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SECTOR NOTE

The Ultimate All-Weather Investment: Canadian Senior Living Real Estate

December 4, 2018

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Page 1 of 35

Frederic Blondeau, Managing Director, Head of Real Estate Research | 514.396.3616 | [email protected]

Stephan Boire, Real Estate Analyst | 514.396.3622 | [email protected]

4 December 2018

Real Estate

Real Estate

The Ultimate All-Weather Investment: Canadian Senior Living Real Estate

Optimal Timing and Momentum for a Sector Note on Senior Living Real Estate

Publishing a sector piece on the Senior Living Real Estate space is timely for Echelon Wealth Partners and our research group, as our views on the global economy remain relatively cautious at the end of 2018, and looking forward to 2019. That said, YTD, rather surprisingly given the current interest rates context, at the time of writing, the SPRTRE Index was outperforming the SPTSX Index by 1,250bps. Although momentum remains relatively solid, we believe investors should continue to favour quality names within sectors less sensitive to interest rate fluctuations. One of the best examples of such a sector is the Senior Living space.

Despite the recent increase in equity indices volatility, we believe the broader global market might still underappreciate the current macroeconomic environment, while global debt and corporate share buybacks could have sent, and could continue to send, the “wrong” messages on “real” conditions. More specifically, to summarize, we are concerned by:

Globally rising interest rates, while the FED seems to totally ignore (rightfully so from a structural standpoint) any

comment from the US President. In parallel, overall US corporate credit quality seems to continue to deteriorate, and

real wages remain relatively stable;

Global shadow banking risks (according to Mario Draghi, EU’s total shadow banking now represents ~40% of EU’s

financial system);

Passive strategies: According to the Federal Reserve Bank of Boston, as at December 2017, passive funds accounted for

37% of the combined US mutual fund and ETF AUM, which could mean higher volatility should investors’ risk

perceptions continue to degrade;

Canada’s housing sector;

The trade war between the US and China negatively affecting China’s economic environment, while at the same time

infrastructure investments by local governments are decreasing (in addition to growing tensions over contested

territories);

Germany’s general economic conditions;

Italy’s political and macroeconomic stability (potential downgrade from rating agencies);

The general stability of the Eurozone’s banking system, and its bond market;

The global energy and commodity sectors (especially marketers).

In our opinion, the current political environment could mean a longer period of uncertainty should we see any market dislocation, while lack of US political coherence could translate into delays of implementation of so-called eventual “unconventional measures”.

For these reasons, among others, we think the Canadian Senior Living sector is well positioned to benefit from investors’ attention over both short- and long-term horizons, as the sector continues to be exposed to strong fundamentals and should not be significantly affected by rising interest rates, all else being equal.

We would add that we believe the market’s optimism is reflected in PWC’s recent survey on market sentiment, while Senior Housing ranks second in terms of sector recommendations for 2019 (see Exhibit 1).

Senior Living Sector Note | December 4, 2018

Page 2 of 35



Exhibit 1 – Investment Recommendations for Commercial/Multifamily Subsectors in 2019

Source: PwC Emerging Trends in Real Estate 2019 survey, Based on Canadian investors only

Buy (%) Hold (%) Sell (%)

Moderate-income apartments 56.8 31.1 12.2

Senior hous ing 52.9 37.1 10.0

Medica l office 40.8 48.7 10.5

Affordable apartments 38.9 41.7 19.4

Urban/high-street reta i l 38.0 48.0 14.0

Neighborhood/community shopping centers 38.0 26.0 36.0

Centra l -ci ty office 35.8 46.9 17.3

Midscale hotels 33.3 61.1 5.6

Student hous ing 32.9 44.3 22.9

Suburban office 28.4 32.1 39.5

Economy hotels 27.8 61.1 11.1

Single-fami ly rental 27.1 41.4 31.4

Li festyle/enterta inment centers 24.0 48.0 28.0

High-income apartments 18.9 45.9 35.1

Upscale hotels 16.7 55.6 27.8

Luxury hotels 11.1 38.9 50.0

Regional mal ls 10.0 48.0 42.0

Outlet centers 8.2 44.9 46.9

Power centers 6.0 22.0 72.0


Page 3 of 35



It is All About Demographics

It’s undeniable that the main driver behind Senior Living Real Estate demand and new supply is the demographic profile of the country. The population aged 65+ has increased by more than 70% over the last 30 years, now totalling more than 6M individuals and representing 17% of the population. By 2037, the Canadian population aged 65+ and 80+ could total ~10.4M and ~3.5M individuals, respectively, representing ~24% and ~8%, respectively, of the overall Canadian population (see Exhibits 2-6).

Exhibit 2 – National Average Rent for Standard Bachelor/Private Rooms with Meals Included

Source: Statistics Canada. Table 17-10-0005-01 Population estimates on July 1st, by age and sex

Exhibit 3 – Canadian Population 65+ as Percentage of the Population


Exhibit 4 – Canadian Population Median Age


Exhibit 5 – Seniors are One-Fifth of Population

but Half of Health Spending

Source: The Conference Board of Canada; Statistics Canada; Canadian Institute for Health Information, Canadian Medical Association

1.0

2.0

3.0

4.0

5.0

6.0

20.0

22.0

24.0

26.0

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38.0

Po

pu

lati

on

(M

illio

ns)

Po

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on

(M

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Persons 65 years and over (RHS)

7%

9%

11%

13%

15%

17%

%

65+ as % of the Population

25

27

29

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41

Ye

ars

Median Age

83

53

17

47

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of population Share of health carespending

Less than 65 65+


Page 4 of 35



Exhibit 6 – Canada Population Forecast


0

10

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30

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50

-

5.0

10.0

15.01

97

1

19

73

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Age

Po

pu

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(M

illio

ns)

65 years and over 80 years and over Projection 65+ (Low Growth)Projection 80+ (Low Growth) Projection 65+ (Medium Growth) Projection 80+ (Medium Growth)Projection 65+ (High Growth) Projection 80+ (High Growth) Median age (RHS)

0%

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30%

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65 years and over 80 years and overProjection 65+ (Medium Growth) Projection 80+ (Medium Growth)


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According to Statistics Canada, and as we would intuitively expect, age is a “strong” predictor of demand for nursing homes. Furthermore, the Agency indicated that in 2016, 6.8% of Canadians aged 65+ were living in an institutional residence, whether at a senior residence or a long-term care (LTC) facility. This percentage increases to 30% for the population aged 85+ (see Exhibits 7, 8). Other major factors would be the loss of a marital partner and the diagnosis of a chronic condition. Lastly, we would underline that according to the National Institute on Ageing, 50% of individuals aged 85+ are believed to be frail (see Exhibit 9).

Despite women representing a higher percentage of the senior population, men’s life expectancy has steadily increased over the last 16 years. One prime example of this is the Province of Ontario where, according to the CMHC, men’s share of the 75+ and the 85+ populations increased from 37.9% to 41.7%, and from 29.3% to 35.3%, respectively, between 2001 and 2016. This percentage is expected to increase to 44.6% and 40.7%, respectively, in 2031. Why is this relevant to the Senior Living sector? Because a bigger population of men translates into a lower probability of seniors living alone, a statistic that has been trending down. Also, men are less inclined to live in senior facilities.

Exhibit 8 – Proportion of CCHS Respondents Linked to the Census who were Living in Private Dwellings with Additional Family, Seniors' Residences, and Nursing Homes

Source: CCHS respondents from Cycle 3.1 (2005/2006), Cycle 4.1 (2007/2008), and CCHS-Healthy Aging (2008/2009) linked to 2011 Census respondents, limited to respondents who were age 60 years or older on Census Day (May 10, 2011).

