10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number:  000-54685

CNL Healthcare Properties, Inc.

(Exact name of registrant as specified in its charter)

Maryland	27-2876363
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
CNL Center at City Commons 450 South Orange Avenue Orlando, Florida	32801
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (407) 650-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o    No  x

The number of shares of common stock of the registrant outstanding as of November 11, 2015 was 173,657,093.

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

INDEX

	Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Information (unaudited):
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Statements of Operations	3
Condensed Consolidated Statements of Comprehensive Loss	4
Condensed Consolidated Statements of Stockholders’ Equity and Redeemable Noncontrolling Interest	5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures about Market Risk	52
Item 4. Controls and Procedures	53
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	54
Item 1A. Risk Factors	54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3. Defaults Upon Senior Securities	54
Item 4. Mine Safety Disclosures	54
Item 5. Other Information	54
Item 6. Exhibits	54
Signatures	55
Exhibits	56

Item 1. Financial Statements

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)

	September 30,			December 31,
	2015			2014
ASSETS
Real estate assets:
Real estate investment properties, net (including VIEs $192,663 and $174,449, respectively)	$	2,251,200		$	1,657,500
Real estate under development, including land (including VIEs $67,350 and $47,153, respectively)		69,478			47,153
Total real estate assets, net		2,320,678			1,704,653
Intangibles, net (including VIEs $24,426 and $25,519, respectively)		163,538			140,264
Cash (including VIEs $1,462 and $6,280, respectively)		51,185			91,355
Other assets (including VIEs $862 and $511, respectively)		22,024			19,738
Deferred rent and lease incentives (including VIEs $6,330 and $2,978, respectively)		21,244			8,240
Loan costs, net (including VIEs $2,497 and $2,300, respectively)		12,604			14,012
Restricted cash (including VIEs $2,053 and $5,304, respectively)		8,816			10,753
Total assets	$	2,600,089		$	1,989,015
LIABILITIES AND EQUITY
Liabilities:
Mortgages and other notes payable, net (including VIEs $172,537 and $137,754, respectively)	$	865,263		$	853,561
Credit facilities		390,000			206,403
Accounts payable and accrued liabilities (including VIEs $10,351 and $10,268, respectively)		39,862			26,444
Other liabilities (including VIEs $4,551 and $4,949, respectively)		37,880			27,448
Due to related parties (including VIEs $171 and $219, respectively)		5,620			2,999
Total liabilities		1,338,625			1,116,855
Commitments and contingencies (Note 14)
Redeemable noncontrolling interest		568			568
Stockholders' equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued or outstanding	―			―
Excess shares, $0.01 par value per share, 300,000 shares authorized; none issued or outstanding	―			―
Common stock, $0.01 par value per share, 1,120,000 shares authorized, 172,682 and 116,672 shares issued, and 171,575 and 116,256 shares outstanding, respectively		1,715			1,163
Capital in excess of par value		1,501,420			1,007,326
Accumulated loss		(133,725	)		(83,091	)
Accumulated distributions		(94,233	)		(49,342	)
Accumulated other comprehensive loss		(14,649	)		(4,864	)
Total stockholders' equity		1,260,528			871,192
Noncontrolling interest		368			400
Total equity		1,261,464			872,160
Total liabilities and equity	$	2,600,089		$	1,989,015
The abbreviation VIEs above means variable interest entities.

See accompanying notes to condensed consolidated financial statements

2

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Revenues:
Rental income from operating leases	$	28,435		$	13,393		$	72,306		$	33,478
Resident fees and services		47,505			34,162			129,262			86,636
Tenant reimbursement income		3,964			1,957			10,845			4,787
Interest income on note receivable from related party	―				148		―				498
Total revenues		79,904			49,660			212,413			125,399
Operating expenses:
Property operating expenses		39,923			25,716			105,088			64,703
General and administrative		2,239			1,997			6,823			5,689
Acquisition fees and expenses		9,073			3,729			15,939			15,726
Asset management fees		5,085			2,753			13,426			5,572
Property management fees		3,923			2,358			10,539			6,118
Contingent purchase price consideration adjustment		(268	)		1,800			(589	)		479
Impairment provision	―			―				4,661		―
Loss on lease terminations	―			―				863		―
Depreciation and amortization		27,854			17,550			75,147			44,111
Total operating expenses		87,829			55,903			231,897			142,398
Operating loss		(7,925	)		(6,243	)		(19,484	)		(16,999	)
Other income (expense):
Interest and other income		28			7			138			27
Interest expense and loan cost amortization		(10,990	)		(8,549	)		(30,369	)		(21,654	)
Equity in loss of unconsolidated entities		(151	)		(180	)		(656	)		(1,193	)
Gain on purchase of controlling interest of investment in unconsolidated entity	―				2,798		―				2,798
Total other expense		(11,113	)		(5,924	)		(30,887	)		(20,022	)
Loss before income taxes		(19,038	)		(12,167	)		(50,371	)		(37,021	)
Income tax expense		(193	)		(37	)		(279	)		(9	)
Net loss		(19,231	)		(12,204	)		(50,650	)		(37,030	)
Less: Net loss attributable to noncontrolling interest		(6	)	―				(16	)	―
Net loss attributable to common stockholders	$	(19,225	)	$	(12,204	)	$	(50,634	)	$	(37,030	)
Net loss per share of common stock  (basic and diluted)	$	(0.12	)	$	(0.14	)	$	(0.34	)	$	(0.47	)
Weighted average number of shares of common stock outstanding (basic and diluted)		162,730			89,597			147,075			78,296

See accompanying notes to condensed consolidated financial statements.

3

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(in thousands)

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net loss attributable to common stockholders	$	(19,225	)	$	(12,204	)	$	(50,634	)	$	(37,030	)
Other comprehensive income (loss):
Unrealized income (loss) on derivative financial instruments, net		(6,435	)		224			(10,060	)		(872	)
Reclassification of cash flow hedges upon derecognition		—			—			236			—
Reclassification of cash flow hedges due to ineffectiveness		48			—			48			—
Unrealized income (loss) on derivative financial instruments of equity method investments		(1	)		(2	)		(9	)		21
Total other comprehensive income (loss)		(6,388	)		222			(9,785	)		(851	)
Comprehensive loss		(25,613	)		(11,982	)		(60,419	)		(37,881	)
Less: Comprehensive loss attributable to noncontrolling interest		—			—			—			—
Comprehensive loss attributable to common stockholders	$	(25,613	)	$	(11,982	)	$	(60,419	)	$	(37,881	)

See accompanying notes to condensed consolidated financial statements.

4

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

Nine Months Ended September 30, 2015 (Unaudited) and the Year Ended December 31, 2014

(in thousands, except per share data)

																		Accumulated
	Redeemable		Common Stock						Capital in									Other			Total			Non-
	Noncontrolling		Number			Par			Excess of			Accumulated			Accumulated			Comprehensive			Stockholders'			controlling			Total
	Interest		of Shares			Value			Par Value			Loss			Distributions			Loss			Equity			Interest			Equity
Balance at December 31, 2013	$	—		58,218		$	582		$	500,361		$	(30,580	)	$	(17,423	)	$	(959	)	$	451,981		$	—		$	451,981
Subscriptions received for common stock through public offering and reinvestment plan		—		56,006			560			571,764			—			—			—			572,324			—			572,324
Stock distributions		—		2,356			24			(24	)		—			—			—			—			—			—
Redemptions of common stock		—		(324	)		(3	)		(2,993	)		—			—			—			(2,996	)		—			(2,996	)
Stock issuance and offering costs		—		—			—			(59,782	)		—			—			—			(59,782	)		—			(59,782	)
Net loss		—		—			—			—			(52,511	)		—			—			(52,511	)		—			(52,511	)
Other comprehensive loss		—		—			—			—			—			—			(3,905	)		(3,905	)		—			(3,905	)
Distribution to holder of promoted interest		—		—			—			(2,000	)		—			—			—			(2,000	)		—			(2,000	)
Cash distributions declared and paid or reinvested ($0.4071 per share)		—		—			—			—			—			(31,919	)		—			(31,919	)		—			(31,919	)
Contribution from noncontrolling interests		568		—			—			—			—			—			—		―				400			968
Balance at December 31, 2014		568		116,256			1,163			1,007,326			(83,091	)		(49,342	)		(4,864	)		871,192			400			872,160
Subscriptions received for common stock through public offering and reinvestment plan		—		52,815			528			555,629			—			—			—			556,157			—			556,157
Stock distributions		—		3,196			31			(31	)		—			—			—			—			—			—
Redemptions of common stock		—		(692	)		(7	)		(6,627	)		—			—			—			(6,634	)		—			(6,634	)
Stock issuance and offering costs		—		—			—			(54,877	)		—			—			—			(54,877	)		—			(54,877	)
Net loss		—		—			—			—			(50,634	)		—			—			(50,634	)		(16	)		(50,650	)
Other comprehensive loss		—		—			—			—			—			—			(9,785	)		(9,785	)		—			(9,785	)
Distribution to holder of noncontrolling interest		—		—			—			—			—			—			—			—			(16	)		(16	)
Cash distributions declared and paid or reinvested ($0.3177 per share)		—		—			—			—			—			(44,891	)		—			(44,891	)					(44,891	)
Balance at September 30, 2015	$	568		171,575		$	1,715		$	1,501,420		$	(133,725	)	$	(94,233	)	$	(14,649	)	$	1,260,528		$	368		$	1,261,464

See accompanying notes to condensed consolidated financial statements.

5

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Nine Months Ended
	September 30,
	2015			2014
Operating activities:
Net cash flows provided by operating activities	$	32,393		$	18,673
Investing activities:
Acquisition of properties		(647,538	)		(524,654	)
Development of properties		(54,411	)		(32,893	)
Capital expenditures		(5,840	)		(2,570	)
Issuance of note receivable to related party	―				(2,065	)
Collection of note receivable from related party	―				5,591
Distribution from unconsolidated entities	―				2,206
Purchase of controlling interest in unconsolidated entity	―				(1,584	)
Investment in unconsolidated entities	―				(220	)
Changes in restricted cash		1,937			(3,539	)
Payment of tenant improvements	―				(797	)
Payment of leasing costs		(1,904	)		(324	)
Deposits on real estate		(1,900	)		(2,950	)
Net cash used in investing activities		(709,656	)		(563,799	)
Financing activities:
Subscriptions received for common stock through public offering		530,083			333,960
Payment of stock issuance and offering costs		(55,626	)		(36,575	)
Distributions to stockholders, net of distribution reinvestments		(18,816	)		(9,782	)
Distribution to holder of promoted interest	―				(2,000	)
Contribution from redeemable noncontrolling interest	―				568
Distributions to holder of noncontrolling interest		(16	)	―
Redemptions of common stock		(4,725	)		(1,068	)
Draws under revolving credit facility		215,000			112,115
Repayment on revolving credit facility		(31,403	)		(30,000	)
Proceeds from mortgage and other notes payable		84,888			245,587
Principal payments on mortgage and other notes payable		(80,270	)		(24,096	)
Lender deposits		(36	)		(335	)
Payment of loan costs		(1,986	)		(3,974	)
Net cash flows provided by financing activities		637,093			584,400
Net increase (decrease) in cash		(40,170	)		39,274
Cash at beginning of period		91,355			44,209
Cash at end of period	$	51,185		$	83,483
Supplemental disclosure of non-cash investing and financing activities:
Amounts incurred but not paid (including amounts due to related parties):
Accrued development costs	$	9,100		$	4,683
Redemptions payable	$	2,781		$	1,178
Contingent purchase price consideration	$	3,000		$	—
Unrealized loss on derivative financial instruments, net	$	14,699		$	1,798
Assumption of liabilities on acquisition of property	$	2,502		$	—
Assumption of mortgage note payable on acquisition of property	$	7,128		$	27,657

See accompanying notes to condensed consolidated financial statements.

6

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

1. Organization 

CNL Healthcare Properties, Inc. (“Company”) is a Maryland corporation incorporated on June 8, 2010 that elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with the year ended December 31, 2012.  The Company is externally advised by CNL Healthcare Corp. (“Advisor”) and its property manager is CNL Healthcare Manager Corp. (“Property Manager”), each of which is a Florida corporation and a wholly owned subsidiary of CNL Financial Group, LLC (“Sponsor”).  The Sponsor is an affiliate of CNL Financial Group, Inc. (“CNL”) and CNL Securities Corp., the managing dealer of the Offerings and a wholly owned subsidiary of CNL (“Managing Dealer”).  The Advisor is responsible for managing the Company’s affairs on a day-to-day basis and for identifying and making acquisitions and investments on behalf of the Company pursuant to an advisory agreement among the Company, the operating partnership and the Advisor.  Substantially all of the Company’s acquisition, operating, administrative and certain property management services are provided by affiliates of the Advisor and the Property Manager.  In addition, third-party sub-property managers have been engaged to provide certain property management services.

The Company conducts substantially all of its operations either directly or indirectly through: (1) an operating partnership, CHP Partners, LP, in which the Company is the sole limited partner and its wholly owned subsidiary, CHP GP, LLC, is the sole general partner; (2) a wholly owned taxable REIT subsidiary (“TRS”), CHP TRS Holding, Inc.; (3) property owner subsidiaries and lender subsidiaries, which are single purpose entities; and (4) investments in joint ventures.

On June 27, 2011, the Company commenced its initial public offering (“Initial Offering”), including shares being offered through its distribution reinvestment plan (“Reinvestment Plan”), pursuant to a registration statement on Form S-11 under the Securities Act of 1933 with the Securities and Exchange Commission (“SEC”).  In addition, the Company filed a follow-on registration statement on Form S-11 under the Securities Act of 1933 with the SEC in connection with the proposed offering of up to $1 billion in shares of common stock (“Follow-On Offering”), which was declared effective on February 2, 2015.  Accordingly, the Company closed its Initial Offering and commenced its Follow-On Offering (collectively, the “Offerings”).  The Company closed its Follow-On Offering on September 30, 2015 and discontinued its stock distributions concurrently.

The Company’s investment focus is on acquiring a diversified portfolio of healthcare real estate or real estate-related assets, primarily in the United States, within the seniors housing, medical office, post-acute care and acute care asset classes. The types of seniors housing that the Company may acquire include active adult communities (age-restricted and age-targeted housing), independent and assisted living facilities, continuing care retirement communities, and Alzheimer’s / memory care facilities.  The types of medical offices that the Company may acquire include medical office buildings, specialty medical and diagnostic service facilities, surgery centers, outpatient rehabilitation facilities, and other facilities designed for clinical services. The types of post-acute care facilities that the Company may acquire include skilled nursing facilities, long-term acute care hospitals and inpatient rehabilitative hospitals.  The types of acute care facilities that the Company may acquire include general acute care hospitals and specialty surgical hospitals.  The Company views, manages and evaluates its portfolio homogeneously as one collection of healthcare assets with a common goal of maximizing revenues and property income regardless of the asset class or asset type.

The Company is committed to investing the remaining proceeds of its Offerings through strategic investment types aimed to maximize stockholder value by generating sustainable cash flow growth and increasing the value of its healthcare assets.  The Company expects to primarily lease its seniors housing properties to wholly owned TRS entities and engage independent third-party managers under management agreements to operate the properties under REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structures; however, the Company may also lease its properties to third-party tenants under triple-net or similar lease structures, where the tenant bears all or substantially all of the costs (including cost increases, for real estate taxes, utilities, insurance and ordinary repairs).  Medical office, post-acute care and acute care properties will be leased on a triple-net, net or modified gross basis to third-party tenants.  In addition, the Company expects most investments will be wholly owned, although, it has and may continue to invest through partnerships with other entities where it is believed to be appropriate and beneficial.

The Company has and may continue to invest in new property developments or properties that have not reached full stabilization.  Finally, the Company also may invest in and originate mortgage, bridge or mezzanine loans or in entities that make investments similar to the foregoing investment types.  The Company generally makes loans to the owners of properties to enable them to acquire land, buildings, or to develop property.  In exchange, the owner generally grants the Company a first lien or collateralized interest in a participating mortgage collateralized by the property or by interests in the entity that owns the property.

7

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

2. Summary of Significant Accounting Policies 

Basis of Presentation and Consolidation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles in the United States (“GAAP”). The unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which, in the opinion of management, are necessary for the fair statement of the Company’s results for the interim period presented.  Operating results for the quarter and nine months ended September 30, 2015 may not be indicative of the results that may be expected for the year ending December 31, 2015. Amounts as of December 31, 2014 included in the unaudited condensed consolidated financial statements have been derived from audited consolidated financial statements as of that date but do not include all disclosures required by GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The accompanying unaudited condensed consolidated financial statements include the Company’s accounts and the accounts of its wholly owned subsidiaries or subsidiaries for which the Company has a controlling financial interest, including the accounts of variable interest entities (“VIEs”) in which the Company is the primary beneficiary.  All material intercompany accounts and transactions have been eliminated in consolidation.

In accordance with the guidance for the consolidation of VIEs, the Company analyzes its variable interests, including loans, leases, guarantees, and equity investments, to determine if the entity in which it has a variable interest is a variable interest entity (“VIE”).  The Company’s analysis includes both quantitative and qualitative reviews.  The Company bases its quantitative analysis on the forecasted cash flows of the entity, and its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and financial agreements. The Company also uses its quantitative and qualitative analyses to determine if it is the primary beneficiary of the VIE, and if such determination is made, it includes the accounts of the VIE in its consolidated financial statements.

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the disclosure of contingent liabilities. For example, significant assumptions are made in the allocation of purchase price, the analysis of real estate impairments, the valuation of contingent assets and liabilities, and the valuation of restricted stock shares issued.  Accordingly, actual results could differ from those estimates.

Adopted Accounting Pronouncements — In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.”  This update changes the criteria for reporting discontinued operations where only disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results, such as a major line of business or geographical area, should be presented as a discontinued operation. This ASU is effective prospectively for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014 with early adoption permitted.   The Company has determined that the amendments will impact the Company’s determinations of which future property disposals, if any, qualify as discontinued operations and will require additional disclosure about discontinued operations for future property disposals, if any.

Recent Accounting Pronouncements — In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” as a new Accounting Standard Concept (“ASC”) topic (Topic 606).  The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The standard further provides guidance for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, lease contracts).  The FASB subsequently issued ASU 2015-14 to defer the effective date of ASU 2014-09 until annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with earlier adoption permitted.  ASU 2014-09 can be adopted using one of two retrospective transition methods: 1) retrospectively to each prior reporting period presented or 2) as a cumulative-effect adjustment as of the date of adoption.  The Company has not yet selected a transition method and is currently evaluating the impact of ASU 2014-09; however, its adoption could potentially have a significant effect on the Company’s consolidated financial position, results of operations or cash flows.

8

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

2. Summary of Significant Accounting Policies (continued) 

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which requires amendments to both the variable interest entity and voting models. The amendments (i) modify the identification of variable interests (fees paid to a decision maker or service provider), the VIE characteristics for a limited partnership or similar entity and primary beneficiary determination under the VIE model, and (ii) eliminate the presumption within the current voting model that a general partner controls a limited partnership or similar entity.  The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The amendments may be applied using either a modified retrospective or full retrospective approach.  The Company has determined that it will not early adopt this ASU and is currently evaluating the effect the guidance will have on its consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which requires that loan costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts or premiums. The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The ASU is to be applied retrospectively for each period presented.  Upon adoption, an entity is required to comply with the applicable disclosures for a change in an accounting principle.  The FASB subsequently issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which clarifies that, given the absence of authoritative guidance in ASU 2015-03 regarding presentation and subsequent measurement of loan costs related to line-of-credit arrangements, the SEC Staff would not object to an entity deferring and presenting loan costs as an asset and subsequently amortizing the loan costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  The Company has determined that it will not early adopt this ASU and that the amendments will materially impact the presentation of the Company’s consolidated financial position but will not have a material impact on the Company’s consolidated results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments,” which requires an acquirer to recognize provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined.  The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.  The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The Company has determined that it will not early adopt this ASU and does not expect that adopting this guidance will have a material impact on its consolidated financial position, results of operations or cash flows.

9

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

3. Acquisitions 

Real Estate Investment Properties — During the nine months ended September 30, 2015, the Company acquired the following 30 properties, which were comprised of one acute care hospital, 17 medical office buildings (“MOB”) and 12 seniors housing communities:

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Acute care
Triangle Orthopaedic
North Carolina Specialty Hospital	Modified Lease	6/29/2015	$	31,830
Durham, NC
Medical Office
Novi Orthopaedic Center	Modified Lease	2/13/2015		30,500	(1)
Novi, MI
Southeast Medical Office Properties
UT Cancer Institute	Modified Lease	2/20/2015		33,660
Knoxville, TN
Bend Memorial Clinic Medical Office Building	Modified Lease	5/11/2015		34,612	(1)
Bend, OR
Stoneterra Medical Plaza	Modified Lease	5/29/2015		15,050	(1)
San Antonio, TX
Triangle Orthopaedic
Triangle Orthopaedic Durham	Modified Lease	6/29/2015		21,275
Durham, NC
Triangle Orthopaedic Oxford	Modified Lease	6/29/2015		4,728
Oxford, NC
Triangle Orthopaedic Chapel Hill	Modified Lease	6/29/2015		3,257
Chapel Hill, NC
Triangle Orthopaedic Roxboro	Modified Lease	6/29/2015		2,067
Roxboro, NC
Doctor's Park
Doctor's Park Building B	Modified Lease	6/30/2015		5,000	(1)
Chula Vista, CA ("San Diego")
Doctor's Park Building C	Modified Lease	6/30/2015		10,000	(1)
Chula Vista, CA ("San Diego")
540 New Waverly Place	Modified Lease	7/20/2015		15,000	(1)
Cary, NC ("Raleigh")
MedHelp	Modified Lease	7/31/2015		14,076	(1)
Birmingham, AL
Maryland MOBs
Patriot Professional Center	Modified Lease	7/31/2015		16,900	(1)
Frederick, MD ("Baltimore")
Liberty Professional Center	Modified Lease	7/31/2015		7,350	(1)
Frederick, MD ("Baltimore")
Columbia MOBs
Broadway Medical Plaza 1	Modified Lease	8/21/2015		10,619	(1)
Columbia, MO
Broadway Medical Plaza 2	Modified Lease	8/21/2015		13,014	(1)
Columbia, MO
Broadway Medical Plaza 4	Modified Lease	8/21/2015		14,091	(1)
Columbia, MO

10

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

3. Acquisitions (continued) 

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Seniors Housing
Fieldstone Memory Care (2)	Managed	3/31/2015		12,400	(1)
Yakima, WA
Primrose III Communities
Primrose Retirement Community of Anderson	Triple-net Lease	5/29/2015		21,086
Anderson, IN ("Muncie")
Primrose Retirement Community of Lancaster	Triple-net Lease	5/29/2015		25,657
Lancaster, OH ("Columbus")
Primrose Retirement Community of Wausau	Triple-net Lease	5/29/2015		20,307
Wausau, WI ("Green Bay")
Superior Residences of Panama City	Managed	7/15/2015		20,000	(1)
Panama City Beach, FL
Southeast Seniors Housing Communities
Parc at Duluth	Triple-net Lease	7/31/2015		52,800
Duluth, GA ("Atlanta")
Parc at Piedmont	Triple-net Lease	7/31/2015		50,800
Marietta, GA ("Atlanta")
The Pavilion at Great Hills	Managed	7/31/2015		35,000
Austin, TX
The Hampton at Meadows Place	Managed	7/31/2015		28,400
Fort Bend, TX ("Houston")
The Beacon at Gulf Breeze	Managed	7/31/2015		28,000
Gulf Breeze, FL ("Pensacola")
Palmilla Senior Living	Managed	9/30/2015		47,600
Albuquerque, NM
Cedar Lake Assisted Living and Memory Care	Managed	9/30/2015		30,000
Lake Zurich, IL ("Chicago")
			$	655,079

FOOTNOTES:

⁽¹⁾ This represents a single property or portfolio acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property or portfolio.

⁽²⁾ This property was purchased from a related party of the Company’s Sponsor; refer to Note 11. “Related Party Arrangements” for additional information.

11

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

3. Acquisitions (continued) 

During the nine months ended September 30, 2014, the Company acquired the following 22 properties, which were comprised of three acute care hospitals, three MOBs, three post-acute care hospitals and, 13 seniors housing communities:

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Acute Care
Memorial Hermann Orthopedic & Spine Hospital ("MHOSH")	Triple-net Lease	6/2/2014	$	49,000
Bellaire, TX ("Houston")
Medical Portfolio II Properties
Hurst Specialty Hospital	Modified Lease	8/15/2014		29,465
Hurst, TX ("Dallas/Fort Worth")
Beaumont Specialty Hospital	Modified Lease	8/15/2014		33,600
Beaumont, TX ("Houston")
Medical Office
Chula Vista Medical Arts Center - Plaza I	Modified Lease	1/21/2014		17,863	(1)
Chula Vista, CA ("San Diego")
MHOSH Medical Office Building	Modified Lease	6/2/2014		27,000
Bellaire, TX ("Houston")
Lee Hughes Medical Building	Modified Lease	9/29/2014		29,870	(1)
Glendale, CA ("Los Angeles")
Post-Acute Care
Medical Portfolio II Properties
Oklahoma City Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		25,504
Oklahoma City, OK
Las Vegas Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		22,292
Las Vegas, NV
South Bend Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		20,240
Mishawaka, IN ("South Bend")
Seniors Housing
Pacific Northwest II Communities
Prestige Senior Living Auburn Meadows	Managed	2/3/2014		21,930
Auburn, WA ("Seattle")
Prestige Senior Living Bridgewood	Managed	2/3/2014		22,096
Vancouver, WA ("Portland")
Prestige Senior Living Monticello Park	Managed	2/3/2014		27,360
Longview, WA
Prestige Senior Living Rosemont	Managed	2/3/2014		16,877
Yelm, WA
Prestige Senior Living West Hills	Managed	3/3/2014		14,986
Corvallis, OR

12

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

3. Acquisitions (continued) 

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
South Bay II Communities
Isle at Cedar Ridge	Managed	2/28/2014		21,630
Cedar Park, TX ("Austin")
HarborChase of Plainfield	Managed	3/28/2014		26,500
Plainfield, IL
Legacy Ranch Alzheimer’s Special Care Center	Managed	3/28/2014		11,960
Midland, TX
The Springs Alzheimer’s Special Care Center	Managed	3/28/2014		10,920
San Angelo, TX
Isle at Watercrest – Bryan	Managed	4/21/2014		22,050
Bryan, TX
Watercrest at Bryan	Managed	4/21/2014		28,035
Bryan, TX
Isle at Watercrest – Mansfield	Managed	5/5/2014		31,300
Mansfield, TX ("Dallas/Fort Worth")
Watercrest  at Mansfield	Managed	6/30/2014		49,000
Mansfield, TX ("Dallas/Fort Worth")
			$	559,478

FOOTNOTE:

⁽¹⁾ This represents a single property acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property.

The following summarizes the purchase price allocation for the above properties, and the estimated fair values of the assets acquired and liabilities assumed (in thousands):

	September 30,
	2015			2014
Land and land improvements	$	66,583		$	46,064
Buildings and building improvements		523,103			442,887
Furniture, fixtures and equipment		9,469			10,014
Intangibles (1)		65,126			67,431
Other liabilities		(3,765	)		(8,718	)
Liabilities assumed		(2,589	)	―
Assumed mortgage note payable (2)		(6,976	)		(27,657	)
Net assets acquired		650,951			530,021
Contingent purchase price consideration		(3,000	)		(12,395	)
Total purchase price consideration	$	647,951		$	517,626

FOOTNOTE:

⁽¹⁾ At the acquisition date, the weighted-average amortization period on the acquired lease intangibles for the nine months ended September 30, 2015 and 2014 was approximately 7.9 years and 7.1 years, respectively.  The acquired lease intangibles during the nine months ended September 30, 2015 were comprised of approximately $60.7 million and $4.4 million of in-place lease intangibles and other lease intangibles, respectively, and the acquired lease intangibles during the nine months ended September 30, 2014 were comprised of approximately $61.4 million and $6.0 million of in-place lease intangibles and other lease intangibles, respectively.

⁽²⁾ At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.2 million discount on the below-market mortgage note payable assumed.

13

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

3. Acquisitions (continued) 

The revenues and net loss (including deductions for acquisition fees and expenses, and depreciation and amortization expense) attributable to the acquired properties considered to be material were approximately $7.1 million and $4.7 million, respectively, and $8.6 million and $7.6 million, respectively, for the quarter and nine months ended September 30, 2015; and approximately $19.8 million and $4.7 million, respectively, and $36.5 million and $15.3 million, respectively, for the quarter and nine months ended September 30, 2014.

The following table presents the unaudited pro forma results of operations for the Company as if the 2015 acquisitions noted as material in Note 3. “Acquisitions” above were acquired as of January 1, 2014 and the unaudited pro forma results of operations for the Company assuming the 2014 acquisitions noted as material in Note 3. “Acquisitions” above were acquired as of January 1, 2013 (in thousands except per share data):

	(Unaudited)						(Unaudited)
	Quarter Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenues	$	86,793		$	64,136		$	245,650		$	187,170
Net income (loss) (1)	$	(16,244	)	$	(11,332	)	$	(48,601	)	$	(45,370	)
Loss per share of common stock (basic and diluted)	$	(0.09	)	$	(0.10	)	$	(0.29	)	$	(0.46	)
Weighted average number of shares of common stock outstanding (basic and diluted) (2)		171,102			109,212			165,408			97,911

FOOTNOTES:

⁽¹⁾ The unaudited pro forma results for the quarter and nine months ended September 30, 2015, were adjusted to exclude approximately $6.1 million and $9.8 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the quarter and nine months ended September 30, 2015. The unaudited pro forma results for the nine months ended September 30, 2014 were adjusted to include approximately $9.8 million of acquisition related expenses, as if the properties had been acquired on January 1, 2014.  The unaudited pro forma results for the quarter and nine months ended September 30, 2014 were adjusted to exclude approximately $3.1 million and $13.8 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the quarter and nine months ended September 30, 2014, as if the properties had been acquired on January 1, 2013.

⁽²⁾ As a result of the acquired properties being treated as operational since January 1, 2014, the Company assumed approximately 19.0 million shares were issued as of January 1, 2014. Consequently the weighted average shares outstanding was adjusted to reflect this amount of shares being issued on January 1, 2014 instead of actual dates on which the shares were issued, and such shares were treated as outstanding as of the beginning of the period presented.

Real Estate Under Development — In August 2015, the Company acquired a tract of land in Greenville, South Carolina for $2.3 million (“Waterstone at Greenville”).  In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of an assisted living and memory care community with a maximum development budget of approximately $27.0 million, including the allocated purchase price of the land.  The Company determined that Waterstone at Greenville is a VIE because it believes there is insufficient equity at risk due to the development nature of the property. The Company is the primary beneficiary while the developer or its affiliates manage the development, construction and certain day-to-day operations of the property subject to the Company’s oversight.  Under a promoted interest agreement with the developer, certain net operating income targets have been established which, upon meeting such targets, result in the developer being entitled to additional payments based on enumerated percentages of the assumed net proceeds of a deemed sale, subject to achievement of an established internal rate of return on the Company’s investment in the development.

In September 2015, the Company acquired a tract of land in Grand Junction, Colorado for $1.1 million (“Wellbrook Senior Living Grand Junction”).  In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of a transitional rehabilitation facility with a maximum development budget of approximately $13.1 million, including the allocated purchase price of the land.  The Company determined that Wellbrook Senior Living Grand Junction is not a VIE because the Company’s equity investment is sufficient to finance the activities of the entity without a construction loan and the Company will receive substantially all expected residual returns.

14

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

3. Acquisitions (continued) 

In September 2015, the Company acquired a tract of land in Lexington, South Carolina for $2.3 million (“Wellmore of Lexington”), which is a suburb of Columbia, South Carolina.  In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of a continuing care retirement facility with a maximum development budget of approximately $53.9 million, including the allocated purchase price of the land.  The Company determined that Wellmore of Lexington is a VIE because it believes there is insufficient equity at risk due to the development nature of the property. The Company is the primary beneficiary while the developer or its affiliates manage the development, construction and certain day-to-day operations of the property subject to the Company’s oversight.  Under a promoted interest agreement with the developer, certain net operating income targets have been established which, upon meeting such targets, result in the developer being entitled to additional payments based on enumerated percentages of the assumed net proceeds of a deemed sale, subject to achievement of an established internal rate of return on the Company’s investment in the development.

Purchase of Controlling Interest in Montecito Joint Venture — In January 2013, the Company acquired a 90% membership interest in a two-story MOB in Claremont, California for approximately $7.0 million in equity through a joint venture (“Montecito Joint Venture”) formed by the Company and its co-venture partner, an unrelated party, that initially held the remaining 10% interest.  The Montecito Joint Venture was previously recorded under the equity method of accounting because the decisions that significantly impacted the entity were shared between the Company and its co-venture partner.

In August 2014, the Company acquired its co-venture partner’s 10% interest in the Montecito Joint Venture for approximately $1.6 million.  As a result of this transaction, the Company owns 100% of the Montecito Joint Venture, and began consolidating all of the assets, liabilities and results of operations in the Company’s consolidated financial statements upon acquisition.  Accordingly, the Company recorded a step up from its carrying value of the investment in the Montecito Joint Venture to the estimated fair value of the net assets acquired and liabilities assumed.   The following summarizes the allocation of the purchase price, and the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Land and land improvements	$	6,324
Buildings and building improvements		13,533
Intangibles (1)		2,691
Working capital, net		87
Other liabilities		(175	)
Mortgage note payable assumed  (2)		(12,331	)
Net assets acquired	$	10,129

FOOTNOTES:

⁽¹⁾ At the acquisition date, the weighted-average amortization period on the acquired lease intangibles was approximately 5.1 years and was comprised of approximately $1.9 million and $0.8 million of in-place lease intangibles and other lease intangibles, respectively.

⁽²⁾ At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.6 million discount on the below-market mortgage note payable assumed.

The fair value of the Company’s equity interest in the Montecito Joint Venture immediately before the acquisition date was approximately $5.7 million. The Company recorded a gain of approximately $2.8 million based on the acquisition-date fair value of its equity interest in the Montecito Joint Venture.  The following summarizes the gain that resulted from the change of control in the equity method investment for the quarter and nine months ended September 30, 2014 (in thousands):

Fair value of net assets acquired	$	10,129
Less: Previous investment in Montecito Joint Venture		(5,747	)
Less: Cash paid to acquire co-venture partner's interest		(1,584	)
Gain on purchase of controlling interest of investment in unconsolidated entity	$	2,798

15

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

4. Real Estate Assets, net 

The gross carrying amount and accumulated depreciation of the Company’s real estate assets as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,			December 31,
	2015			2014
Land and land improvements	$	200,763		$	128,662
Building and building improvements		2,094,128			1,545,614
Furniture, fixtures and equipment		54,284			36,319
Less: accumulated depreciation		(97,975	)		(53,095	)
Real estate investment properties, net		2,251,200			1,657,500
Real estate under development, including land		69,478			47,153
Total real estate assets, net	$	2,320,678		$	1,704,653

Depreciation expense on the Company’s real estate investment properties, net was approximately $16.9 million and $44.8 million for the quarter and nine months ended September 30, 2015, respectively, and approximately $10.8 million and $27.4 million for the quarter and nine months ended September 30, 2014, respectively.

In June 2015, the Company completed the construction and development of a seniors housing community in Tega Cay, South Carolina (“Wellmore of Tega Cay”), which is a suburb of Charlotte, North Carolina.  Wellmore of Tega Cay opened to residents beginning in July 2015 and was considered placed into service as of June 30, 2015.  As such, the asset values related to Tega Cay are included in real estate investment properties, net in the accompanying condensed consolidated balance sheet as of September 30, 2015.

As of September 30, 2015, six of the Company’s properties have real estate under development with third-party developers as follows (in thousands):

Property Name (and Location)	Developer	Real Estate Development Costs Incurred (1)		Remaining Development Budget (2)
HarborChase of Shorewood (Shorewood, WI)	Harbor Shorewood Development, LLC	$	22,034	$	5,776
Raider Ranch (Lubbock, TX)	South Bay Partners, Ltd		13,464		3,460
Watercrest at Katy (Katy, TX) (3)	South Bay Partners, Ltd		20,049		22,342
Welbrook Senior Living Grand Junction (Grand Junction, CO)	Embree Asset Group, Inc.		2,128		11,473
Waterstone at Greenville (Greenville, SC)	The Balance Group, Inc.		5,298		22,401
Wellmore of Lexington (Lexington, SC)	Maxwell Group, Inc.		6,505		48,698
		$	69,478	$	114,150

FOOTNOTES:

⁽¹⁾ This amount represents land and total capitalized costs for GAAP purposes for the acquisition, development and construction of the seniors housing or post-acute care communities as of September 30, 2015.  Amounts include investment services fees, asset management fees, interest expense and other costs capitalized during the development period.

⁽²⁾ This amount includes preleasing and marketing costs which will be expensed as incurred.

⁽³⁾ This property is owned through a joint venture in which the Company’s initial ownership interest is 95%.

The development budgets include the cost of the land, construction costs, development fees, financing costs, start-up costs and initial operating deficits of the respective properties.  An affiliate of the developer of the respective community coordinates and supervises the management and administration of the development and construction.  Each developer is responsible for any cost overruns beyond the approved development budget for the applicable project pursuant to a cost overrun guarantee.  Some of these developments were deemed to be VIEs; refer to Note 7. “Variable Interest Entities” for additional information.

16

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

5. Intangibles, net 

The gross carrying amount and accumulated amortization of the Company’s intangible assets and liabilities as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,			December 31,
	2015			2014
In-place lease intangibles	$	199,815		$	148,880
Above-market lease intangibles		13,586			11,320
Below-market ground lease intangibles		12,470			10,314
Less: accumulated amortization		(62,333	)		(30,250	)
Intangible assets, net	$	163,538		$	140,264
Below-market lease intangibles	$	(10,685	)	$	(13,243	)
Above-market ground lease intangibles		(3,488	)		(2,273	)
Less: accumulated amortization		2,177			1,014
Intangible liabilities, net (1)	$	(11,996	)	$	(14,502	)

FOOTNOTE:

⁽¹⁾ Intangible liabilities, net are included in other liabilities in the accompanying condensed consolidated balance sheets.

Amortization on the Company’s intangible assets was approximately $11.6 million and $32.1 million for the quarter and nine months ended September 30, 2015, of which approximately $0.6 million and $1.5 million, respectively, were treated as a reduction of rental income from operating leases, approximately $0.08 million and $0.2 million, respectively, were treated as an increase of property operating expenses and approximately $10.9 million and $30.3 million, respectively, were included in depreciation and amortization.  Amortization on the Company’s intangible assets was approximately $7.1 million and $17.4 million for the quarter and nine months ended September 30, 2014, of which approximately $0.3 million and $0.7 million, respectively, were treated as a reduction of rental income from operating leases, approximately $0.02 million and $0.1 million, respectively, were treated as an increase of property operating expenses and approximately $6.7 million and $16.7 million, respectively, were included in depreciation and amortization.

Amortization on the Company’s intangible liabilities was approximately $0.4 million and $1.2 million for the quarter and nine months ended September 30, 2015, of which approximately $0.4 million and $1.1 million, respectively, were treated as an increase of rental income from operating leases and approximately $0.02 million and $0.06 million, respectively, were treated as a reduction of property operating expenses.  For the quarter and nine months ended September 30, 2014, amortization on the Company’s intangible liabilities was approximately $0.3 million and $0.5 million, of which approximately $0.3 million and $0.5 million, respectively, were treated as an increase of rental income from operating leases and approximately two thousand and six thousand dollars, respectively, was treated as a reduction of property operating expenses.

During the nine months ended September 30, 2015, due to the uncertainty of a tenant’s ability to meet its future obligations under the leases at two of the Company’s specialty hospitals, the Company recorded an impairment provision of approximately $4.7 million related to the lease intangibles as it was determined that the carrying value of these assets would more than likely not be recoverable.  In September 2015, the Company signed an amended and restated lease agreement with a new tenant at one of the specialty hospitals, which included similar economic terms and the collection of approximately $1.0 million in rents owed under the lease.  In addition, the Company assessed the underlying real estate assets on the second specialty hospital for impairment and concluded that no adjustment to the carrying value was necessary based on the Company’s expected holding period and the estimated undiscounted cash flows and estimated net sales proceeds that could be generated by the property.

17

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

5. Intangibles, net (continued) 

The estimated future amortization on the Company’s intangibles for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 is as follows (in thousands):

	In-place Lease Intangibles		Above- market Leases		Below- market Ground Leases		Total Assets		Below- market Leases			Above- market Ground Leases			Total Liabilities
2015	$	11,859		524		80	$	12,463	$	(379	)		(22	)	$	(401	)
2016		38,280		1,797		320		40,397		(1,449	)		(89	)		(1,538	)
2017		24,845		1,636		320		26,801		(1,299	)		(89	)		(1,388	)
2018		14,685		1,469		320		16,474		(1,146	)		(89	)		(1,235	)
2019		10,537		1,168		320		12,025		(982	)		(89	)		(1,071	)
Thereafter		40,374		4,282		10,722		55,378		(3,321	)		(3,042	)		(6,363	)
	$	140,580		10,876		12,082	$	163,538	$	(8,576	)		(3,420	)	$	(11,996	)

Weighted average remaining useful life as of September 30, 2015 (in years):

In-place Lease Intangibles		Above- market Leases		Below- market Ground Leases		Below- market Leases		Above- market Ground Leases
	4.6		6.2		37.8		4.9		38.3

6. Operating Leases

As of September 30, 2015, the Company owned 78 properties that were leased to tenants on a triple-net, net or modified gross basis, and accounted for as operating leases; of which, 37 are single-tenant properties that are 100% leased under operating leases and the remaining 41 are multi-tenant properties that are leased under operating leases. The Company’s leases had a weighted average remaining lease term of 7.5 years based on annualized base rents expiring between 2015 and 2038, subject to the tenants’ options to extend the lease periods ranging from two to 10 years.  In addition, certain tenants hold options to extend their leases for multiple periods.

Under the terms of the Company’s triple-net lease agreements, each tenant is responsible for the payment of property taxes, general liability insurance, utilities, and repairs and maintenance, including structural and roof maintenance expenses.  Each tenant is expected to pay real estate taxes directly to taxing authorities.  However, if the tenant does not pay, the Company will be liable.  The total annualized property tax assessed on these properties is approximately $2.8 million.

