Presbyterian Villages of Michigan 1st Quarter 2014 MANAGEMENT DISCUSSION OF FINANCIAL PERFORMANCE and POSITION

Transcription

1 Presbyterian Villages of Michigan 1st Quarter 2014 MANAGEMENT DISCUSSION OF FINANCIAL PERFORMANCE and POSITION The following is a brief Management Discussion of the PVM Obligated Group s (OG) financial activities, performance, and position as of and for the three months ended March 31, 2014 ( 1st Quarter ). Semi-annually (for the June 30 and December 31 periods) management intends to deliver a more comprehensive report. Overview The 1st Quarter OG financial performance was positively impacted by holding OG overall expenses to 98.8%; though this was more than offset by overall OG operating revenues running at 96.2% of budget. OG occupancy was 88.5% of operational capacity which was below the 89.7% budgeted, yet 1.3% above the prior year 1st Quarter. The OG unrestricted fund had a net income of $1,076,000, which was $471,000 less than budget. The OG unrestricted net assets stand at $15,819,000 at March 31, 2014, or 25.6% of total assets, compared to $14,720,000, or 23.8% at December 31, The OG debt service coverage (DSC) ratio for the 1st Quarter was 3.35, which was below the 5.78 budgeted, yet above the prior year 1st Quarter of Without the realized gain recorded on the sale of Redford OG cottages (see Facilities Advancement section below) the DSC ratio was The OG operating margin ratio, excluding realized gains, is a negative 2.76%, which is below the negative 1.00% budgeted for the 1st Quarter. This is an improvement from the prior year s 1st Quarter of a negative The OG operating ratio deteriorated to 95.8% from 92.6% in the prior year 1st Quarter, and is worse than the 94.2% budgeted. The OG days cash on hand ratio stood at 119 at March 31, 2014, compared to the 117 at December 31, Financial Operating Performance Key Factors The significant positive factors that contributed to the 1st Quarter operating and nonoperating financial performance included: Redford recorded $1.36 million in realized gains on the sale of its independent

2 Presbyterian Villages of Michigan 1st Quarter 2014 Management Discussion of Obligated Group May 15, 2014 Page 2 living units to a PVM-affiliated low income housing tax credit entity. This was a portion of the overall realized gains to be booked in 2014, as management is working through the calculation of the overall gain based on the discounted value of the Seller s note established at closing. The remaining $4.6 million realized gains will be recorded in April Departmental expenses ran $175,000 under budget. Grants and allocations ran $107,000 under budget. The above positive factors in the 1st Quarter were offset by the following: Resident revenues ran $58,000 (or 0.7%) under budget. Interest and dividend income and gain on sale of portfolio investments ran $207,000 under budget. Revenue from assets released from restriction ran $165,000 under budget. Bad debt reserves for resident receivables ran $275,000 over budget. Occupancy and Revenues As noted above, overall OG occupancy for the 1st Quarter ran slightly below budgeted expectations, yet ran above the prior year s 1st Quarter. Redford East Harbor Westland Nursing % capacity 93% 95% N/A Nursing % budget 99% 100% N/A AL/ML % capacity 92% 95% 85% AL/ML % budget 97% 100% 98% IL % capacity * 98% 77% IL % budget * 102% 97% *Redford IL was transferred outside of the Obligated Group to a low income housing tax credit entity in February Investments Returns Investment returns, net of fees, for the 1st Quarter were a positive 1.29%, which for the first time in many quarters was worse than the index benchmark of 1.62%. The market value of the Foundation s investment portfolio was $15,091,000 at March 31,