7.5 6.7 5.7 5.9 6.2 5.8 7.0 5.3 5.9 5.1 4.0 6.0

0.2 0.7 1.6

3.9 7.6

11.0 0.0 0.5 0.5

1.8 4.7

8.3 0.2 0.4

1.7

3.9

7.8

16.2

0.2 0.3 1.2 1.9

4.8

10.3

0

5

10

15

20

25

30

35

60 to 69 70 to 74 75 to 79 80 to 84 85 to 89 90 andolder

60 to 69 70 to 74 75 to 79 80 to 84 85 to 89 90 andolder

Women Men

Pro

po

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n o

f lin

ked

re

spo

nd

en

ts li

vin

g in

dw

elli

ng

cate

gory

(%

)

Private dwelling with additional family Seniors' residence Nursing home

Exhibit 7 – Percentage of the Population Aged 65+ Living in Special Care Facilities by

Age Group

Source: Statistics Canada, Census of Population, 2011

0

5

10

15

20

25

30

35

65 to 69years

70 to 74years

75 to 79years

80 to 84years

85 yearsand over

%

Men Women Total


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Exhibit 9 – Profile of Residents in Residential and Hospital-Based Continuing Care, 2017–2018

Source: Canadian Institute for Health Information

Highlights on Quebec, Ontario, and BC

Canada’s three biggest senior homes markets are following the national trends in terms of the growing number of seniors. Although Ontario’s percentage of people aged 65+ is pretty much in line with the national average at ~17.0% in 2017, Quebec and BC seniors represent ~18.5% of the provinces’ populations. It appears that BC is benefitting from a strong influx from net immigration (see Exhibits 10-14).

Exhibit 10 – Canadian Population Aged 65+, by

Province


Exhibit 11 – Canadian Population Aged 65+ as

Percentage of the Population, by Province


-4.0

-2.0

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

-1,000

-500

-

500

1,000

1,500

2,000

2,500

3,000

3,500

NL NS ON MB AB BC YT

Ch

ange

20

14

-20

18

Ch

ange

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14

-20

18

Number of Residential Care Residents Number of Residential Care Facilities (RHS)

3.5

4.0

4.5

5.0

5.5

6.0

0.0

0.5

1.0

1.5

2.0

2.5

Po

pu

lati

on

(M

illio

ns)

Po

pu

lati

on

(M

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Quebec Ontario British Colombia Canada (RHS)

12%

13%

14%

15%

16%

17%

18%

19%

% o

f P

rovi

nce

Po

pu

lati

on

65

+

Canada Quebec Ontario British Colombia


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Exhibit 12 – Migrant Population Aged 80+ by Province

Source: Statistics Canada. Table 17-10-0015-01 Estimates of the components of interprovincial migration, by age and sex, annual

Exhibit 13 – Migrant Population Aged 65+ by Province


Exhibit 14 – Age of the Canadian Population by

Province


-400

-200

0

200

400

600

Mig

ran

ts

Quebec 80 years and over Ontario 80 years and over

British Columbia 80 years and over

-1500

-1000

-500

0

500

1000

1500

2000

2500

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Mig

ran

ts

Quebec 65 years and over Ontario 65 years and over

British Columbia 65 years and over

5.0%

7.0%

9.0%

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13.0%

15.0%

17.0%

19.0%

197

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7

65

+ as

% o

f P

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Po

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Canada Quebec Ontario British Columbia


Page 8 of 35



Quebec

Although the population of Quebec is growing older, the province does not naturally benefit from net migration (see Exhibit 15).

Within the Province of Quebec, in 2018 the vacancy rate for standard spaces is 6.9%, 70bps above the relative low of 2017 at 6.2%, and the third year in a row below the 7.0% mark, looking back 10 years. That said, strength in construction activity should result in a subsequent increase in the vacancy rate in the province next year. In 2018, the total number of spaces within the Province of Quebec is 119K, with an overall vacancy rate of 6.5%. The number of residents is 124K, with a capture rate, i.e., the percentage of the population aged 75+ living in the Province of Quebec, of 17.9%.

Ontario

Following two difficult years, in 2015 and 2016, of negative net migration of 65+ seniors and flat net migration for 85+ seniors, in 2017 the Province of Ontario saw its biggest influx since 2001 (see Exhibit 16).

According to the CMHC, the overall vacancy rate within the Senior Housing sector decreased to a record low of 9.9% in 2018, down 40bps y/y, while the average rent for a standard space increased by 2.6% y/y, to $3,618. The market remains relatively strong despite a supply increase of 3,500 spaces y/y, the largest increase in 17 years. In 2018, Ontario’s inventory is 61K spaces while the number of residents is 59K, and the capture rate is 5.5%.

British Columbia

Although since 2010 the Province of BC does benefit from a steady and healthy influx of net international immigration, the net interprovincial immigration has significantly increased since 2013, and has since remained steady (see Exhibit 17). Moreover, the province’s population aged 85+ continues to tremendously increase (see Exhibits 18-20).

The aged 65+ population has almost doubled over the last 30 years, now totalling ~0.9M individuals and representing ~18% of the population. By 2037, the population aged 65+ and 80+ could total ~1.5M and ~0.5M individuals, respectively, representing ~25% and ~10%, respectively, of the overall Province of BC population.

Exhibit 15 – QC, Net Migration Population Aged 65+


Exhibit 16 – ON, Net Migration Population Aged 65+


-1,000

-900

-800

-700

-600

-500

-400

-300

-200

-100

-

Mig

ran

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Net-migration 65 years and over Net-migration 80 years and over

-800

-600

-400

-200

-

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600

Mig

ran

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Page 9 of 35



Exhibit 17 – British Columbia Interprovincial and International Migration

Source: Statistics Canada. Table 17-10-0020-01 Estimates of the components of interprovincial migration, quarterly, Table 17-10-0040-01 Estimates of the components of international migration, quarterly

Exhibit 18 – B.C., Net Migration Population Aged

65+


Exhibit 19 – B.C., Population Aged 80+


(5,000)

-

5,000

10,000

15,000

20,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2010 2011 2012 2013 2014 2015 2016 2017 2018

Mig

ran

ts

Net Interprovincial Immigration Net Int'l ImmigrationNet Immigration Net Immigration (Excluding Net Non-Permanent Residents)

-500

-

500

1,000

1,500

2,000

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3,000

Mig

ran

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-

50

100

150

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Po

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lati

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(Th

ou

san

ds)

80 years and over


Page 10 of 35



Exhibit 20 – British Columbia Population Forecast


0

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-

0.5

1.0

1.5

2.01

97

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Age

Po

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65 years and over 80 years and over Projection 65+ (Low Growth)Projection 80+ (Low Growth) Projection 65+ (Medium Growth) Projection 80+ (Medium Growth)Projection 65+ (High Growth) Projection 80+ (High Growth) Median age (RHS)

0%

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65 years and over 80 years and overProjection 65+ (Medium Growth) Projection 80+ (Medium Growth)


Page 11 of 35



According to the CMHC, the overall independent living vacancy rate in BC was down 150bps y/y to 3.0% in 2018, and steadily down from a relative peak of 12.6% in 2012, while the new supply of spaces is relatively moderate. A healthy single-family homes market is helping to support the demand for senior living homes, resulting in a 3.3% y/y increase in independent living rents.

In 2018, BC’s overall inventory is 32K spaces while the number of residents is 33K, and the capture rate is 8.3%.

Industry Overview: An Evolving Environment

Looking at the Senior Housing sector in a comprehensive manner, there are three sub-segments (see Exhibit 21):

Senior Housing: Property can either be specialized or include a mix of products:

o Independent Supportive Living (ISL): ISL essentially targets senior people who would pay for specific services

(e.g., housekeeping, laundry, etc.), in addition to the rental rate. These residents require limited assistance.

o Assisted Living (Memory Care; AL): AL targets more vulnerable senior people, who need support with daily

living activities. Most AL services are provided as private-pay.

Long-Term Care (Skilled Nursing; MC/LTC): LTC targets senior people requiring constant supervision, notably

skilled nursing care. This type of service is regulated by governmental agencies, and placement is based on a

person’s care requirements.

Exhibit 21 – Senior Housing Health Services Spectrum

Source: Chartwell Retirement Residences

Compared to other real estate sub-sectors, in general operational considerations are relatively more critical to the Senior Living and LTC segments. Ultimately, Home Care is the alternative to Institutional Care. Lastly, Canada’s top three markets, namely Ontario, Quebec and BC, are subject to rent control guidelines.

