10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
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: 333-196302

American Realty Capital Healthcare Trust III, Inc.

(Exact name of registrant as specified in its charter)

Maryland	38-3930747
(State or other  jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
405 Park Ave., 14th Floor New York, NY	10022
(Address of principal executive offices)	(Zip Code)
(212) 415-6500
(Registrant's telephone number, including area code)

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 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 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 o	(Do not check if a smaller reporting company)	Smaller reporting company x

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

As of October 31, 2015, the registrant had 6,322,180 shares of common stock outstanding.

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014	3
Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended September 30, 2015 and 2014, Nine Months Ended September 30, 2015 and the Period from April 24, 2014 (date of inception) to September 30, 2014 (Unaudited)	4
Consolidated Statement of Stockholders' Equity (Deficit) for the Nine Months Ended September 30, 2015 (Unaudited)	5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and for the Period from April 24, 2014 (date of inception) to September 30, 2014 (Unaudited)	6
Notes to Consolidated Financial Statements (Unaudited)	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
Item 4. Controls and Procedures	41
PART II - OTHER INFORMATION	42
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities	43
Item 3. Defaults Upon Senior Securities	44
Item 4. Mine Safety Disclosures	44
Item 5. Other Information	45
Item 6. Exhibits	45
Signatures	46

2

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

	September 30, 2015			December 31, 2014
	(Unaudited)
ASSETS
Real estate investments, at cost:
Land	$	7,192		$	—
Buildings and improvements	57,073			—
Acquired intangible lease assets	10,017			—
Total real estate investments, at cost	74,282			—
Less: accumulated depreciation and amortization	(563		)	—
Total real estate investments, net	73,719			—
Cash	48,330			187
Restricted cash	45			—
Receivable for sale of common stock	930			—
Prepaid expenses and other assets	1,420			59
Deferred costs, net	115			—
Total assets	$	124,559		$	246
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Mortgage note payable	$	5,108		$	—
Mortgage premium, net	166			—
Market lease intangible liabilities, net	1,393			—
Accounts payable and accrued expenses (including $314 and $1,895 due to related parties as of September 30, 2015 and December 31, 2014, respectively)	1,061			2,520
Deferred rent	289			—
Distributions payable	688			—
Total liabilities	8,705			2,520
Preferred stock, $0.01 par value, 50,000,000 authorized, none issued and outstanding as of September 30, 2015 and December 31, 2014	—			—
Common stock, $0.01 par value, 300,000,000 shares authorized, 5,625,853 and 11,554 shares of common stock issued and outstanding as of September 30, 2015 and December 31, 2014, respectively	56			—
Additional paid-in capital	121,115			(2,094		)
Accumulated deficit	(5,317		)	(180		)
Total stockholders' equity (deficit)	115,854			(2,274		)
Total liabilities and stockholders' equity (deficit)	$	124,559		$	246

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except for share and per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,			For the Period from April 24, 2014 (date of inception) to
	2015			2014			2015			September 30, 2014
Revenues:
Rental income	$	1,025		$	—		$	1,195		$	—
Operating expense reimbursements	140			—			173			—
Resident services and fee income	19			—			19			—
Total revenues	1,184			—			1,387			—
Expenses:
Property operating and maintenance	382			—			418			—
Operating fees to related party	15			—			15			—
Acquisition and transaction related	1,415			—			1,888			—
General and administrative	440			28			975			44
Depreciation and amortization	464			—			543			—
Total expenses	2,716			28			3,839			44
Operating loss	(1,532		)	(28		)	(2,452		)	(44		)
Other expense:
Interest expense	(25		)	—			(25		)	—
Total other expense	(25		)	—			(25		)	—
Loss before income taxes	(1,557		)	(28		)	(2,477		)	(44		)
Income tax expense	(4		)	—			(4		)	—
Net loss	$	(1,561	)	$	(28	)	$	(2,481	)	$	(44	)
Comprehensive loss	$	(1,561	)	$	(28	)	$	(2,481	)	$	(44	)
Basic and diluted weighted average shares outstanding	4,614,153			8,888			2,291,631			7,389
Basic and diluted net loss per share	$	(0.34	)	$	(3.15	)	$	(1.08	)	$	(5.95	)
Distributions declared per share	$	0.39		N/A			$	0.86		N/A

_______________

N/A        Not Applicable

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

For the Nine Months Ended September 30, 2015

(In thousands except for share data)

(Unaudited)

	Common Stock
	Number of Shares		Par Value		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
Balance, December 31, 2014	11,554		$	—	$	(2,094	)	$	(180	)	$	(2,274	)
Issuance of common stock	5,570,998		56		137,235			—			137,291
Common stock offering costs, commissions and dealer manager fees	—		—		(15,002		)	—			(15,002		)
Common stock issued through distribution reinvestment plan	41,656		—		989			—			989
Common stock repurchases	(1,021	)	—		(25		)	—			(25		)
Equity-based compensation	2,666		—		12			—			12
Distributions declared	—		—		—			(2,656		)	(2,656		)
Net loss	—		—		—			(2,481		)	(2,481		)
Balance, September 30, 2015	5,625,853		$	56	$	121,115		$	(5,317	)	$	115,854

The accompanying notes are an integral part of this unaudited consolidated financial statement.

5

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended			For the Period from April 24, 2014 (date of inception) to
	September 30, 2015			September 30, 2014
Cash flows from operating activities:
Net loss	$	(2,481	)	$	(44	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	543			—
Amortization of deferred financing costs	4			—
Amortization of mortgage premium	(6		)	—
Amortization of market lease intangibles	(5		)	—
Equity-based compensation	12			1
Changes in assets and liabilities:
Prepaid expenses and other assets	(486		)	—
Accounts payable and accrued expenses	508			25
Deferred rent and other liabilities	289			—
Restricted cash	(45		)	—
Net cash used in operating activities	(1,667		)	(18		)
Cash flows from investing activities:
Investments in real estate and other assets	(67,557		)	—
Deposits paid for real estate acquisitions	(875		)	—
Net cash used in investing activities	(68,432		)	—
Cash flows from financing activities:
Payments of mortgage note payable	(16		)	—
Payments of deferred financing costs	(119		)	—
Proceeds from issuance of common stock	136,361			200
Payments of offering costs and fees related to common stock issuances	(15,795		)	(994		)
Distributions paid	(979		)	—
Advances from (repayments to) related party	(1,210		)	813
Net cash provided by financing activities	118,242			19
Net change in cash	48,143			1
Cash, beginning of period	187			—
Cash, end of period	$	48,330		$	1

6

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended		For the Period from April 24, 2014 (date of inception) to
	September 30, 2015		September 30, 2014
Supplemental disclosure of cash flow information:
Cash paid for interest	$	27	$	—
Non-cash investing and financing activities:
Receivable for sale of common stock	$	930	$	—
Payable and accrued offering costs	436		781
Unfulfilled repurchase requests included in accounts payable, accrued expenses and other liabilities	25		—
Assumption of mortgage note payable used to acquire investment in real estate	5,124		—
Premium on assumed mortgage note payable	172		—
Liabilities assumed in real estate acquisitions	11		—
Common stock issued through distribution reinvestment plan	989		—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Note 1 — Organization

American Realty Capital Healthcare Trust III, Inc. (including, as required by context, American Realty Capital Healthcare III Operating Partnership, L.P., and its subsidiaries, the "Company") was incorporated on April 24, 2014 as a Maryland corporation that intends to elect and qualify to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") beginning with its taxable year ending December 31, 2015. On August 20, 2014, the Company commenced its ongoing initial public offering (the "IPO") on a "reasonable best efforts" basis of up to 125.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $3.1 billion, pursuant to a registration statement on Form S-11 (File No. 333-196302) (as amended, the "Registration Statement"), filed with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended. The Registration Statement also covers up to 26.3 million shares of common stock available pursuant to a distribution reinvestment plan (the "DRIP") under which common stockholders may elect to have their distributions reinvested in additional shares of common stock.

On February 11, 2015, the Company received and accepted aggregate subscriptions in excess of the minimum offering amount for the IPO of $2.0 million in shares of common stock, broke general escrow and issued shares to its initial investors, who were admitted as stockholders of the Company. As of September 30, 2015, the Company had 5.6 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO of $138.5 million. Until the net asset value ("NAV") pricing date (as described below), the per share purchase price in the IPO will be up to $25.00 per share (including the maximum allowed to be charged for commissions and fees) and the purchase price for shares issued under the DRIP will be equal to $23.75 per share, which is equal to 95% of the offering price in the IPO. Beginning with the NAV pricing date, the per share price for shares in the IPO and under the DRIP will vary quarterly and will be equal to the Company’s per share NAV as determined by American Realty Capital Healthcare III Advisors, LLC (the “Advisor”), plus applicable commissions and fees, in the case of the IPO, and the per share purchase price in the DRIP will be equal to the NAV per share. The Company reserves the right to reallocate shares covered in the Registration Statement between the IPO and the DRIP. The NAV pricing date means the date that the Company first publishes an estimated per share NAV, which will be on or prior to July 11, 2017, which is 150 days following the second anniversary of the date that the Company broke escrow in the IPO.

The Company was formed to primarily acquire a diversified portfolio of healthcare-related assets including medical office buildings ("MOB"), seniors housing communities and other healthcare-related facilities for investment purposes. All such properties may be acquired and operated by the Company alone or jointly with another party. The Company may also originate or acquire first mortgage loans secured by real estate. The Company purchased its first property and commenced real estate operations in March 2015. As of September 30, 2015, the Company owned 13 properties located in 7 states and comprised of 273,620 rentable square feet.

Substantially all of the Company's business is conducted through American Realty Capital Healthcare III Operating Partnership, L.P. (the "OP"), a Delaware limited partnership. The Company is the sole general partner and holds substantially all of the units of limited partner interests in the OP ("OP Units"). Additionally, the Advisor contributed $2,020 to the OP in exchange for 90 OP Units, which represents a nominal percentage of the aggregate OP ownership. A holder of limited partner interests has the right to convert OP Units for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, as allowed by the limited partnership agreement of the OP. The remaining rights of the holders of limited partner interests in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.

The Company has no direct employees. The Advisor has been retained to manage the Company's affairs on a day-to-day basis. The Company also has retained American Realty Capital Healthcare III Properties, LLC (the "Property Manager") to serve as the Company's property manager. Realty Capital Securities, LLC (the "Dealer Manager") serves as the dealer manager of the IPO. The Advisor, the Property Manager and the Dealer Manager are under common control with AR Capital, LLC ("ARC"), the parent of the Company's sponsor, American Realty Capital VII, LLC (the "Sponsor"), as a result of which they are related parties, and each will receive compensation, fees and other expense reimbursements from the Company for services related to the IPO and the investment and management of the Company's assets. The Advisor, Property Manager and Dealer Manager will receive fees during the Company's offering, acquisition, operational and liquidation stages.

8

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Note 2 — Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results for the entire year or any subsequent interim period.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of December 31, 2014, and for the period from April 24, 2014 (date of inception) to December 31, 2014, which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 31, 2015. As the Company was formed on April 24, 2014, there are no comparative consolidated statements of operations and comprehensive loss or consolidated statements of cash flows for the nine months ended September 30, 2014. There have been no significant changes to the Company's significant accounting policies during the nine months ended September 30, 2015 other than the updates described below.

Reclassifications

The Company has reclassified $0.1 million from cash flows from operating activities to cash flows from financing activities within the unaudited consolidated statement of cash flows for the period from April 24, 2014 (date of inception) to September 30, 2015 to conform with the current year presentation.

Revenue Recognition

The Company's rental income is primarily related to rent received from tenants in MOBs and other healthcare-related facilities and from residents in seniors housing — operating properties ("SHOP") held using a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA"). Rent from tenants is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease. Because many of the leases provide for rental increases at specified intervals, GAAP requires the Company to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. Rental income from residents in the Company's SHOPs is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. The Company defers the revenue related to lease payments received from tenants and residents in advance of their due dates.

The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company records an increase in the allowance for uncollectible accounts or records a direct write-off of the receivable in the consolidated statements of operations.

Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.

Resident services and fee income relates to ancillary services performed for residents in the Company's SHOPs. Fees for ancillary services are recorded in the period in which the services are performed.

Reportable Segments

The Company has determined that it has three reportable segments, with activities related to investing in MOBs, triple-net leased healthcare facilities, and SHOPs. Management evaluates the operating performance of the Company's investments in real estate and SHOPs on an individual property level.

9

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued revised guidance relating to revenue recognition. Under the revised guidance, an entity is required to recognize revenue when it transfers 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 revised guidance was to become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption was not permitted under GAAP. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. In July 2015, the FASB deferred the effective date of the revised guidance by one year to annual reporting periods beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as of the original effective date. The Company has not yet selected a transition method and is currently evaluating the impact of this new guidance.

In January 2015, the FASB issued updated guidance that eliminates from GAAP the concept of an event or transaction that is unusual in nature and occurs infrequently being treated as an extraordinary item. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Any amendments may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company has elected to adopt this new guidance as of September 30, 2015. The Company has assessed the impact from the adoption of this revised guidance and has determined that there is no impact to its financial position, results of operations and cash flows.

In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are variable interest entities ("VIEs") or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. If the Company decides to early adopt the revised guidance in an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes the interim period. The Company is currently evaluating the impact of this new guidance.

In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendment requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not previously been issued. If the Company decides to early adopt the revised guidance in an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes the interim period. The Company is currently evaluating the impact of this new guidance.

In September 2015, the FASB issued an update that eliminates the requirement to adjust provisional amounts from a business combination and the related impact on earnings by restating prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of measurement period adjustments on current and prior periods, including the prior period impact on depreciation, amortization and other income statement items and their related tax effects, shall be recognized in the period the adjustment amount is determined. The cumulative adjustment would be reflected within the respective financial statement line items affected. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company has elected to adopt this new guidance as of September 30, 2015. The adoption of this guidance had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Note 3 — Real Estate Investments

The Company owned 13 properties as of September 30, 2015. The Company focuses on investing in MOBs, seniors housing communities and other healthcare-related facilities primarily to expand and diversify its portfolio and revenue base. The rentable square feet or annualized straight-line rental income of the following acquisitions represent 5% or more of the Company's total portfolio rentable square feet or annualized straight-line rental income as of September 30, 2015:

10

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

On April 20, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building located in Clearwater, Florida ("RAI Clearwater"). The seller of RAI Clearwater was R.H.C. Investments I, Inc., which had no preexisting relationship with the Company. The contract purchase price of RAI Clearwater was $4.8 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of RAI Clearwater as a business combination and incurred acquisition related costs of $0.1 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On June 11, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building located in Rockwall, Texas ("Rockwall Medical Plaza"). The seller of Rockwall Medical Plaza was Rockwall Medical Properties, L.P., which had no preexisting relationship with the Company. The contract purchase price of Rockwall Medical Plaza was $6.6 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Rockwall Medical Plaza as a business combination and incurred acquisition related costs of $0.2 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On July 24, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building and a leasehold interest in an adjacent parking lot located in Decatur, Georgia ("Decatur Medical Office Building"). The seller of Decatur Medical Office Building was GCS Stemmer Properties, LLC, which had no preexisting relationship with the Company. The contract purchase price of Decatur Medical Office Building was $5.1 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Decatur Medical Office Building as a business combination and incurred acquisition related costs of $0.1 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On August 3, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building located in Cleveland, Ohio ("Buckeye Health Center"). The seller of Buckeye Health Center was 200 E. 18^th LLC, which had no preexisting relationship with the Company. The contract purchase price of Buckeye Health Center was $5.6 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Buckeye Health Center as a business combination and incurred acquisition related costs of $0.1 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On August 14, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in two adjacent medical office buildings located in Lawrenceville, Georgia ("Philip Professional Center"). The seller of Philip Professional Center was ICM VI – Philip Centre, LP, which had no preexisting relationship with the Company. The contract purchase price of Philip Professional Center was $9.0 million and was funded with $3.9 million in proceeds from the Company's ongoing IPO and the assumption of $5.1 million in existing mortgage debt. The Company accounted for the purchase of Philip Professional Center as a business combination and incurred acquisition related costs of $0.2 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On August 21, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a seniors housing community located in Collinsville, Illinois ("Cedarhurst of Collinsville"). The seller of Cedarhurst of Collinsville was Cedarhurst of Collinsville, LLC, which had no preexisting relationship with the Company. The contract purchase price of Cedarhurst of Collinsville was $11.6 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Cedarhurst of Collinsville as a business combination and incurred acquisition related costs of $0.3 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On August 25, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a seniors housing community located in Richmond, Kentucky ("Arcadian Cove Assisted Living"). The sellers of Arcadian Cove Assisted Living were Arcadian Cove, LLC and Arcadian Assisted Living, LLC, neither of which had any preexisting relationship with the Company. The contract purchase price of Arcadian Cove Assisted Living was $4.8 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Arcadian Cove Assisted Living as a business combination and incurred acquisition related costs of $0.2 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

11

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

On September 11, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building located in Woodbury, Minnesota ("Woodlake Office Center"). The seller of Woodlake Office Center was Kraus-Anderson, Incorporated, which had no preexisting relationship with the Company. The contract purchase price of Woodlake Office Center was $14.9 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Woodlake Office Center as a business combination and incurred acquisition related costs of $0.3 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

The following table presents the allocation of the assets acquired during the nine months ended September 30, 2015. There were no assets acquired or liabilities assumed during the period from April 24, 2014 (date of inception) to September 30, 2014.

	Nine Months Ended
(Dollar amounts in thousands)	September 30, 2015
Real estate investments, at cost:
Land	$	7,192
Buildings, fixtures and improvements	57,073
Total tangible assets	64,265
Acquired intangibles:
In-place leases (1)	8,655
Market lease assets (1)	1,362
Market lease liabilities (1)	(1,418		)
Total assets acquired, net	72,864
Mortgage note payable assumed to acquire real estate investment	(5,124		)
Premium on mortgage assumed	(172		)
Other liabilities assumed	(11		)
Cash paid for acquired real estate investments	$	67,557
Number of properties purchased	13

_______________

(1) Weighted-average remaining amortization periods for in-place leases, market lease assets and market lease liabilities acquired during the nine months ended September 30, 2015 were 7.4, 11.0 and 16.7 years, respectively, as of each property's respective acquisition date.

12

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The following table presents unaudited pro forma information as if the acquisitions that were completed during the nine months ended September 30, 2015 had been consummated on April 24, 2014 (date of inception). Additionally, the unaudited pro forma net income (loss) was adjusted to reclassify acquisition and transaction related expenses of $1.9 million from the nine months ended September 30, 2015 to the period from April 24, 2014 (date of inception) to September 30, 2014.

	Nine Months Ended		For the Period from April 24, 2014 (date of inception) to
(In thousands, except for per share information)	September 30, 2015		September 30, 2014
Pro forma revenues (1)(2)	$	6,562	$	3,846
Pro forma net income (loss) (1)(2)	$	334	$	(1,156	)
Basic weighted average shares outstanding	2,291,631		7,389
Basic pro forma net income (loss) per share	$	0.15	$	(156.45	)
Diluted weighted average shares outstanding	2,295,078		7,389
Diluted pro forma net income (loss) per share	$	0.10	$	(156.45	)

_______________

(1) For the nine months ended September 30, 2015, aggregate revenues and net income derived from the Company's 2015 acquisitions (for the Company's period of ownership) were $1.4 million and $0.4 million, respectively.

(2) During the period from October 1, 2015 to November 6, 2015, the Company completed its acquisition of two properties. As of the date that these unaudited consolidated financial statements were available to be issued, the Company was still reviewing the financial information of these properties and, as such, it was impractical to include in these unaudited consolidated financial statements the pro forma effect of these acquisitions (see Note 13 — Subsequent Events).

The following table presents future minimum base rental cash payments due to the Company over the next five years and thereafter as of September 30, 2015. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.

(In thousands)	Future Minimum Base Rent Payments
October 1, 2015 — December 31, 2015	$	1,183
2016	4,760
2017	4,833
2018	4,905
2019	4,748
Thereafter	23,375
	$	43,804

The following table lists the tenants (including for this purpose, all affiliates of such tenant) whose annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income for all properties on a straight-line basis as of September 30, 2015. The Company did not own any properties and had no tenant concentrations as of September 30, 2014.

Tenant	September 30, 2015
Summit Orthopedics, Ltd.	14.2%
United States of America	11.3%

13

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The following table lists the states where the Company has a concentration of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis as of September 30, 2015. The Company did not own any properties and had no state concentrations as of September 30, 2014.

State	September 30, 2015
Georgia	19.2%
Illinois	40.6%
Minnesota	14.2%

Note 4 — Mortgage Note Payable

The following table reflects the Company's mortgage note payable as of September 30, 2015. The Company had no mortgage notes payable as of December 31, 2014.

	Encumbered Properties	Outstanding Loan Amount as of		Effective Interest Rate		Interest Rate
Portfolio		September 30, 2015					Maturity
		(In thousands)
Philip Professional Center — Lawrenceville, GA	2	$	5,108	4.0	%	Fixed	Oct. 2019

Real estate investment, at cost, of $9.2 million at September 30, 2015 related to the mortgage note payable at September 30, 2015 has been pledged as collateral and is not available to satisfy our debts and obligations unless first satisfying the mortgage note payable on the property. The Company makes payments of principal and interest on its mortgage note payable on a monthly basis.

The following table summarizes the scheduled aggregate principal payments on the Company's mortgage note payable for the five years subsequent to September 30, 2015:

(In thousands)	Future Principal Payments
October 1, 2015 — December 31, 2015	$	16
2016	96
2017	100
2018	104
2019	4,792
Thereafter	—
	$	5,108

Note 5 — Fair Value of Financial Instruments

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 — Unobservable inputs that reflect the entity's own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

14

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, receivable for sale of common stock, prepaid expenses and other assets, accounts payable and accrued expenses, deferred rent and distributions payable approximates their carrying value on the unaudited consolidated balance sheets due to their short-term nature. The fair value of the Company's remaining financial instrument that is not reported at fair value on the unaudited consolidated balance sheet is reported below:

		Carrying Amount(1) at		Fair Value at
(In thousands)	Level	September 30, 2015		September 30, 2015
Mortgage note payable and premium, net	3	$	5,274	$	5,321

_______________

(1) Carrying value includes mortgage note payable of $5.1 million and mortgage premium, net of $0.2 million as of September 30, 2015.

The fair value of the mortgage note payable is estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of borrowing arrangements.

Note 6 — Common Stock

The Company had 5.6 million and 11,554 shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds of $138.5 million and $0.2 million as of September 30, 2015 and December 31, 2014, respectively.

On January 29, 2015, the Company's board of directors authorized, and the Company declared, distributions payable to stockholders of record each day during the applicable period at a rate equal to $0.0042808219 per day. Distributions began to accrue on March 15, 2015. Distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.

Share Repurchase Program

The Company's board of directors has adopted a Share Repurchase Program (“SRP”) that enables stockholders to sell their shares to the Company in limited circumstances. The SRP permits investors to sell their shares back to the Company after they have held them for at least one year, subject to significant conditions and limitations described below.

Prior to the time that the Company’s shares are listed on a national securities exchange and until the Company begins to calculate NAV, the repurchase price per share will depend on the length of time investors have held such shares as follows: after one year from the purchase date — the lower of $23.13 or 92.5% of the amount they actually paid for each share, and after two years from the purchase date — the lower of $23.75 or 95% of the amount they actually paid for each share (in each case, as adjusted for any stock distributions, combinations, splits and recapitalizations).

Once the Company begins to calculate NAV, the price per share that the Company will pay to repurchase the Company’s shares will be the Company's NAV per share of common stock for the quarter. Subject to limited exceptions, stockholders who redeem their shares of the Company's common stock within the first four months from the date of purchase will be subject to a short-term trading fee of 2% of the aggregate NAV per share of the shares of common stock received. Because the Company's NAV per share will be calculated quarterly, the repurchase price may fluctuate between the redemption request day and the date on which the Company pays redemption proceeds.

15

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The Company is only authorized to repurchase shares pursuant to the SRP using the proceeds received from the DRIP and will limit the amount spent to repurchase shares in a given quarter to the amount of proceeds received from the DRIP in that same quarter. In addition, the board of directors may reject a request for redemption at any time. Due to these limitations, the Company cannot guarantee that it will be able to accommodate all repurchase requests. Purchases under the SRP by the Company will be limited in any calendar year to 5% of the weighted average number of shares outstanding on December 31 of the previous calendar year.

When a stockholder requests a repurchase and the repurchase is approved, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation. Shares purchased under the SRP will have the status of authorized but unissued shares. The following table reflects the number of shares repurchased cumulatively through September 30, 2015:

	Number of Requests	Number of Shares Repurchased	Average Price per Share
Cumulative repurchases as of December 31, 2014	—	—	$	—
Nine Months Ended September 31, 2015(1)	1	1,021	24.97
Cumulative repurchases as of September 31, 2015(1)	1	1,021	$	24.97

_______________

(1) Includes one unfulfilled repurchase request consisting of 1,021 shares for approximately $25,000 and an average repurchase price per share of $24.97, which was approved for repurchase as of September 30, 2015 and was completed in October 2015. The accrual for this unfulfilled repurchase request is reflected in the accounts payable and accrued expenses line item in the accompanying unaudited consolidated balance sheets.

The SRP will immediately terminate if the Company's shares are listed on any national securities exchange. In addition, our board of directors may amend, suspend (in whole or in part) or terminate the SRP at any time upon 30 days’ prior written notice to our stockholders.

Distribution Reinvestment Plan

Pursuant to the DRIP, stockholders may elect to reinvest distributions by purchasing shares of common stock in lieu of receiving cash. No dealer manager fees or selling commissions are paid with respect to shares purchased under the DRIP. Participants purchasing shares pursuant to the DRIP have the same rights and are treated in the same manner as if such shares were issued pursuant to the IPO. The board of directors may designate that certain cash or other distributions be excluded from reinvestment pursuant to the DRIP. The Company has the right to amend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants. Shares issued under the DRIP are recorded to equity in the accompanying unaudited consolidated balance sheets in the period distributions are declared. During the nine months ended September 30, 2015, the Company issued 41,656 shares of common stock pursuant to the DRIP, with a value of $1.0 million and a par value of $0.01 per share.

Note 7 — Related Party Transactions and Arrangements

As of September 30, 2015 and December 31, 2014, American Realty Capital Healthcare III Special Limited Partnership, LLC (the "Special Limited Partner"), an entity controlled by the Sponsor, owned 8,888 shares of the Company's outstanding common stock. The Advisor and its affiliates may incur and pay costs and fees on behalf of the Company. As of September 30, 2015 and December 31, 2014, the Company had $0.3 million and $1.9 million, respectively, payable to related parties.

16

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Fees Paid in Connection with the IPO

The Dealer Manager is paid fees and compensation in connection with the sale of the Company's common stock in the IPO. The Dealer Manager is paid a selling commission of up to 7.0% of the per share purchase price of the IPO proceeds before reallowance of commissions earned by participating broker-dealers. In addition, the Dealer Manager receives up to 3.0% of the gross proceeds from the sale of shares, before reallowance to participating broker-dealers, as a dealer manager fee. The Dealer Manager may reallow its dealer manager fee to such participating broker-dealers. A participating broker dealer may elect to receive a fee equal to 7.5% of the gross proceeds from the sale of shares (not including selling commissions and dealer manager fees) by such participating broker dealer, with 2.5% thereof paid at the time of such sale and 1.0% thereof paid on each anniversary of the closing of such sale up to and including the fifth anniversary of the closing of such sale. If this option is elected, the dealer manager fee will be reduced to 2.5% of gross proceeds (not including selling commissions and dealer manager fees). The following table details total selling commissions and dealer manager fees incurred from and due to the Dealer Manager as of and for the periods presented:

	Three Months Ended September 30,				Nine Months Ended		For the Period from April 24, 2014 (date of inception) to		Payable as of
(In thousands)	2015		2014		September 30, 2015		September 30, 2014		September 30, 2015		December 31, 2014
Total commissions and fees incurred from and due to the Dealer Manager	$	4,663	$	—	$	11,942	$	—	$	81	$	—

The Advisor and its affiliates receive compensation and reimbursement for services relating to the IPO, including transfer agent services provided by an affiliate of the Dealer Manager. All offering costs incurred by the Company and the Advisor or its affiliates on behalf of the Company are charged to additional paid-in capital on the accompanying unaudited consolidated balance sheet as of September 30, 2015. The following table details reimbursable offering costs incurred from and due to the Advisor and Dealer Manager as of and for the periods presented:

	Three Months Ended September 30,				Nine Months Ended		For the Period from April 24, 2014 (date of inception) to		Payable as of
(In thousands)	2015		2014		September 30, 2015		September 30, 2014		September 30, 2015		December 31, 2014
Fees and expense reimbursements incurred from and due to the Advisor	$	721	$	43	$	782	$	43	$	42	$	66
Fees and expense reimbursements incurred from and due to the Dealer Manager	422		233		1,239		237		164		619
Fees and expense reimbursements incurred from and due to the Sponsor	7		—		7		—		—		—
Total fees and expense reimbursements incurred from and due to the Advisor and Dealer Manager	$	1,150	$	276	$	2,028	$	280	$	206	$	685

The Company is responsible for offering and related costs from the IPO, excluding selling commissions and dealer manager fees, up to a maximum of 2.0% of gross proceeds received from the IPO, measured at the end of the IPO. Offering costs, excluding selling commissions and dealer manager fees, in excess of the 2.0% cap as of the end of the IPO are the Advisor's responsibility. As of September 30, 2015, offering and related costs, excluding commissions and dealer manager fees, exceeded 2.0% of gross proceeds received from the IPO by $2.6 million.

After the general escrow break, the Advisor caps cumulative offering costs for the IPO, including selling commissions and dealer manager fees, incurred by the Company, net of unpaid amounts, to 15.0% of gross common stock proceeds during the offering period of the IPO. As of September 30, 2015, cumulative offering costs were $17.3 million. As of September 30, 2015, cumulative offering costs, net of unpaid amounts, were less than 15.0% of gross common stock proceeds.

17

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Fees and Participations Paid in Connection With the Operations of the Company

The Advisor receives an acquisition fee of 1.5% of the contract purchase price of each property acquired and 1.5% of the amount advanced for a loan or other investment. The Advisor is also reimbursed for services provided for which it incurs investment-related expense, or insourced expenses. Such insourced expenses may not exceed 0.5% of the contract purchase price of each acquired property and 0.5% of the amount advanced for a loan or other investment. Additionally, the Company reimburses the Advisor for third party acquisition expenses. The Company also reimburses the Advisor for legal expenses it or its affiliates incur in connection with the selection, evaluation and acquisition of assets, in an amount not to exceed 0.1% of the contract purchase price of each property or 0.1% of the amount advanced for each loan or other investment. Once the proceeds from the IPO have been fully invested, the aggregate amount of acquisition fees and any financing coordination fees (as described below) may not exceed 2.0% of the contract purchase price and the amount advanced for a loan or other investment for all the assets acquired. In no event will the total of all acquisition fees, acquisition expenses and any financing coordination fees payable with respect to a particular investment exceed 4.5% of the contract purchase price of the Company's portfolio to be measured at the close of the acquisition phase or 4.5% of the amount advanced for all loans or other investments.

