of the most seasoned senior housing developers, and while strong demand for new assisted living and memory care units only increases, few new projects have been developed or are even in the planning stages. Zoning ordinances continue to pose a problem for unsuspecting developers and operators, making these two communities even more appealing as they are positioned in very dense submarkets.

Arcadian At Aliso 9 Capital Investment by Owner The current owner has historically invested significant capital into the property. This investment can easily be seen in the exterior grounds, pool, patio areas, and the interior quality of the common areas and individual resident rooms. Additional upgrades have made to the commercial kitchen and common dining hall. Strong Payor Mix The Arcadian at Aliso community service area was recently compared to 30,000+ markets nationally through the use of a 3rd party software program (MRA) that uses local demographic data and statistics from the Centers of Medicare and Medicaid Services (CMS). According to the study, the Arcadian at Aliso service area scored better than 96% of the markets nationally for healthcare and senior housing utilization. The Aliso Viejo service area is made up of a large, rapidly growing, and affluent patient base. The service area is expected to grow at a rate of 3.91% over the next five years. This patient base has a median household income of $85,904.01 and an affluence score of 130.04 making it one of the most attractive service areas in the Southern California region. Furthermore, 94.12% of the total population accesses medical care through Government or Private Programs, with 71.19% Commercially Insured, 14.90% Medicare covered, and 8.03% covered by Medicaid. Appealing Senior Aging Trends The number of Americans aged 65 and older (with an increased need for health care) is projected to double to 71 million or nearly 20% of the U.S. population by 2030. Within a five-mile radius of the subject property, the fastest growing age segment is the 65+ year age range, and currently 15.87% of the total population is 65 years or older (senior). These growth trends give credence to the long-term demand for senior living and memory care units within the primary service area. (Source: MRA & NIC).

10 Arcadian at Aliso Arcadian at aliso ie Gail Road Moulton Parkway Pacific Park Drive

Arcadian At Aliso 11 Arcadian at aliso Aliso Creek Road Alicia Parkway La Paz Road Moulton Parkway Pacific Park Drive Nellie

12 Arcadian at Aliso SANTA ANA Arcadian at aliso TUSTIN IRVINE LAKE FOREST COSTA MESA IRVINE SPECTRUM RANCHO SANTA MARGARITA NEWPORT BEACH NEWPORT COAST LAGUNA HILLS SUBJECT PROPERTY MISSION VIEJO COTO DE CAZA ALISO VIEJO LAGUNA BEACH LAGUNA NIGUEL SAN JUAN CAPISTRANO DANA POINT SAN CLEMENTE

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14 Arcadian at Aliso Property Description

Arcadian At Aliso 15 PROPERTY summary Amenities Quality interior finishes Large outdoor common areas Exterior Gardens Well appointed individual rooms Single and double occupancy provides residents greater choice Commercial kitchens and food preparation areas Common dining rooms On-site rehabilitation and therapy Secured 2nd Floor for high risk patients Gated Pool Area Exterior Patio Family meeting rooms Easy Freeway Access via the 405 Freeway or the San Joaquin (73) Toll Road

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Arcadian At Aliso 17 Arcadian at Aliso Building Specifications Location: 24552 Pacific Park Drive, Aliso Viejo, California 92656 Building Size: 49,184 Square Feet Year Constructed: 1987 Stories: Three (3) Land Area: 2.92 Acres Parcel No: 636-201-28; 636-201-29; 636-201-30 Zoning: Ownership: Parking: Foundation/Structure: Exterior Walls: Roof: Interior Finishes: Elevators & Stairs: HVAC: Electrical: Fire/Life/Safety: PO (Professional Office) with Managed Care Facility Use Via CUP Grant Deed 155 spaces for residents and employees in surface parking on the lot with shared parking with the adjacent medical building. Reinforced concrete slab on grade foundation with poured reinforced concrete above covered parking. Drywall over metal stud with framing throughout. 1979 Construction. Steel, moment frame above grade beams. Granite facia exterior walls Built-up roof Painted drywall finishes throughout the building. Ceilings are sprayed acoustic in resident suites and acoustic panels with hanging T-bar system in hallways and common areas. Floors are finished with wood style vinyl plank, carpet, linoleum, and ceramic tile. Three (3) elevators; Two (2) access stairwells. Several roof-mounted package HVAC units service the common areas of the building. 120/208 Volts, 3-phase, 4-wire Wire Type throughout Wet sprinkler fire protection throughout facility with fire alarms and smoke detectors.

18 Arcadian at Aliso Garden Pool Patio Dining & Kitchen O OS AY KW R PA Not a Part

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20 Arcadian at Aliso Location Overview

Arcadian At Aliso 21 Arcadian at aliso Arcadian at Aliso is perfectly located in the heart of South Orange County next to the San Joaquin (73) Toll Road and approximately 12 miles southeast of John Wayne Airport. Arcadian at Aliso is one of the premier assisted living communities in the sunny Orange County area, an area with a population of over 3 million people. The senior living community offers 84 units on three floors and is located close to shopping areas within walking distances of restaurants and marketplaces. It is also conveninetly located 2 miles from Aliso Viejo s premier Town Center, a 300-acre center accommodating a broad range of shopping and retail services, medical and health care facilities, places of worship, professional and corporate offices, restaurant uses, entertaiment and community facilities.

