Affordable Independent and Assisted Living / Memory Care Targeting the Middle Market

This confidential presentation is for accredited investors, subject to change without notice, and no offering of securities is made hereby.

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Affinity Living Group(Operator / Management Company)

Based in Hickory, NC Affinity Living Group (ALG) is the 11th largest operator of assisted living, and 6th

largest operator of memory care in the United States. Affinity is a healthcare company striving to provide affordable, enhanced outcomes to the senior community through operational excellence.

• By FYE 2019, Affinity will operate ~140 communities in 9 primarily southeastern states, with capacity to serve over 7,500 residents.

• ALG is led by Charles E. Trefzger, Jr., founder and CEO. Charlie’s team is actively growing the company via development and acquisitions.

• Each of the company’s senior executives has significant experience in the development, acquisition and operation of senior living residences.

• The company makes continuousinvestments in technology and other management tools to operate efficiently and provide affordable care.

COMPANY FOOTPRINT

*Arizona property have not been included in the footprint shown at right.

¾ Affinity’s footprint is predominantlylocated in the southeastern U.S.

¾With 96 facilities in operation and 28 inthe pipeline, for a total of 124 facilities.

¾ Company footprint show at rightincludes all current operations (Red Pins)and facilities in the pipeline (Blue Pins)

Footprint Detail

StateCurrent Pipeline

Total(Red Pins) (Blue Pins)

NC 79 22 101SC 2 2 4VA 3 0 3FL 4 0 4MS 1 0 1GA 6 1 7AL 1 2 3AZ* 0 1 1Total 96 28 124

Affinity is a thought leader in providing affordable, quality care for middle market seniors including state of the art independent living, assisted living, memory care and related services.

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Arizona Opportunity

With Prescott Valley as the anchor, our current objective is to build and / or acquire sufficient scale to support a Regional Director of Operations in Arizona.

• A few years ago, Affinity set out to create a presence in Arizona.

• We are currently constructing a state of the art 106-unit, 121 bed assisted living and memory care community in Prescott Valley; a 90 minute drive northwest of Phoenix.

• The community is slated to open early 2020.

• We have established a pipeline of development opportunities in other rural Arizona submarkets.

• The equity requirement for each project ranges from $4 - $7 million.

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Projected Growth of Age 75+ Population in the U.S.

Steady, Predictable Age Demographics

There are 19.8 million people aged 75+ in the U.S. today - growing to 23.1 million by 2020 - and 34.1 million in 2030. Many of these people will require an affordable senior living

alternative that is differentiated from what the industry typically offers today.

2020 2025 2030 2035 2040

Source: US Census Bureau

~$275 billion

75+ Population

Annual Growth Rate of 75+ Pop. (%)

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~$400 billion

Projected Market Size*

~$550 billion

Projected Market Size (Estimate Only)

0%

1%

2%

3%

4%

5%

75+ pop. (000’s)

Growth Rate Pct.

* Assumes constant percentage of utilization

over time

2015

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A Wave of People – What About Affordability?

Unfortunately the vast majority of people in the United States have not properly planned for their retirement years. Some facts:

$95,0001

1 http://www.cnbc.com/2016/09/12/heres-how-much-the-average-american-family-has-saved-for-retirement.html

3 https://www.ssa.gov/news/press/factsheets/colafacts2016.html

$1,341 / mo3

2 https://www.fool.com/investing/general/2015/05/25/the-typical-american-has-this-much-in-home-equity.aspx

$130,0002Median SS IncomeMedian Savings Median Home Equity

The average (mean) net worth according to the US Census Bureau is $194,226. Typical monthly Social Security benefits for working class people is ~$800.

The “spend-down” math demonstrates why all-in costs of long-term assisted living should be less than $4,000 / month to attract the middle market.