Under the terms of the multi-tenant lease agreements that have third-party property managers, each tenant is responsible for the payment of their proportionate share of property taxes, general liability insurance, utilities, repairs and common area maintenance. These amounts are billed monthly and recorded as tenant reimbursement income in the accompanying condensed consolidated statements of operations.

The following are future minimum lease payments to be received under non-cancellable operating leases for the remainder of 2015, each of the next four years and thereafter, as of September 30, 2015 (in thousands):

2015	$	26,253
2016		103,139
2017		97,240
2018		89,806
2019		81,268
Thereafter		442,941
	$	840,647

The above future minimum lease payments to be received excludes tenant reimbursements, straight-line rent adjustments, amortization of above- and below-market lease intangibles and base rent attributable to any renewal options exercised by the tenants in the future.  In addition, future minimum lease payments related to one of the two specialty hospitals discussed in Note 5. “Intangibles, net” have been excluded.

18

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

7. Variable Interest Entities 

Consolidated VIEs – As of September 30, 2015, the Company has 15 subsidiaries, which are VIEs due to the following factors and circumstances:

⁽¹⁾ Two of these subsidiaries are single property entities, designed to own and lease their respective properties to single tenants, for which buy-out options are held by the respective tenants that are formula based.

⁽²⁾ Four of these subsidiaries are single property entities, designed to own and lease their respective properties to multiple tenants, which are subject to either a ground lease or an air rights lease that include buy-out and put options held by either the tenant or landlord under the applicable lease.

⁽³⁾ Seven of these subsidiaries are entities with real estate under development or completed developments in which the third-party developers have an opportunity to earn promoted interest payments after certain net operating income targets and internal rate of return targets have been met.

⁽⁴⁾ One of these subsidiaries is a joint venture with real estate under development in which the third-party developer has an opportunity to earn promoted interest payments after certain net operating income targets and internal rate of return targets have been met.

⁽⁵⁾ One of these subsidiaries is a joint venture with equity interest that consists of non-substantive voting rights.

The Company determined it is the primary beneficiary and holds a controlling financial interest in each of the aforementioned property and development entities due to its power to direct the activities that most significantly impact the economic performance of the entities, as well as its obligation to absorb the losses and its right to receive benefits from these entities that could potentially be significant to these entities. As such, the transactions and accounts of these VIEs are included in the accompanying condensed consolidated financial statements.

The aggregate carrying amount and major classifications of the consolidated assets that can be used to settle obligations of the VIEs and liabilities of the consolidated VIEs that are non-recourse to the Company as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,		December 31,
	2015		2014
Assets:
Real estate investment properties, net	$	192,663	$	174,449
Real estate under development, including land	$	67,350	$	47,153
Intangibles, net	$	24,426	$	25,519
Cash	$	1,462	$	6,280
Other assets	$	862	$	511
Deferred rent and lease incentives	$	6,330	$	2,978
Loan costs, net	$	2,497	$	2,300
Restricted cash	$	2,053	$	5,304
Liabilities:
Mortgages and other notes payable	$	172,537	$	137,754
Accounts payable and accrued liabilities	$	1,497	$	2,317
Accrued development costs	$	8,854	$	7,951
Due to related parties	$	171	$	219
Other liabilities	$	4,551	$	4,949

The Company’s maximum exposure to loss as a result of its involvement with these VIEs is limited to its net investment in these entities which totaled approximately $109.0 million as of September 30, 2015. The Company’s exposure is limited because of the non-recourse nature of the borrowings of the VIEs.

19

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

8. Ground and Air Rights Leases 

During the nine months ended September 30, 2015, in conjunction with the Novi Orthopaedic Center, UT Cancer Institute, and Columbia MOBs detailed in Note 3. “Acquisitions,” the Company acquired interests in five additional ground leases. The Novi Orthopaedic Center, UT Cancer Institute, and Columbia MOBs ground leases represent operating leases with scheduled payments over the life of the respective lease expiring in 2045 to 2076.

Overall, under the terms of its ground and air rights lease agreements, the Company is responsible for the monthly rental payments. These amounts are billed monthly and recorded as property operating expenses in the accompanying condensed consolidated statements of operations.  In some cases, the Company is able to pass this expense through to its tenants as tenant reimbursement income.  For the quarter and nine months ended September 30, 2015, the Company incurred approximately $0.7 million and $1.8 million, respectively, in ground and air rights lease expense, including any straight-line rent adjustments.  For the quarter and nine months ended September 30, 2014, the Company incurred approximately $0.04 million and $0.1 million, respectively, in ground and air rights lease expense, including any straight-line rent adjustments.

The following is a schedule of future minimum lease payments to be paid under the ground and air rights leases for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 (in thousands):

2015	$	484
2016		1,957
2017		1,984
2018		2,016
2019		2,041
Thereafter		115,515
	$	123,997

9. Contingent Purchase Price Consideration

Capital Health Communities

In connection with the acquisition of the Capital Health Communities in 2012, the Company required that approximately $7.0 million of the purchase price be placed in an escrow account as the seller guaranteed the Company an annual return of at least $6.9 million, $7.0 million, and $7.1 million of net operating income on the acquired properties during 2013, 2014 and 2015, respectively (“Yield Guaranty”).  As of September 30, 2015, the Company determined the fair value of the Yield Guaranty to be $1.8 million, which was recorded as other assets in the accompanying condensed consolidated balance sheet.  The following table provides a roll-forward of the fair value of the contingent purchase price consideration related to the Yield Guaranty on the Capital Health Communities for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter ended					Nine Months Ended
	September 30,					September 30,
	2015		2014			2015			2014
Beginning balance	$	1,820	$	3,509		$	4,078		$	4,488
Yield Guaranty payment received from seller		—		(301	)		(2,579	)		(2,601	)
Change in fair value		—		—			321			1,321
Ending balance	$	1,820	$	3,208		$	1,820		$	3,208

20

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

9. Contingent Purchase Price Consideration (continued) 

Medical Portfolio I

During 2013, in conjunction with the acquisition of Medical Portfolio I, the Company entered into an earn-out agreement with the seller related to Cleveland Clinic, the tenant at Chestnut Commons, whereby the tenant maintains an exercisable right to expand the leased space by an additional 10,000 square feet within 24 months of the property acquisition closing (“Chestnut Commons Earn-Out”).  The Chestnut Commons Earn-Out fee was equal to (a) the base rent due for the first full year of the lease applicable to the expansion space divided by 8% minus (b) the costs incurred by the Company in connection with the exercise by Cleveland Clinic of its option for the expansion space, including tenant improvement costs, multiplied by 50%.  The Chestnut Commons Earn-Out expired in August 2015. The following table provides a roll-forward of the fair value of the contingent purchase price consideration related to the Chestnut Commons Earn-Out for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Beginning balance	$	(268	)	$	(507	)	$	(268	)	$	(507	)
Contingent consideration in connection with acquisition		—			—			—			—
Change in fair value		268			—			268			—
Ending balance	$	—		$	(507	)	$	—		$	(507	)

South Bay II Communities

In conjunction with the acquisition of the South Bay II Communities, the Company entered into an agreement with the sellers whereby the purchase price is adjusted in the event that certain net operating income targets are met.  The additional consideration was determined within three months of the acquisition date and is equal to (a) the baseline net operating income divided by the baseline capitalization rates (as defined in the purchase and sale agreement) less (b) the purchase price paid at closing.  The following table provides a roll-forward of the fair value of the estimated contingent purchase price consideration related to the South Bay II Communities for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter ended					Nine Months Ended
	September 30,					September 30,
	2015		2014			2015		2014
Beginning balance	$	—	$	(8,500	)	$	—	$	—
Contingent consideration in connection with acquisition		—		—			—		(12,395	)
Contingent consideration payment		—		10,300			—		14,195
Change in fair value		—		(1,800	)		—		(1,800	)
Ending balance	$	—	$	—		$	—	$	—

Superior Residences of Panama City

In connection with the purchase of Superior Residences of Panama City, the Company entered into an earn-out agreement with the seller whereby additional consideration is owed in the event that certain performance targets are met (“Panama City Earn-Out”).  Under the earn-out agreement, the seller has an opportunity of earning up to $4.0 million in additional purchase price consideration during the immediate 36 months post-closing.  At the acquisition date and as of September 30, 2015, the Company determined the fair value of the Panama City Earn-Out to be $3.0 million, which was recorded as other liabilities in the accompanying condensed consolidated balance sheet.

Fair Value Measurements

The fair value of the contingent purchase price consideration was based on a then-current income approach that is primarily determined based on the present value and probability of future cash flows using internal underwriting models.  The income approach further includes estimates of risk-adjusted rate of return and capitalization rates for each property.  Since this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurements of the estimated fair value related to the Company’s contingent purchase price consideration are categorized as Level 3 on the three-level fair value hierarchy.

21

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

10. Indebtedness 

The following table provides details of the Company’s indebtedness as of September 30, 2015 and December 31, 2014 (in thousands):

	September 30,			December 31,
	2015			2014
Mortgages payable and other notes payable:
Fixed rate debt	$	395,783		$	370,854
Variable rate debt (1)		469,739			482,922
Mortgages and other notes payable		865,522			853,776
Premium (discount), net (2)		(259	)		(215	)
Total mortgages and other notes payable, net		865,263			853,561
Credit facilities:
Term Loan Facility (1)		175,000			175,000
Revolving Credit Facility (3)		215,000			31,403
Total borrowings	$	1,255,263		$	1,059,964

FOOTNOTES:

⁽¹⁾ As of September 30, 2015 and December 31, 2014, the Company had entered into interest rate swaps with notional amounts of approximately $342.7 million and $182.1 million, respectively, which were settling on a monthly basis. In addition, as of September 30, 2015 and December 31, 2014, the Company had entered into forward-starting interest rate swaps for total notional amounts of approximately $187.1 million and $269.4 million, respectively, in order to hedge its exposure to variable rate debt in future periods.  The remaining forward-starting interest rate swaps have a range of effective dates beginning in 2015 and continuing through the maturity date of the loans being hedged.

⁽²⁾ Premium (discount), net is reflective of the Company recording mortgage notes payable assumed at fair value on the respective acquisition date.

⁽³⁾ As of September 30, 2015 and December 31, 2014, availability under the Revolving Credit Facility was approximately $15.0 million and $14.0 million, respectively, based on the value of the properties in the unencumbered collateral pool of assets supporting the loan.

Maturities of indebtedness for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 are as follows (in thousands):

2015	$	4,769
2016		37,730
2017		261,106
2018		299,180
2019		487,724
Thereafter		164,754
	$	1,255,263

As a result of the tenant default discussed in Note 5. “Intangibles, net,” the lender on the mortgage loan secured by the two specialty hospitals elected to accelerate the required debt service payments related to these properties from a 25-year to a 15-year amortization period given that the tenant did not meet the required lease coverage thresholds.  In September 2015, the Company signed an amended and restated lease agreement with a new tenant at one of the specialty hospitals and the lender re-adjusted the required debt service payments for the property back to a 25-year amortization period.  The above maturities of indebtedness have been updated to reflect the amortization adjustments made by the lender effective November 2015.

22

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

10. Indebtedness (continued) 

The Company financed a portion of the acquisitions described in Note 3. “Acquisitions” through additional borrowings and loan assumptions.  The following table provides details of new indebtedness during the nine months ended September 30, 2015 as of September 30, 2015 (in thousands):

	Interest Rate at
	September 30,		Maturity	September 30,
Property and Loan Type	2015 (1)	Payment Terms	Date (2)	2015
Novi Orthopaedic Center; Mortgage Loan	3.61% per annum	Monthly interest only payments through June 2018; principal and interest payments thereafter based on a 25-year amortization schedule	6/15/20	$	19,825
ProMed Medical Building I; Mortgage Loan	3.64% per annum (3)	Monthly principal and interest payments based upon a 30-year amortization schedule	1/15/22		7,095
540 New Waverly Place; Mortgage Loan	4.08% per annum	Monthly principal and interest payments based upon a 25-year amortization schedule	5/31/28		7,096
		Total fixed rate debt			34,016
Raider Ranch Development; Construction Loan	30-day LIBOR plus 3.50% at 0.5% LIBOR floor	Monthly interest only payments through October 2017; principal and interest payments thereafter based on a 25-year amortization schedule	10/27/17		5,914
HarborChase of Shorewood; Construction Loan	30-day LIBOR plus 3%; 2% all in floor	Monthly interest only payments through July 2017; principal and interest payments thereafter based on a 25-year amortization schedule	7/15/19		10,117
UT Cancer Institute; Mortgage Loan	30-day LIBOR plus 2.00% per annum	Monthly interest only payments through July 2017; principal and interest payments thereafter based on a 25-year amortization schedule	12/22/19		21,672
Watercrest at Katy; Construction Loan	30-day LIBOR plus 2.75% per annum	Monthly interest only payments through December 2017; principal and interest payments thereafter based on a 30-year amortization schedule	12/27/19		4,505
		Total variable rate debt			42,208
		Fixed and variable rate debt			76,224
		Premium (discount), net			(150	)
		Total debt		$	76,074

FOOTNOTES:

⁽¹⁾ The 30-day LIBOR was approximately 0.19% as September 30, 2015.

⁽²⁾ Represents the initial maturity date (or, as applicable, the maturity date as extended).  The maturity date may be extended beyond the date shown subject to certain lender conditions.

⁽³⁾ Beginning January 2020, the interest rate transitions to variable rate based on 30-day LIBOR plus 2.20% per annum.

23

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

10. Indebtedness (continued) 

The fair market value and carrying value of the mortgage and other notes payable was approximately $876.3 million and $865.5 million, respectively, and both the fair market value and carrying value of the Credit Facilities was $390.0 million as of September 30, 2015.  The fair market value and carrying value of the mortgage and other notes payable was approximately $868.5 million and $853.6 million, respectively, and both the fair market value and carrying value of the Credit Facilities was $206.4 million as of December 31, 2014.  These fair market values are based on current rates and spreads the Company would expect to obtain for similar borrowings.  Since this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair values related to the Company’s mortgage notes payable is categorized as Level 3 on the three-level valuation hierarchy.  The estimated fair value of accounts payable and accrued liabilities approximates the carrying value as of September 30, 2015 and December 31, 2014 because of the relatively short maturities of the obligations.

In March 2015, the Company repaid its $30.0 million outstanding mortgage loan on the Perennial Communities prior to its scheduled maturity.  In connection therewith, the Company wrote-off approximately $0.2 million in unamortized loan costs as interest expense and loan cost amortization in the accompanying condensed consolidated statements of operations.  In addition, the corresponding interest rate swap was terminated and approximately $0.1 million related to the derecognition of the cash flow hedge was reclassified from other comprehensive loss to interest expense and loan cost amortization in the accompanying condensed consolidated financial statements.

In April 2015, the Company repaid its $34.5 million outstanding mortgage loan on the Medical Portfolio I Properties prior to its scheduled maturity.  In connection therewith, the Company wrote-off approximately $0.2 million in unamortized loan costs as interest expense and loan cost amortization in the accompanying condensed consolidated statements of operations.  In addition, the corresponding interest rate swap was terminated and approximately $0.2 million related to the derecognition of the cash flow hedge was reclassified from other comprehensive loss to interest expense and loan cost amortization in the accompanying condensed consolidated financial statements.

In December 2014, the Company amended and restated the terms of its credit agreement with KeyBank, as administrative agent, by entering into a $230 million Revolving Credit Facility and a $175 million Term Loan Facility.  Pursuant to the Amended Credit Agreement, the Company has the ability to increase the collective borrowings under the Credit Facilities to $700 million.  Moreover, the Revolving Credit Facility has an initial term of 36 months plus two 12-month extension options; whereas, the Term Loan Facility has an initial term of 50 months plus one 12-month extension option.  The Credit Facilities bear interest based on LIBOR and a spread that varies with the Company’s leverage ratio.  In addition, the Company is required to make interest only payments until the respective maturity dates of the Credit Facilities as well as to pay fees ranging from 0.15% to 0.25% for unused commitments on the Revolving Credit Facility.

The Credit Facilities contain affirmative, negative, and financial covenants which are customary for loans of this type, including (but not limited to): (i) maximum leverage, (ii) minimum fixed charge coverage ratio, (iii) minimum consolidated net worth, (iv) restrictions on payments of cash distributions except if required by REIT requirements, (v) maximum secured and unsecured indebtedness, and (vi) limitations on certain types of investments and with respect to the pool of properties supporting borrowings under the Credit Facilities, minimum debt service coverage ratio, and remaining lease terms, as well as property type, MSA, operator, and asset value concentration limits.  The limitations on distributions includes a limitation on the extent of allowable distributions, which are not to exceed the greater of 95% of adjusted FFO (as defined per the Credit Facilities) and the minimum amount of distributions required to maintain the Company’s REIT status.

All of the Company’s mortgage and construction loans contain customary financial covenants and ratios; including (but not limited to): debt service coverage ratio, minimum occupancy levels, limitations on incurrence of additional indebtedness, etc.  As of September 30, 2015, the Company was in compliance with all financial covenants and ratios.

24

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

11. Related Party Arrangements 

In March 2013, the Company entered into the Advisor Expense Support Agreement, whereby commencing on April 1, 2013, the Advisor agreed to provide expense support to the Company through forgoing the payment of fees in cash and acceptance of restricted stock for services rendered and specified expenses incurred in an amount equal to the positive excess, if any, of (a) aggregate stockholder cash distributions declared for the applicable quarter, over (b) the Company’s aggregate modified funds from operations (as defined in the Advisor Expense Support Agreement).  The Advisor expense support amount is determined for each calendar quarter of the Company, on a non-cumulative basis, each quarter-end date (“Determination Date”).  In August 2013, the Company entered into the Property Manager Expense Support Agreement, whereby  commencing on July 1, 2013, the Property Manager agreed to provide expense support to the Company through forgoing the payment of fees in cash and accepting restricted stock for services in an amount equal to the positive excess, if any, of (a) aggregate stockholder cash distributions declared for the applicable quarter, over (b) the Company’s aggregate modified funds from operations (as defined in the Property Manager Expense Support Agreement).  The Property Manager expense support amount shall be determined, on a non-cumulative basis, after the calculation of the Advisor expense support amount pursuant to the Property Manager Expense Support Agreement on each Determination Date.  The terms of both the Advisor Expense Support Agreement and the Property Manager Expense Support Agreement (‘the Expense Support Agreements”) automatically renew for consecutive one year periods, subject to the right of the Advisor or Property Manager to terminate their respective agreements upon 30 days’ written notice to the Company. 

In exchange for services rendered and in consideration of the expense support provided, the Company will issue, within 45 days following each Determination Date, a number of shares of restricted stock equal to the quotient of the expense support amount provided by the Advisor and Property Manager for the preceding quarter divided by either: (1) the then-current public offering price per share of common stock during the Offerings or (2) the Company’s then-current net asset value (“NAV”) per share of common stock subsequent to the Offerings.  Any amounts settled, and for which restricted stock shares are issued, pursuant to the Expense Support Agreements will be permanently waived and the Company will have no obligation to pay such amounts to the Advisor or the Property Manager.  The Restricted Stock is subordinated and forfeited to the extent that stockholders do not receive their original invested capital back with at least a 6% annualized return on investment upon ultimate liquidity of the Company.  Since the vesting criteria is outside the control of the Advisor and Property Manager and involves both market conditions and counterparty performance conditions, the restricted stock shares will be treated as unissued for financial reporting purposes until the vesting criteria, as defined in the Expense Support Agreements, are met.

The following fees were settled and paid in the form of Restricted Stock in connection with the Expense Support Agreements for the quarter and nine months ended September 30, 2015 and 2014, and cumulatively as of September 30, 2015 (in thousands, except offering price):

	Quarter ended				Nine Months Ended				As of
	September 30,				September 30,				September 30,
	2015		2014		2015		2014		2015
Asset management fees (1)	$	885	$	884	$	2,298	$	3,764	$	8,566
Then-current offering price (2)	$	10.58	$	10.14	$	10.58	$	10.14	$	10.58
Restricted stock shares (3)		84		87		217		371		828
Cash distributions on Restricted Stock (4)	$	75	$	30	$	197	$	48	$	300
Stock distributions on Restricted Stock (5)		5		2		14		4		21

FOOTNOTES:

⁽¹⁾ No other amounts have been settled in accordance with the Expense Support Agreements for the quarter and nine months ended September 30, 2015 and 2014, and cumulatively as of September 30, 2015.

⁽²⁾ During the Offerings, the then-current offering prices were based on the Company’s NAV per share as of the Determination Date, plus selling commissions and marketing support fees.  Subsequent to the close of the Company’s Offerings, the then-current offering prices are based on the Company’s NAV per share as of the Determination Date.

⁽³⁾ Restricted stock shares are comprised of approximately 0.08 million issuable to the Advisor as of September 30, 2015.  No fair value was assigned to the restricted stock shares as the shares were valued at zero, which represents the lowest possible value estimated at vesting.  In addition, the restricted stock shares were treated as unissued for financial reporting purposes because the vesting criteria had not been met through September 30, 2015. 

25

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

11. Related Party Arrangements (continued) 

⁽⁴⁾ The cash distributions have been recognized as compensation expense as issued and included in general and administrative expense in the accompanying condensed consolidated statements of operations.

⁽⁵⁾ The par value of the stock distributions has been recognized as compensation expense as issued and included in general and administrative expense in the accompanying condensed consolidated statements of operations.

The Company maintains accounts totaling approximately $0.1 million as of both September 30, 2015 and December 31, 2014, at a bank in which the Company’s chairman serves as a director.

In March 2015, the Company acquired Fieldstone Memory Care, a 40-unit memory care community located in Yakima, Washington for a purchase price of $12.4 million from a related party of the Company’s Sponsor.  The board of directors, including all of the independent directors, concluded that substantial justification existed to consummate the Fieldstone Memory Care acquisition.  In determining whether to approve the Fieldstone Transaction, the board of directors reviewed and took into account, among other factors it deemed appropriate, the following information, facts and circumstances:  an affiliate of CNL is the majority interest holder and managing member of the seller; the purchase price exceeds the seller’s acquisition and development costs; a March 2015 independent appraisal; and a prospective value upon reaching stabilization.

In June 2013, the Company originated an acquisition, development and construction loan (“ADC Loan”) to C4 Development, LLC (“Crosland Southeast”), a related party by virtue of a family relationship between a principal of the borrower and the Company’s vice chairman who recused himself from review and approval of the investment, for the development of an MOB in Rutland, Virginia that will function as an out-patient emergency and imaging center and was leased to Hospital Corporation of America (“HCA”). As of December 31, 2014, the Company’s ADC Loan had been fully repaid.  For the quarter and nine months ended September 30, 2014, the Company recorded interest income of approximately $0.2 million and $0.5 million, respectively, which is included in interest income on note receivable from related party in the accompanying condensed consolidated statements of operations.

The Company incurs operating expenses which, in general, relate to administration of the Company on an ongoing basis.  Pursuant to the advisory agreement, the Advisor shall reimburse the Company the amount by which the total operating expenses paid or incurred by the Company exceed, in any four consecutive fiscal quarters (“Expense Year”) commencing with the Expense Year ending June 30, 2013, the greater of 2% of average invested assets or 25% of net income (as defined in the advisory agreement) (“Limitation”), unless a majority of the Company’s independent directors determines that such excess expenses are justified based on unusual and non-recurring factors (“Expense Cap Test”).  In performing the Expense Cap Test, the Company uses operating expenses on a GAAP basis after making adjustments for the benefit of expense support under the Expense Support Agreements.  For the Expense Year ended September 30, 2015, the Company did not incur operating expenses in excess of the Limitation.

The fees incurred by and reimbursable to the Managing Dealer in connection with the Company’s Offerings for the quarter and nine months ended September 30, 2015 and 2014, and related amounts unpaid as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	Quarter ended				Nine Months Ended				Unpaid amounts as of (1)
	September 30,				September 30,				September 30,		December 31,
	2015		2014		2015		2014		2015		2014
Selling commissions (2)	$	4,085	$	6,689	$	12,076	$	12,285	$	340	$	388
Marketing support fees (2)		5,232		4,524		15,851		9,937		300		555
	$	9,317	$	11,213	$	27,927	$	22,222	$	640	$	943

26

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

11. Related Party Arrangements (continued) 

The expenses and fees incurred by and reimbursable to the Company’s related parties for the quarter and nine months ended September 30, 2015 and 2014, and related amounts unpaid as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	Quarter ended				Nine Months Ended				Unpaid amounts as of (1)
	September 30,				September 30,				September 30,		December 31,
	2015		2014		2015		2014		2015		2014
Reimbursable expenses:
Offering costs (2)	$	919	$	1,075	$	2,785	$	3,442	$	266	$	713
Operating expenses (3)		1,119		918		3,140		2,402		1,305		479
Acquisition fees and expenses		156		130		461		463		14		80
		2,194		2,123		6,386		6,307		1,585		1,272
Investment services fees (4)		8,624		3,651		13,645		11,875		1,434	―
Financing coordination fees (5)	―		―		―			220	―		―
Property management fees (6)		1,128		728		2,844		1,763		726		429
Asset management fees (7)		6,075		3,696		16,127		9,510		1,235		355
	$	18,021	$	10,198	$	39,002	$	29,675	$	4,980	$	2,056

FOOTNOTES:

⁽¹⁾ Amounts are recorded as due to related parties in the accompanying condensed consolidated balance sheets.

⁽²⁾ Amounts are recorded as stock issuance and offering costs in the accompanying condensed consolidated statements of stockholders’ equity and redeemable noncontrolling interest.

⁽³⁾ Amounts are recorded as general and administrative expenses in the accompanying condensed consolidated statements of operations.

⁽⁴⁾ For the quarter and nine months ended September 30, 2015, the Company incurred approximately $8.6 million and $13.6 million, respectively, in investment service fees, of which approximately $1.5 million and $1.5 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  For the quarter and nine months ended September 30, 2014, Company incurred approximately $3.7 million and $11.9 million, respectively, in investment service fees, of which approximately $0.4 million and $1.6 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  Investment services fees, that are not capitalized, are recorded as acquisition fees and expenses in the accompanying condensed consolidated statements of operations.

⁽⁵⁾ There were no financing coordination fees for the quarter and nine months ended September 30, 2015.  For the nine months ended September 30, 2014, the Company incurred approximately $0.2 million in financing coordination fees which was capitalized and included in its investment in the Windsor Manor Joint Venture.

⁽⁶⁾ For the quarter and nine months ended September 30, 2015, the Company incurred approximately $1.1 million and $2.8 million, respectively, in property and construction management fees payable to the Property Manager of which approximately $0.3 million and $0.6 million, respectively, in construction management fees were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  For the quarter and nine months ended September 30, 2014, the Company incurred approximately $0.7 million and $1.8 million, respectively, in property and construction management fees payable to the Property Manager of which approximately $0.2 million and $0.3 million, respectively, in construction management fees were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.

⁽⁷⁾ For the quarter and nine months ended September 30, 2015, the Company incurred approximately $6.1 million  and $16.1 million, respectively, in asset management fees payable to the Advisor of which approximately $0.9 million and $2.3 million, respectively, was settled in accordance with the terms of the Advisor Expense Support Agreement and approximately $0.1 million and $0.4 million, respectively, was capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  For the quarter and nine months ended September 30, 2014, the Company incurred approximately $3.7 million and $9.5 million, respectively, in asset management fees payable to the Advisor of which approximately $0.9 million and $3.8 million, respectively, was settled in accordance with the terms of the Advisor Expense Support Agreement and approximately $0.1 million and $0.2 million, respectively, was capitalized for each period and included in real estate under development in the accompanying condensed consolidated balance sheets.

27

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

12. Derivative Financial Instruments 

The following table summarizes the terms of the derivative financial instruments held by the Company or through its joint venture and the asset (liability) that has been recorded (in thousands):

Initial													Fair value asset (liability) as of
Notional						Credit			Trade	Forward	Maturity		September 30,			December 31,
Amount			Strike (1)			Spread (1)			date	date	date		2015			2014
$	12,421	(2)		1.3	%		2.6	%	1/17/2013	1/15/2015	1/16/2018		$	(170	)	$	(71	)
$	38,255	(2)		2.7	%		2.5	%	9/6/2013	8/17/2015	7/10/2018		$	(1,906	)	$	(1,228	)
$	26,067	(2)		2.8	%		2.5	%	9/6/2013	8/17/2015	8/29/2018		$	(1,396	)	$	(906	)
$	30,000	(2)		1.1	%		2.7	%	10/22/2013	8/5/2015		(4)	$	—		$	(82	)
$	29,952	(2)		0.9	%		4.3	%	11/13/2013	5/11/2015		(4)	$	—		$	(74	)
$	11,000	(3)		3.0	%	―		%	6/27/2014	6/30/2014	6/30/2017		$	1		$	10
$	48,415	(2)		2.4	%		2.9	%	8/15/2014	6/1/2016	6/2/2019		$	(1,360	)	$	(270	)
$	84,251	(2)		2.3	%		2.4	%	9/12/2014	8/1/2015	7/15/2019		$	(3,315	)	$	(1,326	)
$	7,129	(2)		1.2	%		2.3	%	11/12/2014	11/15/2014	10/15/2017		$	(79	)	$	(35	)
$	175,000	(2)		1.6	%		2.0	%	12/23/2014	12/19/2014	2/19/2019		$	(3,526	)	$	(881	)
$	138,698	(2)		1.7	%		2.0	%	1/9/2015	12/10/2015	12/22/2019		$	(2,946	)	$	—

FOOTNOTES:

⁽¹⁾ The all-in rates are equal to the sum of the Strike and Credit Spread detailed above.

⁽²⁾ Amounts related to interest rate swaps held by the Company, or its equity method investments, which are recorded at fair value and included in either other assets or other liabilities in the accompanying condensed consolidated balance sheets.

⁽³⁾ Amounts related to the interest rate cap held by the Windsor Manor Joint Venture for which the proportionate amounts of fair value relative to the Company’s ownership percentage are included in investments in unconsolidated entities in the accompanying condensed consolidated balance sheets.

⁽⁴⁾ The loans associated with these derivatives were repaid during the nine months ended September 30, 2015. Refer to Note 10. “Indebtedness” for additional information.

Although the Company has determined that the majority of the inputs used to value its derivative financial instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties.  The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative financial instruments and has determined that the credit valuation adjustments on the overall valuation adjustments are not significant to the overall valuation of its derivative financial instruments. As a result, the Company determined that its derivative financial instruments valuation in its entirety is classified in Level 2 of the fair value hierarchy. Determining fair value requires management to make certain estimates and judgments.  Changes in assumptions could have a positive or negative impact on the estimated fair values of such instruments which could, in turn, impact the Company’s or its joint venture’s results of operations.

13.Equity

Stockholders’ Equity:

Public Offerings — The following table details the Company’s aggregate proceeds from its Offerings as of September 30, 2015 and December 31, 2014 (in millions):

	September 30, 2015								December 31, 2014
	Subscriptions				Reinvestment Plan				Subscriptions				Reinvestment Plan
	Proceeds		Shares		Proceeds		Shares		Proceeds		Shares		Proceeds		Shares
Initial Offering	$	1,271.4		125.1	$	27.1		2.8	$	1,114.2		110.2	$	27.1		2.8
Follow-on Offering		372.9		35.3		26.0		2.6	―		―		―		―
	$	1,644.3		160.4	$	53.1		5.4	$	1,114.2		110.2	$	27.1		2.8

28

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

13. Equity (continued) 

Distributions — The following table details the Company’s historical share prices in its Offerings, including the prices pursuant to the Reinvestment Plan and the Company’s monthly cash and stock distributions per share:

Period	Offering Price per Share		Reinvestment Plan Price per Share		Monthly Cash Distributions (1)		Monthly Stock Distributions
December 11, 2013 through November 3, 2014	$	10.14	$	9.64	$	0.0338		0.0025
November 4, 2014 through September 30, 2015	$	10.58	$	10.06	$	0.0353		0.0025

FOOTNOTE:

⁽¹⁾ Monthly cash distributions were effective and payable to all common stockholders of record as of the close of business on the first business day in the month subsequent to the announcement of the Company’s NAV (i.e. December 1, 2014 for the current Offering price).

During the nine months ended September 30, 2015 and 2014, the Company declared cash distributions of $44.9 million and $21.7 million, respectively, of which $18.8 million and $9.8 million, were paid in cash to stockholders and $26.1 million and $11.9 million, respectively, were reinvested pursuant to the Reinvestment Plan.  In addition, for the nine months ended September 30, 2015 and 2014, the Company declared and made stock distributions of approximately 3.2 million and 1.6 million shares of common stock, respectively. The Company closed its Follow-On Offering on September 30, 2015 and discontinued its stock distributions concurrently.

The tax composition of the Company’s distributions declared for the nine months ended September 30, 2015 and 2014 were as follows:

	Nine Months Ended September 30,
Distribution Type	2015			2014
Taxable as ordinary income		30.1	%		21.5	%
Return of capital		69.9	%		78.5	%

Redemptions — During the nine months ended September 30, 2015 and 2014, the Company received requests for the redemption of common stock of approximately 0.7 million and 0.2 million shares, respectively, all of which were approved for redemption at an average price of $9.51 and $9.13, respectively, and for a total of approximately $6.6 million and $2.1 million, respectively.

Other comprehensive income (loss) — The following table reflects the effect of derivative financial instruments held by Company, or its equity method investments, and included in the condensed consolidated statements of comprehensive loss for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

Derivative Financial Instrument	Gain (loss) recognized in other comprehensive loss on derivative financial instrument						Location of gain (loss) reclassified into earnings	Loss reclassified from AOCI into earnings
	Quarter Ended							Quarter Ended
	September 30,							September 30,
	2015			2014				2015			2014
Interest rate swaps	$	(6,435	)	$	224		Interest expense and loan cost amortization	$	(1,078	)	$	—
Reclassification of interest rate swaps upon derecognition		—			—		Interest expense and loan cost amortization		—			—
Reclassification of interest rate swaps due to ineffectiveness		48			—		Interest expense and loan cost amortization		(48	)		—
Interest rate cap held by unconsolidated joint venture		(1	)		(2	)	Not applicable	―				—
Total	$	(6,388	)	$	222			$	(1,126	)	$	—

29

CNL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)

13. Equity (continued) 

	Nine Months Ended							Nine Months Ended
	September 30,							September 30,
	2015			2014				2015			2014
Interest rate swaps	$	(10,060	)	$	(872	)	Interest expense and loan cost amortization	$	(2,411	)	$	—
Reclassification of interest rate swaps upon derecognition		236			—		Interest expense and loan cost amortization		(236	)		—
Reclassification of interest rate swaps due to ineffectiveness		48			—		Interest expense and loan cost amortization		(48	)		—
Interest rate cap held by unconsolidated joint venture		(9	)		21		Not applicable	―				—
Total	$	(9,785	)	$	(851	)		$	(2,695	)	$	—

14. Commitments and Contingencies

From time to time the Company may be exposed to litigation arising from operations of its business in the ordinary course of business.  Management is not aware of any litigation that it believes will have a material adverse impact on the Company’s financial condition or results of operations.

Refer to Note 4. “Real Estate Assets, net” for additional information on the remaining development budgets for the Company’s seniors housing developments.

Refer to Note 8. “Ground and Air Rights Leases” for information on commitments under its ground and air rights lease agreements.

Refer to Note 9. “Contingent Purchase Price Consideration” for information on potential contingent purchase price consideration related to the purchase of Superior Residences of Panama City.

Refer to Note 11. “Related Party Arrangements” for information on contingent restricted stock shares due to the Company’s Advisor and Property Manager in connection with the Expense Support Agreements.

15. Subsequent Events

During the period from October 1, 2015 through October 30, 2015, the Company received additional subscription proceeds of approximately $21.9 million (2.1 million shares).  While the Follow-On Offering closed on September 30, 2015, the Company accepted subscriptions proceeds for agreements that were received in good order on or before September 30, 2015 and for which subscription proceeds were received by the transfer agent through October 30, 2015.

The Company’s board of directors declared a monthly cash distribution of $0.0353 on each outstanding share of common stock on October 1, 2015 and November 1, 2015.  These distributions are to be paid and distributed by December 31, 2015.

30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Caution Concerning Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q for the nine months and the quarter ended September 30, 2015 may constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995.  The Company intends that such forward-looking statements be subject to the safe harbor created by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Forward-looking statements are statements that do not relate strictly to historical or current facts, but reflect management’s current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of the Company’s business and its performance, the economy, and other future conditions and forecasts of future events, and circumstances.  Forward-looking statements are typically identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “continues,” “pro forma,” “may,” “will,” “seeks,” “should” and “could,” and words and terms of similar substance in connection with discussions of future operating or financial performance, business strategy and portfolios, projected growth prospects, cash flows, costs and financing needs, legal proceedings, amount and timing of anticipated future distributions, estimated per share net asset value of the Company’s common stock, and/or other matters.  The Company’s forward-looking statements are not guarantees of future performance.  While the Company’s management believes its forward-looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances.  As with any projection or forecast, forward-looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise, and may not be realized.  The Company’s forward-looking statements are based on management’s current expectations and a variety of risks, uncertainties and other factors, many of which are beyond the Company’s ability to control or accurately predict.  Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company’s actual results could differ materially from those set forth in the forward-looking statements due to a variety of risks, uncertainties and other factors.

Important factors that could cause the Company's actual results to vary materially from those expressed or implied in its forward-looking statements include, but are not limited to, government regulation, economic, strategic, political and social conditions, and the following: a worsening economic environment in the U.S. or globally, including financial market fluctuations; risks associated with the Company’s investment strategy, including its concentration in the healthcare sector; the illiquidity of an investment in the Company’s stock; liquidation at less than the subscription price of the Company’s stock; the impact of regulations requiring periodic valuation of the Company on a per share basis, including the uncertainties inherent in such valuations and that the amount that a stockholder would ultimately realize upon liquidation may vary significantly from the Company’s estimated net asset value; risks associated with real estate markets, including declining real estate values; risks associated with reliance on the Company’s advisor and its affiliates, including conflicts of interest; the Company’s failure to obtain, renew or extend necessary financing or to access the debt or equity markets; the use of debt to finance the Company’s business activities, including refinancing and interest rate risk and the Company’s failure to comply with debt covenants; the Company’s inability to identify and close on suitable investments; failure to successfully manage growth or integrate acquired properties and operations; the Company’s inability to make necessary improvements to properties on a timely or cost-efficient basis; risks related to property expansions and renovations; risks related to development projects or acquired property value-add conversions, if applicable, including construction delays, cost overruns, the Company’s inability to obtain necessary permits, and/or public opposition to these activities; competition for properties and/or tenants; defaults on or non-renewal of leases by tenants; failure to lease properties on favorable terms or at all; the impact of current and future environmental, zoning and other governmental regulations affecting the Company’s properties; the impact of changes in accounting rules; inaccuracies of the Company’s accounting estimates; unknown liabilities of acquired properties or liabilities caused by property managers or operators; material adverse actions or omissions by any joint venture partners; consequences of the Company’s net operating losses; increases in operating costs and other expenses; uninsured losses or losses in excess of the Company’s insurance coverage; the impact of outstanding and/or potential litigation; risks associated with the Company’s tax structuring; failure to qualify for and maintain the Company’s qualification as a REIT for federal income tax purposes; and the Company’s inability to protect its intellectual property and the value of its brand.  Given these uncertainties, the Company cautions you not to place undue reliance on forward-looking information.

For further information regarding risks and uncertainties associated with the Company’s business, and other important factors that could cause the Company’s actual results to vary materially from those expressed or implied in its forward-looking statements, please refer to the factors listed and described in the Company’s reports filed from time to time with the Securities and Exchange Commission, including, but not limited to, the Company’s quarterly reports on Form 10-Q and the Company’s annual report on Form 10-K, copies of which may be obtained from the Company’s website at www.cnlhealthcareproperties.com.

All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by this cautionary note.  Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to, and expressly disclaims any obligation to, publicly release the results of any revisions to its forward-looking statements to reflect new information, changed assumptions, the occurrence of unanticipated subsequent events or circumstances, or changes to future operating results over time, except as otherwise required by law.

31

Introduction

The following discussion is based on the condensed consolidated financial statements as of September 30, 2015 (unaudited) and December 31, 2014.  Amounts as of December 31, 2014, included in the unaudited condensed consolidated balance sheets have been derived from the audited consolidated financial statements as of that date. This information should be read in conjunction with the accompanying unaudited condensed consolidated balance sheets and the notes thereto, as well as the audited consolidated financial statements, notes and management’s discussion and analysis included in our annual report on Form 10-K for the year ended December 31, 2014.

Overview

CNL Healthcare Properties, Inc. is a Maryland corporation incorporated on June 8, 2010 that elected to be taxed as a REIT beginning with the year ended December 31, 2012 for U.S. federal income tax purposes. The terms “us,” “we,” “our,” “Company” and “CNL Healthcare Properties” include CNL Healthcare Properties, Inc. and each of its subsidiaries.

We are externally managed and advised by CNL Healthcare Corp. Our Advisor is responsible for managing our day-to-day affairs and for identifying and making acquisitions and investments on our behalf. We have also retained CNL Healthcare Manager Corp. to manage our properties under a six year property management agreement, which is effective through June 8, 2017.

We had no operations prior to the commencement of our Initial Offering. The net proceeds from our Offerings are contributed to CHP Partners, LP, our operating partnership, in exchange for partnership interests. Substantially all of our assets are held by, and substantially all of our operations are conducted through, the operating partnership.

Our investment focus is on acquiring a diversified portfolio of healthcare real estate or real estate-related assets, primarily in the United States, within the seniors housing, medical office, post-acute care and acute care asset classes. The types of seniors housing that we may acquire include active adult communities (age-restricted and age-targeted housing), independent and assisted living facilities, continuing care retirement communities, and Alzheimer's / memory care facilities.  The types of medical office facilities that we may acquire include medical office buildings, specialty medical and diagnostic service facilities, surgery centers, outpatient rehabilitation facilities, and other facilities designed for clinical services. The types of post-acute care facilities that we may acquire include skilled nursing facilities, long-term acute care hospitals and inpatient rehabilitative facilities.  The types of acute care facilities that we may acquire include general acute care hospitals and specialty surgical hospitals.  We view, manage and evaluate our portfolio homogeneously as one collection of healthcare assets with a common goal of maximizing revenues and property income regardless of the asset class or asset type.