22 Arcadian at Aliso Senior Housing Advisory Report OCCUPANCY BY UNIT TYPE The property is located in the Los Angeles National Investment Center 100% for Seniors Housing ( NIC ) Map Top 25 metropolitan statistical area (MSA). Only limited supply has hit the market in recent years, and both rental growth and occupancy continue to move upward with the average rental rates nearly $1,000 per month plus above 80% 60% 40% the national average and occupancy over three hundred (300) basis points above the national average. The aging population in surrounding communities should only enhance an operators ability to maintain strong occupancy. 20% 0% IL Studio IL 1 Bedroom IL 2 Bedroom AL Studio AL 1 Bedroom AL 2 Bedroom MC Studio MC 1 Bedroom MC 2 Bedroom

Arcadian At Aliso 23 LOCATION ANALYZER RESULTS In further investigation and analysis of each submarket, we established a five mile radius in order to do a comparative analysis of the submarket compared to the greater MSA as a whole. Each Segment or Service Area is comprised of a five mile radius around each property. The 65+ aged group is the fastest growing segment of the population in the service area. arcadian at aliso SEGMENT DATA Occupancy Average Rent Implied RevPAR Inventory 1Q13 Quarterly Change Annual Change 1Q13 Annual Change 1Q13 Independent Living 822 69.7% -597 bps 110 bps $4,744 4.3% $3,378 Assisted Living 964 88.6% 143 bps 353 bps $3,582 4.3% $3,214 Segment Unit Type Inventory Unit Mix Occupancy Average Rent Assited Living Studio 722 43.6% 88.0% $3,020 Assisted Living 1 Bedroom 165 10.0% 89.7% $5,536 SENIOR HOUSING AVERAGE RENT Comparable Set Los Angeles, CA $4,000 $3,800 $3,600 $3,400 1Q13 4Q12 3Q12 2Q12 1Q12 4Q11 3Q11 2Q11 1Q11 4Q10 3Q10 2Q10 NOTE: Proprietary research provided by NIC, STDB, and MAR. Not to be reused or distributed without written permission by CBRE, Inc.

24 Arcadian at Aliso regional competition

Arcadian At Aliso 25 Regional Senior Housing Overview Local Senior Housing Environment With the combination of recent legislative changes in healthcare along with shifting demographics among seniors, the post-acute and senior housing segment of the real estate market will see significant growth over the next decade. This fact has not gone unnoticed by developers or those within the investment community. The number of Americans aged 65 and older (with an increased need for health care) is projected to double to 71 million or nearly 20% of the U.S. population by 2030. Each year, more than 10 million Medicare beneficiaries are discharged from acute care hospitals into post-acute care settings, many of these being assisted living communities and memory care facilities. These growth trends give credence to the long-term viability of retirement communities as a strong asset class, including both assisted living and memory care assets. In the greater L.A. region we have seen the effects of these changes and the increasing demand being placed on the existing senior housing infrastructure. While occupancy of Independent living decreased by nearly 6% in the first quarter of 2013, occupancy of assisted living during the same time grew by nearly two percent to 89.7%. Assisted living occupancy in the previous 12 months grew by 3.53% in the region and the annual average rent continued to climb upward by over 4% to $5,536 per unit per month based on a one bedroom, single occupant unit.

Electrical 26 Arcadian at Aliso Arcadian at aliso FLOOR PLANS FIRST FLOOR Dining Room 1 2 3 4 5 Activity Room Sink Kitchen Freezor Food Storage 6 7 8 9 10 11 12 13 14 15 Reception Lobby Office Admin 16 Covered Drop Off 17 Activity Room 18 23 19 20 22 21

Arcadian At Aliso 27 arcadia at aliso FLOOR PLANS second FLOOR

28 Arcadian at Aliso arcadia at aliso FLOOR PLANS third FLOOR

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Arcadian At Aliso 31 Process and Offer Instructions

32 Arcadian at Aliso OFFERING INSTRUCTIONS Distribute Offering Memorandum. Confidential Offering Memorandum distributed to interested parties that have executed a Confidentiality Agreement. Marketing Period. During the marketing period, interested parties are encourage to: (i) review materials provided by the exclusive listing brokers and found on www.cbre.com/arcadianataliso (ii) schedule showings / market tours with exclusive listing brokers (iii) dialogue with exclusive listing brokers to clarify any information provided in the offering memorandum. Offers Due. Offers should be submitted in writing and include the following: Terms Lease Rate and deposit Lease duration including any renewal periods Tenant Finish if any Proposed commencement date Investor Information Description of Lessee s entity structure and capital source Details on Lessee s business and operating history Description of your due diligence process Description of any contingencies, caveats, and approvals of which the Ownership should be aware in evaluating your offer Please submit one electronic copy of the offer to Jecoah Byrnes at jecoah.byrnes@cbre.com. Tours to be conducted with 48 hour notice by contacting exclusive listing agents. Interested parties are requested to direct all communication regarding the property to: Jecoah Byrnes 3501 Jamboree Road, Suite 100 Newport Beach, CA 92660 jecoah.byrnes@cbre.com T +1 949 725 8467 F +1 949 725 8500 Chris Bates 3501 Jamboree Road, Suite 100 Newport Beach, CA 92660 chris.bates@cbre.com T +1 949 725 8483 F +1 949 725 8545 Jeff Carr 3501 Jamboree Road, Suite 100 Newport Beach, CA 92660 jeff.carr@cbre.com T +1 949 725 8631 F +1 949 725 8545

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CBRE HEALTHCARE SERVICES CBRE Exclusive Agents Jecoah Byrnes, CCIM CBRE Healthcare Services CA License 01915914 +1 949 725 8467 jecoah.byrnes@cbre.com Chris Bates First Vice President CA License 00671391 +1 949 725 8483 chris.bates@cbre.com Jeff Carr First Vice President CA License 01009600 +1 949 725 8631 jeff.carr@cbre.com