Demand Drivers of Assisted Living / Memory Care

Skilled Nursing (SNF)

Specialty AcuteCare (Inpatient Rehab or LTAC)

Assisted Living (AL) /

Memory Care (MC)

Independent Living (IL)

Hospitalization (Typically

Preceded by an Emergency)

Independence In

Mainstream Community

Lowest Acuity Highest Acuity

Resident has

“aged in place”

and now needs

closer

supervision and

care than family

or other support

system can

provide in the

independent

community

Resident is not

safe to be at

home without

care and family

is not in a

position to

provide it

Resident has

“aged in place”

and may wish to

stay in IL as long

as possible; only

move on to AL

as medical

conditions

require, as it is

more expensive

Family request,

and liability

issues with

keeping the

resident in the

IL community

who needs

more

supervision

This level of

care is quite

sufficient for

those who

require help

with activities

of daily living,

and generally

are in a stable

medical

condition

Typically,

residents in AL

will continue to

age in place or

move to higher

care segments;

they will not

return to the

independent

community

Patient has

exhausted

Medicare SNF

benefit. Patient

is not safe to

return to

independent

setting. Family

seeks less costly

alternative than

self-pay SNF

Compliance with

family request,

and custodial

beds may not be

available at the

SNF (many SNF

facilities take only

transitional

patients and de-

emphasize long

term care)

Patient cannot

be discharged

safely to home.

Patient does not

meet criteria for

Medicare SNF

coverage so

cannot go to

SNF unless self

paying

Specialty

hospital

reimbursement

is generally

capitated, thus

strong economic

incentive to

move the

patient in

pursuit of short

length of stay

Hospital

reimbursement

is generally

capitated, thus

strong economic

incentive to

move the

patient in

pursuit of short

length of stay

Patient cannot

be discharged

safely to home.

Patient does not

meet criteria for

Medicare SNF

coverage so

cannot go to

SNF unless self

paying

Description of Resident /

Patient condition

necessitating transfer to an AL/MC facility

Incentive for transferring the

Resident / Patient to an

AL/MC facility

Resident makes lifestyle choices Resident is typically in a “needs” driven situation 6

7

Good Sam SNF/MC

Yavapai Regional Hospital - East

Mountain Valley Inpatient /

Oupatient Rehab

LutheranChurch

Sungate VillaSenior Apts

ViewpointSr. Apts.

EquestrianCenter

PoliceDept

PV City Hall

PublicLibrary

WalMartSupercenter

Kohl’s

Fry’s / Mixed Use Retail

Prescott ValleyEvent Center

KMartSafeway

CVS

GlassfordAssisted

Living

HarkinsTheatre 14 Plex

HamptonInn

Good SamIL

E Lakeshore Dr

N. GlassfordHill Road

State Route 69

Viewpoint Dr

Main St

Chili’s

Denny’s

E Florentine Rd

N LakeValley Rd

Liberty Traditional

School

Park Ave

Yavapai CountyCommunity Health

Walgreens

WellsFargo

AutoZone

Super 8

Arizona Innof PV

Sonic

LonesomeValley

Brewing

Boot BarnChinese

Restaurant

McDonald’s

Subway Jack in the Box

Burger King

Taco Bell

BuffaloWild WingsWendy’s

Garcia’s Mexican

Restaurant

PandaExpress

Fry’s GasStation

SonoraQuest Labs

West YavapaiBH Clinic

XzylaCorpComputer

Repair

Va

Valley View Apratments

Christian ChurchMontessori

Charter School

Grayson House Church of

Latter Day Saints

St. GermaineCatholic Church

Albertson’s

Women’s Clinic

Text

Subject Site

Parcel103-02-717M

WindsongDrive

Representative Location: Prescott Valley, AZ

We focus on underserved, rural communities where a new presence is welcomed and adds value to the local market.