Senior Housing

Being private-pay in nature, Senior Housing facilities generate higher margins than LTC facilities. We would also add that demand for higher end products is relatively solid. In general, a retirement residence would require a staff of approximately 40 people to accommodate 100 residents. According to the CBRE, Canada’s largest 15 retirement home operators represent a market share of 38% in terms of number of suites (see Exhibit 22).

Independent Supportive Living (ISL) &

Independent Living (IL)Assisted Living (AL) & Memory Care (MC) Long Term Care (LTC)

Level of Care: Low to medium Medium to high Very high

Target Resident: More active, healthy seniorsSeniors with some cognitive and/or

phys ica l impairments

Seniors with acute cognitive and/or

phys ica l impairments requiring higher

levels of da i ly personal care

Service Offering:

Activi ties , transportation, securi ty

Avai labi l i ty of meals , housekeeping,

bas ic ass is tance with dai ly l iving

ISL/IL services + Care services and

speci fic ML programming included

24-hour regis tered nurs ing care or

supervis ion

Funding: Predominantly private pay Mostly private pay Predominantly government funded

Regulations: Mostly consumer protection Mostly consumer protection Heavi ly regulated


Page 12 of 35



Exhibit 22 – Canadian’s Largest Retirement Operators

Source: Chartwell Retirement Residences Q3-2018 investor presentation

Since 2010, the national average vacancy rate has steadily decreased from 10.8% to 8.2%, while the average rent increased from $1,857 to $2,210 over the same time period (see Exhibits 23,24).

Exhibit 23 – Seniors Canadian Rental Housing Vacancy by Province

Source: Canada Mortgage and Housing Corporation

Largest Retirement OperatorsNo. of Properties

Operated (1)

No. of Suites

Operated (2)

1 Chartwel l Retirement Res idences 168 24,356

2 Revera Inc 108 12,218

3 Sélection Retra i te 37 9,596

4 Le Groupe Maurice 28 7,885

5 Cogir 35 7,480

6 Groupe Savoie 14 5,646

7 Al l Seniors Care 30 4,568

8 Sienna Senior Living 37 4,143

9 Amica Mature Li festyles & Baybridge 30 4,014

10 Verve Senior Living 27 3,737

11 Atria Senior Living 29 3,376

12 Seasons Retirement Communities 20 2,254

13 Shannex Inc. 13 2,088

14 Schlegel Vi l lages 8 2,025

15 Retirement Concepts 18 1,948

1.0

3.0

5.0

7.0

9.0

11.0

13.0

15.0

17.0

2010 2011 2012 2013 2014 2015 2016Vac

ancy

Rat

e o

f St

and

ard

Sp

ace

s (%

)

Canada Quebec Ontario Manitoba Saskatchewan Alberta British Columbia

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2010 2011 2012 2013 2014 2015 2016

Vac

ancy

Rat

e o

f St

and

ard

Sp

ace

s (%

)

Canada Newfoundland and Labrador Prince Edward Island Nova Scotia New Brunswick


Page 13 of 35



Exhibit 24 – Seniors Canadian Rental Housing Vacancy by Province

Source: Canada Mortgage and Housing Corporation

In general, the overall strength of Canadian Senior Living fundamentals, i.e., relatively strong demand and a relatively low level of new supply across the country, could result in an affordability crisis for seniors. According to DBRS, while in 2017 the average senior home rental rate was $1,678 in Quebec, $3,526 in Ontario and $3,009 in BC, with the national average rent currently growing at 4.7% per annum, the national average rental rate could grow to the $4,000 mark by 2025.

Long-Term Care (LTC)

LTC facilities, regulated by the government and often subject to waiting lists, are similar to hospitals in the sense that medical supervision is omnipresent. In fact, a typical LTC facility would require a ratio of one staff member to accommodate one resident. Any LTC funding is performed at the provincial level. According to the CBRE, Canada’s largest LTC operators represent a market share of 26% in terms of number of suites (see Exhibit 25).

1,000

1,500

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2010 2011 2012 2013 2014 2015 2016

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1,600

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2010 2011 2012 2013 2014 2015 2016

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Page 14 of 35



Exhibit 25 – Canadian Largest Long-Term Care Operators

Source: Chartwell Retirement Residences Q3-2018 investor presentation

According to The Conference Board of Canada, the cost to the Canadian federal government to cover the same fraction of the costs associated with caring for the country’s aging population as they currently contribute to the healthcare system as a whole is expected to increase from $281M in 2017-2018 to $4.3B in 2026-2027, representing a compounding annual increase of ~35% (~37% in Ontario; ~32% in Quebec; ~36% in BC). Overall, Canadian provinces and territorial governments are expected to need an additional $93B over the next 10 years to address the Canadian aging population needs (see Exhibits 26-33).

Obviously, those needs mean more LTC beds. In November 2017, The Conference Board of Canada estimated that the country could need an additional 43,000 new LTC beds over the next five years, and a total of 199,000 additional beds by 2035. We would further underline that generally speaking, in Canada and in other countries, governments want to reduce costs by transferring non-acute functions from hospitals to LTC facilities.

Largest Long Term Care OperatorsNo. of Properties

Operated (1)

No. of Suites

Operated (2)

1 Extendicare Inc. 74 9,243

2 Revera Inc. 48 7,613

3 Sienna Senior Living 28 3,692

4 Chartwel l Retirement Res idences 18 2,642

5 Schlegel Vi l lages 19 2,015

6 Park Place Seniors Living 17 1,918

7 Retirement Concepts 22 1,845

8 Shannex Inc 11 1,689

9 Rykka Care Centres 13 1,592

10 Group Champla in 14 1,486

11 Jarlette Health Care 18 1,475

12 Omni Health Care 15 1,247

13 Caressant Care 12 1,148

14 Good Samaritan Society 7 928

15 Steeves & Rozema

Exhibit 26 – Canadian Health Care Costs

Attributable to Population Aging

Source: The Conference Board of Canada; Statistics Canada; Canadian Institute for Health Information, Canadian Medical Association

1.22.5

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de

mo

grap

hic

s)

Health Care Costs Attributable to Population Aging


Page 15 of 35



Exhibit 27 – Canada Total Health Expenditure


Exhibit 28 – Canada Total Health Expenditure per Capita by Use of Funds, in Current Dollars


6

7

8

9

10

11

12

1,500

2,000

2,500

3,000

3,500

4,000

4,500

%$

Total health expenditure per capita in constant 1997 dollars Total health expenditure as a percentage of GDP

-

500

1,000

1,500

2,000

$

Hospitals Other institutions Physicians Total other professionals Total drugs

Capital Public health Administration Total otherhealth spending


Page 16 of 35



Exhibit 29 – Percentage Distribution of Total Health Expenditure by Use of Funds


Exhibit 30 – Total Health Expenditure Per Capita by Source of Finance, in Constant 1997 Millions of

Dollars


0%

20%

40%

60%

80%

100%

%

Hospitals Other institutions Physicians Total other professionals Total drugs

Capital Public health Administration Total otherhealth spending

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

$

Provincial government Federal direct Municipal government Social security funds

Public-sector total Private-sector Total


Page 17 of 35



Exhibit 31 – Total Health Expenditure by Source of Finance, in Constant 1997 Millions of Dollars


Exhibit 32 – Total Health Expenditure per Capita by Source of Finance, in Current Dollars


0

20,000

40,000

60,000

80,000

100,000

$

Provincial government Federal direct Municipal governmentSocial security funds Public-sector total Private-sector

0

1,000

2,000

3,000

4,000

5,000

$

Provincial government Federal direct Municipal government

Social security funds Public-sector total Private-sector


Page 18 of 35



Exhibit 33 – Percentage Distribution of Total Health Expenditure by Source of Finance


Ontario

Ontario is Canada’s biggest provincial LTC sector. According to the Ontario Long Term Care Association (OLTCA), which represents ~70% of LTC homes in Ontario, since 2010 the Ontario Long-Term Care sector has dramatically evolved, while today only people with significant needs have access to long-term care in the province. This is essentially due to more funding available for care at home. The OLTCA also indicates that more than 90% of Ontario’s seniors living in long-term care suffer from cognitive impairment, while in 2016/17 85% of residents needed extensive complete support, compared to 77% in 2011/12. One in three residents is highly or completely dependent on staff. 50% of the province’s LTC homes need to be rebuilt. Lastly, the wait list is increasing by ~15% a year, now at 34K up from 23K in 2015, while the average time to placement for LTC as at February 2018 was 161 days.