3 Presbyterian Villages of Michigan 1st Quarter 2014 Management Discussion of Obligated Group May 15, 2014 Page , which was $2,303,000 above cost. Realized gains were $141,000 in the 1st Quarter or $116,000 over budget. Unrealized losses on Foundation investments were $48,000 in the 1st Quarter. Expenses OG departmental expenses for the 1st Quarter were $175,000 under budgeted levels, and 0.4% under the prior year s 1st Quarter, despite this year s winter conditions. Redford had a favorable variance of $60,000 largely due to savings in maintenance and nursing ancillaries. East Harbor had a negative variance of $134,000 due to nursing wages and nursing ancillary costs. PVM Corporate incurred a favorable variance of $134,000 across a wide variety of departments. PVM Foundation had a favorable variance of $43,000. Equity Adjustments Change in investments in related organizations that are treated as equity transfers and thus excluded from the debt service coverage covenant calculation. These transfers were $113,000 to Perry Farm Development Co. Financial Position Performance Cash Days cash on hand ended at 119 at March 31, 2014 compared to 117 at December 31, Days in OG resident accounts receivables declined to 31.7 at March 31, 2014 from 33.3 days at December 31, 2013, or $40,000, largely due to increased bad debt reserves of $335,000 during the 1st Quarter. OG member PV North recovered $174,000 from the PVM non-og affiliate Pontiac ILF for loans advanced in The close on funding for the Redford Cottage conversion project generated $1.62 million in proceeds, $175,000 was recovered in pre-development advances, and $200,000 collected in development fees. Also, PVM collected on behalf of the PVM EJNP Real Estate Company $267,000 from predevelopment advances and proceeds from the sale of Rivertown Neighborhood condo unit, and funded the purchase with temporarily restricted donations. These collections were offset by a net $64,000 increase in operating advances to PVM non-og affiliates. Additionally, PVM invested $334,000 of donations into the PVM non-og affiliate Harry and Jeanette Weinberg Green Houses at Rivertown.

4 Presbyterian Villages of Michigan 1st Quarter 2014 Management Discussion of Obligated Group May 15, 2014 Page 4 The $76,000 equity reduction in the Center for Senior Independence was more than offset with the increased equity of $186,000 in the PVM EJNP Real Estate Company. The change in the gross assets and reserves is broken down as follows: 12/31/2013 3/31/14 Gross Reserves Gross Reserves Due From Affiliate for Development Advances 443,785 36,324 Due From Affiliate for Development Fees 228, ,637 Due From Affiliate for Operating Advances 596, ,259 Less Allowance -285, ,000 Note Receivable From Perry Farm to PVM 250, ,187 Less Allowance -250, ,187 Note Receivable From Perry Farm to PVMF 342, ,000 Less Allowance -342, ,000 Notes Receivable From Other Affiliates 812, ,820 Less Allowance -125, ,928 Project Pre-Develop Advances 832, ,208 Investment in Center for 2,135,098 2,037,095 Senior Independence/PACE Investments in Senior Housing and Services 6,060,893 6,438,382 Less Allowance -55,322-55,322 Gross 11,702,304 11,716,911 Less Allowance -1,058,257-1,134,437 Net Receivable $10,644,047 $10,582,474

5 Presbyterian Villages of Michigan 1st Quarter 2014 Management Discussion of Obligated Group May 15, 2014 Page 5 Net Assets The OG unrestricted net assets increased by an operating income of $1,075,000. OG temporarily restricted net assets declined by $335,000, due primarily to the release of restricted funds for the purchase of the condo unit at Rivertown. OG permanently restricted net assets remained relatively unchanged at $4,105,000 at March 31, Foundation The Foundation continues its Statewide Comprehensive Campaign into the fifth year. The 2014 goal is to reach $17.5 million, with $2.8 million remaining to be raised in Restructurings and Repositionings Management is working with Village Boards, partners, and lenders to execute on program repositioning and capital restructuring designed to provide a stronger sustainability for the following Villages and eliminate advances by the OG. Perry Farm Village Management has engaged workout counsel and is working with the local lender to reach a level of funding commitments towards a solution that significantly reduces the future cash outlays from the PVM OG. Alpena Village LLC (AVLLC) Management is working with its co-general Partner Wellspring Lutheran Services (Wellspring) and local lender to refinance debt that came due on May 1, 2014 and extended on a short term basis. The Village of Redford In addition to the Redford Cottage conversion project, management continues building its transitional care program census, investing in planned demolition of selected vacant and obsolete buildings in the summer of 2014, assessing the investment in nursing and rehabilitation services in 2014/2015, and assessing the conversion of assisted living to affordable assisted living in 2015/2016.