If the Advisor provides services in connection with the origination or refinancing of any debt that the Company obtains and uses to acquire properties or to make other permitted investments, or that is assumed, directly or indirectly, in connection with the acquisition of properties, the Company will pay the Advisor a financing coordination fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations.

For its asset management services, the Company pays the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the board of directors) to the Advisor performance-based restricted, forfeitable partnership units of the OP designated as "Class B Units." The Class B Units are intended to be profit interests and will vest, and no longer be subject to forfeiture, at such time as any one of the following events occur: (1) the termination of the advisory agreement by an affirmative vote of a majority of the Company's independent directors without cause; (2) a listing of the Company's common stock on a national securities exchange; or (3) a transaction to which the Company or the OP is a party, as a result of which OP Units or the Company's common stock are or will be exchanged for or converted into the right, or the holders of such securities will otherwise be entitled, to receive cash, securities or other property or any combination thereof; provided that the Advisor, pursuant to the advisory agreement, is providing services to the Company immediately prior to the occurrence of an event of the type described therein (the "performance condition"). Such Class B Units will be forfeited immediately if the advisory agreement is terminated for any reason other than a termination without cause.

When and if approved by the board of directors, the Class B Units are expected to be issued to the Advisor quarterly in arrears pursuant to the terms of the limited partnership agreement of the OP. The number of Class B Units issued in any quarter is an amount equal to: (i) the excess of (A) the product of (y) 0.1875% multiplied by (z) the cost of the Company's assets (until the NAV pricing date, then the lower of the cost of assets and the fair value of the Company’s assets) over (B) any amounts payable as an oversight fee (as described below) for such calendar quarter; divided by (ii) the value of one share of common stock as of the last day of such calendar quarter, which is equal initially to $22.50 (the IPO price minus the selling commissions and dealer manager fees). The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the performance condition to be probable. The Advisor will receive distributions on unvested Class B Units equal to the distribution received on the Company's common stock. Such distributions on issued Class B Units will be expensed in the consolidated statements of operations and comprehensive loss until the performance condition is considered probable to occur. As of September 30, 2015, the Company's board of directors had approved the issuance of 1,457 Class B Units to the Advisor in connection with this arrangement.

Unless the Company contracts with a third party, the Company will pay the Property Manager a property management fee of 1.5% of gross revenues from the Company's single-tenant net leased properties and 2.5% of gross revenues from all other types of properties. The Company will also reimburse the Property Manager for property level expenses. If the Company contracts directly with third parties for such services, the Company will pay them customary market fees and will pay the Property Manager an oversight fee of up to 1.0% of the gross revenues of the property managed. In no event will the Company pay the Property Manager or any affiliates of the Property Manager both a property management fee and an oversight fee with respect to any particular property. Property management fees are recorded to operating fees to related party in the accompanying unaudited consolidated statements of operations and comprehensive loss.

18

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The Dealer Manager and its affiliates also provide other general professional services. The Advisor pays general and administrative expenses on behalf of the Company, for which, the Company subsequently reimburses the Advisor. These fees and reimbursements are included in general and administrative expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss.

The following table details amounts incurred, forgiven and payable in connection with the Company's operations-related services described above as of and for the period presented.

	Three Months Ended September 30,								Nine Months Ended				For the Period from April 24, 2014 (date of inception) to
	2015				2014				September 30, 2015				September 30, 2014				Payable as of
(In thousands)	Incurred		Forgiven		Incurred		Forgiven		Incurred		Forgiven		Incurred		Forgiven		September 30, 2015		December 31, 2014
One-time fees and reimbursements:
Acquisition fees	$	855	$	—	$	—	$	—	$	1,091	$	—	$	—	$	—	$	—	$	—
Acquisition cost reimbursements	285		—		—		—		364		—		—		—		—		—
Financing coordination fees	38		—		—		—		38		—		—		—		—		—
Ongoing fees and reimbursements:
Property management fees	15		—		—		—		15		3		—		—		15		—
Professional fees and reimbursements	81		—		—		—		277		—		—		—		12		—
Total related party operating fees and reimbursements	$	1,274	$	—	$	—	$	—	$	1,785	$	3	$	—	$	—	$	27	$	—

The Company reimburses the Advisor's costs of providing administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company's operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairments or other similar non-cash expenses and excluding any gain from the sale of assets for that period (the "2%/25% Limitation"), unless the Company's independent directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, in which case the excess amount may be reimbursed to the Advisor in subsequent periods. Additionally, the Company will reimburse the Advisor for personnel costs in connection with other services during the operational stage; however, the Company may not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives acquisition fees or real estate commissions or for persons serving as executive officers of the Company. No reimbursement was incurred from the Advisor for providing such services during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or during the period from April 24, 2014 (date of inception) to September 30, 2014. For the four preceding fiscal quarters, the Company's operating expenses exceeded the 2%/25% Limitation by $0.8 million. The Company's board of directors concluded that the expenses in excess of the 2%/25% Limitation were due to unusual and non-recurring factors caused by the Company's limited operating history and were, therefore, justified. No reimbursement of operating expenses in excess of the 2%/25% Limitation was made by the Advisor to the Company during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

In order to improve operating cash flows and the ability to pay distributions from operating cash flows, the Advisor may elect to waive certain fees. If the Advisor waives certain fees, cash flow from operations that would have been paid to the Advisor may be available to pay distributions to stockholders. The fees that may be forgiven are not deferrals and accordingly, will not be paid to the Advisor in cash. In certain instances, to improve the Company's working capital, the Advisor may elect to absorb a portion of the Company's general and administrative costs. No expenses were absorbed by the Advisor during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

19

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Fees and Participations Paid in Connection with a Listing or the Liquidation of the Company's Real Estate Assets

The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of the Company's total return to stockholders, payable annually in arrears, such that for any year in which the Company's total return on stockholder's capital exceeds 6.0% per annum, the Advisor will be entitled to 15.0% of the excess total return but not to exceed 10.0% of the aggregate total return for such year. This fee will be payable only upon the sale of assets, distributions or other event which results in the return on stockholder's capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

The Company will pay the Advisor a real estate commission on the sale of property, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third party broker is also involved; provided, however, that in no event may the real estate commissions paid to the Advisor, its affiliates and agents and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission. Real estate commissions will only be payable to the Advisor if the Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. No such fees were incurred during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

The Company will pay the Special Limited Partner a subordinated participation in the net sales proceeds of the sale of real estate assets of 15.0% of remaining net sale proceeds after return of capital contributions to investors plus payment to investors of a 6.0% cumulative, pre-tax non-compounded annual return on the capital contributed by investors. The Special Limited Partner will not be entitled to the subordinated participation in the net sales proceeds unless investors have received a return of their capital plus a return equal to a 6.0% cumulative non-compounded annual return on their capital contributions. No participation in net sales proceeds was incurred during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

If the Company's shares of common stock are listed on a national securities exchange, the Special Limited Partner will receive a subordinated incentive listing distribution from the OP equal to 15.0% of the amount by which the Company's market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Company cannot assure that it will provide this 6.0% annual return but the Special Limited Partner will not be entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distribution was incurred during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014. Neither the Special Limited Partner nor any of its affiliates can earn both the subordinated participation in the net sales proceeds and the subordinated listing distribution.

Upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, the Special Limited Partner will be entitled to receive distributions from the OP equal to 15% of the amount by which the sum of the Company's market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to an annual 6.0% cumulative, pre-tax, non-compounded annual return to investors. The Special Limited Partner may elect to defer its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.

Note 8 — Economic Dependency

Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common ownership with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, the sale of shares of the Company's common stock available for issue, transfer agency services, as well as other administrative responsibilities for the Company including accounting services, transaction management services and investor relations.

As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

20

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Note 9 — Equity-Based Compensation

Restricted Share Plan

The Company has an employee and director incentive restricted share plan (the "RSP"), which provides for the automatic grant of 1,333 restricted shares of common stock to each of the independent directors, without any further action by the Company's board of directors or the stockholders, after initial election to the board of directors and after each annual stockholder's meeting, with such shares vesting annually beginning with the one year anniversary of initial election to the board of directors and the date of the next annual meeting, respectively. Restricted shares issued to independent directors will vest over a five-year period in increments of 20.0% per annum. The RSP provides the Company with the ability to grant awards of restricted shares to the Company's directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company. The total number of common shares granted under the RSP may not exceed 5.0% of the Company's outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 6.3 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).

Restricted share awards entitle the recipient to receive common shares from the Company under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives. Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient's employment or other relationship with the Company. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in common shares shall be subject to the same restrictions as the underlying restricted shares. The following table reflects restricted share award activity for the period presented:

	Number of Common Shares	Weighted-Average Issue Price
Unvested December 31, 2014	2,666	$	22.50
Granted	2,666	22.50
Vested	—	—
Forfeitures	—	—
Unvested, September 30, 2015	5,332	$	22.50

As of September 30, 2015, the Company had $0.1 million of unrecognized compensation cost related to unvested restricted share award grants under the Company's RSP. That cost is expected to be recognized over a weighted average period of 3.8 years. The fair value of the restricted shares is being expensed on a straight-line basis over the service period of five years. Compensation expense related to restricted shares was approximately $6,000 and $12,000 for the three and nine months ended September 30, 2015, respectively. Compensation expense related to restricted shares was approximately $1,000 for the three months ended September 30, 2014 and the period from April 24, 2014 (date of inception) to September 30, 2014. Compensation expense related to restricted shares is recorded as general and administrative expense in the accompanying unaudited consolidated statements of operations and comprehensive loss.

21

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Note 10 — Net Loss Per Share

The following is a summary of the basic and diluted net loss per share computation for the three and nine months ended September 30, 2015, the three months ended September 30, 2014 and for the period from April 24, 2014 (date of inception) to September 30, 2014:

	Three Months Ended September 30,						Nine Months Ended September 30,			For the Period from April 24, 2014 (date of inception) to
(In thousands)	2015			2014			2015			September 30, 2014
Net loss	$	(1,561	)	$	(28	)	$	(2,481	)	$	(44	)
Basic and diluted weighted average shares outstanding	4,614,153			8,888			2,291,631			7,389
Basic and diluted net loss per share	$	(0.34	)	$	(3.15	)	$	(1.08	)	$	(5.95	)

The Company had the following potentially dilutive securities as of September 30, 2015 and 2014, which were excluded from the calculation of diluted loss per share attributable to stockholders as their effect would have been antidilutive:

	September 30,
	2015	2014
Unvested restricted shares	5,332	2,666
OP Units	90	—
Class B Units	1,457	—
Total potentially dilutive securities	6,879	2,666

Note 11 — Segment Reporting

During the three and nine months ended September 30, 2015, the Company operated in three reportable business segments for management and internal financial reporting purposes: medical office buildings, triple-net leased healthcare facilities and seniors housing — operating properties. During the three months ended September 30, 2014 and the period from April 24, 2014 (date of inception) to September 30, 2014, the Company did not own any properties and had not commenced real estate operations.

These operating segments are the segments of the Company for which separate financial information is available and for which segment results are evaluated by the Company's executive officers in deciding how to allocate resources and in assessing performance. The medical office building segment primarily consists of MOBs leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses. The triple-net leased healthcare facilities segment primarily consists of investments in seniors housing communities, hospitals, inpatient rehabilitation facilities and skilled nursing facilities under long-term leases, under which tenants are generally responsible to directly pay property-related expenses. The SHOP segment consists of direct investments in seniors housing communities, primarily providing assisted living, independent living and memory care services, which the Company operates through engaging independent third-party managers. The Company evaluates performance of the combined properties in each segment based on net operating income. Net operating income is defined as total revenues less property operating and maintenance expenses. There are no intersegment sales or transfers. The Company uses net operating income to evaluate the operating performance of real estate investments and to make decisions concerning the operation of the properties. The Company believes that net operating income is useful to investors in understanding the value of income-producing real estate. Net income (loss) is the GAAP measure that is most directly comparable to net operating income; however, net operating income should not be considered as an alternative to net income as the primary indicator of operating performance as it excludes certain items such as operating fees to the Advisor and Property Manager, acquisition and transaction related expenses, general and administrative expenses, depreciation and amortization expense, interest expense and income tax expense. Additionally, net operating income as defined by the Company may not be comparable to net operating income as defined by other REITs or companies.

22

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

The following tables reconcile the segment activity to consolidated net loss for the three and nine months ended September 30, 2015.

	Three Months Ended September 30, 2015									Nine Months Ended September 30, 2015
(In thousands)	Medical Office Buildings		Triple-Net Leased Healthcare Facilities		Seniors Housing — Operating Properties		Consolidated			Medical Office Buildings		Triple-Net Leased Healthcare Facilities		Seniors Housing — Operating Properties		Consolidated
Revenues:
Rental income	$	690	$	43	$	292	$	1,025		$	860	$	43	$	292	$	1,195
Operating expense reimbursements	140		—		—		140			173		—		—		173
Resident services and fee income	—		—		19		19			—		—		19		19
Total revenues	830		43		311		1,184			1,033		43		311		1,387
Property operating and maintenance	184		—		198		382			220		—		198		418
Net operating income	$	646	$	43	$	113	802			$	813	$	43	$	113	969
Operating fees to related party							(15		)							(15		)
Acquisition and transaction related							(1,415		)							(1,888		)
General and administrative							(440		)							(975		)
Depreciation and amortization							(464		)							(543		)
Interest expense							(25		)							(25		)
Income tax expense							(4		)							(4		)
Net loss							$	(1,561	)							$	(2,481	)

The following table reconciles the segment activity to consolidated total assets as of the periods presented:

	September 30,		December 31,
(In thousands)	2015		2014
	(Unaudited)
ASSETS
Investments in real estate, net:
Medical office buildings	$	57,464	$	—
Triple-net leased healthcare facilities	4,761		—
Seniors housing — operating properties	11,494		—
Total investments in real estate, net	73,719		—
Cash	48,330		187
Restricted cash	45		—
Receivable for sale of common stock	930		—
Prepaid expenses and other assets	1,420		59
Deferred costs, net	115		—
Total assets	$	124,559	$	246

23

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Note 12 — Commitments and Contingencies

The Company has entered into an operating lease agreement related to a certain acquisition under a leasehold interest arrangement. The following table reflects the minimum base cash rental payments due from the Company over the next five years and thereafter under this arrangement. These amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes among other items.

(In thousands)	Future Minimum Base Rental Payments
October 1, 2015 — December 31, 2015	$	8
2016	32
2017	33
2018	34
2019	35
Thereafter	106
	$	248

Total rental expense from the Company's operating lease was approximately $6,000 during the three and nine months ended September 30, 2015. The Company did not own any real estate investments and therefore had no operating lease agreements or related expense during the the three months ended September 30, 2014 or for the period from April 24, 2014 (date of inception) to September 30, 2014.

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

Note 13 — Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for the following transactions:

Sales of Common Stock

As of October 31, 2015, the Company had 6.3 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, from total gross proceeds from the IPO and the DRIP of $155.7 million.

Total capital raised to date, including shares issued under the DRIP, is as follows:

Source of Capital (In thousands)	Inception to September 30, 2015		October 1, 2015 to October 31, 2015		Total
Common stock	$	138,454	$	17,205	$	155,659

24

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

Acquisitions

The following table presents certain information about the properties that the Company acquired from October 1, 2015 to November 6, 2015:

	Number of Properties	Rentable Square Feet	Base Purchase Price (1)
			(In thousands)
Portfolio, September 30, 2015	13	273,620	$	72,719
Acquisitions	2	52,663	12,275
Portfolio, November 6, 2015	15	326,283	$	84,994

________________________

(1) Contract purchase price, excluding acquisition fees of $1.3 million and other acquisition related costs.

Sponsor Transaction

On November 9, 2015, ARC advised the Company that ARC and Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, “Apollo”) have mutually agreed to terminate an agreement, dated as of August 6, 2015, pursuant to which Apollo would have purchased a controlling interest in a newly formed company that would have owned a majority of the ongoing asset management business of AR Capital, including the Advisor and the Property Manager.  The termination has no effect on the Company’s current management team.

Also on November 9, 2015, RCS Capital Corporation (“RCS Capital”), the parent of the Dealer Manager and a company under common control with ARC, and Apollo announced that they have mutually agreed to amend an agreement, dated as of August 6, 2015, pursuant to which RCS Capital will sell its wholesale distribution business, including the Dealer Manager, to an affiliate of Apollo. This transaction is subject to customary closing conditions and regulatory approvals and is expected to close early in the first quarter of 2016. American National Stock Transfer, LLC and RCS Advisory Services, LLC will remain as subsidiaries of RCS Capital.

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

The following discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements of American Realty Capital Healthcare Trust III, Inc. and the notes thereto. As used herein, the terms the "Company," "we," "our" and "us" refer to American Realty Capital Healthcare Trust III, Inc., a Maryland corporation, including, as required by context, American Realty Capital Healthcare III Operating Partnership, L.P., a Delaware limited partnership, which we refer to as the "OP," and its subsidiaries. The Company is externally managed by American Realty Capital Healthcare III Advisors, LLC (our "Advisor"), a Delaware limited liability company. Capitalized terms used herein, but not otherwise defined, have the meaning ascribed to those terms in "Part I — Financial Information" included in the notes to the unaudited consolidated financial statements and contained herein.

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

• We have a limited operating history and no established financing sources, which makes our future performance difficult to predict.

• Certain of our executive officers and directors are also officers, managers and/or holders of a direct or indirect controlling interest in American Realty Capital Healthcare III Advisors, LLC (the "Advisor"), our dealer manager, Realty Capital Securities, LLC (the "Dealer Manager"), and other entities affiliated with the parent of our sponsor, AR Capital, LLC ("ARC"). As a result, certain of our executive officers and directors, our Advisor and its affiliates face conflicts of interest, including significant conflicts created by our Advisor's compensation arrangements with us and other investment programs advised by affiliates of ARC and conflicts in allocating time among these investment programs and us. These conflicts could result in unanticipated actions.

• Because investment opportunities that are suitable for us may also be suitable for other investment programs advised by affiliates of ARC, our Advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders.

• No public market currently exists, or may ever exist, for shares of our common stock which are, and may continue to be, illiquid.

• Our initial public offering of common stock (the "IPO"), which commenced on August 20, 2014, is a blind pool offering and stockholders may not have the opportunity to evaluate all of our investments before they purchase our common stock, thus making investment in our common stock more speculative.

• We focus on acquiring a diversified portfolio of healthcare-related assets located in the United States and are subject to risks inherent in concentrating investments in the healthcare industry.

• The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could result in the inability of tenants to make lease payments to us.

• We are depending on our Advisor to select investments and conduct our operations. If we and our Advisor are unable to find suitable investments, then we may not be able to achieve our investment objectives or pay distributions. Adverse changes in the financial condition of our Advisor or our relationship with our Advisor could adversely affect us.

• We may be unable to pay or maintain cash distributions or increase distributions over time.

• We are obligated to pay fees, which may be substantial, to our Advisor and its affiliates.

• We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants.

• Increases in interest rates could increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.

26

• We are permitted to pay distributions from unlimited amounts of any source. Until substantially all of the proceeds from our IPO are invested, we may use net proceeds from our IPO and borrowings to fund distributions until we have sufficient cash flows from operations. There are no established limits on the amount of net proceeds and borrowings that we may use to fund distribution payments, except in accordance with our organizational documents and Maryland law.

• Any distributions may reduce the amount of capital we ultimately invest in properties and other permitted investments and negatively impact the value of our stockholder's investment.

• We may not generate cash flows in the future sufficient to pay our distributions to stockholders and, as such, we may be forced to source distributions from borrowings, which may be at unfavorable rates, or depend on our Advisor to waive reimbursement of certain expenses and fees to fund our operations.

• We are subject to risks associated with any dislocations or liquidity disruptions that may exist or occur in the credit markets of the United States from time to time.

• We may fail to qualify, or continue to qualify, to be treated as a real estate investment trust for U.S. federal income tax purposes ("REIT"), which would result in higher taxes, may adversely affect our operations and would reduce the value of an investment in our common stock and the cash available for distributions.

• We may be deemed to be an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and thus subject to regulation under the Investment Company Act.

• Commencing on the net asset value ("NAV") pricing date, the offering price and repurchase price for our shares, including shares sold pursuant to our distribution reinvestment plan ("DRIP"), will be based on NAV, which may not accurately reflect the value of our assets.

Overview

We were incorporated on April 24, 2014 as a Maryland corporation that intends to qualify as a REIT beginning with our taxable year ending December 31, 2015. On August 20, 2014, we commenced our ongoing IPO on a "reasonable best efforts" basis of up to 125.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $3.1 billion, pursuant to a registration statement on Form S-11 (File No. 333-196302) (as amended, the "Registration Statement"), filed with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended. The Registration Statement also covers up to 26.3 million shares of common stock available pursuant to the DRIP under which common stockholders may elect to have their distributions reinvested in additional shares of common stock.

On February 11, 2015, we received and accepted aggregate subscriptions in excess of the minimum offering amount for the IPO of $2.0 million in shares of common stock, broke general escrow and issued shares to our initial investors, who were admitted as stockholders. As of September 30, 2015, we had 5.6 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO of $138.5 million. Until the NAV pricing date (as described below) the per share purchase price in our IPO will be at $25.00 per share, subject to certain volume and other discounts, and shares issued under the DRIP will be equal to $23.75 per share, which is equal to 95% of the offering price in our IPO. Beginning with the NAV pricing date, the per share price for shares in our IPO and under the DRIP will vary quarterly and will be equal to our NAV, as determined by our Advisor, plus applicable commissions and fees in the case of our IPO. We reserve the right to reallocate shares covered in the Registration Statement between our IPO and the DRIP. The NAV pricing date means the date we first publish an estimated per share NAV, which will be on or prior to July 11, 2017, which is 150 days following the second anniversary of the date that we broke escrow in our IPO.

We were formed to primarily acquire a diversified portfolio of healthcare-related assets including medical office buildings ("MOB"), seniors housing communities and other healthcare-related facilities for investment purposes. All such properties may be acquired and operated by us alone or jointly with another party. We may also originate or acquire first mortgage loans secured by real estate. We purchased our first property and commenced real estate operations in March 2015. As of September 30, 2015, we owned 13 properties consisting of 273,620 rentable square feet.

Substantially all of our business is conducted through our OP. We are the sole general partner and hold substantially all of the units of limited partner interests in the OP ("OP Units"). Additionally, the Advisor contributed $2,020 to the OP in exchange for 90 OP Units, which represents a nominal percentage of the aggregate OP ownership. A holder of limited partner interests has the right to convert OP Units for the cash value of a corresponding number of shares of our common stock or, at our option, a corresponding number of shares of our common stock, as allowed by the limited partnership agreement of the OP. The remaining rights of the limited partner interests in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.

27

We have no direct employees. The Advisor has been retained to manage our affairs on a day-to-day basis. We also have retained American Realty Capital Healthcare III Properties, LLC (the "Property Manager") to serve as our property manager. Our Dealer Manager serves as the dealer manager of our IPO. The Advisor, the Property Manager and the Dealer Manager are under common control with ARC, the parent of our sponsor, American Realty Capital VII, LLC (the "Sponsor"), as a result of which they are related parties, and each of which will receive compensation, fees and other expense reimbursements from us for services related to our IPO and the investment and management of our assets. The Advisor, Property Manager and Dealer Manager will receive fees during our offering, acquisition, operational and liquidation stages.

Significant Accounting Estimates and Critical Accounting Policies

Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates and critical accounting policies include:

Offering and Related Costs

Offering and related costs include all expenses incurred in connection with our IPO. Offering costs (other than selling commissions and the dealer manager fees) include costs that may be paid by the Advisor, the Dealer Manager or their affiliates on our behalf. These costs include but are not limited to (i) legal, accounting, printing, mailing, and filing fees; (ii) escrow service related fees; (iii) reimbursement of the Dealer Manager for amounts it may pay to reimburse the itemized and detailed due diligence expenses of broker-dealers; and (iv) reimbursement to the Advisor for a portion of the costs of its employees and other costs in connection with preparing supplemental sales materials and related offering activities. We are obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on our behalf, provided that the Advisor is obligated to reimburse us to the extent organization and offering costs (excluding selling commissions and the dealer manager fee) incurred by us in our IPO exceed 2.0% of gross offering proceeds in our IPO. As a result, these costs are only our liability to the extent aggregate selling commissions, the dealer manager fee and other organization and offering costs do not exceed 12.0% of the gross proceeds determined at the end of our IPO.

Revenue Recognition

Our rental income is primarily related to rent received from tenants in MOBs and triple-net leased healthcare facilities and from residents in seniors housing — operating properties ("SHOP") held using a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA"). Rent from tenants is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease. Because many of the leases provide for rental increases at specified intervals, accounting principles generally accepted in the United States ("GAAP") require us to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When we acquire a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. Rental income from residents in our SHOP operating segment is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. We defer the revenue related to lease payments received from tenants and residents in advance of their due dates.

We continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, we record an increase in the allowance for uncollectible accounts or record a direct write-off of the receivable in the consolidated statements of operations and comprehensive loss.

Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.

Resident services and fee income relates to ancillary services performed for residents in our SHOPs. Fees for ancillary services are recorded in the period in which the services are performed.

Real Estate Investments

Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred.

28

We evaluate the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.

In business combinations, we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets may include the value of in-place leases and above- and below-market leases. In addition, any assumed mortgages receivable or payable and any assumed or issued noncontrolling interests are recorded at their estimated fair values.

The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases is recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and our estimate of the fair market lease rate for the corresponding in-place lease, measured over the remaining term of the lease including any below-market fixed rate renewal options for below-market leases.

In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates.

In allocating the fair value to non-controlling interests, amounts are recorded based on the fair value of units issued at the date of acquisition, as determined by the terms of the applicable agreement.

In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including real estate valuations prepared by independent valuation firms. We also consider information and other factors including market conditions, the industry that the tenant operates in, characteristics of the real estate, i.e. location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business.

We are required to present the operations related to properties that have been sold or properties that are intended to be sold as discontinued operations in the consolidated statements of operations and comprehensive loss for all periods presented to the extent the disposal of a component represents a strategic shift that has or will have a major effect on our operations and financial results. Properties that are intended to be sold are to be designated as "held for sale" on the consolidated balance sheet at the lesser of the carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale. Properties are no longer depreciated when they are classified as held for sale.

Depreciation and Amortization

We are required to make subjective assessments as to the useful lives of the components of our real estate investments for purposes of determining the amount of depreciation to record on an annual basis. These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our real estate investments, we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

Capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.

Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.

The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.

The assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining term of the respective mortgages.

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Impairment of Long Lived Assets

When circumstances indicate that the carrying value of a property may not be recoverable, we review the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued revised guidance relating to revenue recognition. Under the revised guidance, an entity is required to recognize revenue when it transfers 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 revised guidance was to become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption was not permitted under GAAP. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. In July 2015, the FASB deferred the effective date of the revised guidance by one year to annual reporting periods beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as of the original effective date. We have not yet selected a transition method and are currently evaluating the impact of this new guidance.

In January 2015, the FASB issued updated guidance that eliminates from GAAP the concept of an event or transaction that is unusual in nature and occurs infrequently being treated as an extraordinary item. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Any amendments may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We have elected to adopt this new guidance as of September 30, 2015. We have assessed the impact from the adoption of this revised guidance and have determined that there will be no impact to our financial position, results of operations and cash flows.

In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are variable interest entities ("VIEs") or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. If we decide to early adopt the revised guidance in an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes the interim period. We have not yet selected a transition method and are currently evaluating the impact of this new guidance.

In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendments require that debt issuance 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. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not previously been issued. If we decide to early adopt the revised guidance in an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes the interim period. We are currently evaluating the impact of this new guidance.

In September 2015, the FASB issued an update that eliminates the requirement to adjust provisional amounts from a business combination and the related impact on earnings by restating prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of measurement period adjustments on current and prior periods, including the prior period impact on depreciation, amortization and other income statement items and their related tax effects, shall be recognized in the period the adjustment amount is determined. The cumulative adjustment would be reflected within the respective financial statement line items affected. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. We have elected to adopt this new guidance as of September 30, 2015. The adoption of this guidance had no impact on our consolidated financial position, results of operations or cash flows.

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Properties

The following table includes information about the properties we own as of September 30, 2015:

Property/Portfolio	Acquisition Date	Number of Properties	Rentable Square Feet	Occupancy	Remaining Lease Term	Base Purchase Price (1)
						(In thousands)
Medical Office Buildings:
DaVita Bay Breeze — Largo, FL	Mar. 2015	1	7,247	100.0%	11.7	$	1,650
RAI Clearwater — Clearwater, FL	Apr. 2015	1	14,936	100.0%	9.2	4,750
DaVita Hudson — Hudson, FL	May 2015	1	8,984	100.0%	9.0	2,725
Rockwall Medical Plaza — Rockwall, TX	Jun. 2015	1	18,176	100.0%	4.5	6,639
Decatur Medical Office Building — Decatur, GA	Jul. 2015	1	20,800	100.0%	7.1	5,100
Buckeye Health Center — Cleveland, OH	Aug. 2015	1	25,070	100.0%	4.6	5,550
Philip Professional Center — Lawrenceville, GA	Aug. 2015	2	31,483	93.9%	12.9	9,000
Illinois CancerCare Clinic — Galesburg, IL	Aug. 2015	1	9,211	100.0%	8.9	3,400
Galesburg VA Outpatient Clinic — Galesburg, IL	Aug. 2015	1	9,979	100.0%	7.8	2,630
Woodlake Office Center - Woodbury, MN	Sep. 2015	1	36,375	100.0%	7.0	14,900
Total Medical Office Buildings:		11	182,261	98.9%	8.1	56,344
Triple-Net Leased Healthcare Facility(2):
Arcadian Cove Assisted Living — Richmond, KY	Aug. 2015	1	34,659	95.9%	14.9	4,775
Seniors Housing — Operating Property:
Cedarhurst of Collinsville — Collinsville, IL	Aug. 2015	1	56,700	95.5%	N/A	11,600
Portfolio, September 30, 2015		13	273,620			$	72,719

_______________

(1) Contract purchase price, excluding acquisition related costs.

(2) Revenues for our triple-net leased healthcare facility generally consist of fixed rental amounts (subject to annual contractual escalations) received from our tenant in accordance with the applicable lease terms and do not vary based on the underlying operating performance of the property. Therefore, while occupancy rates may affect the profitability of our tenant's operations, they do not have a direct impact on our revenues or financial results. Occupancy statistics for our triple-net leased healthcare facility are compiled through reports from the tenant and have not been independently validated by us.

N/A Not applicable

Results of Operations

We were incorporated on April 24, 2014. We purchased our first property and commenced our real estate operations in March 2015. Accordingly, our results of operations for the three and nine months ended September 30, 2015 as compared to the three months ended September 30, 2014 and the period from April 24, 2014 (date of inception) to September 30, 2014 reflect significant increases in most categories.

