Service Integrated Housing Village Service Overlay and Funding Model Interactive Workshop

“Service Integrated Housing”  What is a SIH Program? A planned provision of care services to accommodation clients. Increased care in a variety of situations (as required).  Why has this come about? Government reforms Market demand for “ageing-in-place”  What settings will it occur in? Co-located aged care and retirement villages Stand-alone retirement villages Satellite retirement villages

“Service Integrated Housing”  What are the components of SIH? Day-to-day delivery of care and other services o The types of activities/participants involved will depend on the needs of residents  What are the RESIDENT benefits of SIH? Improved emotional, social, cognitive, physical and sensory wellbeing Builds a stronger sense of community and engagement Provides a true ageing-in-place continuum

Program Service Types Domestic services, housekeeping and cleaning Personal care, bathing, dressing and grooming Meal assistance and preparation Nutritional planning Medication monitoring Transport and assistance to appointments Wellness and exercising programs Visiting friends and relatives Pet care (e.g. dog walking) Shopping and bill paying assistance Social outings including support and assistance at family functions Care coordination Special occasion care

“Service Integrated Housing” SIH represents a fundamental shift from an accommodation model to a CARE model

“Service Integrated Housing” What are the differences?  Accommodation Model Sales proposition = “independence”, “lifestyle” No underlying provision for future care needs as residents age Future care may need to be outsourced (e.g. fee for service) Likelihood for earlier resident relocation due to higher care needs  Care Model Sales proposition = “care”, “wellbeing” Aligned with mission objectives and organisational philosophy Resident care needs are met throughout the ageing process Cost of care delivery for resident front and back ended

“Service Integrated Housing” What are the OPERATOR benefits?  Care Model In-house program provides “control” of service delivery Builds a strong bond with the residents Justification for Deferred Management Fees Bridges gap between ILUs and residential aged care Financially viable business case

Service Integrated Housing (“SIH”)  Two delivery examples 1)On-site care Live on site carer After hours carer support from other sites or call centre Forego 1 unit Uplift in entry prices/DMF Suited to medium to large villages

Service Integrated Housing (“SIH”)  Two delivery examples 2)“Hub & spoke” model Live off site Care delivered from central hub Uplift in prices/DMF Caters for smaller satellite sites with limited community facilities

Service Integrated Housing (“SIH”) Benefits a) Resident access to care is not totally reliant on government funding b) No limit/regulation to growth of care delivery Costs a) Administration, staffing and delivery management b) Consumables c) Upfront negative cash flow d) Length of stay risk

Financial Benefit  Co-located RACF, ALUs, ILUs a) 8-12% uplift in ILU entry contributions b) Improved sales rates c) Economies of scale  Service Integrated Housing a) Potential increase in sales rates b) Entry contributions between 5-10% higher c) DMF percentages > 50% with higher front end weighting d) Justification for capital gain retention e) Shorter length of stay

Financial Risks  Capital Cost a) Minimum 2-3 FTE carers b) Potential unit give-up c) Administration and management d) OH & S and other related costs e) Capital budget to cover start up and ramp up period

A “Typical” Pricing Model DevelopmentBuild Cost$300,000 Base assumptions LoansLoan Value$300,000zero dev. profit Average Length of Stay6 years Operating Expenses Operating MarginNilexpenses = charges Major Refurbishment3.5% of unit valueoccurs on resale RatesCPI3.0% p.a. Loan Appreciation3.0% p.a.

A “Typical” Pricing Model DMF Structures Base Entry Price$300,000 Yearly Charge3% over 10 years DMF calculated onExit price Max DMF30% Total Charge (based on 6-year stay) 18% Cap Gain to Resident100% Additional Expensenil

A “Typical” Pricing Model IRR16.3%

Base Vs Base + Carer DMF Structures BaseBase + Carer Entry Price$300,000 Yearly Charge3% over 10 years DMF calculated onExit price Max DMF30% Total Charge (based on 6-year stay) 18% Cap Gain to Resident100% Additional Expensenil$7,500 p.a. Carer cost per unit Carer cost per unit

Base Vs Base + Carer IRR16.3% IRR8.8% Diminished Returns Diminished Returns

Base Vs + Carer Scenarios BaseBase + Carer↑ 5% + Carer↑ 10% + Carer Entry Price$300,000 $315,000$330,000 Yearly Charge3% over 10 years 5% over 5 years, then 3% for 5 years 7% over 5 years, then 3% for 5 years DMF calculated onExit price Max DMF30% 40%50% Total Charge (based on 6-year stay) 18% 28%38% Cap Gain to Resident100% Additional Expensenil$7,500 p.a. DMF Structures

Base Vs + Carer Scenarios IRR16.3% IRR8.8% IRR16.4% IRR22.4% Similar returns Improved returns

Impact of Length of Stay Base↑ 5% + Carer Entry Price$300,000$315,000 Yearly Charge3% over 10 years 5% over 5 years, then 3% for 5 years DMF calculated onExit price Max DMF30%40% Total Charge (based on 6-year stay) 18%28% Cap Gain to Resident100% Additional Expensenil$7,500 p.a. DMF Structures

Length of Stay on Base IRR17.8% IRR16.3%IRR15.0% Marginal change

Length of Stay on ↑ 5% (40%) IRR19.9% IRR16.4%IRR13.0% Larger impact

Service Integrated Housing (“SIH”)  Business case considerations Staffing requirements o Qualifications/skills, non-English languages, ongoing training Hourly rates need to be market tested – weekend/overnight rates Staffing/service productivity statement Benefits of any brokerage services Capital cost and ramp up o potential “cost of carry” during start-up phase

Changes in Thinking Summary  Committed to providing care and wellbeing services into retirement accommodation  Live-in or rostered carer  Hub & spoke model – satellite villages  Increased front and back-end payments

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