may 2011 status report july 13, 2011 · may 2011 status report 4 i. introduction greystone, on...

May 2011 Status Report

July 13, 2011

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TABLE OF CONTENTS Page I. INTRODUCTION ............................................................................................................................... 4

II. DEVELOPMENT PROGRESS ......................................................................................................... 4

III. MARKETING PROGRESS ............................................................................................................... 5

APPENDIX A: FINANCIAL STATEMENTS

APPENDIX B: PROJECT TEAM LIST

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Skyline at First Hill


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I. INTRODUCTION

Greystone, on behalf of FH, LLC, is pleased to provide a narrative summary of marketing, construction progress, and financial information as well as key project information for Skyline at First Hill. This report reflects marketing progress as of July 8, 2011. In April, Alan Fletcher resigned as Executive Director. His last day was June 6, 2011. Effective June 27, 2011, Rob Liebreich replaced Alan as the Skyline at First Hill Executive Director. Rob came from an Erickson Living project as the Associate Executive Director and was previously the Director of Marketing and Sales for The Shelter Group. Rob will be an PRCN employee.

II. DEVELOPMENT PROGRESS

• The Construction Phase has been completed.

• Skyline is currently in discussions with Perkins-Will to recover costs for design and code related issues.


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III. MARKETING PROGRESS

As of July 8, 2011 there were 132 occupied apartments with 166 reservation deposits. In July there have been 2 sales, 2 move-ins, 4 pending cancellations, 1 pending move-out, 2 remaining scheduled move-ins during July and and 0 holds. Due to high activity, reservation holds are no longer offered. There are approximately 13 additional pre-opening reservations that the Community expects to terminate during July due to lack of move-in efforts. Skyline has implemented, and will continue to utilize, a variety of promotional strategies and tactics including sales incentives, deferred entrance fee plans and alternative pricing plans. The team has also implemented urgency tools to promote move-ins.

• The Bridge Loan Program was rolled out and was introduced to strong leads to assist in promoting deposits and scheduled move-in dates. The bridge loan is between the resident utilizing the program and a local bank with Skyline subsidizing interest payments (at approximately 4.50%) for up to 12 months. Thus far, 27 move-ins have utilized this program and an additional 1 has been approved.

• The Deferred Entrance Fee Program has been utilized for 34 move-ins since opening. There are $2.4 million in Entrance Fees outstanding as of July 8, 2011 representing 7 units.

• The Ladder Benefit Program has been utilized in 35 of 37 sales during fiscal year 2011. The Ladder Benefit has been changed to allow for an entrance fee reduction of 10% if the depositor moves in within 60 days and an additional 5% if moved in within 45 days.

• Location Challenged Apartments:

o Olympics: 10 units identified for a deep discount of 15% comprised of 5% upon deposit

and an additional 10% if moved in within 90 days. o Lower level Townhomes (Renamed “8th Avenue Homes”): 13 units identified for a

discount of 20% if occupancy is taken within 60 days. The program is offered until July 31st, it may be extended thru the end of September.

The following changes were approved and implemented the last week of April:

• Enhanced Ladder Benefits with shortened time frame: 10% Entrance Fee reduction if occupancy occurs within 60 days of deposit or 15% if occupied within 45 days.

• Location Challenged 8th Avenue Homes (Townhomes): If move-in occurs within 60 days of deposit, a 20% entrance fee discount and complimentary 2nd person fee for 12 months is offered.

• Enhanced Resident Referral Program for the current residents (progressive incentive): $2,500 for first referral resulting in a move-in, $5,000 for the 2nd and $7,500 for the 3rd. The new resident moving in will receive $2,500.

• 50% Refundable Entrance Fee o Type 1 (limited to 10): 0% Entrance Fee Discount (previously 15%) and an average

Monthly Service Fee Discount of $2333 per month (previously $0). o Type 2 (limited to 5): 20% Entrance Fee Discount and 20% Monthly Service Fee

Discount (previously 15% EF and $0 MSF)


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• 0% Refundable Entrance Fee (limited to 5): 40% Entrance Fee Discount and $0 Monthly Service Fee Discount (previously 30% and $0).

