Sie sind auf Seite 1von 26

Business Plan

ALF Development
702-102-1231
123 Anywhere
Columbus, OH

DEVELOPMENT
Conden ality Agreement
The undersigned reader of ALF Developments Business Plan hereby
acknowledges that the informa on provided is completely conden al
and therefore the reader agrees not to disclose anything found in the
business plan without the express wri en consent of ALF Development.

It is also acknowledged by the reader that the informa on to be


furnished in this business plan is in all aspects conden al in nature,
other than informa on that is in the public domain through other
means and that any disclosure or use of the same by the reader may
cause serious harm and or damage to ALF Development.

Upon request this business plan document will be immediately returned


to ALF Development.

This is a business plan. It does not imply an oer of any securi es.

____________________
Signature

____________________
Printed Name

DEVELOPMENT
Overview
ALF is a real estate development company in the
forefront of mee ng demand in the senior healthcare
area through buildings that exceed expecta ons and
empower operators to fulll their mission in excellent
environments.

Business Plan
Table of Contents
Execu ve Summary 6
Project Summary 6
Market Summary 7
Five Year Objec ves 8
Keys to Success 8
Financing Summary 8
Industry Outlook 9
Market Needs 10
Demand Determinants 10
Market Segmenta on 12
Strategy & Implementa on Summary 13
Management Team 14
Organiza onal Chart 15
SWOT Analysis 16
Major Companies 17
Marke ng Plan 19
Financial Forecasts 19
Use of Funds 19
Financial Highlights 20
Financial Indicators 21
Revenue Forecast 21
Projected Prot and Loss 22
Projected Cash Flow 22
Projected Balance Sheet 23
Sensi vity Analysis 24
Break-Even Analysis 30
Appendix 25

DEVELOPMENT
ALF Development will be
partnering with local and
regional senior housing
service provider

Table of Figures
Figure 1: Organiza onal Chart 15

Figure 2: Post-Financing Expenses 16

Figure 3: Financial Highlights 20

Figure 4: Financial Indicators 21

Figure 5: Revenue Forecast 21

Figure 6: Prot & Loss 22

Figure 7: Cash Flow 22

Figure 8: Wages & Payroll 22

Figure 9: Balance Sheet 23

Figure 10: Scenario Analysis 23

Figure 11: Break-Even Analysis 24

Figure 12: 12 Month Prot & Loss 25

Figure 13: 12 Month Cash Flow Statement 26

Business Plan
ALF Development is Execu ve Summary Project Summary
exploring a 17 acre ALF Development will be partnering ALF Development is exploring a 17 acre
parcel in Oak Creek, with local and regional senior housing parcel in Oak Creek, Wisconsin with a
service providers, to locate four focus on serving Southeastern
Wisconsin with a focus buildings dedicated to serve seniors Wisconsin including Milwaukee and
on serving Southeastern with both independent and assisted the surrounding county. The company
living needs in the southeastern region plans to design and construct a total of
Wisconsin including
of Wisconsin. four buildings in two phases. Phase
Milwaukee and the One will consist of two buildings leased
The following business plan outlines
surrounding county. to a registered facility for independent
the ve year growth strategy that pairs re rement living purposes. The units
ALF Developments exper se in the will include x, y, z ameni es. Phase
real estate industry, with the growing Two will consist of an addi onal two
need for dedicated senior living in the buildings operated by a registered
area. It details the problems the facility to oer memory care CBRF
company solves in the market, and the assisted living, including pa ents with
projected nancial performance based Alzheimers, demen a and related
on its current business model. ailments. This will create a Re rement
Community servicing a wide-range of
the elderly and re ring popula on
with both independent living needs
and assisted care.

DEVELOPMENT 6
Market Summary margins as high as 11.7% of revenue in
2012. However, as the number of
The Re rement Communi es industry industry establishments has risen more
provides residen al and personal care rapidly in the later part of the period,
services for the elderly and other prot margins have fallen. In addi on,
individuals who are unable to fully care protability has been pressured by the
for themselves or who desire to live in a costs associated with regula on
community facility. compliance, which was exacerbated by
various Medicare and Medicaid
The Re rement Communi es industry is Key Sta s cs
reimbursement cuts over the period. In
forecast to exhibit accelerated growth in Snapshot
2017, prot is expected to fall to 7.6% of
the next two decades. An aging revenue.
popula on and growing need for Revenue
demen a care are s mula ng much of
the industry's growth. Re rement
In the ve years to 2022, a growing
economy, an aging popula on,
$66.3bn
communi es provide many services to healthcare reform and new services will
assist seniors that suer from chronic facilitate industry growth. IBISWorld Prot
illnesses or with ac vi es of daily living.
In the past ve years, the number of
es mates industry revenue is projected
to grow at an annualized rate of 4.2% to
$5.0bn
assisted living facili es that provide $81.3 billion by 2022. As the housing
demen a care has risen as a propor on market grows, more seniors will be able Annual Growth 12-17
of total facili es. While the industry
exhibited resistance to the economic
to sell their homes and pay resident fees.
However, despite increased nancing for
3.6%
downturn, the poor housing market the construc on market, risk associated
hampered individuals' ability to move with bank-line renewal and the lower Wages
into a community because many seniors
nance the expenses of re rement
liquidity that many operators are
experiencing will likely cause them to
$24.7bn
communi es through selling their depend on real estate investment trusts
houses. However, since bo oming out, to supply new industry facili es. Over the Annual Growth 17-22
occupancy rates have been on the rise
across the industry, bene ng from the
ve years to 2022, the number of
industry establishments is projected to 4.2%
associated rise in housing prices that rise at an average annual rate of 3.3% to
began in 2012. As a result, industry 54,286 loca ons to meet demands of an Businesses
revenue is expected to grow at an
annualized rate of 3.5% to $66.3 billion,
aging popula on.
38,874
including a projected 4.7% jump in 2017.

