Well Spring Retirement Community 4100 Well Spring Drive Greensboro, NC 27410 Additional Financial & Statistical Data as specified in Section 8.12 (2003 Series)
FEE STRUCTURE Residents of Well Spring pay two separate fees: a one-time entrance fee and a monthly service fee. Well Spring offers two Residence and Care Agreement options; Lifecare Residence and Care and Modified Lifecare Residence and Care. Well Spring offers a Lifecare Residence and Care Agreement to Residents that meet the eligibility requirements described below. The Lifecare Residence Care Agreement provides financial options that allow the prospective resident to pay a one-time entrance fee and an ongoing monthly service fee. Should a Resident with a Lifecare Residence Care Agreement need additional services in either Well-Spring's Adult Care or Skilled Nursing areas, the base monthly fee will not increase over the Independent Living monthly service fee paid by the resident except for additional meals and care related supplies. Well Spring offers a Modified Residence and Care Agreement to Residents that meet the eligibility requirement described below. The Modified Residence and Care Agreement provides financial options that allow the Prospective Resident to pay a one time reduced entrance fee and an ongoing discounted monthly service fee. Should a Resident with a Modified Residence and Care Agreement need additional services in either Well Spring's Adult Care Unit or Skilled Nursing areas, the monthly cost will be the then current per diem rate for the appropriate level of care, less a percentage discount. The percentage discount is 20% for contracts entered into in 2010 and prior and 15% for contracts entered into in 2011 and after. A Prospective Resident(s) qualifying for the Lifecare Residence and Care Agreement may select either agreement. A Prospective Resident(s) that does not meet the medical criteria for the Lifecare Resident and Care Agreement may be offered the Modified Lifecare Residence and Care Agreement. The entrance fee gives the resident the right to lifetime occupancy at Well Spring. In addition, the entrance fee gives the resident the right to participate in the activities and use the services provided in the central community building and to use the facilities and services in the on-site Health Care Center. The entrance fee varies according to the entrance fee refund plan selected and the living unit selected. The entrance fee is set at the time the Reservation Agreement is signed. The balance of the entrance fee is due upon occupancy of the unit or sixty (60) days after the Residence and Care Agreement is signed, whichever comes first. If a resident desires additional time beyond the sixty (60) days they may extend that time by making an additional deposit above and beyond the required 10%. The monthly service fee allows a resident in an apartment, garden home, or villa to enjoy the following services and amenities: use of central community building for social activities, arts and crafts, and health and exercise programs use of the aquatic and fitness center postal box delivery on-site nursing care 24-hour nursing staff for consultations and emergencies on-site resident clinic 35 meals per month weekly housekeeping 24-hour security 2
MARKETING parking regularly scheduled transportation maintenance of building (interior and exterior) and grounds utilities including water, sewer, heating, electricity, air-conditioning, cable TV, recycling, and trash removal 24-hour on-site emergency response team activities programs The overall planning and supervision of marketing on a daily basis is the responsibility of the Chief Executive Officer. The marketing director and director of retirement relocation carry out all aspects of the marketing program relating to the sale of units. This includes, but is not limited to, tours and meetings with prospects, retirement counseling, entering into reservation agreements, press releases, special event planning, distribution of a newsletter, advertising placement, lead cultivation and community interaction. As of December 31, 2011, 97% of all available Independent Living units were occupied or reserved with 7 units