Health lease investor presentation july 2012

HealthLease Properties REIT

Forward-Looking Statements

This presentation contains forward-looking statements which reflect management’s expectations regarding objectives, plans, goals,strategies, future growth, results of operations, performance and business prospects and opportunities of the REIT. The words “plans”,“expects”, “does not expect”, “scheduled”, “estimates”, “intends”, “anticipates”, “does not anticipate”, “projects”, “believes” or variationsof such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “might”,“occur”, “be achieved” or “continue” and similar expressions identify forward-looking statements. Some of the specific forward-lookingstatements in this presentation include, but are not limited to, statements with respect to the following: the intention of the REIT to paystable and growing distributions; the ability of the REIT to execute its growth strategies; the forecasted financial results of the REIT for theperiods set out in the financial forecast section of this presentation and the REIT’s prospectus; the expected tax treatment of the REIT andof the REIT’s distributions to Unitholders; and the expected seniors housing and care industry and demographic trends. Forward-lookingstatements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of theREIT as of the date of this presentation, are inherently subject to significant business, economic and competitive uncertainties andcontingencies. The REIT’s estimates, beliefs and assumptions, which may prove to be incorrect, include the various assumptions set forthherein, including, but not limited to, the REIT’s future growth potential, results of operations, future prospects and opportunities, thedemographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, thetax laws as currently in effect remaining unchanged, the continual availability of capital and the current economic conditions remainingunchanged. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance onthese statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of futureperformance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance orresults will be achieved. A number of factors could cause actual results to differ materially from the results discussed in theforward-looking statements, including, but not limited to, the factors discussed under the “Risk Factors” section of the REIT’s prospectus.These forward-looking statements are made as of the date of this presentation and, except as expressly required by applicable law, theREIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, futureevents or otherwise.

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High-quality seniors housing and care facilitiesUNDER

triple-net leasesTO

experienced tenant operators

Unique, cross-border, seniors housing and care investment opportunity

15 U.S. and Canadian properties 1,931 beds/suites

FOCUSED ON

need-driven care skilled nursing, long-term care and assisted living

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Beverly Centre - Lake MidnaporeCalgary, Alberta


Portfolio of high-quality facilities in the U.S. and Canada

focused on need-driven care

Favourable demographicsand industry dynamics

Triple-net lease structureproviding stable cash flows

Proven and de-riskedpre-leased development model

offering measured growth

Leading regional tenant operatorswith high-quality payor sources and

robust occupancies

Attractive investmentand leverage metrics

Investment Highlights

Experienced and aligned management team and board

4


Growing Healthcare Industry

17.4%of GDP

11.7%

Growth in healthcare spending expected to outpace broader economy

of GDP

4.2%Growth in 2011

6.5%CAGR

(2005 - 2010)

U.S.

$2.8 Trillion $193 BillionCanada

National Healthcare Spending

HIGHEST HEALTHCARE SPENDPER-CAPITA GLOBALLY

3RD HIGHEST HEALTHCARE SPENDPER-CAPITA GLOBALLY

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Seniors Housing and Care - Spectrum of Care

REAL ESTATE COMPONENT SERVICES COMPONENT

Shelter Activities, Recreation

Transport, Laundry

Meals Care Services Short-Term Post Acute Care

Long-Term Chronic Care

Independent Living Facilities (ILFs)

Assisted Living Facilities (ALFs)

Skilled Nursing Facilities (SNFs) / Long-Term Care Facilities (LTCs)

Continuing Care Retirement Communities (CCRCs)

LOW ACUITY

HIGH ACUITY

PRIVATE PAY GOVERNMENT PAY

>90% of the REIT’s portfolio is focused on need-driven care

6


Seniors Housing and Care

Revenue Stability• Need-driven services• Stable occupancy

(historical occupancy ~90%)• Favourable funding sources

Barriers to Entry

Cost-Effective Care Alternative

Ownership Fragmentation

Supply/Demand Imbalance

By 2031, seniors population expected to reach

73.3MU.S.