Industry prot margins beneted from


slow growth in new senior housing starts
early in the ve-year period, which
increased occupancy levels across
exis ng facili es. Higher occupancy rates
were able to buoy the industry's prot

7 Business Plan
Five Year Objec ves
Purchase land for development in the Milwaukee area (has site been iden ed?)
Develop two apartment-style buildings suited for independent re rement living within the rst 6 months.
Develop two addi onal buildings dedicated to memory care to be leased to a registered facility.
Full capacity es mated at 6 months for each development phase.

Keys to Success
Being familiar with local tastes and preferences: Mee ng the residen al care needs of the local popula on changes with
each region. Companies must adapt their services and accommoda ons to a ract nearby residents by making them feel
at home.
Ability to a ract local support/patronage: Ability to a ract local support/patronage: Many residents prefer to move to
facili es that are located in their current ci es to stay in proximity to family and friends.
Ability to provide a broad spectrum of care: Con nuing care re rement communi es are growing in popularity. Such
facili es enable operators to meet a range of customers' needs. More individuals are choosing to move to facili es where
they can stay for the remainder of their lives.
Ability to obtain regulatory approvals: Delays in obtaining required regulatory approvals could impede a company's ability
to expand to addi onal communi es, which could nega vely impact opera ons and cash ows.

Financing Summary
Startup Expenses Startup Liabili es
Sales & Marke ng 50,000 Liabili es and Capital -
Legal and Professional Fees 25,000 Current Borrowing -
Oce Expenses 24,000 Long-Term Liabili es -
Other SG&A 120,000 Accounts Payable -
Total Startup Expenses 219,000 Other Current Liabili es -
Startup Assets Startup Investments
Startup Working Capital 1,000,000 Planned Investment
Land Acquisi on 4,000,000 Owner 4,000,000
CBRF Development 7,200,000 Investor -
Independent Living Development 4,000,000 Mortgage 12,419,000
Total Startup Assets 16,200,000 Total Planned Investment 16,419,000
Total Requirements Startup Funding
Total Startup Expenses 219,000 Total Liabili es -
Total Startup Assets 16,200,000 Total Planned Investment 16,419,000
Total Requirements 16,419,000 Total Funding 16,419,000

DEVELOPMENT 8
Industry Outlook communi es. Pension obliga ons and a decline in real
estate tax revenue will lead to tax increases, par cularly
The Re rement Communi es industry's revenue growth in the form of increased local real estate taxes. Higher
is expected to accelerate in the next ve years with a taxes are projected to cause more operators to sell real
growing number of re ring baby boomers, indica ng estate assets and lease more facili es.
that the industry is in the growth phase of it life cycle.
Industry value added, a measure of the industry's A new kind of re rement
contribu on to the overall US economy, is forecast to Many Americans have been delaying their re rement,
grow at an annualized rate of 4.1% over the 10 years to which is expected to persist throughout the next two
2022. Over the same period, the average annual growth decades. Today, people have longer life spans and
in US GDP is projected to be 2.0%. improved health, enabling them to extend their work
lives. Addi onally, people have decided to remain in the
Strong growth in the aging popula on and an increase workforce for longer periods, as their savings accounts
in the incidence of progressive illnesses, such as and pensions suered during the recession.
Alzheimer's disease, will drive demand for services.
Over the 10 years to 2022, IBISWorld es mates that the Major technological advances and new architectural
number of individuals aged 65 and older will increase at designs will play a signicant role in industry growth as
an annualized rate of 3.2% to 55.6 million. Social demand for innova ve ameni es strengthens. To many
factors, such as an increase in people living alone and a consumers, re rement and assisted living communi es
reduc on in the level of assistance families provide to are considered a refuge of last resort. To counter this
the elderly, are also expected to boost demand. percep on, operators will adjust services and facili es
to a ract more knowledgeable and educated residents.
In the next ve years, a growing economy, an aging More rooms will have instant voice and visual access to
popula on, favorable healthcare reform legisla on and family and friends, while facili es will feature access to
new service oerings will support this growth. a wider variety of medical sources, ranging from
physicians to nutri onists.
Housing market grows
With occupancy levels s ll below their 2007 peak, Technology will be able to measure calorie intake and
revenue and prot have the poten al to grow as the changes in weight, hearing, eyesight, blood pressure
economy con nues to expand. As occupancy rises, and vital signs. Also, operators will incorporate more
more aggressive increases in pricing will magnify this home-like designs into their facili es that will likely
eect, helping prot margins grow. In addi on, the include be er and more crea ve use of light, sound,
housing market is projected to regain some strength as water and greenery to enhance socializa on areas. To
a result of the improving economic climate. IBISWorld accommodate rising demand, industry operators will
forecasts that housing prices will con nue to grow in hire more workers, with employment projected to rise
the next ve years as demand improves in conjunc on an annualized 3.9% to 1.2 million people over the ve
with higher income growth and shrinking years to 2022.
unemployment. However, this pace of recovery is
vulnerable to the Federal Reserves interest rate Changing supply model
policies, which directly determine mortgage rates and, Over the next ve years, credit concerns will remain
in turn, the aordability of homes. low. Long-term borrowing costs are forecast to increase
as the yield on treasury bills trends upward through
Healthcare reform and other legisla on 2022, although they will remain well below historical
In the ve years to 2022, healthcare reform will become norms. This trend may hamper the industry as the cost
a more per nent topic as the government faces steeper of borrowing money for construc ng new facili es rises.
budget decits. Medicare and Medicaid reimbursement While nancing for new construc on is projected to
for senior care is expected to suer, which may deter become more available over the next ve years, the risk
many individuals from entering re rement associated with bank-line renewal and the lower