6 Presbyterian Villages of Michigan 1st Quarter 2014 Management Discussion of Obligated Group May 15, 2014 Page 6 Facilities Advancement The Village of East Harbor, Chesterfield Township, Michigan The Village continued planning on the $500,000 investment in its transitional care program, financed through a loan and grant from the PVM Foundation. Planning and fund raising continues for the 11,000 square foot Rehabilitation and Wellness Center. The Village of Redford, Redford, Michigan The sale of the Redford OG cottages to a PVM affiliate on February 21, 2014 generated $1.62 million in proceeds for Redford s OG. The $16.1 million project will provide $1.1 million in paid development fees through 2015 and $900,000 in deferred development fees from cash flows, though it will increase operating losses to the Redford OG entity by the loss of approximately $300,000 in annual net operating income in Planning occurred in the 1st Quarter for the selective demolition of older assisted living in Capital Financing PVM Corporate renewed its Huntington National Bank (HNB) line of credit in May As previously described, the PVM non-og affiliate closed on LIHTC equity, MSDHA tax exempt bonds, and a FHA non-recourse loan to convert the Redford OG market rate cottages to affordable housing. Management is planning a thorough assessment of its existing and planned systemwide capital structure in 2014 with the objectives to increase debt capacity and liquidity, reposition and renovate many of PVM s existing Villages, and set up PVM for potential acquisitions and investments in future years. Questions are welcome and can be directed to: Roger L. Myers, President/CEO (248) , rmyers@pvm.org, Joanne Robinson, SVP/COO (248) , jrobinson@pvm.org, or, Brian W. Carnaghi, SVP/CFO/Treasurer (248) bcarnaghi@pvm.org. Attachments Internal Preliminary Financial Statements as of and for Three Months Then Ended March 31, 2014

7 CONSOLIDATED BALANCE SHEET MARCH 31 SUB (as of) 2013 (as of) V of R V of EH V of W PVM Corp PV North PVMF TOTAL INTER CO TOTAL TOTAL ASSETS Unrestricted Cash & Investments 3, , , , , ,589 Accounts Receivable - Resident, Net 1,501,154 1,438,607 5, ,945,424-2,945,424 2,441,487 Intercompany Receivables 13,532,784 4,615,213 10,854,712 1,064,192 3,975,608 34,042,509 (34,042,509) - - Other Receivables 184, , , ,552 Bond Payment Fund 255, , ,510 11, , , ,444 Related Party development fees receiva , , , ,156 Accrued Interest Receivable ,768 84,768-84,768 48,375 Other Assets - current Prepaid and Other Current Assets 88,331 99,151 58, ,977 1, , , ,121 Building & Equipment, Net of Accum De 6,285,728 13,148,144 4,684, , ,490 14,157 24,797,831-24,797,831 26,198,041 Debt Service Reserve 761, , ,883 44,006 2,320,585-2,320,585 2,332,914 Other Investments-Unrestricted 10,832,123 10,832,123 10,832,123 9,437,913 Other Investments-Restricted 500, ,995 4,260,264 5,420,534 5,420,534 5,348,789 Beneficial interests held by 3rd party 278, , , ,067 Pooled Income Mortgages 116, ,178 (116,178) - - Loans and Advances 1,102,575 1,102,575 1,102,575 1,861,235 Other Receivables - 1,474,658 1,474,658 1,474, ,362 Project Development costs 834, , ,208 2,053,346 Bond Issue and financing Costs - net 146, , ,209 99, , , ,147 Related Party Investments and other - 8,127, , ,798,204 8,798,204 6,387,663 Total Assets 9,042,409 29,832,057 10,570,990 23,204,805 2,166,377 21,080,961 95,897,599 (34,158,687) 61,738,912 60,206,201 LIABILITIES & NET ASSETS Accounts Payable 40,169 4, ,994 73, , ,946 3,330,914 Intercompany Accounts Payable 10,816,118-19,212,189 38,594 30,066,901 (30,066,901) - - Due to Related Organizations Short Term Indebtedness - 5,132,407 5,132,407 (4,697,560) 434, ,117 Current Portion of LT debt 245, , ,882 11, , , ,001 Accrued Payroll 191, ,225 66, ,795 40, , , ,642 Liability Under Life Leases - 2,026, ,026,447-2,026,447 2,056,806 Accrued Interest Payable 194, , , , , ,440 Other Current Liabilities 45,290 45,290 45,290 12,792 Pooled Income Fund Mortgages - 116, ,178 (116,178) - - Long Term Debt Net of Current 9,332,425 8,772,386 9,560,349 2,606,217 30,271, ,952 30,993,329 31,902,915 Other Liability and Split Interest Agreem - 46,170 46,170 46,170 94,773 Net Assets - Unrestricted (11,777,735) 18,291, ,677 (4,824,206) 2,166,377 11,469,567 15,818,730-15,818,730 12,912,275 Net Assets - Temporarily Restricted - 5,307,505 5,307,505 5,307,505 3,343,827 Net Assets - Restricted ,104,808 4,104,808-4,104,808 4,094,699 Total Liability & Net Assets 9,042,409 29,832,057 10,570,990 23,204,805 2,166,377 21,080,961 95,897,599 (34,158,687) 61,738,912 60,206, L:\Finance\financials\Mar 14\OG _MD\Mar 14 1