remaining to be sold. Reserved units are units on which a prospective resident has made a 10% deposit and signed a Reservation Agreement. Upon acceptance, a prospective resident has one week to sign a Residence and Care Agreement, and sixty (60) days thereafter to take occupancy of his or her living unit, at which time the resident is required to pay the remaining balance of his or her entrance fee and begin paying his or her monthly service fee. If a resident desires additional time beyond the sixty (60) days they may extend that time by making an additional deposit above and beyond the required 10%. RESIDENTIAL UNIT OCCUPANCY(as of 12-31-2011) Independent Living _ Total Units Available Occupied Reserved Available for Sale 238 220 11 7 Health Care Total Units Available Occupied Available for Occupancy Unit Type Adult Care 61 56 5 Skilled Nursing/Memory Care 66 * 60 6 * WeII Spring has a total of 70 units for Skilled Nursing/Memory Care. As of 12/31/11, four of those units were in the process of being renovated and therefore, unavailable for occupancy. AGREEMENTFORFUTURE OCCUPANCY if a person wishes to move to WeII Spring, and his or her specific desired unit type is unavailable, he or she may sign an Agreement for Future Occupancy. Each unit type has its own future occupancy list. An admission deposit of $1,000 is collected to secure a space on the future occupancy list for a residential unit. A reservation fee of 10% of the entrance fee is 3
received when a unit is available and a reservation agreement is executed. When the 10% reservation fee is received, a residential unit is considered reserved. When the applicant takes occupancy of a unit, the entire admission deposit of $1,000 is applied toward the entrance fee due. In the event of withdrawal from the future occupancy list or termination of the reservation, the applicant receives a refund of the admission deposit paid by the applicant, less an administrative fee of $250. If Well Spring terminates the reservation agreement, or the applicant is not accepted for admission, the entire admission deposit of $1,000 is refunded. As of December 31, 2011, one hundred fifteen (115) persons had signed Agreements for Future Occupancy. REVENUE AND EXPENSES Overview Well Spring began the operation of the Facility in June 1993. Audited financial statements, related notes, and other financial information for the fiscal years ended December 31, 2011 and 2010 is included with this filing. Monthly service fees for Lifecare residents have increased as follows: June 1, 1994 4.0% June 1, 1995 4.0% June 1, 1996 3.0% June 1, 1997 3.9% June 1, 1998 5.8% June 1, 1999 3.8% March 1, 2000 5.0% (average) January 1, 2001 5.0% (average) January 1, 2002 4.25% (average) January 1, 2003 3.5% (average) January 1, 2004 3.75% (average) January 1, 2005 3.75% (average) January 1, 2006 4.25% (average) January 1, 2007 4.5% (average) January 1, 2008 4.75% (average) January 1, 2009 4.5% (average) January 1, 2010 1.5% (average) January 1, 2011 2.5% (average) January 1, 2012 3.1% (average) 4
Fiscal Year Ended December 31, 2011 During 2011 Well Spring maintained strong occupancy rates across all levels of care. Average occupancy by level of care for 2011 Independent Living 88% Assisted Living 85% Skilled Nursing 96% During 2011, Well Spring had 36 moving to Independent Living, which was the greatest number in Well Spring's history except for years when new units were added. Well Spring's long-term debt service coverage ratio exceeded the required ratio of 1.10 during the year. All required reserves have been established and are in compliance with funding level requirements. In 2011 Well Spring recorded $198,395 in realized losses and $398,176 in unrealized losses related to Well Spring's investment portfolio. Realized and unrealized losses on investments in 2011 are primarily due to rebalancing of the investment portfolio and a decrease in market values. On December 21, 2011, Well Spring replaced the Series 1997 bonds with taxable variable rate debt issued by Branch Banking & Trust Company. The Community recognized a loss on extinguishment of debt of $291,393 as a result of writing off deferred financing costs related to the Series 1997 bonds. In 2011 Well Spring's interest expense was $903,601 compared to $1,079,231 in 2010. The fiscal year ended December 31, 2011 showed an increase in unrestricted net assets of $396,673. 5