We are committed to investing the remaining proceeds of our Offerings through strategic investment types aimed to maximize stockholder value by generating sustainable cash flow growth and increasing the value of our healthcare assets.  We expect to primarily lease seniors housing properties to wholly owned TRS entities and engage independent third-party managers under management agreements to operate the properties as permitted under RIDEA structures; however, we may also lease our properties to third-party tenants under triple-net or similar lease structures, where the tenant bears all or substantially all of the costs (including cost increases, for real estate taxes, utilities, insurance and ordinary repairs).  Medical office, post-acute care and acute care properties will be leased on a triple-net, net or modified gross basis to third-party tenants.  In addition, we expect most investments will be wholly owned, although, we have and may continue to invest through partnerships with other entities where we believe it is appropriate and beneficial.   We have and may continue to invest in new property developments or properties which have not reached full stabilization.  Finally, we also may invest in and originate mortgage, bridge or mezzanine loans or in entities that make investments similar to the foregoing investment types.  We generally make loans to the owners of properties to enable them to acquire land, buildings, or to develop property.  In exchange, the owner generally grants us a first lien or collateralized interest in a participating mortgage collateralized by the property or by interests in the entity that owns the property.

32

Portfolio Overview

We believe recent demographic trends and compelling supply and demand indicators present a strong case for an investment focus on the acquisition of healthcare real estate or real estate-related assets. We believe that the healthcare sector will continue to provide attractive opportunities as compared to other asset sectors over the long-term.  Our healthcare investment portfolio is geographically diversified with properties in 33 states. The map below shows our current property allocations across geographic regions as of November 11, 2015:

As of November 11, 2015, our healthcare investment portfolio consisted of interests in 135 properties, including 71 seniors housing communities, 49 medical offices, 10 post-acute care facilities and five acute care hospitals.  Of our properties held at November 11, 2015, six of our 71 seniors housing communities currently have real estate under development and five were owned through an unconsolidated joint venture. One of our 10 post-acute care facilities currently have real estate under development. The following table summarizes our healthcare portfolio by asset class and investment structure as of November 11, 2015:

			Amount of		Percentage
Type of Investment	Number of Investments		Investments (in millions)		of Total Investments
Consolidated investments:
Seniors housing leased (1)		15	$	327.7		12.2	%
Seniors housing managed (2)		45		1,150.2		42.8	%
Seniors housing developments (3)		6		67.4		2.5	%
Medical office leased (1)		49		830.1		30.9	%
Post-acute care leased (1)		9		124.3		4.6	%
Post-acute care development (3)		1		2.1		0.1	%
Acute care leased (1)		5		153.9		5.7	%
Unconsolidated investments:
Seniors housing managed (4)		5		31.1		1.2	%
		135	$	2,686.8		100.0	%

FOOTNOTES:

⁽¹⁾ Properties that are leased to third-party tenants for which we report rental income from operating leases.

⁽²⁾ Seniors housing communities are leased to TRSs and managed pursuant to third-party management contracts (i.e. RIDEA structure) where we report resident fees and services, and the corresponding property operating expenses.

⁽³⁾ Investments herein represent funded and accrued development costs as of September 30, 2015.

⁽⁴⁾ Properties that are owned through an unconsolidated joint venture and are leased to TRSs and managed pursuant to third-party management contracts (i.e. RIDEA structure).  The joint venture is accounted for using the equity method.

33

Portfolio Evaluation

We monitor the performance of our tenants and third-party operators to stay abreast of any material changes in the operations of the underlying properties by (1) reviewing the current, historical and prospective operating margins (measured by a tenant’s earnings before interest, taxes, depreciation, amortization and facility rent), (2) monitoring trends in the source of our tenants’ revenue, including the relative mix of public payors (including Medicare, Medicaid, etc.) and private payors (including commercial insurance and private pay patients), (3) evaluating the effect of evolving healthcare legislation and other regulations on our tenants’ profitability and liquidity, and (4) reviewing the competition and demographics of the local and surrounding areas in which the tenants operate.

In addition to operating statistics of the underlying properties, when evaluating the performance of our healthcare portfolio within the seniors housing and post-acute care asset classes, management reviews occupancy levels and monthly revenue per occupied unit (“RevPOU”), which we define as total revenue divided by average number of occupied units or beds during a month and is considered a performance metric within these asset classes.  Similarly, within the medical office and acute care asset classes, management reviews operating statistics of the underlying properties, including occupancy levels and monthly rent per square foot.  Lastly, when evaluating the performance of our third-party operators or developers, management reviews monthly financial statements, property level operating performance versus budgeted expectations, conducts periodic operational review calls with operators and conducts periodic property inspections or site visits.  All of the aforementioned metrics assist us in determining the ability of our properties or operators to achieve market rental rates, to assess the overall performance of our diversified healthcare portfolio, and to review compliance with leases, debt, licensure, real estate taxes, and other collateral.

Furthermore, in our evaluation of the properties that we have purchased and additional properties that we expect to purchase, we consider the operating stage of the investments within the following stages: development, value-add or stabilizing and stabilized.  Development properties are those in which we or our joint venture have purchased land for the development of new operating properties.  We typically hold rights as the owner or managing member of the development properties while a third-party or our joint venture partner manages the development, construction and certain day-to-day operations of the property subject to our oversight.  Stabilizing properties are either developed properties that have been fully constructed and in lease-up phase (typically 18 months post-construction) or existing (“value-add”) properties in which we expect to make capital investments to upgrade or expand.  A property is considered stabilized upon the earlier of (i) when the property reaches 85% occupancy for a trailing three month period, or (ii) a two year period from acquisition or completion of development.  For those assets that are above an 85% occupancy level and subsequently drop below 85%, they are reclassified to stabilizing until they hit the trailing three month 85% occupancy metric.

We have increased the level of our investment in new ground up development and value-add or stabilizing properties.  During the construction and lease up phase, these types of investments are expected to generate limited cash flows or losses from operations and may result in near term downward pressure on our net asset valuation. However, we believe that investing a portion of our capital into these types of properties is beneficial because they are expected to provide a higher yield on cost and higher net asset valuations in the long-term as compared to similar stabilized acquisitions.  Additionally, these types of assets will result in our portfolio having a lower average age, which we believe will enhance our overall market value over the long-term.

Based on revenues as of September 30, 2015, the Company’s portfolio is comprised of 66.0% stabilized properties, of which 1.4% are completed developments that are still in the lease-up phase and 34.0% value-add or stabilizing properties, of which 2.1% are recently completed developments that are currently in the lease-up phase.

The following table lists our occupancy, RevPOU and rent per square feet by asset class within our healthcare portfolio as of September 30, 2015:

Operating Stage	Occupancy %			RevPOU		Rent per Square Feet
Value-add or Stabilizing:
Seniors Housing		81.5	%	$	3,545	$	—
Medical Office		79.8	%	$	—	$	2.90
Stabilized:
Seniors Housing		91.3	%	$	4,388	$	—
Medical Office		95.6	%	$	—	$	2.55
Acute (1)		100.0	%	$	—	$	3.07
Post-Acute (2)		99.9	%	$	6,565	$	2.73

FOOTNOTES:

⁽¹⁾ Rent per square feet related to one of the two specialty hospitals discussed in Note 5. “Intangibles, net” has been excluded.

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⁽²⁾ Post-acute is comprised of skilled nursing facilities, which are evaluated based on RevPOU, and inpatient rehab hospitals, which are evaluated based on rent per square feet. 

Real Estate Under Development

As of November 11, 2015, we had interests in seven developments that will provide us with 815 additional units upon completion as follows:

Property Name (and Location)	Developer	Number of Units upon Completion	Development Costs Incurred (in millions) (1)		Remaining Development Budget (in millions) (2)		Maximum Construction Loans Available (in millions)		Estimated Completion Date
HarborChase of Shorewood (Shorewood, WI)	Harbor Shorewood Development, LLC	94 units	$	22.0	$	5.8	$	8.9	4th quarter 2015
Raider Ranch      (Lubbock, TX)	South Bay Partners, Ltd	72 units		13.5		3.5		6.6	1st quarter 2016
Watercrest at Katy      (Katy, TX) (3)	South Bay Partners, Ltd	210 units		20.1		22.3		24.9	2nd quarter 2016
Welbrook Senior Living Grand Junction      (Grand Junction, CO)	Embree Asset Group, Inc.	50 units		2.1		11.5	―		3rd quarter 2016
Fieldstone at Pear Orchard (Yakima, WA)(4)	Cascadia Development, LLC	75 units	―			15.3		10.9	4th quarter 2016
Waterstone at Greenville (Greenville, SC)	The Balance Group, Inc.	114 units		5.3		22.4		18.9	1st quarter 2017
Wellmore of Lexington (Lexington, SC)	Maxwell Group, Inc.	200 units		6.5		48.7		35.7	2nd quarter 2017
	Total	815 units	$	69.5	$	129.5	$	105.9

FOOTNOTES:

⁽¹⁾ This amount represents land and total capitalized costs for GAAP purposes for the acquisition, development and construction of the seniors housing community or post–acute care facility as of September 30, 2015.  Amounts include investment services fees, asset management fees, interest expense and other costs capitalized during the development period.

⁽²⁾ This amount includes preleasing and marketing costs which will be expensed as incurred.

⁽³⁾ This property is owned through a joint venture in which the Company’s initial ownership interest is 95%.

⁽⁴⁾ This property is owned through a joint venture in which the Company’s initial ownership interest is 75%.

The development budgets of the developments include the cost of the land, construction costs, development fees, financing costs, start-up costs and initial operating deficits of the respective properties.  An affiliate of the developer of the respective community coordinates and supervises the management and administration of the development and construction.  Each developer is responsible for any cost overruns beyond the approved development budget for the applicable project.

Significant Tenants and Operators

Our real estate portfolio is operated by a mix of national or regional operators and the following represents the significant tenants and operators that lease or manage 5% or more of our rentable space as of September 30, 2015:

Tenants	Number of Properties		Rentable Square Feet (in thousands)		Percentage of Rentable Square Feet			Lease Expiration Year
TSMM Management, LLC		13		1,261		25.3	%		2025
Parc Communities, LLC		2		385		7.7	%		2017
Novant Medical Group, Inc.		5		276		5.5	%		2025
Senior Living Centers		6		261		5.2	%		2023
Other tenants (1)		52		2,797		56.3	%			2015-2033
		78		4,980		100.0	%

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Operators	Number of Properties		Rentable Square Feet (in thousands)		Percentage of Rentable Square Feet			Operator Expiration Year
Integrated Senior Living, LLC		5		1,319		27.5	%			2019
Prestige Senior Living, LLC		13		895		18.6	%			2019
MorningStar Senior Management, LLC		4		834		17.4	%			2018
Harbor Retirement Associates, LLC		3		246		5.1	%		2018-2023
Other operators (1)		19		1,507		31.4	%		2017-2025
		44		4,801		100.0	%

FOOTNOTE:

⁽¹⁾ Comprised of various tenants or operators each of which comprise less than 5% of our rentable square footage.

While we are not directly impacted by the performance of the underlying properties leased to third-party tenants, we believe that the financial and operational performance of our tenants provides an indication about the health of our tenants and their ability to pay rent. To the extent that our tenants, managers or joint venture partners experience operating difficulties and become unable to generate sufficient cash to make rent payments to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Our tenants and managers are contractually required to provide this information to us in accordance with their respective lease, management and joint venture agreements. Therefore, in order to mitigate the aforementioned risk, we monitor our investments through a variety of methods determined by the type of property.

We monitor the credit of our tenants to stay abreast of any material changes in quality. We monitor tenant credit quality by (1) reviewing financial statements that are publicly available or that are required to be delivered to us under the applicable lease, (2) direct interaction with onsite property managers, (3) monitoring news and rating agency reports regarding our tenants (or their parent companies) and their underlying businesses, (4) monitoring the timeliness of rent collections and (5) monitoring lease coverage.

In July 2015, an anchor tenant at two of our medical office buildings filed for chapter 11 bankruptcy and is in the process of marketing the sale of the health system and its affiliated operations to potential buyers.  For the nine months ended September 30, 2015, the revenues attributable to this tenant represented approximately 1.0% of our total revenues and, as of September 30, 2015, the related lease intangibles represented approximately 0.2% of our total assets.  As of September 30, 2015, the tenant was delinquent on approximately $0.3 million of rent for certain suites it occupies in the two buildings.  We continue to monitor developments relating to the tenant’s planned reorganization and as of the date of this filing, the tenant had neither affirmed nor rejected our leases under its plan of reorganization.

Tenant Lease Expirations

During the nine months ended September 30, 2015, our rental revenues from operating leases represented approximately 34.0% of our total revenues.  As of September 30, 2015, approximately 66.0% of our rental revenues from operating leases were scheduled to expire in 2020 or later.  Based on this, we do not expect lease turnover or any increases in property operating expenses to have a significant impact on our cash flow from operations in the near term.

Our asset management team collaborates with existing tenants to understand their current and anticipated space needs in advance of their lease term renewal date.  We work with and begin lease-related negotiations well in advance of the lease expirations or renewal period options in order for us to maintain a balanced lease rollover schedule and high occupancy levels, as well as to enhance the value of our properties through extended lease terms. Lease extensions are likely to create an obligation to pay lease commissions, lease incentives and/or tenant improvements and may also provide our tenants with some periods of reduced and/or “free rent.” Certain amendments or modifications to the terms of existing leases could require lender approval.

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The following table lists, on an aggregate basis, scheduled expirations for the remainder of 2015, each of the next nine years and thereafter on our consolidated healthcare investment portfolio (excludes real estate under development), assuming that none of the tenants exercise any of their renewal options as of September 30, 2015 (in thousands, except for number of tenants and percentages):

Year of Expiration (1)	Number of Tenants		Expiring Rentable Square Feet		Expiring Annualized Base Rents (2)		Percentage of Expiring Annual Base Rents
2015		34		117	$	3,003		2.9	%
2016		59		209		5,143		4.9	%
2017		66		626		10,880		10.5	%
2018		96		393		9,962		9.5	%
2019		61		265		6,521		6.2	%
2020		45		279		6,444		6.2	%
2021		14		118		2,728		2.6	%
2022		22		1,020		14,757		14.1	%
2023		57		582		13,653		13.1	%
2024		7		224		5,250		5.0	%
Thereafter		44		1,147		26,095		25.0	%
Total		505		4,980	$	104,436		100.0	%
Weighted Average Remaining Lease Term: (3)					7.5 years

FOOTNOTES:

⁽¹⁾ Represents current lease expiration and does not take into consideration lease renewals available under existing leases at the option of the tenants.

⁽²⁾ Represents the current base rent, excluding tenant reimbursements and the impact of future rent escalations included in leases, multiplied by 12 and included in the year of expiration.

⁽³⁾ Weighted average remaining lease term is the average remaining term weighted by annualized current base rents.

Liquidity and Capital Resources

General

Our primary source of capital, through the close of our Follow-on Offering on September 30, 2015, was proceeds we received from our Offerings.  Our principal demands for funds will be for:

· the acquisition of real estate and real estate-related assets,

· the payment of offering costs (through the close of our Offerings) and operating expenses,

· the payment of debt service on our outstanding indebtedness, and

· the payment of distributions.

Generally, we expect to meet short-term capital needs from our cash flows from operations and proceeds from our Reinvestment Plan.  In addition, we expect to meet long-term capital needs from net proceeds remaining from our Offerings and additional borrowings.  However, until such time as we are fully invested, we may continue to use the remaining proceeds from our Offerings and borrowings to pay a portion of our operating expenses, distributions and debt service.

We intend to strategically leverage our real properties and possibly other assets and use debt as a means of providing additional funds for the acquisition of properties and the diversification of our portfolio.  Our ability to increase our diversification through borrowing could be adversely affected by credit market conditions which result in lenders reducing or limiting funds available for loans, including loans collateralized by real estate.  We may also be negatively impacted by rising interest rates on any unhedged variable rate debt or the timing of when we seek to refinance existing debt.  During times when interest rates on mortgage loans are high or financing is otherwise unavailable on a timely basis, we may purchase certain properties for cash with the intention of obtaining a mortgage loan for a portion of the purchase price at a later time. In addition, we will continue to evaluate the need for additional interest rate swaps on unhedged variable rate debt.

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Potential future sources of capital include proceeds from collateralized or uncollateralized financings from banks or other lenders, proceeds from the sale of properties, other assets and undistributed operating cash flows.  If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures.

Sources of Liquidity and Capital Resources

Common Stock Offerings

For the nine months ended September 30, 2015 and 2014, we received proceeds from our Offerings of approximately $530.1 million (50.2 million shares) and $334.0 million (33.0 million shares), respectively. We closed our Follow-On Offering on September 30, 2015 and discontinued our stock distributions concurrently.

During the period from October 1, 2015 through October 30, 2015, the Company received additional subscription proceeds of approximately $21.9 million (2.1 million shares).  While the Follow-On Offering closed on September 30, 2015, we accepted subscriptions proceeds for agreements that were received in good order on or before September 30, 2015 and for which subscription proceeds were received by our transfer agent through October 30, 2015.

As of September 30, 2015, we had unused proceeds from our Follow-on Offering of approximately $51.2 million as cash on hand and we had fully invested the proceeds from our Initial Offering. We plan to use the available uncommitted cash on hand as of September 30, 2015, as well as additional borrowings and offering proceeds obtained subsequently, to acquire additional healthcare real estate and real estate-related assets.

Borrowings

We have borrowed and intend to continue borrowing money to acquire properties, make loans and other permitted investments, fund ongoing enhancements to our portfolio, and to cover periodic shortfalls between distributions paid and cash flows from operating activities.  During the nine months ended September 30, 2015 and 2014, we borrowed approximately $299.9 million and $357.7 million, respectively.  These amounts were primarily used to fund real estate under development and acquire additional properties, respectively.

In May 2015, we executed an amendment to our credit agreement with KeyBank, as administrative agent, related to the Credit Facilities, which adjusts certain criteria and terms for the unencumbered collateral pool of assets supporting our Revolving Credit Facility.  The amendment allowed us to include the Perennial Communities and Medical Portfolio I Properties in the unencumbered collateral pool, which increased our availability under the Revolving Credit Facility in future periods.  Refer to “Uses of Liquidity and Capital Resources – Debt Repayments” for additional information related to the repayment of the secured mortgage loans on these properties.

As of September 30, 2015, we had availability under the Revolving Credit Facility of approximately $15.0 million, based on the value of the properties in the unencumbered collateral pool of assets supporting the loan.  In addition, we had an aggregate debt leverage ratio of approximately 48.3%, based on the aggregate carrying value of our assets.  We may borrow money to pay distributions to stockholders, for working capital and for other corporate purposes.  See “Uses of Liquidity and Capital Resources – Distributions” below for additional information related to the payment of distributions with other sources for GAAP purposes.  In many cases, we have pledged our assets in connection with our borrowings and intend to encumber assets in connection with additional borrowings.  The aggregate amount of long-term financing is not expected to exceed 60% of our total assets on an annual basis.

While our Revolving Credit Facility provides us flexibility with regards to managing our capital resources in the short-term, we may refinance all or a portion of the balance outstanding on our Revolving Credit Facility with a term loan, which may result in a lower interest rate on the amount thereof.  In addition, the refinancing of amounts outstanding under our Revolving Credit Facility would allow us to finance the acquisition of additional properties with further borrowings on the Revolving Credit Facility.  We currently intend to maintain amounts outstanding under our long-term debt arrangements, so that we will have adequate funds available for working capital and potential future investment whether in capital improvements to our existing properties or in acquisitions of additional properties.

As a result of the tenant default discussed in Note 5. “Intangibles, net,” the lender on the mortgage loan secured by the two specialty hospitals elected to accelerate the required debt service payments related to these properties from a 25-year to a 15-year amortization period given that the tenant did not meet the required lease coverage thresholds.  In September 2015, we signed an amended and restated lease agreement with a new tenant at one of the specialty hospitals and the lender re-adjusted the required debt service payments for the property back to a 25-year amortization period effective November 2015.

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Distributions from Unconsolidated Entities

As of September 30, 2015, we had an investment in five unconsolidated properties through a joint venture.  Pursuant to the joint venture agreement, we are entitled to receive quarterly preferred cash distributions to the extent there is cash available to distribute.  These distributions are generally received within 45 days after each quarter end.  During the nine months ended September 30, 2015, we received approximately $0.7 million of operating distributions from our investment in these unconsolidated entities.

For the nine months ended September 30, 2014, we received approximately $1.5 million of operating distributions from our two investments in unconsolidated entities.  In August 2014, we acquired our co-venture partner’s 10% interest in the Montecito Joint Venture for approximately $1.6 million.  As a result, we own 100% of the Montecito Joint Venture and began consolidating all of the assets, liabilities and results of operations in our consolidated financial statements upon acquisition.

Net Cash Provided by Operating Activities

We generally expect to meet future cash needs for general and administrative expenses, debt service and distributions from the net operating income from our properties (“Property-level NOI”). We define Property-level NOI, a non-GAAP measure, as rental income from operating leases, resident fees and services, tenant reimbursement income and interest income less the property operating expenses and property management fees from managed properties.  We experienced positive cash flow from operating activities for the nine months ended September 30, 2015 and 2014 of approximately $32.4 million and $18.7 million, respectively.

The increase in cash flows from operating activities for the nine months ended September 30, 2015 as compared to the same period in 2014 was primarily the result of the following:

· an increase in total revenues and Property-level NOI for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, primarily as the result of having 122 consolidated operating properties in 2015 as compared with 78 consolidated operating properties in 2014; and

· offset by the payment of approximately $11.6 million in lease incentives (discussed below);

· an increase in interest expense paid resulting from additional borrowings on properties acquired subsequent to September 30, 2014 and properties acquired during the nine months ended September 30, 2014 being owned for the entire period;

· an increase in asset management fees resulting from the continued growth and increased total assets under management net of amounts related to asset management fees that were foregone by our Advisor under the Advisor Expense Support Agreement (discussed below), which is primarily reflective of our growth in Property-level NOI outpacing the growth in our distributions, interest expense and other expenses;  and

· an increase in general and administrative expenses paid resulting from our continued portfolio growth.

As we continue to acquire additional properties we expect that cash flows provided by operating activities will continue to grow.

Expense Support Agreements

As discussed above, during the nine months ended September 30, 2015, our cash from operating activities was positively impacted by the Expense Support Agreements, which we entered into with our Advisor and Property Manager commencing on April 1, 2013 and July 1, 2013, respectively, and which automatically renew for successive one-year periods thereafter, subject to the right of the Advisor or Property Manager to terminate their respective agreements upon 30 days’ written notice.  Pursuant to the Expense Support Agreements, our Advisor and Property Manager have agreed to forgo the payment of fees in cash and accept restricted forfeitable stock for services in an amount equal to the positive excess, if any, of (a) aggregate stockholder cash distributions declared for the applicable quarter, over (b) our aggregate modified funds from operations (as defined in the Expense Support Agreements).  The Advisor expense support amount is determined for each calendar quarter, on a non-cumulative basis, on each quarter-end date.  The Property Manager expense support amount is determined for each calendar quarter, on a non-cumulative basis, after the calculation of the Advisor expense support amount pursuant to the Property Manager Expense Support Agreement on each quarter-end date.  For the quarter and nine months ended September 30, 2015, our Advisor had settled approximately $0.9 million and $2.3 million, respectively, in asset management fees in accordance with the terms of the Advisor Expense Support Agreement.  For the quarter and nine months ended September 30, 2014, our Advisor had settled approximately $0.9 million and $3.8 million, respectively, in asset management fees in accordance with the terms of the Advisor Expense Support Agreement.  There were no amounts settled under the Property Manager expense support agreement through September 30, 2015.

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In exchange for services rendered and in consideration of the expense support provided, the Company will issue, within 45 days following each Determination Date, a number of shares of restricted stock equal to the quotient of the expense support amount provided by to the Advisor and Property Manager for the preceding quarter divided by the then-current public offering price per share of common stock, on the terms and conditions and subject to the restrictions set forth in the Expense Support Agreements. Any amounts deferred, and for which restricted stock shares are issued, pursuant to the Expense Support Agreements will be permanently waived and the Company will have no obligation to pay such amounts to the Advisor or the Property Manager. The Restricted Stock is subordinated and forfeited to the extent that shareholders do not receive their original invested capital back with at least a 6% annualized return on investment upon ultimate liquidity of the company.

Refer to Note 11. “Related Party Arrangements” for additional information.

Uses of Liquidity and Capital Resources

Acquisitions

During the nine months ended September 30, 2015 and 2014, we acquired 30 and 22 consolidated operating properties for an aggregate purchase price paid of approximately $647.5 million and $524.7 million, respectively, net of liabilities assumed.  The acquired operating properties were spread across our targeted asset classes and located in 17 and eight different states, respectively, which allowed us to expand both the variety of our asset classes and the geographical diversification of our healthcare investment portfolio.  In addition, the operating properties acquired during the nine months ended September 30, 2015 and 2014 increased our total units by 1,314 and 1,303, respectively. Furthermore, during the nine months ended September 30, 2015 and 2014, our total leasable square footage increased by approximately 1.5 million and 0.7 million, respectively.  We expect to continue to expand our healthcare investment portfolio in the near term through additional acquisitions.

Development Properties

In connection with our various seniors housing developments, we funded approximately $54.4 million and $32.9 million in development costs during the nine months ended September 30, 2015 and 2014, respectively.  Pursuant to the development agreements for the other active properties under development as of September 30, 2015, we expect to fund approximately $114.2 million of additional development and other costs.  Furthermore, we expect to fund an additional $15.3 million related to an additional seniors housing development acquired in October 2015. We expect to fund the remaining development and other costs primarily from construction loans on each development or with the remaining proceeds from our Offerings.  Our Advisor continues to evaluate additional development opportunities.

Debt Repayments

During the nine months ended September 30, 2015, we paid approximately $111.7 million of total repayments which is comprised of $31.4 million in repayments on our Revolving Credit Facility, $64.5 million in repayments on our mortgage loans for the Perennial Communities and Medical Portfolio I Properties prior to their scheduled maturities, $2.6 million of prepayments on our mortgage loan for the Capital Health Communities related to monies received under the Yield Guaranty and $13.2 million of scheduled repayments.  During the nine months ended September 30, 2014, we had total repayments of $54.1 million.

Stock Issuance and Offering Costs

Under the terms of the Offerings, certain affiliates and third-party broker dealers are entitled to receive selling commissions of up to 7% of gross offering proceeds on all shares sold, a marketing support fee of up to 3% of gross offering proceeds, and reimbursement of actual expenses incurred in connection with the Offerings.  In accordance with our articles of incorporation and the advisory agreement, the total amount of selling commissions, marketing support fees, due diligence expense reimbursements, and organizational and other offering costs to be paid by us may not exceed 15% of the gross aggregate proceeds of our Offerings.

During the nine months ended September 30, 2015 and 2014, we paid approximately $55.6 million and $36.6 million, respectively, of stock issuance and offering costs.

Lease Incentives

During the nine months ended September 30, 2015, we paid approximately $1.9 million of lease incentives in connection with the build-out of space for certain tenants at our medical office buildings.  There were no lease incentives paid during the quarter and nine months ended September 30, 2014.  Lease incentives are capitalized as deferred rent and amortized over the respective lease terms.

40

In April 2015, we paid approximately $1.7 million of lease incentives in connection with the build-out of approximately 25,000 square feet of space for a new tenant at Physicians Plaza B at North Knoxville Medical Center.  The related lease commenced in April 2015 upon completion of the build-out and includes an initial 10-year lease term that also provides the tenant with two 5-year renewal options.

In addition, in April 2015, we executed a lease modification with the tenant at Memorial Hermann Orthopedic & Spine Hospital (“MHOSH”), which included an extension of the lease term from 2023 to 2038 and provides the tenant with three 10-year renewal options.  In connection therewith, the tenant agreed to extend the lease term of its current space in the MHOSH MOB from 2023 to 2038 and lease approximately 7,000 square feet of additional space by the end 2015 that would be co-terminus with lease terms through 2038.  We paid the tenant approximately $3.0 million of aggregate lease incentives in connection with the lease modifications and leasing of additional space.

In August 2015, we executed a lease modification with the tenant at Batesville Healthcare Center, Searcy Healthcare Center and Mine Creek Healthcare Center that included the termination of the tenant’s options to purchase the leased properties.  We paid approximately $5.0 million of lease incentives in connection with the modification, of which $3.0 million was treated as an adjustment to the lease basis and will increase rental income from these operating leases in future periods.

While we expect the impact of these lease incentives to adversely impact our cash flows from operations in the near term, we anticipate that the new leasing activity will contribute to same-store NOI growth in future periods and that the extension of existing lease terms could increase the value of our properties.

Distributions

In order to qualify as a REIT, we are required to make distributions, other than capital gain distributions, to our stockholders each year in the amount of at least 90% of our taxable income. We may make distributions in the form of cash or other property, including distributions of our own securities.  Until we have sufficient cash flow from operating activities or funds from operations, we have decided and may continue to make stock distributions or to fund all or a portion of the payment of distributions from other sources; such as from cash flows generated by financing activities, a component of which includes our borrowings and the remaining proceeds of our Offerings.

In November 2014, in connection with the determination of our estimated NAV per share, we announced that our board of directors increased the amount of monthly cash distributions to $0.0353 per share (from $0.0338 per share) together with monthly stock distributions of 0.0025 shares of common stock payable to all common stockholders of record as of the close of business on the first business day of each month beginning December 1, 2014.  This change allowed us to maintain our historical annual distribution rate of 4.0% in cash (based on our current $10.58 offering price) and 3% in stock (based on three shares for each 100 outstanding shares of our common stock).  The new distribution rates were payable to all common stockholders of record as of the close of business of the first day of each month beginning December 1, 2014.  We closed our Follow-On Offering on September 30, 2015 and discontinued our stock distribution concurrently.

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The following table represents total cash distributions declared, distributions reinvested and cash distributions per share for quarter and nine months ended September 30, 2015 and 2014 (in thousands, except per share data):

			Distributions Paid (1)
Periods	Cash Distributions per Share		Total Cash Distributions Declared		Reinvestedvia Reinvestment Plan		Cash Distributions net of Reinvestment Proceeds		Stock Distributions Declared (Shares)		Stock Distributions Declared (at then-current offering price)		Total Cash and Stock Distributions Declared (2)		Cash Flows Provided by Operating Activities (3)
2015 Quarters
First	$	0.1059	$	13,248	$	7,648	$	5,600		943	$	9,977	$	23,225	$	11,317
Second		0.1059		14,895		8,619		6,276		1,060		11,215		26,110		10,757
Third		0.1059		16,748		9,808		6,940		1,193		12,620		29,368		10,319
Total	$	0.3177	$	44,891	$	26,075	$	18,816		3,196	$	33,812	$	78,703	$	32,393
2014 Quarters
First	$	0.1014	$	6,147	$	3,349	$	2,798		455	$	4,614	$	10,761	$	6,277
Second		0.1014		7,145		3,916		3,229		529		5,364		12,509		5,035
Third		0.1014		8,385		4,630		3,755		621		6,295		14,680		7,361
Total	$	0.3042	$	21,677	$	11,895	$	9,782		1,605	$	16,273	$	37,950	$	18,673

____________________________

FOOTNOTES:

⁽¹⁾ Represents the amount of cash used to fund distributions and the amount of distributions paid which were reinvested in additional shares through our Reinvestment Plan.

⁽²⁾ For the nine months ended September 30, 2015 and 2014, our net loss was approximately $50.6 million and $37.0 million, respectively, while cash distributions declared were approximately $44.9 million and $21.7 million, respectively, and total distributions declared were approximately $78.7 million, and $38.0 million, respectively.  For the nine months ended September 30, 2015 and 2014, approximately 72% and 86%, respectively, of cash distributions declared to stockholders were considered to be funded with cash provided by operating activities as calculated on a quarterly basis for GAAP purposes and approximately 28% and 14%, respectively, were considered to be funded with other sources (i.e., Offering proceeds).  For the nine months ended September 30, 2015 and 2014, approximately 41% and 49%, respectively, of total distributions declared to stockholders were considered to be funded with cash provided by operating activities as calculated on a quarterly basis for GAAP purposes and approximately 59% and 51%, respectively, of total distributions declared to stockholders were considered to be funded with other sources (i.e., Offering proceeds).

⁽³⁾ Cash flows from operating activities calculated in accordance with GAAP are not necessarily indicative of the amount of cash available to pay distributions.  For example, GAAP requires that the payment of acquisition fees and costs related to business combinations be classified as a use of cash in operating activities in the statement of cash flows, which directly reduces the measure of cash flows from operations.  However, acquisition fees and costs are paid for with proceeds from our Offerings as opposed to operating cash flows.  For the nine months ended September 30, 2015 and 2014, we expensed approximately $15.9 million and $15.7 million, respectively, in acquisition fees and expenses, which were paid from the proceeds of our Offerings.  Additionally, the board of directors also uses other measures such as FFO and MFFO in order to evaluate the level of distributions.

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The tax composition of our distributions declared for the nine months ended September 30, 2015 and 2014 were as follows:

	Nine Months Ended September 30,
Distribution Type	2015			2014
Taxable as ordinary income		30.1	%		21.5	%
Return of capital		69.9	%		78.5	%

No amounts distributed to stockholders for the nine months ended September 30, 2015 and 2014 were required to be or have been treated as return of capital for purposes of calculating the stockholders’ return on their invested capital as described in our advisory agreement.

The following tables present a summary of requests received and shares redeemed pursuant to our redemption plan during the nine months ended September 30, 2015 and 2014:

2015 Quarters	First			Second			Third			Total
Redemptions requested		204,184			195,873			292,429			692,486
Shares redeemed		(204,184	)		(195,873	)		(292,429	)		(692,486	)
Pending redemption requests	―			―			―			―
Average price paid per share	$	9.51		$	9.51		$	9.51		$	9.51

2014 Quarters	First			Second			Third			Total
Redemptions requested		28,343			75,313			129,022			232,678
Shares redeemed		(28,343	)		(75,313	)		(129,022	)		(232,678	)
Pending redemption requests	―			―			―			―
Average price paid per share	$	9.13		$	9.13		$	9.13		$	9.13

Common Stock Redemptions

We have adopted a redemption plan that allows our stockholders who hold shares for at least one year to request that we redeem between 25% and 100% of their shares.  If we have sufficient funds available to do so and if we choose, in our sole discretion, to redeem shares, the number of shares we may redeem in any calendar year and the price at which they are redeemed are subject to conditions and limitations, including:

· If we elect to redeem shares, some or all of the proceeds from the sale of shares under our distribution reinvestment plan attributable to any quarter may be used to redeem shares presented for redemption during such quarter. In addition, we may use the unused amount of any offering proceeds available for use in future quarters to the extent not used to invest in assets or for other purposes;

· No more than 5% of the weighted average number of shares of our common stock outstanding during such 12-month period may be redeemed during such 12-month period; and

· Redemption pricing shall not exceed an amount equal to the lesser of (i) the then-current public offering price for our shares of common stock (other than the price at which the shares are sold under our Reinvestment Plan); and (ii) the purchase price paid by the stockholder.

Our board of directors has the ability, in its sole discretion, to amend or suspend the redemption plan or to waive any specific conditions if it is deemed to be in our best interest.

During the nine months ended September 30, 2015, we received redemption requests for 0.7 million shares at a redemption price of $9.51 per share of which approximately $4.7 million was paid and approximately $2.8 million was payable as of September 30, 2015. During the nine months ended September 30, 2014, we received redemption requests for 0.2 million shares at a redemption price of $9.13 per share of which approximately $1.1 million was paid and approximately $1.2 million was payable as of September 30, 2014.

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Results of Operations

The following discussion and analysis should be read in conjunction with the consolidated financial statements and the notes thereto of our Annual Report on Form 10-K for the year ended December 31, 2014.

As of September 30, 2015, we owned 122 consolidated operating properties and our portfolio consisted of 4,781 units operated under management agreements with third-party operators under RIDEA structures and approximately 4.9 million leasable square feet that was 95.9% leased to third-party tenants.

In understanding our operating results in the accompanying condensed consolidated financial statements, it is important to understand how the growth in our assets has impacted our results.  We use Property-level NOI, a non-GAAP measure, as a key performance metric for internal monitoring and planning purposes, including the preparation of annual operating budgets and monthly operating reviews, as well as to facilitate analysis of future investment and business decisions. It does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income or loss (determined in accordance with GAAP) as an indication of our operating performance or to be an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity.  We believe the presentation of this non-GAAP measure is important to the understanding of our operating results for the periods presented because it is an indicator of the return on property investment and provides a method of comparing property performance over time.  In addition, we have aggregated Property-level NOI on a “same-store” basis only for comparable properties that we have owned during the entirety of all periods presented.  Non-same-store NOI represents aggregated Property-level NOI from acquisitions made after July 1, 2014 or January 1, 2014, which are excluded as we did not own those properties during the entirety of all periods presented.  The chart below illustrates our net losses, Property-level NOI and same-store NOI for the quarter and nine months ended September 30, 2015 and 2014 (in thousands), and the amount invested in properties as of September 30, 2015 and 2014 (in thousands):

	Quarter Ended											Nine Months Ended
	September 30,						Change					September 30,						Change
	2015			2014			$		%			2015			2014			$		%
Net loss	$	(19,231	)	$	(12,204	)						$	(50,650	)	$	(37,030	)
Adjusted to exclude:
General and administrative expenses		2,239			1,997								6,823			5,689
Acquisition fees and expenses		9,073			3,729								15,939			15,726
Asset management fees		5,085			2,753								13,426			5,572
Contingent purchase price consideration adjustment		(268	)		1,800								(589	)		479
Impairment provision	―			―									4,661		―
Loss on lease terminations	―			―									863		―
Depreciation and amortization		27,854			17,550								75,147			44,111
Other expenses, net of other income		11,113			5,924								30,887			20,022
Income tax expense		193			37								279			9
Property-level NOI		36,058			21,586								96,786			54,578
Less: Non-same-store NOI		(14,552	)		(1,540	)							(51,703	)		(13,049	)
Same-store NOI	$	21,506		$	20,046		$	1,460		7.3	%	$	45,083		$	41,529		$	3,554		8.6	%
Invested in operating properties, end of period (in millions)	$	2,521		$	1,455							$	2,521		$	1,455

We anticipate using our cash on hand as of September 30, 2015, additional borrowings as well as remaining net proceeds received through our Offerings to invest in additional properties.  As such, we anticipate additional operating income will be generated in subsequent periods.

We are not aware of any material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from the acquisition and operation of properties, loans and other permitted investments, other than those referred to in the risk factors identified in “Part II, Item 1A” of this report and the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2014.

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Quarter and nine months ended September 30, 2015 as compared to the quarter and nine months ended September 30, 2014

Rental Income from Operating Leases. Rental income from operating leases was approximately $28.4 million and $72.3 million for the quarter and nine months ended September 30, 2015, respectively, as compared to $13.4 million and $33.5 million for the quarter and nine months ended September 30, 2014, respectively.  The increase in rental income from operating leases resulted from our acquisition of 29 medical office buildings, one acute care hospital and five leased seniors housing communities subsequent to September 30, 2014 as well as three medical office buildings, three post-acute care facilities and three acute care hospitals acquired during the nine months ended September 30, 2014 being owned for the entire period.  We expect this revenue stream to increase as these investments are held in future periods and we acquire additional properties with operating leases.

Resident Fees and Services. Resident fees and services income was approximately $47.5 million and $129.3 million for the quarter and nine months ended September 30, 2015, respectively, as compared to $34.2 million and $86.6 million for the quarter and nine months ended September 30, 2014, respectively.  The increase in resident fees and services is a result of the eight managed seniors housing communities acquired subsequent to September 30, 2014, 13 managed seniors housing communities acquired during the nine months ended September 30, 2014 being owned for the entire period.  In addition, Wellmore of Tega Cay, Dogwood Forest of Acworth and HarborChase of Villages Crossing were placed into service in June 2015, June 2014 and December 2013, respectively, which further contributed to the increase as operations began or continued to ramp-up across periods. We expect this revenue stream to increase as these investments are held in future periods, our value-add and completed development properties stabilize and we acquire additional managed seniors housing communities.

Tenant Reimbursement Income. Tenant reimbursement income was approximately $4.0 million and $10.8 million for the quarter and nine months ended September 30, 2015, respectively, as compared to $2.0 million and $4.8 million for the quarter and nine months ended September 30, 2014, respectively.  This amount is comprised of common area maintenance (“CAM”) revenue and the increase resulted from our acquisition of 29 medical office buildings, and one acute care hospitals subsequent to September 30, 2014 as well as three medical office buildings, three post-acute care facilities and three acute care hospitals acquired during the nine months ended September 30, 2014 being owned for the entire period.  We expect this revenue stream to increase as these investments are held in future periods and we acquire additional properties with modified operating leases.

Interest Income on Note Receivable from Related Party. Interest income on note receivable from related party was approximately $0.2 million and $0.5 million for the quarter and nine months ended September 30, 2014.  This amount is comprised of interest income on the outstanding ADC loan made to Crosland Southeast for the HCA Rutland development beginning in June 2013.  Interest income from this loan ceased once the ADC loan was repaid in August 2014.

Property Operating Expenses. Property operating expenses were approximately $39.9 million and $105.1 million for the quarter and nine months ended September 30, 2015, respectively, as compared to $25.7 million and $64.7 million for the quarter and nine months ended September 30, 2014, respectively.  This increase is a result of our acquisition of eight managed seniors housing communities, 29 medical office buildings, and one acute care hospital subsequent to September 30, 2014 as well as 13 managed seniors housing communities, three medical office buildings, three post-acute care facilities and three acute care hospitals acquired during the nine months ended September 30, 2014 being owned for the entire period.  In addition, Wellmore of Tega Cay, Dogwood Forest of Acworth and HarborChase of Villages Crossing were placed into service in June 2015, June 2014 and December 2013, respectively, which further contributed to the increase as operations began or continued to ramp-up across periods. We expect property operating expenses to increase as these investments are held in future periods, our value-add and completed development properties stabilize and we acquire additional properties.

General and Administrative. General and administrative expenses were approximately $2.2 million and $6.8 million for the quarter and nine months ended September 30, 2015, respectively, as compared to $2.0 million and $5.7 million for the quarter and nine months ended September 30, 2014, respectively.  General and administrative expenses were comprised primarily of personnel expenses of affiliates of our Advisor, directors’ and officers’ insurance, franchise taxes, accounting and legal fees, and board of director fees and will continue to grow as our asset base increases.  The increase in general and administrative expense was primarily attributed to increased costs as a result of the growth of our portfolio.  Specifically, we incurred increased personnel expenses reimbursable to the Advisor due to increased accounting, legal and administrative activity as a result of the growth of the portfolio and related reporting.  We expect increases in general and administrative expenses in the future as we purchase additional real estate properties and the properties acquired during the nine months ended September 30, 2015 are operational for a full period.