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Windsong Senior Living is under construction

Opening spring 2020: 106 units / 121 beds

Prescott Valley, AZ

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Full Complement of Models

FULL COMPLIMENT OF MODELS

Mon

thly Ren

tal R

ates

• High‐end private pay markets

Premier Model

• Middle income markets• Typically 11‐50% Medicaid

Traditional Model

• Low to moderate income markets

• Typically 61‐80% Medicaid

Affordable Model

Affinity has a full complement of models to address the income / wealth profile of the local market.

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Representative Sources and Uses

Actual costs will vary by project

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Representative 5 Year Proforma

We typically target an unlevered development yield >=10% (stabilized NOI divided by total project cost)

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Representative 10 Year Investor Cash Flows / Returns

We offer investors a preferred return, followed by return of capital, then split of cash flows.

Our preferred method of returning capital is via agency financing upon stabilization. Then hold for long term cash flow / residual appreciation. Alternatively, the assets may be sold.

Projected equity multiple in the 2’s translates into 12% - 20% IRR. The actual result is sensitive to timing and proceeds from the refinance.

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Key Investment Risks

• Investors may lose a portion or all of their investment. We are viewing equity investments as risk capital. There are no guarantees that prospective new development sites under consideration will be constructed, leased up, or stabilized. There are no guarantees that the same leverage strategies employed for Windsong Senior Living will be available or optimal for projects inthe current pipeline. It is possible equity requirements for new developments may change prior to closing on construction financing.

• Lease-up risk, both timing and ability to achieve targeted rental rates. Our strategy is to provide a sustainably affordable alternative to what we perceive as primarily higher-end properties managed by other industry participants. While we believe market demand projections are conservative based on our experience in the industry and verified via an independent feasibility study, our actual stabilization results will not be known until the project is built, licensed, and fully operational.

• Operating margins. Operating margins impact cash flow, and therefore the project’s ability to successfully return investor capital. Cash flow is affected by a number of factors, some of which are outside of management’s control. These factors include the effectiveness of labor scheduling, cost and availability of qualified labor, food and beverage costs, liability insurancepremiums, utilities, and in general, variances in actual fixed or variable costs from our projections.

• General liability during operations. By the very nature of the business, people experience deteriorating health circumstances and die in assisted living and memory care facilities. In certain instances, litigants may claim that this is due to the neglect of the operating company. Affinity views properly and responsibly dealing with these complaints as a normal component of managing the assisted living / memory care business. In addition to staff training and education, Affinity mitigates its risk via maintenance of sufficient liability insurance, and a separation of the real estate (PropCo) and operating (OpCo) entities.

• Construction and licensure risk. We will be building this community with a qualified general contractor who has significant experience in the senior living space. While we intend to contractually cap construction hard costs, development projects havean inherent risk of construction defects, overall cost overruns, delays, disputes and/or other issues which may increase our basis in the asset and/or delay the successful opening of the community. There is a risk that in spite of best efforts and timelyapplication, the Arizona Department of Health Services may delay granting the facility licensure concurrent with receipt of acertificate of occupancy.

• Limited barriers to entry. There are limited barriers to new construction in the State of Arizona. It is possible that targeted submarkets may become oversupplied in the future.

Novo Management Bio

Jeffrey Fleischer • Since 2012, focused on the senior living industry, including sourcing capital and structuring the acquisition and development of

investment grade communities.• SVP of Acquisitions for Spirit Finance (NYSE:SRC) from 2003 - 2010, responsible for an acquisition team originating over $3.7

billion of single tenant net lease transactions.• VP of Acquisitions for Franchise Finance Corp. of America (NYSE:FFA) / GE Capital Franchise Finance from 1994 – 2001;

responsible for originating over $700 million of net lease and mortgage loan investments.• Sales and credit officer of Chase Manhattan Bank from 1989 – 1992. Primary focus on commercial and residential lending. • Received his BA in Economics from Boston University in 1989; and MBA from Washington University in St. Louis in 1994.

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For additional information, contact:

Jeffrey Fleischer 602-448-8855

jfleischer@novolivingproperties.com