Notes & Assumptions to Pro Forma Statement of Assets,
Liabilities & Equities
The following notes and assumptions pertain to these pro forma statements:
1. The accounting method election is for accrual on the balance sheet statement to the
extent the following entries are made:
1.1. Accounts Receivable.
1.2. Prepaid Operating Expense.
1.3. Assets Limited As To Use (Amortization)
1.4. Accounts Payable
1.5. Accrued Payroll & Benefits Liability.
1.6. Current Interest Due.
1.7. Current Maturity Long-Term Debt.
2. Assets.
2.1. Current Assets.
2.1.1. Cash Operating Account. Reports the cash balance of funds held in the
operating account of the Owner. The pro forma financial assumes the cash
position of the Cash Operating Account to be equal to the Total Liabilities &
Equities less Assets Limited As To Use, Other/Long-Term Assets, Accounts
Receivable, Inventory and Prepaid Expense.
2.1.2. Accounts Receivable. Reports the credit to the cash account for accounts
receivable expenditures. The pro forma financial presentation empirically
assumes the Accounts Receivable line item to be equal to the gross revenues
reported for the following monthly period value on the Pro Forma Statement
of Operating Income & Expense line item.
2.1.3. Inventory. Reports the credit to the cash account for all expenditures of
inventory and supplies of the proposed Project. The pro forma financial
presentation assumes the Inventory line item to be equal to ten percent
(10.00%) of the sum of:
2.1.3.1.
Office Supplies line item reported on the statement entitled, “Pro
Forma General & Administrative Department Expense”.
2.1.3.2.
Supplies (ILF, ALCF and ALZ/ALCF) line item reported on the
statement entitled, “Pro Forma Activities Department Expense”.
2.1.3.3.
Continence Briefs, Medicines (non-prescription), Other Supplies
and Office Supplies line items reported on the statement entitled, “Pro
Forma Assisted Living Department Expense”.
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2.1.3.4.
Food Purchases, Beer/Wine/Liquor Purchases, Disposable
Products and Ingredients/Other line items reported on the statement
entitled, “Pro Forma Food Service Department Expense”.
2.1.3.5.
Cleaning Supplies & Chemicals and line items reported on the
statement entitled, “Pro Forma Housekeeping Department Expense”.
2.1.3.6.
Paint/Drywall Materials, Electrical Supplies, Plumbing Supplies
and HVAC Supplies line items reported on the statement entitled, “Pro
Forma Maintenance Department Expense”.
2.1.3.7.
Other Printing/Copying line item reported on the statement
entitled, “Pro Forma Marketing Department Expense”.
2.1.4. Prepaid Operating Expense. Reports the portion of fixed operating
expense that is prepaid. The pro forma financial presentation empirically
assumes this line item to be equal to 50% of the sum of the total annual
operating expenses listed below. The pro forma financial presentation
empirically assumes an accounting election wherein the total amount is
recorded on the first month of the annual reporting period and then reduced
by 1/12th for each subsequent month of the annual period. The basis for
reporting the Prepaid Operating Expense is the annual total of:
2.1.4.1.
Continuing Education, Dues/Subscriptions and Employee
Screening line items on the Pro Forma Statement of General &
Administrative Department Expense; and
2.1.4.2.
Training/Continuing Education line item on the Pro Forma
Statement of Assisted Living Department Expense; and
2.1.4.3.
Greasetrap Contract and Hood Cleaning/Powerwashing Contract
line items on the Pro Forma Statement of Dietary Department Expense;
and
2.1.4.4.
HVAC Service Contract, Plumbing Service Contract, Electrical
Service Contract and Fire/Sprinkler Service Contract line items on the
Pro Forma Statement of Maintenance Department Expense; and
2.1.4.5.
Advertising - Newspaper and Advertising - Periodicals line items
on the Pro Forma Statement of Marketing Department Expense; and
2.1.4.6.
Property Insurance and Business Liability Insurance line items on
the Pro Forma Statement of Fixed Operating Expense.
2.2. Assets Limited As To Use.
2.2.1. Operating Reserve Fund. Reports the sums held in cash reserve and
credited against the cash account as the reserve for operations. This reserve
is funded to be equal to one (1) fiscal quarter of operating expenses based
upon the Year 3 Operating Expense.
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2.2.2. Replacement Reserve Fund. Reports the sums held in cash reserve to
replace worn out capital assets and is equal to 25% of the straight-line
method depreciation expense reported by the proposed Project.
2.2.3. Debt Service Reserve Fund. Reports the sums held as a long-term debt
service reserve in favor of the lender.
2.2.4. Tenant Deposits. Reports the application fee for residency in the proposed
Project being charged to each tenant and held in reserve.
2.3. Other/Long-Term Assets.
2.3.1. Plant & Property (recorded at cost). Reports the plant and property capital
expenditures and is empirically assumed to be equal to the sum of the SubTotal Direct Development Expense of the proposed Project as set forth in the
Pro Forma Statement of Project Sources & Uses of Funds.
2.3.2. Accumulated Depreciation. Reports the cumulative depreciation expense
of the proposed Project as set forth on the Pro Forma Statement of NonOperating Expenses.