9.6MCanada

70% of U.S. seniors will require some type of long-term care

Favourable Industry Dynamics

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>40% of U.S. seniorswill need care in anursing home


TOTAL U.S. POPULATION >65(M) TOTAL CANADIAN POPULATION >65(M)

Demographics Driving Demand

Aging population and increasing life expectancy

Changing family dynamics

Changes in consumer preference

40.246.8

56.665.7

73.3

% OF TOTAL POPULATION

4.85.8

7.1

9.68.4

% OF TOTAL POPULATION

Seniors population growing 3X FASTER than overall population

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13%14%

16%18% 20%

14%16%

18%21%

23%


Significant Supply/Demand Imbalance

U.S. Current supply: 15,622 SNFstotaling 1.7 million beds

Number of facilities declined by 5% (2001 to 2011)

Annual new construction starts represent 0.3% of existing supply (since 2008)

Number of facilities not keeping pace with seniors population growth

CanadaCurrent supply: 7,951 facilities totaling 390,600 suites

Current LTC waiting list:

• Ontario: >20,000 beds, representing~26% of current bed stock

• Alberta: 1,700 beds, representing~11% of current bed stock

>315,000new LTC & ALF beds/suites needed

(next 20 years)new construction needed

(next 35 years)

>US$400B

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10

Well-positioned to capitalize on expected growth in

seniors housing and care


Miller’s Merry Manor of MarionMarion, Indiana

HealthLease Properties REITHealthLease Properties REIT

Business Model

High-Quality Facilities

Focused on Need-Driven Care

Long-Term Triple-Net Leases

Leading Regional Tenant Operators with High-Quality Pay Sources

and Robust Occupancies

LEASEDUNDER

TO

11HealthLease Properties REIT

Valleyview Care CentreMedicine Hat, Alberta

Harmony Court Care CentreBurnaby, British Columbia

Avalon Springs Health CampusValparaiso, Indiana


High-Quality Portfolio

15 properties 1,931 beds/suites

Hotel-Like Design and Hospitality-Inspired Amenities

Current and Next Generation™ Facilities

High-Quality Construction

Quality assets drive strong margins for tenant operators

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Average Age:

8 years(including major renovations)

Private Rooms:

~70%

72%High-QualityOccupancy Payor Mix

(non-Medicaid)

2.0xPortfolio EBITDARto Rent Coverage(weighted average)

88.4%Portfolio

Occupancy (weighted average)


6 properties in Canadatotaling 1,002 beds/suites acquired from Northern Properties REIT

• Owned by NPR since 2006

• Stable NOI: CAGR of 1.8% (since 2007)

Initial Portfolio

9 properties in the U.S.totaling 929 beds/suites acquired from Mainstreet

• 6 properties (654 beds/suites)

• 3 pre-leased Next Generation™development properties (275 beds/suites)

BEDS/SUITES SNF/LTC ALF/ILF Total

U.S. 754 175 929

Canada 572 430 1,002

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~$265M appraised value(inclusive of U.S. portfolio premium of 5.3%)


Key Portfolio Statistics

BEDS/SUITES BY TYPE OF SERVICE PROVIDED

7%ILF134

69%SNF/LTC1,326

24%ALF471

RENTS BY GEOGRAPHY1

9%British Columbia

34%Indiana

6%Illinois

51%Alberta

1. Based on contractual rent for 2013.

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Quality assets drive strong margins for tenant operatorsNeed-driven care in diverse geographies

HealthLease Properties REIT 15HealthLease Properties REIT

Beverly Centre - Glenmore Calgary, Alberta



Superior Finishes

Hotel-Like Design, Hospitality-Inspired Amenities




Spacious Private Rooms and Baths


Columbia Assisted LivingLethbridge, Alberta

Marion Rehabilitation and Assisted Living Marion, Indiana




Large Common Areas and Social Destinations

Beverly Centre - Glenmore Calgary, Alberta

Harmony Court Care Centre Burnaby, British Columbia



0%

17.4%

0% 1.5%

81.1%


Tenant operatorsassume operational risk

• Operators pay all operating expenses and most capital expenditures• Fixed rent escalators1

• Corporate or personal guarantees (with respect to most leases)• Significant landlord rights and remedies• Regular tenant reporting requirements

