2017 ANNUAL REPORT

A Senior Living Community

A Senior Living Community

Letter from Keith Grady, Executive Director

Applewood is Revamped, Renewed and Reinvigorated for the Future.

Another exciting year!

Residents and staff successfully partnered again in 2017 to introduce community-wide enhancements to meet the interests of our residents. From new resident-managed clubs and day-trip destinations to a top-to-bottom community dining room redesign, it’s been an invigorating year.

A year ago, we redecorated the lobby, community center and promenade with a more contemporary theme which carries through to the furnishings, wall finishes, lighting, artwork and carpets. In 2017, we continued this casual elegance theme into our dining room. The update offers residents and their guests the perfect atmosphere to enjoy their daily dining experience.

Construction began on the outdoor resident garden which is scheduled to open in Spring 2018.

By no means will we rest on the successes of the past year, which includes the Federal Government’s five-star rating of our Healthcare Center by the Centers for Medicare & Medicaid Services (CMS).

As we continue to welcome new residents, we continue to strive for excellence in maintaining Applewood as New Jersey’s premier continuing care retirement community (CCRC).

On behalf of the entire Applewood team, with support from the CentraState Healthcare System, we thank the residents who have shared their ideas, opinions and feedback with us.

Through this relationship of trust and mutual respect, there will be no stopping us in 2018 and beyond.

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Mission Statement

Applewood, New Jersey’s premier retirement community, is committed to providing mature adults opportunities to explore an engaged living lifestyle while providing abundant amenities and supportive services to enhance their independence at every stage. Through participation in cultural, recreational and educational opportunities, our residents can shape their environment through meaningful contributions. As part of CentraState Healthcare System, Applewood residents benefit from superior healthcare services provided by professionals devoted to clinical excellence.

Core Values

At Applewood, we believe in and are dedicated to:

• Assuring integrity and ethics through responsible proactive leadership

• Achieving standards of excellence through innovative leadership

• Maintaining fiscal responsibility

• Fostering mutual respect among all internal and external stakeholders

• Encouraging community enhancements and physical plant improvements through cooperation and communication between management and residents

• Recruiting, developing and retaining the highest quality staff

• Providing opportunities for growth and enrichment through engagement of all residents and staff

• Delivering quality customer service that exceeds the expectations of all stakeholders

2017 ANNUAL REPORT

Social Accountability

Strengthening our own community by supporting those around us.At Applewood, our residents and staff work together on projects that benefit both Applewood and its surrounding community.

The “Tools 4 Schools” program completed its second year of providing classroom support and supplies to the children of the Freehold Borough School District. Each summer, staff and residents donate uniforms, school supplies and backpacks to the school district for distribution to those students in need. Several resident volunteers visit the Freehold Borough schools weekly. They offer assistance with reading, arts and crafts and writing. Both the residents and the children look forward to the weekly sessions.

The “Workplace Training Program,” in partnership with the Freehold Regional High School District, continued in 2017. This program, offering eligible students transitional services focusing on functional academics, career exploration and life skills development expanded to five days per week in Applewood’s Dining Services Department. The program closely links school-based classroom instruction with community-based workplace training to help prepare students for life beyond high school. The students assist in the Dining Services Department with tasks such as setting tables, folding napkins, filling salt and pepper shakers and bussing tables.

Applewood’s knitting group has adopted a wonderful new project. “SACK — Supporting a Community with Kindness” is a Monmouth County organization that provides personal items for the homeless. Resident volunteers use 100% cotton yarn to knit or crochet individual sacks which hold a bar of soap and serve double-duty as a washcloth. These small acts of kindness can make a world of difference in the life of someone struggling.

In 2017, Applewood provided subsidized funding of approximately $226,000 to allow residents to remain in their homes. These funds are a combination of generous gifts from current and past residents and from other donations secured through the efforts of the CentraState Healthcare Foundation.

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MarketingIn 2017, there were 43 move-ins. The year ended with a most favorable 86% occupancy. The Engaged LivingTM program continues to attract a vibrant group of prospective residents. Our approach to planning marketing events continues to focus on “fun” and being more engaging. “Roadshows” with panel discussions continued to draw prospective residents. Increased interest in Applewood can also be attributed to our award-winning website and links to social media sites with blogs and community information routinely updated.

Master PlanningThe Master Plan Phase 2 was implemented in 2017. The Formal Dining Room received a fresh, modern look: new chairs, wall coverings, carpeting, lighting and art work. Phase 2 will continue in 2018 as the project moves to The Bistro.

EnvironmentA new parking lot was opened to accommodate the increase in the number of residents and visitors. Additional work was completed on the HVAC and cooling tower system.

All required approvals were received for the new Memory Care program. Construction is to begin in the 1st quarter of 2018.

Technological ImprovementsPlans for the physical security of the community were developed and approved. Work on the state-of-the art security system will begin in 2018.