9 Business Plan
liquidity experienced by many operators will likely cause million. The largest market segment in the industry is
them to depend on real estate investment trusts to elderly people who live alone, par cularly those who
supply new industry facili es. Consequently, real estate have no children. According to the Na onal Center for
investment trusts (REITs) are projected to own more Assisted Living (NCAL), the average age of residents in
assets in the industry as operators realize the diculty assisted living facili es is nearly 87 years. Also, the
of managing and owning industry proper es. The four number of people aged 85 and older increased across
largest publicly-listed US healthcare REITs that invest in all states during the 10 years to 2022.
diverse assets, such as senior-living facili es, medical
oces, skilled-nursing facili es and hospitals, are More than three-quarters of residents in industry
looking to purchase more of these proper es to tap into facili es are female, reec ng the overall demographics
industry growth. in the United States, where women are the majority in
the older popula on. More specically, women
Despite the changing supply model, industry growth will represent nearly 70.0% of the popula on aged 85 and
spur new industry construc on; according to data from over. Although women outnumber men in the older
the Na onal Investment Center for the Seniors Housing ages, men con nue to increase at a faster rate than
and Care Industry (NIC), the number of new senior women. Among ve-year age groups, men between 90
housing starts surpassed prerecession levels in 2013. and 94 experienced the fastest growth rate (50.3%),
Over the ve years to 2022, IBISWorld projects industry while women between 65 and 69 increased the fastest
establishments to rise at an annualized rate of 3.3% to (28.2%).
54,286 loca ons.
Based on Census Data 2006-2010 and the 2011-2015
Market Needs American Community Survey 5-Year es mates,
Demand for industry services is driven by the growth in Milwaukee County has a popula on of 955,939
the 65-and-older popula on and aging genera on of residents out of which 11.9% are 65 years and over. The
baby boomers. IBISWorld es mates that in the ve Wisconsin Department of Health Services a growth in
years to 2017, the number of adults aged 65 and older this segment of the popula on of 5.9% through 2040.
will increase at an annualized rate of 3.1% to 47.3

Milwaukee County Popula on Projec on (2010-2035) For Ages 60+ Milwaukee County Popula on Change by Age Category 2000 to 2010
US Census US Census
49%

214,722 215,979 41%


208,370
194,175
175,132
158,892

15%
12%
8%
3% 2% 4%

-1% -2%
-10% -9%

2010 2015 2020 2025 2030 2035 -17%


-25% -24%
0 to 4 5 to 9 10 to 15 to 20 to 25 to 35 to 45 to 55 to 60 to 65 to 70 to 75 to79 80 to 85 or
14 19 24 34 44 54 59 64 69 74 84 more
Provided by AARP State Research 2012

Demand Determinants in rela on to senior living.