Comparison of the Three Months EndedSeptember 30, 2015 to the Three Months EndedSeptember 30, 2014

Rental Income

Rental income for the three months ended September 30, 2015 was $1.0 million. As of September 30, 2015, we owned 13 properties, with consolidated annualized rental income of $7.5 million. We did not own any properties during the three months ended September 30, 2014 and therefore had no rental income during such period.

Operating Expense Reimbursements

Operating expense reimbursements were $0.1 million for the three months ended September 30, 2015. Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are generally directly responsible for all operating costs of the respective properties. We did not own any properties during the three months ended September 30, 2014 and therefore had no operating expense reimbursement income during such period.

Resident Services and Fee Income

Resident services and fee income of approximately $19,000 for the three months ended September 30, 2015 relates to services offered to residents in our SHOP depending on the level of care required, as well as fees associated with other ancillary services. We did not own any SHOPs and therefore did not have any resident services and fee income during the three months ended September 30, 2014.

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Property Operating and Maintenance Expenses

Property operating and maintenance expenses were $0.4 million for the three months ended September 30, 2015. These costs primarily relate to the costs associated with our properties, including real estate taxes, property insurance, utilities, repairs, maintenance and unaffiliated third party property management fees, as well as costs relating to caring for the residents of our SHOP. We did not own any properties during the three months ended September 30, 2014 and therefore had no property operating and maintenance expenses during such period.

Operating Fees to Related Party

Our Property Manager is paid a fee for property management services for managing our properties on a day-to-day basis. We incurred approximately $15,000 in property management fees from our Property Manager for the three months ended September 30, 2015. We did not own any properties and therefore incurred no property management fees during the three months ended September 30, 2014. Property management fees will increase in direct correlation with gross revenues.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses of $1.4 million for the three months ended September 30, 2015 related to our acquisition of nine properties with an aggregate contract purchase price of $57.0 million. We did not purchase any properties and therefore had no acquisition and transaction related expenses during the three months ended September 30, 2014.

General and Administrative Expenses

General and administrative expenses were $0.4 million for the three months ended September 30, 2015, compared to approximately $28,000 for the three months ended September 30, 2014. Professional fees, board of director costs and insurance expense increased $0.4 million in order to support our real estate portfolio. We did not own any properties and therefore had nominal general and administrative expenses during the three months ended September 30, 2014.

Depreciation and Amortization Expense

Depreciation and amortization expenses of $0.5 million for the three months ended September 30, 2015 related to our acquisition of 13 properties during the nine months ended September 30, 2015, with an aggregate contract purchase price of $72.7 million. The purchase price of acquired properties is allocated to tangible and identifiable intangible assets and liabilities and depreciated or amortized over their estimated useful lives. We did not own any properties during the three months ended September 30, 2014 and therefore had no depreciation and amortization expense during such period.

Interest Expense

Interest expense of approximately $25,000 for the three months ended September 30, 2015 related to our mortgage note payable balance of $5.1 million as of September 30, 2015. We did not have any debt and therefore did not have interest expense during the three months ended September 30, 2014.

Income Tax Expense

Income tax expense of approximately $4,000 for the three months ended September 30, 2015 related to various state income tax liabilities. We did not own any properties as of September 30, 2014 and therefore had no income tax expense during the three months ended September 30, 2014.

Comparison of the Nine Months EndedSeptember 30, 2015 to the Period from April 24, 2014 (date of inception) to September 30, 2014

Rental Income

Rental income for the nine months ended September 30, 2015 was $1.2 million. As of September 30, 2015, we owned 13 properties, with consolidated annualized rental income of $7.5 million. We did not own any properties during the period from April 24, 2014 (date of inception) to September 30, 2014 and therefore had no rental income during such period.

Operating Expense Reimbursements

Operating expense reimbursements were $0.2 million for the nine months ended September 30, 2015. Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are generally directly responsible for all operating costs of the respective properties. We did not own any properties during the period from April 24, 2014 (date of inception) to September 30, 2014 and therefore had no operating expense reimbursement income during such period.

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Resident Services and Fee Income

Resident services and fee income of approximately $19,000 for the nine months ended September 30, 2015 relates to services offered to residents in our SHOP depending on the level of care required, as well as fees associated with other ancillary services. We did not own any SHOPs and therefore did not have any resident services and fee income during the the period from April 24, 2014 (date of inception) to September 30, 2014.

Property Operating and Maintenance Expenses

Property operating and maintenance expenses were $0.4 million for the nine months ended September 30, 2015. These costs primarily relate to the costs associated with our properties, including real estate taxes, property insurance, utilities, repairs, maintenance and unaffiliated third party property management fees, as well as costs related to caring for residents of our SHOP. We did not own any properties during the period from April 24, 2014 (date of inception) to September 30, 2014 and therefore had no property operating and maintenance expenses during such period.

Operating Fees to Related Party

Our Property Manager is paid a fee for property management services for managing our properties on a day-to-day basis. We incurred approximately $15,000 in property management fees from our Property Manager for the nine months ended September 30, 2015. We did not own any properties and therefore incurred no property management fees during the period from April 24, 2014 (date of inception) to September 30, 2014. Property management fees will increase in direct correlation with gross revenues.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses of $1.9 million for the nine months ended September 30, 2015 related to our acquisition of 13 properties with an aggregate contract purchase price of $72.7 million. We did not purchase any properties and therefore had no acquisition and transaction related expenses during the period from April 24, 2014 (date of inception) to September 30, 2014.

General and Administrative Expenses

General and administrative expenses were $1.0 million for the nine months ended September 30, 2015 compared to approximately $44,000 for the period from April 24, 2014 (date of inception) to September 30, 2014. Professional fees, board of director costs and insurance expense increased $0.9 million in order to support our real estate portfolio. We did not own any properties and therefore had nominal general and administrative expenses during the period from April 24, 2014 (date of inception) to September 30, 2014.

Depreciation and Amortization Expense

Depreciation and amortization expenses of $0.5 million for the nine months ended September 30, 2015 related to our acquisition of 13 properties during the nine months ended September 30, 2015, with an aggregate contract purchase price of $72.7 million. The purchase price of acquired properties is allocated to tangible and identifiable intangible assets and liabilities and depreciated or amortized over their estimated useful lives. We did not own any properties during the period from April 24, 2014 (date of inception) to September 30, 2014 and therefore had no depreciation and amortization expense during such period.

Interest Expense

Interest expense of approximately $25,000 for the nine months ended September 30, 2015 related to our mortgage note payable balance of $5.1 million as of September 30, 2015. We did not have any debt and therefore did not have interest expense during the period from April 24, 2014 (date of inception) to September 30, 2014.

Income Tax Expense

Income tax expense of approximately $4,000 for the nine months ended September 30, 2015 related to various state income tax liabilities. We did not own any properties as of September 30, 2014 and therefore had no income tax expense during the period from April 24, 2014 (date of inception) to September 30, 2014.

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Cash Flows for the Nine Months EndedSeptember 30, 2015

During the nine months ended September 30, 2015, net cash used in operating activities was $1.7 million. The level of cash flows used in or provided by operating activities is affected by the volume of acquisition activity, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash flows used in operating activities during the nine months ended September 30, 2015 included $1.9 million of acquisition and transaction related costs. Cash outflows related to a net loss adjusted for non-cash items of $1.9 million (net loss of $2.5 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, amortization of deferred financing costs, amortization of mortgage premiums and equity based compensation of $0.5 million), an increase in prepaid expenses and other assets of $0.5 million due to prepaid real estate taxes and property insurance as well as increases in rent and other receivables and unbilled receivables recorded in accordance with straight-line basis accounting and a $45,000 increase in restricted cash. These cash outflows were partially offset by an increase in accounts payable and accrued expenses of $0.5 million related to professional fees, real estate taxes and property operating expenses for our MOBs and SHOP and a $0.3 million increase in deferred rent.

The net cash used in investing activities during the nine months ended September 30, 2015 of $68.4 million included $67.6 million to acquire 13 properties as well as $0.9 million in deposits for a future potential real estate acquisition.

Net cash provided by financing activities of $118.2 million during the nine months ended September 30, 2015 consisted primarily of proceeds from the sale of common stock of $136.4 million, which was partially offset by financing costs of $0.1 million, offering costs of $15.8 million, distributions to stockholders of $1.0 million and repayments to a related party of $1.2 million previously received to fund offering costs.

Cash flows for the Period from April 24, 2014 (date of inception) to September 30, 2014

During the period from April 24, 2014 (date of inception) to September 30, 2014, net cash used in operating activities was approximately $18,000, primarily related to a net loss adjusted for non cash items of approximately $43,000 (net loss of approximately $44,000 offset by share based compensation expense of approximately $1,000). This cash outflow was offset by an increase of approximately $25,000 in accounts payable and accrued expenses related to professional fees.

Net cash provided by financing activities of approximately $19,000 during the period from April 24, 2014 (date of inception) to September 30, 2014 consisted primarily of advances from a related party of $0.8 million to fund the payment of third party offering costs and net proceeds from the sale of common stock of $0.2 million. These cash inflows were offset by $1.0 million of payments for offering costs.

Liquidity and Capital Resources

As of September 30, 2015, we had cash of $48.3 million. We expect cash flows from operations and the sale of common stock to be used primarily to invest in real estate, pay debt service, pay operating expenses and pay stockholder distributions.

In February 2015, we had raised proceeds sufficient to break escrow in connection with our IPO. We received and accepted aggregate subscriptions in excess of the minimum $2.0 million, broke general escrow and issued shares of common stock to our initial investors, who were simultaneously admitted as stockholders. As of September 30, 2015, we had 5.6 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO of $138.5 million. Proceeds from our IPO will be applied to the investment in properties and the payment or reimbursement of selling commissions and other fees and expenses related to our IPO. We will experience a relative increase in liquidity as we receive additional subscriptions for shares and a relative decrease in liquidity as we spend net offering proceeds in connection with the acquisition and operation of our properties or the payment of distributions.

We acquired our first property and commenced real estate operations in March 2015. As of September 30, 2015, we owned 13 properties with an aggregate purchase price of $72.7 million. Our principal demands for cash will be for acquisition costs, including the purchase price of any properties, loans and securities we acquire, improvement costs, the payment of our operating and administrative expenses and distributions to our stockholders. Generally, we will fund our acquisitions from the net proceeds of our IPO. We intend to acquire our assets with cash and mortgage or other debt, but we also may acquire assets free and clear of permanent mortgage or other indebtedness by paying the entire purchase price for the asset in cash or in OP Units, or any mix thereof.

We expect to fund our future short-term operating liquidity requirements through a combination of cash on hand, proceeds from our IPO, net cash provided by our current property operations and the operations of properties to be acquired in the future and secured mortgage financings. Once we have used all the proceeds from our IPO to acquire properties, management expects that cash flow from our properties will be sufficient to fund operating expenses and the payment of our monthly distributions. Other potential future sources of capital include proceeds from secured and unsecured financings from banks or other lenders, proceeds from public and private offerings, proceeds from the sale of properties and undistributed funds from operations.

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We intend to make reserve allocations as necessary to aid our objective of preserving capital for our investors by supporting the maintenance and viability of properties we acquire. If reserves or other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional funds by borrowing, refinancing properties or liquidating our investment in one or more properties. There is no assurance that such funds will be available, or, if available, that the terms will be acceptable to us.

We expect to utilize proceeds from our IPO and proceeds from secured financings to complete future property acquisitions. Specifically, we may incur mortgage debt and pledge all or some of our properties as security for that debt to obtain funds to acquire additional properties. We may borrow if we need funds to satisfy the REIT tax qualification requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income, as calculated in accordance with GAAP, determined without regard to the deduction for dividends paid and excluding net capital gain). We also may borrow if we otherwise deem it necessary or advisable to assure that we maintain our qualification as a REIT.

We expect to use debt financing as a source of capital. Under our charter, the maximum amount of our total indebtedness may not exceed 300% of our total "net assets" (as defined by the North American Securities Administrators Association ("NASAA") Statement of Policy Regarding Real Estate Investment Trusts, ("NASAA REIT Guidelines") as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of our investments. However, we may exceed that limit if approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for exceeding such limit. In addition, it is currently our intention to limit our aggregate borrowings to 45% of the aggregate fair market value of our assets, unless borrowing a greater amount is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for borrowing such a greater amount. This limitation, calculated after the close of our IPO and once we have invested substantially all the proceeds of our IPO, will not apply to individual real estate assets or investments. At the date of acquisition of each asset, we anticipate that the cost of investment for such asset will be substantially similar to its fair market value, which will enable us to satisfy our requirements under the NASAA REIT Guidelines. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits.

After the NAV pricing date, if our NAV exceeds $1.0 billion in the aggregate, we intend to maintain 5% of the overall value of our portfolio in liquid assets. However, our stockholders should not expect that we will maintain liquid assets at or above this level. To the extent that we maintain borrowing capacity under a line of credit, if a line of credit is ever obtained, such available amount will be included in calculating our liquid assets. Our Advisor will consider various factors in determining the amount of liquid assets we should maintain, including but not limited to our receipt of proceeds from sales of additional shares, our cash flow from operations, available borrowing capacity under a line of credit, if any, our receipt of proceeds from any asset sale, and the use of cash to fund repurchases. The board of directors will review the amount and sources of liquid assets on a quarterly basis.

Our board of directors has adopted a Share Repurchase Program ("SRP") that enables our stockholders to sell their shares to us under limited circumstances. At the time a stockholder requests a repurchase, we may, subject to certain conditions, repurchase the shares presented for repurchase for cash to the extent we have sufficient funds available to fund such purchase. There are limits on the number of shares we may repurchase under this program during any 12-month period. Further, we are only authorized to repurchase shares using the proceeds secured from the DRIP in any given quarter. The following table reflects the number of shares repurchased cumulatively through September 30, 2015:

	Number of Requests	Number of Shares Repurchased	Average Price per Share
Cumulative repurchases as of December 31, 2014	—	—	$	—
Nine Months Ended September 31, 2015(1)	1	1,021	24.97
Cumulative repurchases as of September 31, 2015(1)	1	1,021	$	24.97

_______________

(1) Includes one unfulfilled repurchase request consisting of 1,021 shares at an average repurchase price per share of $24.97, which was approved for repurchase as of September 30, 2015 and was completed in October 2015.

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Acquisitions

As of November 6, 2015, we owned 15 properties with a contract price of $85.0 million. In accordance with the terms of the investment opportunity allocation agreement we have entered into with Healthcare Trust, Inc., we have been provisionally allocated MOB assets identified by our Advisor and its affiliates with an expected aggregate contract price of $99.4 million that are under contract or under executed letters of intent. Pursuant to the terms of the purchase and sale agreements and letters of intent, the obligation to close upon these acquisitions is subject to certain conditions customary to closing, including the successful completion of due diligence and fully negotiated binding agreements. There can be no assurance that we will complete these acquisitions. We intend to use proceeds raised from our IPO to fund acquisitions.

Funds from Operations and Modified Funds from Operations

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.

Because of these factors, the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has published a standardized measure of performance known as funds from operations ("FFO"), which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT's operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards set forth in the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with GAAP, but excluding gains or losses from sales of property and real estate related impairments, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

We believe that the use of FFO 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.

Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT's definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.

Because of these factors, the Investment Program Association (the "IPA"), an industry trade group, has published a standardized measure of performance known as modified funds from operations ("MFFO"), which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year over year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it 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. MFFO is not equivalent to our net income or loss as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the "Practice Guideline") issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction related fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition and transaction-related fees and expenses, amortization of above and below market intangible lease assets and liabilities and amounts relating to straight line rents (in order to adjust lease and rental payments from a GAAP accrual basis to a cash basis) and accretion of discounts and amortization of premiums on debt investments.

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We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, 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 are acquiring properties and once our portfolio is stabilized. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.

Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP 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 GAAP measurements as an indication of our performance. FFO and MFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.

Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guideline or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.

The table below reflects the items deducted or added to net loss in our calculation of FFO and MFFO for the periods indicated:

	Three Months Ended									Nine Months Ended
(In thousands)	March 31, 2015			June 30, 2015			September 30, 2015			September 30, 2015
Net loss (in accordance with GAAP)	$	(319	)	$	(601	)	$	(1,561	)	$	(2,481	)
Depreciation and amortization	4			75			464			543
FFO attributable to common stockholders	(315		)	(526		)	(1,097		)	(1,938		)
Acquisition and transaction related	48			425			1,415			1,888
Amortization of market lease intangibles	(1		)	(5		)	1			(5		)
Straight-line rent	(1		)	(5		)	(41		)	(47		)
Amortization of mortgage premium	—			—			(6		)	(6		)
MFFO attributable to common stockholders	$	(269	)	$	(111	)	$	272		$	(108	)

Distributions

On January 29, 2015, our board of directors authorized, and we declared, distributions payable to stockholders of record each day during the applicable period at a rate equal to $0.0042808219 per day. Distributions began to accrue on March 15, 2015. Distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.

The amount of distributions payable to our stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to qualify and maintain our status as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). Distribution payments are dependent on the availability of funds. Our board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.

During the nine months ended September 30, 2015, distributions paid to common stockholders totaled $2.0 million, including $1.0 million which was reinvested through our DRIP. During the nine months ended September 30, 2015, cash used to pay distributions was generated from offering proceeds from issuance of common stock and proceeds received from common stock issued under the DRIP.

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The following table shows the sources for the payment of distributions to common stockholders, including distributions on unvested restricted shares, but excluding distributions related to unvested performance-based restricted, forfeitable partnership units of the OP designated as "Class B Units" as these distributions are recorded as expenses in the consolidated statements of operations and comprehensive loss, for the periods indicated:

	Three Months Ended															Nine Months Ended
	March 31, 2015					June 30, 2015					September 30, 2015					September 30, 2015
(In thousands)				Percentage of Distributions					Percentage of Distributions					Percentage of Distributions					Percentage of Distributions
Distributions:
Distributions to stockholders	$	—				$	451				$	1,517				$	1,968
Source of distribution coverage:
Cash flows provided by operations (1)	$	—		—	%	$	—		—	%	$	—		—	%	$	—		—	%
Offering proceeds from issuance of common stock	—			—	%	236			52.3	%	768			50.6	%	1,004			51.0	%
Proceeds received from common stock issued under the DRIP	—			—	%	215			47.7	%	749			49.4	%	964			49.0	%
Proceeds from financings	—			—	%	—			—	%	—			—	%	—			—	%
Total source of distribution coverage	$	—		—	%	$	451		100.0	%	$	1,517		100.0	%	$	1,968		100.0	%
Cash flows used in operations (in accordance with GAAP) (1)	$	(140	)			$	(585	)			$	(942	)			$	(1,667	)
Net loss attributed to stockholders (in accordance with GAAP)	$	(319	)			$	(601	)			$	(1,561	)			$	(2,481	)

______________________________

(1) Cash flows used in operations for the three months ended March 31, 2015, June 30, 2015 and September 30, 2015 and the nine months ended September 30, 2015 reflect acquisition and transaction related expenses of approximately $48,000, $0.4 million, $1.4 million and $1.9 million, respectively.

For the nine months ended September 30, 2015, cash flows used in operations were $1.7 million. As shown in the table above, we funded distributions with proceeds from our IPO as well as proceeds from our IPO which were reinvested in common stock issued under our DRIP. To the extent we pay distributions in excess of cash flows provided by operations, our stockholders' investment may be adversely impacted. Since inception, our cumulative distributions have exceeded our cumulative FFO. Distributions paid from sources other than our cash flows from operations, particularly from proceeds of our IPO, will result in us having fewer funds available for the acquisition of properties and other real estate-related investments and may dilute our stockholders' interests in us, which may adversely affect our ability to fund future distributions with cash flows from operations and may adversely affect our stockholders' overall return.

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The following table compares cumulative distributions paid to cumulative net loss and cumulative cash flows provided by operations (in accordance with GAAP) for the period from April 24, 2014 (date of inception) through September 30, 2015:

	For the Period from April 24, 2014 (date of inception) to
(In thousands)	September 30, 2015
Distributions to stockholders(1)	$	1,968
Reconciliation of net loss:
Revenues	$	1,387
Acquisition and transaction related	(1,888		)
Depreciation and amortization	(543		)
Other operating expenses	(1,588		)
Other non-operating expenses	(25		)
Income tax expense	(4		)
Net loss (in accordance with GAAP)(2)	$	(2,661	)
Cash flow used in operations	$	(1,821	)
FFO attributable to common stockholders	$	(2,118	)

_____________________

(1) Distributions paid to common stockholders includes $1.0 million of proceeds received pursuant to the DRIP.

(2) Net loss as defined by GAAP includes the non-cash impact of depreciation and amortization expense as well as costs incurred relating to acquisitions and related transactions.

Loan Obligations

The payment terms of our loan obligation requires principal and interest amounts to be paid monthly with all unpaid principal and interest due at maturity. Our loan agreement stipulates that we comply with specific reporting covenants. As of September 30, 2015, we were in compliance with the debt covenants under our loan agreement.

Our Advisor may, with approval from our independent directors, seek to borrow short-term capital that, combined with secured mortgage financing, exceeds our targeted leverage ratio. Such short-term borrowings may be obtained from third-parties on a case-by-case basis as acquisition opportunities present themselves. We view the use of short-term borrowings, including advances under our credit facility, as an efficient and accretive means of acquiring real estate.

Contractual Obligations

The following table reflects contractual debt obligations under our mortgage notes payable and minimum base rental cash payments due for leasehold interests over the next five years and thereafter as of September 30, 2015. The minimum base rental cash payments due for leasehold interests amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes, among other items. As of September 30, 2015, the outstanding mortgage notes payable had a weighted average effective interest rate of 4.0%.

					Years Ended December 31,
(In thousands)	Total		October 1, 2015 — December 31, 2015		2016 — 2017		2018 — 2019		Thereafter
Principal on mortgage note payable	$	5,108	$	16	$	196	$	4,896	$	—
Interest on mortgage note payable	786		34		400		352		—
Lease rental payments due	248		8		65		69		106
	$	6,142	$	58	$	661	$	5,317	$	106

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Election as a REIT

We intend to elect and qualify to be taxed as a REIT under Sections 856 through 860 of the Code, effective for our taxable year ending December 31, 2015. We believe that, commencing with such taxable year, we will be organized and operating in such a manner as to qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner to qualify for taxation as a REIT, but no assurance can be given that we will operate in a manner so as to qualify or remain qualified as a REIT. In order to qualify and continue to qualify for taxation as a REIT, we must, among other things, distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard to the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on that portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as federal income and excise taxes on our undistributed income.

Inflation

We may be adversely impacted by inflation on any leases that do not contain indexed escalation provisions. In addition, we may be required to pay costs for maintenance and operation of properties, which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation.

Related-Party Transactions and Agreements

We have entered into agreements with affiliates of our Sponsor, whereby we have paid and/or may in the future pay certain fees or reimbursements to our Advisor, its affiliates and entities under common ownership with our Advisor in connection with items such as acquisition and financing activities, sales and maintenance of common stock under our IPO, transfer agency services, asset and property management services and reimbursement of operating and offering related costs.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our long-term debt, which consists of secured financings, bears interest at a fixed rate. As of September 30, 2015, we did not have any derivative financial instruments. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars, and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.

As of September 30, 2015, our debt included fixed-rate secured mortgage financings with a carrying value of $5.3 million and a fair value of $5.3 million. Changes in market interest rates on our fixed-rate debt impact the fair value of the notes, but it has no impact on interest due on the notes. For instance, if interest rates rise 100 basis points and our fixed rate debt balance remains constant, we expect the fair value of our obligation to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed–rate debt assumes an immediate 100 basis point move in interest rates from their September 30, 2015 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt by $0.2 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt by $0.2 million.

These amounts were determined by considering the impact of hypothetical interest rates changes on our borrowing costs, and assuming no other changes in our capital structure. The information presented above includes only those exposures that existed as of September 30, 2015 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

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Item 4. Controls and Procedures.

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of such period, that our disclosure controls and procedures are effective.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to any material pending legal proceedings.

Item 1A. Risk Factors.

Our potential risks and uncertainties are presented in the section entitled "Item 1A. Risk Factors," disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014. The following additional risk factors should be considered regarding our potential risks and uncertainties:

Distributions paid from sources other than our cash flows from operations, particularly from proceeds of our IPO, result in us having fewer funds available for the acquisition of properties and other real estate-related investments and may dilute our stockholders' interests in us, which may adversely affect our ability to fund future distributions with cash flows from operations and may adversely affect our stockholders' overall return.

Our cash flows used in operations were $1.7 million for the nine months ended September 30, 2015. During the nine months ended September 30, 2015, we paid distributions of $2.0 million, of which $1.0 million, or 51.0%, was funded from offering proceeds from issuance of common stock and $1.0 million, or 49.0%, was funded from offering proceeds reinvested in common stock under the DRIP. During the nine months ended September 30, 2015, cash flow from operations included an increase in accounts payable and accrued expenses of $0.5 million, as reflected on the statement of cash flows. Accordingly, if these accounts payable and accrued expenses had been paid during the nine months ended September 30, 2015, there would have been $0.5 million less in cash flow from operations available to pay distributions. Using offering proceeds to pay distributions, especially if the distributions are not reinvested through our DRIP, reduces cash available for investment in assets or other purposes, and reduces our per share stockholders' equity. We may continue to use our remaining net offering proceeds to fund distributions.

We may not generate sufficient cash flows from operations to pay future distributions. If we do not generate sufficient cash flows from our operations and other sources, such as from borrowings, the sale of additional securities, advances from our Advisor, and our Advisor's deferral, suspension or waiver of its fees and expense reimbursements, to fund distributions, we may continue to use the remaining proceeds from our IPO. Moreover, our board of directors may change our distribution policy, in its sole discretion, at any time. Distributions made from our remaining offering proceeds are a return of capital to stockholders, from which we will have already paid offering expenses in connection with our IPO. We have not established any limit on the amount of proceeds from our IPO that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (1) cause us to be unable to pay our debts as they become due in the usual course of business; (2) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences, if any; or (3) jeopardize our ability to qualify as a REIT.

Funding distributions from borrowings could restrict the amount we can borrow for investments, which may affect our profitability. Funding distributions with the sale of assets or the remaining proceeds of our IPO may affect our ability to generate additional operating cash flows. Funding distributions from the sale of additional securities could dilute each stockholder's interest in us if we sell shares of our common stock or securities that are convertible or exercisable into shares of our common stock to third-party investors. Payment of distributions from the mentioned sources could restrict our ability to generate sufficient cash flows from operations, affect our profitability or affect the distributions payable to stockholders upon a liquidity event, any or all of which may have an adverse effect on an investment in our shares.

We rely significantly on five major tenants (including, for this purpose, all affiliates of such tenants) and therefore are subject to tenant credit concentrations that make us more susceptible to adverse events with respect to such tenants.

As of September 30, 2015, the following five major tenants represented 5% or more of our consolidated annualized rental income on a straight-line basis including, for this purpose, all affiliates of such tenants:

Tenant	September 30, 2015
Meridian Senior Living, LLC	5.6%
The MetroHealth System	5.3%
Northside Hospital	8.4%
Summit Orthopedics, Ltd.	14.2%
United States of America	11.3%

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Therefore, the financial failure of these tenants could have a material adverse effect on our results of operations and our financial condition. In addition, the value of our investment is driven by the credit quality of the underlying tenants, and an adverse change in the tenant's financial condition or a decline in the credit rating of such tenant may result in a decline in the value of our investment.

Our property portfolio has a high concentration of properties located in seven states. Our properties may be adversely affected by economic cycles and risks inherent to such states.

As of September 30, 2015, the following seven states represented 5% or more of our consolidated annualized rental income on a straight-line basis:

State	Percentage of Straight-line Rent
Florida	8.8%
Georgia	19.2%
Illinois	40.6%
Kentucky	5.6%
Minnesota	14.2%
Ohio	5.3%
Texas	6.3%

Any adverse situation that disproportionately affects the states listed above may have a magnified adverse effect on our portfolio. Real estate markets are subject to economic downturns, as they have been in the past, and we cannot predict how economic conditions will impact this market in both the short and long term. Declines in the economy or a decline in the real estate market in this state could hurt our financial performance and the value of our property. Factors that may negatively affect economic conditions in this state include:

• business layoffs or downsizing;

• industry slowdowns;

• relocations of businesses;

• changing demographics;

• increased telecommuting and use of alternative work places;

• infrastructure quality;

• any oversupply of, or reduced demand for, real estate;

• concessions or reduced rental rates under new leases for properties where tenants defaulted; and

• increased insurance premiums.

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

Unregistered Sales of Equity Securities

On July 13, 2015, we issued 2,666 restricted shares that vest over a period of five years to our independent directors, pursuant to our employee and director incentive restricted share plan. No selling commissions or other consideration were paid in connection with such issuances, which were made without registration under the Securities Act in reliance upon the exemption from registration in Section 4(a)(2) of the Securities Act as transactions not involving any public offering.

Use of Proceeds of Registered Securities

On August 20, 2014, we commenced our IPO on a "reasonable best efforts" basis of up to a maximum of $3.1 billion of common stock, consisting of up to 125.0 million shares, pursuant to the Registration Statement initially filed on May 28, 2014 with the SEC under the Securities Act of 1933, as amended. The Registration Statement, which was declared effective by the SEC on August 20, 2014, also covers 26.3 million shares of common stock pursuant to the DRIP under which common stockholders may elect to have their distributions reinvested in additional shares of common stock. As of September 30, 2015, we have issued 5.6 million shares of our common stock, including unvested restricted shares and shares issued pursuant to the DRIP, and received $138.5 million of offering proceeds.

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The following table reflects the offering costs associated with the issuance of common stock:

	Nine Months Ended
(In thousands)	September 30, 2015
Selling commissions and dealer manager fees	$	11,942
Other offering costs	3,060
Total offering costs	$	15,002

The Dealer Manager may reallow the selling commissions and a portion of the dealer manager fees to participating broker-dealers. The following table details the selling commissions reallowed related to the sale of shares of common stock:

	Nine Months Ended
(In thousands)	September 30, 2015
Selling commissions and dealer manager fees	$	11,942
Less:
Commissions to participating broker-dealers	(7,765		)
Reallowance to participating broker-dealers	(1,296		)
Net to the Dealer Manager	$	2,881

As of September 30, 2015, we have incurred $17.3 million of cumulative offering costs in connection with registering and selling shares of our common stock. As of September 30, 2015, cumulative offering costs included $2.7 million of offering cost reimbursements incurred from the Advisor, Dealer Manager and Sponsor, excluding commissions and dealer manager fees. The Advisor elected to cap cumulative offering costs incurred by us, net of unpaid amounts, to 15.0% of gross common stock proceeds during the offering period. Cumulative offering costs, net of unpaid amounts, were less than 15.0% of gross proceeds at September 30, 2015. Cumulative offering proceeds from the sale of common stock exceeded cumulative offering costs by $121.2 million at September 30, 2015.