The Independent Living Sales Team includes a Marketing/Sales Director and two Sales Counselors, one of which joined on March 7, 2011. In addition, the Marketing Assistant provides support in scheduling and coordinating move-ins. Furthermore, PRCN’s Vice President of Marketing will provide up to 32 hours per week in direct sales support in coming months and a part-time telemarketer was added at the end of January for 10 hours per week providing support re-engaging leads by setting presentation appointments and filling seminars. The team continues to promote on-site seminars and events to attract new inquiries as well as re-engage leads. Two Life Care Seminars and one advanced Life Care Contract Seminar are held monthly. In addition, the Skyline team conducted two successful Resident Panel events in April which will be repeated in July. In June, there will be a real estate and rightsizing seminar which is a repeat of a successful February event. The team has developed a seminar and event calendar through September 2011 and will also invite strong prospects to lifestyle and resident events as appropriate. In the month of May there were 32 new leads generated and an additional 5 re-inquired. The team had 23 initial appointments, 27 subsequent appointments and 10 retention appointments. The team had 533 call outs and 60 telemarketing call outs in May. Additionally, there were 6 sales, 5 move-ins, 0 move-outs and 1 cancellation during the month of May. In the month of June there were 40 new leads generated and an additional 4 re-inquired. The team had 31 initial appointments, 35 subsequent appointments and 6 retention appointments. The team had 571 call outs and 52 telemarketing call outs in June. Additionally, there were 5 sales, 10 move-ins, 1 move-out and 1 cancellation during the month of June.


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Chart 1, below, shows the comparison of actual pre-sales obtained to the minimum pre-sales required by the Master Trust Indenture Covenants and the Amended Letter of Credit Agreement Covenants. For the quarter ending June 30, 2011 the Master Trust Indenture marketing covenant requires a minimum of 176 reservations. The Letter of Credit Agreement Second Amendment requires 135 reservations for the quarter ending June 30, 2011. As of May 31, 2011 and June 30, 2011, there were 161 and 164 reservation deposits, respectively.

Chart 1

Marketing Progress

135

141

153

158

163

170

179181

175171

169166

150152

157153

157

152154 155

153 152156

161164

166

100

110

120

130

140

150

160

170

180

190

# of

IL

Uni

ts

Month

Reservations of IL Units

Actual Reservations Master Trust Indenture LOC Agreement

** Actual reservations are as of July 8, 2011. As of July 8, 2011, there were 4 pending cancels, 1 pending move-out and 13 pre-opening reservations that the Community expects to cancel in July due to lack of move-in efforts.


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Chart 2, below, shows the comparison of actual occupancy to the minimum occupancy levels required by the Master Trust Indenture and the Amended Letter of Credit Agreement. For the quarter ending June 30, 2011, the Master Trust Indenture Occupancy Covenant requires a minimum of 147 occupied units and the Second Amended Letter of Credit Agreement Occupancy Covenant requires a minimum of 127 occupied units. As of June 30, 2011, there were 130 occupied units. As of July 8, 2011, there were 132 occupied units.

Chart 2

IL Occupancy

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45 48 54 60 62 65 6984 88 93

104 102 103112 113 114 115 116 121

130 132

0

20

40

60

80

100

120

140

160

# of

IL

Uni

ts

Month

IL Occupancy

Actual IL Occupied Units IL Occupancy Master Trust Indenture Covenant Minimum

IL Occupancy Amended LOC Agreement Covenant Minimum

Occupancy as of July 8, 2011is 132 with 1 pending move-out.


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Table 2, below, indicates current and historical marketing results. Net cumulative reservations as of each month-end are shown, as well as new independent living unit reservations and cancellations by month. Table 3 then indicates rationale for terminations.

Table 1

Marketing Progress

Actual Reservations

% of Total IL Apartments

February-07* 135 0 0 135 67.8% n/aMarch-07 12 6 0 141 70.9% 130June-07 4 1 0 153 76.9% 130

September-07 3 3 0 158 79.4% 137December-07 3 1 0 163 81.9% 140

March-08 3 2 0 170 85.4% 145June-08 1 1 0 179 89.9% 150

September-08 2 3 0 181 91.0% 155December-08 0 3 0 175 87.9% 160

March-09 0 1 0 171 85.9% 152June-09 1 2 0 169 84.9% 150

September-09 1 3 0 166 83.4% 151December-09 2 7 0 150 75.4% 154 151

March-10 5 0 0 152 76.4% 158 151June-10 7 3 0 157 78.9% 161 154

September-10 1 1 0 153 76.9% 165 158October-10 6 0 2 157 78.9% 165 158

November-10 2 6 1 152 76.4% 165 158December-10 3 0 1 154 77.4% 169 161January-11 4 3 0 155 77.9% 169 161February-11 3 5 0 153 76.9% 169 161March-11 4 4 1 152 76.4% 173 130April-11 8 2 2 156 78.4% 173 130May-11 6 1 0 161 80.9% 173 130Jun-11 5 1 1 164 82.4% 176 135Jul-11* 2 0 0 166 83.4% 176 135

September-11 177 144December-11 179 154

* There were 135 net reservations as of the date of permanent financing (February 23, 2007).