Demand for the Re rement Communi es industry is
driven by demographic factors, such as age, wealth and Aging popula on is at the wheel
health of the popula on, which determine the need for Growth in the aging popula on and the genera on of
and ability to aord industry services. Other factors that re ring baby boomers are driving demand for industry
inuence demand for industry services include services. According to the Na onal Center for Assisted
alterna ves for care, the percentage of seniors living Living, the average age of residents in assisted living
alone and the tastes and preferences of the popula on facili es is 87 years. As people age, they become frailer

DEVELOPMENT 10
and more inclined to suer from chronic illnesses, Percent of Persons 65+ Living Alone by Gender State and Milwaukee, 2010
including memory loss, heart disease, diabetes, colon US Census

cancer and high blood pressure. In addi on, aging Wisconsin Milwaukee County
42%

nega vely aects a person's func onal abili es, such as 36%
38%

sight, hearing, muscle strength and coordina on,


30%
exposing older people to signicant risks of injuries. 26%
Consequently, older adults or their families consider
19%
moving into re rement communi es, where they can
receive assistance with ac vi es of daily living,
including bathing, dressing, toile ng and ea ng. As a
result of the aging demographic trend, demand for
services provided by re rement communi es is
Persons 65+ % living alone Males % living alone Females % living alone
expected to stay strong in future years.
Provided by AARP State Research 2012

Wealth aects aordability


The decision to move into a re rement or assisted living community is inuenced by an individual's ability to pay for the
services. Since most seniors who consider moving into a facility are re red, their wealth is inuenced by their assets. The
state of the US economy and the housing market has a signicant impact on industry occupancy rates. A drop in home
prices has both a psychological and nancial impact on seniors, o en causing them to delay their decision to move. The
inability or unwillingness of seniors to sell their homes in a depressed market could prevent them from moving into
con nuing care re rement communi es, which typically require an entry fee that ranges from $150,000 to more than $1.0
million.

The cost of services is, in some markets, inuenced by the extent of insurance coverage and government assistance.
According to the US Health and Human Services Department, assisted living facili es for the elderly make up a largely
private-pay sector; most residents cover the costs out-of-pocket or use private insurance. A private room in an assisted
living facility costs, on average, less than two-thirds of an equivalent room in a nursing home. However, there is less
reimbursement available compared with a nursing home, so most residents pay out-of-pocket. Medicaid, which is now
available in about 40 states, only covers par al costs. High-service or high-privacy assisted living facili es are largely
unaordable for most moderate and low income older people unless they spend down their assets or receive help from
rela ves. An increase in the availability of insurance that covers long-term care could promote industry ac vity.

Level of Household Income for Householders 65+ Milwaukee County 2000, 2010
US Census
10,550
9,785 9,989
8,851
8,453 Total 2000 Total 2010
7,800
6,998 6,934
6,277 6,450
5,949 5,826
4,967
4,895 5,074
4,517 4,547 4,250 4,304
4,115
3,483 3,189 3,486
2,880
2,304
1,444 1,204 1,075
729 667 751 922
$10,000-$14,999

$15,000-$19,999

$20,000-$24,999

$25,000-$29,999

$30,000-$34,999

$35,000-$39,999

$40,000-$44,999

$45,000-$49,999

$50,000-$59,999

$60,000-$74,999

$75,000-$99,999

$100,000-$124,999

$125,000-$149,999

$150,000-$199,999

$200,000 or more
lessthan $ 10,000

11 Business Plan
be an alterna ve to ins tu onalized care for many
seniors. While many seniors are able to live out their
Industry demand is needs-based lives in assisted living without moving to a nursing
The decision to enter an assisted living community home, this is not always possible. Most states s ll
o en depends on the individual's need for require a person to move to a nursing home or other
assistance and the available alterna ves in the ins tu on if their needs increase signicantly. As a
market. According to the US Census Bureau, 16.0% result, assisted living communi es make admission
of the popula on aged 75 to 79 requires assistance and reten on determina ons based on state
with the ac vi es of daily life. This percentage regula ons, as well as their own ability to meet a
increases considerably to 30.0% for those aged 80 given resident's par cular needs without
and over. compromising the ability to care for
other residents.
Over the past 20 years, assisted living has proved to

Self Reported General Health Status of Persons 65+Milwaukee County 2010


Wisconsin Milwaukee US Census

43%
39%
37%
35%

25%
23%

Excellent/Very good Good Fair/Poor

Market Segmenta on Major market segmenta on (2017)


5.9%
Males with incomes
less than $20,000
16.8%
Females with incomes
less than $20,000