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Acquisition Fees and Expenses. Acquisition fees and expenses were approximately $11.3 million and $18.1 million for the quarter and nine months ended September 30, 2015, respectively, of which $2.2 million were capitalized as real estate under development for both the quarter and nine months ended September 30, 2015.  We incurred approximately $4.3 million and $19.0 million for the quarter and nine months ended September 30, 2014, respectively, of which $0.5 million and $3.3 million were capitalized as real estate under development.  The net increase in acquisition fees and expenses is a result of having acquired 30 operating properties totaling approximately $655.1 million during the nine months ended September 30, 2015, as compared with the acquisition of 22 operating properties totaling approximately $559.5 million, which included a large value add acquisition, during the nine months ended September 30, 2014.  We expect to incur additional acquisition fees and expenses in the future as we purchase additional real estate or real estate-related assets.

Asset Management Fees. We incurred asset management fees payable to our Advisor of approximately $6.1 million and $16.1 million for the quarter and nine months ended September 30, 2015, respectively, as compared to $3.7 million and $9.5 million for the quarter and nine months ended September 30, 2014, respectively.  For the quarter and nine months ended September 30, 2015, approximately $0.9 million and $2.3 million, respectively, in asset management fees were settled in accordance with the terms of the Expense Support Agreements and approximately $0.1 million and $0.4 million, respectively, were capitalized as real estate under development.  For the quarter and nine months ended September 30, 2014, approximately $0.9 million and $3.8 million, respectively, in asset management fees were settled in accordance with the terms of the Expense Support Agreements and approximately $0.1 million and $0.2 million, respectively, were capitalized as real estate under development.  As described in Note 11. “Related Party Arrangements,” during the quarter and nine months ended September 30, 2015, asset management fees were reduced by $0.9 million and $2.3 million, respectively, because the shares of restricted stock, which will be accepted by the Advisor as payment for asset management services rendered, were valued at zero— the lowest possible value estimated at vesting.   For the quarter and nine months ended September 30, 2014, approximately $0.9 million and $3.8 million in asset management fees were settled with issuance of restricted stock in accordance with the Expense Support Agreements.  Monthly asset management fees equal to 0.08334% of invested assets are paid to the Advisor for management of our real estate assets, including our pro rata share of our investments in unconsolidated entities, loans and other permitted investments.  We expect increases in asset management fees in the future as we purchase additional real estate or real estate-related assets and the properties owned as of September 30, 2015 are operational for a full period; however, a portion of such fees may be settled in the form of forfeitable restricted stock under the Expense Support Agreements.

Property Management Fees. We incurred property and construction management fees of approximately $4.9 million and $13.1 million for the quarter and nine months ended September 30, 2015, respectively, as compared to $3.0 million and $7.0 million for the quarter and nine months ended September 30, 2014, respectively.  For the quarter and nine months ended September 30, 2015, approximately $1.0 million and $2.6 million, respectively, as compared to $0.6 million and $0.9 million for the quarter and nine months ended September 30, 2014, respectively, were capitalized as real estate under development.  Property management fees generally range from 2% to 5% of property revenues for leased properties, depending on the type of property, and are paid to third-party managers.  However, an oversight fee equal to 1% of property revenues is paid to the Property Manager for those properties managed by a third-party.  Overall property management fees increased as a result of the increases in rental income from operating leases and resident fees and services from acquisitions subsequent to September 30, 2014, as well as the properties acquired during the quarter ended September 30, 2014 being owned for the entire nine months ended September 30, 2015.  Although we expect total property management fees will increase during the remainder of 2015, a portion of such fees may be settled in the form of forfeitable restricted stock under the Expense Support Agreements.

Impairment Provision. During the nine months ended September 30, 2015, we recorded an impairment provision of $4.7 million to write-off the lease intangibles related to two of our specialty hospitals, as it was determined that the carrying value of these assets would not be recoverable; refer to Note 5. “Intangibles, net” for additional information.  There were no impairments during the quarter ended September 30, 2015 or the quarter and nine months ended September 30, 2014.

Loss on Lease Termination. During the nine months ended September 30, 2015, we recorded a loss on lease termination of $0.9 million related to two of our specialty hospitals, as it was determined that the carrying value of certain deferred rent and lease incentives would not be recoverable.  There were no losses on lease terminations during the quarter ended September 30, 2015 or the quarter and nine months ended September 30, 2014.

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Contingent Purchase Price Consideration Adjustment.  During the quarter and nine months ended September 30, 2015, we recorded fair value adjustments of approximately $0.3 million and $0.6 million, respectively, related to two separate acquisitions.  Based on lower than expected occupancy and revised projections of future net operating income, we revised our fair value estimate of our Capital Health Yield Guaranty receivable by approximately $0.3 million for the nine months ended September 30, 2015.  In addition, as a result of the expiration of the Chestnut Commons Earn-Out agreement, we recorded a fair value adjustment of approximately $0.3 million during the quarter and nine months ended September 30, 2015.  During the quarter and nine months ended September 30, 2014, we recorded fair value adjustments of approximately $1.8 million and $0.5 million, respectively, relating to two separate acquisitions.  Based on lower than expected occupancy and revised projections of future net operating income, we revised our fair value estimate of our Capital Health Yield Guaranty receivable by approximately $1.3 million and recorded as a reduction to our operating loss in the accompanying consolidated statements of operations for nine months ended September 30, 2014.  In addition, based on exceeding certain net operating income targets on one of the South Bay II communities, we have recognized $1.8 million of expense during the quarter and nine months ended September 30, 2014.

Depreciation and Amortization. Depreciation and amortization expenses were approximately $27.9 million and $75.1 million for the quarter and nine months ended September 30, 2015, respectively, as compared to approximately $17.6 million and $44.1 million for the quarter and nine months ended September 30, 2014, respectively.  Depreciation and amortization expenses are comprised of depreciation and amortization of the buildings, equipment, land improvements and in-place leases related to our real estate portfolio.  The increase in depreciation and amortization expense across periods resulted from our acquisition of eight managed seniors housing communities, five leased seniors housing communities, 29 medical office buildings, and one acute care hospital subsequent to September 30, 2014, as well as 13 managed seniors housing communities, three medical office buildings, three post-acute care facilities and three acute care hospitals acquired during the nine months ended  September 30, 2014 being owned for the entire period.  In addition, Wellmore of Tega Cay, Dogwood Forest of Acworth and HarborChase of Villages Crossing were placed into service in June 2015, June 2014 and December 2013, respectively, which further contributed to the increase. We expect depreciation and amortization expense to increase as these investments are held in future periods and we acquire additional properties.

Interest Expense and Loan Cost Amortization. Interest expense and loan cost amortization were approximately $11.5 million and $32.2 million for the quarter and nine months ended September 30, 2015, respectively, as compared to approximately $8.7 million and $22.3 million for the quarter and nine months ended September 30, 2014, respectively.  For the quarter and nine months ended September 30, 2015, approximately $0.5 million and $1.8 million, respectively, were capitalized as development costs relating to our real estate under development, as compared to approximately $0.2 million and $0.6 million for the quarter and nine months ended September 30, 2014, respectively. Approximately $2.1 million and $6.8 million of the increase for the quarter and nine months ended September 30, 2015, respectively, was primarily the result of an increase in our average debt outstanding to approximately $1.2 billion for both the quarter and nine months ended September 30, 2015, as compared with approximately $0.8 billion and $0.7 billion for the quarter and nine months ended September 30, 2014, respectively.  In addition, during the quarter and nine months ended September 30, 2015, we incurred approximately $0.2 million and $0.5 million, respectively, in additional loan cost amortization relating to debt obtained subsequent to September 30, 2014.  Moreover, during the nine months ended September 30, 2015, we recorded a write-off of approximately $0.5 million in loan costs and paid approximately $0.3 million on the derecognition of cash flow hedges in connection with the early extinguishment of debt on the Perennial Communities and Medical Portfolio I Properties.

Equity in Loss of Unconsolidated Entities. Our unconsolidated entities generated losses of approximately $0.2 million and $0.7 million for quarter and nine months ended September 30, 2015, respectively, relating to our investment in the Windsor Manor joint venture, as compared to losses of approximately $0.2 million and $1.2 million for the quarter and nine months ended September 30, 2014 relating to our investments in the Windsor Manor and Montecito joint ventures.  Equity in earnings (loss) from unconsolidated entities is determined using the hypothetical liquidation book value (“HLBV”) method of accounting, which can create significant variability in earnings or loss from the joint venture while the preferred cash distributions that we anticipate to receive from the joint venture may be more consistent as a result of our distribution preferences.

Gain from Purchase of Controlling Interest of Investment in Unconsolidated Entity. During the quarter and nine months ended September 30, 2014, we recognized a gain of approximately $2.8 million related to the purchase of our co-venture partner’s 10% interest in the Montecito Joint Venture, which resulted in us controlling and consolidating the property.  There was no change in the controlling interest of unconsolidated entities during the quarter and nine months ended September 30, 2013 nor do we currently expect future changes in control of investments in unconsolidated entities.

Income Tax Expense.  During the quarter and nine months ended September 30, 2015, we recognized state income tax expense related to our properties of approximately $0.2 million and $0.3 million, respectively, as compared to approximately $0.04 million and $0.01 million of benefit for the quarter and nine months ended September 30, 2014, respectively.

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Funds from Operations and Modified Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, National Association Real Estate Investment Trust (“NAREIT”) promulgated a measure known as funds from operations (“FFO”), which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT.  The use of FFO is recommended by the REIT industry as a supplemental performance measure.  FFO is not equivalent to net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards approved by the Board of Governors of NAREIT.  NAREIT defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, real estate asset impairment write-downs, plus depreciation and amortization of real estate related assets, and after adjustments for unconsolidated partnerships and joint ventures.  Our FFO calculation complies with NAREIT’s policy described above.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or is requested or required by lessees for operational purposes in order to maintain the value of the property. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative.  Historical accounting for real estate involves the use of GAAP.  Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP.  Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income or loss. However, FFO and modified funds from operations (“MFFO”), as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or loss in its applicability in evaluating operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.

Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses for business combinations from a capitalization/depreciation model) to an expensed-as-incurred model that were put into effect in 2009, and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT’s definition of FFO, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP and accounted for as operating expenses.  Our management believes these fees and expenses do not affect our overall long-term operating performance.  Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation.  While other start up entities may also experience significant acquisition activity during their initial years, we believe that non-listed REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after its acquisition activity ceases.  Due to the above factors and other unique features of publicly registered, non-listed REITs, the Investment Program Association (“IPA”), an industry trade group, has standardized a measure known as MFFO which the IPA has recommended as a supplemental measure for publicly registered non-listed REITs and which we believe to be another appropriate supplemental measure to reflect the operating performance of a non-listed REIT.  MFFO is not equivalent to our net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended.  We believe that because MFFO excludes costs that we consider more reflective of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that affect our operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we acquired our properties and once our portfolio is in place.  By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance after our properties have been acquired.  We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry.

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We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: MFFO, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income or loss: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to remove the impact of GAAP straight-line adjustments from rental revenues); accretion of discounts and amortization of premiums on debt investments,  mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, and unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, nonrecurring unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income or loss. These expenses are paid in cash by us.  All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property.

Our management uses MFFO and the adjustments used to calculate it in order to evaluate our performance against other non-listed REITs which have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter.  As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate in this manner.  We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence that the use of such measures is useful to investors.  For example, acquisition costs are funded from our subscription proceeds and other financing sources and not from operations.  By excluding expensed acquisition costs, the use of MFFO provides information consistent with management’s analysis of the operating performance of the properties.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different non-listed REITs, although it should be noted that not all REITs calculate FFO and MFFO the same way and as such comparisons with other REITs may not be meaningful.  Furthermore, FFO and MFFO are not necessarily indicative of cash flows available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations, as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders.  FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance.  Now that our NAV is disclosed and updated at least annually, MFFO is useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete.  FFO and MFFO are not useful measures in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO and MFFO.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments we use to calculate FFO or MFFO.  In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO.

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The following table presents a reconciliation of net loss to FFO and MFFO for the quarter and nine months ended September 30, 2015 and 2014 (in thousands, except per share data):

	Quarter Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net loss attributable to common stockholders	$	(19,225	)	$	(12,204	)	$	(50,634	)	$	(37,030	)
Adjustments:
Depreciation and amortization		27,854			17,550			75,147			44,111
Impairment provision on real estate assets	―			―				4,661		―
FFO adjustments from unconsolidated entities (1)		380			551			1,338			2,570
Gain from change in control of investment in unconsolidated entity	―				(2,798	)	―				(2,798	)
Total funds from operations		9,009			3,099			30,512			6,853
Acquisition fees and expenses (2)		9,073			3,729			15,939			15,726
Straight-line adjustments for leases (3)		(1,324	)		(323	)		(3,118	)		(1,595	)
Amortization of above/below market intangible assets and liabilities (4)		285			71			685			188
Unrealized gains from mark-to-market adjustments on swaps (5)		48		―				48		―
Loss on extinguishment of debt (6)	―			―				749		―
Loss on lease terminations (7)	―			―				863		―
Adjustments to contingent purchase price consideration (8)		(268	)		1,800			(589	)		479
MFFO adjustments from unconsolidated entities (1)	―				12		―				46
Modified funds from operations	$	16,823		$	8,388		$	45,089		$	21,697
Weighted average number of shares of common
stock outstanding (basic and diluted) (9)		162,730			89,597			147,075			78,296
Net loss per share (basic and diluted)	$	(0.12	)	$	(0.14	)	$	(0.34	)	$	(0.47	)
FFO per share (basic and diluted)	$	0.06		$	0.03		$	0.21		$	0.09
MFFO per share (basic and diluted)	$	0.10		$	0.09		$	0.31		$	0.28

FOOTNOTES:

⁽¹⁾ This amount represents our share of the FFO or MFFO adjustments allowable under the NAREIT or IPA definitions, respectively, calculated using the HLBV method.

⁽²⁾ In evaluating investments in real estate, management differentiates the costs to acquire the investment from the operations derived from the investment.  By adding back acquisition expenses, management believes MFFO provides useful supplemental information of its operating performance and will also allow comparability between different real estate entities regardless of their level of acquisition activities.  Acquisition expenses include payments to our Advisor or third parties.  Acquisition expenses for business combinations under GAAP are considered operating expenses and as expenses included in the determination of net income (loss) and income (loss) from continuing operations, both of which are performance measures under GAAP.  All paid or accrued acquisition expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property.

⁽³⁾ Under GAAP, rental receipts are allocated to periods using various methodologies.  This may result in income recognition that is significantly different than underlying contract terms.  By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, providing insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance.

⁽⁴⁾ Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment, and certain intangibles are assumed to diminish predictably in value over time and are amortized, similar to depreciation and amortization of other real estate-related assets that are excluded from FFO.  However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges relating to amortization of these intangibles, MFFO provides useful supplemental information on the performance of the real estate.

50

⁽⁵⁾ Management believes that adjusting for the unrealized gains from mark-to-market adjustments on swaps is appropriate because the non-cash adjustment that is not reflective of our ongoing operating performance and aligns results with management’s analysis of operating performance. 

⁽⁶⁾ Management believes that adjusting for the realized loss on the early extinguishment of debt is appropriate because the write-off of unamortized loan costs is a non-cash adjustment that is not reflective of our ongoing operating performance and aligns results with management’s analysis of operating performance.

⁽⁷⁾ Management believes that adjusting for impairment provisions on lease related costs is appropriate because they are non-cash adjustments that are not reflective of our ongoing operating performance and aligns results with management’s analysis of operating performance.  We recorded an impairment provision for deferred rent from prior GAAP straight-lining adjustments which resulted from a change in our expected holding periods for those properties.

⁽⁸⁾ Management believes that the elimination of the adjustments to contingent purchase price consideration included in operating income (expense) for GAAP purposes is appropriate because the adjustment is not reflective of our ongoing operating performance and aligns results with management’s analysis of operating performance.

⁽⁹⁾ For purposes of determining the weighted average number of shares of common stock outstanding, stock distributions are treated as if they were outstanding as of the beginning of the periods presented.

Off-Balance Sheet Arrangements

In May 2015, it was determined that the Windsor Manor joint venture did not meet the debt service coverage requirement per the loan agreement as the debt service coverage ratio fell below the 1.35 minimum requirement for the reporting period ending March 31, 2015.  As a result, a waiver was obtained from the lender as of March 31, 2015.  It was determined that the Windsor Manor joint venture did not meet the same debt service coverage requirement for the reporting periods ending June 30, 2015 and September 30, 2015 and additional waivers were obtained from the lender.  As of September 30, 2015, approximately $21.5 million remained outstanding under the loan agreement.  We are actively monitoring this portfolio and note that there has been improvement in operating performance quarter over quarter during the nine months ended September 30, 2015. 

Contractual Obligations

The following table presents our contractual obligations and the related payment periods as of September 30, 2015:

	Payments Due by Period
	2015		2016-2017		2018-2019		Thereafter		Total
Mortgage and other notes payable (principal and interest)	$	12,544	$	146,768	$	654,916	$	179,326	$	993,554
Credit Facilities (principal and interest)		1,981		230,846		179,116	―			411,943
Development contracts on development properties (1)		28,772		85,378	―		―			114,150
Ground and air rights leases (2)		484		3,941		4,057		115,515		123,997
	$	43,781	$	466,933	$	838,089	$	294,841	$	1,643,644

FOOTNOTES:

⁽¹⁾ The amounts presented above represent accrued development costs as of September 30, 2015 and development costs not yet incurred of the aggregate budgeted development costs, including start-up costs, in accordance with the development agreements, and the expected timing of such costs.  The amounts include approximately $105.3 million of contractual obligations with third-party developers and approximately $8.9 million of additional expected development costs that have been included in the respective development budgets.

⁽²⁾ Ground and air rights leases are operating leases with scheduled payments over the life of the respective leases and with expirations ranging from 2045 to 2082.

Critical Accounting Policies and Estimates

See Item 1. “Financial Statements” and our Annual Report on Form 10-K for the year ended December 31, 2014 for a summary of our critical accounting policies and estimates.

Recent Accounting Pronouncements

See Item 1. “Financial Information” for a summary of the impact of recent accounting pronouncements.

51

Item 3. Quantitative and Qualitative Disclosures about Market Risks

We may be exposed to interest rate changes primarily as a result of long-term debt used to acquire properties and to make loans and other permitted investments. Our management objectives related to interest rate risk will be to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs.  To achieve our objectives, we expect to borrow primarily at fixed rates or variable rates with the lowest margins available, and in some cases, with the ability to convert variable rates to fixed rates.  With regard to variable rate financing, we will assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.

The following is a schedule as of September 30, 2015, of our fixed and variable rate debt maturities for the remainder of 2015, and each of the next four years and thereafter (principal maturities only) (in thousands):

	Expected Maturities
	2015			2016			2017			2018			2019			Thereafter			Total			Fair Value (1)
Fixed rate debt	$	2,317		$	9,557		$	9,983		$	204,191		$	5,152		$	164,754		$	395,954		$	397,000
Weighted average interest rate on fixed debt		4.26	%		4.25	%		4.25	%		4.30	%		4.14	%		4.12	%		4.22	%
Variable rate debt	$	2,452		$	28,173		$	251,123		$	94,989		$	482,572		―			$	859,309		$	869,000
Average interest rate on variable rate debt	LIBOR+ 2.22		%	LIBOR + 2.22		%	LIBOR + 2.23		%	LIBOR + 2.33		%	LIBOR + 2.28		%	―		%	LIBOR + 2.27		%

FOOTNOTE:

⁽¹⁾ The estimated fair value of our fixed and variable rate debt was determined using discounted cash flows based on market interest rates as of September 30, 2015. We determined market rates through discussions with our existing lenders pricing our loans with similar terms and current rates and spreads.

Management estimates that a one-percentage point increase or decrease in LIBOR in 2015, compared to LIBOR rates as of September 30, 2015, would result in fluctuation of interest expense on our variable rate debt of approximately $8.6 million for the year ending December 31, 2015.  This sensitivity analysis contains certain simplifying assumptions, and although it gives an indication of our exposure to changes in interest rates, it is not intended to predict future results and actual results will likely vary given that our sensitivity analysis on the effects of changes in LIBOR does not factor in a potential change in variable rate debt levels, any offsetting gains on interest rate swap contracts, or the impact of any LIBOR floors or caps.

As of September 30, 2015, the Company’s debt is comprised of approximately 31.5% in fixed rate debt, approximately 44.1% in variable rate debt with current or forward-starting interest rate swaps and approximately 24.4% of unhedged variable rate debt.  The remaining unhedged variable rate debt primarily relates to our construction loans and Revolving Credit Facility.  Overall, we believe longer term fixed rate debt could be beneficial in a rising interest rate or rising inflation rate environment and as such we continue to evaluate the need for additional interest rate swaps on unhedged variable rate debt.

52

Item 4.Controls and Procedures 

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

During the most recent fiscal quarter, there were no changes in our internal controls over financial reporting (as defined under Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

53

PART II. OTHER INFORMATION 

Item 1. Legal Proceedings - None

Item 1A. Risk Factors

There have been no material changes in our assessment of our risk factors from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

During the period covered by this quarterly report, we did not sell any equity securities that were not registered under the Securities Act of 1933, and we did not repurchase any of our securities.

Secondary Sales of Registered Shares between Investors

We are not aware of any other transfers of shares by investors for the quarter and nine months ended September 30, 2015 and we are not aware of any other trades of our shares, other than previous purchases made in our public offerings and redemptions of shares by us.

Use of Proceeds from Registered Securities

As of June 30, 2015, all offering proceeds from our Initial Offering had been deployed.  Please see the Form 10-Q for the quarter and six months ended June 30, 2015 filed on August 13, 2015 for additional detail.

Issuer Purchases of Equity Securities

The following table presents details regarding our repurchase of securities between July 1, 2015 and September 30, 2015:

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of a publically announced plan		Maximum number of shares that may yet be purchased under the plan (1)
July 1, 2015 through July 31, 2015	―		―		―			3,077,250
August 1, 2015 through August 31, 2015	―		―		―			3,190,138
September 1, 2015 through September 30, 2015		292,429	$	9.51		292,429		3,130,629
Total		292,429	$	9.51		292,429

FOOTNOTES:

(1) This represents the maximum number of shares which can be redeemed under the redemption plan and is subject to a five percent limitation in a rolling 12-month period as described above.  However, we are not obligated to redeem such amounts and this does not take into account the amount the board of directors has determined to redeem or whether there are sufficient proceeds under the redemption plan.  Under the redemption plan, we can, at our discretion, use the full amount of the proceeds from the sale of shares under our Reinvestment Plan attributable to any month to redeem shares presented for redemption during such month.  Any amount of proceeds from our Offerings which is available for redemptions but which is unused may be carried over to the next succeeding calendar quarter for use in addition to the amount of proceeds from our Offerings and Reinvestment Plan proceeds that would otherwise be available for redemptions.

Item 3. Defaults Upon Senior Securities - None

Item 4. Mine Safety Disclosure – Not Applicable

Item 5. Other Information - None

Item 6. Exhibits

The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this report.

54

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the 12th day of November 2015.

CNL HEALTHCARE PROPERTIES, INC.
By:	/s/ Stephen H. Mauldin
	STEPHEN H. MAULDIN
	Chief Executive Officer and President
	(Principal Executive Officer)
By:	/s/ Kevin R. Maddron
	KEVIN R. MADDRON
	Chief Financial Officer, Treasurer and Chief Operating Officer
	(Principal Financial Officer)

55

EXHIBIT INDEX

Exhibits

The following exhibits are included, or incorporated by reference in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.	Description
10.59	Purchase and Sale Agreement dated as of January 9, 2015, by and among UT Cancer Institute Building L.P., CHP Partners, LP and First American Title Insurance Company. (Previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed January 15, 2015 and incorporated herein by reference.)
31.1	Certification of Chief Executive Officer of CNL Healthcare Properties, Inc., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
31.2	Certification of Chief Financial Officer of CNL Healthcare Properties, Inc., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
32.1	Certification of Chief Executive Officer and Chief Financial Officer of CNL Healthcare Properties, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
101	The following materials from CNL Healthcare Properties, Inc. Quarterly Report on Form 10-Q for the quarter and nine months ended September 30, 2015, formatted in XBRL (Extensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statement of Operations, (iii) Condensed Consolidated Statement of Comprehensive Loss, (iv) Condensed Consolidated Statements of Stockholders’ Equity and Redeemable Noncontrolling Interest, (v) Condensed Consolidated Statement of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.

56

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

OF CNL HEALTHCARE PROPERTIES, INC.

PURSUANT TO RULE 13a-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen H. Mauldin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNL Healthcare Properties, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:  November 12, 2015	By:	/s/ Stephen H. Mauldin
		STEPHEN H. MAULDIN
		Chief Executive Officer and President
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

OF CNL HEALTHCARE PROPERTIES, INC.

PURSUANT TO RULE 13a-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kevin R. Maddron, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNL Healthcare Properties, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:  November 12, 2015	By:	/s/ Kevin R. Maddron
		KEVIN R. MADDRON
		Chief Financial Officer, Treasurer and Chief Operating Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of CNL Healthcare Properties, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2015, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen H. Mauldin, Chief Executive Officer and Kevin R. Maddron, Chief Financial Officer, Treasurer and Chief Operating Officer of the Company, each certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  November 12, 2015	By:	/s/ Stephen H. Mauldin
		Stephen H. Mauldin
		Chief Executive Officer and President
Date:  November 12, 2015	By:	/s/ Kevin R. Maddron
		Kevin R. Maddron
		Chief Financial Officer, Treasurer and Chief Operating Officer

XML

Schedule of Purchase Price Allocation (Detail) - USD ($) $ in Thousands		Sep. 30, 2015	Sep. 30, 2014	Aug. 31, 2014
Business Acquisition [Line Items]
Land and land improvements		$ 66,583	$ 46,064
Buildings and building improvements		523,103	442,887
Furniture, fixtures and equipment		9,469	10,014
Intangibles	[1]	65,126	67,431
Other liabilities		(3,765)	(8,718)
Liabilities assumed		(2,589)
Assumed mortgage note payable	[2]	(6,976)	(27,657)
Net assets acquired		650,951	530,021
Contingent purchase price consideration		(3,000)	(12,395)
Total purchase price consideration		$ 647,951	517,626
Montecito Joint Venture
Business Acquisition [Line Items]
Land and land improvements				$ 6,324
Buildings and building improvements				13,533
Intangibles	[3]			2,691
Other liabilities				(175)
Assumed mortgage note payable	[4]			(12,331)
Net assets acquired			$ 10,129	10,129
Working capital, net				$ 87

[1] At the acquisition date, the weighted-average amortization period on the acquired lease intangibles for the nine months ended September 30, 2015 and 2014 was approximately 7.9 years and 7.1 years, respectively. The acquired lease intangibles during the nine months ended September 30, 2015 were comprised of approximately $60.7 million and $4.4 million of in-place lease intangibles and other lease intangibles, respectively, and the acquired lease intangibles during the nine months ended September 30, 2014 were comprised of approximately $61.4 million and $6.0 million of in-place lease intangibles and other lease intangibles, respectively.

[2] At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.2 million discount on the below-market mortgage note payable assumed.

[3] At the acquisition date, the weighted-average amortization period on the acquired lease intangibles was approximately 5.1 years and was comprised of approximately $1.9 million and $0.8 million of in-place lease intangibles and other lease intangibles, respectively

[4] At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.6 million discount on the below-market mortgage note payable assumed.

XML

Aggregate Carrying Amount and Major Classifications of Consolidated Assets and Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Variable Interest Entity [Line Items]
Real estate investment properties, net	$ 2,251,200	$ 1,657,500
Real estate under development, including land	69,478	47,153
Intangibles, net	163,538	140,264
Cash	51,185	91,355	$ 83,483	$ 44,209
Other assets	22,024	19,738
Deferred rent and lease incentives	21,244	8,240
Loan costs, net	12,604	14,012
Restricted cash	8,816	10,753
Mortgages and other notes payable	865,263	853,561
Due to related parties	5,620	2,999
Other liabilities	37,880	27,448
VIEs
Variable Interest Entity [Line Items]
Real estate investment properties, net	192,663	174,449
Real estate under development, including land	67,350	47,153
Intangibles, net	24,426	25,519
Cash	1,462	6,280
Other assets	862	511
Deferred rent and lease incentives	6,330	2,978
Loan costs, net	2,497	2,300
Restricted cash	2,053	5,304
Mortgages and other notes payable	172,537	137,754
Accounts payable and accrued liabilities	1,497	2,317
Accrued development costs	8,854	7,951
Due to related parties	171	219
Other liabilities	$ 4,551	$ 4,949

XML

Schedule of Net Book Value of Intangibles (Detail) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets And Liabilities [Line Items]
Less: accumulated amortization, assets		$ (62,333)	$ (30,250)
Intangible assets, net		163,538	140,264
Less: accumulated amortization, liabilities		2,177	1,014
In-place lease intangibles
Finite-Lived Intangible Assets And Liabilities [Line Items]
Gross carrying amount, assets		199,815	148,880
Above-market lease intangibles
Finite-Lived Intangible Assets And Liabilities [Line Items]
Gross carrying amount, assets		13,586	11,320
Gross carrying amount, liabilities		(3,488)	(2,273)
Below-market ground lease intangibles
Finite-Lived Intangible Assets And Liabilities [Line Items]
Gross carrying amount, assets		12,470	10,314
Gross carrying amount, liabilities		(10,685)	(13,243)
Other liablities
Finite-Lived Intangible Assets And Liabilities [Line Items]
Intangible liabilities, net	[1]	$ (11,996)	$ (14,502)

[1] Intangible liabilities, net are included in other liabilities in the accompanying condensed consolidated balance sheets.

XML

Schedule of Fees, Reimbursable Expenses and Related Amounts Unpaid to Related Parties (Parenthetical) (Detail) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Related Party Transaction [Line Items]
Investment services fees	[1]	$ 8,624,000	$ 3,651,000	$ 13,645,000	$ 11,875,000
Investment service fees capitalized		1,500,000	400,000	1,500,000	1,600,000
Financing coordination fees		0		0	220,000	[2]
Construction management fees capitalized		300,000	200,000	600,000	300,000
Asset management fees		5,085,000	2,753,000	13,426,000	5,572,000
Expense under Support Agreement		900,000	900,000	2,300,000	3,800,000
Asset management fees capitalized		100,000	100,000	400,000	200,000
Reimbursable expenses
Related Party Transaction [Line Items]
Property and construction management fees payable		1,100,000	700,000	2,800,000	1,800,000
Asset management fees	[3]	6,075,000	3,696,000	16,127,000	9,510,000
Investment Services Fees
Related Party Transaction [Line Items]
Investment services fees		$ 8,600,000	$ 3,700,000	$ 13,600,000	$ 11,900,000

[1] For the quarter and nine months ended September 30, 2015, the Company incurred approximately $8.6 million and $13.6 million, respectively, in investment service fees, of which approximately $1.5 million and $1.5 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets. For the quarter and nine months ended September 30, 2014, Company incurred approximately $3.7 million and $11.9 million, respectively, in investment service fees, of which approximately $0.4 million and $1.6 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets. Investment services fees, that are not capitalized, are recorded as acquisition fees and expenses in the accompanying condensed consolidated statements of operations.

[2] There were no financing coordination fees for the quarter and nine months ended September 30, 2015. For the nine months ended September 30, 2014, the Company incurred approximately $0.2 million in financing coordination fees which was capitalized and included in its investment in the Windsor Manor Joint Venture.

[3] For the quarter and nine months ended September 30, 2015, the Company incurred approximately $6.1 million and $16.1 million, respectively, in asset management fees payable to the Advisor of which approximately $0.9 million and $2.3 million, respectively, was settled in accordance with the terms of the Advisor Expense Support Agreement and approximately $0.1 million and $0.4 million, respectively, was capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets. For the quarter and nine months ended September 30, 2014, the Company incurred approximately $3.7 million and $9.5 million, respectively, in asset management fees payable to the Advisor of which approximately $0.9 million and $3.8 million, respectively, was settled in accordance with the terms of the Advisor Expense Support Agreement and approximately $0.1 million and $0.2 million, respectively, was capitalized for each period and included in real estate under development in the accompanying condensed consolidated balance sheets.

XML

Ground and Air Rights Leases - Additional Information (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) Lease	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) Lease	Sep. 30, 2014 USD ($)
Operating Leased Assets [Line Items]
Number of Properties Subject to Ground Leases | Lease	5		5
Ground Rights Leases | Minimum | Novi Orthopaedic Center
Operating Leased Assets [Line Items]
Lease, expiration year			2045
Ground Rights Leases | Minimum | UT Cancer Institute
Operating Leased Assets [Line Items]
Lease, expiration year			2045
Ground Rights Leases | Minimum | Columbia MOBs
Operating Leased Assets [Line Items]
Lease, expiration year			2045
Ground Rights Leases | Maximum | Novi Orthopaedic Center
Operating Leased Assets [Line Items]
Lease, expiration year			2076
Ground Rights Leases | Maximum | UT Cancer Institute
Operating Leased Assets [Line Items]
Lease, expiration year			2076
Ground Rights Leases | Maximum | Columbia MOBs
Operating Leased Assets [Line Items]
Lease, expiration year			2076
Ground and Air Rights Leases
Operating Leased Assets [Line Items]
Operating lease rental expense	$ 700	$ 40	$ 1,800	$ 100

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Real Estates under Development with Third-Party Developers (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Real Estate Properties [Line Items]
Real Estate Development Costs Incurred	$ 69,478	[1]
Remaining Development Budget	$ 114,150	[2]
HarborChase Of Shorewood (Shorewood, WI)
Real Estate Properties [Line Items]
Developer	Harbor Shorewood Development, LLC
Real Estate Development Costs Incurred	$ 22,034	[1]
Remaining Development Budget	$ 5,776	[2]
Raider Ranch (Lubbock, TX)
Real Estate Properties [Line Items]
Developer	South Bay Partners, Ltd
Real Estate Development Costs Incurred	$ 13,464	[1]
Remaining Development Budget	$ 3,460	[2]
Watercrest at Katy (Katy, TX)
Real Estate Properties [Line Items]
Developer	South Bay Partners, Ltd	[3]
Real Estate Development Costs Incurred	$ 20,049	[1],[3]
Remaining Development Budget	$ 22,342	[2],[3]
Welbrook Senior Living Grand Junction (Grand Junction, CO)
Real Estate Properties [Line Items]
Developer	Embree Asset Group, Inc.
Real Estate Development Costs Incurred	$ 2,128	[1]
Remaining Development Budget	$ 11,473	[2]
Waterstone at Greenville (Greenville, SC)
Real Estate Properties [Line Items]
Developer	The Balance Group, Inc.
Real Estate Development Costs Incurred	$ 5,298	[1]
Remaining Development Budget	$ 22,401	[2]
Wellmore of Lexington (Lexington, SC)
Real Estate Properties [Line Items]
Developer	Maxwell Group, Inc.
Real Estate Development Costs Incurred	$ 6,505	[1]
Remaining Development Budget	$ 48,698	[2]

[1] This amount represents land and total capitalized costs for GAAP purposes for the acquisition, development and construction of the seniors housing or post-acute care communities as of September 30, 2015. Amounts include investment services fees, asset management fees, interest expense and other costs capitalized during the development period.

[2] This amount includes preleasing and marketing costs which will be expensed as incurred.

[3] This property is owned through a joint venture in which the Company’s initial ownership interest is 95%.

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Related Party Arrangements (Tables)

9 Months Ended

Sep. 30, 2015

Related Party Arrangement, Fees and Expenses Incurred By, Reimbursable, Settled and Paid

The expenses and fees incurred by and reimbursable to the Company’s related parties for the quarter and nine months ended September 30, 2015 and 2014, and related amounts unpaid as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	Quarter ended				Nine Months Ended				Unpaid amounts as of (1)
	September 30,				September 30,				September 30,		December 31,
	2015		2014		2015		2014		2015		2014
Reimbursable expenses:
Offering costs (2)	$	919	$	1,075	$	2,785	$	3,442	$	266	$	713
Operating expenses (3)		1,119		918		3,140		2,402		1,305		479
Acquisition fees and expenses		156		130		461		463		14		80
		2,194		2,123		6,386		6,307		1,585		1,272
Investment services fees (4)		8,624		3,651		13,645		11,875		1,434	―
Financing coordination fees (5)	―		―		―			220	―		―
Property management fees (6)		1,128		728		2,844		1,763		726		429
Asset management fees (7)		6,075		3,696		16,127		9,510		1,235		355
	$	18,021	$	10,198	$	39,002	$	29,675	$	4,980	$	2,056

FOOTNOTES:

⁽¹⁾ Amounts are recorded as due to related parties in the accompanying condensed consolidated balance sheets.

⁽²⁾ Amounts are recorded as stock issuance and offering costs in the accompanying condensed consolidated statements of stockholders’ equity and redeemable noncontrolling interest.

⁽³⁾ Amounts are recorded as general and administrative expenses in the accompanying condensed consolidated statements of operations.

⁽⁴⁾ For the quarter and nine months ended September 30, 2015, the Company incurred approximately $8.6 million and $13.6 million, respectively, in investment service fees, of which approximately $1.5 million and $1.5 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  For the quarter and nine months ended September 30, 2014, Company incurred approximately $3.7 million and $11.9 million, respectively, in investment service fees, of which approximately $0.4 million and $1.6 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  Investment services fees, that are not capitalized, are recorded as acquisition fees and expenses in the accompanying condensed consolidated statements of operations.

⁽⁵⁾ There were no financing coordination fees for the quarter and nine months ended September 30, 2015.  For the nine months ended September 30, 2014, the Company incurred approximately $0.2 million in financing coordination fees which was capitalized and included in its investment in the Windsor Manor Joint Venture.

⁽⁶⁾ For the quarter and nine months ended September 30, 2015, the Company incurred approximately $1.1 million and $2.8 million, respectively, in property and construction management fees payable to the Property Manager of which approximately $0.3 million and $0.6 million, respectively, in construction management fees were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  For the quarter and nine months ended September 30, 2014, the Company incurred approximately $0.7 million and $1.8 million, respectively, in property and construction management fees payable to the Property Manager of which approximately $0.2 million and $0.3 million, respectively, in construction management fees were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.

Expense Support Agreements

Related Party Arrangement, Fees and Expenses Incurred By, Reimbursable, Settled and Paid

The following fees were settled and paid in the form of Restricted Stock in connection with the Expense Support Agreements for the quarter and nine months ended September 30, 2015 and 2014, and cumulatively as of September 30, 2015 (in thousands, except offering price):

	Quarter ended				Nine Months Ended				As of
	September 30,				September 30,				September 30,
	2015		2014		2015		2014		2015
Asset management fees (1)	$	885	$	884	$	2,298	$	3,764	$	8,566
Then-current offering price (2)	$	10.58	$	10.14	$	10.58	$	10.14	$	10.58
Restricted stock shares (3)		84		87		217		371		828
Cash distributions on Restricted Stock (4)	$	75	$	30	$	197	$	48	$	300
Stock distributions on Restricted Stock (5)		5		2		14		4		21

FOOTNOTES:

⁽¹⁾ No other amounts have been settled in accordance with the Expense Support Agreements for the quarter and nine months ended September 30, 2015 and 2014, and cumulatively as of September 30, 2015.

⁽²⁾ During the Offerings, the then-current offering prices were based on the Company’s NAV per share as of the Determination Date, plus selling commissions and marketing support fees.  Subsequent to the close of the Company’s Offerings, the then-current offering prices are based on the Company’s NAV per share as of the Determination Date.

⁽³⁾ Restricted stock shares are comprised of approximately 0.08 million issuable to the Advisor as of September 30, 2015.  No fair value was assigned to the restricted stock shares as the shares were valued at zero, which represents the lowest possible value estimated at vesting.  In addition, the restricted stock shares were treated as unissued for financial reporting purposes because the vesting criteria had not been met through September 30, 2015. 

11. Related Party Arrangements (continued)

⁽⁴⁾ The cash distributions have been recognized as compensation expense as issued and included in general and administrative expense in the accompanying condensed consolidated statements of operations.

⁽⁵⁾ The par value of the stock distributions has been recognized as compensation expense as issued and included in general and administrative expense in the accompanying condensed consolidated statements of operations.

Public Offering | Managing Dealer

Related Party Arrangement, Fees and Expenses Incurred By, Reimbursable, Settled and Paid

The fees incurred by and reimbursable to the Managing Dealer in connection with the Company’s Offerings for the quarter and nine months ended September 30, 2015 and 2014, and related amounts unpaid as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	Quarter ended				Nine Months Ended				Unpaid amounts as of (1)
	September 30,				September 30,				September 30,		December 31,
	2015		2014		2015		2014		2015		2014
Selling commissions (2)	$	4,085	$	6,689	$	12,076	$	12,285	$	340	$	388
Marketing support fees (2)		5,232		4,524		15,851		9,937		300		555
	$	9,317	$	11,213	$	27,927	$	22,222	$	640	$	943

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Historical Share Prices in Its Offerings, Including the Prices Pursuant To the Reinvestment Plan and the Company's Monthly Cash and Stock Distributions per Share (Detail) - $ / shares		9 Months Ended		11 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Nov. 03, 2014
Dividends Payable [Line Items]
Offering Price per Share		$ 10.58		$ 10.58	$ 10.14
Monthly Cash Distribution	[1]	$ 0.0353		$ 0.0353	$ 0.0338
Stock distributions on Restricted Stock		3,200,000	1,600,000	0.0025	0.0025
Reinvestment Plan
Dividends Payable [Line Items]
Reinvestment Plan Price per Share		$ 10.06		$ 10.06	$ 9.64

[1] Monthly cash distributions were effective and payable to all common stockholders of record as of the close of business on the first business day in the month subsequent to the announcement of the Company’s NAV (i.e. December 1, 2014 for the current Offering price).