We have used and expect to continue to use substantially all of the net proceeds from our IPO to primarily acquire a diversified portfolio of income producing real estate properties, focusing predominantly on MOBs and healthcare-related facilities. We may also originate or acquire first mortgage loans secured by real estate. As of September 30, 2015, we have used the net proceeds from our IPO to purchase 13 properties with an aggregate purchase price of $72.7 million. In connection with our acquisitions, we paid acquisition fees of $1.1 million, acquisition expense reimbursements of $0.4 million and financing coordination fees of approximately $38,000 to our Advisor during the nine months ended September 30, 2015. We paid third-party acquisition expenses of $0.4 million during the nine months ended September 30, 2015.

Issuer Purchases of Equity Securities

The following table reflects the number of shares repurchased cumulatively through September 30, 2015:

	Number of Requests	Number of Shares Repurchased	Average Price per Share
Cumulative repurchases as of December 31, 2014	—	—	$	—
Nine Months Ended September 31, 2015(1)	1	1,021	24.97
Cumulative repurchases as of September 31, 2015(1)	1	1,021	$	24.97

_______________

(1) Includes one unfulfilled repurchase request consisting of 1,021 shares at an average repurchase price per share of $24.97, which was approved for repurchase as of September 30, 2015 and was completed in October 2015.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

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Item5. Other Information.

On November 9, 2015, ARC advised us that ARC and Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, “Apollo”) have mutually agreed to terminate an agreement, dated as of August 6, 2015, pursuant to which Apollo would have purchased a controlling interest in a newly formed company that would have owned a majority of the ongoing asset management business of AR Capital, including the Advisor and the Property Manager.  The termination has no effect on our current management team.

Also on November 9, 2015, RCS Capital Corporation (“RCS Capital”), the parent of the Dealer Manager and a company under common control with ARC, and Apollo announced that they have mutually agreed to amend an agreement, dated as of August 6, 2015, pursuant to which RCS Capital will sell its wholesale distribution business, including the Dealer Manager, to an affiliate of Apollo. This transaction is subject to customary closing conditions and regulatory approvals and is expected to close early in the first quarter of 2016. American National Stock Transfer, LLC and RCS Advisory Services, LLC will remain as subsidiaries of RCS Capital.

Item6. Exhibits.

The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC.
By:	/s/ Thomas P. D'Arcy
	Thomas P. D'Arcy
	Chief Executive Officer, President and Secretary  (Principal Executive Officer)
By:	/s/ Edward F. Lange, Jr.
	Edward F. Lange, Jr.
	Chief Financial Officer, Chief Operating Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

Dated: November 10, 2015

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EXHIBITS INDEX

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

Exhibit No.	Description
10.3*	Property Management and Leasing Agreement, dated August 20, 2014, by and among the Company, American Realty Capital Healthcare III Operating Partnership, L.P. and American Realty Capital Healthcare III Properties, LLC
10.14*	Agreement for Purchase and Sale of Real Property, dated July 2, 2015, by and between American Realty Capital VII, LLC and 200 E. 18th LLC
10.15*	First Amendment to Agreement for Purchase and Sale of Real Property, dated August 3, 2015, by and between American Realty Capital VII, LLC and 200 E. 18th LLC
10.16*	Agreement for Purchase and Sale of Real Property, dated May 27, 2015, by and between American Realty Capital VII, LLC and ICM VI-Philip Centre, LP
10.17*	Consent and Assumption Agreement with Release, dated as of August 14, 2015, by and among RGA Reinsurance Company, ICM VI-Philip Centre, LP, Bruce Timm, ARHC PPLVLGA01, LLC and the Company
10.18*	Assignment and Subordination of Management Agreement, dated August 14, 2015, by and among ARHC PPLVLGA01, LLC, Caddis Management Company, LLC and RGA Reinsurance Company
10.19*	Environmental Indemnity Agreement, dated August 14, 2015, by ARHC PPLVLGA01, LLC and the Company for the benefit of RGA Reinsurance Company
10.20*	Separate Guaranty of Carveout Obligations, dated August 14, 2015, by the Company in favor of RGA Reinsurance Company
10.21*	Asset Purchase Agreement, dated as of June 23, 2015, between American Realty Capital VII, LLC and Cedarhurst of Collinsville, LLC
10.22*	Agreement for Purchase and Sale of Real Property, dated July 1, 2015, among American Realty Capital VII, LLC, 310 Home Boulevard, Galesburg, IL - Davessa Venture, LLC and 336 Home Boulevard, Galesburg, IL - S.J. Russell, LLC
10.23*	First Amendment to Agreement for Purchase and Sale of Real Property, dated August 3, 2015, by and among American Realty Capital VII, LLC, Davessa Venture, LLC, S.J. Russell, LLC and Galeva LLC
10.24*	Second Amendment to Agreement for Purchase and Sale of Real Property, dated August 24, 2015, by and between American Realty Capital VII, LLC and Galeva LLC
10.25*	Asset Purchase Agreement, dated July 6, 2015, among American Realty Capital VII, LLC, Arcadian Cove, LLC and Arcadian Assisted Living, LLC
10.26*	First Amendment to Asset Purchase Agreement, dated August 25, 2015, among American Realty Capital VII, LLC, Cove Development, LLC, Arcadian Cove, LLC and Arcadian Assisted Living, LLC
10.27*	Agreement for Purchase and Sale of Real Property, dated July 28, 2015, between American Realty Capital VII, LLC and Kraus-Anderson, Incorporated
10.28*	First Amendment to Agreement for Purchase and Sale of Real Property, dated August 31, 2015, between American Realty Capital VII, LLC and Kraus-Anderson, Incorporated
31.1*	Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	XBRL (eXtensible Business Reporting Language). The following materials from American Realty Capital Healthcare Trust III, Inc.'s Quarterly Report on Form 10-Q for the nine months ended September 30, 2015, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.

____________________

*     Filed herewith.

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EX-10.3

Exhibit 10.3

PROPERTY MANAGEMENT AND LEASING AGREEMENT

This property management and leasing agreement (this “Management Agreement”), is dated as of August 20, 2014 and effective as of the Effective Date (as defined below), by and among AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC., a Maryland corporation (the “Company”), AMERICAN REALTY CAPITAL HEALTHCARE III OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “OP”), and AMERICAN REALTY CAPITAL HEALTHCARE III PROPERTIES, LLC, a Delaware limited liability company (the “Manager”).

WHEREAS, the OP was organized to acquire, own, operate, lease and manage real estate properties on behalf of the Company;

WHEREAS, the Company intends to continue to raise money from the sale of its common stock to be used, net of payment of certain offering costs and expenses, for investment in the acquisition and rehabilitation of income-producing real estate and other real-estate related investments, which are to be acquired and held by the Company or by the OP on behalf of the Company; and

WHEREAS, the Owner desires to retain the Manager to manage and coordinate the leasing of real estate properties acquired by the Owner in the Territory, and the Manager desires to be so retained, all under the terms and conditions set forth in this Management Agreement.

NOW, THEREFORE, in consideration of the foregoing and of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

ARTICLE I
DEFINITIONS

Except as otherwise specified or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Management Agreement:

1.1“Account” has the meaning set forth in Section 2.3(i) hereof.

1.2“Affiliate” means with respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. For purposes of this definition, the terms “controls,” “is controlled by,” or “is under common control with” shall mean the possession,

1

direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through ownership or voting rights, by contract or otherwise.

1.3“Articles of Incorporation” means the Articles of Incorporation of the Company, as amended from time to time.

1.4“Budget” has the meaning set forth in Section 2.5(c) hereof.

1.5“Effective Date” means the date on which the Registration Statement is declared effective by the SEC.

1.6“Gross Revenues” means all amounts actually collected as rents or other charges for the use and occupancy of the Properties, but shall exclude interest and other investment income of the Owner and proceeds received by the Owner for a sale, exchange, condemnation, eminent domain taking, casualty or other disposition of assets of the Owner.

1.7“Improvements” means buildings, structures, equipment from time to time located on the Properties and all parking and common areas located on the Properties.

1.8“Independent Director” has the meaning set forth in the Articles of Incorporation.

1.9“Joint Venture” means the joint venture or partnership arrangements (other than between the Company and the OP) in which the Company or the OP or any of their subsidiaries is a co-venturer or general partner which are established to own Properties.

1.10“Management Fees” has the meaning set forth in Section 4.1(a) hereof.

1.11“Oversight Fees” has the meaning set forth in Section 4.2 hereof.

1.12“Owner” means the Company, the OP and any Joint Venture that owns, in whole or in part, any Properties.

1.13“Ownership Agreements” has the meaning set forth in Section 2.3(k) hereof.

1.14“Person” means an individual, corporation, partnership, joint venture, association, company (whether of limited liability or otherwise), trust, bank or other entity, or government or any agency or political subdivision of a government.

1.15“Plan” has the meaning set forth in Section 2.5(c) hereof.

1.16“Properties” means all real estate properties owned by the Owner in the Territory and all tracts as yet unspecified but to be acquired by the Owner in the Territory containing income-producing Improvements or on which the Owner will develop or rehabilitate income-producing Improvements.

1.17“Registration Statement” means the Company’s registration statement on Form S‑11 (File No. 333-196549) and the prospectus contained therein.

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1.18“Territory” means the United States and its territories, commonwealths and possessions.

ARTICLE II
APPOINTMENT OF THE MANAGER; SERVICES TO BE PERFORMED

2.1Appointment of the Manager. The Owner hereby engages and retains the Manager as the sole and exclusive manager and agent of the Properties, and the Manager hereby accepts such appointment, all on the terms and conditions hereinafter set forth, it being understood that this Management Agreement shall cause the Manager to be, at law, the Owner’s agent upon the terms contained herein.

2.2General Duties. The Manager shall use commercially reasonable efforts in performing its duties hereunder to manage, operate, maintain and lease the Properties in a diligent, careful and vigilant manner. The services of the Manager are to be of scope and quality not less than those generally performed by professional property managers of other similar properties in the area. The Manager shall make available to the Owner the full benefit of the judgment, experience and advice of its members and staff with respect to the policies to be pursued by the Owner relating to the operation and leasing of the Properties.

2.3Specific Duties. The Manager’s duties include the following:

(a)Lease Obligations. The Manager shall perform all duties of the landlord under all leases insofar as such duties relate to the operation, maintenance, and day-to-day management of the Properties. The Manager shall also provide or cause to be provided, at the Owner’s expense, all services normally provided to tenants of like premises, including, where applicable and without limitation, gas, electricity or other utilities required to be furnished to tenants under leases, normal repairs and maintenance, and cleaning and janitorial service. The Manager shall arrange for and supervise the performance of all installations and improvements in space leased to any tenant which are either expressly required under the terms of the lease of such space or which are customarily provided to tenants.

(b)Maintenance. The Manager shall cause the Properties to be maintained in the same manner as similar properties in the area. The Manager’s duties and supervision in this respect shall include, without limitation, cleaning of the interior and the exterior of the Improvements and the public common areas on the Properties and the making and supervision of repair, alterations, and decoration of the Improvements, subject to and in strict compliance with this Management Agreement and any applicable leases. Construction and rehabilitation activities undertaken by the Manager, if any, will be limited to activities related to the management, operation, maintenance, and leasing of the Property (e.g., repairs, renovations, and leasehold improvements).

(c)Leasing Functions. The Manager shall coordinate the leasing of the Properties and shall negotiate and use its best efforts to secure executed leases from qualified tenants, and to execute same on behalf of the Owner, if requested, for available

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space in the Properties, such leases to be in form and on terms approved by the Owner and the Manager, and to bring about complete leasing of the Properties. The Manager shall be responsible for the hiring of all leasing agents, as necessary for the leasing of the Properties, and to otherwise oversee and manage the leasing process on behalf of the Owner.

(d)Notice of Violations. The Manager shall forward to the Owner, promptly upon receipt, all notices of violation or other notices from any governmental authority, and board of fire underwriters or any insurance company, and shall make such recommendations regarding compliance with such notice as shall be appropriate.

(e)Personnel. Any personnel hired by the Manager to maintain, operate and lease the Property shall be the employees or independent contractors of the Manager and not of the Owner. The Manager shall use due care in the selection and supervision of such employees or independent contractors. The Manager shall be responsible for the preparation of and shall timely file all payroll tax reports and timely make payments of all withholding and other payroll taxes with respect to each employee.

(f)Utilities and Supplies. The Manager shall enter into or renew contracts for electricity, gas, steam, landscaping, fuel, oil, maintenance and other services as are customarily furnished or rendered in connection with the operation of similar rental property in the area.

(g)Expenses. The Manager shall analyze all bills received for services, work and supplies in connection with maintaining and operating the Properties, pay all such bills, and, if requested by the Owner, pay, when due, utility and water charges, sewer rent and assessments, any applicable taxes, including, without limitation, any real estate taxes, and any other amount payable in respect to the Properties. All bills shall be paid by the Manager within the time required to obtain discounts, if any. The Owner may from time to time request that the Manager forward certain bills to the Owner promptly after receipt, and the Manager shall comply with any such request. The payment of all bills, real property taxes, assessments, insurance premiums and any other amounts payable with respect to the Properties shall be paid out of the Account by the Manager. All expenses shall be billed at net cost (i.e., less all rebates, commissions, discounts and allowances, however designed).

(h)Monies Collected. The Manager shall collect all rent and other monies from tenants and any sums otherwise due to the Owner with respect to the Properties in the ordinary course of business. In collecting such monies, the Manager shall inform tenants of the Properties that all remittances are to be in the form of a check or money order. The Owner authorizes the Manager to request, demand, collect and provide receipts for all such rent and other monies and to institute legal proceedings in the name of the Owner for the collection thereof and for the dispossession of any tenant in default under its lease.

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(i)Banking Accommodations. The Manager shall establish and maintain a separate checking account (the “Account”) for funds relating to the Properties. All monies deposited from time to time in the Account shall be deemed to be trust funds and shall be and remain the property of the Owner and shall be withdrawn and disbursed by the Manager for the account of the Owner only as expressly permitted by this Management Agreement for the purposes of performing the obligations of the Manager hereunder. No monies collected by the Manager on the Owner’s behalf shall be commingled with funds of the Manager. The Account shall be maintained, and monies shall be deposited therein and withdrawn therefrom, in accordance with the following:

(i)All sums received from rents and other income from the Properties shall be promptly deposited by the Manager in the Account. The Manager shall have the right to designate two (2) or more Persons who shall be authorized to draw against the Account, but only for purposes authorized by this Management Agreement.

(ii)All sums due to the Manager hereunder, whether for compensation, reimbursement for expenditures, or otherwise, as herein provided, shall be a charge against the operating revenues of the Properties and shall be paid and/or withdrawn by the Manager from the Account prior to the making of any other disbursements therefrom.

(iii)On or before the 30th day following the end of each calendar quarter during the term of this Management Agreement, the Manager shall forward to the Owner all net operating proceeds from the preceding quarter, retaining at all times, however, a reserve of $5,000, in addition to any other amounts otherwise provided in the Budget.

(j)Tenant Complaints. The Manager shall maintain business-like relations with the tenants of the Properties.

(k)Ownership Agreements. The Manager has received copies of the Agreement of Limited Partnership of the OP, Articles of Incorporation and the other constitutive documents of the Owner (collectively, the “Ownership Agreements”) and is familiar with the terms thereof. The Manager shall use reasonable care to avoid any act or omission which, in the performance of its duties hereunder, shall in any way conflict with the terms of the Ownership Agreements.

(l)Signs. The Manager shall place and remove, or cause to be placed and removed, such signs upon the Properties as the Manager deems appropriate, subject, however, to the terms and conditions of the leases and to any applicable ordinances and regulations.

2.4Approval of Leases, Contracts, Etc. In fulfilling its duties to the Owner, the Manager may and hereby is authorized to enter into any leases, contracts or agreements on behalf

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of the Owner in the ordinary course of the management, operation, maintenance and leasing of the Properties.

2.5Accounting, Records and Reports.

(a)Records. The Manager shall maintain all office records and books of account and shall record therein, and keep copies of, each invoice received from services, work and supplies ordered in connection with the maintenance and operation of the Properties. Such records shall be maintained on a double entry basis. The Owner and Persons designated by the Owner shall at all reasonable times have access to and the right to audit and make independent examinations of such records, books and accounts and all vouchers, files and all other material pertaining to the Properties and this Management Agreement, all of which the Manager agrees to keep safe, available and separate from any records not pertaining to the Properties, at a place recommended by the Manager and approved by the Owner.

(b)Quarterly Reports. On or before the 30th day following the end of each calendar quarter during the term of this Management Agreement, the Manager shall prepare and submit to the Owner the following reports and statements:

(i)Rental collection record;

(ii)Quarterly operating statement;

(iii)Copy of cash disbursements ledger entries for such period, if requested;

(iv)Copy of cash receipts ledger entries for such period, if requested;

(v)The original copies of all contracts entered into by the Manager on behalf of the Owner during such period, if requested; and

(vi)Copy of ledger entries for such period relating to security deposits maintained by the Manager, if requested.

(c)Budgets and Leasing Plans. On or before November 15 of each calendar year, the Manager shall prepare and submit to the Owner for its approval an operating budget (a “Budget”) and a marketing and leasing plan (a “Plan”) on the Properties for the calendar year immediately following such submission. Each Budget and Plan shall be in the form approved by the Owner prior to the date thereof. As often as reasonably necessary during the period covered by any Budget or Plan, the Manager may submit to the Owner for its approval an updated Budget or Plan incorporating such changes as shall be necessary to reflect cost overruns and the like during such period. If the Owner does not disapprove a Budget or Plan within thirty (30) days after receipt thereof by the Owner, such Budget or Plan shall be deemed approved. If the Owner shall disapprove any Budget or Plan, it shall so notify the Manager within said thirty (30) day period and

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explain the reasons therefor. The Manager will not incur any costs other than those estimated in an approved Budget except for:

(i)maintenance or repair costs under $5,000 per Property;

(ii)costs incurred in emergency situations in which action is immediately necessary for the preservation or safety of the Property, or for the safety of occupants or other Persons on the Property (or to avoid the suspension of any necessary service of the Property);

(iii)expenditures for real estate taxes and assessments; and

(iv)maintenance supplies calling for an aggregate purchase price of less than $25,000 for all Properties.

(d)Returns Required by Law. The Manager shall execute and file when due all forms, reports, and returns required by law relating to the employment of its personnel.

(e)Notices. Promptly after receipt, the Manager shall deliver to the Owner all notices, from any tenant, or any governmental authority, that are not of a routine nature. The Manager shall also report expeditiously to the Owner notice of any extensive damage to any part of the Properties.

2.6Subcontracting. Notwithstanding anything to the contrary contained in this Management Agreement, the Manager may subcontract any of its duties hereunder, without the consent of the Owner, for a fee that may be less than the Management Fees paid hereunder. In the event that the Manager does so subcontract any its duties hereunder, such fees payable to such third parties may, at the instruction of the Manager, be deducted from the Management Fees and paid by the Owner to such parties, or paid directly by the Manager to such parties, in its discretion.

ARTICLE III
EXPENSES

3.1Owner’s Expenses. Except as otherwise specifically provided, all costs and expenses incurred hereunder by the Manager in fulfilling its duties to the Owner shall be for the account of and on behalf of the Owner. Such costs and expenses may include, without limitation, reasonable wages and salaries and other employee-related expenses of all on-site and off-site employees of the Manager who are engaged in the operation, management, maintenance and leasing of the Properties, including taxes, insurance and benefits relating to such employees, and legal, travel and other out-of-pocket expenses which are directly related to the operation, management, maintenance and leasing of specific Properties. All costs and expenses for which the Owner is responsible under this Management Agreement shall be paid by the Manager out of the Account. In the event the Account does not contain sufficient funds to pay all of the costs

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and expenses, the Owner shall fund all sums necessary to meet such additional costs and expenses.

3.2Manager’s Expenses. The Manager shall, out of its own funds, pay all of its general overhead and administrative expenses.

ARTICLE IV
MANAGER’S COMPENSATION

4.1Management Fees.

(m)The Owner shall pay the Manager or any of its Affiliates property management and leasing fees (the “Management Fees”), on a monthly basis, equal to: (i) with respect to stand-alone, single-tenant net leased Properties, one and a half percent (1.5%) of Gross Revenues from the Properties managed; and (ii) with respect to all other types of Properties, two and a half percent (2.5%) of Gross Revenues from the Properties managed, plus market-based leasing commissions applicable to the geographic location of the Property. Except as otherwise set forth herein, the Owner shall also reimburse the Manager for any costs and expenses incurred by the Manager in connection with managing the Properties.

(n)The Manager may charge a separate fee for the one-time initial rent-up or leasing-up of newly constructed Properties in an amount not to exceed the fee customarily charged in arm’s length transactions by others rendering similar services in the same geographic area for similar properties.

(o)Notwithstanding the foregoing, the Manager may be entitled to receive higher fees in the event the Manager can demonstrate to the satisfaction of the board of directors of the Company (including a majority of the Independent Directors) through empirical data that a higher competitive fee is justified for the services rendered and the type of Property managed. As described in Section 2.6 above, in the event that the Manager properly engages one or more third parties to perform the services described herein, the fees payable to such parties for such services will be deducted from the Management Fees, or paid directly by the Manager, at the Manager’s option. The Manager’s compensation under this Section 4.1 shall apply to all renewals, extensions or expansions of leases which the Manager originally negotiated.

4.2Oversight Fees. If the Owner contracts directly with one or more third parties for the services described in Section 2.3 above, the Owner will pay such third parties customary market fees and shall pay the Manager oversight fees (the “Oversight Fees”) equal to one percent (1.0%) of the Gross Revenues of the particular Property managed by such third parties. In no event shall the Manager (including any Affiliate of the Manager) be entitled to an Oversight Fee if any such third party receives fees greater than the Management Fees set forth in Section 4.1 above.

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4.3Additional Fees. If the Manager provides services other than those specified herein, the Owner shall pay to the Manager a monthly fee equal to no more than that which the Owner would pay to a third party that is not an Affiliate of the Owner or the Manager to provide such services.

4.4Audit Adjustment. If any audit of the records, books or accounts relating to the Properties discloses an overpayment or underpayment of fees, the Owner or the Manager shall promptly pay to the other party the amount of such overpayment or underpayment, as the case may be. If such audit discloses an overpayment of fees for any fiscal year of more than the correct fees for such fiscal year, the Manager shall bear the cost of such audit.

ARTICLE V
INSURANCE AND INDEMNIFICATION

5.1Insurance to be Carried.

(a)The Manager shall obtain and keep in full force and effect insurance on the Properties against such hazards as the Owner and the Manager shall deem appropriate, but in any event, insurance sufficient to comply with the leases and the Ownership Agreements shall be maintained. All liability policies shall provide sufficient insurance satisfactory to both the Owner and the Manager and shall contain waivers of subrogation for the benefit of the Manager.

(b)The Manager shall obtain and keep in full force and effect, in accordance with the laws of the state in which each Property is located, employer’s liability insurance applicable to and covering all employees of the Manager at the Properties and all Persons engaged in the performance of any work required hereunder, and the Manager shall furnish the Owner certificates of insurers naming the Owner as a co-insured and evidencing that such insurance is in effect. If any of the Manager’s duties hereunder are subcontracted as permitted under Section 2.6, the Manager shall include in each subcontract a provision that the subcontractor shall also furnish the Owner with such a certificate.

5.2Cooperation with Insurers. The Manager shall cooperate with and provide reasonable access to the Properties to representatives of insurance companies and insurance brokers or agents with respect to insurance which is in effect or for which application has been made. The Manager shall use its best efforts to comply with all requirements of insurers.

5.3Accidents and Claims. The Manager shall promptly investigate and report in detail to the Owner all accidents, claims for damage relating to the ownership, operation or maintenance of the Properties, and any damage or destruction to the Properties and the estimated costs of repair thereof, and shall prepare for approval by the Owner all reports required by an insurance company in connection with any such accident, claim, damage, or destruction. Such reports shall be given to the Owner promptly and any report not so given within ten (10) days after the occurrence of any such accident, claim, damage or destruction shall be noted in the report delivered to the Owner pursuant to Section 2.5(b). The Manager is authorized to settle

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any claim against an insurance company arising out of any policy and, in connection with such claim, to execute proofs of loss and adjustments of loss and to collect and provide receipts for loss proceeds.

5.4Indemnification. The Manager shall hold the Owner harmless from and indemnify and defend the Owner against any and all claims or liability for any injury or damage to any Person or property whatsoever for which the Manager is responsible occurring in, on, or about the Properties, including, without limitation, the Improvements when such injury or damage is caused by the negligence or misconduct of the Manager, its agents, servants, or employees, except to the extent that the Owner recovers insurance proceeds with respect to such matter. The Owner will indemnify and hold the Manager harmless against all liability for injury to Persons and damage to property caused by the Owner’s negligence and which did not result from the negligence or misconduct of the Manager, except to the extent the Manager recovers insurance proceeds with respect to such matter.

ARTICLE VI
TERM; TERMINATION

6.1Term. This Management Agreement shall commence on the Effective Date and shall continue until terminated in accordance with the earliest to occur of the following:

(f)One year from the date of the commencement of the term hereof. However, this Management Agreement will be automatically extended for an unlimited number of successive one year terms at the end of each year unless any party gives sixty (60) days’ written notice to the other parties of its intention to terminate this Management Agreement;

(g)Immediately upon the occurrence of any of the following:

(iv)A decree or order is rendered by a court having jurisdiction (A) adjudging the Manager as bankrupt or insolvent, (B) approving as properly filed a petition seeking reorganization, readjustment, arrangement, composition or similar relief for the Manager under the federal bankruptcy laws or any similar applicable law or practice, or (C) appointing a receiver, liquidator, trustee or assignee in bankruptcy or insolvency of the Manager or a substantial part of the Manager’s assets, or for the winding up or liquidation of its affairs, or

(v)The Manager (A) voluntarily institutes proceedings to be adjudicated bankrupt or insolvent, (B) consents to the filing of a bankruptcy proceeding against it, (C) files a petition, answer or consent seeking reorganization, readjustment, arrangement, composition or relief under any similar applicable law or practice, (D) consents to the filing of any such petition, or to the appointment of a receiver, liquidator, trustee or assignee in bankruptcy or insolvency for it or for a substantial part of its assets, (E) makes an assignment for the benefit of creditors, (F) is unable to or admits in writing its inability to pay its debts generally as they become due, unless such inability shall be the fault of the

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Owner, or (G) takes corporate or other action in furtherance of any of the aforesaid purposes; and

(h)Upon written notice from the Owner in the event that the Manager commits an act of gross negligence or willful misconduct in the performance of its duties hereunder.

Upon termination, the obligations of the parties hereto shall cease; provided, however; that the Manager shall comply with the provisions hereof applicable in the event of termination and shall be entitled to receive all compensation which may be due to the Manager hereunder up to the date of such termination; provided, further, however; that if this Management Agreement terminates pursuant to clauses (b) or (c) of this Section 6.1, the Owner shall have other remedies as may be available at law or in equity.

6.2Manager’s Obligations after Termination. Upon the termination of this Management Agreement, the Manager shall have the following duties:

(a)The Manager shall deliver to the Owner, or its designee, all books and records with respect to the Properties.

(b)The Manager shall transfer and assign to the Owner, or its designee, all service contracts and personal property relating to or used in the operation and maintenance of the Properties, except personal property paid for and owned by the Manager. Manager shall also, for a period of sixty (60) days immediately following the date of such termination, make itself available to consult with and advise the Owner, or its designee, regarding the operation, maintenance and leasing of the Properties.

(c)The Manager shall render to the Owner an accounting of all funds of the Owner in its possession and shall deliver to the Owner a statement of Management Fees claimed to be due the Manager and shall cause funds of the Owner held by the Manager relating to the Properties to be paid to the Owner or its designee.

(d)The Manager shall cooperate with the Owner to provide an orderly transition of the Manager’s duties hereunder.

ARTICLE VII
MISCELLANEOUS

7.1Notices. All notices, approvals, consents and other communications hereunder shall be in writing, and, except when receipt is required to start the running of a period of time, shall be deemed given when delivered in person or on the fifth day after its mailing by either party by registered or certified United States mail, postage prepaid and return receipt requested, to the other party, at the addresses set forth after their respect name below or at such different addresses as either party shall have theretofore advised the other party in writing in accordance with this Section 7.1.

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To the Owner:

American Realty Capital Healthcare Trust III, Inc. 405 Park Avenue, 14th Floor New York, NY 10022 Attention: Thomas P. D’Arcy, Chief Executive Officer, President and Secretary with a copy to: American Realty Capital Healthcare III Operating Partnership, L.P. 405 Park Avenue, 14th Floor New York, NY 10022 Attention: Thomas P. D’Arcy with a copy to: Proskauer Rose LLP Eleven Times Square New York, New York 10036 Attention: Peter M. Fass, Esq.

To the Manager:

American Realty Capital Healthcare III Properties, LLC 405 Park Avenue, 14th Floor New York, NY 10022 Attention: Thomas P. D’Arcy, Chief Executive Officer, President and Secretary with a copy to: Proskauer Rose LLP Eleven Times Square New York, New York 10036 Attention: Peter M. Fass, Esq.

7.2Governing Law. This Management Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of law thereof.

7.3Assignment. Except as permitted in Section 2.6 hereof, this Management Agreement may not be assigned by the Manager, except to an Affiliate of the Manager, and then only upon the consent of the Owner and the approval of a majority of the Independent Directors. Any assignee of the Manager shall be bound hereunder to the same extent as the Manager. This Management Agreement shall not be assigned by the Owner without the written consent of the Manager, except to a Person which is a successor to such Owner. Such successor shall be bound hereunder to the same extent as such Owner. Notwithstanding anything to the contrary contained herein, the economic rights of the Manager hereunder, including the right to receive all compensation hereunder, may be sold, transferred or assigned by the Manager without the consent of the Owner.

7.4No Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Management Agreement shall operate as a waiver

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thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrences. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

7.5Amendments. This Management Agreement may be amended only by an instrument in writing signed by the party against whom enforcement of the amendment is sought.

7.6Headings. The headings of the various subdivisions of this Management Agreement are for reference only and shall not define or limit any of the terms or provisions hereof.

7.7Counterparts. This Management Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.

7.8Entire Agreement. This Management Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.

7.9Disputes. If there shall be a dispute between the Owner and the Manager relating to this Management Agreement resulting in litigation, the prevailing party in such litigation shall be entitled to recover from the other party to such litigation such amount as the court shall fix as reasonable attorneys’ fees.

7.10Activities of the Manager. The obligations of the Manager pursuant to the terms and provisions of this Management Agreement shall not be construed to preclude the Manager from engaging in other activities or business ventures, whether or not such other activities or ventures are in competition with the Owner or the business of the Owner.

7.11Independent Contractor. The Manager and the Owner shall not be construed as joint venturers or partners of each other pursuant to this Management Agreement, and neither party shall have the power to bind or obligate the other except as set forth herein. In all respects, the status of the Manager to the Owner under this Management Agreement is that of an independent contractor.

7.12Pronouns and Plurals. Whenever the context may require, any pronoun used in this Management Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

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IN WITNESS WHEREOF, the parties have executed this Management Agreement as of the date first above written.

