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Investor Presentation December 6, 2012. Cautionary Note Certain information in this presentation and oral answers to questions may contain forward-looking.

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Presentation on theme: "Investor Presentation December 6, 2012. Cautionary Note Certain information in this presentation and oral answers to questions may contain forward-looking."— Presentation transcript:

1 Investor Presentation December 6, 2012

2 Cautionary Note Certain information in this presentation and oral answers to questions may contain forward-looking information. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking information, and certain material factors or assumptions were applied in drawing conclusions or making forecasts or projections as reflected in the forward- looking information. Additional information about the material factors and risks that could cause actual results to differ materially from the conclusions, forecasts or projections in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are disclosed in disclosure documents filed on SEDAR ( 2

3 Long-Term Care (LTC)Non-LTC Ontarios third largest LTC provider3 retirement residences in ON*: 323 suites 27 LTC homes / 4,474 beds3 retirement residences in BC: 392 suites Average age 86, 4 / 5 medical conditions, cognitive impairment, require 24/7 care 1 independent living residence: 53 apartments ~ 90% of Q3 2012 total revenueSubsidiaries: Ontario Long-Term Care, Preferred Health Care Services 3 Business Overview Canadas fifth largest operator of seniors housing / ~6,000 employees * Muskoka residence (29 suites) currently being converted to a short stay healthcare and convalescent care facility

4 4 TSX: LWIPO: March, 2010 Indices: TSX / S&P SmallCap Index, MSCI IMI Canada Dividend: $0.075 / month ($0.90 / year)* Current yield: 6.9% Shares outstanding: 29,272,889Recent close: $12.35 (Dec. 4, 2012) Market capitalization: ~ $360 million52-week high / low: $13.00 / $10.75 Analyst Coverage: Capital Market Profile * Monthly dividend increased to $0.075 per share from $0.0708 per share, effective Dec. 2012

5 Experienced senior management Dino Chiesa, Interim CEOFormer Chair, CMHC; former Vice-Chair CAP REIT; former CEO of RES REIT; served as Ontario ADM Manny DiFilippo, CFOExpertise in M&A, internal audit, financial controls, risk management and financial reporting; 19 year financial career with the Weston/Loblaw organizations Paul Rushforth, COOMore than 15 years of senior healthcare management experience, including: Extendicare, Calgary Regional Health Authority Strong governance Dino ChiesaFormer Chair, CMHC; former Vice-Chair CAP REIT; former CEO of RES REIT; served as Ontario ADM David CutlerCEO of Centric Health / Former CEO of Leisureworld. More than 20 years with Leisureworld and predecessors; senior executive of industry association John McLaughlinFormer Director, Futuremed Healthcare Income Fund, AIM Health Group; formerly senior executive with Extendicare, American Medical Intl Janet GrahamManaging Director, IQ Alliance Inc.; provides real estate advisory services to corporate clients; former senior executive with a Canadian chartered bank Jack MacdonaldChair and former CEO of Compass Group Canada and ESS North America, a leading food service and facilities management company, former President, Communicare Division, MDS Health Group 5 Strong Leadership

6 6 Source: Statistics Canada Favourable Demographics Canadians over the age of 75 Factors Supporting Growth & Stability

7 7 Increasing Life Expectancy Factors Supporting Growth & Stability Source: Statistics Canada; Life expectancy at birth and at age 1, by sex, Canada (1920 – 1922 to 2005 – 2007)

8 Increasing affluence Relative increases in net worth and household income allow seniors to afford higher quality housing and amenities Changing family dynamics Dual income families have less time to care for parents Increasing demand for home healthcare services Provincial governments focused on controlling healthcare costs 8 Factors Supporting Growth & Stability Ontario Long-Term Care (LTC)Ontario Hospital $155.19 / day Acute care bed: ~ $1,000 / day Chronic care bed: ~ $ 650 / day

9 Long-Term Care Ontarios 3 rd largest LTC Operator

10 Essential service and vital part of community infrastructure Effectively 100% funded by Ontario government (MOHLTC) ̶ Funding based on need, not economic conditions Stringent licensing requirements Additional laws and regulations: public health, safety, privacy 10 77,500 LTC beds Wait List: ~20,000 Highly Regulated Environment / High Barriers to Entry Ontario Long-Term Care (LTC)