ENTRANCE FEES LIFECARE RESIDENCE AND CARE AGREEMENT Effective: January 1, 2012 Plan A Plan B* 90%* APARTMENTS: 1 Bedroom/1 Bath (A) $117,600 N/A $128,100 N/A $220,935 N/A 1 Bedroom/1 Bath (B) $117,600 N/A $128,100 N/A $220,935 N/A 1 Bedroom/1 Bath Deluxe (C) $155,900 $213,700 $169,800 $232,700 $292,889 $401,478 2 Bedroom/2 Bath (D) $208,000 $273,300 $226,500 $297,600 $390,769 $513,448 2 Bedroom/2 Bath (E) $225,300 $291,200 $245,400 $317,100 $423,271 $547,077 _ Plan A Plan B* 90%* _ GARDEN HOMES: 1 Bedroom/1 Bath (F) $155,900 $213,700 $169,800 $232,700 $292,889 $401,478 2 Bedroom/2 Bath (G) $221,600 $284,400 $241,300 $309,700 $416,319 $534,302 2 Bedroom/1-112 Bath (H) $214,100 $276,500 $233,200 $301,100 $402,229 $519,460 VILLAS: Plan A Plan B* 90%* 2 Bedroom/2 Bath I $234,100 $297,600 $254,900 $324,100 $439,803 $559,100 2 Bedroom/2 Bath/Stud (J $263,100 $329,000 $286,500 $358,300 $494,285 $618,091 2 Bedroom/2 Bath/Stud K $282,200 $351,500 $307,300 $382,800 $530,168 $660,362 2 Bedroom/2 Bath/Screened Porch L $306,600 $381,000 $333,900 $414,900 $576,009 $715,784 3 Bedroom/2 Bath/Screened Porch M $381,000 $476,400 $414,900 $518,800 $715,784 $895,011 Entrance fees under this Entrance Fee Refund Plan are determined based on a prospective resident's age at the ti me of the Residence and Care Agreement is signed. (*) Entrance fees shown are for a person who is seventyfive (75) years of age at the time the Resident and Care Agreement is signed. Entrance fees under these Entrance Fee Refund Plans for persons age sixty-two (62) or older are available from Well Spring upon request. 6
ENTRANCE FEES MODIFIED LIFECARE RESIDENCE AND CARE AGREEMENT Effective: January 1, 2012 Plan A Plan B* APARTMENTS: 1 Bedroom/1 Bath (A) $75,260 NIA $96,630 NIA 1 Bedroom/I Bath (B) $75,260 NIA $96,630 NIA 1 Bedroom/1 Bath Deluxe (C) $99,780 $136,770 $128,120 $175,610 2 Bedroom/2 Bath (D) $133,120 $174,910 $170,930 $224,580 2 Bedroom/2 Bath (E) $144,190 $186,370 $185,140 $239,300 Plan A Plan B* GARDEN HOMES: 1 Bedroom/I Bath (F) $99,780 $136,770 $128,120 $175,610 2 Bedroom/2 Bath (G) $141,820 $182,020 $182,100 $233,710 2 Bedroom/I-1/2 Bath (H) $137,020 $176,960 $175,930 $227,220 VILLAS: Plan A Plan B* 2 Bedroom/2 Bath (I) $149,820 $190,460 $192,370 $244,550 2 Bedroom/2 Bath/Study (J) $168,380 $210,560 $216,200 $270,360 2 Bedroom/2 Bath/Study (K) $180,610 $224,960 $231,900 $288,850 2 Bedroom/2 Bath/Screened Porch (L) $196,220 $243,840 $251,950 $313,090 3 Bedroom/2 Bath/Screened Porch (M) $243,840 $304,900 $313,090 $391,490 Entrance fees under this Entrance Fee Refund Plan are determined based on a prospective resident's age at the time of the Residence and Care Agreement is signed. (*) Entrance fees shown are for a person who is seventyfive (75) years of age at the time the Resident and Care Agreement is signed. Entrance fees under these Entrance Fee Refund Plans for persons age sixty-two (62) or older are available from Well Spring upon request. 7
Other services and amenities are available to residents upon request for an additional charge. These services include such things as personal care services, secretarial work, shopping and running local errands, pet sitting, plant maintenance, laundry, and specialty cleaning. The monthly service fee is due on the first day of each month and is payable no later than the fifteenth day of each month. The service fee paid by a resident living in an apartment, garden home, or villa varies according to the size of the unit and the number of residents occupying the unit. The entrance fee and monthly service fees contained in this document are those being charged as of the date of January 1, 2012. The monthly service fee may be adjusted by Well Spring upon 60 days' notice to the residents. Generally, the independent living entrance fee is analyzed annually and adjusted on January 1st of every other year. Independent Living monthly service fees increased an average of 3.1% on January 1, 2012. ENTRANCE FEES Well Spring offers