EFTA Document EFTA01468869

Subject: Re: Long Equity: Consider $1mm Brookdale Senior Living on macro/- micro tailwinds (-30% upside to $42 tgt) [C] From: jeffrey E. <[email protected]> Date: Tue, 20 May 2014 09:41:53 -0400 To: Tazia Smith Cc: Paul Morris Vinit Sahni Nav Gupta Richard Kahn Vahe Stepanian i want to play a stronger rupee 9 month horizon On Tue, May 20, 2014 at 9:33 AM, Tazia Smith < > wrote: 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). Ql 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 EFTA01468869 Emeritus' portfolio, merger approvals, housing market, interest rate sensitivity CFFO = cash flow from operations https://ger.gm.cib.intranet.db.com/ger/document/pdf/0900b8c088436c25.pdf Brookdale Senior Living 12mo Price History as of 5/19/14 Used with permission of Bloomberg Finance LP Tazia Smith Director I Key Client Partners - US DB Securities Inc Deutsche Asset & Wealth Management 345 Park Avenue, 10154-0004 New York, NY, USA Tel. + Fax +1 Mobile +1 Email 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. please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for EFTA01468870 the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to [email protected], and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved EFTA01468871