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Contingent Purchase Price Consideration - Additional Information (Detail) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015 USD ($) ft²	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) ft²	Sep. 30, 2014 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)
Business Acquisition, Contingent Consideration [Line Items]
Contingent purchase price consideration			$ 3,000
Operating income (loss)	$ (7,925)	$ (6,243)	(19,484)	$ (16,999)
Capital Health Communities
Business Acquisition, Contingent Consideration [Line Items]
Contingent purchase price consideration								$ 7,000
Fair value of Contingent consideration	$ 1,820	$ 3,208	$ 1,820	$ 3,208		$ 4,078	$ 4,488		$ 1,820	$ 3,509
Capital Health Communities | Yield Guarantee
Business Acquisition, Contingent Consideration [Line Items]
Operating income (loss)						$ 7,000	$ 6,900
Capital Health Communities | Yield Guarantee | Scenario Forecast
Business Acquisition, Contingent Consideration [Line Items]
Operating income (loss)					$ 7,100
Medical Portfolio I
Business Acquisition, Contingent Consideration [Line Items]
Expandable lease space under earn-out agreement | ft²	10,000		10,000
Contingent consideration arrangements, description			The Chestnut Commons Earn-Out fee was equal to (a) the base rent due for the first full year of the lease applicable to the expansion space divided by 8% minus (b) the costs incurred by the Company in connection with the exercise by Cleveland Clinic of its option for the expansion space, including tenant improvement costs, multiplied by 50%.
Earn out expiration date			2015-08
Superior Residences of Panama City
Business Acquisition, Contingent Consideration [Line Items]
Contingent purchase price consideration			$ 3,000
Additional purchase price consideration			$ 4,000
Additional purchase price consideration period			36 months

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Effect of Derivative Financial Instruments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments, Gain (loss) recognized in other comprehensive loss	$ (6,388)	$ 222	$ (9,785)	$ (851)
Interest Expense and Loan Cost Amortization
Derivative Instruments, Gain (Loss) [Line Items]
Loss reclassified from AOCI into earnings	(1,126)		(2,695)
Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments, Gain (loss) recognized in other comprehensive loss	(6,435)	224	(10,060)	(872)
Interest Rate Swap | Interest Expense and Loan Cost Amortization
Derivative Instruments, Gain (Loss) [Line Items]
Loss reclassified from AOCI into earnings	(1,078)		(2,411)
Reclassification of Interest Rate Swaps Upon Derecognition
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments, Gain (loss) recognized in other comprehensive loss			236
Reclassification of Interest Rate Swaps Upon Derecognition | Interest Expense and Loan Cost Amortization
Derivative Instruments, Gain (Loss) [Line Items]
Loss reclassified from AOCI into earnings			(236)
Reclassification of Interest Rate Swaps Due to Ineffectiveness
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments, Gain (loss) recognized in other comprehensive loss	48		48
Reclassification of Interest Rate Swaps Due to Ineffectiveness | Interest Expense and Loan Cost Amortization
Derivative Instruments, Gain (Loss) [Line Items]
Loss reclassified from AOCI into earnings	(48)		(48)
Interest Rate Cap | Unconsolidated Joint Venture
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments, Gain (loss) recognized in other comprehensive loss	$ (1)	$ (2)	$ (9)	$ 21

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Subsequent Events - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions		1 Months Ended	9 Months Ended	12 Months Ended
		Oct. 31, 2015	Sep. 30, 2015	Dec. 31, 2014	Nov. 01, 2015	Oct. 01, 2015	Nov. 03, 2014
Subsequent Event [Line Items]
Offering value of common stock			$ 556,157	$ 572,324
Cash and stock distribution to be paid and distributed, date			Dec. 31, 2015
Monthly Cash Distribution	[1]		$ 0.0353				$ 0.0338
Subsequent Event
Subsequent Event [Line Items]
Offering value of common stock		$ 21,900
Shares issued		2.1
Monthly Cash Distribution					$ 0.0353	$ 0.0353

[1] Monthly cash distributions were effective and payable to all common stockholders of record as of the close of business on the first business day in the month subsequent to the announcement of the Company’s NAV (i.e. December 1, 2014 for the current Offering price).

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Amounts Related to Derivative Financial Instruments Included in Unconsolidated Entities in Condensed Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2015	Dec. 31, 2014
Derivative Financial Instruments One
Derivative [Line Items]
Initial Notional Amount	[1]	$ 12,421
Strike	[2]	1.30%
Credit Spread	[2]	2.60%
Trade date		Jan. 17, 2013
Forward date		Jan. 15, 2015
Maturity date		Jan. 16, 2018
Fair value asset (liability)		$ (170)	$ (71)
Derivative Financial Instruments Two
Derivative [Line Items]
Initial Notional Amount	[1]	$ 38,255
Strike	[2]	2.70%
Credit Spread	[2]	2.50%
Trade date		Sep. 06, 2013
Forward date		Aug. 17, 2015
Maturity date		Jul. 10, 2018
Fair value asset (liability)		$ (1,906)	(1,228)
Derivative Financial Instruments Three
Derivative [Line Items]
Initial Notional Amount	[1]	$ 26,067
Strike	[2]	2.80%
Credit Spread	[2]	2.50%
Trade date		Sep. 06, 2013
Forward date		Aug. 17, 2015
Maturity date		Aug. 29, 2018
Fair value asset (liability)		$ (1,396)	(906)
Derivative Financial Instruments Four
Derivative [Line Items]
Initial Notional Amount	[1]	$ 30,000
Strike	[2]	1.10%
Credit Spread	[2]	2.70%
Trade date		Oct. 22, 2013
Forward date		Aug. 05, 2015
Fair value asset (liability)			(82)
Derivative Financial Instruments Five
Derivative [Line Items]
Initial Notional Amount	[1]	$ 29,952
Strike	[2]	0.90%
Credit Spread	[2]	4.30%
Trade date		Nov. 13, 2013
Forward date		May 11, 2015
Fair value asset (liability)			(74)
Derivative Financial Instruments Six
Derivative [Line Items]
Initial Notional Amount	[3]	$ 11,000
Strike	[2]	3.00%
Trade date		Jun. 27, 2014
Forward date		Jun. 30, 2014
Maturity date		Jun. 30, 2017
Fair value asset (liability)		$ 1	10
Derivative Financial Instruments Seven
Derivative [Line Items]
Initial Notional Amount	[1]	$ 48,415
Strike	[2]	2.40%
Credit Spread	[2]	2.90%
Trade date		Aug. 15, 2014
Forward date		Jun. 01, 2016
Maturity date		Jun. 02, 2019
Fair value asset (liability)		$ (1,360)	(270)
Derivative Financial Instruments Eight
Derivative [Line Items]
Initial Notional Amount	[1]	$ 84,251
Strike	[2]	2.30%
Credit Spread	[2]	2.40%
Trade date		Sep. 12, 2014
Forward date		Aug. 01, 2015
Maturity date		Jul. 15, 2019
Fair value asset (liability)		$ (3,315)	(1,326)
Derivative Financial Instruments Nine
Derivative [Line Items]
Initial Notional Amount	[1]	$ 7,129
Strike	[2]	1.20%
Credit Spread	[2]	2.30%
Trade date		Nov. 12, 2014
Forward date		Nov. 15, 2014
Maturity date		Oct. 15, 2017
Fair value asset (liability)		$ (79)	(35)
Derivative Financial Instruments Ten
Derivative [Line Items]
Initial Notional Amount	[1]	$ 175,000
Strike	[2]	1.60%
Credit Spread	[2]	2.00%
Trade date		Dec. 23, 2014
Forward date		Dec. 19, 2014
Maturity date		Feb. 19, 2019
Fair value asset (liability)		$ (3,526)	$ (881)
Derivative Financial Instruments Eleven
Derivative [Line Items]
Initial Notional Amount	[1]	$ 138,698
Strike	[2]	1.70%
Credit Spread	[2]	2.00%
Trade date		Jan. 09, 2015
Forward date		Dec. 10, 2015
Maturity date		Dec. 22, 2019
Fair value asset (liability)		$ (2,946)

[1] Amounts related to interest rate swaps held by the Company, or its equity method investments, which are recorded at fair value and included in either other assets or other liabilities in the accompanying condensed consolidated balance sheets.

[2] The all-in rates are equal to the sum of the Strike and Credit Spread detailed above.

[3] Amounts related to the interest rate cap held by the Windsor Manor Joint Venture for which the proportionate amounts of fair value relative to the Company’s ownership percentage are included in investments in unconsolidated entities in the accompanying condensed consolidated balance sheets.

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2015

Acquisitions of Properties

Real Estate Investment Properties — During the nine months ended September 30, 2015, the Company acquired the following 30 properties, which were comprised of one acute care hospital, 17 medical office buildings (“MOB”) and 12 seniors housing communities:

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Acute care
Triangle Orthopaedic
North Carolina Specialty Hospital	Modified Lease	6/29/2015	$	31,830
Durham, NC
Medical Office
Novi Orthopaedic Center	Modified Lease	2/13/2015		30,500	(1)
Novi, MI
Southeast Medical Office Properties
UT Cancer Institute	Modified Lease	2/20/2015		33,660
Knoxville, TN
Bend Memorial Clinic Medical Office Building	Modified Lease	5/11/2015		34,612	(1)
Bend, OR
Stoneterra Medical Plaza	Modified Lease	5/29/2015		15,050	(1)
San Antonio, TX
Triangle Orthopaedic
Triangle Orthopaedic Durham	Modified Lease	6/29/2015		21,275
Durham, NC
Triangle Orthopaedic Oxford	Modified Lease	6/29/2015		4,728
Oxford, NC
Triangle Orthopaedic Chapel Hill	Modified Lease	6/29/2015		3,257
Chapel Hill, NC
Triangle Orthopaedic Roxboro	Modified Lease	6/29/2015		2,067
Roxboro, NC
Doctor's Park
Doctor's Park Building B	Modified Lease	6/30/2015		5,000	(1)
Chula Vista, CA ("San Diego")
Doctor's Park Building C	Modified Lease	6/30/2015		10,000	(1)
Chula Vista, CA ("San Diego")
540 New Waverly Place	Modified Lease	7/20/2015		15,000	(1)
Cary, NC ("Raleigh")
MedHelp	Modified Lease	7/31/2015		14,076	(1)
Birmingham, AL
Maryland MOBs
Patriot Professional Center	Modified Lease	7/31/2015		16,900	(1)
Frederick, MD ("Baltimore")
Liberty Professional Center	Modified Lease	7/31/2015		7,350	(1)
Frederick, MD ("Baltimore")
Columbia MOBs
Broadway Medical Plaza 1	Modified Lease	8/21/2015		10,619	(1)
Columbia, MO
Broadway Medical Plaza 2	Modified Lease	8/21/2015		13,014	(1)
Columbia, MO
Broadway Medical Plaza 4	Modified Lease	8/21/2015		14,091	(1)
Columbia, MO

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Seniors Housing
Fieldstone Memory Care (2)	Managed	3/31/2015		12,400	(1)
Yakima, WA
Primrose III Communities
Primrose Retirement Community of Anderson	Triple-net Lease	5/29/2015		21,086
Anderson, IN ("Muncie")
Primrose Retirement Community of Lancaster	Triple-net Lease	5/29/2015		25,657
Lancaster, OH ("Columbus")
Primrose Retirement Community of Wausau	Triple-net Lease	5/29/2015		20,307
Wausau, WI ("Green Bay")
Superior Residences of Panama City	Managed	7/15/2015		20,000	(1)
Panama City Beach, FL
Southeast Seniors Housing Communities
Parc at Duluth	Triple-net Lease	7/31/2015		52,800
Duluth, GA ("Atlanta")
Parc at Piedmont	Triple-net Lease	7/31/2015		50,800
Marietta, GA ("Atlanta")
The Pavilion at Great Hills	Managed	7/31/2015		35,000
Austin, TX
The Hampton at Meadows Place	Managed	7/31/2015		28,400
Fort Bend, TX ("Houston")
The Beacon at Gulf Breeze	Managed	7/31/2015		28,000
Gulf Breeze, FL ("Pensacola")
Palmilla Senior Living	Managed	9/30/2015		47,600
Albuquerque, NM
Cedar Lake Assisted Living and Memory Care	Managed	9/30/2015		30,000
Lake Zurich, IL ("Chicago")
			$	655,079

FOOTNOTES:

⁽¹⁾ This represents a single property or portfolio acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property or portfolio.

⁽²⁾ This property was purchased from a related party of the Company’s Sponsor; refer to Note 11. “Related Party Arrangements” for additional information.

During the nine months ended September 30, 2014, the Company acquired the following 22 properties, which were comprised of three acute care hospitals, three MOBs, three post-acute care hospitals and, 13 seniors housing communities:

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Acute Care
Memorial Hermann Orthopedic & Spine Hospital ("MHOSH")	Triple-net Lease	6/2/2014	$	49,000
Bellaire, TX ("Houston")
Medical Portfolio II Properties
Hurst Specialty Hospital	Modified Lease	8/15/2014		29,465
Hurst, TX ("Dallas/Fort Worth")
Beaumont Specialty Hospital	Modified Lease	8/15/2014		33,600
Beaumont, TX ("Houston")
Medical Office
Chula Vista Medical Arts Center - Plaza I	Modified Lease	1/21/2014		17,863	(1)
Chula Vista, CA ("San Diego")
MHOSH Medical Office Building	Modified Lease	6/2/2014		27,000
Bellaire, TX ("Houston")
Lee Hughes Medical Building	Modified Lease	9/29/2014		29,870	(1)
Glendale, CA ("Los Angeles")
Post-Acute Care
Medical Portfolio II Properties
Oklahoma City Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		25,504
Oklahoma City, OK
Las Vegas Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		22,292
Las Vegas, NV
South Bend Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		20,240
Mishawaka, IN ("South Bend")
Seniors Housing
Pacific Northwest II Communities
Prestige Senior Living Auburn Meadows	Managed	2/3/2014		21,930
Auburn, WA ("Seattle")
Prestige Senior Living Bridgewood	Managed	2/3/2014		22,096
Vancouver, WA ("Portland")
Prestige Senior Living Monticello Park	Managed	2/3/2014		27,360
Longview, WA
Prestige Senior Living Rosemont	Managed	2/3/2014		16,877
Yelm, WA
Prestige Senior Living West Hills	Managed	3/3/2014		14,986
Corvallis, OR

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
South Bay II Communities
Isle at Cedar Ridge	Managed	2/28/2014		21,630
Cedar Park, TX ("Austin")
HarborChase of Plainfield	Managed	3/28/2014		26,500
Plainfield, IL
Legacy Ranch Alzheimer’s Special Care Center	Managed	3/28/2014		11,960
Midland, TX
The Springs Alzheimer’s Special Care Center	Managed	3/28/2014		10,920
San Angelo, TX
Isle at Watercrest – Bryan	Managed	4/21/2014		22,050
Bryan, TX
Watercrest at Bryan	Managed	4/21/2014		28,035
Bryan, TX
Isle at Watercrest – Mansfield	Managed	5/5/2014		31,300
Mansfield, TX ("Dallas/Fort Worth")
Watercrest  at Mansfield	Managed	6/30/2014		49,000
Mansfield, TX ("Dallas/Fort Worth")
			$	559,478

FOOTNOTE:

⁽¹⁾ This represents a single property acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property.

Schedule of Purchase Price Allocation

The following summarizes the purchase price allocation for the above properties, and the estimated fair values of the assets acquired and liabilities assumed (in thousands):

	September 30,
	2015			2014
Land and land improvements	$	66,583		$	46,064
Buildings and building improvements		523,103			442,887
Furniture, fixtures and equipment		9,469			10,014
Intangibles (1)		65,126			67,431
Other liabilities		(3,765	)		(8,718	)
Liabilities assumed		(2,589	)	―
Assumed mortgage note payable (2)		(6,976	)		(27,657	)
Net assets acquired		650,951			530,021
Contingent purchase price consideration		(3,000	)		(12,395	)
Total purchase price consideration	$	647,951		$	517,626

FOOTNOTE:

⁽¹⁾ At the acquisition date, the weighted-average amortization period on the acquired lease intangibles for the nine months ended September 30, 2015 and 2014 was approximately 7.9 years and 7.1 years, respectively.  The acquired lease intangibles during the nine months ended September 30, 2015 were comprised of approximately $60.7 million and $4.4 million of in-place lease intangibles and other lease intangibles, respectively, and the acquired lease intangibles during the nine months ended September 30, 2014 were comprised of approximately $61.4 million and $6.0 million of in-place lease intangibles and other lease intangibles, respectively.

⁽²⁾ At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.2 million discount on the below-market mortgage note payable assumed.

Schedule of Unaudited Proforma Results of Operations

The following table presents the unaudited pro forma results of operations for the Company as if the 2015 acquisitions noted as material in Note 3. “Acquisitions” above were acquired as of January 1, 2014 and the unaudited pro forma results of operations for the Company assuming the 2014 acquisitions noted as material in Note 3. “Acquisitions” above were acquired as of January 1, 2013 (in thousands except per share data):

	(Unaudited)						(Unaudited)
	Quarter Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenues	$	86,793		$	64,136		$	245,650		$	187,170
Net income (loss) (1)	$	(16,244	)	$	(11,332	)	$	(48,601	)	$	(45,370	)
Loss per share of common stock (basic and diluted)	$	(0.09	)	$	(0.10	)	$	(0.29	)	$	(0.46	)
Weighted average number of shares of common stock outstanding (basic and diluted) (2)		171,102			109,212			165,408			97,911

FOOTNOTES:

⁽¹⁾ The unaudited pro forma results for the quarter and nine months ended September 30, 2015, were adjusted to exclude approximately $6.1 million and $9.8 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the quarter and nine months ended September 30, 2015. The unaudited pro forma results for the nine months ended September 30, 2014 were adjusted to include approximately $9.8 million of acquisition related expenses, as if the properties had been acquired on January 1, 2014.  The unaudited pro forma results for the quarter and nine months ended September 30, 2014 were adjusted to exclude approximately $3.1 million and $13.8 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the quarter and nine months ended September 30, 2014, as if the properties had been acquired on January 1, 2013.

⁽²⁾ As a result of the acquired properties being treated as operational since January 1, 2014, the Company assumed approximately 19.0 million shares were issued as of January 1, 2014. Consequently the weighted average shares outstanding was adjusted to reflect this amount of shares being issued on January 1, 2014 instead of actual dates on which the shares were issued, and such shares were treated as outstanding as of the beginning of the period presented.

Gain That Resulted From Change of Control in Equity Method Investment

The following summarizes the gain that resulted from the change of control in the equity method investment for the quarter and nine months ended September 30, 2014 (in thousands):

Fair value of net assets acquired	$	10,129
Less: Previous investment in Montecito Joint Venture		(5,747	)
Less: Cash paid to acquire co-venture partner's interest		(1,584	)
Gain on purchase of controlling interest of investment in unconsolidated entity	$	2,798

Montecito Joint Venture

Schedule of Purchase Price Allocation

The following summarizes the allocation of the purchase price, and the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Land and land improvements	$	6,324
Buildings and building improvements		13,533
Intangibles (1)		2,691
Working capital, net		87
Other liabilities		(175	)
Mortgage note payable assumed  (2)		(12,331	)
Net assets acquired	$	10,129

FOOTNOTES:

⁽¹⁾ At the acquisition date, the weighted-average amortization period on the acquired lease intangibles was approximately 5.1 years and was comprised of approximately $1.9 million and $0.8 million of in-place lease intangibles and other lease intangibles, respectively.

⁽²⁾ At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.6 million discount on the below-market mortgage note payable assumed.

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Schedule of Estimated Future Amortization and Weighted Average Remaining Useful Life (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets And Liabilities [Line Items]
Intangible assets, net	$ 163,538	$ 140,264
Finite-Lived Intangible Assets
Finite-Lived Intangible Assets And Liabilities [Line Items]
2015	12,463
2016	40,397
2017	26,801
2018	16,474
2019	12,025
Thereafter	55,378
Intangible assets, net	163,538
Intangible Liabilities
Finite-Lived Intangible Assets And Liabilities [Line Items]
2015	(401)
2016	(1,538)
2017	(1,388)
2018	(1,235)
2019	(1,071)
Thereafter	(6,363)
Intangible liabilities, net	$ (11,996)
In-place lease intangibles
Finite-Lived Intangible Assets And Liabilities [Line Items]
Weighted average useful life, assets	4 years 7 months 6 days
In-place lease intangibles | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets And Liabilities [Line Items]
2015	$ 11,859
2016	38,280
2017	24,845
2018	14,685
2019	10,537
Thereafter	40,374
Intangible assets, net	$ 140,580
Above-market lease intangibles
Finite-Lived Intangible Assets And Liabilities [Line Items]
Weighted average useful life, assets	6 years 2 months 12 days
Weighted average useful life, liabilities	38 years 3 months 18 days
Above-market lease intangibles | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets And Liabilities [Line Items]
2015	$ 524
2016	1,797
2017	1,636
2018	1,469
2019	1,168
Thereafter	4,282
Intangible assets, net	10,876
Above-market lease intangibles | Intangible Liabilities
Finite-Lived Intangible Assets And Liabilities [Line Items]
2015	(22)
2016	(89)
2017	(89)
2018	(89)
2019	(89)
Thereafter	(3,042)
Intangible liabilities, net	$ (3,420)
Below-market ground lease intangibles
Finite-Lived Intangible Assets And Liabilities [Line Items]
Weighted average useful life, assets	37 years 9 months 18 days
Weighted average useful life, liabilities	4 years 10 months 24 days
Below-market ground lease intangibles | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets And Liabilities [Line Items]
2015	$ 80
2016	320
2017	320
2018	320
2019	320
Thereafter	10,722
Intangible assets, net	12,082
Below-market ground lease intangibles | Intangible Liabilities
Finite-Lived Intangible Assets And Liabilities [Line Items]
2015	(379)
2016	(1,449)
2017	(1,299)
2018	(1,146)
2019	(982)
Thereafter	(3,321)
Intangible liabilities, net	$ (8,576)

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Schedule of Unaudited Proforma Results of Operations (Parenthetical) (Detail) - USD ($) $ in Thousands, shares in Millions		3 Months Ended		9 Months Ended
	Jan. 02, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Acquisition fees and expenses		$ 9,073	$ 3,729	$ 15,939	$ 15,726
Shares issued to fund acquisition	19.0
Proforma results adjusted to exclude
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Acquisition fees and expenses		$ 6,100	$ 3,100	$ 9,800	13,800
Proforma results adjusted to include
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Acquisition fees and expenses					$ 9,800

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Tax Composition of Company's Distributions Declared (Detail)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Uncategorized [Abstract]
Taxable as ordinary income	30.10%	21.50%
Return of capital	69.90%	78.50%

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Acquisitions - Additional Information (Detail)	1 Months Ended				3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Aug. 31, 2015 USD ($)	Aug. 31, 2014 USD ($)	Jan. 31, 2013 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) Property	Sep. 30, 2014 USD ($) Property
Business Acquisition [Line Items]
Number of properties acquired | Property							30	22
Revenues attributable to properties					$ 7,100,000	$ 19,800,000	$ 8,600,000	$ 36,500,000
Net loss attributable to properties					4,700,000	4,700,000	$ 7,600,000	15,300,000
Payment to acquire interest in joint ventures								1,584,000
Gain from change of control in equity method investment						2,798,000		$ 2,798,000
Acute Care Hospital
Business Acquisition [Line Items]
Number of properties acquired | Property							1	3
Medical Office
Business Acquisition [Line Items]
Number of properties acquired | Property							17	3
Senior Housing
Business Acquisition [Line Items]
Number of properties acquired | Property							12	13
Post-acute Care Hospital
Business Acquisition [Line Items]
Number of properties acquired | Property								3
Waterstone at Greenville (Greenville, SC)
Business Acquisition [Line Items]
Purchase price of land		$ 2,300,000
Maximum development budget		$ 27,000,000
Location		Greenville, South Carolina
Date Acquired		Aug. 31, 2015
Welbrook Senior Living Grand Junction (Grand Junction, CO)
Business Acquisition [Line Items]
Purchase price of land	$ 1,100,000
Maximum development budget	$ 13,100,000				13,100,000		$ 13,100,000
Location	Grand Junction, Colorado
Date Acquired	Sep. 30, 2015
Wellmore of Lexington (Lexington, SC)
Business Acquisition [Line Items]
Purchase price of land	$ 2,300,000
Maximum development budget	$ 53,900,000				$ 53,900,000		$ 53,900,000
Location	Lexington, South Carolina
Date Acquired	Sep. 30, 2015
Montecito Joint Venture
Business Acquisition [Line Items]
Percentage of membership interest acquired			10.00%	90.00%
Value of equity issued in acquisition				$ 7,000,000
Co-venture partner's interest in the acquired business				10.00%
Payment to acquire interest in joint ventures			$ 1,584,000			1,584,000		$ 1,584,000
Percentage of membership interest acquired	100.00%				100.00%		100.00%
Fair value of equity interest in Montecito Joint Venture immediately before the acquisition date			5,700,000
Gain from change of control in equity method investment			$ 2,798,000			$ 2,798,000		$ 2,798,000

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Schedule of Future Minimum Lease Payments to be Received Under Non-Cancellable Operating Leases (Detail) $ in Thousands	Sep. 30, 2015 USD ($)
Leases [Abstract]
2015	$ 26,253
2016	103,139
2017	97,240
2018	89,806
2019	81,268
Thereafter	442,941
Total	$ 840,647

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Related Party Arrangement, Fees and Expenses Incurred (Parenthetical) (Detail) - CNL Healthcare Corp. - Restricted Stock shares in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) shares
Related Party Transaction [Line Items]
Shares issued to Advisor | shares	80
Restricted stock fair value	$ 0

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Schedule of Maturities of Indebtedness (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Net Balance
2015	$ 4,769
2016	37,730
2017	261,106
2018	299,180
2019	487,724
Thereafter	164,754
Total borrowings	$ 1,255,263	$ 1,059,964

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Real Estates under Development with Third-Party Developers (Parenthetical) (Detail)	Sep. 30, 2015
Watercrest at Katy (Katy, TX) | Corporate Joint Venture
Real Estate Properties [Line Items]
Percentage of ownership interest	95.00%

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Organization

9 Months Ended

Sep. 30, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

1. Organization

CNL Healthcare Properties, Inc. (“Company”) is a Maryland corporation incorporated on June 8, 2010 that elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with the year ended December 31, 2012.  The Company is externally advised by CNL Healthcare Corp. (“Advisor”) and its property manager is CNL Healthcare Manager Corp. (“Property Manager”), each of which is a Florida corporation and a wholly owned subsidiary of CNL Financial Group, LLC (“Sponsor”).  The Sponsor is an affiliate of CNL Financial Group, Inc. (“CNL”) and CNL Securities Corp., the managing dealer of the Offerings and a wholly owned subsidiary of CNL (“Managing Dealer”).  The Advisor is responsible for managing the Company’s affairs on a day-to-day basis and for identifying and making acquisitions and investments on behalf of the Company pursuant to an advisory agreement among the Company, the operating partnership and the Advisor.  Substantially all of the Company’s acquisition, operating, administrative and certain property management services are provided by affiliates of the Advisor and the Property Manager.  In addition, third-party sub-property managers have been engaged to provide certain property management services.

The Company conducts substantially all of its operations either directly or indirectly through: (1) an operating partnership, CHP Partners, LP, in which the Company is the sole limited partner and its wholly owned subsidiary, CHP GP, LLC, is the sole general partner; (2) a wholly owned taxable REIT subsidiary (“TRS”), CHP TRS Holding, Inc.; (3) property owner subsidiaries and lender subsidiaries, which are single purpose entities; and (4) investments in joint ventures.

On June 27, 2011, the Company commenced its initial public offering (“Initial Offering”), including shares being offered through its distribution reinvestment plan (“Reinvestment Plan”), pursuant to a registration statement on Form S-11 under the Securities Act of 1933 with the Securities and Exchange Commission (“SEC”).  In addition, the Company filed a follow-on registration statement on Form S-11 under the Securities Act of 1933 with the SEC in connection with the proposed offering of up to $1 billion in shares of common stock (“Follow-On Offering”), which was declared effective on February 2, 2015.  Accordingly, the Company closed its Initial Offering and commenced its Follow-On Offering (collectively, the “Offerings”).  The Company closed its Follow-On Offering on September 30, 2015 and discontinued its stock distributions concurrently.

The Company’s investment focus is on acquiring a diversified portfolio of healthcare real estate or real estate-related assets, primarily in the United States, within the seniors housing, medical office, post-acute care and acute care asset classes. The types of seniors housing that the Company may acquire include active adult communities (age-restricted and age-targeted housing), independent and assisted living facilities, continuing care retirement communities, and Alzheimer’s / memory care facilities.  The types of medical offices that the Company may acquire include medical office buildings, specialty medical and diagnostic service facilities, surgery centers, outpatient rehabilitation facilities, and other facilities designed for clinical services. The types of post-acute care facilities that the Company may acquire include skilled nursing facilities, long-term acute care hospitals and inpatient rehabilitative hospitals.  The types of acute care facilities that the Company may acquire include general acute care hospitals and specialty surgical hospitals.  The Company views, manages and evaluates its portfolio homogeneously as one collection of healthcare assets with a common goal of maximizing revenues and property income regardless of the asset class or asset type.

The Company is committed to investing the remaining proceeds of its Offerings through strategic investment types aimed to maximize stockholder value by generating sustainable cash flow growth and increasing the value of its healthcare assets.  The Company expects to primarily lease its seniors housing properties to wholly owned TRS entities and engage independent third-party managers under management agreements to operate the properties under REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structures; however, the Company may also lease its properties to third-party tenants under triple-net or similar lease structures, where the tenant bears all or substantially all of the costs (including cost increases, for real estate taxes, utilities, insurance and ordinary repairs).  Medical office, post-acute care and acute care properties will be leased on a triple-net, net or modified gross basis to third-party tenants.  In addition, the Company expects most investments will be wholly owned, although, it has and may continue to invest through partnerships with other entities where it is believed to be appropriate and beneficial.

The Company has and may continue to invest in new property developments or properties that have not reached full stabilization.  Finally, the Company also may invest in and originate mortgage, bridge or mezzanine loans or in entities that make investments similar to the foregoing investment types.  The Company generally makes loans to the owners of properties to enable them to acquire land, buildings, or to develop property.  In exchange, the owner generally grants the Company a first lien or collateralized interest in a participating mortgage collateralized by the property or by interests in the entity that owns the property.

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Indebtedness - Additional Information (Detail)	1 Months Ended			9 Months Ended
	Apr. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($) Extension	Sep. 30, 2015 USD ($)
Debt Instrument [Line Items]
Line of credit facility extension period			12 months
After Modification
Debt Instrument [Line Items]
Aggregate maximum principal amount available for borrowing			$ 700,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Fair value of notes payable			206,400,000	$ 390,000,000
Carrying value of notes payable			206,400,000	$ 390,000,000
Aggregate maximum principal amount available for borrowing			$ 230,000,000
Term of credit facility			36 months
Number of extension options available | Extension			2
Line of credit facility extension period			12 months
Description of covenants				The Credit Facilities contain affirmative, negative, and financial covenants which are customary for loans of this type, including (but not limited to): (i) maximum leverage, (ii) minimum fixed charge coverage ratio, (iii) minimum consolidated net worth, (iv) restrictions on payments of cash distributions except if required by REIT requirements, (v) maximum secured and unsecured indebtedness, and (vi) limitations on certain types of investments and with respect to the pool of properties supporting borrowings under the Credit Facilities, minimum debt service coverage ratio, and remaining lease terms, as well as property type, MSA, operator, and asset value concentration limits. The limitations on distributions includes a limitation on the extent of allowable distributions, which are not to exceed the greater of 95% of adjusted FFO (as defined per the Credit Facilities) and the minimum amount of distributions required to maintain the Company’s REIT status.
Term Loan Facility
Debt Instrument [Line Items]
Aggregate maximum principal amount available for borrowing			$ 175,000,000
Term of credit facility			50 months
Number of extension options available | Extension			1
Mortgage Loans
Debt Instrument [Line Items]
Mortgage loan amortizable period				25 years
Fair value of notes payable			$ 868,500,000	$ 876,300,000
Mortgage Loans | Medical Portfolio I Properties
Debt Instrument [Line Items]
Extinguishment of outstanding debt	$ 34,500,000
Write off of unamortized loan cost	200,000
Reclassified amount in connection with the derecognition of the cash flow hedge	$ (200,000)
Mortgage Loans | Perennial Communities
Debt Instrument [Line Items]
Extinguishment of outstanding debt		$ 30,000,000
Write off of unamortized loan cost		200,000
Reclassified amount in connection with the derecognition of the cash flow hedge		$ (100,000)
Other notes
Debt Instrument [Line Items]
Carrying value of notes payable			$ 853,600,000	$ 865,500,000
Maximum | Revolving Credit Facility
Debt Instrument [Line Items]
Fees paid range on unused commitments, percentage			0.25%
Maximum | Mortgage Loans | Two Specialty Hospitals
Debt Instrument [Line Items]
Mortgage loan amortizable period				25 years
Minimum | Revolving Credit Facility
Debt Instrument [Line Items]
Fees paid range on unused commitments, percentage			0.15%
Minimum | Mortgage Loans | Two Specialty Hospitals
Debt Instrument [Line Items]
Mortgage loan amortizable period				15 years

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Gain Resulted From Change of Control in Equity Method Investment (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
	Aug. 31, 2014	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2015
Schedule of Equity Method Investments [Line Items]
Fair value of net assets acquired		$ 530,021	$ 530,021	$ 650,951
Less: Cash paid to acquire co-venture partner's interest			(1,584)
Gain on purchase of controlling interest of investment in unconsolidated entity		2,798	2,798
Montecito Joint Venture
Schedule of Equity Method Investments [Line Items]
Fair value of net assets acquired	$ 10,129	10,129	10,129
Less: Previous investment in Montecito Joint Venture		(5,747)	(5,747)
Less: Cash paid to acquire co-venture partner's interest	(1,584)	(1,584)	(1,584)
Gain on purchase of controlling interest of investment in unconsolidated entity	$ 2,798	$ 2,798	$ 2,798

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Variable Interest Entities (Tables)

9 Months Ended

Sep. 30, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Aggregate Carrying Amount and Major Classifications of Consolidated Assets

The aggregate carrying amount and major classifications of the consolidated assets that can be used to settle obligations of the VIEs and liabilities of the consolidated VIEs that are non-recourse to the Company as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,		December 31,
	2015		2014
Assets:
Real estate investment properties, net	$	192,663	$	174,449
Real estate under development, including land	$	67,350	$	47,153
Intangibles, net	$	24,426	$	25,519
Cash	$	1,462	$	6,280
Other assets	$	862	$	511
Deferred rent and lease incentives	$	6,330	$	2,978
Loan costs, net	$	2,497	$	2,300
Restricted cash	$	2,053	$	5,304
Liabilities:
Mortgages and other notes payable	$	172,537	$	137,754
Accounts payable and accrued liabilities	$	1,497	$	2,317
Accrued development costs	$	8,854	$	7,951
Due to related parties	$	171	$	219
Other liabilities	$	4,551	$	4,949

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Operating Leases (Tables)

9 Months Ended

Sep. 30, 2015

Leases [Abstract]

Schedule of Future Minimum Lease Payments to be Received Under Non-Cancellable Operating Leases

The following are future minimum lease payments to be received under non-cancellable operating leases for the remainder of 2015, each of the next four years and thereafter, as of September 30, 2015 (in thousands):

2015	$	26,253
2016		103,139
2017		97,240
2018		89,806
2019		81,268
Thereafter		442,941
	$	840,647

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Schedule of Future Minimum Lease Payments Under Ground and Air Rights Leases (Detail) - Ground and Air Rights Leases $ in Thousands	Sep. 30, 2015 USD ($)
Operating Leased Assets [Line Items]
2015	$ 484
2016	1,957
2017	1,984
2018	2,016
2019	2,041
Thereafter	115,515
Total	$ 123,997

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Schedule of Real Estate Investment Properties (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Real Estate [Abstract]
Land and land improvements	$ 200,763	$ 128,662
Building and building improvements	2,094,128	1,545,614
Furniture, fixtures and equipment	54,284	36,319
Less: accumulated depreciation	(97,975)	(53,095)
Real estate investment properties, net	2,251,200	1,657,500
Real estate under development, including land	69,478	47,153
Total real estate assets, net	$ 2,320,678	$ 1,704,653

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Ground and Air Rights Leases (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Future Minimum Lease Payments to be Received Under Non-Cancellable Operating Leases

The following are future minimum lease payments to be received under non-cancellable operating leases for the remainder of 2015, each of the next four years and thereafter, as of September 30, 2015 (in thousands):

2015	$	26,253
2016		103,139
2017		97,240
2018		89,806
2019		81,268
Thereafter		442,941
	$	840,647

Ground and Air Rights Leases

Schedule of Future Minimum Lease Payments to be Received Under Non-Cancellable Operating Leases

The following is a schedule of future minimum lease payments to be paid under the ground and air rights leases for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 (in thousands):

2015	$	484
2016		1,957
2017		1,984
2018		2,016
2019		2,041
Thereafter		115,515
	$	123,997

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Contingent Purchase Price Consideration (Tables)

9 Months Ended

Sep. 30, 2015

Capital Health Communities

Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]

Fair Value of Contingent Purchase Price Consideration

The following table provides a roll-forward of the fair value of the contingent purchase price consideration related to the Yield Guaranty on the Capital Health Communities for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter ended					Nine Months Ended
	September 30,					September 30,
	2015		2014			2015			2014
Beginning balance	$	1,820	$	3,509		$	4,078		$	4,488
Yield Guaranty payment received from seller		—		(301	)		(2,579	)		(2,601	)
Change in fair value		—		—			321			1,321
Ending balance	$	1,820	$	3,208		$	1,820		$	3,208

Medical Portfolio I

Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]

Fair Value of Contingent Purchase Price Consideration

The following table provides a roll-forward of the fair value of the contingent purchase price consideration related to the Chestnut Commons Earn-Out for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Beginning balance	$	(268	)	$	(507	)	$	(268	)	$	(507	)
Contingent consideration in connection with acquisition		—			—			—			—
Change in fair value		268			—			268			—
Ending balance	$	—		$	(507	)	$	—		$	(507	)

South Bay II Communities

Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]

Fair Value of Contingent Purchase Price Consideration

The following table provides a roll-forward of the fair value of the estimated contingent purchase price consideration related to the South Bay II Communities for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter ended					Nine Months Ended
	September 30,					September 30,
	2015		2014			2015		2014
Beginning balance	$	—	$	(8,500	)	$	—	$	—
Contingent consideration in connection with acquisition		—		—			—		(12,395	)
Contingent consideration payment		—		10,300			—		14,195
Change in fair value		—		(1,800	)		—		(1,800	)
Ending balance	$	—	$	—		$	—	$	—

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating activities:
Net cash flows provided by operating activities	$ 32,393	$ 18,673
Investing activities:
Acquisition of properties	(647,538)	(524,654)
Development of properties	(54,411)	(32,893)
Capital expenditures	(5,840)	(2,570)
Issuance of note receivable to related party		(2,065)
Collection of note receivable from related party		5,591
Distribution from unconsolidated entities		2,206
Purchase of controlling interest in unconsolidated entity		(1,584)
Investment in unconsolidated entities		(220)
Changes in restricted cash	1,937	(3,539)
Payment of tenant improvements		(797)
Payment of leasing costs	(1,904)	(324)
Deposits on real estate	(1,900)	(2,950)
Net cash used in investing activities	(709,656)	(563,799)
Financing activities:
Subscriptions received for common stock through public offering	530,083	333,960
Payment of stock issuance and offering costs	(55,626)	(36,575)
Distributions to stockholders, net of distribution reinvestments	(18,816)	(9,782)
Distribution to holder of promoted interest		(2,000)
Contribution from redeemable noncontrolling interest		568
Distributions to holder of noncontrolling interest	(16)
Redemptions of common stock	(4,725)	(1,068)
Draws under revolving credit facility	215,000	112,115
Repayment on revolving credit facility	(31,403)	(30,000)
Proceeds from mortgage and other notes payable	84,888	245,587
Principal payments on mortgage and other notes payable	(80,270)	(24,096)
Lender deposits	(36)	(335)
Payment of loan costs	(1,986)	(3,974)
Net cash flows provided by financing activities	637,093	584,400
Net increase (decrease) in cash	(40,170)	39,274
Cash at beginning of period	91,355	44,209
Cash at end of period	51,185	83,483
Amounts incurred but not paid (including amounts due to related parties):
Accrued development costs	9,100	4,683
Redemptions payable	2,781	1,178
Contingent purchase price consideration	3,000
Unrealized loss on derivative financial instruments, net	14,699	1,798
Assumption of liabilities on acquisition of property	2,502
Assumption of mortgage note payable on acquisition of property	$ 7,128	$ 27,657

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Indebtedness (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Details of Indebtedness

The following table provides details of the Company’s indebtedness as of September 30, 2015 and December 31, 2014 (in thousands):

	September 30,			December 31,
	2015			2014
Mortgages payable and other notes payable:
Fixed rate debt	$	395,783		$	370,854
Variable rate debt (1)		469,739			482,922
Mortgages and other notes payable		865,522			853,776
Premium (discount), net (2)		(259	)		(215	)
Total mortgages and other notes payable, net		865,263			853,561
Credit facilities:
Term Loan Facility (1)		175,000			175,000
Revolving Credit Facility (3)		215,000			31,403
Total borrowings	$	1,255,263		$	1,059,964

FOOTNOTES:

⁽¹⁾ As of September 30, 2015 and December 31, 2014, the Company had entered into interest rate swaps with notional amounts of approximately $342.7 million and $182.1 million, respectively, which were settling on a monthly basis. In addition, as of September 30, 2015 and December 31, 2014, the Company had entered into forward-starting interest rate swaps for total notional amounts of approximately $187.1 million and $269.4 million, respectively, in order to hedge its exposure to variable rate debt in future periods.  The remaining forward-starting interest rate swaps have a range of effective dates beginning in 2015 and continuing through the maturity date of the loans being hedged.

⁽²⁾ Premium (discount), net is reflective of the Company recording mortgage notes payable assumed at fair value on the respective acquisition date.

⁽³⁾ As of September 30, 2015 and December 31, 2014, availability under the Revolving Credit Facility was approximately $15.0 million and $14.0 million, respectively, based on the value of the properties in the unencumbered collateral pool of assets supporting the loan.