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC.

By: /s/ Thomas P. D’Arcy

Thomas P. D’Arcy,
Chief Executive Officer

AMERICAN REALTY CAPITAL HEALTHCARE III OPERATING PARTNERSHIP, L.P.

By: American Realty Capital Healthcare Trust III, Inc., its General Partner

By: /s/ Thomas P. D’Arcy

Thomas P. D’Arcy,
Chief Executive Officer

AMERICAN REALTY CAPITAL HEALTHCARE III ADVISORS, LLC

By: American Realty Capital Healthcare III Special Limited Partnership, LLC, its Member

By: American Realty Capital VII, LLC, its Managing Member

By: /s/ William M. Kahane

William M. Kahane

Authorized Signatory

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EX-10.14

Exhibit 10.14

AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

METROHEALTH BUCKEYE HEALTH CENTER

2816 EAST 116^TH STREET, CLEVELAND, OHIO 44120

THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Agreement”) is made and entered into as of the Effective Date by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), and 200 E. 18^TH LLC, a New York limited liability company (“Seller”).

In consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Terms and Definitions. The terms listed below shall have the respective meaning given them as set forth adjacent to each term.

(a)“Broker” shall mean Healthcare Real Estate Capital, LLC, acting as Seller’s agent.

(b)“Closing” shall mean the consummation of the transaction contemplated herein, which shall occur, subject to any applicable extension periods set forth in this Agreement, on the date that is five (5) business days after the last day of the Due Diligence Period (as defined herein), unless the Buyer waives the full Due Diligence Period and elects to close earlier by providing written notice thereof to Seller. The date of Closing is sometimes hereinafter referred to as the “Closing Date.” Neither party will need to be present at Closing, it being anticipated that the parties will deliver all Closing documents and deliverables in escrow to the Escrow Agent prior to the date of Closing.

(c)“Due Diligence Period” shall mean the period beginning upon the Effective Date and extending until 11:59 PM EDT on the date that is twenty-five (25) days thereafter or the date on which Seller receives written notice of Buyer’s waiver of the Due Diligence Period. Seller shall deliver to Buyer all of the Due Diligence Materials within five (5) business days after the Effective Date.

(d) “Earnest Money” shall mean Two Hundred Eighty Thousand and No/100 Dollars ($280,000.00). The Earnest Money shall be delivered to Escrow Agent within three (3) business days after the Effective Date. The Earnest Money shall be deposited by Buyer in escrow with Escrow Agent, to be applied as part payment of the Purchase Price at the time of Closing, or disbursed as agreed upon in accordance with the terms of this Agreement. Seller and Buyer each shall pay one-half of all reasonable escrow fees charged by Escrow Agent.

(e)“Effective Date” This Agreement shall be signed by both Seller and Buyer. The date that is one (1) business day after the date of execution and delivery of this Agreement by both Seller and Buyer shall be the “Effective Date” of this Agreement.

(f)“Escrow Agent” shall mean Stewart Title Guaranty Company, whose address is One Washington Mall - Suite 1400, Boston, MA 02108, Attention: Annette Comer, Telephone: 617-933-2441, Telecopy: 617-727-8372; E-Mail: acomer@stewart.com. The parties agree that the Escrow Agent and Buyer’s title agent, if any, shall be responsible for (x) organizing the issuance of the Title Commitment (hereinafter defined) and Title Policy (hereinafter defined), (y) preparation of the closing statement, and (z) collections and disbursement of the funds.

(g)“Guarantor” shall mean each guarantor, if any, of the Lease.

(h)“Guaranty” shall mean each Lease guaranty executed by a Guarantor.

(i)“Lease” shall mean that certain Shopping Center Lease Agreement, dated as of September 22, 2003, by and between E & A Northeast Limited Partnership, as predecessor-in-interest to Seller, as landlord, and The MetroHealth System, a county hospital board of trustees, (“Tenant”), as tenant.

(j)“Property” shall mean (1) that certain real property located at 2816 East 116^th Street, Cleveland, Ohio 44120, being more particularly described on Exhibit A, attached hereto and incorporated herein (the “Real Property”), together with all buildings, facilities and other improvements located thereon (collectively, the “Improvements”); (1) all right, title and interest of Seller under the Lease and all security deposits (if any) that Seller is holding pursuant to the Lease; (1) all right, title and interest of Seller in all machinery, furniture, lighting, electrical, mechanical, plumbing and heating, ventilation and air conditioning systems and other equipment used in connection with operation of the Real Property and the Improvements, and all carpeting, draperies, appliances and other fixtures and equipment attached or appurtenant to the Real Property and Improvements, and items of personal property of Seller attached or appurtenant to, located on or used in the ownership, use, operation or maintenance of the Property or the Improvements (collectively, the “Personalty”); (1) all right, title and interest of Seller, if any, to any unpaid award for (1) any taking or condemnation of the Property or any portion thereof, or (1) any damage to the Property or the Improvements by reason of a change of grade of any street or highway; (e) all easements, licenses, rights-of-way, air and subsurface rights and appurtenances relating to any of the foregoing, including, without limitation, any reciprocal easement agreements and parking lot agreements; (f) all right, title and interest of Seller in and to any warranties and guaranties respecting the Improvements and Personalty; (g) all right, title and interest of Seller in and to all licenses, permits, authorizations and approvals issued by any governmental agency or authority which pertain to the Real Property and the Improvements, to the extent they exist and are transferable and assignable; (h) to the extent the same are assignable, all site plans, surveys, and plans which relate to the Real Property; and (i) all right, title and interest of Seller in and to any tradenames, logos (including any federal or state trademark or tradename registrations), or other identifying name or mark now used in connection with the Real Property and/or the Improvements, but expressly excluding any such property to the extent owned by Tenant.

(k)“Purchase Price” shall mean Five Million Five Hundred Fifty Thousand and No/100 Dollars ($5,550,000.00). The Purchase Price is based upon information made available to Buyer by Seller and its representatives and is subject to change if such information is inaccurate or additional information is discovered during the Due Diligence Period.

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(l)Seller and Buyer’s Notice address

(i)“Seller’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

200 E. 18th LLC

100 Garden City Plaza, Suite 102

Garden City, NY 11530

Attention: Seth Fortgang

Tel. No.: (516) 967-0206

Email: Sfortgang@fortprov.com

And to:

Moritt Hock & Hamroff LLP

Attn: David Cohen

100 Garden City Plaza

Garden City, NY 11530

Tel. No.: (516) 873-2000

Email: dcohen@moritthock.com

(ii)“Buyer’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

Thomas P. D’Arcy

c/o American Realty Capital VII, LLC

405 Park Avenue, 14^th Floor

New York, NY 10022

Tel. No.: (212) 415-6500

Email: TD’Arcy@arlcap.com

And to:

Jesse Galloway, Esq.

c/o American Realty Capital VII, LLC

405 Park Avenue, 14^th Floor

New York, NY 10022

Tel. No.: (212) 415-6516

Email: jgalloway@arlcap.com

And Due Diligence Materials (if provided by email) to:

duediligence@arlcap.com

With hard copies and/or cds to:

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Jim Mezzanotte

c/o American Realty Capital VII, LLC

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Tel. No.: (704) 626-4400

Email: jmezzanotte@arlcap.com

2.Purchase and Sale of the Property. Subject to the terms of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property for the Purchase Price.

3.Payment of Purchase Price. The Purchase Price to be paid by Buyer to Seller shall be paid by wire transfer of immediately available funds in the amount of the Purchase Price plus or minus prorations, credits and adjustments as provided in Section 4 and elsewhere in this Agreement to Escrow Agent, at the time of Closing, or as otherwise agreed to between Buyer and Seller.

4.Proration of Expenses and Payment of Costs and Recording Fees.

(a)All real estate taxes, rollback taxes, personal property taxes, water and sewer use charges, and any other charges and assessments constituting a lien on the Property (collectively “Taxes and Assessments”) due and payable on or before the Closing Date shall be remitted to the collecting authorities or to the Escrow Agent by Seller prior to or at Closing. At Closing there shall be no adjustments between Buyer and Seller for Taxes and Assessments not yet due and payable on the Closing Date unless the payment of such Taxes and Assessments under the terms of the Lease is not the obligation of the Tenant.

(b)All rents shall be prorated as of the Closing Date with Buyer being credited for rent attributable to the day of Closing through and including the last day of the calendar month in which the Closing Date occurs.

(c)Seller shall pay or be charged with the following costs and expenses in connection with this transaction:

(i)50% of all Title Policy premiums, including search costs and any endorsements issued in connection with such policy, if any;

(ii)Documentary stamp taxes and conveyance fees on the sale and transfer of the Property;

(iii)Broker’s commission payments, in accordance with Section 24 of this Agreement;

(iv)Any unpaid leasing commissions or tenant improvement allowances, or outstanding rent concessions related to the Lease, whether or not due and payable; and

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(v)All fees relating to the granting, executing and recording of the Deed for the Property and for any costs incurred in connection with the release of existing debt, including, but not limited to, prepayment penalty fees and recording fees for documents providing for the release of the applicable Property from the existing debt.

(d)Buyer shall pay or be charged with the following costs and expenses in connection with this transaction:

(i)50% of all Title Policy premiums, including search costs and any endorsements issued in connection with such policy, if any;

(ii)all costs and expenses in connection with Buyer’s financing, including appraisal, points, commitment fees and the like and costs for the filing of all documents necessary to complete such financing and related documentary stamp tax and intangibles tax; and

(iii)Buyer shall pay for the cost of its own survey, Phase I environmental study and due diligence investigations.

(e)    Each party shall pay its own legal fees incidental to the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

5.Title. At Closing, Seller agrees to convey to Buyer fee simple marketable title to the Property by special warranty deed, free and clear of all liens, defects of title, conditions, easements, assessments, restrictions, and encumbrances except for Permitted Exceptions (as hereinafter defined).

6.Examination of Property. Seller and Buyer hereby agree as follows:

(a)Buyer shall order a title commitment (the “Title Commitment”) from Escrow Agent, a survey and a zoning report for the Property promptly after the date hereof. All matters shown in the Title Commitment, survey or zoning report (“Title Matters”) with respect to which Buyer fails to object prior to the expiration of the Due Diligence Period shall be deemed “Permitted Exceptions”. However, Permitted Exceptions shall not include, and Seller shall be obligated to remove of record prior to or at Closing, any mechanic’s lien or any monetary lien, fine or penalty, or any deeds of trust, mortgage, or other loan documents secured by the Property or any judgments and federal and state tax liens (collectively, “Liens”). Seller shall be required to cure or remove all Liens (by payment, bond deposit or indemnity acceptable to Escrow Agent). Seller agrees to remove or cure any objections of Buyer which are of a nature that are capable of being cured with reasonable efforts prior to Closing, including the payment of a sum of money in connection therewith. Seller shall have no obligation to cure any Title Matter objected to, except the Liens as aforesaid, provided Seller notifies Buyer of any objections which Seller elects not to remove or cure within five (5) business days following receipt of Buyer’s objections. In the event that Seller refuses to remove or cure any objections, Buyer shall have the right to terminate this Agreement upon written notice to Seller given within five (5) business days after receipt of Seller’s notice, upon which termination the Earnest Money, and all interest earned thereon, shall be returned

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to Buyer and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein. If any matter not revealed in the Title Commitment is discovered by Buyer or by the Escrow Agent and is added to the Title Commitment by the Escrow Agent at or prior to Closing, Buyer shall have until the earlier of (i) ten (10) days after the Buyer’s receipt of the updated, revised Title Commitment showing the new title exception, together with a legible copy of any such new matter, or (ii) the Closing Date, to provide Seller with written notice of its objection to any such new title exception (an “Objection”). If Seller does not remove or cure such Objection prior to the Closing Date, Buyer may terminate this Agreement, in which case the Earnest Money, together with all interest earned thereon, shall be returned to Buyer, Seller shall reimburse Buyer for all out of pocket costs and expenses incurred hereunder and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein.

(b)Within five (5) business days following the Effective Date, Seller shall provide to Buyer copies of the following documents and materials pertaining to the Property to the extent within Seller’s possession or reasonably obtainable by Seller or Seller’s counsel: (i) a complete copy of all leases and lease guaranties affecting the Property and all amendments thereto and of all material correspondence relating thereto; (ii) a copy of all surveys and site plans of the Property, including, without limitation, any as-built surveys obtained or delivered to the Tenant of the Property in connection with its construction; (iii) a copy of all architectural plans and specifications and construction drawings for improvements located on the Property; (iv) a copy of Seller’s title insurance commitments and policies relating to the Property; (v) a copy of the certificate of occupancy and zoning reports for the Property and of all governmental permits and approvals; (vi) a copy of all environmental, engineering and physical condition reports for the Property; (vii) the operating budget and any CAM reconciliations of the Property for the current year and following year, if available; (viii) the operating statements and delinquency reports of the Property for the twenty-four (24) month period immediately preceding the Purchase and Sale Agreement effective date; (ix) copies of the Property’s real estate tax bills for the current and prior two (2) tax years; (x) all service contracts and insurance policies which affect the Property, if any; (xi) a copy of all warranties relating to the improvements constructed on the Property, including without limitation any structural slab or roof warranties; (xii) a written inventory of all items of personal property to be conveyed to Buyer, if any; (xiii) updated set of Tenant’s financials to be provided through the Closing Date to extent reasonably available to Seller and consistent with Tenant’s reporting requirements; (xiv) complete copy of any feasibility study completed by the developer; (xv) a copy of all primary and secondary state licenses or regulatory permits for the Property; and (xvi) a copy of any documents relating to a waiver of life safety code or physical plant requirements (collectively, the “Due Diligence Materials”). Seller shall deliver any other documents relating to the Property reasonably requested by Buyer, to the extent within Seller’s possession or reasonably obtainable by Seller or Seller’s counsel, within three (3) business days following such request. Additionally, during the term of this Agreement, Buyer, its agents and designees, shall have the right to enter the Property for the purposes of inspecting the Property, conducting soil tests, and making surveys, mechanical and structural engineering studies, inspecting construction, and conducting any other investigations and inspections as Buyer may reasonably require to assess the condition and suitability of the Property; provided, however, that such activities by or on behalf of Buyer on the Property shall not damage the Property or the conduct of business by Tenant under the Lease; and provided further, however, that Buyer shall indemnify and hold Seller harmless from and against any and all

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claims or damages to the extent resulting from the activities of Buyer on the Property, and Buyer shall repair any and all damage caused, in whole or in part, by Buyer and return the Property to substantially its condition prior to such damage, which obligation shall survive Closing or any termination of this Agreement. Any company that does invasive testing at the Property shall name the Seller, its Mortgagee and Management Company, if any, as additional named insured, on policies covering the invasive testing done at the Property. Seller shall reasonably cooperate with the efforts of Buyer and the Buyer’s representatives to inspect the Property. After the Effective Date, Buyer shall be permitted to speak and meet with Tenant in connection with Buyer’s due diligence. Upon signing this Agreement, Seller shall provide Buyer with the name of a contact person(s) for the purpose of arranging site visits. Buyer shall give Seller reasonable written notice (which in any event shall not be less than two (2) business days) before entering the Property, and Seller may have a representative present during any and all examinations, inspections and/or studies on the Property. Buyer shall have the unconditional right, for any reason or no reason, to terminate this Agreement by giving written notice thereof to Seller and the Escrow Agent prior to the expiration of the Due Diligence Period, in which event this Agreement shall become null and void, Buyer shall receive a refund of the Earnest Money, together with all interest earned thereon, and all rights, liabilities and obligations of the parties under this Agreement shall expire, except as otherwise expressly set forth herein.

(c)Within two (2) business days following the Effective Date, Seller shall request a waiver of any first right of refusal, right of first offer or other purchase right that any party may have to purchase the Property (and simultaneously provide Buyer with copies of such requests). Within two (2) business days following the Effective Date, Seller shall deliver to Buyer a draft of the completed Estoppel Certificate (defined below). It shall be a condition of Closing that Seller shall have obtained a tenant and guarantor estoppel certificate certified to Buyer, its lender and their successors and assigns in the form attached hereto as Exhibit F, or to the extent the Lease explicitly requires a particular form, in the form required under the Lease (the “Estoppel Certificate”). Seller shall promptly deliver to Buyer a photocopy or pdf file of the executed Estoppel Certificate when Seller receives the same.

(d)Seller shall use good faith efforts to obtain estoppel certificates with respect to reciprocal easement agreements affecting the Property, as may be reasonably requested by Buyer.

(e)On or before the expiration of the Due Diligence Period, Buyer shall notify Seller in writing if Buyer elects not to assume at Closing any of the Contracts (defined below). If Buyer does not notify Seller prior to the expiration of the Due Diligence Period that it elects not to assume any of the Contracts, Buyer shall be deemed to have accepted and agreed to assume all of the Contracts. If Buyer exercises its right not to assume one or more Contracts at Closing, Seller shall give notice of termination of such disapproved Contract(s); provided, if by the terms of the disapproved Contract Seller has no right to terminate same on or prior to Closing, Buyer shall be required at Closing to assume all obligations thereunder until the effective date of the termination; provided, further, if any fee or other compensation is due under any disapproved Contract as a result of such termination, whether payable before or after the Closing Date, Seller shall remain obligated to pay the contractor or to reimburse Buyer for the payment of the termination charge.

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Notwithstanding the foregoing, Seller shall, without notice from Buyer, terminate any and all property management and listing agreements prior to Closing at Seller’s sole cost and expense.

(f)Seller shall cause its property manager to complete the Property Manager Questionnaire in the form attached hereto as Exhibit L and return the same to Buyer within ten (10) days following the Effective Date.

7.Risk of Loss/Condemnation. Upon an occurrence of a casualty, condemnation or taking, Seller shall notify Buyer in writing of same. Until Closing, the risk of loss or damage to the Property, except as otherwise expressly provided herein, shall be borne by Seller. In the event all or any portion of the Property is damaged in any casualty or condemned or taken (or notice of any condemnation or taking is issued) so that: (a) Tenant has a right of termination or abatement of rent under the Lease, whether or not the restoration work shall be timely completed, or (b) with respect to any casualty, if the cost to repair such casualty would exceed $50,000, or (c) with respect to any condemnation, any Improvements or access to the Property or more than five percent (5%) of the Property is (or will be) condemned or taken, then, Buyer may elect to terminate this Agreement by providing written notice of such termination to Seller within ten (10) business days after Buyer’s receipt of written notice of such condemnation, taking or damage, upon which termination, the Earnest Money, together with all interest earned thereon, shall be returned to the Buyer and neither party hereto shall have any further rights, obligations or liabilities under this Agreement, except as otherwise expressly set forth herein. With respect to any condemnation or taking (of any notice thereof), if Buyer does not elect to cancel this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the awards, if any, for the condemnation or taking, and Buyer shall be entitled to receive and keep all such awards. With respect to a casualty, if Buyer does not elect to terminate this Agreement or does not have the right to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the proceeds under Seller’s insurance policies covering such Property with respect to such damage or destruction (or pay to Buyer any such proceeds received prior to Closing) and pay to Buyer the amount of any deductible with respect thereto, and Buyer shall be entitled to receive and keep any monies received from such insurance policies.

8.Earnest Money Disbursement. The Earnest Money shall be held by Escrow Agent, in trust, and disposed of only in accordance with the following provisions:

(a)If the Closing occurs, Escrow Agent shall deliver the Earnest Money to, or upon the instructions of, Seller and Buyer on the Closing Date to be applied as part payment of the Purchase Price. If for any reason the Closing does not occur, Escrow Agent shall deliver the Earnest Money to Seller or Buyer only upon receipt of a written demand therefor from such party, subject to the following provisions of this clause (a). Subject to the last sentence of this clause (a), if for any reason the Closing does not occur and either party makes a written demand (the “Demand”) upon Escrow Agent for payment of the Earnest Money, Escrow Agent shall give written notice to the other party of the Demand within one (1) business day after receipt of the Demand. If Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) business days after the giving of such notice by Escrow Agent, Escrow Agent is hereby

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authorized to make the payment set forth in the Demand. If Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court. Notwithstanding the foregoing provisions of this clause (a), if Buyer delivers a notice to Escrow Agent and Seller stating that Buyer has terminated this Agreement on or prior to the expiration of the Due Diligence Period, then Escrow Agent shall immediately return the Earnest Money, together with all interest earned thereon, to Buyer without the necessity of delivering any notice to, or receiving any notice from Seller.

(b)The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent’s mistake of law respecting the scope or nature of Escrow Agent’s duties. Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent’s duties hereunder, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement or involving negligence on the part of Escrow Agent. Escrow Agent has executed this Agreement in the place indicated on the signature page hereof in order to confirm that Escrow Agent shall hold the Earnest Money in escrow and shall disburse the Earnest Money pursuant to the provisions of this Section 8.

9.Default

(a)In the event that Seller is ready, willing and able to close in accordance with the terms and provisions hereof, and Buyer defaults in any of its obligations undertaken in this Agreement, Seller shall be entitled, as its sole and exclusive remedy, to either: (i) if Buyer is willing to proceed to Closing, waive such default and proceed to Closing in accordance with the terms and provisions hereof; or (ii) declare this Agreement to be terminated, and Seller shall be entitled to immediately receive all of the Earnest Money as liquidated damages as and for Seller’s sole remedy. Upon such termination, neither Buyer nor Seller shall have any further rights, obligations or liabilities hereunder, except as otherwise expressly provided herein. Seller and Buyer agree that (a) actual damages due to Buyer’s default hereunder would be difficult and inconvenient to ascertain and that such amount is not a penalty and is fair and reasonable in light of all relevant circumstances, (b) the amount specified as liquidated damages is not disproportionate to the damages that would be suffered and the costs that would be incurred by Seller as a result of having withdrawn the Property from the market, and (c) Buyer desires to limit its liability under this Agreement to the amount of the Earnest Money paid in the event Buyer fails to complete Closing, and such amount shall be paid to Seller as liquidated damages and as Seller’s sole remedy hereunder. Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer. In no event under this Section or otherwise shall Buyer be liable to Seller for any punitive, speculative or consequential damages.

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(b)In the event of a default in the obligations herein taken by Seller with respect to the Property, Buyer may, as its sole and exclusive remedy, either: (i) waive any unsatisfied conditions and proceed to Closing in accordance with the terms and provisions hereof; (ii) terminate this Agreement by delivering written notice thereof to Seller no later than Closing, upon which termination the Earnest Money, together with all interest earned therein, shall be refunded to Buyer, Seller shall pay to Buyer all of the out-of-pocket costs and expenses incurred by Buyer in connection with this Agreement, which return and payment shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof; (iii) enforce specific performance of Seller’s obligations hereunder; or (iv) by notice to Seller given on or before the Closing Date, extend the Closing Date for a period of up to thirty (30) days (the “Closing Extension Period”) to permit Seller to remedy any such default, and the “Closing Date” shall be moved to the last day of the Closing Extension Period. If Buyer so extends the Closing Date, then Seller may, but shall not be obligated to, cause said conditions to be satisfied during the Closing Extension Period. If Seller does not cause said conditions to be satisfied during the Closing Extension Period, then Buyer shall have the remedies set forth in Section 9(b) (i) through (iii) above, except that the term “Closing” shall read “Extended Closing.”

Notwithstanding the foregoing, in the event of a willful or intentional default of Seller hereunder, Buyer shall, in addition to the foregoing remedies, be permitted to pursue any and all rights and remedies available to Buyer at law or in equity; provided, however, in no event shall Seller be liable to Buyer for any punitive, speculative or indirect consequential damages.

10.Closing. The Closing shall consist of the execution and delivery of documents by Seller and Buyer, as set forth below, and delivery by Buyer to Seller of the Purchase Price in accordance with the terms of this Agreement. Seller shall deliver to Escrow Agent for the benefit of Buyer at Closing the following executed documents:

(a)A Limited Warranty Deed in the form and substance substantially similar as that attached hereto as Exhibit B, except that the “Exhibit B” contained therein shall be replaced with the Permitted Exceptions, as defined in Section 6(a) herein and the “AS-IS” and “WITH ALL FAULTS” language contained therein shall be modified to conform with the representations and disclaimers contained in this Agreement (the “Deed”);

(b)An Assignment and Assumption of Lease, Guaranty and Security Deposit, in the form attached hereto as Exhibit C;

(c)A Bill of Sale for the Personalty, if any, in the form attached hereto as Exhibit D;

(d)An Assignment of Contracts, Permits, Licenses and Warranties in the form of Exhibit E;

(e)An original of the Estoppel Certificate from Tenant and Guarantor dated no earlier than thirty (30) days prior to the date of Closing. The Estoppel Certificate must (i) reflect the business terms of the Lease, (ii) not reflect any defaults, (iii) be fully completed, dated and

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executed, and (iv) be certified to Buyer and its lender. If the Lease and any amendments, bearing the original signatures of the landlord and tenant thereunder have not been delivered to Buyer previously, a copy thereof confirming that the copy is true, correct and complete shall be attached to the Estoppel Certificate;

(f)To the extent obtained by Seller, estoppel certificates with respect to reciprocal easement agreements as may be reasonably requested by Buyer;

(g)A settlement statement setting forth the Purchase Price, all prorations and other adjustments to be made pursuant to the terms hereof, and the funds required for Closing as contemplated hereunder;

(h)All transfer tax statements, declarations and filings as may be necessary or appropriate for purposes of recordation of the deed;

(i)Good standing certificates and corporate resolutions or member or partner consents, as applicable, and such other documents as reasonably requested by Escrow Agent;

(j)Originals of the Warranties (as hereinafter defined) re-issued at Seller’s expense to Buyer or Tenant, as requested by Buyer;

(k)A certificate pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended, or the regulations issued pursuant thereto, certifying the non-foreign status of Seller in the form attached hereto as Exhibit M;

(l)An owner’s title affidavit as to mechanics’ liens and possession and other matters in customary form reasonably acceptable to Buyer and Escrow Agent;

(m)ALetter to Tenant in form of Exhibit H attached hereto, with such changes as Buyer might reasonably require;

(n)A bring down certificate with respect to Seller’s representations and warranties provided herein in the form attached hereto as Exhibit N;

(o)Certificates of insurance or other evidence reasonably satisfactory to Buyer memorializing and confirming that Tenant is then maintaining policies of insurance of the types and in the amounts required by the Lease, which shall name Buyer and its mortgagee as additional insured parties and/or as loss payees and/or mortgagees, as appropriate, as their respective interests may appear;

(p)All records (including originals) within Seller’s or Seller’s managing agent’s possession or reasonably obtainable by such parties reasonably required for the continued operation of the Property, including but not limited to, service contracts, plans, surveys, the Lease, the Guaranty, lease files, licenses, permits, warranties, guaranties, and records of current expenditures for repairs and maintenance; and

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(q)Such other instruments as are reasonably required by Escrow Agent to close the escrow and consummate the purchase of the Property in accordance with the terms hereof.

At Closing, Buyer shall instruct Escrow Agent to deliver the Earnest Money, together with all interest earned thereon, to Seller which shall be applied to the Purchase Price, shall deliver the balance of the Purchase Price to Seller and shall execute and deliver execution counterparts of the closing documents referenced in clauses (b), (g) and (h) above. Buyer shall have the right to advance the Closing upon five (5) days prior written notice to Seller; provided that all conditions precedent to both Buyer’s and Seller’s respective obligations to proceed with Closing under this Agreement have been satisfied (or, if there are conditions to a party’s obligation to proceed with Closing that remain unsatisfied, such conditions have been waived by such party). Buyer shall have a one-time right to extend the Closing for up to thirty (30) business days upon written notice to Seller to be received by Seller on or prior to the date scheduled for the Closing. If Buyer timely exercises this right to extend, any document that Seller is obligated to provide that is “time sensitive” does not need to be provided again by Seller. The Closing shall be held through the mail by delivery of the closing documents to the Escrow Agent on or prior to the Closing or such other place or manner as the parties hereto may mutually agree.

11.Representations by Seller. For the purpose of inducing Buyer to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, Seller makes the following representations and warranties to Buyer as of the date hereof and as of the Closing Date:

(a)Seller is duly organized (or formed), validly existing and in good standing under the laws of its state of organization, and to the extent required by law, the State in which the Property is located. Seller has the power and authority to execute and deliver this Agreement and all closing documents to be executed by Seller, and to perform all of Seller’s obligations hereunder and thereunder. Neither the execution and delivery of this Agreement and all closing documents to be executed by Seller, nor the performance of the obligations of Seller hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Seller or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Seller is bound. The execution, delivery and performance of this Agreement does not require the consent or approval of any court, administrative or governmental authority and does not result in the creation or imposition of any lien or equity of any kind whatsoever upon, or give to any other person any interest or right (including any right of termination or cancellation) in or with respect to, any material agreement to which Seller is a party or the business or operations of Seller or any of its properties or assets;

(b)Seller has not received any written notice of any current or pending litigation, condemnation proceeding or tax appeals affecting Seller or the Property and Seller does not have any knowledge of any pending litigation or tax appeals against Seller or the Property; Seller has not initiated, nor is Seller participating in, any action for a change or modification in the current subdivision, site plan, zoning or other land use permits for the Property;

(c)Attached hereto as Exhibit J is a true, correct and complete list of all contracts and agreements relating to the operation or maintenance of the Property (the “Contracts”). Other

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than the Lease and the Contracts, Seller has not entered into any agreements affecting the Property which will be binding upon Buyer after the Closing;

(d)Except for violations which have been cured or remedied on or before the date hereof, Seller has not received any written notice from (or delivered any notice to) any governmental authority regarding any violation of any law applicable to the Property and Seller does not have knowledge of any such violations, and the Property shall be delivered free from all violations at Closing;

(e)Seller has fee simple title to the Property free and clear of all liens and encumbrances except for Permitted Exceptions and Seller is the sole owner of the entire lessor’s interest in the Lease. The Property constitutes one or more separate tax parcels for purposes of ad valorem taxation;

(f)With respect to the Lease: (i) the Lease forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Lease; (ii) the Lease is in full force and effect and there is no default thereunder; (iii) no brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the current term of the Lease or any extension or renewal thereof; (iv) Seller has no outstanding obligation to provide Tenant with an allowance to construct, or to construct at its own expense, any tenant improvements; (v) the total scheduled annual base rent for the current term of the Lease is $402,373.56per annum; (vi) Tenant is notentitled to rental concessions or abatements for any period subsequent to the scheduled date of Closing; (vii) Tenant has not prepaid any rents as of the date hereof nor has Tenant delivered a security deposit, letter of credit or other security in connection with the Lease, except as set forth on Exhibit K attached hereto; (viii) Tenant has not made any request for any assignment, transfer, or subletting in connection with all or a portion of the premises demised to Tenant which is presently pending or under consideration by Seller; (ix) all specified work required to be performed by the landlord under the Lease has been completed; (x) Seller has not received and has no knowledge of any pending notices from Tenant electing to vacate the premises leased to Tenant or exercising any right of Tenant to terminate the Lease; and (xi) Seller has heretofore billed Tenant for all fixed rent and additional rent due under the Lease as of the date hereof;

(g)There are no occupancy rights, leases or tenancies affecting the Property other than the Lease. Neither this Agreement nor the consummation of the transactions contemplated hereby is subject to any right of first refusal, right of first offer or other purchase right in favor of any person or entity; and apart from this Agreement, Seller has not entered into any written agreements for the purchase or sale of the Property, or any interest therein which has not been terminated;

(h)The transactions contemplated hereby either (i) will not constitute a sale of all or substantially all the assets of Seller, or (ii) if such transaction does constitute a sale of all or substantially all the assets of any Seller, Seller shall provide to Buyer at Closing an excise tax lien waiver or such other reasonably obtainable instruments evidencing compliance with laws or payment of taxes to the extent required by the law of the relevant state, or an indemnification from a party

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reasonably acceptable to Buyer for any resulting liability with respect to the period prior to the Closing;

(i)To Seller’s knowledge, except as set forth in the environmental reports previously delivered by Seller to Buyer, no hazardous substances have been generated, stored, released, or disposed of on or about the Property in violation of any law, rule or regulation applicable to the Property which regulates or controls matters relating to the environment or public health or safety (collectively, “Environmental Laws”) and no adverse environmental condition exists at the Property. Seller has not received any written notice from (nor delivered any notice to) any federal, state, county, municipal or other governmental department, agency or authority (1) concerning any petroleum product or other hazardous substance discharge or seepage at, on, around or under the Property, or migrating from the Property, in violation of any Environmental Laws or; (2) of any pending actions, suits, claims and/or proceedings claiming that Seller, Tenant or the Property is in violation of any Environmental Laws. For purposes of this Subsection, “hazardous substances” shall mean any substance or material which is defined or deemed to be hazardous or toxic pursuant to any Environmental Laws. To Seller’s knowledge, there are no underground storage tanks located on the Property;

(j)Exhibit I attached hereto is a true, correct and complete listing of all warranties in effect for the Property (the “Warranties”);

(k)Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code;

(l)There presently exists no unrestored casualty or condemnation affecting the Property; and

(m)With respect to the Guaranty: (a) the Guaranty forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Guaranty; and (b) the Guaranty is in full force and effect and there is no default thereunder.