8 CONSOLIDATED OPERATING STATEMENT SUB 2014 YTD 2013 YTD V of R V of EH V of W PVM Corp PV North PVMF TOTAL INTER CO TOTAL TOTAL UNRESTRICTED OPERATING REVENUES Resident Revenue 2,927,243 4,101,682 1,325, ,354,004-8,354,004 8,205,279 Management Fees , , , ,528 Intercompany Transfers , ,397 (473,397) - - Development Fees , , ,000 - Other Revenue ,170 3, ,960 (65,568) 131, ,061 Interest and Dividend Income less fees (3,827) (3,262) (3,581) 1,598 78,303 69,231 (19,344) 49,887 71,851 Unrestricted Donations 15,530 15,530-15,530 (12,186) Gain (Loss) on Disposal of Assets 1,359,530 (323) (353) (16) 141,211 1,500,049 1,500, ,338 Intercompany Transfers (grants) 66, ,309 23, ,616 (197,616) - Change in investments in related orgs 110, , , ,383 Assets Released from Restriction - 420, , , ,682 Total Operating Revenues 4,349,020 4,206,406 1,344,378 1,204,815 3, ,512 11,763,921 (755,925) 11,007,996 9,324,936 OPERATING EXPENSES Departmental Expenses 2,750,394 3,131, ,563 1,235,195 8, ,530 8,182,708 (65,568) 8,117,140 8,151,688 Grants and Allocations 638, ,783 (522,138) 116, ,112 Bad Debts 188, ,101 1, , , ,714 Intercompany Transfers-Mgmt. Fee 168, ,137 74, , ,397 (473,397) - - Insurance 46,814 52,562 24,172 8, , , ,098 Interest 129, , ,472 23, ,889 (19,344) 410, ,948 Depreciation and Amortization 242, , ,852 30,055 2,848 1, , , ,130 Total Operating Expenses 3,526,814 3,955,152 1,270,964 1,296,666 11, ,977 10,851,007 (1,080,447) 9,770,560 9,745,690 Operating Gain (Loss) 822, ,254 73,414 (91,851) (7,644) (134,465) 912, ,522 1,237,436 (420,754) OTHER REVENUES (EXPENSES and EQUITY TRANSFERS) Net Unrealized Gain (Loss) on Investm (48,221) (48,221) - (48,221) 514,144 Foundation grants for capital , ,522 (324,522) - - Equity Transfers (113,455) - (113,455) - (113,455) - Increase (Decrease) in Unrestricted Ne 822, ,254 73, ,216 (7,644) (182,686) 1,075,760-1,075,760 93,390 Prior YTD Operating Gain (Loss) (462,775) 532,670 67,491 (303,354) 2,277 (440,255) (603,946) 183,192 (420,754) Improvement (Decline) from prior ye 1,284,981 (281,416) 5, ,503 (9,921) 305,790 1,516, ,330 1,658,190 % improvement <decline> 278% -53% 9% 70% Last Year Budgeted YTD Oper Gain/(Lo 1,323, ,796 89,227 (328,727) 8,596 (380,090) 1,144,363 L:\Finance\financials\Mar 14\OG _MD\Mar 14 2