Plans were completed and contractors were identified for the structured cabling and network infrastructure project.

Wellness CenterThe Wellness Center continues to thrive and the “Rise and Tuck” program, which assists residents in need of services upon awakening and bed time, continued to gain popularity and is being utilized by more residents. Once again the Wellness Center provided over 30,000 services to residents including scheduling physician appointments, injections, on-site lab services, medication management and other ancillary services.

Employee Appreciation FundIn its second year, over $43,000 was donated to this resident-funded program. During the holiday season, all funds collected are distributed amongst the Applewood employees.

Achievements for 2017

2017 ANNUAL REPORT

FoundationA gift of $113,000 was given to Applewood. $230,000 was received for the refurbishment of The Bistro. An additional $10,000 was donated for the replacement of the overhead projector in the Performing Arts Center.

Scholarship RecipientsThis resident-funded program is open to Applewood employees and their children. Total amount granted in 2017=$21,500. Heather Braunstein: $5,000, Rebecca Roman: $3,000, Norma Dorer: $3,000, Francesca Denbigh: $2,000, Skla Valoroso: $2,000, Jonathan Serrano: $1,500, Andrew Feldman: $1,500, Kylie Garolis: $1,500, Marc Zapanta: $1,000, Talia Schiavello: $1,000.

Innovation AwardsThis program was established in 2015 to encourage Applewood staff to participate in the development of new ideas, programs and improvements in three categories: beautification, problem solving and service improvements. Innovation award winners for 2017: Lily Busto (Marketing), Joan Cinque (Resident Services), Susan Gelbard (Administration), Tricia Koches (Marketing), Joe Messenger (Dining Services), Barbara Rasch (Nursing), Sharon Trotta (Admissions), Ray Vargas (Building Services), David Wooten (Nursing).

Applewood at HomeThrough its partnership with Alpine Homecare of New Jersey, Applewood at Home continued to offer personal and healthcare services to the Applewood independent residents. Twenty-one have taken advantage of Alpine’s services from assistance with ADL’s (activities of daily living) to shopping to companionship.

Tools 4 SchoolsThis intergenerational collaborative program developed by Applewood, in conjunction with the Freehold Borough schools, continued to flourish in 2017. The number of resident volunteers who visit the schools weekly to assist with in-class academics has increased to six. Applewood provides transportation for the volunteers to and from the schools they visit.

Go GreenThis program is an ongoing collaboration between residents and staff. Residents are encouraged to bring reusable plastic containers to the dining venues to take home their “to go” meals or leftovers. The use of plastic bags has decreased as residents use their Applewood tote bags which were supplied by Applewood management.

Financial Highlights

Financial Results 2015/2016/2017

2015 2016 2017

Resident Fees 16,261 17,674 18,503

Investment Income-Realized 588 764 745

Other Income (non-cash) 3,408 3,738 3,614

Total Operating Revenue 20,257 22,176 22,860

Payroll & Benefits 9,155 9,634 9,909

Interest Expense 776 783 742

Depreciation (non-cash) 2,409 2,495 2,620

Other Expenses 7,252 7,545 8,151

Total Expenses 19,592 20,457 21,422

Net Operating (Loss)/Gain 665 1,719 1,438

Total Bottom Line 3,360,000

Move-Ins

43 for the year Sub-Acute

Revenue

$4M

(in thousands)

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2017 ANNUAL REPORT

Debt Service

RatioApplewood Restricted Funds 2017

Balance

Residents’ Assistance 2,102,431

Employee Scholarships 354,777

Arts & Education 27,744

Programs & Services 13,980

Healthcare Services 46,367

Endowment 140,303

Memory Care Unit 200,368

Special Projects 10,372

Master Plan Donation 286,964

6.04645.50

Days Cashon Hand

400.00 Required* 1.20 Required*

* Standard requirement per Letter of Credit

(in thousands)

Engaged Living

The Engaged Living program which explores each person’s well-being continues to grow in leaps and bounds. “Fitness Dan” Piereth, Fitness & Wellness Coordinator, has added new programming to meet the needs and desires of our residents. Exercise classes have increased to 15 per week and a tier system of difficulty was added to accommodate the abilities of all interested residents. The Walking Club gathers once per week to take advantage of the beautiful new walking path. Monthly chair massages have become increasingly popular.

The arrival of Wanda Garrin, Engaged Living Coordinator, has brought resident activity and programming to a new level. From TED talks to art lectures to Jeopardy to High Tea, the residents have many in-house programs from which to choose. Cultural excursions to museums, the New

York Philharmonic, the Robbinsville Mandir Hindu Temple and the New York Botanical Gardens, to name a few, are increasingly popular. In partnership with CentraState

Medical Center, the Minds in Motion brain health course was offered twice in 2017.