11 MOHLTC Base Operating Funding Increases Exceed CPI Growth 11 MOHLTC Funding (funding per bed, per day)

12 Incentive to manage carefully within envelopes Larger, more professional operators advantaged Per diem base: $155.19 per day, per bed 12 Operator Profits MOHLTC Funding Envelopes Cost Categories MOHLTC FundingReturn of Surplus Operator Profit Stream Accommodations NPC costs PSS costs Raw Food Nursing and Personal Care (NPC) Programs and Support Services (PSS) Room, Board and Services Other Accommodations (OA) MOHLTC Funding Model

13 13 * Excludes Property Tax Funding at 85% of taxes paid ** A home based on 60% of beds designated private accommodation; new admissions after July 1, 2012 pay higher rate. B and C home amount dependent on number of private and semi-private rooms MOHLTC Funding Model Funding ($ per bed / per day) A homeB homeC home NPC86.91 PSS8.43 Raw Food7.68 OA52.17 Base Operating Funding155.19 Accreditation0.33 Pay Equity / Equalization Adjustment3.255.25 Construction Funding10.35-- Structural compliance--2.501.00 Total government funding*169.12163.27161.77 Preferred accommodation**11.85 / 10.80Variable

14 Construction costs initially borne by LTC home owners Contracted daily government funding provides substantial offset Level of reimbursement tied to design and construction standards; not occupancy Construction funding for New (Class A) beds Approximately 54% of Leisureworld portfolio $10.35 per bed / per day 15-year term, $96 million support for AFFO* Structural compliance premium; life of license B beds: $2.50 per day, C beds: $1.00 per day Capital Renewal for B & C homes Government announcement on complete program revisions expected in 2013 Recent preferred accommodation increase provides enhanced incentive 14 LTC Capital Cost Reimbursement *Reflects recent acquisition of Madonna LTC home

15 Occupancy 100% government funding for occupancy 97% Government funds at actual plus up to 2% for occupancy between 90% 96% Government funds at actual for occupancy < 90% Preferred accommodation Up to 60% of operator capacity Private: $18.00 per day / $19.75* per day Semi-private: $8.00 per day / 9.00* per day Fees charged directly to residents ~ 22 % of Leisureworlds LTC NOI 15 Additional LTC Revenue Drivers *Effective July 1, 2012 for new residents

16 16 Operating Focus High Quality Care and Services Culture of quality: train, benchmark, establish best practices Continuously monitor care and service delivery Homes assessed by Accreditation Canada / CARF* Professional On-Site Administration Administrator on site ensures close oversight, timely response Support at regional, corporate levels and in other LTC homes Continuous Maintenance & Upgrades Effective, as >50% of LTC homes built post-1998 (Classified New) Dedicated resource for asset management Proactive approach Disciplined Cost Control Daily operating expense analysis/control Centralized purchasing, high volumes for best pricing *Commission on Accreditation of Rehabilitation Facilities

17 17 Maximizing Total & Private LTC Occupancy Rates Daily review of occupancy across all LTC homes LTC average total occupancy: 98.7% (YTD 2012) Private LTC occupancy: @ maximum allowable level (60% in new homes) Branding and marketing strategies / Survey residents, families and staff Total LTC OccupancyPrivate LTC Occupancy Operating Focus

18 Retirement Expanding our presence across the continuum of seniors living in Canada

19 19 Ontario Retirement Residences New (2009), five-storey, 148,500 sq. ft. luxury retirement residence 158 suites, currently in lease-up Sept. 30, 2012 occupancy: 68.4% Target net average move-in rate: 2.5 residents per property / month; ~ 90% occupancy by H2 2013 New (2009), five-storey, 140,000 sq. ft. luxury retirement residence 136 suites, currently in lease-up Sept. 30, 2012 occupancy: 71.3% Target net average move-in rate: 2.5 residents per property / month; ~ 90% occupancy by H2 2013 Midland Gardens: 53 independent living apartments in Scarborough for self-reliant seniors (adjacent to LWs Scarborough LTC home) Muskoka retirement residence (29 suites) currently being converted to a short-stay healthcare and convalescent care facility to serve local community Kanata Kingston Midland Gardens / Muskoka

