GruenePointe/OnPointe Health Texas Portfolio

Leased to wholly owned subsidiaries of GruenePointe and managed by an affiliate of OnPointe Health, one of the owners of GruenePointe, this portfolio of 10 skilled nursing facilities is located in areas we believe have less competition and a stable-to-growing demand for additional patient services, particularly higher acuity services, that can sustain high occupancy levels, which are characteristics similar to markets in which OnPointe Health has existing facilities and experience. We believe that OnPointe Health’s experience and specialties in higher acuity services can allow these facilities to meet the needs of growing patient populations in markets previously underserved while achieving efficiencies within GruenePointe and OnPointe Health’s existing network of operations that would translate into higher profitability and solid regulatory compliance.

Life Generations Portfolio

The Life Generations Portfolio is comprised of six high quality facilities located in attractive markets in San Diego and the greater Los Angeles, California area. Each of the five rated facilities in the Life Generations Portfolio are rated four stars or higher by CMS, which differentiates them from other facilities in the same markets. In addition, the above average quality of care provided at the facilities operated by Life Generations, as indicated by the CMS star ratings, has been a prominent factor in achieving robust patient occupancy levels. We believe the locations of the facilities in major metropolitan areas and in close proximity to large population centers will allow the Life Generations Portfolio to continue to maintain high occupancy levels. The considerable replacement costs and development within these California markets should limit future development of competing facilities. Furthermore, the Health and Safety Code regulations imposed by the California Office of Statewide Health Planning and Development, or OSHPD, create substantial barriers to the development of new skilled nursing facilities in California.

Lakeway Hospital

Lakeway Hospital is leased to Scott & White Hospital – Round Rock, part of the nationally recognized Baylor Scott & White Health System, which includes 48 hospitals, more than 900 patient access points, and over 6,000 active physicians and 40,000 employees providing services in the Dallas-Fort Worth metropolitan area and central Texas region. Lakeway Hospital is part of Baylor’s central Texas provider network that includes approximately 13 hospitals and over 100 clinics and other provider locations. Lakeway Hospital is located in the highly affluent area of Lakeway, Texas, which is approximately 20 miles northwest of Austin, Texas. The population of the Lakeway area has grown rapidly as the area has experienced strong investment in residential and commercial development. We anticipate that the limited number of nearby competing facilities will allow Lakeway Hospital to service the growing demand for the high-acuity services in the Lakeway area. We believe the attractive demographic characteristics of the area combined with the need for both specialized acute care services in the local market will support the long-term value of Lakeway Hospital.


Kentfield Rehabilitation and Specialty Hospital

Leased to a subsidiary of Vibra Healthcare, Kentfield Hospital is a 40,091 square-foot facility located in Kentfield, California, within the highly affluent Marin County in the San Francisco Bay area. Kentfield Hospital, which underwent a $15 million renovation in October 2015, consists of an approximately 29,000 square-foot long term acute care hospital with 60 licensed long-term acute care hospital beds and an approximately 11,000 square-foot adjoining medical office building. Kentfield Hospital is one of only two licensed long-term acute care hospitals in the San Francisco Bay Area market and benefits from a surrounding population of approximately 7.2 million, according to the 2010 U.S. Census, which supports its bed demand. Kentfield Hospital has been one of Vibra Healthcare’s top performing facilities. In addition, we believe Kentfield Hospital receives referrals from Marin General Hospital, a 235-bed general acute-care hospital that is approximately one mile from Kentfield Hospital. As a result of this relationship, Kentfield Hospital has benefitted from a consistent step-down patient flow.


Mountain’s Edge Hospital

Leased to a wholly owned subsidiary of Fundamental Healthcare, Mountain’s Edge Hospital is a newly developed 72,140 square foot acute care hospital that began accepting patients in early July 2015, is licensed for 130 beds and located in Las Vegas, Nevada. We believe the new state-of-the-art hospital will be a significant upgrade from existing in-patient rehabilitation facilities in the Las Vegas market. Mountain’s Edge Hospital replaces an existing hospital, which is expected to be converted to a skilled nursing facility, with Mountain’s Edge Hospital intended to be the principal hospitalization site for the Health Plan of Nevada’s managed care patient population. As a result, Mountain’s Edge Hospital is expected to benefit from an immediate flow of patients. In addition, Mountain’s Edge Hospital is expected to benefit from a daily 75-bed minimum guarantee from a leading national managed care company. Mountain’s Edge Hospital includes imaging services, an intensive care unit and comprehensive rehabilitation modalities. We believe that the supportive demographic trends and immediate source of patient referrals will allow Mountain’s Edge Hospital to quickly ramp up its operations.]