three entrance fee refund options. Option C is only applicable to the Lifecare Residence and Care Agreement. The entrance fee refund plans differ only in the amount of the entrance fee required and the amount of refund available, if any, upon termination of the Residence and Care Agreement. The entrance fee refund plans are described below. Year, Four Percent Per Month Declininq Refund Option - (Plan A) (Lifecare & Modified Lifecare) A resident or his or her estate will receive 90% of the entrance fee paid in the event the termination date occurs within 60 days after the scheduled date of move-in. Thereafter, the refund will be equal to 90% of the entrance fee paid less 4% of the entrance fee per month of occupancy after the initial 60 days. After 12 months of occupancy, no refund will be paid under this option. Percent Per Month Declininq Refund Option - (Plan B) (Lifecare & Modified Lifecare) Same as Plan A during the initial 60 day occupancy period. Thereafter, the refund is equal to 90% of the entrance fee paid less 1% of the entrance fee per month of occupancy after the initial 60 days. No refund will be paid after 92 months of occupancy. Ninety Percent Refund Option -(Lifecare Only) Under entrance fee Ninety Percent Refund Option, Well Spring will refund an amount equal to 90% of the entrance fee paid, regardless of when the termination date occurs. Upon voluntary termination of the Residence and Care Agreement, entrance fee refunds are to be paid upon the receipt of another entrance fee for a vacated unit or expiration of two years after the termination, whichever occurs first. Upon involuntary termination of a Residence and Care Agreement, entrance fee refunds are to be paid within five business days. Refunds related to the cancellation of a resident's reservation (prior to occupancy) are to be paid within 5 working days of termination of the Reservation Agreement. 8
Timing of Refunds Upon voluntary termination of the Residence and Care Agreement, entrance fee refunds are to be paid upon the receipt of another entrance fee for a vacated unit or expiration of two years after the termination, whichever occurs first. Upon involuntary termination of a Residence and Care Agreement, entrance fee refunds are to be paid within five business days. Refunds related to the cancellation of a resident's reservation (prior to occupancy) are to be paid within 5 working days of termination of the Reservation Agreement. Selection of Refund Options As of December 31, 2011, residents of Well. Spring had selected the following refund options: Residents Percentaqe Lifecare 209 63% Modified Lifecare 122 37% 3_3j 100% 9
Monthly Service Fees Lifecare ModifiedLifecare APARTMENTS: s s 1 Bedroom/1 Bath (A) $2,443 N/A $2,125 N/A 1 Bedroom/1 Bath (B) $2,443 NIA $2,125 NIA 1 Bedroom/1 Bath Deluxe (C) $2,954 $4,417 $2,570 $3,843 2 Bedroom/2 Bath (D) $3,196 $4,659 $2,781 $4,053 2 Bedroom/2 Bath (E) $3,362 $4,825 $2,925 $4,198 Plan A ModifiedLifecare GARDEN HOMES: s s 1 Bedroom/1 Bath (F) $3,122 $4,585 $2,716 $3,989 2 Bedroom/2 Bath (G) $3,419 $4,882 $2,975 $4,247 2 Bedroom/1-112 Bath (H) $3,330 $4,793 $2,897 $4,170 Plan A ModifiedLifecare VILLAS: s s 2 Bedroom/2 Bath (I) $3,591 $5,054 $3,124 $4,397 2 Bedroom/2 Bath/Study (J) $3,734 $5,197 $3,249 $4,521 2 Bedroom/2 Bath/Study (K) $4,032 $5,495 $3,508 $4,781 2 Bedrooml2 Bath/Screened Porch (L) $4,193 $5,656 $3,648 $ 4,921 3 Bedroom/2 Bath/Screened Porch (M) $4,420 $5,883 $3,845 $5,118 The Monthly Service Fees above are those being charged as of January 1, 2012. The service fee is adjusted annually by Well Spring upon 60 days' notice to the residents. As of January 1, 2012, the fee for the adult care unit is $184 per day and the fee for the skilled nursing unit is $290 per day. Residents on the Modified Lifecare plan pay the daily rates for Assisted Living and Skilled Nursing less a 15% - 20% discount. If a Lifecare contract resident from Independent Living is transferred to the Health Care Center, he or she is covered by his or her lifetime guaranty that allows full use of the Health Care Center at no additional monthly fee. Residents are required to pay for additional meals not covered by the monthly fee. 10