(a) The Letter of Credit Agreement was amended a second time effective March 8, 2011 to revise the March 2011 - December 2011 covenant levels.

Reservations Required by

Master Trust Indenture CovenantMonth

Reservation Deposits and Signed

Reservation Agreements Cancels

Reservations Required by

Amended LOC Agreement Level I

Covenant (a) Transfers/ Move-Outs

Net Reservations to Date

** Actual reservations are as of July 8, 2011. As of June 8, 2011, there were 4 pending cancels, 1 pending move-out and 13 reservations that the Community expects to terminate in July due to lack of move-in efforts. These are primarily pre-opening depositors.


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Table 2

IL Reservation Terminations/Cancellations

As of July 8, 2011

Reason for May & June* Cumulative NumberCancellation/Termination Cancel/Term of Cancel/Term**

Health Complications 0 10Not Ready 0 24Deceased 0 11Competitor 0 18Cost Considerations/Economic Conditions 1 41

Lack of Apartment Availability 0 1

Spouse Deceased 0 0

Transfer to Higher Level of Care 0 2

Location/Moving Closer to Family 0 14

Other 1 23

2 144

* From May 6, 2011- July 8, 2011

* Cancellations from February 2007 and forward.

Independent Living Marketing Activities & Events as of July 8, 2011

Pending IL Reservation Activity (not included in depositor information above): • 2 pending reservation deposits • 4 pending reservation cancels and 13 reservations in cancellation process • 1 pending move-out/transfer • 2 Scheduled July move-ins

Independent Living events/seminars:

• March, April, June & August: Life Care Seminars • April & July: 2 Resident Panel Seminars per month, “What it’s really like” • June: 2 Real Estate / Rightsizing Events with local Realtor and Local rightsizing expert. • Bridge Loan Individual Meetings • Various Lifestyle events occurring throughout the month and coming year. • Resident Referrals: Inviting individual strong leads to specific resident events or parties.

Incentives for IL Sales and Move-ins:

• Resident Referral Program with residents: bonus upon move-in for existing resident and the person referred.

• Ladder Benefit Discount Program • Deferred Entrance Fee Plan Program • Refundability Plans (90% - 50% - 0%) • Bridge Loan Program • Challenged Apartments Discount: 8th Avenue Homes and Olympic


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IL Media: • Seattle Times Newspaper • Website – two Microsites: Independent Living and Health Services

o Paid Advertising o Organic o ENewsletter published and a second quarterly newsletter is in development

IL Direct Mail:

• Seminars - 2011 o 10 Months mailed by GlynnDevins o 2 months were to be mailed internally to leads, GlynnDevins is now completing.

• Resident Testimonials – 3 part series: interviews and photo shoot completed o Three residents o Direct Mail: March, April and May

• February and June “Upsizing to Downsizing” / Real Estate Event • Calendar set through September 2011

Assisted Living and Skilled Nursing Marketing Activities & Events as of July 8, 2011

4/30/2011 24 units 40% 16 units 100% 28 beds 82%5/31/2011 32 units 53% 15 units 94% 32 beds 94%6/30/2011 38 units 63% 16 units 100% 33 beds 97%

7/8/2011 37 units 62% 15 units 94% 32 beds 94%

AL MS SNFOccupancy Occupancy Occupancy

The Terraces Assisted Living and Skilled Nursing Tactics: o Increase in sales conversion from leads to referrals o Increase in Internet leads to move-in’s; due to microsite optimization

AL Media & Direct Mail:

• Enhanced “Banner” on micro-website for “Catered Assisted Living” • Continued use of Google ads and search engine optimization to maximize web traffic

Incentives for AL Sales and Move-ins:

• Promoting the Resident Referral Program to the residents: bonus upon move-in for resident and the person referred.

o Personal letter and open house to “Look and See the Difference” in “Catered Assisted Living” – Open House Scheduled for July 14th on 10th floor

AL Programs:

• High demand for “Catered Assisted Living” with the approval to WanderGuard ™ to the 10th floor exits and elevators to allow for Mild Cognitive Impairment, MCI, and Early (On-set) Stage Dementia residents; as a “bridge” between traditional assisted living and memory support.