9 CONSOLIDATED OPERATING STATEMENT SUB 2014 YTD 2013 YTD V of R V of EH V of W PVM Corp PV North PVMF TOTAL INTER CO TOTAL TOTAL TEMPORARILY RESTRICTED NET ASSETS Temporarily Restricted Contributions 90,412 90,412 90, ,727 Unappropriated Earnings - endowments (17,322) (17,322) (17,322) (15,006) Unappropriated Real Gains - endowments 17,795 17,795 17,795 15,002 Change in value - other (5,173) (5,173) (5,173) 73,324 Net assets released from restriction (420,468) (420,468) (420,468) (291,682) Increase (Decrease) in Temp Restricte (334,756) (334,756) - (334,756) 12,365 PERMANENTLY RESTRICTED NET ASSETS Temporarily Restricted Contributions Change in Value of outside trust Increase (Decrease) in Perm Restricte Increase (Decrease) in Net Assets 822, ,254 73, ,216 (7,644) (516,767) 741, , ,452 (1,295,315) Debt service YTD actual 191, , , , , ,594 CURRENT YEAR DSC ratio L:\Finance\financials\Mar 14\OG _MD\Mar 14 3

10 CONSOLIDATED KEY RATIOS STATEMENT 2014 YTD 2013 YTD V of R V of EH V of W PVM Corp PV North PVMF Subtotal TOTAL TOTAL Debt Service Coverage Ratio-Current Period Total Excess Gain/(Loss) 822, ,254 73, ,216 (7,644) (182,686) 1,075, ,075,760 93,390 Less: Equity transfers 113, , ,455 0 realized gains/losses Assets released from restriction Plus/Minus Unrealized Gain/Loss on In ,221 48, ,221 (514,144) Plus: Interest Expense 129, , ,472 23, ,889 (19,344) 410, ,948 Plus: Depreciation&Amort 242, , ,852 30,055 2,848 1, , , ,130 Total 1,194, , , ,887 (4,796) (132,551) 2,326,369 (19,344) 2,307, ,324 Interest Payments 129, , ,838 5, , , ,281 Principal Payments + other debt 61,469 72,693 62, , , , ,536 Total 191, , , , , , ,817 Total Ratio #DIV/0! w/o Redford gain Operating Margin Ratio, Excluding Realized Gains Total Operating Revenue 4,349,020 4,206,406 1,344,378 1,529,337 3, ,512 12,088,443 (1,080,447) 11,007,996 9,324,936 Gain (Loss) on disposal of assets (1,359,530) (141,211) (1,500,049) (1,500,049) (237,721) Less Total Operating Expenses, Including Interest, Depr & Special Pro 3,526,814 3,955,152 1,270,964 1,296,666 11, ,977 10,851,007 (1,080,447) 9,770,560 9,745,690 (537,324) 251,577 73, ,687 (7,644) (275,676) (262,613) 0 (262,613) (658,475) Total Operating Revenue 2,989,490 4,206,729 1,344,731 1,529,353 3, ,301 10,588,394 (1,080,447) 9,507,947 9,087,215 Total Ratio % 5.98% 5.49% 15.21% % % -2.48% -2.76% -7.25% Operating Ratio Total Operating Expenses 3,526,814 3,955,152 1,270,964 1,296,666 11, ,977 10,851,007 (1,080,447) 9,770,560 9,745,690 Less Depreciation & Amort 242, , ,852 30,055 2,848 1, , , ,130 Total Cash Expenses 3,283,890 3,695,701 1,149,112 1,266,611 8, ,063 10,191,963 (1,080,447) 9,111,516 9,087,560 Total Cash Revenues 2,989,490 4,206,729 1,344,731 1,529,353 3, ,301 10,588,394 (1,080,447) 9,507,947 9,087,215 Total Ratio % 87.85% 85.45% 82.82% % % 96.26% 95.83% % Days Cash on Hand Unrestricted Cash & Investments 3, , , , , ,589 Other Investments-Unrestricted and TR ,832,123 10,832, ,832,123 9,437,913 Bond Payment Fund 255, , ,510 11, , , ,444 Total 258, , , , ,874,731 12,049, ,049,045 10,618,946 Total Cash Expenses 3,283,890 3,695,701 1,149,112 1,266,611 8, ,063 10,191,963 (1,080,447) 9,111,516 9,087,560 Total Ratio EBIDA 1,194, , ,738-38,635-4, ,307 1,667,091 EBIDA YTD last year -80, , , ,929 4, , ,254 L:\Finance\financials\Mar 14\OG _MD\Mar 14 4