In May 2018, there were 627 licensed facilities in Ontario, funded and regulated by the Ontario Ministry of Health and Long-Term Care (MOHLTC), 58% of which were privately owned, 24% non-profit, and 16% municipal. About half of the total number of licenced facilities need to become subject to major renovation programs, and for this reason in October 2014, the Associate Minister of Long-Term Care and Wellness announced the MOHLTC’s “Enhanced Long-Term Care Home Renewal Strategy”. Provisions of the plan included an increase of the Construction Funding Subsidy, the extension of the maximum LTC licence term (from 25 to 30 years) for homes that are being redeveloped, and to schedule LTC homes for redevelopment.

Licensed operators are entitled to operational funding, paid monthly, for care services to residents from the MOHLTC to fund certain care services. Excess funding must be reimbursed to the MOHLTC. The MOHLTC offers additional funding for structural compliance and capital funding, on the basis of three structural classification types (Class-A, Class-B and Class-C) (see Exhibit 34).

Exhibit 34 – Ministry of Health and Long-Term Care Per Diem Funding Summary

Source: Ministry of Health and Long-Term Care

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

%

Provincial government Federal direct Municipal government Social security funds Public-sector total Private-sector

EnvelopeLevel-of-Care

Per Diem

Supplementary

Per DiemTotal %

Nurs ing and Personal Care $100.26 $0.65 $100.91 57.1%

Program and Support Services $9.79 $0.00 $9.79 5.5%

Raw Food $9.54 $0.00 $9.54 5.4%

Other Accommodations $56.16 $0.36 $56.52 32.0%

Total $175.75 $1.01 $176.76 100.0%


Page 19 of 35



Exciting Times for Both Direct and Listed Senior Living Real Estate

Direct

On the direct side, fund flows directed towards the Canadian Senior Living space have been steady. As a result, capitalization rates have continuously compressed since 2009.

Two Examples of Canadian Private Operators you Should Hear from in the Short to Mid-Term:

KMK Capital:

KMK, based in St. John’s, NL, owns, manages and leases a diversified commercial and residential real estate portfolio. The portfolio includes two state-of-the-art retirement residences, namely Tiffany Village, comprising 182 suites, and Kenny’s Pond, comprising 116 units. We feel like the Company is well positioned to continue to grow within the Canadian Senior Living space in 2019 and after.

Horizon Retirement Management:

Horizon Retirement Management is a Montreal-based senior living residences operator. The Company currently manages four properties located in Montreal and two properties located in Ottawa, totalling 1,100 independent supported living units.

In 2012, RFA Capital entered into the retirement seniors’ space, specifically focused on value-added opportunities. To increase operational strength and build scale, a vertically integrated retirement management property team based out of Montreal called Horizon Retirement Management Inc. was formed. With the infrastructure designed for growth, the platform has grown from one single residence to six residences across two provinces with over 1,000 suites under management. Now that RFA has established its platform, the investment strategy is to grow the platform by another 750 to 1,000 units in 2019, and 2,000 to 5,000 units over the next five years in Quebec and Ottawa. RFA offers seniors a continuum of care across Independent Living, Assisted Living, Memory Care, and Condos. With RFA’s experience with debt and capital structures, the combination of relationships and efficiencies on both the financial side and the operations side led to the relatively successful growth of the seniors’ retirement platform.

Listed

The Canadian listed Senior Living sector has decreased in size in 2014 and 2015. As a reminder, the consolidation movement, during which three Canadian listed senior living REIT/REOCs were taken over during a period of ~12 months, started with the takeover of Healthlease Properties REIT announcing in August 2014 that it entered into an agreement with Health Care REIT (HCN-NYSE, NR), to be acquired at a purchase price of $14.20/unit in cash. The purchase price implied a 31% premium to HLP’s last closing price, and an ~7% implied capitalization rate. HCN was essentially interested in Mainstreet’s (then US largest senior housing developer) pipeline. In fact, HCN paid Mainstreet US$370M to purchase 17 communities, then under construction and expected to be completed in Q4/14 and in Q1/16. Moreover, HCN has also acquired the exclusive right to buy an additional 45 properties from Mainstreet, which were expected to be constructed in 2016 and 2017.

In June 2015, Revera (owned by PSP) and HCN announced a bid to acquire Regal Lifestyle Communities for $12.00/shr in a joint bid. The acquisition was all cash and not subject to any financing conditions. The $12.00/shr offer implied a 27% premium to the stock’s last close and an implied capitalization rate of ~6.3%.

In September 2015, Amica Mature Lifestyles received an all-cash $18.75/shr bid from BayBridge Senior Housing, led by Teachers’ Private Capital’s Long-Term Equities group. The offered price implied a 113% premium to the previous day’s close, and an implied capitalization rate of ~4.7%. Amica was founded in 1993 by Mr. Samir Manji, with the financial backing of his parents. At the time of the offer, the family owned 30% of the Company. We believe this valuation was essentially explained by four factors, namely the tightly held ownership of ACC’s shares; the unparalleled quality of ACC’s portfolio; the then-prevailing competition for senior living properties; and ACC’s well respected management and development platform.


Page 20 of 35



Today, the Canadian listed universe comprises only four names: Chartwell Retirement Residences (CSH, NR, $15.07), Sienna Senior Living (SIA, BUY, TP $19.50, $16,76), offering exposure to relatively diversified portfolios of senior housing and LTC products, Invesque (IVQ, BUY, TP US$10,00, US$6,74), as well as Extendicare (EXE, BUY; Covered by Douglas Loe, TP $9.00, $6.89), exposed to LTC products.

Within the listed space, at the current juncture we would direct investors’ attention to the two senior living names we currently cover at Echelon:

Sienna Senior Living (SIA; BUY, TP $19.50, $16,76):

SIA owns 70 residences (43 LTC facilities and 27 retirement residences), totalling more than 10K beds and manages 15 residences (~1,700 beds), located in Ontario and BC. By mid-2020, management expects to generate 50% of its total NOI from its LTC portfolio, and 50% from its retirement residences portfolio. SIA was included in the S&P/TSX Composite Index in March 2018.

In August 2018, the Board of Directors approved a 2.0% increase in Sienna’s dividend to $0.918 on an annualized basis, commencing on September 14.

We are particularly excited by SIA’s development pipeline. Management recently indicated being actively engaged with regional and provincial authorities in order to obtain approvals for SIA’s Phase 1 development projects. They will include the new development of 1,000 older LTC beds, and the addition of 280 new LTC beds and 500 retirement suites over the next five years.

In addition, SIA has recently completed the retrofit of LTC property Bloomington Cove Care community, located in Stouffville, ON. Also, by mid-2019, management expects to complete a 55-suite expansion at Island Park, a retirement residence located in Campbellford, ON.

Invesque (IVQ; BUY, TP US$10,00, US$6,74):

Invesque owns 105 properties, totalling more than 9K beds and 580K sq. ft. of medical office GLA, representing a total value of US$1.4B. The portfolio is leased on a triple-net basis through 20 partnerships with operators, with a weighted average lease to maturity of 12 years. The portfolio is located in 19 US states and 2 Canadian provinces. IVQ’s target portfolio is 30% seniors housing, 30% skilled nursing, 30% medical offices, and 5-10% development.

On November 9, IVQ announced that the TSE has approved its notice of intention to put in place an NCIB. Since November 14, the Company is authorized to acquire up to a maximum of 2.6M shares (5% of outstanding shares) over the next 12 months, subject to a current daily maximum of 7.9M shares (25% of the last six months ADV).