57.2%
Females with incomes
greater than $20,000

20.1%
Males with incomes
greater than $20,000

Total $66.3bn SOURCE:WWW.IBISWORLD.COM

DEVELOPMENT 12
Demographics have been a fundamental driver for growth Although Alzheimer's disease develops dierently for
in re rement communi es. The increasing age of people every individual, most o en it is diagnosed in people aged
living in the US encouraged operators to expand 65 and older. As the disease progresses, these individuals
geographically and oer addi onal services. Advances in begin experiencing problems with language and long-term
nutri on and medical science have resulted in an memory loss and, therefore, require special assistance in
increased life expectancy and, consequently, a growing daily tasks, such as feeding themselves.
number of older residents. Many seniors are living longer,
more ac ve lives and delaying re rement to accumulate Financial prole
more wealth to provide for their needs a er exi ng the The resident prole varies by geographic region. For
workforce. As a result, these individuals are choosing instance, a notable dierence between the metropolitan
independent or assisted living over nursing homes, which and nonmetropolitan assisted living resident concerns
provide 24-hour medical care and less autonomy. nancial status. The average annual pretax income of
residents overall is about $29,000, and residents' average
Seniors aged 65 and older assets are worth $160,000. However, the pretax income
Demand for industry services is driven by the growth in and average asset gures for metropolitan residents are
the 65-and-older popula on and aging genera on of baby $31,000 and $182,000, respec vely, compared with
boomers. IBISWorld es mates that in the ve years to $27,700 and $133,600, respec vely, for nonmetropolitan
2017, the number of adults aged 65 and older will increase residents. Addi onally, the percentage of residents with
at an annualized rate of 3.1% to 47.3 million. The largest incomes of less than $20,000 is 27.0% overall, but there is
market segment in the industry is elderly people who live a signicant dierence between metropolitan and
alone, par cularly those who have no children. nonmetropolitan numbers for this demographic (22.1%
compared with 33.2%).
More than three-quarters of residents in industry facili es
are female, reec ng the overall demographics in the Residents move to industry facili es from a variety of
United States, where women are the majority in the older se ngs, including their homes or apartments (60.0%);
popula on. More specically, women represent nearly another re rement or independent living community
70.0% of the popula on aged 85 and over. Although (12.0%); a family residence, such as living with children
women outnumber men in the older ages, men con nue (10.0%); another assisted living facility or group home
to increase at a faster rate than women. Among ve-year (9.0%); or a nursing facility (8.0%). Today, many older
age groups, men between 90 and 94 experienced the Americans want to remain in their current homes and
fastest growth rate (50.3%), while women between 65 and communi es as they age; according to the US Census data,
69 increased the fastest (28.2%). 21.4% of adults aged 65 and over owned a house in 2011.
However, many seniors are already facing problems
Seniors with special needs aording their homes or nding a subsidized place. As a
Most seniors move to assisted living because of health result, some seniors move in with their adult children or
reasons or because they have a need for assistance or are enter senior living communi es.
unable to live alone, according to the Assisted Living
Federa on of America (ALFA). The need for assistance Strategy & Implementa on Summary
increases with age, rising from 20.9% of the 75 to 84 years During the ini al development phase, we will target local
of age popula on to 50.2% of the 85 years of age and regional senior housing and senior living approved
popula on. Moderately disabled seniors need assistance operators to present our development plans and oer the
with one to two ac vi es of daily living (ADLs), while loca on for much needed services in the Milwaukee area.
severely disabled seniors need assistance with two or Target leaseholders will include large, na onal name
more ac vi es. The average assisted living resident needs brands such as Brookdale, Five Star Quality Care and
assistance with 1.6 ADLs according to the ALFA. Sunrise Senior Living, as well as well-known mid-size
Many re rement communi es provide services to seniors companies with strong reputa ons in the market, such as
with physical and behavioral issues, including care for the Residen al Living Services, Alexian and Wilson Commons
individuals coping with Alzheimer's disease and demen a. amongst others.

13 Business Plan
Management Team

John Doe Susan Miller


Chief Execu ve Ocer Chief Opera ng Ocer
Sed ut perspicia s unde omnis iste natus error sit Sed ut perspicia s unde omnis iste natus error sit
voluptatem accusan um doloremque laudan um, voluptatem accusan um doloremque laudan um,
totam rem aperiam, eaque ipsa quae ab illo inventore totam rem aperiam, eaque ipsa quae ab illo inventore
verita s et quasi architecto beatae vitae dicta sunt verita s et quasi architecto beatae vitae dicta sunt
explicabo. Nemo enim ipsam voluptatem quia voluptas explicabo. Nemo enim ipsam voluptatem quia voluptas
sit aspernatur aut odit aut fugit, sed quia consequuntur sit aspernatur aut odit aut fugit, sed quia consequuntur
magni dolores eos qui ra one voluptatem sequi magni dolores eos qui ra one voluptatem sequi
nesciunt. Neque porro quisquam est, qui dolorem nesciunt. Neque porro quisquam est, qui dolorem
ipsum quia dolor sit amet, consectetur ipsum quia dolor sit amet, consectetur

Kevin Jones Adrian Wilcourt


Chief Financial Ocer Legal Compliance
Sed ut perspicia s unde omnis iste natus error sit Sed ut perspicia s unde omnis iste natus error sit
voluptatem accusan um doloremque laudan um, voluptatem accusan um doloremque laudan um,
totam rem aperiam, eaque ipsa quae ab illo inventore totam rem aperiam, eaque ipsa quae ab illo inventore
verita s et quasi architecto beatae vitae dicta sunt verita s et quasi architecto beatae vitae dicta sunt
explicabo. Nemo enim ipsam voluptatem quia voluptas explicabo. Nemo enim ipsam voluptatem quia voluptas
sit aspernatur aut odit aut fugit, sed quia consequuntur sit aspernatur aut odit aut fugit, sed quia consequuntur
magni dolores eos qui ra one voluptatem sequi magni dolores eos qui ra one voluptatem sequi
nesciunt. Neque porro quisquam est, qui dolorem nesciunt. Neque porro quisquam est, qui dolorem
ipsum quia dolor sit amet, consectetur ipsum quia dolor sit amet, consectetur

