EFTA01389070.pdf

18 October 2016 REITs US REIT 3016 Earnings Preview Healthcare: Rents continue upward climb as primary markets mostly shrug off new supply 'Figure 90: 1-Month Healthcare performance 'Figure 91: YTD Healthcare performance 1,4 1 141031101 frairbanr a 6 %61%46% x i 42% ET 3 03 -- 3 rt, 1 ai".41301% 203 2,04 35324:4% loismo% 3 i .7,4 il I . . 22% .13, ' C% nn 110% ' -22% a t 64% 70% Ox a I -t215 1J144 6111/104CT 00C 31411 MM MW NM LTC CM VTR 1401, 10 CNC 1401 CCP SIM 501C1114 Pen 1441 C14CT 1.441 CCC URA VTR LTC NIA 10 301 Hai Oil MCP CCP As of 10/14/16 As of 10114/16 Swot Cann. Sett Mt Sane CM1ZYMV Avg_ SAW J Figure 92: Primary mkt Sr Housing me & rent growth iFigure 93: Total portfolio SS NOI growth 430% 50% • 400% 45% 3.50% 40% • 3.01 35% • 33 • 2.00% & 25% • CI 20% 110% t 15% 1.00% 0503 0.50% g 10% 0 5% • 1400% 000% glaWilil§ 88 RAPAssg§§ 00% , H211 VTR Sr Haan° Pen GrOolh —Si 110000 00331 .2015 13015 44016 41016 882012 • Sr Housing occupancy up 12bps q/q in 3O but • Pre-3O guidance for both companies implies down 9bps y/y some deceleration in 2H16 • IL occupancy up 16bps q/q and up 2bps y/y • While rent growth and occupancy remained • AL occupancy up 6bps q/q and down 22bps y/y healthy in 3Q as per NIC data, elevated supply continues to be a near-term concern for SHOP • Sr Housing rent growth improved to +3.78% vs growth +3.18% in 2O driven by IL +4.21% (+3.43% in 2O) and AL +3.16% (+2.81% in 2Q). This is the • SNFs remain a risk as well with HCN more highest rent growth since 2007 exposed vs. VTR. As the post-acute sector transitions to value-based payment systems, • IL starts declined to 1,500 units in 3Q (2,100 in uncertainty around Medicare reimbursements 2O). staying in line with the 4-quarter average. will continue to weigh on SNF assets and AL construction starts in primary markets picked up with 2,600 units started in 3Q (2Q starts valuation revised to 2.100 from 1,800), slightly below the rolling 4-quarter average of 2,800 Construction as a % of inventory was down slightly to 5.78% in 3O vs 5.99% in 2O (IL 3.89% from 4.25% and AL 8.34% from 8.36%) 33 dad* ink Nie Ate Own/ Mows Stews S:1004 D.cASCP. Yee*. ttortitry Oa* Deutsche Bank Securities Inc. Page 49 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0093300 CONFIDENTIAL SDNY_GM_00239484 EFTA01389070