On August 15, IVQ announced a bought deal of US$50M of convertible unsecured subordinated debentures. Final terms were a price of US$970 per debenture, implying an interest rate of 6.70%. The maturity is September 30, 2023, and the conversion price is US$10.70/shr. IVQ also granted an over-allotment option to purchase up to US$7.5M of additional debentures. The deal closed on August 29 and the Company was able to raise a total of US$50.0M. With such a limited access to equity capital, we believe IVQ was opportunistic in going ahead with a convertible offering. Management was expecting to allocate the net proceeds entirely to reimbursing outstanding mortgage indebtedness, bearing an interest rate of ~6%. This should give the Company short-term flexibility to execute on new acquisitions in the mid-term.

IVQ is pursuing the expansion of its medical office building portfolio. More precisely, the Company recently acquired a property in Buffalo for US$7.7M. In addition, post-quarter on October 31, the Company closed the US$11.0M acquisition of previously announced Keepsake Village at Greenpoint, located in Liverpool, New York. The property is leased to Hearth Management, representing IVQ’s third property operated by Hearth. Management indicated contemplating an acquisition pipeline of the order of US$300M.

Lastly, on August 31, the Company entered into a purchase and sale agreement for the US$70M disposition of seven skilled nursing facilities in Georgia. The properties are currently leased to Traditions Senior Management, and were


Page 21 of 35



acquired through the Care Investment Trust transaction. According to management, capital should be redeployed shortly, either through acquisitions or the NCIB.

As a reminder, on October 21, 2015, an entity controlled by Mainstreet bought a Symphony-operated portfolio of 10 properties, located in the Chicago area. The purchase price was US$268.4M. In addition, the entity bought the Hanover Park property in April 2016 for US$34.1M. Also in April 2016, a TSXV-listed entity did a reverse take-over of the same Mainstreet entity. That entity then became Mainstreet Health Investments (today Invesque Inc.). Since then, IVQ has continuously aimed at diluting its exposure to its Symphony portfolio, now representing 31% of the total rental revenue. Given that the healthcare sector is Illinois’ most significant employer, after the state itself, and that evidence shows that the State of Illinois remains in a very precarious financial condition, we believe that Symphony continues to represent a significant counterparty risk. That said, at these valuation levels, we generally feel much of the risk is already priced in.

Please refer to Exhibit 35


Page 22 of 35



Exhibit 35 – Senior Living and Healthcare Comparables

Seniors' Living Sector Valuation Summary

Chartwell

Retirement

Residences

Extendicare

Inc.Invesque

Sienna

Senior

Living Inc.

CANCareTrust

REIT IncHCP, Inc.

LTC

Properties,

Inc.

Medical

Properties

Trust, Inc.

National

Health

Investors,

Inc.

Omega

Healthcare

Investors,

Inc.

Physicians

Realty Trust

Sabra

Health Care

REIT, Inc.

Senior

Housing

Properties

Trust

Uniti

Group Inc

Ventas,

Inc.

Welltower,

Inc.US

CSH.UT-CA EXE-CA IVQ.USD-CA SIA-CA Seniors' CTRE-US HCP-US LTC-US MPW-US NHI-US OHI-US DOC-US SBRA-US SNH-US UNIT-US VTR-US WELL-US

TSX TSX TSX TSX Avg. NASDAQ NYSE NYSE NYSE NYSE NYSE NYSE NASDAQ NASDAQ NYSE NYSE NYSE Avg.

Recommendation N/R HOLD BUY BUY N/R N/R N/R N/R N/R N/R N/R N/R N/R N/R N/R N/R

Target Data C$ C$ US$ C$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$

Current Price 02-Dec $15.07 $6.89 $6.74 $16.76 $20.02 $29.26 $46.44 $17.27 $77.98 $37.94 $17.81 $19.29 $13.76 $19.93 $63.49 $72.33

12-Month Target Price $16.85 $9.00 $10.00 $19.50 $19.88 $28.19 $44.36 $15.21 $76.11 $34.75 $17.93 $21.38 $15.36 $22.14 $56.91 $68.55

12-Month Target ROR % 15.7% 37.6% 59.3% 21.8% 3.3% 1.4% 0.4% -6.1% 2.7% -1.4% 5.8% 20.1% 22.9% 23.1% -5.4% -0.4%

Impl ied Target Multiple on 2018E AFFO 19.5x 13.0x 11.7x 13.5x 15.3x 17.8x 15.6x 13.3x 14.8x 12.8x 19.2x 9.5x 10.9x 8.8x 15.9x 18.5x

REIT/REOC Data

Market Capita l i zation ($MM) $3,222 $608 $355 $1,104 $1,322 $1,679 $13,750 $1,842 $6,303 $3,293 $7,614 $3,247 $3,439 $3,271 $3,567 $22,632 $27,170 $7,598

Enterprise Value ($MM) $5,064 $1,195 $1,075 $2,156 $2,373 $2,127 $20,967 $2,524 $9,709 $4,560 $12,942 $4,958 $6,687 $7,006 $8,334 $33,385 $42,510 $11,369

Shares O/S (MM) (MRQ) 213.8 88.3 52.7 65.9 83.9 469.9 39.7 364.9 42.2 200.7 182.3 178.3 237.7 179.0 356.5 375.6

Market Float (MM) 209.1 0.0 52.7 64.5 79.6 469.1 39.0 360.4 40.5 197.0 181.1 175.9 234.3 167.8 355.1 374.7

Average Shares Traded Dai ly (000s) 250 195 31.2 183 164.8 667.5 3562.6 234.9 2212.5 205.3 2005.7 1552.0 1681.5 1456.5 2060.7 2413.4 2318.2 1,525.4

Dis tribution Rate (Current Annual ized) $0.58 $0.48 $0.74 $0.91 $0.80 $1.48 $2.28 $1.00 $3.95 $2.64 $0.92 $1.80 $1.56 $2.40 $3.16 $3.48

Yield % 3.9% 7.0% 10.9% 5.4% 6.8% 4.0% 5.1% 4.9% 5.8% 5.1% 7.0% 5.2% 9.3% 11.3% 12.0% 5.0% 4.8% 6.1%

Spread % over Gov't 10-yr Bond Yield 1.6% 4.7% 8.7% 3.2% 4.6% 1.8% 2.8% 2.7% 3.6% 2.8% 4.7% 2.9% 7.1% 9.1% 9.8% 2.7% 2.6% 3.9%

Payout as a % of 2018E AFFO 67% 70% 86% 63% 72% 61% 94% 80% 87% 77% 97% 99% 80% 111% 96% 88% 94% #N/A

Performance

1-wk price change 1.2% 2.4% NA 0.7% 1.4% 3.9% 1.8% 4.3% 4.9% 3.2% 5.2% 4.3% 2.1% 4.2% 2.7% 3.3% 3.4% 3.6%

1-mth price change 7.0% -4.8% NA 2.3% 1.5% 10.7% 7.0% 6.1% 14.8% 4.5% 13.8% 5.0% -12.4% -15.7% 4.8% 7.7% 4.1% 4.6%

3-mth price change -0.5% -17.3% NA -4.6% -7.5% 8.5% 8.7% 0.7% 15.7% -0.8% 14.9% 1.8% -17.6% -27.4% -4.2% 6.5% 8.6% 0.4%

YTD tota l return -7.3% -24.7% NA -8.0% -13.3% 19.5% 12.2% 6.6% 25.3% 3.4% 37.8% -1.0% 2.8% -28.1% 12.0% 5.8% 13.4% 6.2%

Estimates and Growth Rates

Fisca l Year End Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec

FFO 2017 $0.93 $0.66 $0.89 $1.31 $0.85 $1.95 $3.10 $1.35 $5.29 $2.15 $1.05 $2.43 $1.58 $2.51 $4.16 $4.21

2018E $0.91 $0.69 $0.96 $1.33 $1.28 $1.82 $3.04 $1.38 $5.51 $2.95 $1.09 $2.35 $1.57 $2.50 $4.03 $4.06

2019E $0.98 NA $1.03 $1.43 $1.36 $1.78 $3.08 $1.43 $5.61 $3.07 $1.10 $2.15 $1.71 $2.62 $3.91 $4.23

Growth rate (CAGR '17A-'19E) 2.7% NA 7.3% 4.7% 4.9% 26.6% -4.5% -0.3% 3.1% 2.9% 19.4% 2.6% -6.0% 4.2% 2.1% -3.1% 0.2% 3.9%