Schedule of Maturities of Indebtedness

Maturities of indebtedness for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 are as follows (in thousands):

2015	$	4,769
2016		37,730
2017		261,106
2018		299,180
2019		487,724
Thereafter		164,754
	$	1,255,263

Schedule of Indebtedness

The following table provides details of new indebtedness during the nine months ended September 30, 2015 as of September 30, 2015 (in thousands):

	Interest Rate at
	September 30,		Maturity	September 30,
Property and Loan Type	2015 (1)	Payment Terms	Date (2)	2015
Novi Orthopaedic Center; Mortgage Loan	3.61% per annum	Monthly interest only payments through June 2018; principal and interest payments thereafter based on a 25-year amortization schedule	6/15/20	$	19,825
ProMed Medical Building I; Mortgage Loan	3.64% per annum (3)	Monthly principal and interest payments based upon a 30-year amortization schedule	1/15/22		7,095
540 New Waverly Place; Mortgage Loan	4.08% per annum	Monthly principal and interest payments based upon a 25-year amortization schedule	5/31/28		7,096
		Total fixed rate debt			34,016
Raider Ranch Development; Construction Loan	30-day LIBOR plus 3.50% at 0.5% LIBOR floor	Monthly interest only payments through October 2017; principal and interest payments thereafter based on a 25-year amortization schedule	10/27/17		5,914
HarborChase of Shorewood; Construction Loan	30-day LIBOR plus 3%; 2% all in floor	Monthly interest only payments through July 2017; principal and interest payments thereafter based on a 25-year amortization schedule	7/15/19		10,117
UT Cancer Institute; Mortgage Loan	30-day LIBOR plus 2.00% per annum	Monthly interest only payments through July 2017; principal and interest payments thereafter based on a 25-year amortization schedule	12/22/19		21,672
Watercrest at Katy; Construction Loan	30-day LIBOR plus 2.75% per annum	Monthly interest only payments through December 2017; principal and interest payments thereafter based on a 30-year amortization schedule	12/27/19		4,505
		Total variable rate debt			42,208
		Fixed and variable rate debt			76,224
		Premium (discount), net			(150	)
		Total debt		$	76,074

FOOTNOTES:

⁽¹⁾ The 30-day LIBOR was approximately 0.19% as September 30, 2015.

⁽²⁾ Represents the initial maturity date (or, as applicable, the maturity date as extended).  The maturity date may be extended beyond the date shown subject to certain lender conditions.

⁽³⁾ Beginning January 2020, the interest rate transitions to variable rate based on 30-day LIBOR plus 2.20% per annum.

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Schedule of Purchase Price Allocation (Parenthetical) (Detail) - USD ($) $ in Thousands		1 Months Ended	9 Months Ended
		Aug. 31, 2014	Sep. 30, 2015	Sep. 30, 2014
Business Acquisition [Line Items]
Weighted-average amortization period on the acquired lease intangibles			7 years 10 months 24 days	7 years 1 month 6 days
Acquired lease intangibles	[1]		$ 65,126	$ 67,431
Mortgage note payable, discount			200
Montecito Joint Venture
Business Acquisition [Line Items]
Weighted-average amortization period on the acquired lease intangibles		5 years 1 month 6 days
Acquired lease intangibles	[2]	$ 2,691
Mortgage note payable, discount		600
In-place lease intangibles
Business Acquisition [Line Items]
Acquired lease intangibles			60,700	4,400
In-place lease intangibles | Montecito Joint Venture
Business Acquisition [Line Items]
Acquired lease intangibles		1,900
Other lease intangibles
Business Acquisition [Line Items]
Acquired lease intangibles			$ 61,400	$ 6,000
Other lease intangibles | Montecito Joint Venture
Business Acquisition [Line Items]
Acquired lease intangibles		$ 800

[1] At the acquisition date, the weighted-average amortization period on the acquired lease intangibles for the nine months ended September 30, 2015 and 2014 was approximately 7.9 years and 7.1 years, respectively. The acquired lease intangibles during the nine months ended September 30, 2015 were comprised of approximately $60.7 million and $4.4 million of in-place lease intangibles and other lease intangibles, respectively, and the acquired lease intangibles during the nine months ended September 30, 2014 were comprised of approximately $61.4 million and $6.0 million of in-place lease intangibles and other lease intangibles, respectively.

[2] At the acquisition date, the weighted-average amortization period on the acquired lease intangibles was approximately 5.1 years and was comprised of approximately $1.9 million and $0.8 million of in-place lease intangibles and other lease intangibles, respectively

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Variable Interest Entities (VIEs) - Additional Information (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($)
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Variable interest entity, description	As of September 30, 2015, the Company has 15 subsidiaries, which are VIEs due to the following factors and circumstances: (1) Two of these subsidiaries are single property entities, designed to own and lease their respective properties to single tenants, for which buy-out options are held by the respective tenants that are formula based. (2) Four of these subsidiaries are single property entities, designed to own and lease their respective properties to multiple tenants, which are subject to either a ground lease or an air rights lease that include buy-out and put options held by either the tenant or landlord under the applicable lease. (3) Seven of these subsidiaries are entities with real estate under development or completed developments in which the third-party developers have an opportunity to earn promoted interest payments after certain net operating income targets and internal rate of return targets have been met. (4) One of these subsidiaries is a joint venture with real estate under development in which the third-party developer has an opportunity to earn promoted interest payments after certain net operating income targets and internal rate of return targets have been met. (5) One of these subsidiaries is a joint venture with equity interest that consists of non-substantive voting rights.
Maximum exposure to loss VIEs limits	$ 109.0

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Aggregate Proceeds from Offerings (Detail) - USD ($) shares in Millions, $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Subscription
Class of Stock [Line Items]
Aggregate offering proceeds received from public offering	$ 1,644.3	$ 1,114.2
Shares issued	160.4	110.2
Subscription | IPO
Class of Stock [Line Items]
Aggregate offering proceeds received from public offering	$ 1,271.4	$ 1,114.2
Shares issued	125.1	110.2
Subscription | Follow-On Offering
Class of Stock [Line Items]
Aggregate offering proceeds received from public offering	$ 372.9
Shares issued	35.3
Reinvestment Plan
Class of Stock [Line Items]
Aggregate offering proceeds received from public offering	$ 53.1	$ 27.1
Shares issued	5.4	2.8
Reinvestment Plan | IPO
Class of Stock [Line Items]
Aggregate offering proceeds received from public offering	$ 27.1	$ 27.1
Shares issued	2.8	2.8
Reinvestment Plan | Follow-On Offering
Class of Stock [Line Items]
Aggregate offering proceeds received from public offering	$ 26.0
Shares issued	2.6

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Real estate assets:
Real estate investment properties, net (including VIEs $192,663 and $174,449, respectively)	$ 2,251,200	$ 1,657,500
Real estate under development, including land (including VIEs $67,350 and $47,153, respectively)	69,478	47,153
Total real estate assets, net	2,320,678	1,704,653
Intangibles, net (including VIEs $24,426 and $25,519, respectively)	163,538	140,264
Cash (including VIEs $1,462 and $6,280, respectively)	51,185	91,355
Other assets (including VIEs $862 and $511, respectively)	22,024	19,738
Deferred rent and lease incentives (including VIEs $6,330 and $2,978, respectively)	21,244	8,240
Loan costs, net (including VIEs $2,497 and $2,300, respectively)	12,604	14,012
Restricted cash (including VIEs $2,053 and $5,304, respectively)	8,816	10,753
Total assets	2,600,089	1,989,015
Liabilities:
Mortgages and other notes payable, net (including VIEs $172,537 and $137,754, respectively)	865,263	853,561
Credit facilities	390,000	206,403
Accounts payable and accrued liabilities (including VIEs $10,351 and $10,268, respectively)	39,862	26,444
Other liabilities (including VIEs $4,551 and $4,949, respectively)	37,880	27,448
Due to related parties (including VIEs $171 and $219, respectively)	5,620	2,999
Total liabilities	$ 1,338,625	$ 1,116,855
Commitments and contingencies (Note 14)
Redeemable noncontrolling interest	$ 568	$ 568
Stockholders' equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued or outstanding
Excess shares, $0.01 par value per share, 300,000 shares authorized; none issued or outstanding
Common stock, $0.01 par value per share, 1,120,000 shares authorized, 172,682 and 116,672 shares issued, and 171,575 and 116,256 shares outstanding, respectively	$ 1,715	$ 1,163
Capital in excess of par value	1,501,420	1,007,326
Accumulated loss	(133,725)	(83,091)
Accumulated distributions	(94,233)	(49,342)
Accumulated other comprehensive loss	(14,649)	(4,864)
Total stockholders' equity	1,260,528	871,192
Noncontrolling interest	368	400
Total equity	1,261,464	872,160
Total liabilities and equity	$ 2,600,089	$ 1,989,015

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Real Estate Assets Net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Real Estate Investment Properties
Real Estate Properties [Line Items]
Depreciation expense	$ 16.9	$ 10.8	$ 44.8	$ 27.4

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND REDEEMABLE NONCONTROLLING INTEREST (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Redeemable Noncontrolling Interests	Common Stock	Capital in Excess of Par Value	Accumulated Loss	Accumulated Distributions	Accumulated Other Comprehensive Loss	Total Stockholders' Equity	Non- controlling Interest
Beginning Balance at Dec. 31, 2013	$ 451,981		$ 582	$ 500,361	$ (30,580)	$ (17,423)	$ (959)	$ 451,981
Beginning Balance (in shares) at Dec. 31, 2013			58,218
Subscriptions received for common stock through public offering and reinvestment plan (in shares)			56,006
Subscriptions received for common stock through public offering and reinvestment plan	572,324		$ 560	571,764				572,324
Stock distributions			$ 24	(24)
Stock distributions, shares			2,356
Redemptions of common stock	(2,996)		$ (3)	(2,993)				(2,996)
Redemption of common stock, shares			(324)
Stock issuance and offering costs	(59,782)			(59,782)				(59,782)
Net loss	(52,511)				(52,511)			(52,511)
Other comprehensive loss	(3,905)						(3,905)	(3,905)
Distribution to holder of promoted interest	(2,000)			(2,000)				(2,000)
Cash distributions declared and paid or reinvested ($0.4071 per share in 2014 and $0.3177 per share in 2015)	(31,919)					(31,919)		(31,919)
Contribution from noncontrolling interests	968	$ 568							$ 400
Ending Balance at Dec. 31, 2014	$ 872,160	568	$ 1,163	1,007,326	(83,091)	(49,342)	(4,864)	871,192	400
Ending Balance (in shares) at Dec. 31, 2014	116,256		116,256
Subscriptions received for common stock through public offering and reinvestment plan (in shares)			52,815
Subscriptions received for common stock through public offering and reinvestment plan	$ 556,157		$ 528	555,629				556,157
Stock distributions			$ 31	(31)
Stock distributions, shares	3,200		3,196
Redemptions of common stock	$ (6,634)		$ (7)	(6,627)				(6,634)
Redemption of common stock, shares			(692)
Stock issuance and offering costs	(54,877)			(54,877)				(54,877)
Net loss	(50,650)				(50,634)			(50,634)	(16)
Other comprehensive loss	(9,785)						(9,785)	(9,785)
Distribution to holder of noncontrolling interest	(16)								(16)
Cash distributions declared and paid or reinvested ($0.4071 per share in 2014 and $0.3177 per share in 2015)	(44,891)					(44,891)		(44,891)
Ending Balance at Sep. 30, 2015	$ 1,261,464	$ 568	$ 1,715	$ 1,501,420	$ (133,725)	$ (94,233)	$ (14,649)	$ 1,260,528	$ 368
Ending Balance (in shares) at Sep. 30, 2015	171,575		171,575

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Details of Indebtedness (Detail) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Mortgages payable and other notes payable		$ 865,522	$ 853,776
Premium (discount), net	[1]	(259)	(215)
Total mortgages and other notes payable, net		865,263	853,561
Credit Facility		390,000	206,403
Total borrowings		1,255,263	1,059,964
Term Loan Facility
Debt Instrument [Line Items]
Credit Facility	[2]	175,000	175,000
Revolving Credit Facility
Debt Instrument [Line Items]
Credit Facility	[3]	215,000	31,403
Fixed rate debt
Debt Instrument [Line Items]
Mortgages payable and other notes payable		395,783	370,854
Variable Rate Debt
Debt Instrument [Line Items]
Mortgages payable and other notes payable	[2]	$ 469,739	$ 482,922

[1] Premium (discount), net is reflective of the Company recording mortgage notes payable assumed at fair value on the respective acquisition date.

[2] As of September 30, 2015 and December 31, 2014, the Company had entered into interest rate swaps with notional amounts of approximately $342.7 million and $182.1 million, respectively, which were settling on a monthly basis. In addition, as of September 30, 2015 and December 31, 2014, the Company had entered into forward-starting interest rate swaps for total notional amounts of approximately $187.1 million and $269.4 million, respectively, in order to hedge its exposure to variable rate debt in future periods. The remaining forward-starting interest rate swaps have a range of effective dates beginning in 2015 and continuing through the maturity date of the loans being hedged.

[3] As of September 30, 2015 and December 31, 2014, availability under the Revolving Credit Facility was approximately $15.0 million and $14.0 million, respectively, based on the value of the properties in the unencumbered collateral pool of assets supporting the loan.

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Equity (Tables)

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Summary of Aggregate Proceeds from Offerings

The following table details the Company’s aggregate proceeds from its Offerings as of September 30, 2015 and December 31, 2014 (in millions):

	September 30, 2015								December 31, 2014
	Subscriptions				Reinvestment Plan				Subscriptions				Reinvestment Plan
	Proceeds		Shares		Proceeds		Shares		Proceeds		Shares		Proceeds		Shares
Initial Offering	$	1,271.4		125.1	$	27.1		2.8	$	1,114.2		110.2	$	27.1		2.8
Follow-on Offering		372.9		35.3		26.0		2.6	―		―		―		―
	$	1,644.3		160.4	$	53.1		5.4	$	1,114.2		110.2	$	27.1		2.8

Historical Offering Share Prices, Including the Prices Pursuant To the Reinvestment Plan and the Company's Monthly Distributions per Share

The following table details the Company’s historical share prices in its Offerings, including the prices pursuant to the Reinvestment Plan and the Company’s monthly cash and stock distributions per share:

Period	Offering Price per Share		Reinvestment Plan Price per Share		Monthly Cash Distributions (1)		Monthly Stock Distributions
December 11, 2013 through November 3, 2014	$	10.14	$	9.64	$	0.0338		0.0025
November 4, 2014 through September 30, 2015	$	10.58	$	10.06	$	0.0353		0.0025

FOOTNOTE:

⁽¹⁾ Monthly cash distributions were effective and payable to all common stockholders of record as of the close of business on the first business day in the month subsequent to the announcement of the Company’s NAV (i.e. December 1, 2014 for the current Offering price).

During the nine months ended September 30, 2015 and 2014, the Company declared cash distributions of $44.9 million and $21.7 million, respectively, of which $18.8 million and $9.8 million, were paid in cash to stockholders and $26.1 million and $11.9 million, respectively, were reinvested pursuant to the Reinvestment Plan.  In addition, for the nine months ended September 30, 2015 and 2014, the Company declared and made stock distributions of approximately 3.2 million and 1.6 million shares of common stock, respectively. The Company closed its Follow-On Offering on September 30, 2015 and discontinued its stock distributions concurrently.

Tax Composition of Company's Distributions Declared

The tax composition of the Company’s distributions declared for the nine months ended September 30, 2015 and 2014 were as follows:

	Nine Months Ended September 30,
Distribution Type	2015			2014
Taxable as ordinary income		30.1	%		21.5	%
Return of capital		69.9	%		78.5	%

Effect of Derivative Financial Instruments

The following table reflects the effect of derivative financial instruments held by Company, or its equity method investments, and included in the condensed consolidated statements of comprehensive loss for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

Derivative Financial Instrument	Gain (loss) recognized in other comprehensive loss on derivative financial instrument						Location of gain (loss) reclassified into earnings	Loss reclassified from AOCI into earnings
	Quarter Ended							Quarter Ended
	September 30,							September 30,
	2015			2014				2015			2014
Interest rate swaps	$	(6,435	)	$	224		Interest expense and loan cost amortization	$	(1,078	)	$	—
Reclassification of interest rate swaps upon derecognition		—			—		Interest expense and loan cost amortization		—			—
Reclassification of interest rate swaps due to ineffectiveness		48			—		Interest expense and loan cost amortization		(48	)		—
Interest rate cap held by unconsolidated joint venture		(1	)		(2	)	Not applicable	―				—
Total	$	(6,388	)	$	222			$	(1,126	)	$	—

	Nine Months Ended							Nine Months Ended
	September 30,							September 30,
	2015			2014				2015			2014
Interest rate swaps	$	(10,060	)	$	(872	)	Interest expense and loan cost amortization	$	(2,411	)	$	—
Reclassification of interest rate swaps upon derecognition		236			—		Interest expense and loan cost amortization		(236	)		—
Reclassification of interest rate swaps due to ineffectiveness		48			—		Interest expense and loan cost amortization		(48	)		—
Interest rate cap held by unconsolidated joint venture		(9	)		21		Not applicable	―				—
Total	$	(9,785	)	$	(851	)		$	(2,695	)	$	—

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Related Party Arrangements - Additional Information (Detail) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended	9 Months Ended
		Mar. 31, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Related Party Transaction [Line Items]
Purchase Price				$ 655,079	$ 559,478
Interest income on note receivable from related party			$ 148		498
Fieldstone Memory Care
Related Party Transaction [Line Items]
Purchase Price	[1],[2]			$ 12,400
Advisor And Property Manager
Related Party Transaction [Line Items]
Annualized return of investment				6.00%
Company Chairman | Bank in Which Company Chairman Serves as Director
Related Party Transaction [Line Items]
Bank deposits				$ 100		$ 100
Related Party of Company Sponsor | Fieldstone Memory Care
Related Party Transaction [Line Items]
Purchase Price		$ 12,400
Crosland Southeast
Related Party Transaction [Line Items]
Interest income on note receivable from related party			$ 200		$ 500
CNL Healthcare Corp.
Related Party Transaction [Line Items]
Operating expenses reimbursement as percentage average invested assets				2.00%
Operating expenses reimbursement as percentage of net income				25.00%

[1] This property was purchased from a related party of the Company’s Sponsor; refer to Note 11. “Related Party Arrangements” for additional information.

[2] This represents a single property or portfolio acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property or portfolio.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

14. Commitments and Contingencies

From time to time the Company may be exposed to litigation arising from operations of its business in the ordinary course of business.  Management is not aware of any litigation that it believes will have a material adverse impact on the Company’s financial condition or results of operations.

Refer to Note 4. “Real Estate Assets, net” for additional information on the remaining development budgets for the Company’s seniors housing developments.

Refer to Note 8. “Ground and Air Rights Leases” for information on commitments under its ground and air rights lease agreements.

Refer to Note 9. “Contingent Purchase Price Consideration” for information on potential contingent purchase price consideration related to the purchase of Superior Residences of Panama City.

Refer to Note 11. “Related Party Arrangements” for information on contingent restricted stock shares due to the Company’s Advisor and Property Manager in connection with the Expense Support Agreements.

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Organization - Additional Information (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
CNL properties Trust, Inc. organized date	Jun. 08, 2010
Offering value of common stock	$ 556,157,000	$ 572,324,000
Follow-On Offering
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Maximum expected date to sell shares of common stock	Sep. 30, 2015
Follow-On Offering | Maximum
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Offering value of common stock	$ 1,000,000,000

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles in the United States (“GAAP”). The unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which, in the opinion of management, are necessary for the fair statement of the Company’s results for the interim period presented.  Operating results for the quarter and nine months ended September 30, 2015 may not be indicative of the results that may be expected for the year ending December 31, 2015. Amounts as of December 31, 2014 included in the unaudited condensed consolidated financial statements have been derived from audited consolidated financial statements as of that date but do not include all disclosures required by GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The accompanying unaudited condensed consolidated financial statements include the Company’s accounts and the accounts of its wholly owned subsidiaries or subsidiaries for which the Company has a controlling financial interest, including the accounts of variable interest entities (“VIEs”) in which the Company is the primary beneficiary.  All material intercompany accounts and transactions have been eliminated in consolidation.

In accordance with the guidance for the consolidation of VIEs, the Company analyzes its variable interests, including loans, leases, guarantees, and equity investments, to determine if the entity in which it has a variable interest is a variable interest entity (“VIE”).  The Company’s analysis includes both quantitative and qualitative reviews.  The Company bases its quantitative analysis on the forecasted cash flows of the entity, and its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and financial agreements. The Company also uses its quantitative and qualitative analyses to determine if it is the primary beneficiary of the VIE, and if such determination is made, it includes the accounts of the VIE in its consolidated financial statements.

Use of Estimates

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the disclosure of contingent liabilities. For example, significant assumptions are made in the allocation of purchase price, the analysis of real estate impairments, the valuation of contingent assets and liabilities, and the valuation of restricted stock shares issued.  Accordingly, actual results could differ from those estimates.

Adopted Accounting Pronouncements

Adopted Accounting Pronouncements — In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.”  This update changes the criteria for reporting discontinued operations where only disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results, such as a major line of business or geographical area, should be presented as a discontinued operation. This ASU is effective prospectively for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014 with early adoption permitted.   The Company has determined that the amendments will impact the Company’s determinations of which future property disposals, if any, qualify as discontinued operations and will require additional disclosure about discontinued operations for future property disposals, if any.

Recent Accounting Pronouncements

Recent Accounting Pronouncements — In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” as a new Accounting Standard Concept (“ASC”) topic (Topic 606).  The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The standard further provides guidance for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, lease contracts).  The FASB subsequently issued ASU 2015-14 to defer the effective date of ASU 2014-09 until annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with earlier adoption permitted.  ASU 2014-09 can be adopted using one of two retrospective transition methods: 1) retrospectively to each prior reporting period presented or 2) as a cumulative-effect adjustment as of the date of adoption.  The Company has not yet selected a transition method and is currently evaluating the impact of ASU 2014-09; however, its adoption could potentially have a significant effect on the Company’s consolidated financial position, results of operations or cash flows.

2. Summary of Significant Accounting Policies (continued)

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which requires amendments to both the variable interest entity and voting models. The amendments (i) modify the identification of variable interests (fees paid to a decision maker or service provider), the VIE characteristics for a limited partnership or similar entity and primary beneficiary determination under the VIE model, and (ii) eliminate the presumption within the current voting model that a general partner controls a limited partnership or similar entity.  The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The amendments may be applied using either a modified retrospective or full retrospective approach.  The Company has determined that it will not early adopt this ASU and is currently evaluating the effect the guidance will have on its consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which requires that loan costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts or premiums. The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The ASU is to be applied retrospectively for each period presented.  Upon adoption, an entity is required to comply with the applicable disclosures for a change in an accounting principle.  The FASB subsequently issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which clarifies that, given the absence of authoritative guidance in ASU 2015-03 regarding presentation and subsequent measurement of loan costs related to line-of-credit arrangements, the SEC Staff would not object to an entity deferring and presenting loan costs as an asset and subsequently amortizing the loan costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  The Company has determined that it will not early adopt this ASU and that the amendments will materially impact the presentation of the Company’s consolidated financial position but will not have a material impact on the Company’s consolidated results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments,” which requires an acquirer to recognize provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined.  The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.  The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The Company has determined that it will not early adopt this ASU and does not expect that adopting this guidance will have a material impact on its consolidated financial position, results of operations or cash flows.

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Fees in Connection with Offering (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Related Party Transactions [Abstract]
Selling commissions	[1]	$ 4,085	$ 6,689	$ 12,076	$ 12,285
Marketing support fees	[1]	5,232	4,524	15,851	9,937
Total offering expenses		9,317	$ 11,213	27,927	$ 22,222
Selling commissions, Unpaid	[1],[2]	340		340		$ 388
Marketing support fees, Unpaid	[1],[2]	300		300		555
Total offering expenses unpaid	[2]	$ 640		$ 640		$ 943

[1] Amounts are recorded as stock issuance and offering costs in the accompanying condensed consolidated statements of stockholders’ equity and redeemable noncontrolling interest.

[2] Amounts are recorded as due to related parties in the accompanying condensed consolidated balance sheets.

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND REDEEMABLE NONCONTROLLING INTEREST (Unaudited) (Parenthetical) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Statement Of Stockholders Equity [Abstract]
Cash distributions, declared and paid per share	$ 0.3177	$ 0.4071

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Real estate investment properties, net	$ 2,251,200	$ 1,657,500
Real estate under development, including land	69,478	47,153
Intangibles, net	163,538	140,264
Cash	51,185	91,355
Other assets	22,024	19,738
Deferred rent and lease incentives	21,244	8,240
Loan costs, net	12,604	14,012
Restricted cash	8,816	10,753
Mortgages and other notes payable, net (including VIEs $172,537 and $137,754, respectively)	865,263	853,561
Accounts payable and accrued liabilities	39,862	26,444
Other liabilities	37,880	27,448
Due to related parties	$ 5,620	$ 2,999
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	200,000,000	200,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Excess shares, par value	$ 0.01	$ 0.01
Excess shares, shares authorized	300,000,000	300,000,000
Excess shares, shares issued	0	0
Excess shares, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,120,000,000	1,120,000,000
Common stock, shares issued	172,682,000	116,672,000
Common stock, shares outstanding	171,575,000	116,256,000
VIEs
Real estate investment properties, net	$ 192,663	$ 174,449
Real estate under development, including land	67,350	47,153
Intangibles, net	24,426	25,519
Cash	1,462	6,280
Other assets	862	511
Deferred rent and lease incentives	6,330	2,978
Loan costs, net	2,497	2,300
Restricted cash	2,053	5,304
Mortgages and other notes payable, net (including VIEs $172,537 and $137,754, respectively)	172,537	137,754
Accounts payable and accrued liabilities	10,351	10,268
Other liabilities	4,551	4,949
Due to related parties	$ 171	$ 219

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Contingent Purchase Price Consideration

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Contingent Purchase Price Consideration

9. Contingent Purchase Price Consideration

Capital Health Communities

In connection with the acquisition of the Capital Health Communities in 2012, the Company required that approximately $7.0 million of the purchase price be placed in an escrow account as the seller guaranteed the Company an annual return of at least $6.9 million, $7.0 million, and $7.1 million of net operating income on the acquired properties during 2013, 2014 and 2015, respectively (“Yield Guaranty”).  As of September 30, 2015, the Company determined the fair value of the Yield Guaranty to be $1.8 million, which was recorded as other assets in the accompanying condensed consolidated balance sheet. The following table provides a roll-forward of the fair value of the contingent purchase price consideration related to the Yield Guaranty on the Capital Health Communities for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter ended					Nine Months Ended
	September 30,					September 30,
	2015		2014			2015			2014
Beginning balance	$	1,820	$	3,509		$	4,078		$	4,488
Yield Guaranty payment received from seller		—		(301	)		(2,579	)		(2,601	)
Change in fair value		—		—			321			1,321
Ending balance	$	1,820	$	3,208		$	1,820		$	3,208

9. Contingent Purchase Price Consideration (continued)

Medical Portfolio I

During 2013, in conjunction with the acquisition of Medical Portfolio I, the Company entered into an earn-out agreement with the seller related to Cleveland Clinic, the tenant at Chestnut Commons, whereby the tenant maintains an exercisable right to expand the leased space by an additional 10,000 square feet within 24 months of the property acquisition closing (“Chestnut Commons Earn-Out”).  The Chestnut Commons Earn-Out fee was equal to (a) the base rent due for the first full year of the lease applicable to the expansion space divided by 8% minus (b) the costs incurred by the Company in connection with the exercise by Cleveland Clinic of its option for the expansion space, including tenant improvement costs, multiplied by 50%.  The Chestnut Commons Earn-Out expired in August 2015. The following table provides a roll-forward of the fair value of the contingent purchase price consideration related to the Chestnut Commons Earn-Out for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Beginning balance	$	(268	)	$	(507	)	$	(268	)	$	(507	)
Contingent consideration in connection with acquisition		—			—			—			—
Change in fair value		268			—			268			—
Ending balance	$	—		$	(507	)	$	—		$	(507	)

South Bay II Communities

In conjunction with the acquisition of the South Bay II Communities, the Company entered into an agreement with the sellers whereby the purchase price is adjusted in the event that certain net operating income targets are met.  The additional consideration was determined within three months of the acquisition date and is equal to (a) the baseline net operating income divided by the baseline capitalization rates (as defined in the purchase and sale agreement) less (b) the purchase price paid at closing.  The following table provides a roll-forward of the fair value of the estimated contingent purchase price consideration related to the South Bay II Communities for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

	Quarter ended					Nine Months Ended
	September 30,					September 30,
	2015		2014			2015		2014
Beginning balance	$	—	$	(8,500	)	$	—	$	—
Contingent consideration in connection with acquisition		—		—			—		(12,395	)
Contingent consideration payment		—		10,300			—		14,195
Change in fair value		—		(1,800	)		—		(1,800	)
Ending balance	$	—	$	—		$	—	$	—

Superior Residences of Panama City

In connection with the purchase of Superior Residences of Panama City, the Company entered into an earn-out agreement with the seller whereby additional consideration is owed in the event that certain performance targets are met (“Panama City Earn-Out”).  Under the earn-out agreement, the seller has an opportunity of earning up to $4.0 million in additional purchase price consideration during the immediate 36 months post-closing.  At the acquisition date and as of September 30, 2015, the Company determined the fair value of the Panama City Earn-Out to be $3.0 million, which was recorded as other liabilities in the accompanying condensed consolidated balance sheet.

Fair Value Measurements

The fair value of the contingent purchase price consideration was based on a then-current income approach that is primarily determined based on the present value and probability of future cash flows using internal underwriting models.  The income approach further includes estimates of risk-adjusted rate of return and capitalization rates for each property.  Since this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurements of the estimated fair value related to the Company’s contingent purchase price consideration are categorized as Level 3 on the three-level fair value hierarchy.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 11, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Entity Registrant Name	CNL Healthcare Properties, Inc.
Entity Central Index Key	0001496454
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		173,657,093

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Indebtedness

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Indebtedness

10. Indebtedness

The following table provides details of the Company’s indebtedness as of September 30, 2015 and December 31, 2014 (in thousands):

	September 30,			December 31,
	2015			2014
Mortgages payable and other notes payable:
Fixed rate debt	$	395,783		$	370,854
Variable rate debt (1)		469,739			482,922
Mortgages and other notes payable		865,522			853,776
Premium (discount), net (2)		(259	)		(215	)
Total mortgages and other notes payable, net		865,263			853,561
Credit facilities:
Term Loan Facility (1)		175,000			175,000
Revolving Credit Facility (3)		215,000			31,403
Total borrowings	$	1,255,263		$	1,059,964

FOOTNOTES:

⁽¹⁾ As of September 30, 2015 and December 31, 2014, the Company had entered into interest rate swaps with notional amounts of approximately $342.7 million and $182.1 million, respectively, which were settling on a monthly basis. In addition, as of September 30, 2015 and December 31, 2014, the Company had entered into forward-starting interest rate swaps for total notional amounts of approximately $187.1 million and $269.4 million, respectively, in order to hedge its exposure to variable rate debt in future periods.  The remaining forward-starting interest rate swaps have a range of effective dates beginning in 2015 and continuing through the maturity date of the loans being hedged.

⁽²⁾ Premium (discount), net is reflective of the Company recording mortgage notes payable assumed at fair value on the respective acquisition date.

⁽³⁾ As of September 30, 2015 and December 31, 2014, availability under the Revolving Credit Facility was approximately $15.0 million and $14.0 million, respectively, based on the value of the properties in the unencumbered collateral pool of assets supporting the loan.

Maturities of indebtedness for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 are as follows (in thousands):

2015	$	4,769
2016		37,730
2017		261,106
2018		299,180
2019		487,724
Thereafter		164,754
	$	1,255,263

As a result of the tenant default discussed in Note 5. “Intangibles, net,” the lender on the mortgage loan secured by the two specialty hospitals elected to accelerate the required debt service payments related to these properties from a 25-year to a 15-year amortization period given that the tenant did not meet the required lease coverage thresholds.  In September 2015, the Company signed an amended and restated lease agreement with a new tenant at one of the specialty hospitals and the lender re-adjusted the required debt service payments for the property back to a 25-year amortization period.  The above maturities of indebtedness have been updated to reflect the amortization adjustments made by the lender effective November 2015.

10. Indebtedness (continued)

The Company financed a portion of the acquisitions described in Note 3. “Acquisitions” through additional borrowings and loan assumptions.  The following table provides details of new indebtedness during the nine months ended September 30, 2015 as of September 30, 2015 (in thousands):

	Interest Rate at
	September 30,		Maturity	September 30,
Property and Loan Type	2015 (1)	Payment Terms	Date (2)	2015
Novi Orthopaedic Center; Mortgage Loan	3.61% per annum	Monthly interest only payments through June 2018; principal and interest payments thereafter based on a 25-year amortization schedule	6/15/20	$	19,825
ProMed Medical Building I; Mortgage Loan	3.64% per annum (3)	Monthly principal and interest payments based upon a 30-year amortization schedule	1/15/22		7,095
540 New Waverly Place; Mortgage Loan	4.08% per annum	Monthly principal and interest payments based upon a 25-year amortization schedule	5/31/28		7,096
		Total fixed rate debt			34,016
Raider Ranch Development; Construction Loan	30-day LIBOR plus 3.50% at 0.5% LIBOR floor	Monthly interest only payments through October 2017; principal and interest payments thereafter based on a 25-year amortization schedule	10/27/17		5,914
HarborChase of Shorewood; Construction Loan	30-day LIBOR plus 3%; 2% all in floor	Monthly interest only payments through July 2017; principal and interest payments thereafter based on a 25-year amortization schedule	7/15/19		10,117
UT Cancer Institute; Mortgage Loan	30-day LIBOR plus 2.00% per annum	Monthly interest only payments through July 2017; principal and interest payments thereafter based on a 25-year amortization schedule	12/22/19		21,672
Watercrest at Katy; Construction Loan	30-day LIBOR plus 2.75% per annum	Monthly interest only payments through December 2017; principal and interest payments thereafter based on a 30-year amortization schedule	12/27/19		4,505
		Total variable rate debt			42,208
		Fixed and variable rate debt			76,224
		Premium (discount), net			(150	)
		Total debt		$	76,074

FOOTNOTES:

⁽¹⁾ The 30-day LIBOR was approximately 0.19% as September 30, 2015.

⁽²⁾ Represents the initial maturity date (or, as applicable, the maturity date as extended).  The maturity date may be extended beyond the date shown subject to certain lender conditions.

⁽³⁾ Beginning January 2020, the interest rate transitions to variable rate based on 30-day LIBOR plus 2.20% per annum.

10. Indebtedness (continued)

The fair market value and carrying value of the mortgage and other notes payable was approximately $876.3 million and $865.5 million, respectively, and both the fair market value and carrying value of the Credit Facilities was $390.0 million as of September 30, 2015.  The fair market value and carrying value of the mortgage and other notes payable was approximately $868.5 million and $853.6 million, respectively, and both the fair market value and carrying value of the Credit Facilities was $206.4 million as of December 31, 2014.  These fair market values are based on current rates and spreads the Company would expect to obtain for similar borrowings.  Since this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair values related to the Company’s mortgage notes payable is categorized as Level 3 on the three-level valuation hierarchy.  The estimated fair value of accounts payable and accrued liabilities approximates the carrying value as of September 30, 2015 and December 31, 2014 because of the relatively short maturities of the obligations.

In March 2015, the Company repaid its $30.0 million outstanding mortgage loan on the Perennial Communities prior to its scheduled maturity.  In connection therewith, the Company wrote-off approximately $0.2 million in unamortized loan costs as interest expense and loan cost amortization in the accompanying condensed consolidated statements of operations.  In addition, the corresponding interest rate swap was terminated and approximately $0.1 million related to the derecognition of the cash flow hedge was reclassified from other comprehensive loss to interest expense and loan cost amortization in the accompanying condensed consolidated financial statements.

In April 2015, the Company repaid its $34.5 million outstanding mortgage loan on the Medical Portfolio I Properties prior to its scheduled maturity.  In connection therewith, the Company wrote-off approximately $0.2 million in unamortized loan costs as interest expense and loan cost amortization in the accompanying condensed consolidated statements of operations.  In addition, the corresponding interest rate swap was terminated and approximately $0.2 million related to the derecognition of the cash flow hedge was reclassified from other comprehensive loss to interest expense and loan cost amortization in the accompanying condensed consolidated financial statements.

In December 2014, the Company amended and restated the terms of its credit agreement with KeyBank, as administrative agent, by entering into a $230 million Revolving Credit Facility and a $175 million Term Loan Facility.  Pursuant to the Amended Credit Agreement, the Company has the ability to increase the collective borrowings under the Credit Facilities to $700 million.  Moreover, the Revolving Credit Facility has an initial term of 36 months plus two 12-month extension options; whereas, the Term Loan Facility has an initial term of 50 months plus one 12-month extension option.  The Credit Facilities bear interest based on LIBOR and a spread that varies with the Company’s leverage ratio.  In addition, the Company is required to make interest only payments until the respective maturity dates of the Credit Facilities as well as to pay fees ranging from 0.15% to 0.25% for unused commitments on the Revolving Credit Facility.

The Credit Facilities contain affirmative, negative, and financial covenants which are customary for loans of this type, including (but not limited to): (i) maximum leverage, (ii) minimum fixed charge coverage ratio, (iii) minimum consolidated net worth, (iv) restrictions on payments of cash distributions except if required by REIT requirements, (v) maximum secured and unsecured indebtedness, and (vi) limitations on certain types of investments and with respect to the pool of properties supporting borrowings under the Credit Facilities, minimum debt service coverage ratio, and remaining lease terms, as well as property type, MSA, operator, and asset value concentration limits.  The limitations on distributions includes a limitation on the extent of allowable distributions, which are not to exceed the greater of 95% of adjusted FFO (as defined per the Credit Facilities) and the minimum amount of distributions required to maintain the Company’s REIT status.

All of the Company’s mortgage and construction loans contain customary financial covenants and ratios; including (but not limited to): debt service coverage ratio, minimum occupancy levels, limitations on incurrence of additional indebtedness, etc.  As of September 30, 2015, the Company was in compliance with all financial covenants and ratios.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues:
Rental income from operating leases	$ 28,435	$ 13,393	$ 72,306	$ 33,478
Resident fees and services	47,505	34,162	129,262	86,636
Tenant reimbursement income	3,964	1,957	10,845	4,787
Interest income on note receivable from related party		148		498
Total revenues	79,904	49,660	212,413	125,399
Operating expenses:
Property operating expenses	39,923	25,716	105,088	64,703
General and administrative	2,239	1,997	6,823	5,689
Acquisition fees and expenses	9,073	3,729	15,939	15,726
Asset management fees	5,085	2,753	13,426	5,572
Property management fees	3,923	2,358	10,539	6,118
Contingent purchase price consideration adjustment	(268)	1,800	(589)	479
Impairment provision			4,661
Loss on lease terminations			863
Depreciation and amortization	27,854	17,550	75,147	44,111
Total operating expenses	87,829	55,903	231,897	142,398
Operating loss	(7,925)	(6,243)	(19,484)	(16,999)
Other income (expense):
Interest and other income	28	7	138	27
Interest expense and loan cost amortization	(10,990)	(8,549)	(30,369)	(21,654)
Equity in loss of unconsolidated entities	(151)	(180)	(656)	(1,193)
Gain on purchase of controlling interest of investment in unconsolidated entity		2,798		2,798
Total other expense	(11,113)	(5,924)	(30,887)	(20,022)
Loss before income taxes	(19,038)	(12,167)	(50,371)	(37,021)
Income tax expense	(193)	(37)	(279)	(9)
Net loss	(19,231)	(12,204)	(50,650)	(37,030)
Less: Net loss attributable to noncontrolling interest	(6)		(16)
Net loss attributable to common stockholders	$ (19,225)	$ (12,204)	$ (50,634)	$ (37,030)
Net loss per share of common stock (basic and diluted)	$ (0.12)	$ (0.14)	$ (0.34)	$ (0.47)
Weighted average number of shares of common stock outstanding (basic and diluted)	162,730	89,597	147,075	78,296

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Real Estate Assets, net

9 Months Ended

Sep. 30, 2015

Real Estate [Abstract]

Real Estate Assets, net

4. Real Estate Assets, net

The gross carrying amount and accumulated depreciation of the Company’s real estate assets as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,			December 31,
	2015			2014
Land and land improvements	$	200,763		$	128,662
Building and building improvements		2,094,128			1,545,614
Furniture, fixtures and equipment		54,284			36,319
Less: accumulated depreciation		(97,975	)		(53,095	)
Real estate investment properties, net		2,251,200			1,657,500
Real estate under development, including land		69,478			47,153
Total real estate assets, net	$	2,320,678		$	1,704,653

Depreciation expense on the Company’s real estate investment properties, net was approximately $16.9 million and $44.8 million for the quarter and nine months ended September 30, 2015, respectively, and approximately $10.8 million and $27.4 million for the quarter and nine months ended September 30, 2014, respectively.

In June 2015, the Company completed the construction and development of a seniors housing community in Tega Cay, South Carolina (“Wellmore of Tega Cay”), which is a suburb of Charlotte, North Carolina.  Wellmore of Tega Cay opened to residents beginning in July 2015 and was considered placed into service as of June 30, 2015.  As such, the asset values related to Tega Cay are included in real estate investment properties, net in the accompanying condensed consolidated balance sheet as of September 30, 2015.

As of September 30, 2015, six of the Company’s properties have real estate under development with third-party developers as follows (in thousands):

Property Name (and Location)	Developer	Real Estate Development Costs Incurred (1)		Remaining Development Budget (2)
HarborChase of Shorewood (Shorewood, WI)	Harbor Shorewood Development, LLC	$	22,034	$	5,776
Raider Ranch (Lubbock, TX)	South Bay Partners, Ltd		13,464		3,460
Watercrest at Katy (Katy, TX) (3)	South Bay Partners, Ltd		20,049		22,342
Welbrook Senior Living Grand Junction (Grand Junction, CO)	Embree Asset Group, Inc.		2,128		11,473
Waterstone at Greenville (Greenville, SC)	The Balance Group, Inc.		5,298		22,401
Wellmore of Lexington (Lexington, SC)	Maxwell Group, Inc.		6,505		48,698
		$	69,478	$	114,150

FOOTNOTES:

⁽¹⁾ This amount represents land and total capitalized costs for GAAP purposes for the acquisition, development and construction of the seniors housing or post-acute care communities as of September 30, 2015.  Amounts include investment services fees, asset management fees, interest expense and other costs capitalized during the development period.

⁽²⁾ This amount includes preleasing and marketing costs which will be expensed as incurred.

⁽³⁾ This property is owned through a joint venture in which the Company’s initial ownership interest is 95%.

The development budgets include the cost of the land, construction costs, development fees, financing costs, start-up costs and initial operating deficits of the respective properties.  An affiliate of the developer of the respective community coordinates and supervises the management and administration of the development and construction.  Each developer is responsible for any cost overruns beyond the approved development budget for the applicable project pursuant to a cost overrun guarantee.  Some of these developments were deemed to be VIEs; refer to Note 7. “Variable Interest Entities” for additional information.