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Staffing: • Independent Living

� Marketing/Sales Director � 2 full time Sales Counselors � Marketing Assistant � PRCN Corporate Support (32 hours) � Part-Time Telemarketer (10 hours a week)

• Assisted Living

� Community Relations and Events Planning Manager position now created for whole campus approach to overall marketing and events planning support for both IL and Assisted Living

Table 3

Sales Results by Unit Type

As of July 8, 2011

Unit Type Sq. Ft. Total Reserved % Reserved Occupied % Occupied # Avail % Avail

1BR Bainbridge 750 1 1 100% 0 0% 0 0%

1BR Birch 766 2 1 50% 1 50% 0 0%

1BR Camano 785 20 5 25% 14 70% 1 5%

1BR Cascade 814 1 0 0% 0 0% 1 100%

1BR Cedar 871 1 0 0% 0 0% 1 100%

1BR Columbia 886 3 2 67% 1 33% 0 0%

1BR Elliott 907 19 3 16% 14 74% 2 11%

1BR Emerald 923 20 3 15% 12 60% 5 25%

1BR Evergreen 1019 2 0 0% 0 0% 2 100%

1BR Garland 1051 1 0 0% 1 100% 0 0%

1BR Juniper 1159 1 0 0% 1 100% 0 0%

2BR Kingston 1100 20 7 35% 15 75% -2 -10%

2BR Madronna 1206 2 0 0% 2 100% 0 0%

2BR Magnolia 1223 3 0 0% 2 67% 1 33%

2BR Mercer 1262 20 1 5% 15 75% 4 20%

2BR Neah 1314 2 0 0% 1 50% 1 50%

2BR Noble 1213 4 2 50% 0 0% 2 50%

2BR Olympic 1279 16 4 25% 5 31% 7 44%

2BR Rainier 1353 20 1 5% 19 95% 0 0%

2BR Seaview 1440 2 0 0% 1 50% 1 50%

2BR Vashon 1534 19 0 0% 13 68% 6 32%

2BR PH Washington 1694 1 0 0% 1 100% 0 0%

2BR PH Watermark 1832 1 0 0% 1 100% 0 0%

3BR Victoria 1601 18 4 22% 13 72% 1 6%

Total 199 34 17% 132 66% 33 17%


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Table 4

Status of Remaining Depositors

As of July 8, 2011

Status of Depositor

Pre-Opening

Depositor

Post-Opening

DepositorTotal

Depositors

FY 2011- Q4 move-in planned 1 8 9

Processing Cancels- Community Initiated 13 - 13

Pending Cancels- Depositor Initiated 1 3 4

Home on Market 1 2 3

Home not on Market 2 2 4

New Sale/Unscheduled - 1 1

Total 18 16 34

A B A + B Note: As of July 8, 2011 there were 34 reservation deposits.

Table 5


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Estimated Initial Entrance Fee Pool

As of July 8, 2011

Initial Entr Fees

Occupied & Vacated Apartments 96,641,833$ 695,265$ Average Sold Price139 Occupied (132) & Vacated (7) Apts

Partial EF from Move-out 376,978$ 376,978$ Average Partial Entrance Fee1 Partial EF from Move-outs (1 unit reserved)

Reserved Apartments (never been occupied) 10,103,489$ 561,305$ Average Sold Price18 Reserved Apts (17 initial EF, 1 partial EF)

Unreserved Apartments @ 11/23/09 Market Prices 31,849,228$ 758,315$ Average Unsold Price at Current Rates42 Unsold Apts

Subtotal for 199 apartments - Current Estimate 138,971,529$ 696,455$ Weighted Average

Minimum Initial Entr Fee Pool for 199 Apts (100%)(1)(2) 139,300,000$ 700,000$ Average Initial EF at 100% Occupancy

Current Allowance for Marketing Tools & Incentives (328,471)$

880,267$ 51,780$ Average Allowance per pending/processing cancel17 Pending/Processing Cancels

Adjusted Current Allowance for Marketing Tools & Incentives 551,795$

Estimated Initial Entrance Fee Pool Chart

(2) The FY 2011 Operating Budget and Projections assume the initial entrance fee pool ends up totaling $139.9 million. (3) There were 34 reservation depositors as of July 8, 2011. Of the 34 reservation depositors, 15 have reserved specific units that have never been occupied or were vacated without receiving a full entrance fee. Eight of the 15 specific unit depositors are pending/processing cancels. The remaining 19 reservation depositors haveeither reserved units that have been previously occupied or have had their original reserved unit resold to another depositor. Nine of the 19 unassigned depositors are pending/processing cancels. Of the total 17 pending/processing cancels, 13 are being terminated by the Community due to lack of move-in efforts and 4 wereinitiated by the depositor.