Growth rate + Current Yield 6.5% NA 18.2% 10.2% 11.6% 30.6% 0.6% 4.6% 8.9% 8.0% 26.4% 7.7% 3.4% 15.5% 14.2% 1.9% 5.0% 10.5%

AFFO

2017 $0.87 $0.66 $0.96 $1.39 $1.22 $1.71 $2.85 $1.16 $4.75 $3.30 $0.93 $2.31 $1.36 $2.51 $3.75 $3.87

2018E $0.86 $0.69 $0.85 $1.44 $1.30 $1.58 $2.84 $1.15 $5.15 $2.71 $0.93 $2.24 $1.41 $2.50 $3.59 $3.70

2019E $0.93 NA $0.94 $1.52 $1.38 $1.58 $2.96 $1.21 $5.27 $2.79 $0.97 $2.12 $1.44 $2.62 $3.48 $3.86

Growth rate (CAGR '17A-'19E) 3.8% NA -1.1% 4.7% 2.5% 6.2% -4.0% 1.9% 2.1% 5.3% -8.0% 2.0% -4.2% 2.8% 2.1% -3.7% -0.1% 0.2%

Growth rate + Current Yield 7.7% NA 9.9% 10.1% 9.2% 10.2% 1.1% 6.8% 7.9% 10.4% NA 7.2% 5.1% 14.1% 14.2% 1.3% 4.7% 7.5%

Trading Valuation

P/FFO 2017 16.2x 10.4x 7.5x 12.8x 11.8x 23.6x 15.0x 15.0x 12.8x 14.7x 17.6x 17.0x 7.9x 8.7x 7.9x 15.3x 17.2x 14.4x

2018E 16.5x 10.0x 7.0x 12.6x 11.5x 15.7x 16.1x 15.3x 12.6x 14.2x 12.9x 16.3x 8.2x 8.8x 8.0x 15.8x 17.8x 13.5x

2019E 15.4x NA 6.6x 11.7x 11.2x 14.7x 16.5x 15.1x 12.0x 13.9x 12.4x 16.1x 9.0x 8.0x 7.6x 16.3x 17.1x 13.2x

P/AFFO 2017 17.4x 10.4x 7.0x 12.1x 11.7x 16.4x 17.1x 16.3x 14.9x 16.4x 11.5x 19.2x 8.4x 10.1x 7.9x 16.9x 18.7x 14.5x

2018E 17.4x 10.0x 7.9x 11.6x 11.7x 15.4x 18.5x 16.3x 15.0x 15.1x 14.0x 19.1x 8.6x 9.8x 8.0x 17.7x 19.6x 14.8x

2019E 16.2x NA 7.2x 11.0x 11.5x 14.5x 18.6x 15.7x 14.3x 14.8x 13.6x 18.4x 9.1x 9.6x 7.6x 18.3x 18.7x 14.4x

AFFO Spread over Gov't 10-yr Bond Yield

2017E 3.5% 7.8% 10.4% 6.4% 7.0% 4.3% 3.2% 3.9% 4.4% 4.4% 4.9% 3.0% 9.4% 8.0% 10.3% 3.4% 2.9% 5.2%

2018E 3.9% NA 11.7% 6.8% 7.5% 4.6% 3.2% 4.1% 4.8% 4.5% 5.1% 3.2% 8.7% 8.2% 10.9% 3.2% 3.1% 5.3%

PEG Ratio1 2.1x NA 0.7x 1.1x 1.3x 1.4x 16.9x 2.3x 1.8x 1.4x NA 2.6x 1.8x 0.7x 0.5x 14.4x 4.0x 4.3x

Net Asset Value per Share $15.00 $9.00 $10.35 $19.15 $14.47 $27.07 $36.46 $14.07 $65.37 $25.04 $17.41 $18.71 $21.10 NA $54.65 $58.34

P/NAV 100% 77% 65% 88% 82% 138% 108% 127% 123% 119% 152% 102% 103% 65% NA 116% 124% 116%

Portfolio Statistics (MRQ)

Suites Owned (000s) 26,607 14,606 9,100 10,091 NA 26,565 NA NA NA NA 13,503 NA 13,412 NA NA NA

Portfolio Occupancy 92% NA 88.0% 97% NA 96.9% NA NA NA NA NA NA 84.8% NA NA NA

1 PEG Ratio = Multiple (2019E) / (Growth + Yield) / 100

2 Names under coverage Cash NOI = FTM estimate, names not under converage Cash NOI = MRQ x 4, US GAAP NOI = MRQ x 4

3 EBITDA is MRQ x 4 and interest expense is MRQ x 4 *** US Names: CTRE, HCP, HR, HTA, LTC, MPW, NHI, OHI, DOC, SBRA, SNH, UNIT, UHT, VTR, WELL

Source: FactSet, Company Reports, Echelon Wealth Partners


Page 23 of 35



Important Information and Legal Disclaimers

Echelon Wealth Partners Inc. is a member of IIROC and CIPF. The documents on this website have been prepared for the viewer only as an example of strategy consistent with our recommendations; it is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Any opinions or recommendations expressed herein do not necessarily reflect those of Echelon Wealth Partners Inc. Echelon Wealth Partners Inc. cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. Echelon Wealth Partners Inc. employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients.

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U.K. Disclosures: This research report was prepared by Echelon Wealth Partners Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. ECHELON WEALTH PARTNERS INC. IS NOT SUBJECT TO U.K. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS. The contents hereof are intended solely for the use of, and may only be issued or passed onto persons described in part VI of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.

Copyright: This report may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of Echelon Wealth Partners.

ANALYST CERTIFICATION

Company: AP.un, AX.un, BEI.un, HOM.USD-CA, BTB.un, CAR.un, CUF.un, DRG.un, DRA.un, DIR.un, ERE.un, FC, FCA, DELAF-US, FCD.un, INO.un, IIP.un, IVQ.un, KMP.un, MRG.un, NXR.un, NVU.un, NWH.un, RUF'U, PMULF-US, SIA, SOT.un, SRT.un, SMU.un I, Frederic Blondeau hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report. Company: AP.un, AX.un, BEI.un, HOM.USD-CA, BTB.un, CAR.un, CUF.un, DRG.un, DRA.un, DIR.un, ERE.un, FC, FCA, DELAF-US, FCD.un, INO.un, IIP.un, IVQ.un, KMP.un, MRG.un, NXR.un, NVU.un, NWH.un, RUF'U, PMULF-US, SIA, SOT.un, SRT.un, SMU.un I, Stephan Boire, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report


Page 24 of 35



IMPORTANT DISCLOSURES

Is this an issuer related or industry related publication? Industry

Does the Analyst or any member of the Analyst’s household have a financial interest in the securities of the subject issuer? If Yes: 1) Is it a long or short position? No Position; and, 2) What type of security is it? None.

No

Does the Analyst or household member serve as a Director or Officer or Advisory Board Member of the issuer? No

Does Echelon Wealth Partners Inc. or the Analyst have any actual material conflicts of interest with the issuer? No

Does Echelon Wealth Partners Inc. and/or one or more entities affiliated with Echelon Wealth Partners Inc. beneficially own common shares (or any other class of common equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer?

