Brentwood Senior Housing Repositioning Opportunity

• Projected Purchase Price: $22.2 million ($168,182 per unit)
• Total Equity: $9,000,000
• Total Debt: $15,500,000
• Debt Term Rate: 11% Fixed
• Debt I/O Period: 24 months
• Projected Hold Period: 5 Years
• Seasons Year 1 NOI: $1,896,033
• Seasons Year 2 NOI: $3,618,348
• Projected Project Level Leveraged IRR: 46.0%
• Projected Project Level Leveraged Equity Multiple: 4.2x
• LP IRR: 34.22%
• LP Return on Equity: 2.92x

• Immediate Value-Add Opportunity: Acquire a well-maintained property with an in-place T3 Annualized EBITDAR of $2,165,563 and immediate upside through a managed care lease-up strategy and other operational improvements.
• Continued Growth in Performance: The property has shown recent improvement in EBITDAR, with the T3 (Feb–Apr 2025) monthly NOI averaging $178,842 compared to $95,871.62 in the prior three months—an increase of over 86%.
• Significant Discount to Replacement Cost: The purchase price of $22.2 million, or $168,182 per unit, represents a significant discount to replacement cost.
• Attractive Market Opportunity by capturing residents with managed care insurance benefits: Plan to shift to a new insurance-based, Medi-Cal-supported program, tapping into a deeper pool of state-supported residents at attractive, market rates, ensuring more predictable and stable cash flows.
• Strategic Unit Utilization to drive top-line revenue: The managed care program is expected to add 59 assisted living beds via double occupancy, increasing the total number of operating beds from 142 to 200.

• Desirable Location: Ideally situated in a desirable East Bay suburb, with all area competitors operating at 80%+ occupancy, indicating strong market demand. Two of the property’s main competitors, Cogir of Brentwood and Trevista Antioch, are 90%+ occupied.
• Compelling Demographics: Within a five-mile radius, the 75+ population is projected to increase by 19.7% by 2029. The $100K+ income-qualified segment of this age group is anticipated to grow by an impressive 29.12%.

• Structured waterfall with upside participation: Investors participate in upside if the project performs above target.
• Preferred member returns: 34.22% IRR and 2.92x equity multiple.
• 10% annual preferred return: Paid before any sponsor distributions.
• 100% of investor capital returned: Before any profit splits.
• Net profit to preferred members after return of capital: Estimated at approximately $16.38 million.
• Total investor distributions: Projected to range from $38.5 to $39 million on a $9.0 million raise.

Managed Care is a healthcare delivery system designed to control costs, improve quality, and efficiently coordinate patient care. It involves agreements between health insurance providers and medical facilities to provide care at reduced costs while ensuring patients receive comprehensive services.

• Integrated, patient-centered care: The primary goal of managed care is to streamline various aspects of healthcare into a unified system. This ensures patients receive the right care at the right time, helping prevent unnecessary procedures and reducing overall healthcare costs.
• Cost-reduction through appropriate care settings: Managed care offers a strategic opportunity to transition individuals from high-cost Skilled Nursing Facilities (SNFs) to more appropriate, lower-acuity settings like Assisted Living (AL) and Memory Care (MC).

• Pre-Qualified Residents: When the community receives a referral, the resident has already been qualified. While authorization from the insurance company is still required, managed care service organizations like Master Care and Star Nursing typically achieve high approval rates, streamlining the transition process.
• Insurance-Based Payments: Unlike state-run programs, managed care through insurance companies provides a broader revenue stream. Insurance providers such as Anthem and HealthNet manage Medi-Cal services with strong political and financial support at the state level, reducing dependence on state budgets.
• Resident Selection Process: If a referred resident is not suitable for the community, it does not impact future referrals. Master Care and Star Nursing carefully vet placements and will arrange for transfer later if needed.
• Shared Rooms: Placing two managed care residents in a single unit significantly increases revenue potential.
• Preventing Back Door Move-Outs: Managed care residents help reduce financially-driven move-outs, improving resident retention.
• Higher Occupancy Rates: The inclusion of managed care residents leads to more community move-ins, directly boosting occupancy rates.