1. Other than the lease in respect of Highland Manor Health and Living.

Weighted average lease maturity of 13.5 years

0% 0% 0% 0% 0% 0% 0% 0% 0%

PERCENTAGE OF PORTFOLIO RENTAL REVENUE MATURING IN A PARTICULAR YEAR

+

18


Leading Regional Tenant Operators

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Financially strong

Operate in multiple states and provinces

Local market knowledge

Proven track records

Emphasis on high-quality patient care

$285M

2.0x

88.4%

Consolidated annual EBITDAR

Portfolio EBITDAR to rent coverage (weighted average)

Portfolio occupancy (weighted average)

EBITDAR coverage compares favourably to industry average


Leading Regional Tenant Operators

OPERATOR NUMBER OFFACILITIES MANAGED

NUMBER OF BEDS/ SUITES MANAGED

GEOGRAPHIC FOOTPRINT % OF 2013CONTRACTUAL RENT

AgeCare 13 >1,000 Western Canada 60.0%

Life Care Services LLC1 >100 >29,000 Continental U.S. 6.6%

Sprenger Health Systems 11 >1,600 Midwest U.S. 6.3%

Platinum Health Care 29 3,335 Midwest U.S. 6.0%

Covenant Care >50 5,787 Midwest & Western U.S. 5.5%

Miller’s Health Systems 32 3,369 Indiana 5.3%

Trilogy Health Services 67 >7,200 Midwest U.S. 4.9%

Magnolia Health Systems 31 >2,800 Indiana 4.2%

MS Senior I LLC2 1 52 Indiana 1.2%

Total >334 >54,143 100.0%

>200 years combined operating history

1. An entity that is owned, 50% by an affiliate of Life Care Services, LLC, which is the managing member, and 50% by an affiliate of Mainstreet. 2. An affiliate of Mainstreet. The Partnership is in negotiations to lease Highland Manor Health and Living, which is currently operated by Mainstreet Senior I, LLC, to an unrelated third-party operator.

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U.S.

MedicaidState funding assistance for basic care services

Long-term stayIndiana rates average $145 per day

Private InsuranceReimbursement rates are negotiated with insurers

based on patient level of care and local market rates

MedicareFederal health insurance program

Estimated average 2013 Medicare Rates:approximately $455 per day

Private FundsResidents privately pay full rate as determined

by level of care and market need

Funding Environment

Triple-net lease structure and experienced operators mitigates funding variabilityInitially, 60% of 2013 contractual rent generated in Canada

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Canada

Alberta and British ColumbiaGoverned by regional health authorities

Cost shared between province and resident

HealthLease Properties REITHealthLease Properties REIT

Growth Strategy

Organic Growth• Rent step-ups• Financing opportunities• Tenant retention and growth

Construction of Pre-Leased Development Facilities

Strategic and Accretive Acquisitions • Focus on high-quality

facilities and operators

+ +


Avalon Springs Health CampusValparaiso, Indiana Mainstreet Next GenerationTM Campus

Beverly Centre - Lake Midnapore Calgary, Alberta


De-Risked, Pre-Leased Development Model

• Pre-leased prior to construction (limited lease-up risk)

• Bonded contractors

• Guaranteed maximum price construction contracts

• Binding timelines for project completion (~9 to 12 months)

• Rent commences upon certificate of occupancy

• Internal development activity limited to 20% of GBV

Pipeline of external properties with a value of >US$150M10 properties, representing 1,000 bed/suites over the next 24 months

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Mitigates normal risks associated with development

Next Generation™ properties



80% Occupancy

2.0x EBITDAR to rent coverage

On-time: Average construction time of 10 months

On-budget: Within 1% of total cost

Track Record of Pre-Leased Development

Successfully financed, developed and leased

9 facilities(including 5 of the initial properties)

representing a total value of

~US$130M(since 2008)

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1. Represents results of Lafeyette and Noblesville, two stabilized properties developed by Mainstreet. These properties do not form part of the Initial Properties as they are expected to be purchased by the tenant operator.