No

During the last 12 months, has Echelon Wealth Partners Inc. provided financial advice to and/or, either on its own or as a syndicate member, participated in a public offering, or private placement of securities of this issuer? (see table)

Yes

During the last 12 months, has Echelon Wealth Partners Inc. received compensation for having provided investment banking or related services to this Issuer? (overleaf)

Yes

Has the Analyst had an onsite visit with the Issuer within the last 12 months? Yes

Has the Analyst or any Partner, Director or Officer been compensated for travel expenses incurred as a result of an onsite visit with the Issuer within the last 12 months? See table overleaf

Has the Analyst received any compensation from the subject company in the past 12 months? No

Is Echelon Wealth Partners Inc. a market maker in the issuer’s securities at the date of this report? No

Company Name (Last site visit in the last 12 months) Ticker Disclosures

Al l ied Properties REIT Apri l 2018, Toronto AP.un 8

Artis REIT AX.un

Boardwalk REIT July 2018, Ca lgary BEI.un 7,8

BSR REIT June 2018, Arkansas , Texas HOM.USD-CA 8

BTB REIT BTB.un 5, 6

Canadian Apartment Properties REIT CAR.un 7

Cominar REIT CUF.un

Dream Global REIT DRG.un

Dream Hard Asset Al ternatives DRA.un

Dream Industria l REIT DIR.un

European Commercia l REIT ERE.un

Firm Capita l MIC FC

Firm Capita l American Realty Partners Corporation FCA, DELAF-US

Firm Capita l Property Trust September 2018, Montreal FCD.un 8

Inoval is REIT INO.un

InterRent REIT IIP.un 7

Invesque December 2017, Chicago, September 2018, Ottawa HLP.un 5, 6, 8

Ki l lam Apartment REIT October 2018, Toronto KMP.un 8

Morguard NA Res identia l REIT MRG.un

Nexus REIT NXR.un 4, 5, 6

Northview Apartment REIT July 2018, Ca lgary NVU.un 8

Northwest Healthcare Properties REIT NWH.un

Pure Multi -Fami ly Apartment REIT RUF'U, PMULF-US 5, 6

Sienna Senior Living Inc. September 2018, Toronto SIA 8

Slate Office REIT December 2017, Toronto SOT.un 5, 6, 7, 8

Slate Retai l REIT SRT.un

Summit II REIT SMU.un

* Si te vis i t longer than 12 months ago.


Page 25 of 35



RATING DEFINITIONS

Buy The security represents attractive relative value and is expected to appreciate significantly from the current price over the next 12 month time horizon.

Speculative Buy The security is considered a BUY but in the analyst’s opinion possesses certain operational and/or financial risks that are higher than average.

Hold The security represents fair value and no material appreciation is expected over the next 12-18 month time horizon.

Sell The security represents poor value and is expected to depreciate over the next 12 month time horizon.

Under Review While not a rating, this designates the existing rating and/or forecasts are subject to specific review usually due to a material event or share price move.

Tender Echelon Wealth Partners recommends that investors tender to an existing public offer for the securities in the absence of a superior competing offer.

Dropped Coverage

Applies to former coverage names where a current analyst has dropped coverage. Echelon Wealth Partners will provide notice to investors whenever coverage of an issuer is dropped.

RATINGS DISTRIBUTION

Recommendation Hierarchy Buy Speculative Buy Hold Sell Under Review Restricted Tender

Number of recommendations 51 42 12 0 24 0 0

% of Total (excluding Restricted) 40% 33% 9% 0% 19%

Number of investment banking relationships 10 14 1 0 10 0 0

% of Total (excluding Restricted) 29% 40% 3% 0% 29%

PRICE CHART, RATING & PRICE TARGET HISTORY

Date Target (C$) Rating

2 Nov 2017 $40.00 HOLD

2 Aug 2018 $42.00 HOLD

12 Nov 2018 $45.00 HOLD

Coverage Initiated: Nov 2, 2017

Data sourced from: FactSet

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

Dec 15 Apr 16 Aug 16 Dec 16 Apr 17 Aug 17 Dec 17 Apr 18 Aug 18

Allied Properties REIT (TSX:AP.UT-CA)

Price PT Revision


Page 26 of 35




2 Nov 2017 $13.50 HOLD

3 Aug 2018 $12.50 HOLD

5 Nov 2018 $10.25 HOLD



$9.00

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00


Artis REIT (TSX:AX.UT-CA)

Price PT Revision


2 Nov 2017 $40.00 HOLD

26 Feb 2018 $41.00 HOLD

17 May 2018 $47.00 HOLD

13 Aug 2018 $52.00 BUY

15 Nov 2018 $53.50 BUY



$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00


Boardwalk REIT (TSX:BEI.UT-CA)

Price PT Revision


20 Jun 2013 $5.20 BUY

18 Nov 2013 $5.00 BUY

14 May 2014 $5.10 BUY

12 Nov 2014 $5.15 BUY

13 Aug 2015 $5.00 BUY

23 Mar 2016 $4.85 BUY

10 Nov 2016 $4.75 BUY

2 Nov 2017 $4.50 HOLD

7 Nov 2018 $4.25 HOLD

Coverage Initiated: Jun 20, 2013


$3.50

$3.70

$3.90

$4.10

$4.30

$4.50

$4.70

$4.90

$5.10

$5.30

Jun 13Oct 13Feb 14Jun 14Oct 14Feb 15Jun 15Oct 15Feb 16Jun 16Oct 16Feb 17Jun 17Oct 17Feb 18Jun 18Oct 18

BTB REIT (TSX:BTB.UT-CA)

Price PT Revision


Page 27 of 35




2 Nov 2017 $34.25 HOLD

9 May 2018 $38.50 HOLD

13 Aug 2018 $45.00 HOLD

19 Sep 2018 $48.00 HOLD



$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00


Canadian Apartment Properties REIT (TSX:CAR.un)

Price PT Revision


2 Nov 2017 $14.00 BUY

12 Nov 2017 $14.50 BUY

19 Dec 2017 $14.75 BUY

8 May 2018 $14.50 BUY



$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00


Cominar REIT (TSX:CUF.UT-CA)

Price PT Revision


2 Nov 2017 $9.50 BUY

20 Nov 2017 $9.25 BUY

10 May 2018 $11.50 BUY

29 Jun 2018 $11.25 BUY

9 Aug 2018 $10.50 BUY



$6.00

$7.00

$8.00

$9.00

$10.00

$11.00

$12.00


Dream Industrial REIT (TSX:DIR.UT-CA)

Price PT Revision


Page 28 of 35




14 Jun 2018 $8.25 BUY

Coverage Initiated: Jun 14, 2018


$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

$8.50

$9.00


Dream Hard Asset Alternatives (TSX:DRA.UT-CA)

Price PT Revision


2 Nov 2017 $11.50 BUY

22 Feb 2018 $13.00 BUY

10 May 2018 $14.50 BUY



$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

$16.00


Dream Global REIT (TSX:DRG.UT-CA)

Price PT Revision


25 Apr 2018 $4.00 BUY

25 May 2018 $4.25 BUY

29 Aug 2018 $4.35 BUY

Coverage Initiated: Apr 25, 2018


$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

Oct 16 Feb 17 Jun 17 Oct 17 Feb 18 Jun 18 Oct 18

European Commercial REIT (TSX:ERE.UT-CA)

Price PT Revision


Page 29 of 35




2 Nov 2017 $14.25 BUY

21 Mar 2018 $14.50 BUY



$11.00

$11.50

$12.00

$12.50

$13.00

$13.50

$14.00

$14.50

$15.00


Firm Capital MIC (TSX:FC)

Price PT Revision

Date Target (US$) Rating

21 Aug 2018 $7.50 BUY

17 Sep 2018 $8.00 BUY

12 Nov 2018 $8.25 BUY

Coverage Initiated: Aug 21, 2018


$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

$8.50

Feb 17 Jun 17 Oct 17 Feb 18 Jun 18 Oct 18

Firm Capital American Realty Partners Corporation (TSX:DELAF-US, FCA-TSX)

Price PT Revision


21 Aug 2018 $7.00 BUY

Coverage Initiated: Aug 21, 2018


$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50


Firm Capital Property Trust (TSX:FCD.un)

Price PT Revision


Page 30 of 35




2 Oct 2018 $11.50 BUY

Coverage Initiated: Oct 2, 2018


$6.00

$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

May18

Jun18

Jun18

Jun18

Jul 18 Jul 18 Aug18

Aug18

Sep18

Sep18

Oct18

Oct18

Nov18

Nov18

Nov18

BSR REIT (TSX:HOM.USD-TSE)