11 STATEMENT OF CASH FLOWS 2014 YTD 2013 YTD V of R V of EH V of W PVM Corp PV North PVMF TOTAL TOTAL CASH FLOWS FROM OPERATING ACTIVITIES Excess of support and revenue over expenses 822, ,254 73, ,216 (7,644) (516,767) 741,679 83,646 Adjustments to reconcile excess of support and - revenue over expenses to net cash from - operating activities: - Depreciation & Amortization 241, , ,011 25,398 2,848 1, ,295 1,092 Life lease reserves - (25) - (25) - Net realized and unrealized (gains) losses - - Change in value of assets held by third parties - - Endowment gifts Unrealized loss on pooled income funds Bad debt expense/equity transfers Loss (Gain) on sale of land, bldg, equip Gain on beneficial interest - - (Increase) decrease in assets: - - Accounts receivable - related organizations residents 154,576 (154,300) 40,488 (12,738) 28, ,464 - due from related party other 1,152 1,083 1,180 67, , ,528 (761) Prepaid expenses and other current assets 3,947 5,721 2,517 (627) (8,036) 3,522 - Beneficial interest in split interest agreements Liability under split interest agreements - - Accounts payable: - - Trade (66,887) (37,539) (34,332) (857,893) (21,031) (1,017,682) (40,172) Related organizations/grants payable Accrued payroll (113,770) (130,835) (36,930) (29,508) 2,135 (308,908) (8,736) Other current liabilities 129, , ,471 5, ,964 - Net cash provided by (used in) - operating activities 1,171, , ,819 (669,968) 169,497 (555,345) 729, ,533 - CASH FLOWS FROM INVESTING ACTIVITIES - (Purchase) sale of buildings and equipment (25,336) (140,545) (4,899) - (2) - (170,782) - Accum Depr on disposed assets 259, ,850 - Investment in affiliates Due from related organization (250,000) Change in life lease proceeds Change in pooled income mortgages Net cash provided by (used in) - operating and investing activities 1,406, , ,920 (669,968) 169,495 (555,345) 818, ,533 - CASH FLOWS FROM FINANCING ACTIVITIES - Contributions restricted for long term investment Due to related organization (1,221,413) 2,420 (101,512) 1,374,681 (169,495) (49,689) (165,008) (100,121) Pooled income mortgages ,559 Change in actuarial values Proceeds from issuance of debt (740,723) 775,000 34,277 - Payments on bonds payable, net of change in OID NET INCREASE(DECREASE) IN CASH & INVESTMEN 184, , ,408 (36,010) - 169, , ,971 PVM-HELD CASH & INVESTMENTS - 12/31/13 835, , , , ,965,030 17,942,159 PVM-HELD CASH & INVESTMENTS 1,020, ,237 1,052, , ,134,996 18,629,895 LESS RESTRICTED INVESTMENTS (1,017,190) (964,737) (1,051,393) (55,550) - (4,260,264) (7,349,134) 3, , ,874,732 11,280,761 L:\Finance\financials\Mar 14\OG _MD\Mar 14 5