Magnolia Place of Spartanburg

Magnolia Place is a 32,885 square-foot skilled nursing facility that has recently been developed by Fundamental Healthcare to expand the facility to approximately 50,397 square feet and increase the number of licensed beds from 88 to 120. The property is located in Spartanburg, South Carolina and benefits from significant entry barriers in the state. The state of South Carolina regulates the supply of certain healthcare providers through its Certificate of Need Program. The requirement to receive state authorization before developing new nursing and hospital facilities or expanding existing facilities creates a substantial barrier for bed expansion in South Carolina. We believe the expansion at Magnolia Place and restriction of skilled nursing facility beds related to the Certificate of Need Program will enhance profitability of the hospital and provide us with a more financially sound operator for the already successful facility. In addition, we believe Magnolia Place receives referrals from Spartanburg Regional Hospital, a 540-bed general acute care hospital that is approximately two miles from Magnolia Place. As a result of this relationship, Magnolia Place has benefitted from a consistent step-down patient flow.


Horizon Specialty Hospital of Henderson

Leased to a subsidiary of Fundamental Healthcare, Horizon Hospital is a 37,209 square-foot long-term acute care hospital licensed for 39 beds and located in Henderson, Nevada. Horizon Hospital is located in the affluent eastern section of the Las Vegas area and began admitting patients in February 2013. Prior to developing the property, a detailed bed need analysis was performed to estimate potential demand for a new hospital. Using a census of acute care hospitals and skilled nursing facilities operating in the Las Vegas market in combination with zip-code level population and patient discharge data, Fundamental Healthcare determined areas of the Las Vegas market were currently underserved. The location of the Horizon Hospital was strategically chosen to take advantage of the unmet demand in the area, particularly among elderly residents. Importantly, the Nevada State Demographer estimates 61% growth in people aged 65 and older from 2010 to 2030 in Clark County, which includes Las Vegas and Henderson, Nevada. We believe that current capacity constraints will encourage hospitals to move patients, once stabilized, out of high cost acute care hospitals to step-down facilities, such as long-term acute care hospitals, where the cost of continued care is significantly lower than that of an acute care hospital. In addition, Fundamental Healthcare has extensive experience in the Las Vegas market, having operated there for more than 20 years.


Vibra Rehabilitation Hospital of Amarillo

Leased to a wholly owned subsidiary of Vibra Healthcare, Vibra Rehabilitation Hospital of Amarillo is a 44-bed inpatient rehabilitation hospital located in Amarillo, Texas. Located within the Amarillo Medical District, we believe Vibra Rehabilitation Hospital of Amarillo receives referrals from the Northwest Texas Hospital, Baptist Saint Anthony’s Hospital, as well as Vibra’s own long-term acute care hospital, Vibra Hospital of Amarillo, and other medical providers all located within a two-mile radius of its campus. Vibra Rehabilitation Hospital of Amarillo operates 44 of the 76 rehabilitation beds in the Amarillo market and has generated strong financial results since being acquired in September 2013. As a result of the level of care being provided to patients and the facility’s reputation in the Amarillo market, as well as Vibra Rehabilitation Hospital of Amarillo’s relationships with acute care providers, we believe the facility will continue to be the provider of choice in the Amarillo market for patients requiring rehabilitation services.


Mira Vista Court

Leased to a subsidiary of Fundamental Healthcare, Mira Vista is a 51,534 square foot skilled nursing facility located in the expanding southwest section of Fort Worth, Texas. Mira Vista is licensed for 142 beds, began admitting patients in January 2014 and provides skilled nursing care and related services for residents who either need short-term rehabilitation services while recovering from surgery or require long-term nursing and medical supervision. Mira Vista also operates two in-house pulmonary designated wings. We believe the new state-of-the-art campus has been a significant upgrade from existing skilled nursing facilities in the southwest Fort Worth market. In addition, we believe Mira Vista receives referrals from Texas Health Harris Methodist Hospital Southwest, a 222-bed general acute care hospital, as well as the 62-bed HealthSouth City View Rehabilitation Hospital, which are both approximately two miles from Mira Vista. As a result of these relationships, Mira Vista has benefited from a consistent step-down patient flow.


North Brownsville Medical Plaza

North Brownsville Medical Plaza is a 67,682-square-foot medical office building located at 5700 North Expressway, Brownsville, Texas. North Brownsville Medical Plaza is a state-of-the-art medical office building located in Brownsville, Texas. The Brownsville metropolitan area population and its sister city of Matamoras, Mexico has a population in excess of 750,000. We believe the building represents the latest in healthcare facility design and was planned to meet the high expectations and demands of the modern healthcare professional, as well as setting the standard for integrated medicine delivery. Physicians and patients have access to the latest in modern technology at the on-site surgery center, full modality diagnostic center, physical therapy center, lab and physician offices. North Brownsville Medical Plaza also boasts convenient and accessible parking and first-class amenities. The building is currently leased to leading physicians and physician groups in the Brownsville medical community. Approximately 29% of the gross leasable area is leased to VBOA ASC Partners, which operates a large surgery and diagnostic center within the North Brownsville Medical Plaza. VBOA ASC Partners is owned by Tenet Healthcare and benefits from a high volume of patient flow and is one of the premier surgery centers in Brownsville, which provides us with a strong anchor tenant.