The representations and warranties of Seller shall survive Closing for a period of one (1) year.

12.Representationsby Buyer. Buyer represents and warrants to, and covenants with, Seller as follows:

(a)Buyer is duly formed, validly existing and in good standing under the laws of Delaware, is authorized to consummate the transaction set forth herein and fulfill all of its obligations hereunder and under all closing documents to be executed by Buyer, and has all necessary power to execute and deliver this Agreement and all closing documents to be executed by Buyer, and to perform all of Buyer’s obligations hereunder and thereunder. This Agreement and all closing documents to be executed by Buyer have been duly authorized by all requisite corporate or other required action on the part of Buyer and are the valid and legally binding obligation of Buyer, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement and all closing documents to be executed by Buyer, nor the performance of the

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obligations of Buyer hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Buyer or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Buyer is bound.

The representations and warranties of Buyer shall survive Closing for a period of one (1) year.

13.Conditions Precedent to Buyer’s Obligations. Buyer’s obligation to pay the Purchase Price, and to accept title to the Property, shall be subject to compliance by Seller with the following conditions precedent on and as of the date of Closing:

(a)Seller shall deliver to Buyer on or before the Closing the items set forth in Section 10 above;

(b)Buyer shall receive from Escrow Agent or any other title insurer approved by Buyer in its judgment and discretion, a current ALTA owner’s form of title insurance policy, or irrevocable and unconditional binder to issue the same, with extended coverage for the Real Property and the Improvements (including any beneficial easements) in the amount of the Purchase Price (or such lesser amount of the Purchase Price allocable to the Property), dated, or updated to, the date of the Closing, insuring, or committing to insure, at its ordinary premium rates Buyer’s good and marketable title in fee simple to the Real Property and the Improvements and otherwise in such form and with such endorsements as provided in the title commitment approved by Buyer pursuant to Section 6 hereof and subject only to the Permitted Exceptions (the “Title Policy”);

(c)Buyer shall have received a valid and permanent final certificate of occupancy (or the equivalent thereof) for the Property which shall not contain any contingencies or require any additional work to be completed;

(d)Tenant shall be in possession of the premises demised under the Lease, open for business to the public and paying full and unabated rent under the Lease, and shall not have assigned the Lease;

(e)The representations and warranties of Seller contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Seller shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Seller prior to or at the Closing;

(f)Seller shall have delivered to Buyer a written waiver by any party of any right of first refusal, right of first offer or other purchase option that such party has to purchase the Property from Seller; and

(g)Seller shall have made all contributions, payments and/or reimbursements and completed any and all work required by any governmental authority in connection with the

15

construction and development of the Property, including, without limitation, as required by any variance or site plan approval.

In the event that the foregoing conditions precedent have not been satisfied as of Closing, Buyer shall have the rights and remedies set forth in Section 9(b) of this Agreement.

14.Conditions Precedent to Seller’s Obligations. Seller’s obligation to deliver title to the Property shall be subject to compliance by Buyer with the following conditions precedent on and as of the date of Closing:

(a)Buyer shall deliver to Escrow Agent on the Closing Date the remainder of the Purchase Price, subject to adjustment of such amount pursuant to Section 4 hereof; and

(b)The representations and warranties of Buyer contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Buyer shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Buyer prior to or at the Closing.

15.Notices. Unless otherwise provided herein, all notices and other communications which may be or are required to be given or made by any party to the other in connection herewith shall be in writing and shall be deemed to have been properly given and received on the date: (i) delivered by facsimile transmission or by electronic mail (e.g. email), (ii) delivered in person, (iii) deposited in the United States mail, registered or certified, return receipt requested, or (iv) deposited with a nationally recognized overnight courier, to the addresses set out in Section 1, or at such other addresses as specified by written notice delivered in accordance herewith. Notwithstanding the foregoing, Seller and Buyer agree that notice may be given on behalf of each party by the counsel for each party and notice by such counsel in accordance with this Section 15 shall constitute notice under this Agreement.

16.Seller Covenants. Seller agrees that it: (a) shall continue to operate and manage the Property in the same manner in which Seller has previously operated and managed the Property; (b) shall, subject to Section 7 hereof and subject to reasonable wear and tear, maintain the Property in the same (or better) condition as exists on the date hereof; and (c) shall not, without Buyer’s prior written consent, which, after the expiration of the Due Diligence Period may be withheld in Buyer’s sole discretion: (i) amend the Lease in any manner, or enter into any new lease, license agreement or other occupancy agreement with respect to the Property; (ii) consent to an assignment of the Lease or a sublease of the premises demised thereunder or a termination or surrender thereof; (iii) terminate the Lease or release any guarantor of or security for the Lease unless required by the express terms of such Lease; and/or (iv) cause, permit or consent to an alteration of the premises demised under the the Lease (unless such consent is non-discretionary). Seller shall promptly inform Buyer in writing of any material event adversely affecting the ownership, use, occupancy or maintenance of the Property, whether insured or not.

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17.314 Audit. Upon Buyer’s request, for a period of one (1) year after Closing, Seller shall make the financial statements, including balance sheets, income statements, stockholders’ equity statements and cash flow statements and related notes prepared in accordance with United States generally accepted accounting standards, and any and all books, records, correspondence, financial data, leases, delinquency reports and all other documents and matters (other than confidential and privileged information) maintained by Seller or their agents and relating to receipts, expenditures, contributions and distributions reasonably necessary to complete an audit pertaining to the Property for the three (3) most recent full calendar years and the interim period of the current calendar year (collectively, the “Records”) available to Buyer and/or its auditors for inspection, copying and audit by Buyer’s designated accountants, and at Buyer’s expense. Seller shall provide Buyer and/or its auditors, but without expense to Seller, with copies of, or access to, such factual and financial information as may be reasonably requested by Buyer or its designated accountants, and in the possession or control of Seller, to enable Buyer to file any filings required by the Securities and Exchange Commission (the “SEC”) in connection with the purchase of the Property. Seller understands and acknowledges that Buyer is required to file audited financial statements related to the Property with the SEC within seventy-one (71) days of the Closing Date and agrees to provide any Records and requested reasonable representations and/or certifications to the Buyer’s auditors, on a timely basis to facilitate Buyer’s timely submission of such audited financial statements.

18.Performance on Business Days. A "business day" is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government. Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day.

19.Entire Agreement. This Agreement constitutes the sole and entire agreement among the parties hereto and no modification of this Agreement shall be binding unless in writing and signed by all parties hereto. No prior agreement or understanding pertaining to the subject matter hereof (including, without limitation, any letter of intent executed prior to this Agreement) shall be valid or of any force or effect from and after the date hereof.

20.Severability. If any provision of this Agreement, or the application thereof to any person or circumstance, shall be invalid or unenforceable, at any time or to any extent, then the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. Each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

21.No Representations or Warranties. Buyer hereby acknowledges, understands and agrees that it has an opportunity to inspect the Property as set forth in Section 6 herein, and except as set forth in this Agreement, the Property shall be conveyed at Closing to Buyer in “as-is” condition with no representation or warranties whatsoever.

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22.Applicable Law. This Agreement shall be construed under the laws of the State or Commonwealth in which the Property is located, without giving effect to any state's conflict of laws principles.

23.Tax-Deferred Exchange. Buyer and Seller respectively acknowledge that the purchase and sale of the Property contemplated hereby may be part of a separate exchange (an “Exchange”) being made by each party pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated with respect thereto. In the event that either party (the “Exchanging Party”) desires to effectuate such an exchange, then the other party (the “Non-Exchanging Party”) agrees to cooperate fully with the Exchanging Party in order that the Exchanging Party may effectuate such an exchange; provided, however, that with respect to such Exchange (a) all additional costs, fees and expenses related thereto shall be the sole responsibility of, and borne by, the Exchanging Party; (b) the Non-Exchanging Party shall incur no additional liability as a result of such exchange; (c) the contemplated exchange shall not delay any of the time periods or other obligations of the Exchanging Party hereby, and without limiting the foregoing, the scheduled date for Closing shall not be delayed or adversely affected by reason of the Exchange; (d) the accomplishment of the Exchange shall not be a condition precedent or condition subsequent to the Exchanging Party's obligations under the Agreement; and (e) the Non-Exchanging Party shall not be required to hold title to any land other than the Property for purposes of the Exchange. The Exchanging Party agrees to defend, indemnify and hold the Non-Exchanging Party harmless from any and all liability, damage or cost, including, without limitation, reasonable attorney's fees that may result from Non-Exchanging Party's cooperation with the Exchange. The Non-Exchanging Party shall not, by reason of the Exchange, (i) have its rights under this Agreement, including, without limitation, any representations, warranties and covenants made by the Exchanging Party in this Agreement (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller), or in any of the closing documents (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller) contemplated hereby, adversely affected or diminished in any manner, or (ii) be responsible for compliance with or deemed to have warranted to the Exchanging Party that the Exchange complies with Section 1031 of the Code.

24.Broker’s Commissions. Buyer and Seller each hereby represent that, except for the Broker listed herein, there are no other brokers involved or that have a right to proceeds in this transaction. Seller shall be responsible for payment of commissions to the Broker pursuant to a separate written agreement executed by Seller. Seller and Buyer each hereby agree to indemnify and hold the other harmless from all loss, cost, damage or expense (including reasonable attorneys' fees at both trial and appellate levels) incurred by the other as a result of any claim arising out of the acts of the indemnifying party (or others on its behalf) for a commission, finder's fee or similar compensation made by any broker, finder or any party who claims to have dealt with such party (except that Buyer shall have no obligations hereunder with respect to any claim by Broker). The representations, warranties and indemnity obligations contained in this section shall survive the Closing or the earlier termination of this Agreement.

25.Assignment. Buyer may assign its rights under this Agreement to a related entity, provided, however, that no such assignment shall relieve Buyer of any of its obligations hereunder

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until Closing is complete. Buyer is entering into this Agreement for and on behalf of a related special purpose entity titled ARHC MHCLVOH01, LLC (“Approved Assignee”) and intends to assign Approved Assignee its rights hereunder prior to Closing.

26.Attorneys’ Fees. In any action between Buyer and Seller as a result of failure to perform or a default under this Agreement, the prevailing party shall be entitled to recover from the other party, and the other party shall pay to the prevailing party, the prevailing party’s reasonable attorneys’ fees and disbursements and court costs incurred in such action.

27.Time of the Essence. Time is of the essence with respect to each of Buyer’s and Seller’s obligations hereunder.

28.Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Agreement which are transmitted electronically shall be valid for all purposes, however any party shall deliver an original signature on this Agreement to the other party upon request.

29.Anti-Terrorism. Neither Buyer or Seller, nor any of their affiliates, are in violation of any Anti-Terrorism Law (as hereinafter defined) or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. “Anti-Terrorism Laws” shall mean any laws relating to terrorism or money laundering, including: Executive Order No. 13224; the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or may hereafter be, renewed, extended, amended or replaced; the applicable laws comprising or implementing the Bank Secrecy Act; and the applicable laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing may from time to time be amended, renewed, extended, or replaced).

[SIGNATURES APPEAR ON THE FOLLOWING PAGES]

19

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

BUYER:	SELLER:
AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company	200 E. 18TH LLC, a New York limited liability company
By: AR Capital, LLC, a Delaware limited liability company, its sole member	By:/s/ Seth Fortgang    Name: Seth Fortgang    Title: Manager
	Date: July 2, 2015
By: /s/ William M. Kahane
Name: William M. Kahane Title: Manager
Date: July 2, 2015

THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES TO BE BOUND BY THE TERMS OF THIS AGREEMENT RELATING TO ESCROW AGENT AND THE EARNEST MONEY.

ESCROW AGENT:

STEWART TITLE GUARANTY COMPANY

By: /s/Annette M. Comer            

Name: Annette M. Comer            

Title: Vice President                

Date: July 1, 2015                 

EXHIBITS

Exhibit A    -    Real Property

Exhibit B    -    Form of Limited Warranty Deed

Exhibit C    -    Assignment and Assumption of Lease, Guaranty and Security Deposit    

Exhibit D    -    Form of Bill of Sale

Exhibit E    -    Form of Assignment of Contracts, Permits, Licenses and Warranties

Exhibit F    -    Form of Estoppel Certificate

Exhibit G    -    Intentionally Omitted

Exhibit H    -    Form of Notice to Tenant

Exhibit I    -    Warranties

Exhibit J    -    Contracts

Exhibit K    -    Prepaid Rents and Security Deposits

Exhibit L    -    Property Management Questionnaire

Exhibit M    -    Non-Foreign Person Affidavit

Exhibit N    -    Seller’s Bring Down Certificate

EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

A-1

EXHIBIT B

FORM OF LIMITED WARRANTY DEED[Subject to Local Counsel Review]

[Attached]

B-2

EXHIBIT C

FORM OF
ASSIGNMENT AND ASSUMPTION OF LEASE AND SECURITY DEPOSIT

200 E. 18th LLC, a New York limited liability company ("Assignor"), in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby assigns, transfers, sets over and conveys to ARHC MHCLVOH01, LLC, a Delaware limited liability company ("Assignee"), all of Assignor's right, title and interest in and to that certain Shopping Center Lease Agreement, dated as of September 22, 2003, by and between E & A Northeast Limited Partnership, as predecessor-in-interest to Assignor, as landlord, and The MetroHealth System, a county hospital board of trustees, as tenant (as amended from time to time, the “Lease”), including any and all security deposits under the Lease, together with all of Assignor’s right, title and interest in and to that certain lease guaranty made by [GUARANTOR], as guarantor, dated as of [DATE].

Subject to the limitations set forth below, Assignor does hereby agree to defend, indemnify and hold harmless Assignee from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignee by reason of the failure of Assignor to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the lessor or landlord under and by virtue of the Lease arising or accruing prior to the date of this Assignment. Subject to the limitations set forth below, Assignee does hereby agree to defend, indemnify and hold harmless Assignor from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignor by reason of the failure of Assignee to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the lessor or landlord under and by virtue of the Lease arising or accruing on and after the date of this Assignment.

[SIGNATURE PAGE FOLLOWS]

C-1

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment this ______ day of ______________, 2015, which Assignment is effective this date. This Assignment may be executed in counterparts, which when taken together shall be deemed one agreement.

ASSIGNOR: 200 E. 18th LLC, a New York limited liability company    By:       Name:       Title: ASSIGNEE: ARHC MHCLVOH01, LLC, a Delaware limited liability company    By:       Name:       Title:

C-2

EXHIBIT D

FORM OF BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, 200 E. 18th LLC, a New York limited liability company, having an address at ____________________________ (“Seller”), hereby bargains, sells, conveys and transfers to ARHC MHCLVOH01, LLC, a Delaware limited liability company (“Buyer”), all of Seller’s right, title and interest in and to those certain items of personal and intangible property (including any warranty made by third parties in connection with the same and the right to sue on any claim for relief under such warranties) (the “Personal Property”) located at or held in connection with that certain real property located in the State of Ohio, as more particularly described on Schedule A attached hereto and made a part hereof.

Seller has not made and does not make any express or implied warranty or representation of any kind whatsoever with respect to the Personal Property, including, without limitation, with respect to title, merchantability of the Personal Property or its fitness for any particular purpose, the design or condition of the Personal Property; the quality or capacity of the Personal Property; workmanship or compliance of the Personal Property with the requirements of any law, rule, specification or contract pertaining thereto; patent infringement or latent defects. Buyer accepts the Personal Property on an “as is, where is” basis.

[SIGNATURE PAGE FOLLOWS]

D-1

IN WITNESS WHEREOF, Seller has caused this instrument to be executed and delivered as of this ___ day of _______, 2015.

SELLER:

200 E. 18th LLC, a New York limited liability company

By:

Name:

Title:

D-2

SCHEDULE A

TO BILL OF SALE

D-3

EXHIBIT E

FORM OF ASSIGNMENT OF CONTRACTS,
PERMITS, LICENSES AND WARRANTIES

THIS ASSIGNMENT, made as of the ___ day of ________, 2015, by 200 E. 18th LLC, a New York limited liability company (“Assignor”), to ARHC MHCLVOH01, LLC, a Delaware limited liability company (“Assignee”).

W I T N E S S E T H:

WHEREAS, by Agreement for Purchase and Sale, having an effective date of ________ ___, 2015, between American Realty Capital VII, LLC, as predecessor-in-interest to Assignor and Assignee, Assignee has agreed to purchase from Assignor as of the date hereof, and Assignor has agreed to sell to Assignee, that certain property located at 2816 E 116th St, Cleveland, Ohio 44120 (the “Property”); and

WHEREAS, Assignor desires to assign to Assignee as of the date hereof all of Assignor’s right, title and interest in the contracts described on Exhibit A attached hereto and made a part hereof, and the permits, licenses and warranties held by Assignor in connection with the Property (collectively, the “Contracts”).

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Assignor hereby assigns, sets over and transfers unto Assignee to have and to hold from and after the date hereof all of the right, title and interest of Assignor in, to and under the Contracts. Assignor agrees without additional consideration to execute and deliver to Assignee any and all additional forms of assignment and other instruments and documents that may be reasonably necessary or desirable to transfer or evidence the transfer to Assignee of any of Assignor's right, title and interest to any of the Contracts.

This Assignment shall be governed by the laws of the State of Ohio, applicable to agreements made and to be performed entirely within said State.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

E-1

IN WITNESS WHEREOF, Assignor has duly executed this Assignment as of the date first above written.

ASSIGNOR:

200 E. 18th LLC, a New York limited liability company

By:

Name:

Title:

E-2

EXHIBIT A

Assigned Contracts

[Seller to prepare Exhibit]

E-3

EXHIBIT F

FORM OF ESTOPPEL CERTIFICATE

The undersigned hereby certifies to ARHC MHCLVOH01, LLC, a Delaware limited liability company(“Buyer”), and KeyBank National Association (“Lender”) and their respective successors and assigns as follows:

1.    The undersigned is the tenant under that certain Shopping Center Lease Agreement (the “Lease”), dated as of September 22, 2003, by and between E & A Northeast Limited Partnership, as predecessor-in-interest to 200 E. 18th LLC, a New York limited liability company (“Landlord”), as landlord, and The MetroHealth System, a county hospital board of trustees (“Tenant”), as tenant, pursuant to which Tenant leases certain premises, consisting of 25,070 rentable square feet, at that real property located at 2816 E 116th St, Cleveland, Ohio 44120 (the “Premises”).

2.    Except as set forth above, the Lease has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived.

3.    The Lease is valid and in full force and effect on the date hereof. The Lease represents the entire agreement between Landlord and Tenant with respect to the Premises and the land on which the Premises are situated.

4.    Tenant is not entitled to, and has made no agreement with Landlord or its agents or employees concerning, free rent, partial rent, rebate of rent payments, credit or offset or reduction in rent, or any other type of rental concession including, without limitation, lease support payments, lease buy-outs, or assumption of any leasing or occupancy agreements of Tenant.

5.    The initial term of the Lease began on __________ __, _____ and expires on ________ __, 20__. The Rent Commencement Date was __________ __, ____. Tenant has accepted possession of the Premises and is open for business. Tenant has not sublet all or a portion of the Premises to any sublessee and has not assigned, transferred or encumbered any of its rights or interests under the Lease.

6.    Tenant has no outstanding options or rights to renew or extend the term of the Lease, except as follows: ________________ (if none, please state “none”). Tenant has no outstanding expansion options, other options, rights of first refusal or rights of first offer to purchase the Premises or any part thereof and/or the land on which the Premises are situated, or rights of first offer to lease with respect to all or any part of the Premises.

7.    The [Base Annual Rent] payable under the Lease is $____________ ($_________ monthly). Such [Base Annual Rent] payable under the Lease shall be adjusted during the initial term of the Lease as follows: (a) from ___________, 20__ to and including ______________, 20__, the Base Annual Rent shall be $_______ ($_______ monthly); (b) from ___________, 20___ to and including ____________, 20___ the Base Annual Rent shall be $________ ($________ monthly); [and from __________, 20__ to and including __________, 20___ the Base Annual Rent shall be $_________ ($__________ monthly)]. Such rent has been paid through and including the

F-1

month of ____________, 2015. Additional rent under the Lease has been paid through and including the month of __________, 2015. No such rent (excluding security deposits) has been paid more than one (1) month in advance of its due date.

8.    Tenant's security deposit, if any, is $_________________ (if none, please state “none”).

9.    No event has occurred and no condition exists that constitutes, or that with the giving of notice or the lapse of time or both, would constitute, a default by Tenant or, to the best knowledge of Tenant, Landlord under the Lease. Tenant has no existing defenses or offsets against the enforcement of the Lease by Landlord.

10.    (a)    All required contributions by Landlord to Tenant on account of Tenant's improvements have been received by Tenant and all of Tenant's tenant improvements have been completed in accordance with the terms of the Lease.

(b)    Landlord has satisfied all its obligations to Tenant arising out of or incurred in connection with the construction of the tenant improvements on the Premises and no off-set exists with respect to any rents or other sums payable or to become payable by the Tenant under the Lease.

11.    All licenses necessary for using and operating the Premises as a medical building are held by Tenant and are in full force and effect.

12.    No voluntary actions or, to Tenant’s best knowledge, involuntary actions are pending against Tenant under the bankruptcy laws of the United States or any state thereof.

13.    This Certificate is delivered to induce Buyer to acquire the leasehold interest in the Premises and Lender to provide financing in connection with such acquisition, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate.

[SIGNATURE PAGE FOLLOWS]

F-2

The undersigned is duly authorized to execute this Certificate on behalf of Tenant.

Dated: ____________, 2015

TENANT:    

____________________, a ________________

By:______________________
Name:

Title:

[__________], a [_________________________] (“Guarantor”) certifies to and for the benefit of Buyer, Lender and their respective successors and assigns as follows:

With respect to that certain Guaranty Agreement, dated as of [_______], by Guarantor to and for the benefit of Landlord (the “Guaranty”): (a) Guarantor is the guarantor of the Lease pursuant to the Guaranty; (b) the Guaranty has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived; (c) the Guaranty is valid and in full force and effect on the date hereof; and (d) no voluntary actions or, to Guarantor’s best knowledge, involuntary actions are pending against Guarantor under the bankruptcy laws of the United States or any state thereof. This Certificate is delivered to induce Buyer to acquire the Premises and Lender to provide financing in connection with such acquisition, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate. The undersigned is duly authorized to execute this Certificate.

Dated: ____________, 2015

GUARANTOR:    

[______________],

a ________________

By:______________________    Name:

Title:

F-3

EXHIBIT G

INTENTIONALLY OMITTED

G-1

EXHIBIT H

FORM OF NOTICE TO TENANT

________________ ___, 2015

TO:    [INSERT TENANT’S NOTICE ADDRESS FROM LEASE]

Re:    Notice of Change of Ownership of 2816 E 116th St, Cleveland, Ohio 44120

Ladies and Gentlemen:

YOU ARE HEREBY NOTIFIED AS FOLLOWS:

That as of the date hereof, the undersigned has transferred, sold, assigned, and conveyed all of its right, title and interest in and to the leasehold estate in the above-described property (the “Property”) to ARHC MHCLVOH01, LLC, a Delaware limited liability company (the “New Owner”) and assigned to New Owner, all of the undersigned’s right, title and interest under that certain Shopping Center Lease Agreement, dated as of September 22, 2003, by and between E & A Northeast Limited Partnership as predecessor-in-interest to 200 E. 18th LLC, a New York limited liability company, as landlord, and The MetroHealth System, a county hospital board of trustees, as tenant (the “Lease”), together with any security deposits or letters of credit held thereunder.

Accordingly, New Owner is the landlord under the Lease and future notices and correspondence with respect to your leased premises at the Property should be made to the New Owner at the following address:

ARHC MHCLVOH01, LLC

c/o American Realty Capital Healthcare Trust III, Inc.

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Attention: Regional Asset Manager

With a copy to:

ARHC MHCLVOH01, LLC

c/o American Realty Capital Healthcare Trust III, Inc.

405 Park Avenue, 14^th Floor

New York, NY 10022

Attention: General Counsel

You will receive a separate notification from New Owner regarding the new address for the payment of rent. In addition, to the extent required by the Lease, please amend all insurance policies you are required to maintain pursuant to the Lease to name New Owner as an additional insured thereunder and promptly provide New Owner with evidence thereof.

H-1

[SIGNATURE PAGE FOLLOWS]

Very truly yours,

200 E. 18th LLC, a New York limited liability company

By:

Name:

Title:                 

H-1

EXHIBIT I

WARRANTIES

None.

I-1

EXHIBIT J

CONTRACTS

None.

J-1

EXHIBIT K

PREPAID RENTS AND SECURITY DEPOSITS

None.

K-1

EXHIBIT L

PROPERTY MANAGER QUESTIONNAIRE

(Attached)

L-1

EXHIBIT M

NON-FOREIGN PERSON AFFIDAVIT

THIS AFFIDAVIT is made this _____ day of ________________, 20__ by 200 E. 18^th LLC, a New York limited liability company (the “Transferor”), for the benefit of ARHC MHCLVOH01, LLC, a Delaware limited liability company (“Transferee”).

Section 1445(a) of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the “Code”), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the Transferee that withholding of tax is not required upon the disposition by Transferor of an interest in the Property described on Exhibit “A” hereto, the undersigned hereby certifies the following on behalf of Transferor:

(i)Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate or other foreign person (as those terms are defined in the Code and Income Tax Regulations);

(ii)Transferor’s U.S. Employer Identification Number or Social Security Number, as applicable, is ____________; and

(iii)Transferor’s address is 100 Garden City Plaza, Suite 102, Garden City, NY 11530.

Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

M-1

Under penalties of perjury, the undersigned declares that he has examined this certification and, to the best of his knowledge and belief, it is true, correct and complete, and the undersigned further declares that he has authority to sign this document on behalf of Transferor.

TRANSFEROR:

200 E. 18^th LLC, a

New York limited liability company

By:

Name:

Title:

M-2

Exhibit A

M-3

EXHIBIT N

SELLER’S BRING DOWN CERTIFICATE

Reference is made to that certain Agreement for Purchase and Sale of Real Property having an effective date of June ____, 2015 (the “Agreement”) by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company, predecessor-in-interest to ARHC MHCLVOH01, LLC, a Delaware limited liability company (“Buyer”), and 200 E. 18^th LLC, a New York limited liability company (“Seller”). Pursuant to Section 10(n) of the Agreement, Seller hereby certifies to Buyer that all of Seller’s representations and warranties contained in the Agreement are true and correct as of the date hereof.

Dated: ________ ___, 2015.

200 E. 18^th LLC, a New York limited liability company

By:

Name:

Title:

N-1

EX-10.15

Exhibit 10.15

FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

THIS FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Amendment”) is made as of August 3, 2015, by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), and 200 E. 18^th LLC, a New York limited liability company (“Seller”).

WHEREAS, Buyer and Seller entered into that certain Agreement for Purchase and Sale of Real Property, having an effective date as of July 2, 2015 (the “Agreement”), with regard to the Property, as more particularly described in the Agreement. Buyer and Seller wish to amend the Agreement as provided herein.

NOW, THEREFORE, in consideration of the mutual promise contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree that the Agreement shall be amended as follows:

1. Amendment to the Agreement. The Agreement is hereby amended as follows:

2. Legal Description. Exhibit A to the Agreement is hereby deleted in its entirety and replaced by Exhibit A, attached hereto and made a part hereof.

3. Miscellaneous. Except as expressly modified hereby the terms of the Agreement shall remain in full force and effect as written. Capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Agreement. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Amendment which are transmitted electronically shall be valid for all purposes, however any party shall deliver an original signature of this Amendment to the other party upon request.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first set forth above.

BUYER:	SELLER:
American Realty Capital VII, LLC, a Delaware limited liability company	200 E. 18th LLC, a New York limited liability company
By: AR Capital, LLC, a Delaware limited liability company, its sole member By:/s/ William M. Kahane    Name: William Kahane    Title: Manager	By:/s/ Seth Fortgang    Name: Seth Fortgang    Title: Manager

EXHIBIT A

REAL PROPERTY

EX-10.16

Exhibit 10.16

AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

PHILIP PROFESSIONAL CENTER

BUILDING 100 AND BUILDING 200

455 PHILIP BOULEVARD

LAWRENCEVILLE, GEORGIA 30046

THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Agreement”) is made and entered into as of the Effective Date by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), and ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership (“Seller”).

In consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Terms and Definitions. The terms listed below shall have the respective meaning given them as set forth adjacent to each term.

(a)“Broker” shall mean HealthAmerica Realty Group, LLC.

(b)“Closing” shall mean the consummation of the transaction contemplated herein, which shall occur, subject to any applicable extension periods set forth in this Agreement, within five (5) business days following the Lender’s (as defined herein) approval of the Loan Assumption (as defined herein). In no event shall any Closing occur prior to the expiration of the Due Diligence Period (as defined herein). The date of Closing is sometimes hereinafter referred to as the “Closing Date.” Neither party will need to be present at Closing, it being anticipated that the parties will deliver all Closing documents and deliverables in escrow to the Escrow Agent prior to the date of Closing.