20 20 New (2008), two four-storey buildings 175 suites (130 suites owned by LW); 90 independent / 40 assisted Sept. 30, 2012 occupancy: 89% New (2006), six-storey building 127 suites: 92 independent / 35 assisted Sept. 30, 2012 occupancy: 91% New (2010), four-storey building, currently in lease-up 135 suites: 110 independent / 25 assisted Sept. 30, 2012 occupancy: 60% BC Retirement Residences Pacifica – South Surrey Peninsula – South Surrey Astoria – Port Coquitlam

21 21 Five-star accommodations and amenities including: lounges, dining rooms, fireplaces, indoor pools, theatres, exercise facilities, landscaped gardens, chauffeured town cars Current portfolio occupancy (incl. Midland Gardens) has improved to 74.8% on a consolidated basis, up from 59.5% in Q3 a year ago New VP for portfolio recently appointed to drive marketing and increase occupancy Ontario and BC Portfolios

22 Financial Review & Growth Strategy

23 23 Net Operating Income FY2010: LSCLPs results until March 22, public company results thereafter FY2009: LSCLPs results Revenue (Years ended Dec. 31; Q1 ended March 31, 2012; Q2 ended June 30, 2012; Q3 ended Sept. 30, 2012) Financial Review (Years ended Dec. 31; Q1 ended March 31, 2012; Q2 ended June 30, 2012; Q3 ended Sept. 30, 2012)

24 Adjusted Funds From Operations (AFFO) 24 (C$ thousands, except per share and % amounts) Q3 2012Q3 2011YTD 2012YTD 2011 Net Operating Income (NOI)$15,39312,35841,36533,872 Construction funding (interest)7917812,2822,358 Net finance charges(5,016)(4,403)(13,865)(12,255) Current income taxes(682)(527)(1,401)(481) Administrative expenses(3,851)(3,307)(10,419)(9,507) After-tax transaction costs5291311,412833 Funds From Operations (FFO)$7,1645,03319,37414,820 Income tax to book filing adjustment-- (739) HRIS expense--655229 Income support9281,2992,8722,204 Construction funding (principal)1,4681,3524,2664,041 Maintenance Capex(465)(93)(833)(530) Adjusted Funds From Operations (AFFO)$9,0957,65625,73119,825 Basic AFFO per share0.31110.31350.96310.8790 Dividends declared per share0.2124 0.6372 Basic AFFO payout ratio68.3%67.8%66.2%72.5% Three months ended Sept. 30 Financial Review Nine months ended Sept. 30

25 25 Financial Review *Q2 2010 included a partial dividend payment for March, 2010, as LW completed its IPO and public listing on March 23, 2010 Cash distributionsAFFO Cash distribution & AFFO per share/Payout ratio

26 Strong Balance Sheet & Credit Ratings 52.1% Debt to Gross Book Value at Sept. 30, 2012¹ $20.1 million in cash & cash equivalents at Sept. 30, 2012 12-month Adjusted EBITDA / Interest Expense²: ~ 2.32 X $10 million undrawn, committed credit facility / $61.5 million revolving credit facility ($35.0 million drawn as at Sept. 30, 2012) Committed to maintaining investment grade rating Ensures sustainable payout ratio of ~ 80% of AFFO Industry-leading credit ratings³ DBRS:A (Stable) S&P:A- (Stable) 26 Financial Review 1 Debt to gross book value ratio is defined as mortgages and other debt payable over total consolidated assets plus the amount of accumulated amortization. 2 Trailing 12 months (DSCR for $310 million bond is 3.05 X) 3 2015 notes

27 Stable government funding for LTC operations LTC operations fully funded by government at 97% average annual occupancy Government funding for LTC: ~ NOI margin 15.3% Occupancy rates Average total LTC occupancy rate: 98.7% Private LTC occupancy: 98.2% Waiting list for LTC in Ontario Increasing occupancy in non-LTC portfolio Cost controls Financial discipline supports consistency of NOI 27 Reliable cash flow for shareholder dividends Enduring Value

28 Purchasing power Access to low cost of capital financing Expertise in real estate management In-depth knowledge of seniors care Experience in regulatory issues and government relations Employee opportunities Ability to extend client relationships 28 Advantages of scale and sector expertise Leveraging Strengths

29 Aging population Changing family dynamics Increasing life expectancies Increasing seniors affluence Govt focus on controlling costs (LTC) 29 Market Opportunities Long-Term Care Home Care Retirement Residences Independent / Assisted Living Residences Demand Drivers Leisureworld Strategic Focus: To be a leading provider of seniors living facilities and services in Canada Growing Opportunities

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