DEVELOPMENT 14
Organiza onal Chart

Board/Investors Adrian Wilcourt


Legal

John Deo
CEO

Sausan Miller Kevin Jones


COO CFO

Marke ng Director Sales Director Accoun ng

Sales Reps Collec ons

15 Business Plan
SWOT Analysis
Strengths
Strengths of an assisted living company can
come from a well-designed facility. Touches
like devo ng more storage space to
lower-level drawers and cabinets, or installing
lever-style door handles, can meet the needs of
seniors who demand the ability to live as
independently as possible. Walk-in closets not
only imply luxury, they make it easier for seniors
to examine what they want to wear. Focusing on
those features when conduc ng a tour reassures
adult children that their aging parents will be taken
care of, while also showing the prospec ve residents
that the company has their comfort in mind. In
addi on, oering specialized care for those with
memory loss, demen a and Alzheimers disease
illustrates that operators will be able to give seniors the
services they need as their condi on worsens.
Demand is growing faster than supply,
Weaknesses as the popula on ages faster than the
Building assisted living facili es costs money, so access to availability of assisted living facili es
capital can constrain growth. Expenses such as liability are constructed
insurance can be a drain on revenue and keep an assisted
living company from being cost-eec ve, par cularly a an extensive array of medical personnel, or allowing senior
small business less able to spread that cost around to a residents to have a signicant voice in programming
large number of users. A lack of trained workers also can events and enriching other aspects of the user experience,
limit prospects. When a company operates in an area can be a dieren ator that demonstrates these operators
where skilled workers cannot be found, it may have to pay strive to maintain as independent a lifestyle as possible for
more to train them or import them from elsewhere. This their seniors. A successful ini al launch will also create
increases costs and creates communica on barriers that opportuni es for geographical expansion for ALF
can have a nega ve impact on the customer experience. Development.
Ini al costs will be reduced by ALF Development delivering
a nalized product. Threats
Increased regula on can raise the costs associated with an
Opportuni es assisted living company, to the point where it may become
Economic forces leave assisted living companies in a strong a barrier to entry if companies are looking to expand into a
posi on. Demand is growing faster than supply, as the dierent state with a more stringent regulatory agency. In
popula on ages faster than the availability of assisted addi on, the desire to ramp up quickly with new facili es
living facili es are constructed, meaning expansion doesnt can lead to inadequate training and unprepared workers.
face the same market risk as it does in other industries. In An emphasis on cost-cu ng can leave a company
areas where seniors have disposable income and can vulnerable to crippling lawsuits if it leads to subpar
aord your services, a well-targeted marke ng campaign resident care or harsh working condi ons. An economic
can increase awareness of what you oer and its downturn can eliminate a large chunk of the market, as
applicability to their own situa on, another opportunity seniors and their families may re-evaluate the feasibility of
for growth. Adding services like an on-site pharmacy and lower-cost solu ons.

DEVELOPMENT 16
Major Companies

Brookdale Senior Living Inc.


Market Share: 7.6%
Brand Names: Op mum Life

Brookdale Senior Living (Brookdale) is the largest operator communi es (CCRCs) include a variety of living
of senior living communi es in the United States by total arrangements and services, with most of these facili es
capacity. Headquartered in Tennessee, the company oering independent living, assisted living and skilled
operates 1,123 proper es in 47 states, serving more than nursing on one campus.
108,000 residents. The top ve states, Florida, Texas,
California, Ohio and Washington, represent nearly 50.0% In July 2014, Brookdale completed the acquisi on of
of the company's total unit capacity. Brookdale's units Emeritus Corpora on (Emeritus), which added 493
oer various types of re rement communi es; most units communi es to the company's por olio. The company's
are for rental independent living, assisted living and senior housing por olio is par cularly resistant to
demen a. The company also operates rehabilita on economic downturns, compared with many other
therapy and home health businesses that serve about operators, as almost all of its proper es are dedicated to
62,500 units and 66,000 units, respec vely. Brookdale has assisted living and demen a. These services are less
about 53,000 full- me employees and 29,000 part- me discre onary than independent living facili es, making the
employees. The company presently includes the merged company somewhat of a specialist operator in the larger
companies Alterra, American Re rement, Emeritus industry. Moreover, the company generated nearly 90.0%
Corpora on and numerous other smaller acquisi ons. of its revenue from private sources, therefore limi ng its
vulnerability to changes in government funding. At the
Brookdale's target independent living residents are senior me of the acquisi on, Emeritus owned 37.0% of its
ci zens aged 75 and older; the average resident stays in communi es and leased 63.0%.
these facili es for about 32 months. Brookdale's target
assisted living residents are senior ci zens aged 80 and Financial performance
older that require assistance with two or three ac vi es of Revenue at Brookdale has consistently increased over the
daily living; the average resident resides in these facili es ve years to 2017, growing at an annualized rate of 11.6%
stay for about 21 months. The company's memory care to $4.8 billion. This growth includes a 32.5% increase in
facili es are specically designed, freestanding facili es for 2014 and a 29.5% rise in 2015, the result of the company's
residents with Alzheimer's disease and other demen a acquisi on of Emeritus' 493 communi es specializing in
condi ons. Brookdale's con nuing care re rement both assisted living and demen a care. In addi on to
strong occupancy across Brookdale's facili es, which