12 RESIDENT STATISTICS Actual % of Actual % of (as of) Budget Prior Actual Budget Actual V of R V of EH V of W TOTAL TOTAL TOTAL TOTAL Nursing Beds n/a % Nursing Days 7,380 7,696 n/a 15,076 15,147 14, % 102.0% Nursing Occupancy 93.18% 95.01% n/a 94.11% 94.55% 92.25% 99.5% Nursing Payor Mix: Private Pay 12.80% 17.18% n/a 15.04% 24.36% 25.51% 61.7% Medicare 22.90% 29.52% n/a 26.28% 24.54% 21.35% 107.1% Medicaid + Hospice 51.78% 51.07% n/a 51.42% 46.35% 44.70% 110.9% Other 12.52% 2.23% n/a 7.27% 4.75% 8.44% 152.9% % % % % % Assisted Living Beds - total capacity % Assisted Living Beds - operational capacity % Assisted Living Days 4,641 6,650 3,052 14,343 14,535 15, % 90.7% Assisted Living Occupancy 92.08% 94.73% 84.78% 91.59% 92.82% 85.26% 98.7% Assisted Living Payor Mix: Private Pay 94.18% 95.94% 94.10% 94.98% 86.03% 92.06% Supplemental Assistance (Resident Discount) 5.82% 4.06% 5.90% 5.02% 13.97% 7.94% % % % % % % Apartments - total capacity % Apartments - operational capacity % Apartment Days 7,318 14,336 21,654 22,050 26, % 81.0% Apartments Occupancy 97.97% 77.32% 83.25% 84.78% 85.65% 98.2% Private Pay % % % % % Overall Occupancy - to capacity 92.75% 95.90% 78.54% 88.53% 89.67% 87.15% 98.7% Overall Payor Mix Private Pay 44.22% 69.33% 98.96% 73.51% 73.93% 78.61% Medicare 14.06% 10.49% 0.00% 7.76% 7.19% 5.50% Medicaid 31.79% 18.14% 0.00% 15.18% 13.57% 11.52% Other 7.69% 0.79% 0.00% 2.15% 1.39% 2.18% Supplemental Assistance (Resident Discount) 2.25% 1.25% 1.04% 1.41% 3.92% 2.19% % % % % % % L:\Finance\financials\Mar 14\OG _MD\Mar 14 6

13 DEBT SERVICE COVERAGE: ACTUAL VERSUS BUDGET YTD YTD YTD Audit Actual Budgeted Actual 12/31/13 3/31/14 3/31/14 3/31/13 Operating gain (loss) 1,266,662 1,237,436 1,546, ,754 Add (DeduAdd Depreciation 2,704, , , ,130 Add Interest Expense 1,721, , , ,948 Add release from temp restricted donations - incl above incl above Less temp restricted donations not incl above not incl above - not incl above Change in actuarial value - unrestricted (161,136) 0 Add Fnd grants for capital Less development fees earned but not paid 0 TOTAL NET REVENUE 5,531,546 2,307,025 2,658, ,324 Debt service to date 2,844, , , ,818 MAX ANNUAL DEBT SERVICE COVERAGE RATIO BUDGETED DSC RATIO (for entire year) Current year principal and interest 2,298,163 2,301,047 2,301,047 East Harbor Cottage Expansion HNB Construction Financing 11,208 53,551 53,551 Remainder of HNB $3.182 M MTI Obligation 118, , ,025 Rivertown PVM Corporate Guarantee (20% Method) 2,444 14,400 14,400 Alpena LLC PVM Corporate Guarantee (Budgeted 20% Method; Actual 100% Method) 319, , ,504 Interest Payments on East Harbor Pooled Income Fund mortgages 32,641 6,100 6,100 Perry Farm Development Co. PVM Corporate Guarantee (100% Method) 37,453 51,750 51,750 TOTAL 2,819,820 2,758,377 2,758,377 BOND COVENANT (Bond Documents) estimates max annual budgeted Tax-Exempt Bond Interest for 2014* 1,561,047 2,302,400 1,561,047 Tax-Exempt Bond Principal for ,000 incl above 740,000 Remainder of HNB $3.182 M MTI Obliga 178, , ,025 Pooled Income Fund Interest for ,100 6,100 6,100 EJNP guarantee (for calc only - not pd) 14,400 14,400 14,400 East Harbor Expansion 53,551 53,551 53,551 Alpena (for calc only - not pd) 153, , ,504 Perry Farm (for calc only - not pd) 51,750 51,750 51,750 total debt service for ,758,377 2,759,730 2,758,377 * includes $4,301 pd vs accrued interest expense 2,706,179 L:\Finance\financials\Mar 14\OG _MD\Mar 14 7