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Acquisitions

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Acquisitions

3. Acquisitions

Real Estate Investment Properties — During the nine months ended September 30, 2015, the Company acquired the following 30 properties, which were comprised of one acute care hospital, 17 medical office buildings (“MOB”) and 12 seniors housing communities:

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Acute care
Triangle Orthopaedic
North Carolina Specialty Hospital	Modified Lease	6/29/2015	$	31,830
Durham, NC
Medical Office
Novi Orthopaedic Center	Modified Lease	2/13/2015		30,500	(1)
Novi, MI
Southeast Medical Office Properties
UT Cancer Institute	Modified Lease	2/20/2015		33,660
Knoxville, TN
Bend Memorial Clinic Medical Office Building	Modified Lease	5/11/2015		34,612	(1)
Bend, OR
Stoneterra Medical Plaza	Modified Lease	5/29/2015		15,050	(1)
San Antonio, TX
Triangle Orthopaedic
Triangle Orthopaedic Durham	Modified Lease	6/29/2015		21,275
Durham, NC
Triangle Orthopaedic Oxford	Modified Lease	6/29/2015		4,728
Oxford, NC
Triangle Orthopaedic Chapel Hill	Modified Lease	6/29/2015		3,257
Chapel Hill, NC
Triangle Orthopaedic Roxboro	Modified Lease	6/29/2015		2,067
Roxboro, NC
Doctor's Park
Doctor's Park Building B	Modified Lease	6/30/2015		5,000	(1)
Chula Vista, CA ("San Diego")
Doctor's Park Building C	Modified Lease	6/30/2015		10,000	(1)
Chula Vista, CA ("San Diego")
540 New Waverly Place	Modified Lease	7/20/2015		15,000	(1)
Cary, NC ("Raleigh")
MedHelp	Modified Lease	7/31/2015		14,076	(1)
Birmingham, AL
Maryland MOBs
Patriot Professional Center	Modified Lease	7/31/2015		16,900	(1)
Frederick, MD ("Baltimore")
Liberty Professional Center	Modified Lease	7/31/2015		7,350	(1)
Frederick, MD ("Baltimore")
Columbia MOBs
Broadway Medical Plaza 1	Modified Lease	8/21/2015		10,619	(1)
Columbia, MO
Broadway Medical Plaza 2	Modified Lease	8/21/2015		13,014	(1)
Columbia, MO
Broadway Medical Plaza 4	Modified Lease	8/21/2015		14,091	(1)
Columbia, MO

3. Acquisitions (continued)

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Seniors Housing
Fieldstone Memory Care (2)	Managed	3/31/2015		12,400	(1)
Yakima, WA
Primrose III Communities
Primrose Retirement Community of Anderson	Triple-net Lease	5/29/2015		21,086
Anderson, IN ("Muncie")
Primrose Retirement Community of Lancaster	Triple-net Lease	5/29/2015		25,657
Lancaster, OH ("Columbus")
Primrose Retirement Community of Wausau	Triple-net Lease	5/29/2015		20,307
Wausau, WI ("Green Bay")
Superior Residences of Panama City	Managed	7/15/2015		20,000	(1)
Panama City Beach, FL
Southeast Seniors Housing Communities
Parc at Duluth	Triple-net Lease	7/31/2015		52,800
Duluth, GA ("Atlanta")
Parc at Piedmont	Triple-net Lease	7/31/2015		50,800
Marietta, GA ("Atlanta")
The Pavilion at Great Hills	Managed	7/31/2015		35,000
Austin, TX
The Hampton at Meadows Place	Managed	7/31/2015		28,400
Fort Bend, TX ("Houston")
The Beacon at Gulf Breeze	Managed	7/31/2015		28,000
Gulf Breeze, FL ("Pensacola")
Palmilla Senior Living	Managed	9/30/2015		47,600
Albuquerque, NM
Cedar Lake Assisted Living and Memory Care	Managed	9/30/2015		30,000
Lake Zurich, IL ("Chicago")
			$	655,079

FOOTNOTES:

⁽¹⁾ This represents a single property or portfolio acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property or portfolio.

⁽²⁾ This property was purchased from a related party of the Company’s Sponsor; refer to Note 11. “Related Party Arrangements” for additional information.

3. Acquisitions (continued)

During the nine months ended September 30, 2014, the Company acquired the following 22 properties, which were comprised of three acute care hospitals, three MOBs, three post-acute care hospitals and, 13 seniors housing communities:

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
Acute Care
Memorial Hermann Orthopedic & Spine Hospital ("MHOSH")	Triple-net Lease	6/2/2014	$	49,000
Bellaire, TX ("Houston")
Medical Portfolio II Properties
Hurst Specialty Hospital	Modified Lease	8/15/2014		29,465
Hurst, TX ("Dallas/Fort Worth")
Beaumont Specialty Hospital	Modified Lease	8/15/2014		33,600
Beaumont, TX ("Houston")
Medical Office
Chula Vista Medical Arts Center - Plaza I	Modified Lease	1/21/2014		17,863	(1)
Chula Vista, CA ("San Diego")
MHOSH Medical Office Building	Modified Lease	6/2/2014		27,000
Bellaire, TX ("Houston")
Lee Hughes Medical Building	Modified Lease	9/29/2014		29,870	(1)
Glendale, CA ("Los Angeles")
Post-Acute Care
Medical Portfolio II Properties
Oklahoma City Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		25,504
Oklahoma City, OK
Las Vegas Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		22,292
Las Vegas, NV
South Bend Inpatient Rehabilitation Hospital	Modified Lease	7/15/2014		20,240
Mishawaka, IN ("South Bend")
Seniors Housing
Pacific Northwest II Communities
Prestige Senior Living Auburn Meadows	Managed	2/3/2014		21,930
Auburn, WA ("Seattle")
Prestige Senior Living Bridgewood	Managed	2/3/2014		22,096
Vancouver, WA ("Portland")
Prestige Senior Living Monticello Park	Managed	2/3/2014		27,360
Longview, WA
Prestige Senior Living Rosemont	Managed	2/3/2014		16,877
Yelm, WA
Prestige Senior Living West Hills	Managed	3/3/2014		14,986
Corvallis, OR

3. Acquisitions (continued)

			Purchase Price
Name and Location	Structure	Date Acquired	(in thousands)
South Bay II Communities
Isle at Cedar Ridge	Managed	2/28/2014		21,630
Cedar Park, TX ("Austin")
HarborChase of Plainfield	Managed	3/28/2014		26,500
Plainfield, IL
Legacy Ranch Alzheimer’s Special Care Center	Managed	3/28/2014		11,960
Midland, TX
The Springs Alzheimer’s Special Care Center	Managed	3/28/2014		10,920
San Angelo, TX
Isle at Watercrest – Bryan	Managed	4/21/2014		22,050
Bryan, TX
Watercrest at Bryan	Managed	4/21/2014		28,035
Bryan, TX
Isle at Watercrest – Mansfield	Managed	5/5/2014		31,300
Mansfield, TX ("Dallas/Fort Worth")
Watercrest  at Mansfield	Managed	6/30/2014		49,000
Mansfield, TX ("Dallas/Fort Worth")
			$	559,478

FOOTNOTE:

⁽¹⁾ This represents a single property acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property.

The following summarizes the purchase price allocation for the above properties, and the estimated fair values of the assets acquired and liabilities assumed (in thousands):

	September 30,
	2015			2014
Land and land improvements	$	66,583		$	46,064
Buildings and building improvements		523,103			442,887
Furniture, fixtures and equipment		9,469			10,014
Intangibles (1)		65,126			67,431
Other liabilities		(3,765	)		(8,718	)
Liabilities assumed		(2,589	)	―
Assumed mortgage note payable (2)		(6,976	)		(27,657	)
Net assets acquired		650,951			530,021
Contingent purchase price consideration		(3,000	)		(12,395	)
Total purchase price consideration	$	647,951		$	517,626

FOOTNOTE:

⁽¹⁾ At the acquisition date, the weighted-average amortization period on the acquired lease intangibles for the nine months ended September 30, 2015 and 2014 was approximately 7.9 years and 7.1 years, respectively.  The acquired lease intangibles during the nine months ended September 30, 2015 were comprised of approximately $60.7 million and $4.4 million of in-place lease intangibles and other lease intangibles, respectively, and the acquired lease intangibles during the nine months ended September 30, 2014 were comprised of approximately $61.4 million and $6.0 million of in-place lease intangibles and other lease intangibles, respectively.

⁽²⁾ At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.2 million discount on the below-market mortgage note payable assumed.

3. Acquisitions (continued)

The revenues and net loss (including deductions for acquisition fees and expenses, and depreciation and amortization expense) attributable to the acquired properties considered to be material were approximately $7.1 million and $4.7 million, respectively, and $8.6 million and $7.6 million, respectively, for the quarter and nine months ended September 30, 2015; and approximately $19.8 million and $4.7 million, respectively, and $36.5 million and $15.3 million, respectively, for the quarter and nine months ended September 30, 2014.

The following table presents the unaudited pro forma results of operations for the Company as if the 2015 acquisitions noted as material in Note 3. “Acquisitions” above were acquired as of January 1, 2014 and the unaudited pro forma results of operations for the Company assuming the 2014 acquisitions noted as material in Note 3. “Acquisitions” above were acquired as of January 1, 2013 (in thousands except per share data):

	(Unaudited)						(Unaudited)
	Quarter Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenues	$	86,793		$	64,136		$	245,650		$	187,170
Net income (loss) (1)	$	(16,244	)	$	(11,332	)	$	(48,601	)	$	(45,370	)
Loss per share of common stock (basic and diluted)	$	(0.09	)	$	(0.10	)	$	(0.29	)	$	(0.46	)
Weighted average number of shares of common stock outstanding (basic and diluted) (2)		171,102			109,212			165,408			97,911

FOOTNOTES:

⁽¹⁾ The unaudited pro forma results for the quarter and nine months ended September 30, 2015, were adjusted to exclude approximately $6.1 million and $9.8 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the quarter and nine months ended September 30, 2015. The unaudited pro forma results for the nine months ended September 30, 2014 were adjusted to include approximately $9.8 million of acquisition related expenses, as if the properties had been acquired on January 1, 2014.  The unaudited pro forma results for the quarter and nine months ended September 30, 2014 were adjusted to exclude approximately $3.1 million and $13.8 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the quarter and nine months ended September 30, 2014, as if the properties had been acquired on January 1, 2013.

⁽²⁾ As a result of the acquired properties being treated as operational since January 1, 2014, the Company assumed approximately 19.0 million shares were issued as of January 1, 2014. Consequently the weighted average shares outstanding was adjusted to reflect this amount of shares being issued on January 1, 2014 instead of actual dates on which the shares were issued, and such shares were treated as outstanding as of the beginning of the period presented.

Real Estate Under Development — In August 2015, the Company acquired a tract of land in Greenville, South Carolina for $2.3 million (“Waterstone at Greenville”).  In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of an assisted living and memory care community with a maximum development budget of approximately $27.0 million, including the allocated purchase price of the land.  The Company determined that Waterstone at Greenville is a VIE because it believes there is insufficient equity at risk due to the development nature of the property. The Company is the primary beneficiary while the developer or its affiliates manage the development, construction and certain day-to-day operations of the property subject to the Company’s oversight.  Under a promoted interest agreement with the developer, certain net operating income targets have been established which, upon meeting such targets, result in the developer being entitled to additional payments based on enumerated percentages of the assumed net proceeds of a deemed sale, subject to achievement of an established internal rate of return on the Company’s investment in the development.

In September 2015, the Company acquired a tract of land in Grand Junction, Colorado for $1.1 million (“Wellbrook Senior Living Grand Junction”).  In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of a transitional rehabilitation facility with a maximum development budget of approximately $13.1 million, including the allocated purchase price of the land.  The Company determined that Wellbrook Senior Living Grand Junction is not a VIE because the Company’s equity investment is sufficient to finance the activities of the entity without a construction loan and the Company will receive substantially all expected residual returns.

3. Acquisitions (continued)

In September 2015, the Company acquired a tract of land in Lexington, South Carolina for $2.3 million (“Wellmore of Lexington”), which is a suburb of Columbia, South Carolina.  In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of a continuing care retirement facility with a maximum development budget of approximately $53.9 million, including the allocated purchase price of the land.  The Company determined that Wellmore of Lexington is a VIE because it believes there is insufficient equity at risk due to the development nature of the property. The Company is the primary beneficiary while the developer or its affiliates manage the development, construction and certain day-to-day operations of the property subject to the Company’s oversight.  Under a promoted interest agreement with the developer, certain net operating income targets have been established which, upon meeting such targets, result in the developer being entitled to additional payments based on enumerated percentages of the assumed net proceeds of a deemed sale, subject to achievement of an established internal rate of return on the Company’s investment in the development.

Purchase of Controlling Interest in Montecito Joint Venture — In January 2013, the Company acquired a 90% membership interest in a two-story MOB in Claremont, California for approximately $7.0 million in equity through a joint venture (“Montecito Joint Venture”) formed by the Company and its co-venture partner, an unrelated party, that initially held the remaining 10% interest.  The Montecito Joint Venture was previously recorded under the equity method of accounting because the decisions that significantly impacted the entity were shared between the Company and its co-venture partner.

In August 2014, the Company acquired its co-venture partner’s 10% interest in the Montecito Joint Venture for approximately $1.6 million.  As a result of this transaction, the Company owns 100% of the Montecito Joint Venture, and began consolidating all of the assets, liabilities and results of operations in the Company’s consolidated financial statements upon acquisition.  Accordingly, the Company recorded a step up from its carrying value of the investment in the Montecito Joint Venture to the estimated fair value of the net assets acquired and liabilities assumed.   The following summarizes the allocation of the purchase price, and the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Land and land improvements	$	6,324
Buildings and building improvements		13,533
Intangibles (1)		2,691
Working capital, net		87
Other liabilities		(175	)
Mortgage note payable assumed  (2)		(12,331	)
Net assets acquired	$	10,129

FOOTNOTES:

⁽¹⁾ At the acquisition date, the weighted-average amortization period on the acquired lease intangibles was approximately 5.1 years and was comprised of approximately $1.9 million and $0.8 million of in-place lease intangibles and other lease intangibles, respectively.

⁽²⁾ At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.6 million discount on the below-market mortgage note payable assumed.

The fair value of the Company’s equity interest in the Montecito Joint Venture immediately before the acquisition date was approximately $5.7 million. The Company recorded a gain of approximately $2.8 million based on the acquisition-date fair value of its equity interest in the Montecito Joint Venture.  The following summarizes the gain that resulted from the change of control in the equity method investment for the quarter and nine months ended September 30, 2014 (in thousands):

Fair value of net assets acquired	$	10,129
Less: Previous investment in Montecito Joint Venture		(5,747	)
Less: Cash paid to acquire co-venture partner's interest		(1,584	)
Gain on purchase of controlling interest of investment in unconsolidated entity	$	2,798

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Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

During the period from October 1, 2015 through October 30, 2015, the Company received additional subscription proceeds of approximately $21.9 million (2.1 million shares).  While the Follow-On Offering closed on September 30, 2015, the Company accepted subscriptions proceeds for agreements that were received in good order on or before September 30, 2015 and for which subscription proceeds were received by the transfer agent through October 30, 2015.

The Company’s board of directors declared a monthly cash distribution of $0.0353 on each outstanding share of common stock on October 1, 2015 and November 1, 2015.  These distributions are to be paid and distributed by December 31, 2015.

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Related Party Arrangements

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related Party Arrangements

11. Related Party Arrangements

In March 2013, the Company entered into the Advisor Expense Support Agreement, whereby commencing on April 1, 2013, the Advisor agreed to provide expense support to the Company through forgoing the payment of fees in cash and acceptance of restricted stock for services rendered and specified expenses incurred in an amount equal to the positive excess, if any, of (a) aggregate stockholder cash distributions declared for the applicable quarter, over (b) the Company’s aggregate modified funds from operations (as defined in the Advisor Expense Support Agreement).  The Advisor expense support amount is determined for each calendar quarter of the Company, on a non-cumulative basis, each quarter-end date (“Determination Date”).  In August 2013, the Company entered into the Property Manager Expense Support Agreement, whereby  commencing on July 1, 2013, the Property Manager agreed to provide expense support to the Company through forgoing the payment of fees in cash and accepting restricted stock for services in an amount equal to the positive excess, if any, of (a) aggregate stockholder cash distributions declared for the applicable quarter, over (b) the Company’s aggregate modified funds from operations (as defined in the Property Manager Expense Support Agreement).  The Property Manager expense support amount shall be determined, on a non-cumulative basis, after the calculation of the Advisor expense support amount pursuant to the Property Manager Expense Support Agreement on each Determination Date.  The terms of both the Advisor Expense Support Agreement and the Property Manager Expense Support Agreement (‘the Expense Support Agreements”) automatically renew for consecutive one year periods, subject to the right of the Advisor or Property Manager to terminate their respective agreements upon 30 days’ written notice to the Company. 

In exchange for services rendered and in consideration of the expense support provided, the Company will issue, within 45 days following each Determination Date, a number of shares of restricted stock equal to the quotient of the expense support amount provided by the Advisor and Property Manager for the preceding quarter divided by either: (1) the then-current public offering price per share of common stock during the Offerings or (2) the Company’s then-current net asset value (“NAV”) per share of common stock subsequent to the Offerings.  Any amounts settled, and for which restricted stock shares are issued, pursuant to the Expense Support Agreements will be permanently waived and the Company will have no obligation to pay such amounts to the Advisor or the Property Manager.  The Restricted Stock is subordinated and forfeited to the extent that stockholders do not receive their original invested capital back with at least a 6% annualized return on investment upon ultimate liquidity of the Company.  Since the vesting criteria is outside the control of the Advisor and Property Manager and involves both market conditions and counterparty performance conditions, the restricted stock shares will be treated as unissued for financial reporting purposes until the vesting criteria, as defined in the Expense Support Agreements, are met.

The following fees were settled and paid in the form of Restricted Stock in connection with the Expense Support Agreements for the quarter and nine months ended September 30, 2015 and 2014, and cumulatively as of September 30, 2015 (in thousands, except offering price):

	Quarter ended				Nine Months Ended				As of
	September 30,				September 30,				September 30,
	2015		2014		2015		2014		2015
Asset management fees (1)	$	885	$	884	$	2,298	$	3,764	$	8,566
Then-current offering price (2)	$	10.58	$	10.14	$	10.58	$	10.14	$	10.58
Restricted stock shares (3)		84		87		217		371		828
Cash distributions on Restricted Stock (4)	$	75	$	30	$	197	$	48	$	300
Stock distributions on Restricted Stock (5)		5		2		14		4		21

FOOTNOTES:

⁽¹⁾ No other amounts have been settled in accordance with the Expense Support Agreements for the quarter and nine months ended September 30, 2015 and 2014, and cumulatively as of September 30, 2015.

⁽²⁾ During the Offerings, the then-current offering prices were based on the Company’s NAV per share as of the Determination Date, plus selling commissions and marketing support fees.  Subsequent to the close of the Company’s Offerings, the then-current offering prices are based on the Company’s NAV per share as of the Determination Date.

⁽³⁾ Restricted stock shares are comprised of approximately 0.08 million issuable to the Advisor as of September 30, 2015.  No fair value was assigned to the restricted stock shares as the shares were valued at zero, which represents the lowest possible value estimated at vesting.  In addition, the restricted stock shares were treated as unissued for financial reporting purposes because the vesting criteria had not been met through September 30, 2015. 

11. Related Party Arrangements (continued)

⁽⁴⁾ The cash distributions have been recognized as compensation expense as issued and included in general and administrative expense in the accompanying condensed consolidated statements of operations.

⁽⁵⁾ The par value of the stock distributions has been recognized as compensation expense as issued and included in general and administrative expense in the accompanying condensed consolidated statements of operations.

The Company maintains accounts totaling approximately $0.1 million as of both September 30, 2015 and December 31, 2014, at a bank in which the Company’s chairman serves as a director.

In March 2015, the Company acquired Fieldstone Memory Care, a 40-unit memory care community located in Yakima, Washington for a purchase price of $12.4 million from a related party of the Company’s Sponsor.  The board of directors, including all of the independent directors, concluded that substantial justification existed to consummate the Fieldstone Memory Care acquisition.  In determining whether to approve the Fieldstone Transaction, the board of directors reviewed and took into account, among other factors it deemed appropriate, the following information, facts and circumstances:  an affiliate of CNL is the majority interest holder and managing member of the seller; the purchase price exceeds the seller’s acquisition and development costs; a March 2015 independent appraisal; and a prospective value upon reaching stabilization.

In June 2013, the Company originated an acquisition, development and construction loan (“ADC Loan”) to C4 Development, LLC (“Crosland Southeast”), a related party by virtue of a family relationship between a principal of the borrower and the Company’s vice chairman who recused himself from review and approval of the investment, for the development of an MOB in Rutland, Virginia that will function as an out-patient emergency and imaging center and was leased to Hospital Corporation of America (“HCA”). As of December 31, 2014, the Company’s ADC Loan had been fully repaid.  For the quarter and nine months ended September 30, 2014, the Company recorded interest income of approximately $0.2 million and $0.5 million, respectively, which is included in interest income on note receivable from related party in the accompanying condensed consolidated statements of operations.

The Company incurs operating expenses which, in general, relate to administration of the Company on an ongoing basis.  Pursuant to the advisory agreement, the Advisor shall reimburse the Company the amount by which the total operating expenses paid or incurred by the Company exceed, in any four consecutive fiscal quarters (“Expense Year”) commencing with the Expense Year ending June 30, 2013, the greater of 2% of average invested assets or 25% of net income (as defined in the advisory agreement) (“Limitation”), unless a majority of the Company’s independent directors determines that such excess expenses are justified based on unusual and non-recurring factors (“Expense Cap Test”).  In performing the Expense Cap Test, the Company uses operating expenses on a GAAP basis after making adjustments for the benefit of expense support under the Expense Support Agreements.  For the Expense Year ended September 30, 2015, the Company did not incur operating expenses in excess of the Limitation.

The fees incurred by and reimbursable to the Managing Dealer in connection with the Company’s Offerings for the quarter and nine months ended September 30, 2015 and 2014, and related amounts unpaid as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	Quarter ended				Nine Months Ended				Unpaid amounts as of (1)
	September 30,				September 30,				September 30,		December 31,
	2015		2014		2015		2014		2015		2014
Selling commissions (2)	$	4,085	$	6,689	$	12,076	$	12,285	$	340	$	388
Marketing support fees (2)		5,232		4,524		15,851		9,937		300		555
	$	9,317	$	11,213	$	27,927	$	22,222	$	640	$	943

11. Related Party Arrangements (continued)

The expenses and fees incurred by and reimbursable to the Company’s related parties for the quarter and nine months ended September 30, 2015 and 2014, and related amounts unpaid as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	Quarter ended				Nine Months Ended				Unpaid amounts as of (1)
	September 30,				September 30,				September 30,		December 31,
	2015		2014		2015		2014		2015		2014
Reimbursable expenses:
Offering costs (2)	$	919	$	1,075	$	2,785	$	3,442	$	266	$	713
Operating expenses (3)		1,119		918		3,140		2,402		1,305		479
Acquisition fees and expenses		156		130		461		463		14		80
		2,194		2,123		6,386		6,307		1,585		1,272
Investment services fees (4)		8,624		3,651		13,645		11,875		1,434	―
Financing coordination fees (5)	―		―		―			220	―		―
Property management fees (6)		1,128		728		2,844		1,763		726		429
Asset management fees (7)		6,075		3,696		16,127		9,510		1,235		355
	$	18,021	$	10,198	$	39,002	$	29,675	$	4,980	$	2,056

FOOTNOTES:

⁽¹⁾ Amounts are recorded as due to related parties in the accompanying condensed consolidated balance sheets.

⁽²⁾ Amounts are recorded as stock issuance and offering costs in the accompanying condensed consolidated statements of stockholders’ equity and redeemable noncontrolling interest.

⁽³⁾ Amounts are recorded as general and administrative expenses in the accompanying condensed consolidated statements of operations.

⁽⁴⁾ For the quarter and nine months ended September 30, 2015, the Company incurred approximately $8.6 million and $13.6 million, respectively, in investment service fees, of which approximately $1.5 million and $1.5 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  For the quarter and nine months ended September 30, 2014, Company incurred approximately $3.7 million and $11.9 million, respectively, in investment service fees, of which approximately $0.4 million and $1.6 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  Investment services fees, that are not capitalized, are recorded as acquisition fees and expenses in the accompanying condensed consolidated statements of operations.

⁽⁵⁾ There were no financing coordination fees for the quarter and nine months ended September 30, 2015.  For the nine months ended September 30, 2014, the Company incurred approximately $0.2 million in financing coordination fees which was capitalized and included in its investment in the Windsor Manor Joint Venture.

⁽⁶⁾ For the quarter and nine months ended September 30, 2015, the Company incurred approximately $1.1 million and $2.8 million, respectively, in property and construction management fees payable to the Property Manager of which approximately $0.3 million and $0.6 million, respectively, in construction management fees were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  For the quarter and nine months ended September 30, 2014, the Company incurred approximately $0.7 million and $1.8 million, respectively, in property and construction management fees payable to the Property Manager of which approximately $0.2 million and $0.3 million, respectively, in construction management fees were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.

⁽⁷⁾ For the quarter and nine months ended September 30, 2015, the Company incurred approximately $6.1 million  and $16.1 million, respectively, in asset management fees payable to the Advisor of which approximately $0.9 million and $2.3 million, respectively, was settled in accordance with the terms of the Advisor Expense Support Agreement and approximately $0.1 million and $0.4 million, respectively, was capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.  For the quarter and nine months ended September 30, 2014, the Company incurred approximately $3.7 million and $9.5 million, respectively, in asset management fees payable to the Advisor of which approximately $0.9 million and $3.8 million, respectively, was settled in accordance with the terms of the Advisor Expense Support Agreement and approximately $0.1 million and $0.2 million, respectively, was capitalized for each period and included in real estate under development in the accompanying condensed consolidated balance sheets.

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Variable Interest Entities

9 Months Ended

Sep. 30, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Variable Interest Entities

7. Variable Interest Entities

Consolidated VIEs – As of September 30, 2015, the Company has 15 subsidiaries, which are VIEs due to the following factors and circumstances:

⁽¹⁾ Two of these subsidiaries are single property entities, designed to own and lease their respective properties to single tenants, for which buy-out options are held by the respective tenants that are formula based.

⁽²⁾ Four of these subsidiaries are single property entities, designed to own and lease their respective properties to multiple tenants, which are subject to either a ground lease or an air rights lease that include buy-out and put options held by either the tenant or landlord under the applicable lease.

⁽³⁾ Seven of these subsidiaries are entities with real estate under development or completed developments in which the third-party developers have an opportunity to earn promoted interest payments after certain net operating income targets and internal rate of return targets have been met.

⁽⁴⁾ One of these subsidiaries is a joint venture with real estate under development in which the third-party developer has an opportunity to earn promoted interest payments after certain net operating income targets and internal rate of return targets have been met.

⁽⁵⁾ One of these subsidiaries is a joint venture with equity interest that consists of non-substantive voting rights.

The Company determined it is the primary beneficiary and holds a controlling financial interest in each of the aforementioned property and development entities due to its power to direct the activities that most significantly impact the economic performance of the entities, as well as its obligation to absorb the losses and its right to receive benefits from these entities that could potentially be significant to these entities. As such, the transactions and accounts of these VIEs are included in the accompanying condensed consolidated financial statements.

The aggregate carrying amount and major classifications of the consolidated assets that can be used to settle obligations of the VIEs and liabilities of the consolidated VIEs that are non-recourse to the Company as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,		December 31,
	2015		2014
Assets:
Real estate investment properties, net	$	192,663	$	174,449
Real estate under development, including land	$	67,350	$	47,153
Intangibles, net	$	24,426	$	25,519
Cash	$	1,462	$	6,280
Other assets	$	862	$	511
Deferred rent and lease incentives	$	6,330	$	2,978
Loan costs, net	$	2,497	$	2,300
Restricted cash	$	2,053	$	5,304
Liabilities:
Mortgages and other notes payable	$	172,537	$	137,754
Accounts payable and accrued liabilities	$	1,497	$	2,317
Accrued development costs	$	8,854	$	7,951
Due to related parties	$	171	$	219
Other liabilities	$	4,551	$	4,949

The Company’s maximum exposure to loss as a result of its involvement with these VIEs is limited to its net investment in these entities which totaled approximately $109.0 million as of September 30, 2015. The Company’s exposure is limited because of the non-recourse nature of the borrowings of the VIEs.

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Details of Indebtedness (Parenthetical) (Detail) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Revolving Credit Facility
Debt Instrument [Line Items]
Debt Instrument, Current borrowing capacity	$ 15.0	$ 14.0
Forward Contracts
Debt Instrument [Line Items]
Notional amount of derivative contract	$ 187.1	269.4
Derivative effective date, year	2015
Interest Rate Swap
Debt Instrument [Line Items]
Notional amount of derivative contract	$ 342.7	$ 182.1

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Intangibles, net

9 Months Ended

Sep. 30, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Intangibles, net

5. Intangibles, net

The gross carrying amount and accumulated amortization of the Company’s intangible assets and liabilities as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,			December 31,
	2015			2014
In-place lease intangibles	$	199,815		$	148,880
Above-market lease intangibles		13,586			11,320
Below-market ground lease intangibles		12,470			10,314
Less: accumulated amortization		(62,333	)		(30,250	)
Intangible assets, net	$	163,538		$	140,264
Below-market lease intangibles	$	(10,685	)	$	(13,243	)
Above-market ground lease intangibles		(3,488	)		(2,273	)
Less: accumulated amortization		2,177			1,014
Intangible liabilities, net (1)	$	(11,996	)	$	(14,502	)

FOOTNOTE:

⁽¹⁾ Intangible liabilities, net are included in other liabilities in the accompanying condensed consolidated balance sheets.

Amortization on the Company’s intangible assets was approximately $11.6 million and $32.1 million for the quarter and nine months ended September 30, 2015, of which approximately $0.6 million and $1.5 million, respectively, were treated as a reduction of rental income from operating leases, approximately $0.08 million and $0.2 million, respectively, were treated as an increase of property operating expenses and approximately $10.9 million and $30.3 million, respectively, were included in depreciation and amortization.  Amortization on the Company’s intangible assets was approximately $7.1 million and $17.4 million for the quarter and nine months ended September 30, 2014, of which approximately $0.3 million and $0.7 million, respectively, were treated as a reduction of rental income from operating leases, approximately $0.02 million and $0.1 million, respectively, were treated as an increase of property operating expenses and approximately $6.7 million and $16.7 million, respectively, were included in depreciation and amortization.

Amortization on the Company’s intangible liabilities was approximately $0.4 million and $1.2 million for the quarter and nine months ended September 30, 2015, of which approximately $0.4 million and $1.1 million, respectively, were treated as an increase of rental income from operating leases and approximately $0.02 million and $0.06 million, respectively, were treated as a reduction of property operating expenses.  For the quarter and nine months ended September 30, 2014, amortization on the Company’s intangible liabilities was approximately $0.3 million and $0.5 million, of which approximately $0.3 million and $0.5 million, respectively, were treated as an increase of rental income from operating leases and approximately two thousand and six thousand dollars, respectively, was treated as a reduction of property operating expenses.

During the nine months ended September 30, 2015, due to the uncertainty of a tenant’s ability to meet its future obligations under the leases at two of the Company’s specialty hospitals, the Company recorded an impairment provision of approximately $4.7 million related to the lease intangibles as it was determined that the carrying value of these assets would more than likely not be recoverable.  In September 2015, the Company signed an amended and restated lease agreement with a new tenant at one of the specialty hospitals, which included similar economic terms and the collection of approximately $1.0 million in rents owed under the lease.  In addition, the Company assessed the underlying real estate assets on the second specialty hospital for impairment and concluded that no adjustment to the carrying value was necessary based on the Company’s expected holding period and the estimated undiscounted cash flows and estimated net sales proceeds that could be generated by the property.

5. Intangibles, net (continued)

The estimated future amortization on the Company’s intangibles for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 is as follows (in thousands):

	In-place Lease Intangibles		Above- market Leases		Below- market Ground Leases		Total Assets		Below- market Leases			Above- market Ground Leases			Total Liabilities
2015	$	11,859		524		80	$	12,463	$	(379	)		(22	)	$	(401	)
2016		38,280		1,797		320		40,397		(1,449	)		(89	)		(1,538	)
2017		24,845		1,636		320		26,801		(1,299	)		(89	)		(1,388	)
2018		14,685		1,469		320		16,474		(1,146	)		(89	)		(1,235	)
2019		10,537		1,168		320		12,025		(982	)		(89	)		(1,071	)
Thereafter		40,374		4,282		10,722		55,378		(3,321	)		(3,042	)		(6,363	)
	$	140,580		10,876		12,082	$	163,538	$	(8,576	)		(3,420	)	$	(11,996	)

Weighted average remaining useful life as of September 30, 2015 (in years):

In-place Lease Intangibles		Above- market Leases		Below- market Ground Leases		Below- market Leases		Above- market Ground Leases
	4.6		6.2		37.8		4.9		38.3

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Operating Leases

9 Months Ended

Sep. 30, 2015

Leases [Abstract]

Operating Leases

6. Operating Leases

As of September 30, 2015, the Company owned 78 properties that were leased to tenants on a triple-net, net or modified gross basis, and accounted for as operating leases; of which, 37 are single-tenant properties that are 100% leased under operating leases and the remaining 41 are multi-tenant properties that are leased under operating leases. The Company’s leases had a weighted average remaining lease term of 7.5 years based on annualized base rents expiring between 2015 and 2038, subject to the tenants’ options to extend the lease periods ranging from two to 10 years.  In addition, certain tenants hold options to extend their leases for multiple periods.

Under the terms of the Company’s triple-net lease agreements, each tenant is responsible for the payment of property taxes, general liability insurance, utilities, and repairs and maintenance, including structural and roof maintenance expenses.  Each tenant is expected to pay real estate taxes directly to taxing authorities.  However, if the tenant does not pay, the Company will be liable.  The total annualized property tax assessed on these properties is approximately $2.8 million.

Under the terms of the multi-tenant lease agreements that have third-party property managers, each tenant is responsible for the payment of their proportionate share of property taxes, general liability insurance, utilities, repairs and common area maintenance. These amounts are billed monthly and recorded as tenant reimbursement income in the accompanying condensed consolidated statements of operations.

The following are future minimum lease payments to be received under non-cancellable operating leases for the remainder of 2015, each of the next four years and thereafter, as of September 30, 2015 (in thousands):

2015	$	26,253
2016		103,139
2017		97,240
2018		89,806
2019		81,268
Thereafter		442,941
	$	840,647

The above future minimum lease payments to be received excludes tenant reimbursements, straight-line rent adjustments, amortization of above- and below-market lease intangibles and base rent attributable to any renewal options exercised by the tenants in the future.  In addition, future minimum lease payments related to one of the two specialty hospitals discussed in Note 5. “Intangibles, net” have been excluded.

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Ground and Air Rights Leases

9 Months Ended

Sep. 30, 2015

Leases [Abstract]

Ground and Air Rights Leases

8. Ground and Air Rights Leases

During the nine months ended September 30, 2015, in conjunction with the Novi Orthopaedic Center, UT Cancer Institute, and Columbia MOBs detailed in Note 3. “Acquisitions,” the Company acquired interests in five additional ground leases. The Novi Orthopaedic Center, UT Cancer Institute, and Columbia MOBs ground leases represent operating leases with scheduled payments over the life of the respective lease expiring in 2045 to 2076.

Overall, under the terms of its ground and air rights lease agreements, the Company is responsible for the monthly rental payments. These amounts are billed monthly and recorded as property operating expenses in the accompanying condensed consolidated statements of operations.  In some cases, the Company is able to pass this expense through to its tenants as tenant reimbursement income.  For the quarter and nine months ended September 30, 2015, the Company incurred approximately $0.7 million and $1.8 million, respectively, in ground and air rights lease expense, including any straight-line rent adjustments.  For the quarter and nine months ended September 30, 2014, the Company incurred approximately $0.04 million and $0.1 million, respectively, in ground and air rights lease expense, including any straight-line rent adjustments.

The following is a schedule of future minimum lease payments to be paid under the ground and air rights leases for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 (in thousands):

2015	$	484
2016		1,957
2017		1,984
2018		2,016
2019		2,041
Thereafter		115,515
	$	123,997

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Schedule of Indebtedness (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2015
30-day LIBOR
Debt Instrument [Line Items]
Interest accrues on loan, LIBOR	0.19%
Mortgage Loans | ProMed Medical Building I
Debt Instrument [Line Items]
Interest accrues on loan in addition to LIBOR	2.20%

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Related Party Arrangement, Fees and Expenses Incurred (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended		11 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Nov. 03, 2014
Related Party Transaction [Line Items]
Asset management fees		$ 5,085	$ 2,753	$ 13,426	$ 5,572
Cash distributions on Restricted Stock				$ 18,816	$ 9,782
Stock distributions, shares				3,200,000	1,600,000	0.0025	0.0025
Expense Support Agreements
Related Party Transaction [Line Items]
Asset management fees	[1]	$ 885	$ 884	$ 2,298	$ 3,764
Then-current offering price	[2]	$ 10.58	$ 10.14	$ 10.58	$ 10.14	$ 10.58
Restricted stock shares	[3]	84,000	87,000	217,000	371,000
Asset management fees	[1]	$ 8,566		$ 8,566		$ 8,566
Expense Support Agreements | Restricted Stock
Related Party Transaction [Line Items]
Cash distributions on Restricted Stock	[4]	$ 75	$ 30	$ 197	$ 48
Stock distributions, shares	[5]	5,000	2,000	14,000	4,000
Restricted stock shares	[3]	828,000		828,000		828,000
Cash distributions on Restricted Stock	[4]	$ 300		$ 300		$ 300
Stock distributions on Restricted Stock	[5]	21,000		21,000		21,000

[1] No other amounts have been settled in accordance with the Expense Support Agreements for the quarter and nine months ended September 30, 2015 and 2014, and cumulatively as of September 30, 2015.

[2] During the Offerings, the then-current offering prices were based on the Company’s NAV per share as of the Determination Date, plus selling commissions and marketing support fees. Subsequent to the close of the Company’s Offerings, the then-current offering prices are based on the Company’s NAV per share as of the Determination Date.

[3] Restricted stock shares are comprised of approximately 0.08 million issuable to the Advisor as of September 30, 2015. No fair value was assigned to the restricted stock shares as the shares were valued at zero, which represents the lowest possible value estimated at vesting. In addition, the restricted stock shares were treated as unissued for financial reporting purposes because the vesting criteria had not been met through September 30, 2015.

[4] The cash distributions have been recognized as compensation expense as issued and included in general and administrative expense in the accompanying condensed consolidated statements of operations.

[5] The par value of the stock distributions has been recognized as compensation expense as issued and included in general and administrative expense in the accompanying condensed consolidated statements of operations.

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Schedule of Indebtedness (Detail) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Total debt		$ 865,522	$ 853,776
Premium (discount), net	[1]	(259)	(215)
Total borrowings		1,255,263	1,059,964
Fixed rate debt
Debt Instrument [Line Items]
Total debt		395,783	370,854
Variable Rate Debt
Debt Instrument [Line Items]
Total debt	[2]	469,739	$ 482,922
Construction Loan | Variable Rate Debt
Debt Instrument [Line Items]
Total debt		$ 42,208
Mortgage Loans
Debt Instrument [Line Items]
Principal and interest payments amortizable period		25 years
Mortgage Loans | Fixed rate debt
Debt Instrument [Line Items]
Total debt		$ 34,016
Mortgage and Construction Loans
Debt Instrument [Line Items]
Total debt		76,224
Premium (discount), net		(150)
Total borrowings		76,074
Novi Orthopaedic Center | Mortgage Loans | Fixed And Variable Interest Rate Debt
Debt Instrument [Line Items]
Total debt		$ 19,825
Novi Orthopaedic Center | Term Loan Facility
Debt Instrument [Line Items]
Interest on Loan accrues - Fixed rate	[3]	3.61%
Payment Terms		Monthly interest only payments through June 2018; principal and interest payments thereafter based on a 25-year amortization schedule
Principal and interest payments amortizable period		25 years
Interest payments ending date		2018-06
Maturity Date	[4]	Jun. 15, 2020
ProMed Medical Building I | Mortgage Loans
Debt Instrument [Line Items]
Interest accrues on loan in addition to LIBOR		2.20%
ProMed Medical Building I | Mortgage Loans | Fixed rate debt
Debt Instrument [Line Items]
Total debt		$ 7,095
ProMed Medical Building I | Term Loan Facility
Debt Instrument [Line Items]
Interest on Loan accrues - Fixed rate	[3],[5]	3.64%
Payment Terms		Monthly principal and interest payments based upon a 30-year amortization schedule
Principal and interest payments amortizable period		30 years
Maturity Date	[4]	Jan. 15, 2022
540 New Waverly Place | Mortgage Loans | Fixed And Variable Interest Rate Debt
Debt Instrument [Line Items]
Total debt		$ 7,096
540 New Waverly Place | Term Loan Facility
Debt Instrument [Line Items]
Interest on Loan accrues - Fixed rate	[3]	4.08%
Payment Terms		Monthly principal and interest payments based upon a 25-year amortization schedule
Principal and interest payments amortizable period		25 years
Maturity Date	[4]	May 31, 2028
Raider Ranch Development | Construction Loan
Debt Instrument [Line Items]
Payment Terms		Monthly interest only payments through October 2017; principal and interest payments thereafter based on a 25-year amortization schedule
Principal and interest payments amortizable period		25 years
Interest payments ending date		2017-10
Maturity Date	[4]	Oct. 27, 2017
Raider Ranch Development | Construction Loan | Variable Rate Debt
Debt Instrument [Line Items]
Total debt		$ 5,914
Raider Ranch Development | Construction Loan | LIBOR
Debt Instrument [Line Items]
Interest accrues on loan in addition to LIBOR	[3]	3.50%
Floor rate		0.50%
HarborChase Of Shorewood (Shorewood, WI) | Construction Loan
Debt Instrument [Line Items]
Payment Terms		Monthly interest only payments through July 2017; principal and interest payments thereafter based on a 25-year amortization schedule
Principal and interest payments amortizable period		25 years
Interest payments ending date		2017-07
Maturity Date	[4]	Jul. 19, 2019
HarborChase Of Shorewood (Shorewood, WI) | Construction Loan | Variable Rate Debt
Debt Instrument [Line Items]
Total debt		$ 10,117
HarborChase Of Shorewood (Shorewood, WI) | Construction Loan | LIBOR
Debt Instrument [Line Items]
Interest accrues on loan in addition to LIBOR	[3]	3.00%
Floor rate		2.00%
UT Cancer Institute | Mortgage Loans | Variable Rate Debt
Debt Instrument [Line Items]
Total debt		$ 21,672
UT Cancer Institute | Mortgage Loans | LIBOR
Debt Instrument [Line Items]
Interest accrues on loan in addition to LIBOR	[3]	2.00%
UT Cancer Institute | Term Loan Facility
Debt Instrument [Line Items]
Payment Terms		Monthly interest only payments through July 2017; principal and interest payments thereafter based on a 25-year amortization schedule
Principal and interest payments amortizable period		25 years
Interest payments ending date		2017-07
Maturity Date	[4]	Dec. 22, 2019
Watercrest at Katy (Katy, TX) | Construction Loan
Debt Instrument [Line Items]
Payment Terms		Monthly interest only payments through December 2017; principal and interest payments thereafter based on a 30-year amortization schedule
Principal and interest payments amortizable period		30 years
Interest payments ending date		2017-12
Maturity Date	[4]	Dec. 27, 2019
Watercrest at Katy (Katy, TX) | Construction Loan | Variable Rate Debt
Debt Instrument [Line Items]
Total debt		$ 4,505
Watercrest at Katy (Katy, TX) | Construction Loan | LIBOR
Debt Instrument [Line Items]
Interest accrues on loan in addition to LIBOR	[3]	2.75%

[1] Premium (discount), net is reflective of the Company recording mortgage notes payable assumed at fair value on the respective acquisition date.