17 Business Plan
averaged 88.0% over the past ve years, the company has only 20.0% of total facili es in the United States. Although
had success in moving away from government funding the industry is fragmented, there are several players that
over the period. The company generates an es mated are rela vely large and inuence smaller par cipants.
80.0% of its revenue from private payers and only 20.0%
from government funding sources.
Five Star Quality Care Inc.
While Brookdale managed to generate an opera ng prot Es mated market share: 2.1%
through 2013, the company con nues to be burdened by
high interest expenses that hampered overall protability. Five Star Quality Care operates independent and assisted
In 2014 and 2015, the company sustained opera ng losses living facili es, as well as skilled-nursing homes. The
of $84.9 and $165.2 million, respec vely, largely due to its company owns, leases and operates 274 senior living
merger with Emeritus. Despite the challenging economic communi es, with more than 31,400 units in 32 states.
environment, occupancy remains within 2.0% of all- me Most of its facili es are leased from Senior Housing
highs and strong revenue growth is expected in 2015, Proper es Trust (SNH). The company also owns and
supported by the integra on of leased and managed operates an ins tu onal pharmacy business and leases
communi es from the Emeritus deal. As a result, the two inpa ent rehabilita on hospitals in the Boston area
company's opera ng prot is expected to return to growth from SNH.
in 2017, reaching an es mated $17.0 million.
Over the ve years to 2017, Five Stars revenue is expected
Over the next ve years, Brookdale an cipates to achieve to grow at an annualized rate of 3.1% to more than $1.4
revenue growth through the con nued expansion of billion. The companys growth is a ributed to the
ancillary services, such as therapy, home health and acquisi ons and long-term leases of independent and
hospice services, as well as the redevelopment and assisted living communi es where residents private
reposi oning of exis ng communi es. The company also resources account for 77.0% of the companys total
plans to achieve revenue growth through a combina on of revenue. In 2011, the company acquired seven assisted
occupancy growth and monthly fee increases due to living communi es containing 854 living units located in
Brookdale's compe ve strength and growing demand for Arizona and Indiana for $148.4 million. While the company
re rement communi es. Brookdale's economies of scale has since con nued its acquisi ons ac vity, it has been far
will help the company cut costs related to the more limited in scope.
procurement of goods and services and increase
eciencies in rela on to various corporate func ons.
Na onal HealthCare Corpora on
Brookdale Senior Living Inc. - nancial performance* Es mated market share: 1.5%
Revenue Opera ng Income
Na onal HealthCare Corpora on (NHC), a long-term care
provider, oers services to 74 skilled-nursing facili es with
more than 9,400 beds. NHCs aliates operate 36
homecare programs, ve independent living centers and
18 assisted living communi es. Other services include
Alzheimers units, long-term care pharmacies, hospices, a
rehabilita on services company and management services
*Es mates Source: ANNUAL REPORT AND IBISWORLD

to third par es. Over the ve years to 2017, the company


has invested millions in new construc on for skilled-
The Re rement Communi es industry is highly
nursing and assisted living facili es. It also invested $345.0
fragmented and characterized by numerous local and
million to acquire healthcare and skilled-nursing centers
regional operators. According to data from the US Census
and homecare programs. Over the past ve years, NHCs
Bureaus Service Annual Survey, nonprot operators
revenue has grown at an es mated annualized rate of
account for 42.0% of industry revenue, but account for
5.0%, reaching $969.9 million in 2017.

DEVELOPMENT 18
Sunrise Senior Living Inc. In January 2013, the third-largest healthcare real estate
investment trust Health Care REIT completed the closing of
Es mated market share: 1.3%
its previously announced acquisi on of Sunrise to expand
Sunrise Senior Living (Sunrise) operates 315 communi es its assisted living communi es. The $4.3 billion investment
located in the United States, Canada and the United included 120 wholly-owned proper es and ve joint-
Kingdom, with an es mated capacity of 26,000 units. The venture proper es, which generate high average monthly
company oers a range of personalized senior living rental rates due to the high concentra on of age and
services, including independent living, assisted living, care income-qualied seniors. In September 2012, Health Care
for individuals with Alzheimers and other forms of REIT also announced its plans to sell Sunrises management
demen a, nursing and rehabilita ve care. business to aliates of private equity rms KKR, BPOC and
Coastwood for $130.0 million. As a result of the
Through 2012, Sunrise performed rela vely poorly despite management partnership, Health Care REIT was able to
the fact that it operated more needs-driven assisted living reduce management fees charged on the wholly owned
units than Brookdale, as well as more top- er proper es and joint venture communi es. Consequently, Sunrises
that may be expected to outperform industry average. performance improved substan ally in the la er half of the
Sunrises occupancy suered from its expensive fees, its current ve-year period, with revenue expected to reach
uncertain nancial posi on and the distrac ons brought on more than $863.8 million in 2017.
by major nancial restructuring and turnover in leadership.