2.3.3. Amortization (L-T Finance & Start-Up Expense). Reports the remaining
balance of amortized long-term finance expense and start-up expense of the
proposed Project per the Pro Forma Statement of Non-Operating Expense
and the Pro Forma Statement of Project Sources & Uses of Funds where the
following line items are empirically assumed to be amortized over a 10-year
period:
2.3.3.1.
Feasibility Studies, OR Services & Related Fees; and
2.3.3.2.
Legal/Organizational Fees & Expense; and
2.3.3.3.
Loan Documentation/Closing Costs; and
2.3.3.4.
Construction Phase Accounting/Auditing; and
2.3.3.5.
Interim Lender's Inspections/Costs; and
2.3.3.6.
Interim Loan Interest Charges; and
2.3.3.7.
Interim Loan Origination Fees/Points; and
2.3.3.8.
Syndication/Offering Fees & Expenses; and
2.3.3.9.
Permanent Loan Origination Fees/Points; and
2.3.3.10.
Pre-Opening Working Capital & Marketing; and
2.3.3.11.
Title Insurance/Stamps/Recording.
3. Liabilities.
3.1. Current Liabilities. The following notes and assumptions are provided:
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3.1.1. Accounts Payable. The pro forma financial presentation empirically
assumes this line item to be equal to the sum of the current line item
expenses below:
3.1.1.1.
Property Management Fees - Commercial, Property Management
Fees - Senior Housing, Accounting, Radio/Beeper Rental and
Reimbursable Expense - Property Management as reported on the Pro
Forma Statement of General & Administrative Department Expense;
and
3.1.1.2.
ALCF Contract Services , ILF Contract Services and ALZ
Contract Services as reported on the Pro Forma Statement of Activities
Department Expense; and
3.1.1.3.
Miscellaneous as reported on the Pro Forma Statement of Assisted
Living Department Expense; and
3.1.1.4.
Food Purchases, Beer/Wine/Liquor Purchases, Disposable
Products, Greasetrap Contract, Hood Cleaning/Powerwashing Contract,
Dietary Consulting, Other Purchases and Ingredients/Other as reported
on the Pro Forma Statement of Dietary Department Expense; and
3.1.1.5.
Cleaning Supplies & Chemicals, Laundry Supplies & Chemicals,
Contract Dry Cleaning Services and Other/Miscellaneous as reported
on the Pro Forma Statement of Housekeeping Department Expense;
and
3.1.1.6.
Extermination, Plumbing Service Contract, Electrical Service
Contract, Fire/Sprinkler Service Contract, Grounds Contract, Trash
Removal, Paint/Drywall Contracting Services, Window Washing
Service and Medical Waste Removal as reported on the Pro Forma
Statement of Maintenance Department Expense; and
3.1.1.7.
Advertising - Newspaper, Advertising - Periodicals, Advertising Mailer Printing, Advertising - Radio, Advertising - Cable TV,
Advertising - Internet Banner, Advertising - Mailer Distribution and
Bonus - ILF Contracts as reported on the Pro Forma Statement of
Marketing Department Expense; and
3.1.1.8.
Vehicle Rent/Lease, Tires/Wheels and Limo/Car Rentals as
reported on the Pro Forma Statement of Transportation Department
Expense; and
3.1.1.9.
Property Insurance, Business Liability Insurance, Natural/Propane
Gas, Electricity and Water/Sewer as reported on the Pro Forma
Statement of Fixed Operating Expense;.
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3.1.2. Accrued Payroll & Benefits. Reports the accrued payroll and benefits
liability of the proposed Project at the empirically assumed 15 days forward
basis.
3.1.3. Current Interest Due on Notes/Loans. Reports the sums due in the
following period for interest on the long-term debt of the proposed Project.
3.1.4. Current Maturity - Long Term Debt.. Reports the sums due as principle
payment on the long-term debt of the proposed Project.
4. Other/Long-Term Liabilities & Equities.
4.1. Long-Term Debt (Less Current Maturity). Reports the outstanding balance of
the indebtedness of the proposed Project including any required bridge loan,
construction loan and/or permanent loan. Principal payments are in accordance
with those recorded on the Pro Forma Statement of Non-Operating Expense and
reductions made on this statement as a result of the application of Syndicate PreSales and/or Entry Fees received.
4.2. Paid-In Capital & Owner's Equity. Reports the additional paid in capital
expensed in the capital structure of the proposed development program once the
Construction Loan is closed. All capital expenditures previous to this point in
time are dealt with as reimbursements at closing.
4.3. Conditional Liability - Tenant Deposit Refunds. Reports the sums held as
conditional refunds and is empirically assumed to be equal to the total Tenant
Deposits line item on this schedule.
4.4. Subordinated Financing/Mezzanine Loan. Reports the net entry fee interest sales
and net gain recorded from the pre-sales of the Syndication.
4.5. Earned Operating Surplus (Loss). Reports the cumulative Net Income of the
proposed Project as set forth on the Pro Forma Statement of Operating Income &
Expense.
Pro Forma Statement of Assets, Liabilities & Equities
The following spreadsheets provide detail for the first five (5) years of operations
pertaining to the future assets, liabilities and equities of the proposed Project.
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