Development / Construction

Property Performance1


The Legacy at Creasy SpringsLafayette, Indiana



Development Agreement• REIT has preferential right to develop internally

on all Mainstreet development activity

• REIT reserves right to purchase non-internally developed projects

• Mainstreet to take back equity(pro rata to a max of 40%)

• REIT may undertake third-party development opportunities

• 5-year term (with renewals, subject to no material default)

Asset Management Agreement• 3% of REIT gross revenue

• 5-year term (with renewal, subject tono material default)

• Internalize at no cost to REIT at $500 million market cap

Non-Competition Agreement• Restricted from, developing, acquiring or

investing in senior housing properties, except as per Development Agreement, or create another REIT/seniors housing pubco in U.S./Canada

Asset Manager and Developer

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Principals with over 35 years experience

focused on seniors housing and care properties


Paul Ezekiel “Zeke” Turner Chairman andChief Executive Officer

Adlai Chester, CPAChief Financial Officer

V. Edward GroggPresident, Mainstreet

Senior Management

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Retaining ~18% ownership position in REIT

Increased ownership through equity consideration from external development


David BeirnesPrincipal, CBG Seniors Realty AdvisorsFormer CFO, Retirement Residences REIT

Aida TammerDirector, Tricon Capital Group

James BremnerPresident, Healthcare of Duke Realty Corporation

Richard Turner President & CEO, TitanStar Investment Group Trustee, Pure Industrial Real Estate TrustFormer Trustee, Sunrise Senior Living REIT

Neil LabattePresident, Global Dimension CapitalFormer CEO, Legacy Hotels REIT

Michael SalterCFO, Medical Facilities Corporation

Paul Ezekiel “Zeke” TurnerChairman and CEO, HealthLease Properties REIT

Founder and CEO, Mainstreet

Board of Trustees

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Experience inMajorityIndependent

Real estate capital marketsHealthcare & seniors housing and careU.S. & Canada

HealthLease Properties REIT 28

FACILITY LEASE WITH OPERATOR EXPECTED COMPLETION OF CONSTRUCTION AND

MAINSTREETDEVELOPMENT LEASE

MATURITY

CONSTRUCTIONCONTRACT

DURATION OF DEVELOPMENT/

LEASE PAYMENTS1

(months)

MAINSTREETDEVELOPMENT

LEASE

The Bridge Care Suites, Illinois

Platinum Health Care, LLC

February 2013 Fixed price 8 $572,193

Mishawaka, Indiana

Sprenger Health Systems

December 2012 Fixed price 6 $341,768

Wabash, Indiana

Life Care Services LLC2 December 2012 Fixed price 6 $333,039

Total $1,247,000

1. Assumes Mainstreet Development Lease payments commence in June 2012 and end the month leading up to the issuance of a Certificate of Occupancy.2. An entity that is owned, 50% by an affiliate of Life Care Services, LLC, which is the managing member, and 50% by an affiliate of Mainstreet.

Mainstreet has pledged certain class B units and their related distributions until tenant occupancy

Mainstreet Development Lease


Debt Strategy

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DEBT MATURITY

NO DEBT MATURITIES UNTIL 2016

Chart represents maturities on debt outstanding as at December 31, 2011 pro forma the IPO. Additional principal payments (not included in above chart) on maturity for anticipated debt incurred in connection with the three preleased development properties is $18.8 million for 2016.

SUMMARY

Debt/GBVat Closing of IPO 52%Debt/GBV(upon completion of pre-leased properties)

55%

Allowed Amountper Indenture

Up to 65%(incl. converts)

HIGHLIGHTS

Weighted Average Rate 5.04%

Average Maturity (no maturities until 2016) 8.6 years

Term Loan Facility US$25M

0.0% 0.0% 0.0% 0.0% 34.0% 66.0%% OF TOTALMATURITIES

(MILLIONS)


Proven and de-risked pre-leased development modeloffering measured growth

Favourable demographicsand industry dynamics

Experienced and alignedmanagement team and board

Attractive investmentand leverage metrics

Investment Highlights

High-Quality Facilities

Focused on Need-Driven Care


Leading Regional Tenant Operators with High-Quality Pay Sources

and Robust Occupancies

LEASEDUNDER

TO

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Health & Medicine

Health lease investor presentation july 2012