2. DETERMINING THE REAL ESTATE VALUE OF A SENIOR HOUSING GOING- CONCERN Presented By Courtney B. Lees, MAI Province Consulting Group, LLC 4 Willow Lane Old Greenwich, CT 06870 (203) 698-0602 – phone Courtlees@aol.com

3. HUD GUIDELINES Board and Care 5% to 15% Assisted Living 10% to 15% Intermediate Care 10% to 20% Nursing Home 15% to 25%

4. IL/AL HEALTH CARE REIT COVERAGE RATIOS REITYEAREBITDAREBITDARM HCR20081.10 Ventas20081.10 HCN20081.30 NHP20081.10 HCN2010N/A1.55 NHP20101.151.33 Average 1.151.44

5. NH HEALTH CARE REIT COVERAGE RATIOS REITYEAREBITDAREBITDARM HCR20081.50 Ventas20081.40 HCN20081.70 NHP20081.30 HCN20101.501.90 NHP20101.401.54 Average 1.461.72

6. Model Assisted Living Income and Expenses Revenues$2,520,000 Less: Expenses @ 70%-$1,764,000 Management @ 5.0%-$126,000 Reserves @ $350-$21,000 NOI$609,000 Units60 Monthly Revenues per Unit$3,500

7. Calculation of Real Estate Value Utilizing HUD Allocation Net Operating Income$609,000 Allocation to Business10.00% Indicated Rent to Real Estate$548,100 RE Capitalization Rate @10.00% Indicated Value to Real Estate$5,481,000 SAY:$5,500,000

8. Calculation of Real Estate Value Utilizing EBITDAR Multiple NOI$609,000 ADD: Reserves$21,000 EBITDAR$630,000 EBITDAR RATIO1.15 NOI to the Real Estate$547,826 RE Capitalization Rate10.00% Indicated Value to Real Estate$5,478,261 SAY:$5,500,000

9. Calculation of Real Estate Value Utilizing EBIDARM Multiple NOI$609,000 ADD: Management$126,000 ADD: Reserves$21,000 EBITDARM$756,000 EBITDARM RATIO1.35 NOI to the Real Estate$560,000 RE Capitalization Rate10.00% Indicated Value to Real Estate$5,600,000 SAY:$5,600,000