“Senior New Europe” Project Development Logic.

Executive summary

Senior Group tends to invest 400 Mln EURO into construction of a new network of live-in aged care facilities in Eastern Europe to meet the demand created by the rapidly expanding population over 65 years old and the lack of modernization of existing residences in the last 25 years rendering them unable to meet that demand.

Eastern Europe is an attractive region for expansion not only due to growing unmet demand, but also thanks to the recent and ongoing legislative and regulatory changes lowering barriers to foreign investment into senior care in these countries.

We plan to have 10 000 beds operational by 2021 with the first phase of 300 beds starting to generate revenue in January 2017. This is a small fraction of the estimated demand of 250 000 new beds through 2030, and we expect to reach 90% and higher occupancy rates in 20 months from the start of operations.

We plan to do both greenfield development as well as acquisition and modernisation of existing residencies. We expect the EBITDA of operations to be close to the 20% level. There is an exit strategy with the 7-10 years horizon.

Senior Group has successfully built and is currently operating large-scale aged care facilities in the Baltics, Poland, and Russia. We have the necessary expertise and experience. We are developing this project in continued partnership with the Almage Group (France). We envision EBRD participation in the project as well, both as a source of funds and additional know-how.