[2] As of September 30, 2015 and December 31, 2014, the Company had entered into interest rate swaps with notional amounts of approximately $342.7 million and $182.1 million, respectively, which were settling on a monthly basis. In addition, as of September 30, 2015 and December 31, 2014, the Company had entered into forward-starting interest rate swaps for total notional amounts of approximately $187.1 million and $269.4 million, respectively, in order to hedge its exposure to variable rate debt in future periods. The remaining forward-starting interest rate swaps have a range of effective dates beginning in 2015 and continuing through the maturity date of the loans being hedged.

[3] The 30-day LIBOR was approximately 0.19% as September 30, 2015.

[4] Represents the initial maturity date (or, as applicable, the maturity date as extended). The maturity date may be extended beyond the date shown subject to certain lender conditions.

[5] Beginning January 2020, the interest rate transitions to variable rate based on 30-day LIBOR plus 2.20% per annum.

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Summary of Gross and Net Amounts of Derivative Financial Instruments Presented in Condensed Consolidated Balance Sheet

The following table summarizes the terms of the derivative financial instruments held by the Company or through its joint venture and the asset (liability) that has been recorded (in thousands):

Initial													Fair value asset (liability) as of
Notional						Credit			Trade	Forward	Maturity		September 30,			December 31,
Amount			Strike (1)			Spread (1)			date	date	date		2015			2014
$	12,421	(2)		1.3	%		2.6	%	1/17/2013	1/15/2015	1/16/2018		$	(170	)	$	(71	)
$	38,255	(2)		2.7	%		2.5	%	9/6/2013	8/17/2015	7/10/2018		$	(1,906	)	$	(1,228	)
$	26,067	(2)		2.8	%		2.5	%	9/6/2013	8/17/2015	8/29/2018		$	(1,396	)	$	(906	)
$	30,000	(2)		1.1	%		2.7	%	10/22/2013	8/5/2015		(4)	$	—		$	(82	)
$	29,952	(2)		0.9	%		4.3	%	11/13/2013	5/11/2015		(4)	$	—		$	(74	)
$	11,000	(3)		3.0	%	―		%	6/27/2014	6/30/2014	6/30/2017		$	1		$	10
$	48,415	(2)		2.4	%		2.9	%	8/15/2014	6/1/2016	6/2/2019		$	(1,360	)	$	(270	)
$	84,251	(2)		2.3	%		2.4	%	9/12/2014	8/1/2015	7/15/2019		$	(3,315	)	$	(1,326	)
$	7,129	(2)		1.2	%		2.3	%	11/12/2014	11/15/2014	10/15/2017		$	(79	)	$	(35	)
$	175,000	(2)		1.6	%		2.0	%	12/23/2014	12/19/2014	2/19/2019		$	(3,526	)	$	(881	)
$	138,698	(2)		1.7	%		2.0	%	1/9/2015	12/10/2015	12/22/2019		$	(2,946	)	$	—

FOOTNOTES:

⁽¹⁾ The all-in rates are equal to the sum of the Strike and Credit Spread detailed above.

⁽²⁾ Amounts related to interest rate swaps held by the Company, or its equity method investments, which are recorded at fair value and included in either other assets or other liabilities in the accompanying condensed consolidated balance sheets.

⁽³⁾ Amounts related to the interest rate cap held by the Windsor Manor Joint Venture for which the proportionate amounts of fair value relative to the Company’s ownership percentage are included in investments in unconsolidated entities in the accompanying condensed consolidated balance sheets.

⁽⁴⁾ The loans associated with these derivatives were repaid during the nine months ended September 30, 2015. Refer to Note 10. “Indebtedness” for additional information.

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Operating Leases - Additional Information (Detail) - Triple Net Lease Agreements $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($) Property
Operating Leased Assets [Line Items]
Number of properties owned	78
Weighted average remaining lease term	7 years 6 months
Total annualized property tax | $	$ 2.8
Minimum
Operating Leased Assets [Line Items]
Lease, expiration year	2015
Extended lease period	2 years
Maximum
Operating Leased Assets [Line Items]
Lease, expiration year	2038
Extended lease period	10 years
Single Tenant Properties
Operating Leased Assets [Line Items]
Number of properties owned	37
Real estate investment properties, percentage leased under operating leases	100.00%
Multi Tenant Properties
Operating Leased Assets [Line Items]
Number of properties owned	41

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Equity

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Equity

13.Equity

Stockholders’ Equity:

Public Offerings — The following table details the Company’s aggregate proceeds from its Offerings as of September 30, 2015 and December 31, 2014 (in millions):

	September 30, 2015								December 31, 2014
	Subscriptions				Reinvestment Plan				Subscriptions				Reinvestment Plan
	Proceeds		Shares		Proceeds		Shares		Proceeds		Shares		Proceeds		Shares
Initial Offering	$	1,271.4		125.1	$	27.1		2.8	$	1,114.2		110.2	$	27.1		2.8
Follow-on Offering		372.9		35.3		26.0		2.6	―		―		―		―
	$	1,644.3		160.4	$	53.1		5.4	$	1,114.2		110.2	$	27.1		2.8

13. Equity (continued)

Distributions — The following table details the Company’s historical share prices in its Offerings, including the prices pursuant to the Reinvestment Plan and the Company’s monthly cash and stock distributions per share:

Period	Offering Price per Share		Reinvestment Plan Price per Share		Monthly Cash Distributions (1)		Monthly Stock Distributions
December 11, 2013 through November 3, 2014	$	10.14	$	9.64	$	0.0338		0.0025
November 4, 2014 through September 30, 2015	$	10.58	$	10.06	$	0.0353		0.0025

FOOTNOTE:

⁽¹⁾ Monthly cash distributions were effective and payable to all common stockholders of record as of the close of business on the first business day in the month subsequent to the announcement of the Company’s NAV (i.e. December 1, 2014 for the current Offering price).

During the nine months ended September 30, 2015 and 2014, the Company declared cash distributions of $44.9 million and $21.7 million, respectively, of which $18.8 million and $9.8 million, were paid in cash to stockholders and $26.1 million and $11.9 million, respectively, were reinvested pursuant to the Reinvestment Plan.  In addition, for the nine months ended September 30, 2015 and 2014, the Company declared and made stock distributions of approximately 3.2 million and 1.6 million shares of common stock, respectively. The Company closed its Follow-On Offering on September 30, 2015 and discontinued its stock distributions concurrently.

The tax composition of the Company’s distributions declared for the nine months ended September 30, 2015 and 2014 were as follows:

	Nine Months Ended September 30,
Distribution Type	2015			2014
Taxable as ordinary income		30.1	%		21.5	%
Return of capital		69.9	%		78.5	%

Redemptions — During the nine months ended September 30, 2015 and 2014, the Company received requests for the redemption of common stock of approximately 0.7 million and 0.2 million shares, respectively, all of which were approved for redemption at an average price of $9.51 and $9.13, respectively, and for a total of approximately $6.6 million and $2.1 million, respectively.

Other comprehensive income (loss) — The following table reflects the effect of derivative financial instruments held by Company, or its equity method investments, and included in the condensed consolidated statements of comprehensive loss for the quarter and nine months ended September 30, 2015 and 2014 (in thousands):

Derivative Financial Instrument	Gain (loss) recognized in other comprehensive loss on derivative financial instrument						Location of gain (loss) reclassified into earnings	Loss reclassified from AOCI into earnings
	Quarter Ended							Quarter Ended
	September 30,							September 30,
	2015			2014				2015			2014
Interest rate swaps	$	(6,435	)	$	224		Interest expense and loan cost amortization	$	(1,078	)	$	—
Reclassification of interest rate swaps upon derecognition		—			—		Interest expense and loan cost amortization		—			—
Reclassification of interest rate swaps due to ineffectiveness		48			—		Interest expense and loan cost amortization		(48	)		—
Interest rate cap held by unconsolidated joint venture		(1	)		(2	)	Not applicable	―				—
Total	$	(6,388	)	$	222			$	(1,126	)	$	—

13. Equity (continued)

	Nine Months Ended							Nine Months Ended
	September 30,							September 30,
	2015			2014				2015			2014
Interest rate swaps	$	(10,060	)	$	(872	)	Interest expense and loan cost amortization	$	(2,411	)	$	—
Reclassification of interest rate swaps upon derecognition		236			—		Interest expense and loan cost amortization		(236	)		—
Reclassification of interest rate swaps due to ineffectiveness		48			—		Interest expense and loan cost amortization		(48	)		—
Interest rate cap held by unconsolidated joint venture		(9	)		21		Not applicable	―				—
Total	$	(9,785	)	$	(851	)		$	(2,695	)	$	—

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Real Estate Assets, net (Tables)

9 Months Ended

Sep. 30, 2015

Real Estate Properties [Line Items]

Schedule of Real Estate Investment Properties

The gross carrying amount and accumulated depreciation of the Company’s real estate assets as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,			December 31,
	2015			2014
Land and land improvements	$	200,763		$	128,662
Building and building improvements		2,094,128			1,545,614
Furniture, fixtures and equipment		54,284			36,319
Less: accumulated depreciation		(97,975	)		(53,095	)
Real estate investment properties, net		2,251,200			1,657,500
Real estate under development, including land		69,478			47,153
Total real estate assets, net	$	2,320,678		$	1,704,653

Under Development with Third-Party Developers

Real Estate Properties [Line Items]

Schedule of Real Estate Investment Properties

As of September 30, 2015, six of the Company’s properties have real estate under development with third-party developers as follows (in thousands):

Property Name (and Location)	Developer	Real Estate Development Costs Incurred (1)		Remaining Development Budget (2)
HarborChase of Shorewood (Shorewood, WI)	Harbor Shorewood Development, LLC	$	22,034	$	5,776
Raider Ranch (Lubbock, TX)	South Bay Partners, Ltd		13,464		3,460
Watercrest at Katy (Katy, TX) (3)	South Bay Partners, Ltd		20,049		22,342
Welbrook Senior Living Grand Junction (Grand Junction, CO)	Embree Asset Group, Inc.		2,128		11,473
Waterstone at Greenville (Greenville, SC)	The Balance Group, Inc.		5,298		22,401
Wellmore of Lexington (Lexington, SC)	Maxwell Group, Inc.		6,505		48,698
		$	69,478	$	114,150

FOOTNOTES:

⁽¹⁾ This amount represents land and total capitalized costs for GAAP purposes for the acquisition, development and construction of the seniors housing or post-acute care communities as of September 30, 2015.  Amounts include investment services fees, asset management fees, interest expense and other costs capitalized during the development period.

⁽²⁾ This amount includes preleasing and marketing costs which will be expensed as incurred.

⁽³⁾ This property is owned through a joint venture in which the Company’s initial ownership interest is 95%.

The development budgets include the cost of the land, construction costs, development fees, financing costs, start-up costs and initial operating deficits of the respective properties.  An affiliate of the developer of the respective community coordinates and supervises the management and administration of the development and construction.  Each developer is responsible for any cost overruns beyond the approved development budget for the applicable project pursuant to a cost overrun guarantee.  Some of these developments were deemed to be VIEs; refer to Note 7. “Variable Interest Entities” for additional information.

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Intangibles net - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Finite-Lived Intangible Assets And Liabilities [Line Items]
Amortization expense on intangible assets		$ 11,600	$ 7,100	$ 32,100	$ 17,400
Amortization expense on intangible liabilities		400	300	1,200	500
Impairment provision of intangible assets				4,700
Rent owed under the lease		28,435	13,393	72,306	33,478
Amended and restated lease agreement
Finite-Lived Intangible Assets And Liabilities [Line Items]
Rent owed under the lease	$ 1,000
Rental Income from Operating Leases
Finite-Lived Intangible Assets And Liabilities [Line Items]
Amortization expense on intangible assets		600	300	1,500	700
Amortization expense on intangible liabilities		400	300	1,100	500
Property Operating Expenses
Finite-Lived Intangible Assets And Liabilities [Line Items]
Amortization expense on intangible assets		80	20	200	100
Amortization expense on intangible liabilities		20	2	60	6
Depreciation And Amortization
Finite-Lived Intangible Assets And Liabilities [Line Items]
Amortization expense on intangible assets		$ 10,900	$ 6,700	$ 30,300	$ 16,700

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Schedule of Unaudited Proforma Results of Operations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Business Combinations [Abstract]
Revenues		$ 86,793	$ 64,136	$ 245,650	$ 187,170
Net income (loss)	[1]	$ (16,244)	$ (11,332)	$ (48,601)	$ (45,370)
Loss per share of common stock (basic and diluted)		$ (0.09)	$ (0.10)	$ (0.29)	$ (0.46)
Weighted average number of shares of common stock outstanding (basic and diluted)	[2]	171,102	109,212	165,408	97,911

[1] The unaudited pro forma results for the quarter and nine months ended September 30, 2015, were adjusted to exclude approximately $6.1 million and $9.8 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the quarter and nine months ended September 30, 2015. The unaudited pro forma results for the nine months ended September 30, 2014 were adjusted to include approximately $9.8 million of acquisition related expenses, as if the properties had been acquired on January 1, 2014. The unaudited pro forma results for the quarter and nine months ended September 30, 2014 were adjusted to exclude approximately $3.1 million and $13.8 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the quarter and nine months ended September 30, 2014, as if the properties had been acquired on January 1, 2013.

[2] As a result of the acquired properties being treated as operational since January 1, 2014, the Company assumed approximately 19.0 million shares were issued as of January 1, 2014. Consequently the weighted average shares outstanding was adjusted to reflect this amount of shares being issued on January 1, 2014 instead of actual dates on which the shares were issued, and such shares were treated as outstanding as of the beginning of the period presented.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement Of Income And Comprehensive Income [Abstract]
Net loss attributable to common stockholders	$ (19,225)	$ (12,204)	$ (50,634)	$ (37,030)
Other comprehensive income (loss):
Unrealized income (loss) on derivative financial instruments, net	(6,435)	224	(10,060)	(872)
Reclassification of cash flow hedges upon derecognition			236
Reclassification of cash flow hedges due to ineffectiveness	48		48
Unrealized income (loss) on derivative financial instruments of equity method investments	(1)	(2)	(9)	21
Total other comprehensive income (loss)	(6,388)	222	(9,785)	(851)
Comprehensive loss	(25,613)	(11,982)	(60,419)	(37,881)
Comprehensive loss attributable to common stockholders	$ (25,613)	$ (11,982)	$ (60,419)	$ (37,881)

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles in the United States (“GAAP”). The unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which, in the opinion of management, are necessary for the fair statement of the Company’s results for the interim period presented.  Operating results for the quarter and nine months ended September 30, 2015 may not be indicative of the results that may be expected for the year ending December 31, 2015. Amounts as of December 31, 2014 included in the unaudited condensed consolidated financial statements have been derived from audited consolidated financial statements as of that date but do not include all disclosures required by GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The accompanying unaudited condensed consolidated financial statements include the Company’s accounts and the accounts of its wholly owned subsidiaries or subsidiaries for which the Company has a controlling financial interest, including the accounts of variable interest entities (“VIEs”) in which the Company is the primary beneficiary.  All material intercompany accounts and transactions have been eliminated in consolidation.

In accordance with the guidance for the consolidation of VIEs, the Company analyzes its variable interests, including loans, leases, guarantees, and equity investments, to determine if the entity in which it has a variable interest is a variable interest entity (“VIE”).  The Company’s analysis includes both quantitative and qualitative reviews.  The Company bases its quantitative analysis on the forecasted cash flows of the entity, and its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and financial agreements. The Company also uses its quantitative and qualitative analyses to determine if it is the primary beneficiary of the VIE, and if such determination is made, it includes the accounts of the VIE in its consolidated financial statements.

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the disclosure of contingent liabilities. For example, significant assumptions are made in the allocation of purchase price, the analysis of real estate impairments, the valuation of contingent assets and liabilities, and the valuation of restricted stock shares issued.  Accordingly, actual results could differ from those estimates.

Adopted Accounting Pronouncements — In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.”  This update changes the criteria for reporting discontinued operations where only disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results, such as a major line of business or geographical area, should be presented as a discontinued operation. This ASU is effective prospectively for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014 with early adoption permitted.   The Company has determined that the amendments will impact the Company’s determinations of which future property disposals, if any, qualify as discontinued operations and will require additional disclosure about discontinued operations for future property disposals, if any.

Recent Accounting Pronouncements — In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” as a new Accounting Standard Concept (“ASC”) topic (Topic 606).  The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The standard further provides guidance for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, lease contracts).  The FASB subsequently issued ASU 2015-14 to defer the effective date of ASU 2014-09 until annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with earlier adoption permitted.  ASU 2014-09 can be adopted using one of two retrospective transition methods: 1) retrospectively to each prior reporting period presented or 2) as a cumulative-effect adjustment as of the date of adoption.  The Company has not yet selected a transition method and is currently evaluating the impact of ASU 2014-09; however, its adoption could potentially have a significant effect on the Company’s consolidated financial position, results of operations or cash flows.

2. Summary of Significant Accounting Policies (continued)

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which requires amendments to both the variable interest entity and voting models. The amendments (i) modify the identification of variable interests (fees paid to a decision maker or service provider), the VIE characteristics for a limited partnership or similar entity and primary beneficiary determination under the VIE model, and (ii) eliminate the presumption within the current voting model that a general partner controls a limited partnership or similar entity.  The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The amendments may be applied using either a modified retrospective or full retrospective approach.  The Company has determined that it will not early adopt this ASU and is currently evaluating the effect the guidance will have on its consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which requires that loan costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts or premiums. The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The ASU is to be applied retrospectively for each period presented.  Upon adoption, an entity is required to comply with the applicable disclosures for a change in an accounting principle.  The FASB subsequently issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which clarifies that, given the absence of authoritative guidance in ASU 2015-03 regarding presentation and subsequent measurement of loan costs related to line-of-credit arrangements, the SEC Staff would not object to an entity deferring and presenting loan costs as an asset and subsequently amortizing the loan costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  The Company has determined that it will not early adopt this ASU and that the amendments will materially impact the presentation of the Company’s consolidated financial position but will not have a material impact on the Company’s consolidated results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments,” which requires an acquirer to recognize provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined.  The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.  The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted.  The Company has determined that it will not early adopt this ASU and does not expect that adopting this guidance will have a material impact on its consolidated financial position, results of operations or cash flows.

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Fair Value of Contingent Purchase Price Consideration (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2012
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Contingent consideration in connection with acquisition			$ (3,000)
Ending balance	$ (3,000)	$ (12,395)	(3,000)	$ (12,395)
Capital Health Communities
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance	1,820	3,509	4,078	4,488
Contingent consideration in connection with acquisition					$ (7,000)
Yield Guaranty payment received from seller		(301)	(2,579)	(2,601)
Change in fair value			321	1,321
Ending balance	1,820	3,208	1,820	3,208
Medical Portfolio I
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Change in fair value	268		268
Beginning balance	$ (268)	(507)	$ (268)	(507)
Ending balance		(507)		(507)
South Bay II Communities
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Contingent consideration in connection with acquisition				(12,395)
Contingent consideration payment		10,300		14,195
Change in fair value		(1,800)		(1,800)
Beginning balance		(8,500)		0
Ending balance		$ 0		$ 0

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Schedule of Fees, Reimbursable Expenses and Related Amounts Unpaid to Related Parties (Detail) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014		Dec. 31, 2014
Related Party Transaction [Line Items]
Offering costs	[1]	$ 919,000	$ 1,075,000	$ 2,785,000	$ 3,442,000
Operating expenses	[2]	1,119,000	918,000	3,140,000	2,402,000
Acquisition fees and expenses		9,073,000	3,729,000	15,939,000	15,726,000
Total reimbursable expenses		2,194,000	2,123,000	6,386,000	6,307,000
Investment services fees	[3]	8,624,000	3,651,000	13,645,000	11,875,000
Financing coordination fees		0		0	220,000	[4]
Property management fees		3,923,000	2,358,000	10,539,000	6,118,000
Asset management fees		5,085,000	2,753,000	13,426,000	5,572,000
Total reimbursable expenses, net		18,021,000	10,198,000	39,002,000	29,675,000
Offering costs, unpaid	[1],[5]	266,000		266,000			$ 713,000
Operating expenses, unpaid	[2],[5]	1,305,000		1,305,000			479,000
Acquisition fees and expenses, unpaid	[5]	14,000		14,000			80,000
Total reimbursable expenses due	[5]	1,585,000		1,585,000			1,272,000
Investment services fees, unpaid	[3],[5]	1,434,000		1,434,000
Property management fees, unpaid	[5],[6]	726,000		726,000			429,000
Asset management fees, unpaid	[5],[7]	1,235,000		1,235,000			355,000
Total related amount unpaid		5,620,000		5,620,000			2,999,000
Reimbursable expenses
Related Party Transaction [Line Items]
Property management fees	[6]	1,128,000	728,000	2,844,000	1,763,000
Asset management fees	[7]	6,075,000	3,696,000	16,127,000	9,510,000
Total related amount unpaid	[5]	4,980,000		4,980,000			$ 2,056,000
Property Manager
Related Party Transaction [Line Items]
Acquisition fees and expenses		$ 156,000	$ 130,000	$ 461,000	$ 463,000

[1] Amounts are recorded as stock issuance and offering costs in the accompanying condensed consolidated statements of stockholders’ equity and redeemable noncontrolling interest.

[2] Amounts are recorded as general and administrative expenses in the accompanying condensed consolidated statements of operations.

[3] For the quarter and nine months ended September 30, 2015, the Company incurred approximately $8.6 million and $13.6 million, respectively, in investment service fees, of which approximately $1.5 million and $1.5 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets. For the quarter and nine months ended September 30, 2014, Company incurred approximately $3.7 million and $11.9 million, respectively, in investment service fees, of which approximately $0.4 million and $1.6 million, respectively, were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets. Investment services fees, that are not capitalized, are recorded as acquisition fees and expenses in the accompanying condensed consolidated statements of operations.

[4] There were no financing coordination fees for the quarter and nine months ended September 30, 2015. For the nine months ended September 30, 2014, the Company incurred approximately $0.2 million in financing coordination fees which was capitalized and included in its investment in the Windsor Manor Joint Venture.

[5] Amounts are recorded as due to related parties in the accompanying condensed consolidated balance sheets.

[6] For the quarter and nine months ended September 30, 2015, the Company incurred approximately $1.1 million and $2.8 million, respectively, in property and construction management fees payable to the Property Manager of which approximately $0.3 million and $0.6 million, respectively, in construction management fees were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets. For the quarter and nine months ended September 30, 2014, the Company incurred approximately $0.7 million and $1.8 million, respectively, in property and construction management fees payable to the Property Manager of which approximately $0.2 million and $0.3 million, respectively, in construction management fees were capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets.

[7] For the quarter and nine months ended September 30, 2015, the Company incurred approximately $6.1 million and $16.1 million, respectively, in asset management fees payable to the Advisor of which approximately $0.9 million and $2.3 million, respectively, was settled in accordance with the terms of the Advisor Expense Support Agreement and approximately $0.1 million and $0.4 million, respectively, was capitalized and included in real estate under development in the accompanying condensed consolidated balance sheets. For the quarter and nine months ended September 30, 2014, the Company incurred approximately $3.7 million and $9.5 million, respectively, in asset management fees payable to the Advisor of which approximately $0.9 million and $3.8 million, respectively, was settled in accordance with the terms of the Advisor Expense Support Agreement and approximately $0.1 million and $0.2 million, respectively, was capitalized for each period and included in real estate under development in the accompanying condensed consolidated balance sheets.

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Intangibles, net (Tables)

9 Months Ended

Sep. 30, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Net Book Value of Intangibles

The gross carrying amount and accumulated amortization of the Company’s intangible assets and liabilities as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

	September 30,			December 31,
	2015			2014
In-place lease intangibles	$	199,815		$	148,880
Above-market lease intangibles		13,586			11,320
Below-market ground lease intangibles		12,470			10,314
Less: accumulated amortization		(62,333	)		(30,250	)
Intangible assets, net	$	163,538		$	140,264
Below-market lease intangibles	$	(10,685	)	$	(13,243	)
Above-market ground lease intangibles		(3,488	)		(2,273	)
Less: accumulated amortization		2,177			1,014
Intangible liabilities, net (1)	$	(11,996	)	$	(14,502	)

Intangible liabilities, net are included in other liabilities in the accompanying condensed consolidated balance sheets.

Schedule of Estimated Future Amortization and Weighted Average Remaining Useful Life

The estimated future amortization on the Company’s intangibles for the remainder of 2015, each of the next four years and thereafter, in the aggregate, as of September 30, 2015 is as follows (in thousands):

	In-place Lease Intangibles		Above- market Leases		Below- market Ground Leases		Total Assets		Below- market Leases			Above- market Ground Leases			Total Liabilities
2015	$	11,859		524		80	$	12,463	$	(379	)		(22	)	$	(401	)
2016		38,280		1,797		320		40,397		(1,449	)		(89	)		(1,538	)
2017		24,845		1,636		320		26,801		(1,299	)		(89	)		(1,388	)
2018		14,685		1,469		320		16,474		(1,146	)		(89	)		(1,235	)
2019		10,537		1,168		320		12,025		(982	)		(89	)		(1,071	)
Thereafter		40,374		4,282		10,722		55,378		(3,321	)		(3,042	)		(6,363	)
	$	140,580		10,876		12,082	$	163,538	$	(8,576	)		(3,420	)	$	(11,996	)

Weighted average remaining useful life as of September 30, 2015 (in years):

In-place Lease Intangibles		Above- market Leases		Below- market Ground Leases		Below- market Leases		Above- market Ground Leases
	4.6		6.2		37.8		4.9		38.3

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Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended		11 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Nov. 03, 2014	Dec. 31, 2014
Class of Stock [Line Items]
Cash distribution declared	$ 44,891	$ 21,700			$ 31,919
Cash paid to stockholders	$ 18,800	$ 9,800
Stock distributions on Restricted Stock	3,200,000	1,600,000	0.0025	0.0025
Redemption of common stock, per share	$ 9.51	$ 9.13	$ 9.51
Redemptions of common stock	$ 6,634	$ 2,100			$ 2,996
Common Stock
Class of Stock [Line Items]
Stock distributions on Restricted Stock	3,196,000				2,356,000
Redemption of common stock, shares	692,000	200,000			324,000
Redemptions of common stock	$ 7				$ 3
Reinvestment Plan
Class of Stock [Line Items]
Cash distribution declared	$ 26,100	$ 11,900

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Acquisitions of Properties (Detail) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014
Business Acquisition [Line Items]
Purchase Price		$ 655,079	$ 559,478
North Carolina Specialty Hospital
Business Acquisition [Line Items]
Location		Durham, NC
Structure		Modified Lease
Date Acquired		Jun. 29, 2015
Purchase Price		$ 31,830
Novi Orthopaedic Center
Business Acquisition [Line Items]
Location		Novi, MI
Structure		Modified Lease
Date Acquired		Feb. 13, 2015
Purchase Price	[1]	$ 30,500
UT Cancer Institute
Business Acquisition [Line Items]
Location		Knoxville, TN
Structure		Modified Lease
Date Acquired		Feb. 20, 2015
Purchase Price		$ 33,660
Bend Memorial Clinic Medical Office Building
Business Acquisition [Line Items]
Location		Bend, OR
Structure		Modified Lease
Date Acquired		May 11, 2015
Purchase Price	[1]	$ 34,612
Stoneterra Medical Plaza
Business Acquisition [Line Items]
Location		San Antonio, TX
Structure		Modified Lease
Date Acquired		May 29, 2015
Purchase Price	[1]	$ 15,050
Triangle Orthopaedic Durham
Business Acquisition [Line Items]
Location		Durham, NC
Structure		Modified Lease
Date Acquired		Jun. 29, 2015
Purchase Price		$ 21,275
Triangle Orthopaedic Oxford
Business Acquisition [Line Items]
Location		Oxford, NC
Structure		Modified Lease
Date Acquired		Jun. 29, 2015
Purchase Price		$ 4,728
Triangle Orthopaedic Chapel Hill
Business Acquisition [Line Items]
Location		Chapel Hill, NC
Structure		Modified Lease
Date Acquired		Jun. 29, 2015
Purchase Price		$ 3,257
Triangle Orthopaedic Roxboro
Business Acquisition [Line Items]
Location		Roxboro, NC
Structure		Modified Lease
Date Acquired		Jun. 29, 2015
Purchase Price		$ 2,067
Doctor's Park Building B
Business Acquisition [Line Items]
Location		Chula Vista, CA ("San Diego")
Structure		Modified Lease
Date Acquired		Jun. 30, 2015
Purchase Price	[1]	$ 5,000
Doctor's Park Building C
Business Acquisition [Line Items]
Location		Chula Vista, CA ("San Diego")
Structure		Modified Lease
Date Acquired		Jun. 30, 2015
Purchase Price	[1]	$ 10,000
540 New Waverly Place
Business Acquisition [Line Items]
Location		Cary, NC ("Raleigh")
Structure		Modified Lease
Date Acquired		Jul. 20, 2015
Purchase Price	[1]	$ 15,000
MedHelp
Business Acquisition [Line Items]
Location		Birmingham, AL
Structure		Modified Lease
Date Acquired		Jul. 31, 2015
Purchase Price	[1]	$ 14,076
Patriot Professional Center
Business Acquisition [Line Items]
Location		Frederick, MD ("Baltimore")
Structure		Modified Lease
Date Acquired		Jul. 31, 2015
Purchase Price	[1]	$ 16,900
Liberty Professional Center
Business Acquisition [Line Items]
Location		Frederick, MD ("Baltimore")
Structure		Modified Lease
Date Acquired		Jul. 31, 2015
Purchase Price	[1]	$ 7,350
Broadway Medical Plaza 1
Business Acquisition [Line Items]
Location		Columbia, MO
Structure		Modified Lease
Date Acquired		Aug. 21, 2015
Purchase Price	[1]	$ 10,619
Broadway Medical Plaza 2
Business Acquisition [Line Items]
Location		Columbia, MO
Structure		Modified Lease
Date Acquired		Aug. 21, 2015
Purchase Price	[1]	$ 13,014
Broadway Medical Plaza 4
Business Acquisition [Line Items]
Location		Columbia, MO
Structure		Modified Lease
Date Acquired		Aug. 21, 2015
Purchase Price	[1]	$ 14,091
Fieldstone Memory Care
Business Acquisition [Line Items]
Location	[2]	Yakima, WA
Structure	[2]	Managed
Date Acquired	[2]	Mar. 31, 2015
Purchase Price	[1],[2]	$ 12,400
Primrose Retirement Community of Anderson
Business Acquisition [Line Items]
Location		Anderson, IN ("Muncie")
Structure		Triple-net Lease
Date Acquired		May 29, 2015
Purchase Price		$ 21,086
Primrose Retirement Community of Lancaster
Business Acquisition [Line Items]
Location		Lancaster, OH ("Columbus")
Structure		Triple-net Lease
Date Acquired		May 29, 2015
Purchase Price		$ 25,657
Primrose Retirement Community of Wausau
Business Acquisition [Line Items]
Location		Wausau, WI ("Green Bay")
Structure		Triple-net Lease
Date Acquired		May 29, 2015
Purchase Price		$ 20,307
Superior Residences of Panama City
Business Acquisition [Line Items]
Location		Panama City Beach, FL
Structure		Managed
Date Acquired		Jul. 15, 2015
Purchase Price	[1]	$ 20,000
Parc at Duluth
Business Acquisition [Line Items]
Location		Duluth, GA ("Atlanta")
Structure		Triple-net Lease
Date Acquired		Jul. 31, 2015
Purchase Price		$ 52,800
Parc at Piedmont
Business Acquisition [Line Items]
Location		Marietta, GA ("Atlanta")
Structure		Triple-net Lease
Date Acquired		Jul. 31, 2015
Purchase Price		$ 50,800
The Pavilion at Great Hills
Business Acquisition [Line Items]
Location		Austin, TX
Structure		Managed
Date Acquired		Jul. 31, 2015
Purchase Price		$ 35,000
The Hampton at Meadows Place
Business Acquisition [Line Items]
Location		Fort Bend, TX ("Houston")
Structure		Managed
Date Acquired		Jul. 31, 2015
Purchase Price		$ 28,400
The Beacon at Gulf Breeze
Business Acquisition [Line Items]
Location		Gulf Breeze, FL ("Pensacola")
Structure		Managed
Date Acquired		Jul. 31, 2015
Purchase Price		$ 28,000
Palmilla Senior Living
Business Acquisition [Line Items]
Location		Albuquerque, NM
Structure		Managed
Date Acquired		Sep. 30, 2015
Purchase Price		$ 47,600
Cedar Lake Assisted Living and Memory Care
Business Acquisition [Line Items]
Location		Lake Zurich, IL ("Chicago")
Structure		Managed
Date Acquired		Sep. 30, 2015
Purchase Price		$ 30,000
Memorial Hermann Orthopedic & Spine Hospital
Business Acquisition [Line Items]
Location		Bellaire, TX ("Houston")
Structure		Triple-net Lease
Date Acquired			Jun. 02, 2014
Purchase Price			$ 49,000
Hurst Specialty Hospital
Business Acquisition [Line Items]
Location		Hurst, TX ("Dallas/Fort Worth")
Structure		Modified Lease
Date Acquired			Aug. 15, 2014
Purchase Price			$ 29,465
Beaumont Specialty Hospital
Business Acquisition [Line Items]
Location		Beaumont, TX ("Houston")
Structure		Modified Lease
Date Acquired			Aug. 15, 2014
Purchase Price			$ 33,600
Chula Vista Medical Arts Center - Plaza I
Business Acquisition [Line Items]
Location		Chula Vista, CA ("San Diego")
Structure		Modified Lease
Date Acquired			Jan. 21, 2014
Purchase Price	[3]		$ 17,863
Memorial Hermann Orthopedic & Spine Hospital Medical Office Building
Business Acquisition [Line Items]
Location		Bellaire, TX ("Houston")
Structure		Modified Lease
Date Acquired			Jun. 02, 2014
Purchase Price			$ 27,000
Lee Hughes Medical Building
Business Acquisition [Line Items]
Location		Glendale, CA ("Los Angeles")
Structure		Modified Lease
Date Acquired			Sep. 29, 2014
Purchase Price	[3]		$ 29,870
Oklahoma City Inpatient Rehabilitation Hospital
Business Acquisition [Line Items]
Location		Oklahoma City, OK
Structure		Modified Lease
Date Acquired			Jul. 15, 2014
Purchase Price			$ 25,504
Las Vegas Inpatient Rehabilitation Hospital
Business Acquisition [Line Items]
Location		Las Vegas, NV
Structure		Modified Lease
Date Acquired			Jul. 15, 2014
Purchase Price			$ 22,292
South Bend Inpatient Rehabilitation Hospital
Business Acquisition [Line Items]
Location		Mishawaka, IN ("South Bend")
Structure		Modified Lease
Date Acquired			Jul. 15, 2014
Purchase Price			$ 20,240
Prestige Senior Living Auburn Meadows
Business Acquisition [Line Items]
Location		Auburn, WA ("Seattle")
Structure		Managed
Date Acquired			Feb. 03, 2014
Purchase Price			$ 21,930
Prestige Senior Living Bridgewood
Business Acquisition [Line Items]
Location		Vancouver, WA ("Portland")
Structure		Managed
Date Acquired			Feb. 03, 2014
Purchase Price			$ 22,096
Prestige Senior Living Monticello Park
Business Acquisition [Line Items]
Location		Longview, WA
Structure		Managed
Date Acquired			Feb. 03, 2014
Purchase Price			$ 27,360
Prestige Senior Living Rosemont
Business Acquisition [Line Items]
Location		Yelm, WA
Structure		Managed
Date Acquired			Feb. 03, 2014
Purchase Price			$ 16,877
Prestige Senior Living West Hills
Business Acquisition [Line Items]
Location		Corvallis, OR
Structure		Managed
Date Acquired			Mar. 03, 2014
Purchase Price			$ 14,986
Isle at Cedar Ridge
Business Acquisition [Line Items]
Location		Cedar Park, TX ("Austin")
Structure		Managed
Date Acquired			Feb. 28, 2014
Purchase Price			$ 21,630
HarborChase of Plainfield
Business Acquisition [Line Items]
Location		Plainfield, IL
Structure		Managed
Date Acquired			Mar. 28, 2014
Purchase Price			$ 26,500
Legacy Ranch Alzheimer’s Special Care Center
Business Acquisition [Line Items]
Location		Midland, TX
Structure		Managed
Date Acquired			Mar. 28, 2014
Purchase Price			$ 11,960
The Springs Alzheimer’s Special Care Center
Business Acquisition [Line Items]
Location		San Angelo, TX
Structure		Managed
Date Acquired			Mar. 28, 2014
Purchase Price			$ 10,920
Isle at Watercrest – Bryan
Business Acquisition [Line Items]
Location		Bryan, TX
Structure		Managed
Date Acquired			Apr. 21, 2014
Purchase Price			$ 22,050
Watercrest at Bryan
Business Acquisition [Line Items]
Location		Bryan, TX
Structure		Managed
Date Acquired			Apr. 21, 2014
Purchase Price			$ 28,035
Isle at Watercrest – Mansfield
Business Acquisition [Line Items]
Location		Mansfield, TX ("Dallas/Fort Worth")
Structure		Managed
Date Acquired			May 05, 2014
Purchase Price			$ 31,300
Watercrest at Mansfield
Business Acquisition [Line Items]
Location		Mansfield, TX ("Dallas/Fort Worth")
Structure		Managed
Date Acquired			Jun. 30, 2014
Purchase Price			$ 49,000

[1] This represents a single property or portfolio acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property or portfolio.

[2] This property was purchased from a related party of the Company’s Sponsor; refer to Note 11. “Related Party Arrangements” for additional information.

[3] This represents a single property acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

12. Derivative Financial Instruments

The following table summarizes the terms of the derivative financial instruments held by the Company or through its joint venture and the asset (liability) that has been recorded (in thousands):

Initial													Fair value asset (liability) as of
Notional						Credit			Trade	Forward	Maturity		September 30,			December 31,
Amount			Strike (1)			Spread (1)			date	date	date		2015			2014
$	12,421	(2)		1.3	%		2.6	%	1/17/2013	1/15/2015	1/16/2018		$	(170	)	$	(71	)
$	38,255	(2)		2.7	%		2.5	%	9/6/2013	8/17/2015	7/10/2018		$	(1,906	)	$	(1,228	)
$	26,067	(2)		2.8	%		2.5	%	9/6/2013	8/17/2015	8/29/2018		$	(1,396	)	$	(906	)
$	30,000	(2)		1.1	%		2.7	%	10/22/2013	8/5/2015		(4)	$	—		$	(82	)
$	29,952	(2)		0.9	%		4.3	%	11/13/2013	5/11/2015		(4)	$	—		$	(74	)
$	11,000	(3)		3.0	%	―		%	6/27/2014	6/30/2014	6/30/2017		$	1		$	10
$	48,415	(2)		2.4	%		2.9	%	8/15/2014	6/1/2016	6/2/2019		$	(1,360	)	$	(270	)
$	84,251	(2)		2.3	%		2.4	%	9/12/2014	8/1/2015	7/15/2019		$	(3,315	)	$	(1,326	)
$	7,129	(2)		1.2	%		2.3	%	11/12/2014	11/15/2014	10/15/2017		$	(79	)	$	(35	)
$	175,000	(2)		1.6	%		2.0	%	12/23/2014	12/19/2014	2/19/2019		$	(3,526	)	$	(881	)
$	138,698	(2)		1.7	%		2.0	%	1/9/2015	12/10/2015	12/22/2019		$	(2,946	)	$	—

FOOTNOTES:

⁽¹⁾ The all-in rates are equal to the sum of the Strike and Credit Spread detailed above.

⁽²⁾ Amounts related to interest rate swaps held by the Company, or its equity method investments, which are recorded at fair value and included in either other assets or other liabilities in the accompanying condensed consolidated balance sheets.

⁽³⁾ Amounts related to the interest rate cap held by the Windsor Manor Joint Venture for which the proportionate amounts of fair value relative to the Company’s ownership percentage are included in investments in unconsolidated entities in the accompanying condensed consolidated balance sheets.

⁽⁴⁾ The loans associated with these derivatives were repaid during the nine months ended September 30, 2015. Refer to Note 10. “Indebtedness” for additional information.

Although the Company has determined that the majority of the inputs used to value its derivative financial instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties.  The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative financial instruments and has determined that the credit valuation adjustments on the overall valuation adjustments are not significant to the overall valuation of its derivative financial instruments. As a result, the Company determined that its derivative financial instruments valuation in its entirety is classified in Level 2 of the fair value hierarchy. Determining fair value requires management to make certain estimates and judgments.  Changes in assumptions could have a positive or negative impact on the estimated fair values of such instruments which could, in turn, impact the Company’s or its joint venture’s results of operations.