14 CONSOLIDATED OPERATING STATEMENT POSITIVE/(NEGATIVE) VARIANCES SUB 2014 YTD 2013 YTD V of R V of EH V of W PVM Corp PV North PVMF TOTAL INTER CO TOTAL TOTAL OPERATING REVENUES Resident Revenue (160,621) 115,462 (13,043) (58,202) - (58,202) (207,552) Management Fees (10,010) - - (10,010) - (10,010) (7,477) Intercompany Transfers , ,270 (9,270) - - Development Fees , ,000-9,000 - Other Revenue (1,750) ,442 (16,781) - (4,089) (65,568) (69,657) 68,551 Interest and Dividend Income less fees (4,202) (3,759) (4,078) (277) - (30,651) (42,967) (19,344) (62,311) (62,847) Unrestricted Donations ,530 3,530-3,530 (18,186) Gain (Loss) Loss on disposal of assets (260,150) (323) (353) (16) - 116,211 (144,631) - (144,631) 80,338 Intercompany Transfers (grants) (2,622) (28,786) (31,408) 31, Change in Actuarial Value - unrestricted , ,030-67, ,383 Assets released from restriction (165,655) (165,655) - (165,655) 79,349 Total Operating Revenues (429,345) 82,594 (17,474) 89,439 (16,781) (76,565) (368,132) (62,774) (430,906) 69,559 - OPERATING EXPENSES - Departmental Expenses 59,692 (134,303) 5, , , ,721 65, , ,753 Grants and Allocations , ,508 (109,467) 170,041 (21,877) Bad Debts (150,000) (125,000) (274,999) - (274,999) (94,841) Intercompany Transfers-Mgmt. Fee - - (1) ,270 9, Insurance (803) - - (476) - (476) (15,171) Interest (4) 7, , ,539 19,344 33,883 15,852 Depreciation 18,166 (11,101) (4,335) 6,002 (345) - 8,387-8,387 (16,229) Total Operating Expenses (72,010) (263,136) 1, , , ,683 (15,285) 121,398 (6,990) - Operating Gain (Loss) (501,355) (180,542) (15,813) 236,876 (16,240) 245,625 (231,449) (78,059) (309,508) 62,569 - OTHER REVENUES (EXPENSES) - Net Unrealized Gain (Loss) on Investments (unrestricted) - (48,221) (48,221) - (48,221) 514,144 Foundation grants for capital (78,059) - - (78,059) 78, Equity Transfers (113,455) - - (113,455) - (113,455) - Increase (Decrease) in Unrestricted Ne (501,355) (180,542) (15,813) 45,362 (16,240) 197,404 (471,184) - (471,184) 576,713 L:\Finance\financials\Mar 14\OG _MD\Mar 14 8

15 CONSOLIDATED OPERATING STATEMENT POSITIVE/(NEGATIVE) VARIANCES SUB 2014 YTD 2013 YTD V of R V of EH V of W PVM Corp PV North PVMF TOTAL INTER CO TOTAL TOTAL TEMPORARILY RESTRICTED NET ASSETS Temporarily Restricted Contributions 54,412 54,412 54, ,727 Unappropriated Earnings - endowments 1,033 1,033 1,033 6,132 Unappropriated Real Gains - endowments 17,795 17,795 17,795 15,002 Change in value - other (5,173) (5,173) (5,173) 73,324 Net assets released from restriction 165, , ,655 (79,212) Increase (Decrease) in Temp Restricte , , , ,973 PERMANENTLY RESTRICTED NET ASSETS Permanently Restricted Contributions (2,325) (2,325) (2,325) (2,303) Change in Value of outside trust Increase (Decrease) in Perm Restricte (2,325) (2,325) - (2,325) (2,303) Increase (Decrease) in Net Assets (501,355) (180,542) (15,813) 45,362 (16,240) 428,801 (239,787) - (239,787) 808,383 L:\Finance\financials\Mar 14\OG _MD\Mar 14 9