TM

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2017 ANNUAL REPORT

“A person’s general well-being cannot be measured by one’s possessions but by the beauty and security of their surroundings, the quality of their culture and the strengths of their relationships.”

The “CIA”, Culinary Institute of Applewood, completed its “sophomore” year and offered hands-on culinary education for the residents of Applewood. Attendance increased from the prior year with 115 new residents participating in monthly lectures, demonstrations and workshops led by the Director of Dining Services and Executive Chef. A “Culinary Passport” was implemented this year to track each resident’s participation in the program. Residents who completed 10 of the 12 sessions were then entered in a drawing for culinary themed prizes. The academic year finished with “Season Two” of our annual “Chopped” competition. Residents were tasked with creating recipes that

utilized four “mystery basket” ingredients. This year, three teams were tied as winners and received laser engraved trophies as well as embroidered chef hats and aprons.

CentraState Healthcare System

Excerpts from John Gribbin’s (President & CEO) report given at CentraState Healthcare System’s annual meeting held on January 11, 2018.

I can tell you, without question, 2017 was a year of change and challenge for CentraState. We believe the best way to serve our community is to stay independent, but in order to do so, we need to consider scale and relevancy. And as I’ve said many times, independent does not mean isolated. We need to be large enough to survive the changing landscape, but not so large that we lose our relevancy to patients in our community, or to the staff we all depend upon for our care. I firmly believe that having engaged physicians who are organized in a way to mold policy and care plan design, is the best scenario for patients. It is this philosophy that led to the establishment of our Physician Hospital Organization, or PHO, which has nearly 300 CentraState physician members. Through the PHO, we are working to improve health care delivery by building an organized approach for physicians and hospitals to work cooperatively and with aligned incentives, enabling us to jointly contract with managed care organizations, participate in risk sharing arrangements and reduce administrative expenses. In 2018, we will continue our work to expand the relevancy of the PHO with the creation of an alliance which targets hundreds of additional physicians from other N.J. hospitals in order to create a clinically integrated network of providers.

2017 brought the introduction of new and expanded clinical programs. We launched the Auto Injury and Concussion Center. This program helps people who have been injured in an automobile accident and who, too often, are left to their own devices to navigate a very complex personal injury system. We opened a second community health pavilion with our business partner IMMEDIATE CARE. The CentraState Health Pavilion at Marlboro is bringing that community a health facility that offers urgent care, primary care through Family Practice of CentraState, physical therapy and laboratory services. Through our population health programs, our OceanFirst Rehabilitation Department is also creating programs, ones that are fighting the debilitating effects of Parkinson’s Disease, combating memory loss and helping to improve memory and brain function. We have helped tackle hypertension, management of diabetes, pre-diabetes and weight loss.

It is innovative programs like these that are the cornerstone of a community-based hospital. And, because we are independent, we can prioritize programs that speak to the needs of our own particular community.

Building a healthier community demands that we collaborate in new ways with other traditional and non-traditional partners.

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2017 ANNUAL REPORT

Awards & Distinctions

• Centers for Medicaid Services 5-Star Quality Rating System awarded Applewood 5 Stars in 2017.

• AV Powell Associates recognized Applewood for its community strong actuarial results placing the community in the top tier of all CCRCs for long term solvency.

• Applewood is a recipient of the 26th annual National Mature Media Award. The program recognizes outstanding marketing resources created for senior adult industries.

• CentraState was reaccredited with Magnet status by the American Nurses Credentialing Center— has achieved this Magnet Recognition for nursing excellence three times.

• Designated by the American Hospital Association for the seventh consecutive year as one the nation’s Most Wired healthcare organizations.

• Centers for Medicare and Medicaid Services 5-Star Quality Rating System. CSMC is one of only ten hospitals in New Jersey to achieve 4 Stars.

Leadership

Keith Grady Executive Director

Linda Rizzo Director of Healthcare Services

Heath Braunstein Director of Dining Services

Eric Eichhorst Director of Marketing

Shanna Lee Director of Nursing

Rhonda Johnson Director of Rehabilitation

Joan Cinque Manager of Resident Services

Ray Vargas Manager of Building Services

Robert Deegan Safety & Security Coordinator

Wanda Garrin Engaged Living Coordinator

Kerry Piscitelli Assisted Living Coordinator

Dan Piereth Fitness and Wellness Coordinator

Toni Vono Wellness Center Coordinator

Susan Gelbard Customer Relations Coordinator

Chris Schilke Building Services Supervisor

Martha Minda Housekeeping Supervisor

Resident Committees

Resident AssociationExecutive CommitteeBuilding ServicesDiningFinance

Health & WellnessLibrarySafety & SecurityEmployee Appreciation FundNewcomers/Ambassadors

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A Senior Living Community

One Applewood Drive Freehold, NJ 07728

732-303-7416 www.Applewood.com

A CentraState Senior Living Community

© 2018 Applewood. All rights reserved.