From: Tazia Smith <

From: Tazia Smith < To: jeevacationggmail.com Cc: Paul Morris Vinit Sahni < Vahe Stepanian ', Nav Gupta Subject: Long Equity: Consider Slmm Brookdale Senior Living on macro/micro tailwinds (-30% upside to S42 tgt) [C] Date: Tue, 20 May 2014 13:33:19 +0000 Inline-Images: unnamed; unnamed(1); unnamed(2) Classification: Confidential Jeffrey - Focusing on listed/exchange traded opportunities: Consider buying $1-2mm position in Brookdale Senior Living (BKD) Macro Trend: Baby boomers retiring and aging population Micro: Merger tailwinds, pro-forma valuation upside and broader investor demand Brookdale Senior Living (BKD) Closed 5/19: $32.06 ($32.40 last) $3.8bn mkt cap (trades 1.3mm shs a day avg) $42 DB 12mo price target (implies —30% upside) vs. 37.71 cons (-16%) Catalyst: merger proxy filing expected this month (Brookdale bid to acquire Emeritus, ESC ($1.4bn mkt cap), in late Feb for $2.8bn in stock; est merger completion is 3Q14) Valuation: $42 = 12x proforma BKD+ESC 2015 CFFO/sh of $3.40 a. Strong Industry Fndamentals b. BKD's market leadership (10% pro forma market share and attractive national footprint + management team and corporate infrastructure lending itself to leverage/scale) c. Mid-teen's growth characteristics with organic 6-8% and accretion from the ESC acquisition adding 8-10% for the next 2- 3 years (ests = +18% in 2015 and + 27% in 2016). Q1 earnings report no 5/8, BKD posted its third consecutive quarter of double digit CFFO growth d. Current Valuation: 9.1x pro-forma 2015 CFFO/sh and just shy of 10x on a stand alone basis (8.9x pro-forma 2015 EV/EBITDA, 11.6x stand-alone) e. Market Cap — pro-forma will be greater than $5bn, expected to deliver broader investor interest Key risks include: competition, new supply, capex requirements to upgrade Emeritus' portfolio, merger approvals, housing market, interest rate sensitivity CFFO = cash flow from operations https://gergm.cib.intranet.db.com/ger/document/pdf/0900b8c088436c25.pdf EFTA01203912 Brookdale Senior Living 12mo Price History as of 5/19/14 10 BKD US E ui BKD US S 132.40 -.34 ---- N32.34!32.41N 1x2 At 9:31 Vol 16,693 032.16N H32.49', L32.16N Val 539 647 99 Save As Wlhakils - rftEdit t Event 0 Security/St 6M YTD 1Y SY Max Daily • 1M ill Line Pinimpare pl === ta Security/Study v4 05/20/2013 05/20/2014 Last Price 3D l + Track .4! Annotate News O Zoom • Last Price 1 32.40 . T High on 04/03/14 34.25 -0-Average 28.8134 I Low on 09/04/13 24.96 Tri 10M is Volume 16693 •fr: 0-34.00 Jun Sep 2013 Dec Mar 2014 Used with permission of Bloomberg Finance LP Tazia Smith Director I Key Client Partners - US DB Securities Inc Deutsche Asset 8 Wealth Management 345 Park Avenue, 10154-0004 New York. NY. USA Tel. +1(212)454-2889 Fax +1 646 257-3131 Mobile Email Passiblchrgeferolt This communication may contain confidential and/or privileged information. If you are not the intended recipient (or have received this communication in error) please notify the sender immediately and destroy this communication. Any unauthorized copying, disclosure or distribution of the material in this communication is strictly forbidden. Deutsche Bank does not render legal or tax advice, and the information contained in this communication should not be regarded as such. EFTA01203913