Price PT Revision


22 Oct 2013 $6.25 BUY

13 May 2014 $6.40 BUY

12 Nov 2014 $6.65 BUY

6 Mar 2015 $7.10 BUY

11 Mar 2016 $7.50 HOLD

6 Apr 2016 $8.00 BUY

5 May 2016 $8.00 HOLD

2 Aug 2016 $8.60 HOLD

20 Sep 2016 $8.75 BUY

9 Nov 2016 $8.65 BUY

2 Nov 2017 $9.00 BUY

15 Nov 2017 $10.50 BUY

8 Feb 2018 $10.75 BUY

14 May 2018 $11.50 BUY

14 Aug 2018 $12.00 BUY

19 Sep 2018 $13.00 BUY

Coverage Initiated: Oct 22, 2013


$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

$13.00

$14.00

Oct 13Feb 14Jun 14Oct 14Feb 15Jun 15Oct 15Feb 16Jun 16Oct 16Feb 17Jun 17Oct 17Feb 18Jun 18Oct 18

InterRent REIT (TSX:IIP.UT-CA)

Price Target (C$)


Page 31 of 35




2 Nov 2017 $9.75 HOLD

15 Nov 2017 $10.00 HOLD

21 Mar 2018 $10.50 HOLD

13 Aug 2018 $10.25 HOLD



$8.50

$9.00

$9.50

$10.00

$10.50

$11.00


Inovalis REIT (TSX:INO.UT-CA)

Price PT Revision


2 Nov 2017 $14.50 BUY

14 Nov 2017 $15.00 BUY

10 May 2018 $15.50 BUY

9 Aug 2018 $16.25 BUY

3 Oct 2018 $17.00 BUY

9 Nov 2018 $17.50 BUY



$8.00

$9.00

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00


Killam Apartment REIT (TSX:KMP.UT-CA)

Price PT Revision


2 Nov 2017 $16.50 BUY

15 Feb 2018 $15.50 BUY

1 Aug 2018 $16.50 BUY

31 Oct 2018 $17.50 BUY



$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00


Morguard NA Residential REIT (TSX:MRG.UT-CA)

Price PT Revision


Page 32 of 35




2 Nov 2017 $23.00 BUY

7 Nov 2017 $26.00 BUY

11 May 2018 $28.00 BUY



$15.00

$17.00

$19.00

$21.00

$23.00

$25.00

$27.00

$29.00


Northview Apartment REIT (TSX:NVU.un)

Price PT Revision


2 Nov 2017 $11.50 BUY

1 Aug 2018 $12.00 BUY



$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

$13.00


Northwest Healthcare Properties REIT (TSX:NWH.UT-CA)

Price PT Revision


25 Jan 2016 $2.20 BUY

11 Apr 2017 $2.35 BUY

11 Jul 2017 $2.40 BUY

2 Nov 2017 $2.40 BUY

30 Nov 2017 $2.50 BUY

Coverage Initiated: Jan 25, 2016


$1.25

$1.45

$1.65

$1.85

$2.05

$2.25

$2.45

$2.65


Nexus REIT (TSXV:NXR.UT-CA)

Price PT Revision


Page 33 of 35




2 Nov 2017 $19.00 BUY

15 Nov 2017 $19.50 BUY



$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00


Sienna Senior Living Inc. (TSX:SIA-CA)

Price PT Revision


2 Nov 2017 $7.25 HOLD

15 Jan 2018 $8.50 BUY

9 May 2018 $9.00 BUY

7 Nov 2018 $9.75 BUY



$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00


Summit II REIT (TSX:SMU.UT-CA)

Price Target (C$)


22 Dec 2017 $9.50 BUY

2 Mar 2018 $10.00 BUY

15 Aug 2018 $10.50 BUY

29 Aug 2018 $10.25 BUY

15 Nov 2018 $10.00 BUY

Coverage Initiated: Dec 22, 2017


$6.50

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

Jun 16 Oct 16 Feb 17 Jun 17 Oct 17 Feb 18 Jun 18 Oct 18

Invesque (TSX:IVQ.USD-CA)

Price PT Revision


Page 34 of 35




2 Nov 2017 $6.75 BUY

4 Apr 2018 $7.59 BUY

27 Aug 2018 $7.25 BUY



$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00


Pure Multi-Family Apartment REIT (TSXV:RUF'U, PMULF-US)

Price PT Revision


12 Feb 2014 $10.60 BUY

16 May 2014 $10.75 BUY

8 Dec 2014 $10.00 BUY

10 Mar 2015 $9.45 BUY

11 Aug 2015 $8.60 BUY

25 Nov 2015 $8.50 BUY

8 Mar 2016 $7.90 BUY

9 May 2016 $8.10 HOLD

9 Aug 2016 $8.85 BUY

2 Nov 2017 Suspended Coverage

16 Apr 2018 $8.00 BUY

Coverage Initiated: Feb 12, 2014

Prior to November 2nd, 2017: Ratings from previous analsyst Data sourced from: FactSet

$6.00

$6.50

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

Feb 14Jun 14Oct 14Feb 15Jun 15Oct 15Feb 16Jun 16Oct 16Feb 17Jun 17Oct 17Feb 18Jun 18Oct 18

Slate Office REIT (TSX:SOT.UT-CA)

Price PT Revision


16 Apr 2018 $13.00 BUY

Coverage Initiated: Apr 16, 2018


$11.00

$11.50

$12.00

$12.50

$13.00

$13.50

$14.00

$14.50

$15.00

$15.50


Slate Retail REIT (TSX:SRT.UT-CA)

Price PT Revision


Page 35 of 35



Toronto Wealth Management

1 Adelaide Street East, Suite 2000

Toronto, ON M5C 2V9

416-572-5523

Toronto Capital Markets

1 Adelaide St East, Suite 2100

Toronto, Ontario M5C 2V9

416-649-4273

Montreal Wealth Management and Capital Markets

1000 De La Gauchetière St. W., Suite 1130

Montréal, QC H3B 4W5

514-396-0333

Ottawa Wealth Management

360 Albert Street, Suite 800

Ottawa, ON K1R 7X7

1-877-967-5866

Calgary Wealth Management

400-525 8 Ave SE

Calgary, AB T2G 1G1

403-218-3144

Vancouver Wealth Management and Capital Markets

1055 Dunsmuir St. Suite 3424; P.O Box 49207

Vancouver, BC V7X 1K8

604-647-2888

Victoria Wealth Management

730 View Street, Suite 210

Victoria, BC V8W 3Y7

1-877-978-9300

Oakville Wealth Management

1275 North Service Road, Suite 612

Oakville, ON L6M 3G4

289-348-5936

London Wealth Management

495 Richmond St., Suite 200

London, ON N6A 5A9

519-858-2112

Saskatoon Wealth Management

402-261 First Avenue North

Saskatoon, SK S7K 1X2

306-667-2282

Tokyo Capital Markets

Holland Hills Mori Tower; RoP #603

5-11-1 Toranomon, Minato-Ku,

Tokyo, 105-0001, Japan

+81.90.1470.1684

https://www.google.ca/maps/place/495+Richmond+St,+London,+ON+N6A+5A9/@42.9863997,-81.2532486,17z/data=!3m1!4b1!4m5!3m4!1s0x882ef20297d5471f:0x1d7293e608a772b0!8m2!3d42.9863997!4d-81.2510599

https://www.google.ca/maps/place/495+Richmond+St,+London,+ON+N6A+5A9/@42.9863997,-81.2532486,17z/data=!3m1!4b1!4m5!3m4!1s0x882ef20297d5471f:0x1d7293e608a772b0!8m2!3d42.9863997!4d-81.2510599

https://www.google.ca/maps/place/261+1st+Ave+N,+Saskatoon,+SK+S7K+1X2/@52.1317985,-106.66658,17z/data=!3m1!4b1!4m5!3m4!1s0x5304f6d9f27ecd6b:0xb3767cbd04efc485!8m2!3d52.1317985!4d-106.6643913

https://www.google.ca/maps/place/261+1st+Ave+N,+Saskatoon,+SK+S7K+1X2/@52.1317985,-106.66658,17z/data=!3m1!4b1!4m5!3m4!1s0x5304f6d9f27ecd6b:0xb3767cbd04efc485!8m2!3d52.1317985!4d-106.6643913

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