(1)Per the amended Letter of Credit Agreement, additional marketing plans, including a fifty percent (50%) refund plan, zero percent (0%) refund plan and ladderbenefit plans, may be utilized provided that the additional plans will not reduce the total initial Entrance Fees to below $139,300,000.

Pending/Processing Cancels on Reserved Apartments (never been occupied)

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Appendix A

Financial Statements (Distributed under Separate Cover)

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Appendix B

Project Team

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TELEPHONE # FAX #

SPONSOR Presbyterian Retirement Communities Northwest 715 - 9th Avenue, Suite 400 Seattle, WA 98104

Tameryn Campbell, President & CEO [email protected] Jon Greeley, Interim CFO [email protected] Rob Liebreich, Executive Director

(206) 826-2126 (206) 826-2125 (206) 407-1710

[email protected] Skyline at First Hill 725 - 9th Avenue Seattle, WA 98104

SPONSOR’S COUNSEL Gottlieb, Fisher & Andrews PLLC 1501 Fourth Avenue, Suite 2150 Seattle, Washington 98101-3225

Irene Fisher [email protected]

(206) 654-1999 x121

(206) 654-8725

BOND COUNSEL K & L Preston Gates Ellis, LLP 925 Fourth Ave., Suite 2900 Seattle, WA 98104-7078

Faith Pettis [email protected]

(206) 370-7596

(206) 370-6154

UNDERWRITER Ziegler Capital Markets 8501 N. Scottsdale Rd., Suite 250 Scottsdale, AZ 85253

Dan Herman, Senior Managing Director [email protected] Mary Muñoz, Managing Director [email protected]

(312) 596-1509 (800) 327-3666 Ext.1602

(312) 263-5217 (928) 832-1534 E-fax

Aaron Schroeder, Analyst [email protected]

(480) 483-5998

(480) 951-2093

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Ziegler Capital Markets 40 Columbia Corporate Center 10480 Little Patuxent Parkway, Suite 600 Columbia, MD 21044

Amy Castleberry, Vice President [email protected]

(800) 592-4862

UNDERWRITER’S COUNSEL

Jones Day 555 California St., 26th Flr. San Francisco, CA 94104

S. Louise Rankin [email protected]

(415) 875-5777

(415) 875-5700

Daniel Gerber [email protected]

(415) 875-5770

(415) 875-5700

LOC CO-AGENT BANKS

CO-AGENT

Sovereign Bank 75 State St. Boston, MA 02109

Naomi O’Dell [email protected]

(312) 596-0476

(312) 443-1105

CO-AGENT AND FRONTING BANK

Bank of America, N.A. WA1-501-13-24 800 Fifth Avenue, 13th Floor Seattle, WA 98104

Thomas E. Brown, Senior Vice President [email protected]

(206) 358-3483

(206) 358-7136

LOC COUNSEL

Winston & Strawn 35 West Wacker Drive Chicago, IL 60601-9703

Kay McNab [email protected]

(312) 558-5959

(312) 558-5700

Jared Feehan [email protected]

(312) 558-5754

(312) 558-5700

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TRUSTEE U.S. Bank National Association PD-WA-T7CT 1420 Fifth Ave, 7th Fl Seattle, WA 98101 Deborah Kuykendall [email protected]

(206) 344-4681

(206) 344-4630

R. Bruce Colwell Jr. [email protected]

(206) 344-4674

(206) 344-4630

DEVELOPMENT CONSULTANT Greystone Communities 222 West Las Colinas Boulevard, Suite 2100 Irving, TX 75039

Mark Andrews, President [email protected]

(972) 402-3716

(972) 402-3750

Brian Schiff, Senior VP - Planning & Finance [email protected]

(972) 402-4249

(972) 402-3750

Roger Randall, Senior Manager - Planning & Finance [email protected]

(972) 402-3628

(972) 402-3750

John Spooner, Executive Vice President [email protected]

(972) 402-3714

(972) 402-3750

Bruce Byers, Senior VP – Marketing [email protected]

(972) 402-4244

(972) 402-3750

Merna Smith, Corporate VP - Marketing [email protected] Mary Krantz, Regional Manager - Marketing [email protected]

(972) 402-3715 (972) 402-3780

(972) 402-3750 (972) 402-3750

Jim Knox, Senior VP – Management Services [email protected] (972) 402-4277 (972) 402-3789

Edward Thorne, Corporate VP - Management Services [email protected]

(972) 402-4242

(972) 402-3789

may 2011 status report july 13, 2011 · may 2011 status report 4 i. introduction greystone, on...

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