Marke ng Plan
With design developed, outreach to both large and mid-size, reputable companies in the industry will be done on a
systema c, one-on-one basis to deliver the full vision of the project and assess their interest and capabili es.

Business Development
Targeted, direct contact with top management at these companies together with presenta ons on our vision and design
will ensure prompt leaseholder acquisi on. The developed buildings together with a strong operator and current demand
will ensure full-capacity within 6 months.

Strategic Partners
Aliate rela onships will be formed with local senior referral service companies, as well as AARP, the Wisconsin Alzheimers
Ins tute Milwaukee Program, and the Milwaukee County Department on Aging.

Financial Forecasts
Use of Funds
Startup Expenses Startup Liabili es
Sales & Marke ng 50,000 Liabili es and Capital -
Legal and Professional Fees 25,000 Current Borrowing -
Oce Expenses 24,000 Long-Term Liabili es -
Other SG&A 120,000 Accounts Payable -
Total Startup Expenses 219,000 Other Current Liabili es -
Startup Assets Startup Investments
Startup Working Capital 1,000,000 Planned Investment
Land Acquisi on 4,000,000 Owner 4,000,000
CBRF Development 7,200,000 Investor -
Independent Living Development 4,000,000 Mortgage 12,419,000
Total Startup Assets 16,200,000 Total Planned Investment 16,419,000
Total Requirements Startup Funding
Total Startup Expenses 219,000 Total Liabili es -
Total Startup Assets 16,200,000 Total Planned Investment 16,419,000
Total Requirements 16,419,000 Total Funding 16,419,000

19 Business Plan
Financial Highlights
The nancial highlights are how the company is
projected to perform over the course of the
next twelve months and three to ve years. The
projec ons are based on comparable facili es
based on es mated revenue range and size,
along with geographic loca on. We have
assumed that for at least the rst six-months of
post-money nancing that expenses may be
greater than revenues while the company
invests into growth.

Financial Highlights ($000)

Projected Opera ng Highlights By Year ($000) Projected Revenues By Year ($000)

Revenue
Gross Margin
EBITDA
Net Prot

Year 1 Year 2 Year 3


Year 1 Year 2 Year 3

Projected Cash Flow By Year ($000) Projected Net Income By Year ($000)

Net Cash Flow


Cash Balance

Year 1 Year 2 Year 3


Year 1 Year 2 Year 3

DEVELOPMENT 20
Financial Indicators
The company believes that it can reach an
increasing net prot margin due to
economies of scale. Through investments in
capital expenditures, it may decrease its
general and administra ve expenses.
Financial indicators are based upon the
performance of comparable companies in
the same asset class, revenue range and age
both from publicly available informa on and
our internal database of research.

Financial Ra os

Gross Margin
Net Prot
Margin
EBITDA to
Revenue

Year 1 Year 2 Year 3

Revenue Forecast
Revenue Forecast (USD) Revenue By Year

Year 1 Year 2 Year 3

Year 1 Revenue Monthly


Month 3

Month 5
Month 1

Month 2

Month 11

Month 12
Month 9
Month 7
Month 6

Month 8

Month 10
Month 4

21 Business Plan
Projected Prot and Loss
The prot and loss assume that the
company will have margins at a
comparable level to companies within its
industry. While management might not
have incurred exactly for future opera ng
expenses, they have been assumed to
reasonable reach comparable prot
margins to industry comparables. The
management will operate with minimal
expenditures to focus on R&D and
commercializa on expenses un l the
company has sucient income to
support dividend distribu on.

Projected Cash Flow


Pro Forma Prot and Loss (USD)

Year 1 Cash
Best Case Flows
Cash Balance

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7

Month 8 Month 9 Month 10 Month 11 Month 12

DEVELOPMENT 22
Projected Balance Sheet
The projected balance sheet assumes
that there are no dividend draws and
all cash ow is re-invested back into the
company at the end of the year. The
balance sheet does not assume any line
of credits or account receivables that
are outstanding at the end of the year
and that the company will have paid o
all liabili es. Likewise, it assumes that
all accounts will pay within thirty-days
and there will be no delinquency of
payments.

Projected Balance Sheet Sensi vity Analysis


Pro Forma Balance Sheet (USD) Best Case Scenario (Revenue Increase by 15%) (USD)

Worst Case Scenario (Revenue Decrease by 15%) (USD)

Revenue

Best Case
Most Likely
Worst Case

Year 1 Year 2 Year 3

23 Business Plan
Break-Even Analysis

Breakeven Analysis
COST-VOLUME-PROFIT

NET UNITS

DEVELOPMENT 24
Business Plan
Appendix
Year 1 Prot & Loss (USD)

25
DEVELOPMENT
Appendix

Year 1 Cash Flow (USD)

26