(c) “Due Diligence Materials” shall mean the documents and materials pertaining to the Property described on Exhibit O attached hereto and incorporated herein, to the extent within Seller’s possession.

(d) “Due Diligence Period” shall mean the period beginning upon the Effective Date (as defined herein) and extending until 6:00 PM ET on the date that is thirty (30) days thereafter or the date on which Seller receives written notice of Buyer’s waiver of the Due Diligence Period. Seller shall deliver to Buyer all of the Due Diligence Materials (as defined herein) within two (2) business days after the Effective Date. In the event all of the Due Diligence Materials have not been provided to Buyer within two (2) business days after the Effective Date, then Buyer shall, within one (1) business day after the expiration of said two (2) business day period, notify Seller in writing and identify with reasonable specificity the Due Diligence Materials that it has not received, and the Due Diligence Period shall automatically be extended by one (1) day for each day beyond such deadline until all of the deficiencies in the Due Diligence Materials identified in such notice have

been provided to Buyer. If Buyer fails to so notify Seller of any deficiencies in the delivery of the Due Diligence Materials, then Buyer shall be deemed to have received all the in accordance with this Agreement. Buyer shall deliver written notice to Seller indicating the extension of the Due Diligence Period, if any, as provided in this Section 1(d).

(e)“Earnest Money” shall mean Four Hundred Fifteen Thousand and 00/100 Dollars ($415,000.00). The Earnest Money shall be delivered to Escrow Agent within two (2) business days after the Effective Date. The Earnest Money shall be deposited by Buyer in escrow with Escrow Agent, to be applied as part payment of the Purchase Price at the time of Closing, or disbursed as agreed upon in accordance with the terms of this Agreement. Seller and Buyer each shall pay one-half of all reasonable escrow fees charged by Escrow Agent.

(f) “Effective Date” This Agreement shall be signed by both Seller and Buyer. The date that is one (1) business day after the date of execution and delivery of this Agreement by both Seller and Buyer as reflected below the signatures of the parties shall be the “Effective Date” of this Agreement.

(g)“Escrow Agent” shall mean Fidelity National Title Insurance Company, whose address is 5565 Glenridge Connector, Suite 300, Atlanta, Georgia 30342, Attention: Christy Hockmeyer, Telephone: 404-414-5094; Telecopy: (404) 303-6307; E-Mail: christy.hockmeyer@fntg.com. The parties agree that the Escrow Agent and Buyer’s title agent, if any, shall be responsible for (x) organizing the issuance of the Title Commitment (hereinafter defined) and Title Policy (hereinafter defined), (y) preparation of the closing statement, and (z) collections and disbursement of the funds.

(h)“Guarantor” shall mean each guarantor, if any, of the Leases.

(i)“Guaranty” shall mean each Lease guaranty executed by a Guarantor.

(j)“Leases” shall mean those certain leases described on Exhibit A-2 attached hereto and made a part hereof between Seller, as landlord, and the tenants described on Exhibit A-2 attached hereto and incorporated herein, as tenant (each tenant, individually, a “Tenant”, and collectively, the “Tenants”), as amended. Each of the Leases may be referred to herein individually as a “Lease” or the “Lease”.

(k)“Property” shall mean (1) that certain real property located at 455 Philip Boulevard, Lawrenceville, Georgia 30046, being more particularly described on Exhibit A-1 attached hereto and incorporated herein (the “Real Property”) together with all buildings, facilities and other improvements located thereon (collectively, the “Improvements”); (1) all right, title and interest of Seller under the Leases and all security deposits (if any) that Seller is holding pursuant to the Leases; (1) all right, title and interest of Seller in all machinery, furniture, lighting, electrical, mechanical, plumbing and heating, ventilation and air conditioning systems and other equipment used in connection with operation of the Real Property and the Improvements, and all carpeting, draperies, appliances and other fixtures and equipment attached or appurtenant to the Real Property and Improvements, and items of personal property of Seller attached or appurtenant to, located on or used in the ownership, use, operation or maintenance of the Property or the Improvements

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(collectively, the “Personalty”); (1) all right, title and interest of Seller, if any, to any unpaid award for (1) any taking or condemnation of the Property or any portion thereof, or (1) any damage to the Property or the Improvements by reason of a change of grade of any street or highway; (e) all easements, licenses, rights-of-way, air and subsurface rights and appurtenances relating to any of the foregoing, including, without limitation, any reciprocal easement agreements and parking lot agreements; (f) all right, title and interest of Seller in and to any warranties and guaranties respecting the Improvements and Personalty; (g) all right, title and interest of Seller in and to all licenses, permits, authorizations and approvals issued by any governmental agency or authority which pertain to the Real Property and the Improvements, to the extent they exist and are transferable and assignable; (h) to the extent the same are assignable, all site plans, surveys, and plans which relate to the Real Property; and (i) all right, title and interest of Seller in and to any tradenames, logos (including any federal or state trademark or tradename registrations), or other identifying name or mark now used in connection with the Real Property and/or the Improvements, but expressly excluding any such property to the extent owned by any Tenant.

(l)“Purchase Price” shall mean Nine Million and 00/100 Dollars ($9,000,000.00).

(m)“Real Estate Taxes” shall mean all real estate taxes, rollback taxes, personal property taxes, water and sewer use charges, or payments in lieu of taxes, and any other charges and assessments constituting a lien on the Property.

(n)Seller and Buyer’s Notice address

(i)“Seller’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

ICM VI-Philip Centre, LP

c/o ICM Realty Group, LLC

3715 Northside Parkway

Building 400, Suite 475

Atlanta, GA 30327

Tel. No.: 678-642-3986 (Mobile)

Email: sypukuga@gmail.com

And to:

Stephen F. White, Esq.

SFW Advisors, P.C.

1000 Parkwood Circle

Suite 810

Atlanta, Georgia 30339

Tel. No.: 770-212-2232 (Phone)

Tel. No.: 404-667-3074 (Mobile)

Email: swhite@sfwadvisors.com

3

(ii)“Buyer’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

Thomas P. D’Arcy

c/o American Realty Capital VII, LLC

405 Park Avenue, 14^th Floor

New York, NY 10022

Tel. No.: (212) 415-6500

Fax No.: (646) 861-7805

Email: tdarcy@arlcap.com

And to:

Jeremy Eichel

c/o American Realty Capital VII, LLC

405 Park Avenue, 14^th Floor

New York, NY 10022

Tel. No.: (212) 415-6551

Email: jeichel@arlcap.com

And Due Diligence Materials (if provided by email) to:

duediligence@arlcap.com

With hard copies and/or cds to:

James A. (Jim) Mezzanotte

c/o American Realty Capital VII, LLC

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Tel. No.: (704) 626-4400

Fax No.: (212) 415-6507

Email: jmezzanotte@arlcap.com

2.Purchase and Sale of the Property. Subject to the terms of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property for the Purchase Price.

3.Payment of Purchase Price.

(a)The portion of the Purchase Price to be paid by Buyer to Seller at Closing shall be the Purchase Price less the outstanding principal balance of the Loan (hereinafter defined) as of the Closing Date of the Property (the "Cash Portion of the Purchase Price"), plus or minus prorations, credits and adjustments as provided in Section 4 and elsewhere in this Agreement. The

4

Cash Portion of the Purchase Price shall be paid by wire transfer of immediately available funds to Escrow Agent, at the time of Closing, or as otherwise agreed to between Buyer and Seller.

(b)Notwithstanding anything contained in this Agreement to the contrary, Buyer shall have no obligation to purchase the Property unless and until (and subject to any of Buyer's termination rights contained in this Agreement) Seller and Buyer have secured from the existing mortgagee of the Property ("Lender") approval for an assumption of the loan secured by the Property (the "Loan Assumption," and the loan, the "Loan," respectively) to be executed by Buyer at Closing, which, as to the Property, shall have:

(i)an original principal balance of $5,200,00.00;

(ii)a fixed annual interest rate of 4.00%;

(iii)payments based upon a thirty (30) year amortization schedule throughout the term of the Loan;

(iv)no cash escrow balances unless fully funded by Seller;

(v)a maturity date of October 1, 2019;

(vi)such loan document modifications as Buyer may request to address Buyer’s parent’s compliance with real estate investment trust laws and regulations and its offering materials, including, but not limited to, modifications to covenants regarding ongoing financial reporting, transfers and distributions of excess cash flow; and

(vii)no requirement for personal recourse liability from any shareholder, owner, officer or employee of Buyer, except for customary carve-out guaranties that are acceptable to Buyer in its sole discretion.

(c)Buyer shall be responsible for any and all fees and expenses of Lender in connection with the Loan Assumption, including an assumption fee in an amount not to exceed one percent (1%) of the Loan. Notwithstanding anything to the contrary contained in this Agreement, if the Loan Assumption is not approved by Lender on or before the date that is sixty (60) days after the Effective Date or if Lender affirmatively disapproves the Loan Assumption for any reason at any time, Buyer shall have the right to terminate this Agreement and receive the Earnest Money, and upon such termination, Seller shall pay to Buyer all of the out-of-pocket costs and expenses actually incurred by Buyer in connection with this Agreement as evidenced by invoices or statements delivered to Seller, up to $25,000.00; provided, however, Seller shall have no such reimbursement obligation for out-of-pocket expenses in the event Buyer terminates this Agreement pursuant to the terms of Section 6(b) herein. Upon such termination, neither party shall have any further rights, obligations or liabilities hereunder, except as otherwise expressly set forth herein.

(d)Within five (5) business days following the Effective Date, Seller shall deliver to Buyer an application for the assumption of the Loan. Buyer shall submit such application to Lender as soon as practicable following Buyer’s receipt of such application from Seller, and

5

thereafter take all commercially reasonable efforts to pursue to completion the Loan Assumption. Buyer and Seller shall use commercially reasonable efforts, including without limitation, the furnishing of all commercially reasonable documents, executed forms, instruments, financial statements and other materials requested by Lender, in a timely manner, to obtain the consent of the Lender to:

(i)the transfer of the Property to Buyer or a bankruptcy remote, special purpose entity or entities to be formed by Buyer to purchase the Property as permitted pursuant and subject to the provisions of Section 25 herein (the "Buyer Entity"), the governance of which may involve an independent director(s) or other person who is not employed by Buyer or an affiliate of Buyer;

(ii)the assumption of the Loan by Buyer or the Buyer Entity;

(iii)the loan document modifications referenced in Section 3(b)(vi) above; and

(iv)a release of Seller and/or any of its affiliates, members or

principals from all liabilities arising under the Loan for periods from and after Closing, including, without limitation, any liability under any guaranty or indemnity executed by Seller and/or any of its affiliates, members or principals in favor of Lender relating to the Loan; provided, however, that notwithstanding anything in this Agreement to the contrary, Seller acknowledges that Buyer will propose the Buyer Entity (which Buyer Entity shall be formed and established to qualify as bankruptcy remote, special purpose entity in compliance with the customary requirements for so-called "securitized loans") to the Lender to assume the Loan and Buyer will determine in its sole and absolute discretion the entity it will offer to the Lender to provide guarantees of non-recourse carve outs and any required environmental or other indemnity. If Lender consents to the assumption of the Loan in accordance with the provisions of this Section 3, the Buyer Entity shall assume and agree to pay and perform at Closing the obligations under the Loan that arise from and after the Closing, in each case subject to the prorations and adjustments provided for in this Agreement.

(e)The parties agree that the value of the Personalty is de minimis, and no part of the Purchase Price is allocated to it.

4.Proration of Expenses and Payment of Costs and Recording Fees.

(a)Prorations. The following items will be prorated as of 12:01 A.M. on the Closing Date, with all items of income and expense for the Property being borne by Buyer from and after (and including) the Closing Date: Tenant Receivables (hereinafter defined) and other income and rents that have been collected by Seller as of Closing; fees and assessments; prepaid expenses and obligations under service contracts which are assigned, if any; accrued operating expenses; Real Estate Taxes; and any assessments by private covenant for the then-current calendar year of Closing.

(b)Taxes

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(i)If Real Estate Taxes for the year of Closing are not known or cannot be reasonably estimated, Real Estate Taxes will be prorated based on Real Estate Taxes for the year prior to Closing. Any additional Real Estate Taxes in the nature of “roll back” taxes or relating to the year of Closing arising out of a change in the use of the Land and Improvements prior to Closing or a change in ownership shall be paid by Seller when due and payable, and Seller will indemnify Buyer from and against any and all such Real Estate Taxes arising out of the transfer of the Property, which indemnification obligation will survive the Closing.

(ii)    If Seller has engaged or will engage prior to the expiration of the Due Diligence Period, consultants for the purpose of protesting the amount of taxes or the assessed valuation for certain tax periods for the Property (“Protest Proceedings”), any cash refunds or proceeds actually distributed (collectively, “Cash Refunds”) will be apportioned as described below. Any Cash Refunds (including interest thereon) on account of a favorable determination, after deduction of costs and expenses incurred for such Protest Proceedings, shall be: (A) the property of Seller to the extent such Cash Refunds were for Real Estate Taxes paid by Seller applicable to a period prior to the Closing Date; (B) prorated between Buyer and Seller for taxes paid for a period during which the Closing Date occurred; and (C) the property of Buyer for Real Estate Taxes for a period after the Closing Date. Seller and Buyer agree to notify the other in writing of any receipt of a Cash Refund within fifteen (15) business days of receipt of such Cash Refund. To the extent either party obtains a Cash Refund, a portion of which is owed to the other party, the receiving party shall deliver the Cash Refund to the other party within fifteen (15) Business Days of its receipt. Buyer agrees and acknowledges that Seller has the right to initiate proceedings to protest the valuation of any of the Property prior to the expiration of the Due Diligence Period. Seller agrees to give Buyer notice of Seller’s intent to initiate such proceedings prior to initiation of such proceedings and at any time subsequent to the end of the Due Diligence Period shall obtain Buyer’s consent to initiation of such proceedings, which consent may be unreasonably withheld.    

(c)Utilities. Buyer will take all steps necessary to effectuate the transfer of all utilities to its name as of the Closing Date, and where necessary, post deposits with the utility companies. The Seller will ensure that all utility meters are read as of the Closing Date. Seller will be entitled to recover any and all deposits held by any utility company as of the Closing Date.

(d)Tenant Receivables. Rents due from Tenants under the Leases (including operating expense and real estate tax contributions or reimbursements and similar charges (collectively, “Pass-Through Expenses”)), set-offs due or required to be paid under or by reason of the Leases (collectively called “Tenant Receivables”) shall be adjusted by appropriate credit to the Seller or Buyer (as the case may be) on the Closing Date. If, at the Closing Date, any Tenant is in arrears in the payment of rents (“Uncollected Delinquent Tenant Receivables”), Seller will disclose the same to Buyer in writing or on the rent roll to be delivered to Buyer pursuant to Section 10 hereof and such amounts shall not be adjusted on the Closing Date. Prior to the Closing Date, Seller shall use Seller’s current business practices to collect Uncollected Delinquent Tenant Receivables. If Buyer shall collect Uncollected Delinquent Tenant Receivables within ninety (90) days after the Closing Date, then Buyer shall turn over to Seller the arrearages so collected, less the reasonable cost of collection thereof, if any; provided, however, Seller may continue to seek to collect the Uncollected Delinquent Tenant Receivables by legal action following the Closing Date. All rents

7

collected by Buyer after the Closing Date (except for amounts specifically billed and paid as end of year reconciliation payments for Pass-Through Expenses, which shall be separately accounted for and allocated, pro rata, between Seller and Buyer as their interest may appear) shall be first applied to rents due and payable after the Closing Date and only the excess thereof shall be paid over to Seller on account of the Uncollected Delinquent Tenant Receivables. Seller shall prepare the reconciliation for Pass-Through Expenses for the Property and provide such reconciliation to Buyer and Buyer’s property manager. Buyer agrees to cause its property manager to cooperate with Seller in preparing such reconciliation. To the extent that items to be apportioned hereunder may be required to be paid directly by a Tenant under its Lease, the same shall not be apportioned, provided, however, that such items shall have been paid by such Tenant currently through the month including the Closing Date. The provisions of this Section 4(d) shall survive Closing and the delivery of the Deed (hereinafter defined), and shall survive the expiration or earlier termination of this Agreement. Seller expressly agrees that if Seller receives any amounts after the Closing Date which are attributable, in whole or in part, to any period after the Closing Date, Seller will notify Buyer of such fact and will remit to Buyer that portion of the monies so received by Seller to which Buyer is entitled within ten (10) business days after receipt thereof. With respect to unbilled Tenant Receivables, Buyer covenants and agrees to cause its property manager to (A) bill the same in the ordinary course of its business and (B) cooperate with Seller to determine the correct amount of operating expenses and/or taxes due.

A reconciliation or determination of Pass-Through Expenses, Uncollected Delinquent Tenant Receivables and unbilled Tenant Receivables due under the Leases shall be made at Closing to the extent possible. To the extent such information is not available at Closing, the foregoing shall be subject to adjustment following the Closing in accordance with the terms of Section 4(e), below. The provisions of this Section 4(d) will survive the Closing.

(e)If final bills are not available or cannot be issued prior to Closing for any item being prorated under Section 4(a) through (d), then, for each separate item for which an adjustment is to be made, the following will apply: (i) Real Estate Taxes shall be re-prorated thirty (30) days after receipt of the final tax bill for the applicable period, (ii) Pass-Through Expenses shall be re-prorated one hundred twenty (120) days after the end of the applicable calendar year, and (iii) all other items of income and expenses shall be re-prorated one hundred twenty (120) days after Closing, to the effect that income and expenses are received and paid by the parties on an accrual basis (or cash basis if so provided herein) with respect to their period of ownership. Payments in connection with the final adjustment shall be due within ten (10) days of written notice. Seller and Buyer shall have reasonable access to, and the right to inspect and audit, the other’s books to confirm the final prorations. All such rights and obligations under this Section 4(e) will survive the Closing.

(f)All security deposits under the Leases collected and not properly applied by Seller as of the Closing (and interest thereon if required by law or contract) must be transferred or credited to Buyer at Closing. As of the Closing, Buyer will assume each Seller’s obligations related to the security deposits, but only to the extent they are credited or transferred to Buyer.

8

(g)Interest on the Loan shall be prorated as of Closing, and Seller shall receive a credit at Closing for the balance of all tax, insurance and other reserves held by Lender and not otherwise distributed to Seller at Closing.

(h)Seller shall pay or be charged with the following costs and expenses in connection with this transaction:

(i)100% of all Title Policy premiums, including search costs, but excluding any endorsements issued in connection with such policies other than endorsements that Seller elects to purchase to cover title issues, if any;

(ii)Any transfer taxes and conveyance fees on the sale and transfer of the Property;

(iii)Broker’s commission payments, in accordance with Section 24 of this Agreement;

(iv)Any unpaid leasing commissions, tenant improvement allowances or outstanding rent concessions related to the Leases, whether or not due and payable; and

(v)A credit against the Purchase Price in an amount equal to the product of (x) $6,500.42 and (y) the number of months or partial months between the Closing Date and September 1, 2015, such amount representing $5.00 per rentable square foot of the premises leased to the Tenant of Building 200.

(i)Buyer shall pay or be charged with the following costs and expenses in connection with this transaction:

(i)Title Policy premiums for any endorsements issued in connection with such policies other than a survey endorsement and endorsements that Seller elects to purchase to cover title issues, if any;

(ii)All costs and expenses in connection with the Loan Assumption, including, without limitation, Lender’s title policy, costs for the filing of all documents necessary to complete the Loan Assumption and related documentary stamp tax and intangibles tax;

(iii)Buyer shall pay for the cost of its own survey, Phase I environmental study and due diligence investigations;

(iv)    All fees relating to the recording of the Deed for the Property; and

(v)     The payment to Seller of the remaining, unpaid balance in the “Funded Maintenance Account” described in paragraph 6(f) of that certain U.S. Government Lease For Real Estate dated September 27, 2011, by and between Grove Street Lawrenceville, LLC, as landlord, and the United States of America, Department of Veterans Affairs (the “VA”), as tenant (as amended

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from time to time, the “VA Lease”), in Building 200 forming a part of the Improvements, provided that Seller assigns to Buyer at Closing by written instrument all of Seller’s right, title and interest to said Funded Maintenance Account. The balance of the Funded Maintenance Account as of May 31, 2015 was $129,735.81.

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(j)    Each party shall pay its own legal fees incidental to the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

5.Title. At Closing, Seller agrees to convey to Buyer fee simple marketable title to the Property by limited warranty deed, free and clear of all liens, defects of title, conditions, easements, assessments, restrictions, and encumbrances except for Permitted Exceptions (as hereinafter defined).

6.Examination of Property. Seller and Buyer hereby agree as follows:

(a)Buyer shall order a title commitment (the “Title Commitment”) from Escrow Agent, a survey and a zoning report for the Property promptly after the date hereof. All matters shown in the Title Commitment, survey or zoning report (“Title Matters”) with respect to which Buyer fails to object prior to the expiration of the Due Diligence Period shall be deemed “Permitted Exceptions”. However, Permitted Exceptions shall not include, and Seller shall be obligated to remove of record prior to or at Closing, any mechanic’s lien or any monetary lien, fine or penalty, or any deeds of trust, mortgage, or other loan documents secured by the Property, other than the Loan Documents (defined below), or any judgments and federal and state tax liens (collectively, “Liens”). Seller shall be required to cure or remove all Liens (by payment, bond deposit or indemnity acceptable to Escrow Agent). Seller shall have no obligation to cure any Title Matter objected to, except the Liens as aforesaid, provided Seller notifies Buyer of any objections which Seller elects not to remove or cure within five (5) business days following receipt of Buyer’s objections. In the event that Seller refuses to remove or cure any objections, Buyer shall have the right to terminate this Agreement upon written notice to Seller given within five (5) business days after receipt of Seller’s notice, upon which termination the Earnest Money, and all interest earned thereon, shall be returned to Buyer and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein. If any matter not revealed in the Title Commitment is discovered by Buyer or by the Escrow Agent and is added to the Title Commitment by the Escrow Agent at or prior to Closing, Buyer shall have until the earlier of (i) five (5) days after the Buyer’s receipt of the updated, revised Title Commitment showing the new title exception, together with a legible copy of any such new matter, or (ii) the Closing Date, to provide Seller with written notice of its objection to any such new title exception (an “Objection”). If Seller does not remove or cure such Objection prior to the Closing Date, Buyer may terminate this Agreement, in which case the Earnest Money, together with all interest earned thereon, shall be returned to Buyer, Seller shall reimburse Buyer for all out of pocket costs and expenses incurred hereunder and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein.

(b)Within two (2) business days following the Effective Date, Seller shall provide to Buyer copies of the Due Diligence Materials, which shall include, without limitation,

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the notes, mortgages and other loan documents securing repayment of the Loan, as listed on Exhibit G attached hereto and made a part hereof (collectively, the “Loan Documents”). Seller shall deliver any other documents relating to the Property reasonably requested by Buyer, to the extent within Seller’s or its affiliates’ or agents’ possession, within three (3) business days following such request. Additionally, during the term of this Agreement, Buyer, its agents and designees, shall have the right to enter the Property for the purposes of inspecting the Property, conducting non-invasive soil tests, and making surveys, mechanical and structural engineering studies, inspecting construction, and conducting any other investigations and inspections as Buyer may reasonably require to assess the condition and suitability of the Property; provided, however, (i) such inspections shall not involve any invasive testing unless Buyer submits a written request to Seller requesting permission to conduct such invasive testing, which permission may be withheld or denied in Seller’s sole and absolute discretion, and (ii) such activities by or on behalf of Buyer on the Property shall not damage the Property nor materially interfere with construction on the Property or the conduct of business by Tenants under the Leases; and provided further, however, that Buyer shall indemnify and hold Seller harmless from and against any and all claims or damages to the extent resulting from the activities of Buyer on the Property, and Buyer shall repair any and all damage caused, in whole or in part, by Buyer and return the Property to substantially its condition prior to such damage, which obligations shall survive Closing or any termination of this Agreement. Seller shall reasonably cooperate with the efforts of Buyer and the Buyer’s representatives to inspect the Property. After the Effective Date, Buyer shall be permitted to speak and meet with the Tenants in connection with Buyer’s due diligence; provided, however, Seller and/or Seller’s representatives shall have the opportunity to accompany Buyer or Buyer’s representatives in each such instance. Upon signing this Agreement, Seller shall provide Buyer with the name of a contact person(s) for the purpose of arranging site visits. Buyer shall give Seller reasonable written notice (which in any event shall not be less than two (2) business days) before entering the Property, and Seller may have a representative present during any and all examinations, inspections and/or studies on the Property. Buyer shall have the unconditional right, for any reason or no reason, to terminate this Agreement by giving written notice thereof to Seller and the Escrow Agent prior to the expiration of the Due Diligence Period, in which event this Agreement shall become null and void, Buyer shall receive a refund of the Earnest Money, together with all interest earned thereon, and all rights, liabilities and obligations of the parties under this Agreement shall expire, except as otherwise expressly set forth herein.

(c)Buyer agrees to maintain or cause to be maintained, at Buyer’s expense, (i) a policy of comprehensive general public liability insurance, with a broad form contractual liability endorsement covering all indemnification obligations of Buyer under Section 6(b) hereof, with a combined single limit of not less than $2,000,000 per occurrence for bodily injury and property damage, insuring Buyer and Buyer’s representatives who perform actual work on the Property on Buyer’s behalf against any injuries or damages to persons or property that may result from or are related to Buyer’s and/or Buyer’s representatives entry upon the Property, and Seller as an additional insured.

(d)It shall be a condition of Closing that Seller shall have obtained estoppel certificates from each Tenant and Guarantor, certified to Buyer, its lender and their successors and assigns, which, except as provided in the following sentence, shall be in the form attached hereto as Exhibit F (the “Estoppel Certificate”). Recognizing that the VA will not be willing to execute

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and deliver an Estoppel Certificate in the form attached hereto as Exhibit F, Buyer shall accept from the VA an Estoppel Certificate substantially similar to the form of estoppel certificate that Seller previously received from the VA, a copy of which estoppel certificate is attached hereto as Exhibit L (the “VA Estoppel”). Within five (5) business days following the Effective Date, Seller shall deliver to Buyer, for Buyer’s review and approval, draft Estoppel Certificates for the Leases. Seller shall promptly deliver to Buyer a photocopy or pdf file of the executed Estoppel Certificate when Seller receives the same. Within five (5) business days following the Effective Date, Seller shall request a waiver of any right of first refusal, right of first offer or other purchase option, if any, that any party may have to purchase the Property (and simultaneously provide Buyer with copies of such requests).

(e)Seller shall use commercially reasonable efforts to obtain a subordination, non-disturbance and attornment agreement from each Tenant in form and substance reasonably acceptable to Buyer and Lender, if applicable (each such agreement, an “SNDA”); provided, however, Buyer acknowledges that with respect to the VA Lease, the tenant under the VA Lease will not be willing to execute and deliver an SNDA on the form requested by Buyer, but only on the form described in the VA Lease.

(f)Seller shall use commercially reasonable efforts to obtain estoppel certificates with respect to reciprocal easement agreements affecting the Property, as may be reasonably requested by Buyer.

(g)On or before the expiration of the Due Diligence Period, Buyer shall notify Seller in writing if Buyer elects not to assume at Closing any of the Contracts (defined below). If Buyer does not notify Seller prior to the expiration of the Due Diligence Period that it elects not to assume any of the Contracts, Buyer shall be deemed to have accepted and agreed to assume all of the Contracts. If Buyer exercises its right not to assume one or more Contracts at Closing, Seller shall give notice of termination of such disapproved Contract(s); provided, if by the terms of the disapproved Contract Seller has no right to terminate same on or prior to Closing, Buyer shall be required at Closing to assume all obligations thereunder until the effective date of the termination; provided, further, if any fee or other compensation is due under any disapproved Contract as a result of such termination, whether payable before or after the Closing Date, Seller shall remain obligated to pay the contractor or to reimburse Buyer for the payment of the termination charge. Notwithstanding the foregoing, Seller shall, without notice from Buyer, terminate any and all property management and listing agreements prior to Closing at Seller’s sole cost and expense. All obligations under this Section 6(g)will survive the Closing.

(h)Buyer and Seller shall complete and execute such documents as the VA may require to effectuate the assignment of the VA Lease and the Funded Maintenance Account from Seller to Buyer. This Section 6(h) shall survive the Closing.

7.Risk of Loss/Condemnation. Upon an occurrence of a casualty, condemnation or taking, Seller shall notify Buyer in writing of same. Until Closing, the risk of loss or damage to the Property, except as otherwise expressly provided herein, shall be borne by Seller. In the event all or any portion of the Property is damaged in any casualty or condemned or taken (or notice of any condemnation or taking is issued) so that: (a) any Tenant has a right of termination or abatement

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of rent under its Leases, whether or not the restoration work shall be timely completed or (b) with respect to any casualty, if the cost to repair such casualty would exceed $250,000, or (c) with respect to any condemnation, any Improvements or access to the Property or more than five percent (5%) of the Property is (or will be) condemned or taken, then, Buyer may elect to terminate this Agreement by providing written notice of such termination to Seller within ten (10) business days after Buyer’s receipt of written notice of such condemnation, taking or damage, upon which termination, the Earnest Money, together with all interest earned thereon, shall be returned to the Buyer and neither party hereto shall have any further rights, obligations or liabilities under this Agreement, except as otherwise expressly set forth herein. With respect to any condemnation or taking (of any notice thereof), if Buyer does not elect to cancel this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the awards, if any, for the condemnation or taking, and Buyer shall be entitled to receive and keep all such awards. With respect to a casualty, if Buyer does not elect to terminate this Agreement or does not have the right to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the proceeds under Seller’s insurance policies covering such Property with respect to such damage or destruction (or pay to Buyer any such proceeds received prior to Closing) and pay to Buyer the amount of any deductible with respect thereto, and Buyer shall be entitled to receive and keep any monies received from such insurance policies.

8.Earnest Money Disbursement. The Earnest Money shall be held by Escrow Agent, in trust, and disposed of only in accordance with the following provisions:

(a)If the Closing occurs, Escrow Agent shall deliver the Earnest Money to, or upon the instructions of, Seller and Buyer on the Closing Date to be applied as part payment of the Purchase Price. If for any reason the Closing does not occur, Escrow Agent shall deliver the Earnest Money to Seller or Buyer only upon receipt of a written demand therefor from such party, subject to the following provisions of this Section 8(a). Subject to the last sentence of this Section 8(a), if for any reason the Closing does not occur and either party makes a written demand (the “Demand”) upon Escrow Agent for payment of the Earnest Money, Escrow Agent shall give written notice to the other party of the Demand within one (1) business day after receipt of the Demand. If Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) business days after the giving of such notice by Escrow Agent, Escrow Agent is hereby authorized to make the payment set forth in the Demand. If Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court. Notwithstanding the foregoing provisions of this Section 8(a), if Buyer delivers a notice to Escrow Agent and Seller stating that Buyer has terminated this Agreement on or prior to the expiration of the Due Diligence Period, then Escrow Agent shall immediately return the Earnest Money, together with all interest earned thereon, to Buyer without the necessity of delivering any notice to, or receiving any notice from Seller.

(b)The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any

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action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent’s mistake of law respecting the scope or nature of Escrow Agent’s duties. Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent’s duties hereunder, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement or involving negligence on the part of Escrow Agent. Escrow Agent has executed this Agreement in the place indicated on the signature page hereof in order to confirm that Escrow Agent shall hold the Earnest Money in escrow and shall disburse the Earnest Money pursuant to the provisions of this Section 8.

9.Default

(a)In the event that Seller is ready, willing and able to close in accordance with the terms and provisions hereof, and Buyer defaults in any of its obligations undertaken in this Agreement, Seller shall be entitled, as its sole and exclusive remedy, to either: (i) if Buyer is willing to proceed to Closing, waive such default and proceed to Closing in accordance with the terms and provisions hereof; or (ii) declare this Agreement to be terminated, and Seller shall be entitled to immediately receive all of the Earnest Money as liquidated damages as and for Seller’s sole remedy. Upon such termination, neither Buyer nor Seller shall have any further rights, obligations or liabilities hereunder, except as otherwise expressly provided herein. Seller and Buyer agree that (a) actual damages due to Buyer’s default hereunder would be difficult and inconvenient to ascertain and that such amount is not a penalty and is fair and reasonable in light of all relevant circumstances, (b) the amount specified as liquidated damages is not disproportionate to the damages that would be suffered and the costs that would be incurred by Seller as a result of having withdrawn the Property from the market, and (c) Buyer desires to limit its liability under this Agreement to the amount of the Earnest Money paid in the event Buyer fails to complete Closing, and such amount shall be paid to Seller as liquidated damages and as Seller’s sole remedy hereunder. Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer. In no event under this Section 9(a) or otherwise shall Buyer be liable to Seller for any punitive, speculative or consequential damages.

(b)In the event of a default in the obligations herein taken by Seller with respect to the Property, Buyer may, as its sole and exclusive remedy, either: (i) waive any unsatisfied conditions and proceed to Closing in accordance with the terms and provisions hereof; (ii) terminate this Agreement by delivering written notice thereof to Seller no later than Closing, upon which termination the Earnest Money, together with all interest earned therein, shall be refunded to Buyer, Seller shall pay to Buyer all of the out-of-pocket costs and expenses incurred by Buyer in connection with this Agreement in an aggregate amount not to exceed $50,000.00, which return and payment shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof; (iii) enforce specific performance of Seller’s obligations hereunder; or (iv) by notice to Seller given on or before the Closing Date, extend the Closing Date for a period of up to thirty (30) days (the

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“Closing Extension Period”) to permit Seller to remedy any such default, and the “Closing Date” shall be moved to the last day of the Closing Extension Period. If Buyer so extends the Closing Date, then Seller may, but shall not be obligated to, cause said conditions to be satisfied during the Closing Extension Period. If Seller does not cause said conditions to be satisfied during the Closing Extension Period, then Buyer shall have the remedies set forth in Section 9(b) (i) through (iii) above, except that the term “Closing” shall read “Extended Closing.”

Notwithstanding the foregoing, if Seller willfully defaults in its obligation to sell and convey the Property to Buyer pursuant to this Agreement and the remedy of specific performance as provided in clause (iii) above is not available to Buyer because Seller has sold or conveyed the Property to another party, then Buyer shall, in addition to the foregoing remedies, be permitted to pursue any and all rights and remedies available to Buyer at law or in equity; provided, however, in no event shall Seller be liable to Buyer for any punitive, speculative or indirect consequential damages. If specific performance is not available as described in the immediately preceding sentence, Seller shall pay to Buyer all actual expenses, including reasonable attorneys’ fees actually incurred, incurred by Buyer in such specific performance action.

10.Closing. The Closing shall consist of the execution and delivery of documents by Seller and Buyer, as set forth below, and delivery by Buyer to Seller of the Purchase Price in accordance with the terms of this Agreement. Seller and Buyer (as applicable) shall deliver to Escrow Agent for the benefit of the other at Closing the following executed documents:

(a)A Limited Warranty Deed executed by Seller in the form attached hereto as Exhibit B (the “Deed”);

(b)An Assignment and Assumption of Leases, Guaranties and Security Deposits executed by Seller and Buyer, in the form attached hereto as Exhibit C;

(c)A Bill of Sale for the Personalty, if any, in the form attached hereto as Exhibit D;

(d)An Assignment and Assumption of Contracts, Permits, Licenses and Warranties executed by Seller and Buyer, in the form of Exhibit E;

(e)An original of each Estoppel Certificate and the VA Estoppel from each applicable Tenant obtained by Seller pursuant to the terms of Section 6(d) and, as applicable, Guarantor, dated no earlier than thirty (30) days prior to the date of Closing. Each Estoppel Certificate and the VA Estoppel must (i) reflect the business terms of the Lease, (ii) not disclose any defaults, (iii) be fully completed, dated and executed, and (iv) be certified to Buyer and Lender. As to any Lease, if the Lease and any amendments, bearing the original signatures of the landlord and tenant thereunder have not been delivered to Buyer previously, a copy thereof confirming that the copy is true, correct and complete shall be attached to the Estoppel Certificate;

(f)To the extent obtained by Seller, estoppel certificates with respect to reciprocal easement agreements as may be reasonably requested by Buyer;

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(g)A settlement statement executed by Seller and Buyer setting forth the Purchase Price, all prorations and other adjustments to be made pursuant to the terms hereof, and the funds required for Closing as contemplated hereunder;

(h)All transfer tax statements, declarations and filings as may be necessary or appropriate for purposes of recordation of the Deed;

(i)Good standing certificates and corporate resolutions or member or partner consents, as applicable, and such other documents as reasonably requested by Escrow Agent, with respect to Seller and Buyer;

(j)Originals or copies of the Warranties (as hereinafter defined), if any;

(k)A certificate pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended, or the regulations issued pursuant thereto, certifying the non-foreign status of Seller in the form attached hereto as Exhibit M;

(l)An owner’s title affidavit as to mechanics’ liens and possession and other matters in customary form reasonably acceptable to Escrow Agent executed by Seller;

(m)To the extent obtained by Seller, an original SNDA from each Tenant fully executed and notarized by such Tenant, if requested by Buyer;

(n)With respect to each Tenant, aLetter to Tenant in form of Exhibit H attached hereto executed by Seller and Buyer, with such changes as Buyer might reasonably require;

(o)An updated Rent Roll (defined below), arrears report and schedule of security deposits and letters of credit, certified by Seller to be true and correct;

(p)A bring down certificate with respect to Seller’s representations and warranties provided herein executed by Seller, in the form attached hereto as Exhibit N;

(q)The agreement documenting the Loan Assumption and any other documents reasonably required by the Lender executed by Seller and Buyer;

(r)Such documentation as may be required to transfer to Buyer all of Seller’s right, title and interest in and to the Funded Maintenance Account;

(s)All records (including originals) within Seller’s or Seller’s managing agent’s possession reasonably required for the continued operation of the Property, including but not limited to, service contracts, plans, surveys, the Leases, Guaranties, lease files, licenses, permits, warranties, guaranties, and records of current expenditures for repairs and maintenance; and

(t)Such other instruments as are reasonably required by Escrow Agent to close the escrow and consummate the purchase of the Property in accordance with the terms hereof.

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At Closing, Buyer shall instruct Escrow Agent to deliver the Earnest Money, together with all interest earned thereon, to Seller, which shall be applied to the Purchase Price, shall deliver the balance of the Purchase Price to Seller and shall execute and deliver execution counterparts of the closing documents referenced in clauses (b), (d) (g), (h), (m), (q) and (r). Buyer shall have the right to advance the Closing upon five (5) days’ prior written notice to Seller; provided that all conditions precedent to both Buyer’s and Seller’s respective obligations to proceed with Closing under this Agreement have been satisfied (or, if there are conditions to a party’s obligation to proceed with Closing that remain unsatisfied, such conditions have been waived by such party). Buyer shall have a one-time right to extend the Closing for up to fifteen (15) business days upon written notice to Seller to be received by Seller on or prior to the date which is five (5) days prior to the Closing Date. If Buyer timely exercises this right to extend, any document that Seller is obligated to provide that is “time sensitive” does not need to be provided again by Seller. The Closing shall be held through the mail, by delivery in escrow of the closing documents to the Escrow Agent, on or prior to the Closing or such other place or manner as the parties hereto may mutually agree.

11.Representations by Seller. For the purpose of inducing Buyer to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, Seller makes the following representations and warranties to Buyer as of the date hereof and as of the Closing Date:

(a)Seller is duly organized (or formed), validly existing and in good standing under the laws of its state of organization, and to the extent required by law, the State in which the Property is located. Seller has the power and authority to execute and deliver this Agreement and all closing documents to be executed by Seller, and to perform all of Seller’s obligations hereunder and thereunder. Neither the execution and delivery of this Agreement and all closing documents to be executed by Seller, nor the performance of the obligations of Seller hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Seller or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Seller is bound. The execution, delivery and performance of this Agreement does not require the consent or approval of any court, administrative or governmental authority and does not result in the creation or imposition of any lien or equity of any kind whatsoever upon, or give to any other person any interest or right (including any right of termination or cancellation) in or with respect to, any material agreement to which Seller is a party or the business or operations of Seller or any of its properties or assets;

(b)Seller has not received any written notice of any current or pending litigation, condemnation proceeding or tax appeals affecting Seller or the Property and Seller does not have any actual knowledge of any pending litigation or tax appeals against Seller or the Property; Seller has not initiated, nor is Seller participating in, any action for a change or modification in the current subdivision, site plan, zoning or other land use permits for the Property;

(c)Attached hereto as Exhibit J is a true, correct and complete list of all contracts and agreements relating to the operation or maintenance of the Property (the “Contracts”). Other than the Leases and Contracts, Seller has not entered into any agreements affecting the Property which will be binding upon Buyer after the Closing;

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(d)Except for violations which have been cured or remedied on or before the date hereof, Seller has not received any written notice from (or delivered any written notice to) any governmental authority regarding any violation of any law applicable to the Property and Seller does not have actual knowledge of any such violations, and the Property shall be delivered free from all violations at Closing;

(e)Seller has fee simple title to the Property free and clear of all liens and encumbrances except for Permitted Exceptions and Seller is the sole owner of the entire lessor’s interest in each Lease. The Property constitutes one or more separate tax parcels for purposes of ad valorem taxation;

(f)Attached hereto as Exhibit A-2 is a true, correct and complete list of all leases and subleases affecting the Property, including all amendments to such leases and subleases.

(g)With respect to each Lease: (i) the Lease forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Lease; (ii) the Lease is in full force and effect and, to Seller’s actual knowledge, there is no default thereunder; (iii) except as disclosed to Buyer, no brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the current term of the Lease or any extension or renewal thereof; (iv) Seller has no outstanding obligation to provide Tenant with an allowance to construct, or to construct at its own expense, any tenant improvements; (v) intentionally deleted; (vi) except as shown on the Rent Roll (as defined herein), Tenant is not entitled to rental concessions or abatements for any period subsequent to the scheduled date of Closing; (vii) Tenant has not prepaid any rents as of the date hereof nor has Tenant delivered a security deposit, letter of credit or other security in connection with the Lease, except as set forth on Exhibit K attached hereto; (viii) Tenant has not made any request for any assignment, transfer, or subletting in connection with all or a portion of the premises demised to Tenant which is presently pending or under consideration by Seller; (ix) all specified work required to be performed by the landlord under the Leaseup to the date of Closing has been completed or will be completed, at Seller’s expense, prior to the Closing; (x) Seller has not received and has no actual knowledge of any pending notices from Tenant electing to vacate the premises leased to Tenant or exercising any right of Tenant to terminate the Lease; and (xi) Seller has heretofore billed Tenant for all fixed rent and additional rent due under the Lease as of the date hereof;

(h)Attached hereto as Exhibit A-3 and made a part hereof is a true, correct and complete copy of the rent roll for the Property (the “Rent Roll”);

(i)There are no occupancy rights, leases or tenancies affecting the Property other than the Leases. Neither this Agreement nor the consummation of the transactions contemplated hereby is subject to any right of first refusal, right of first offer or other purchase right in favor of any other person or entity; and apart from this Agreement, Seller has not entered into any written agreements for the purchase or sale of the Property, or any interest therein which has not been terminated;

(j)To Seller’s actual knowledge, except as set forth in the environmental reports previously delivered by Seller to Buyer, no hazardous substances have been generated, stored,

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released, or disposed of on or about the Property in violation of any law, rule or regulation applicable to the Property which regulates or controls matters relating to the environment or public health or safety (collectively, “Environmental Laws”). Seller has not received any written notice from (nor delivered any written notice to) any federal, state, county, municipal or other governmental department, agency or authority (1) concerning any petroleum product or other hazardous substance discharge or seepage at, on, around or under the Property, or migrating from the Property, in violation of any Environmental Laws or; (2) of any pending actions, suits, claims and/or proceedings claiming that Seller, any Tenant or the Property is in violation of any Environmental Laws. For purposes of this Section 11(j), “hazardous substances” shall mean any substance or material which is defined or deemed to be hazardous or toxic pursuant to any Environmental Laws. To Seller’s actual knowledge, except as set forth in the environmental reports previously delivered by Seller to Buyer, there are no underground storage tanks located on the Property;

(k)Exhibit I attached hereto is a true, correct and complete listing of all warranties in effect for the Property (the “Warranties”);

(l)Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code;

(m)There presently exists no unrestored casualty or condemnation affecting the Property;

(n)Attached hereto as Exhibit G is a true, correct and complete list of the Loan Documents. Except as set forth on Exhibit G, the Loan Documents have not been amended, supplemented, assigned by borrower or otherwise modified. The Loan Documents are valid and in full force and effect on the date hereof. To Seller’s actual knowledge, no event of default has occurred and is continuing, nor, to Seller’s actual knowledge, has any material event or omission occurred which, with the giving of notice or the lapse of time, or both, would constitute an event of default by Seller thereunder;

(o)Jon Leavitt is familiar with the subject matter of Seller’s representations and warranties contained in this Agreement;

(p)Each Guaranty forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Guaranty; and

(p)    To Seller’s actual knowledge and except for Seller’s confidential materials, Seller has provided Buyer with access to all certificates, licenses, permits, Leases, Contracts, books, records, documents and information relating to the Property and the ownership and operation thereof which are in the possession of Seller. Seller represents and warrants that such Due Diligence Materials are true and correct copies of the same materials in Seller’s files.

The representations and warranties of Seller shall survive Closing for a period of six (6) months. No claim for a breach of any representation or warranty of Seller shall be actionable or payable (x) if the breach in question results from or is based on a condition, state of facts or other matter which was actually known to Buyer prior to Closing, (y) unless the valid claims for all such

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breaches collectively aggregate Twenty-Five Thousand Dollars ($25,000.00) or more, in which event the full amount of such valid claims shall be actionable, up to but not exceeding the amount of the Cap (as defined below), and (z) unless written notice containing a description of the specific nature of such breach shall have been given by Buyer to Seller prior to the expiration of said six (6) month period and an action shall have been commenced by Buyer against Seller within nine (9) months after Closing. Seller shall not be liable to Buyer to the extent Buyer’s claim is satisfied from any insurance policy, service contract or Lease. As used herein, the term “Cap” shall mean the total aggregate amount of Five Hundred Thousand and No/100 Dollars ($500,000.00). In no event shall Seller’s aggregate liability to Buyer for any and all breaches of any representation or warranty of Seller in this Agreement exceed the amount of the Cap, and Buyer hereby waives and disclaims any right to damages or compensation for any and all such breaches in excess of the Cap.

For purposes of this Agreement, all references to “Seller’s actual knowledge”, “Seller’s knowledge” or “the knowledge of Seller” or any similar reference shall be deemed to refer to the current actual knowledge of Jon Leavitt, after consultation with Seller’s property manager.

12.Representationsby Buyer. Buyer represents and warrants to, and covenants with, Seller as follows:

(a)Buyer is duly formed, validly existing and in good standing under the laws of Delaware, is authorized to consummate the transaction set forth herein and fulfill all of its obligations hereunder and under all closing documents to be executed by Buyer, and has all necessary power to execute and deliver this Agreement and all closing documents to be executed by Buyer, and to perform all of Buyer’s obligations hereunder and thereunder. This Agreement and all closing documents to be executed by Buyer have been duly authorized by all requisite corporate or other required action on the part of Buyer and are the valid and legally binding obligation of Buyer, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement and all closing documents to be executed by Buyer, nor the performance of the obligations of Buyer hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Buyer or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Buyer is bound.

(b)    Buyer is not, and will not become a person identified on U.S. Treasury’s Office of Foreign Asset Control listing of Specially Designated Nationals and Blocked Persons (a “Prohibited Person”). Buyer (i) is not and will not become owned or controlled by a Prohibited Person, (ii) is not acting hereunder and will not act hereunder for or on behalf of a Prohibited Person, and (iii) is not providing and will not provide material, financial or technological support or other services to or in support of acts of terrorism of a Prohibited Person. Buyer will not enter into or undertake any activities related to this Agreement in violation of Anti-Terrorism Laws (as defined herein).

The representations and warranties of Buyer shall survive Closing for a period of six (6) months.

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13.Conditions Precedent to Buyer’s Obligations. Buyer’s obligation to pay the Purchase Price, and to accept title to the Property, shall be subject to compliance by Seller with the following conditions precedent on and as of the date of Closing:

(a)Seller shall deliver to Buyer on or before the Closing the items set forth in Section 10 above;

(b)Buyer shall receive from Escrow Agent or any other title insurer approved by Buyer in its judgment and discretion, a current ALTA owner’s form of title insurance policy, or irrevocable and unconditional binder to issue the same, with extended coverage for the Real Property and the Improvements (including any beneficial easements) in the amount of the Purchase Price, dated, or updated to, the date of the Closing, insuring, or committing to insure, at its ordinary premium rates Buyer’s good and marketable title in fee simple to the Real Property and the Improvements and otherwise in such form and with such endorsements as provided in the title commitment approved by Buyer pursuant to Section 6 hereof and subject only to the Permitted Exceptions (the “Title Policy”);

(c)The representations and warranties of Seller contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Seller shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Seller prior to or at the Closing;

(d)Seller shall have delivered to Buyer a written waiver from any party of any right of first refusal, right of first offer or other purchase option that such party may have, pursuant to the Leases or otherwise, to purchase the Property from Seller;

(e)Lender shall have given approval of the Loan Assumption on the terms described in Section 3(b) hereof; and

(f)Seller shall have made all contributions, payments and/or reimbursements and completed any and all work required by any governmental authority in connection with the construction and development of the Property, including, without limitation, as required by any variance or site plan approval.

In the event that any of the foregoing conditions precedent have not been satisfied as of the Closing Date, Buyer may elect, in its sole discretion, to either (i) waive such condition and proceed to Closing, (ii)terminate this Agreement, or (iii) notify Seller in writing of the unsatisfied condition and extend the Closing Date for three (3) business days to give Seller the opportunity to satisfy the condition. In the event Seller does not satisfy the condition by the end of such three (3) business day period, Buyer shall have the option to either waive the condition and proceed to Closing on the last day of such three (3) business day period or terminate this Agreement by written notice to Seller. Upon any termination of this Agreement under this paragraph, the Earnest Money shall be refunded to Buyer, and with respect to a failure under subsections (a), (c) or (d) above, Seller shall pay to Buyer upon receipt of reasonable documentary evidence thereof all of the out-of-pocket costs and

21

expenses actually incurred by Buyer in connection with this Agreement in an aggregate amount not to exceed $25,000.00, which return and payment shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof.

14.Conditions Precedent to Seller’s Obligations. Seller’s obligation to deliver title to the Property shall be subject to compliance by Buyer with the following conditions precedent on and as of the date of Closing:

(a)Buyer shall deliver to Escrow Agent on the Closing Date the remainder of the Purchase Price, subject to adjustment of such amount pursuant to Section 4 hereof, and all deliveries required to be made at or prior to the Closing pursuant to Section 10 ofthis Agreement;

(b)The representations and warranties of Buyer contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Buyer shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Buyer prior to or at the Closing; and

(c)Lender shall have given approval of the Loan Assumption on the terms described in Section 3(b) hereof.

In the event that any of the foregoing conditions precedent have not been satisfied as of the Closing Date, Seller may elect, in its sole discretion, to either (i) waive such condition and proceed to Closing, (ii) terminate this Agreement, or (iii) notify Buyer in writing of the unsatisfied condition and extend the Closing Date for three (3) business days to give Buyer the opportunity to satisfy the condition. In the event Buyer does not satisfy the condition by the end of such three (3) business day period, Seller shall have the option to either waive the condition and proceed to Closing on the last day of such three (3) business day period or terminate this Agreement by written notice to Buyer. In the event Seller terminates this Agreement as a result of a failure under subsections (a) or (b) above, Seller shall be entitled to exercise its remedy under Section 9(a) herein. In the event Seller terminates this Agreement as a result of a failure under subsection (c) above, the Earnest Money shall be refunded to Buyer. The delivery of the Earnest Money to the party entitled to receive it under this paragraph shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof.

15.Notices. Unless otherwise provided herein, all notices and other communications which may be or are required to be given or made by any party to the other in connection herewith shall be in writing and shall be deemed to have been properly given and received on the date: (i) delivered by facsimile transmission or by electronic mail (e.g. email), (ii) delivered in person, (iii) deposited in the United States mail, registered or certified, return receipt requested, or (iv) deposited with a nationally recognized overnight courier, to the addresses set out in Section 1, or at such other addresses as specified by written notice delivered in accordance herewith. Notwithstanding the foregoing, Seller and Buyer agree that notice may be given on

22

behalf of each party by the counsel for each party and notice by such counsel in accordance with this Section 15 shall constitute notice under this Agreement.

16.Seller Covenants. Seller agrees that it: (a) shall continue to operate and manage the Property in the same manner in which Seller has previously operated and managed the Property; (b) shall, subject to Section 7hereof and subject to reasonable wear and tear, maintain the Property in the same condition as exists on the date hereof; (c) shall not amend the Loan Documents in any manner or enter into any new loan documents with respect to the Loan; and (d) from and after the date that is three (3) business days prior to the expiration of the Due Diligence Period, shall not, without Buyer’s prior written consent, which, may be withheld in Buyer’s sole discretion: (i) amend the Leases or Guaranties in any manner or enter into any new lease, license agreement or other occupancy agreement with respect to the Property; (ii) consent to an assignment of any Lease or a sublease of the premises demised thereunder or a termination or surrender thereof; (iii) terminate any Lease or release any guarantor of or security for any Lease unless required by the express terms of such Lease; (iv) enter into any contracts unless terminable by Seller without penalty upon not more than thirty (30) days’ prior notice; and/or (v) cause, permit or consent to an alteration of the premises demised under the Leases (unless such consent is non-discretionary). Seller shall promptly inform Buyer in writing of any material event adversely affecting the ownership, use, occupancy or maintenance of the Property, whether insured or not.

17.314 Audit. Upon Buyer’s request, for a period of seventy-one (71) days after the Closing Date, Seller shall make the financial statements, including balance sheets, income statements, stockholders’ equity statements and cash flow statements and related notes prepared in accordance with United States generally accepted accounting standards, and any and all books, records, correspondence, financial data, leases, delinquency reports and all other documents and matters (other than confidential and privileged information) maintained by Seller or their agents and relating to receipts, expenditures, contributions and distributions reasonably necessary to complete an audit pertaining to the Property for the three (3) most recent full calendar years and the interim period of the current calendar year (collectively, the “Records”) available to Buyer and/or its auditors for inspection, copying and audit by Buyer’s designated accountants, and at Buyer’s expense. Seller shall provide Buyer and/or its auditors, but without expense to Seller, with copies of, or access to, such factual and financial information as may be reasonably requested by Buyer or its designated accountants, and in the possession or control of Seller, to enable Buyer to file any filings required by the Securities and Exchange Commission (the “SEC”) in connection with the purchase of the Property. Seller understands and acknowledges that Buyer is required to file audited financial statements related to the Property with the SEC within seventy-one (71) days of the Closing Date and agrees to provide any Records to the Buyer’s auditors on a timely basis to facilitate Buyer’s timely submission of such audited financial statements.

18.Performance on Business Days. A "business day" is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government. Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business

23

day. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day.

19.    Entire Agreement. This Agreement constitutes the sole and entire agreement among the parties hereto and no modification of this Agreement shall be binding unless in writing and signed by all parties hereto. No prior agreement or understanding pertaining to the subject matter hereof (including, without limitation, any letter of intent executed prior to this Agreement) shall be valid or of any force or effect from and after the date hereof.

20.    Severability. If any provision of this Agreement, or the application thereof to any person or circumstance, shall be invalid or unenforceable, at any time or to any extent, then the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. Each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

21.    No Representations or Warranties. Except for the representations and warranties expressly set forth above in Section 11 and the documents delivered by Seller to Buyer under Section 10 hereof, the Property is expressly purchased and sold “AS IS,” “WHERE IS,”and “WITH ALL FAULTS.” The Purchase Price and the terms and conditions set forth herein are the result of arm’s‑length bargaining between entities familiar with transactions of this kind, and said price, terms and conditions reflect the fact that Buyer shall have the benefit of, and, except as otherwise provided in this Agreement and the documents delivered by Seller to Buyer under Section 10 hereof, is not relying upon any information provided by Seller or statements, representations or warranties, express or implied, made by or enforceable directly against Seller, including, without limitation, any relating to the value of the Property, the physical or environmental condition of the Property, any state, federal, county or local law, ordinance, order or permit; or the suitability, compliance or lack of compliance of the Property with any regulation, or any other attribute or matter of or relating to the Property (other than the representations set forth above). Except as otherwise expressly provided otherwise in this Agreement and the documents delivered by Seller to Buyer under Section 10 hereof, if Seller provides or has provided any documents, summaries, opinions or work product of consultants, surveyors, architects, engineers, title companies, governmental authorities or any other person or entity with respect to the Property, Buyer and Seller agree that Seller has done so or shall do so only for the convenience of both parties, Buyer shall not rely thereon and the reliance by Buyer upon any such documents, summaries, opinions or work product shall not create or give rise to any liability of or against Seller, Seller’s partners, members, or affiliates or any of their respective partners, officers, directors, participants, employees, contractors, attorneys, consultants, representatives, agents, successors, assigns or predecessors‑in‑interest. Except for the warranties and representations of Seller, Buyer shall rely only upon any title insurance obtained by Buyer with respect to title to the Property. Except for the representations and warranties expressly set forth above in Section 11, Buyer acknowledges and agrees that no representation has

24

been made and no responsibility is assumed by Seller with respect to current and future applicable zoning or building code requirements or the compliance of the Property with any other laws, rules, ordinances or regulations, the financial earning capacity or expense history of the Property, the continuation of contracts, continued occupancy levels of the Property, or any part thereof, or the continued occupancy by tenants of any Leases or, without limiting any of the foregoing, occupancy at Closing. Prior to Closing, Seller shall have the right, but not the obligation, to enforce its rights against any and all Property occupants, guests or tenants, which rights shall be subject, in any event, to the terms of Section 16 of this Agreement.

22.    Applicable Law. This Agreement shall be construed under the laws of the State or Commonwealth in which the Property is located, without giving effect to any state's conflict of laws principles.

23.    Tax-Deferred Exchange. Buyer and Seller respectively acknowledge that the purchase and sale of the Property contemplated hereby may be part of a separate exchange (an “Exchange”) being made by each party pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated with respect thereto. In the event that either party (the “Exchanging Party”) desires to effectuate such an exchange, then the other party (the “Non-Exchanging Party”) agrees to cooperate fully with the Exchanging Party in order that the Exchanging Party may effectuate such an exchange; provided, however, that with respect to such Exchange (a) all additional costs, fees and expenses related thereto shall be the sole responsibility of, and borne by, the Exchanging Party; (b) the Non-Exchanging Party shall incur no additional liability as a result of such exchange; (c) the contemplated exchange shall not delay any of the time periods or other obligations of the Exchanging Party hereby, and without limiting the foregoing, the scheduled date for Closing shall not be delayed or adversely affected by reason of the Exchange; (d) the accomplishment of the Exchange shall not be a condition precedent or condition subsequent to the Exchanging Party's obligations under the Agreement; and (e) the Non-Exchanging Party shall not be required to hold title to any land other than the Property for purposes of the Exchange. The Exchanging Party agrees to defend, indemnify and hold the Non-Exchanging Party harmless from any and all liability, damage or cost, including, without limitation, reasonable attorney's fees that may result from Non-Exchanging Party's cooperation with the Exchange. The Non-Exchanging Party shall not, by reason of the Exchange, (i) have its rights under this Agreement, including, without limitation, any representations, warranties and covenants made by the Exchanging Party in this Agreement (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller), or in any of the closing documents (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller) contemplated hereby, adversely affected or diminished in any manner, or (ii) be responsible for compliance with or deemed to have warranted to the Exchanging Party that the Exchange complies with Section 1031 of the Code. The obligations under this Section 23 shall survive the Closing.

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24.    Broker’s Commissions. Buyer and Seller each hereby represent that, except for the Broker listed herein, there are no other brokers involved or that have a right to proceeds in this transaction. Seller shall be responsible for payment of commissions to the Broker pursuant to a separate written agreement executed by Seller. Seller and Buyer each hereby agree to indemnify and hold the other harmless from all loss, cost, damage or expense (including reasonable attorneys' fees at both trial and appellate levels) incurred by the other as a result of any claim arising out of the acts of the indemnifying party (or others on its behalf) for a commission, finder's fee or similar compensation made by any broker, finder or any party who claims to have dealt with such party (except that Buyer shall have no obligations hereunder with respect to any claim by Broker). The representations, warranties and indemnity obligations contained in this Section24 shall survive the Closing or the earlier termination of this Agreement.

25.    Assignment. Buyer may assign its rights under this Agreement prior to Closing to a related special purpose entity titled ARHC PPLVLGA01, LLC (“Approved Assignee”); provided, however, that no such assignment shall relieve Buyer of any of its obligations hereunder until Closing is complete. Except for the foregoing permitted assignment or in connection with an Exchange in accordance with the provisions of Section 23 herein, this Agreement and Buyer’s rights and obligations described herein are personal to Buyer and shall not be assigned without Seller’s prior written consent.

26.    Attorneys’ Fees. In any action between Buyer and Seller as a result of failure to perform or a default under this Agreement, the prevailing party shall be entitled to recover from the other party, and the other party shall pay to the prevailing party, the prevailing party’s reasonable attorneys’ fees and disbursements and court costs incurred in such action.

27.    Time of the Essence. Time is of the essence with respect to each of Buyer’s and Seller’s obligations hereunder.

28.    Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Agreement which are transmitted electronically shall be valid for all purposes, however any party shall deliver an original signature on this Agreement to the other party upon request.

29.    Anti-Terrorism. Neither Buyer or Seller, nor any of their affiliates, are in violation of any Anti-Terrorism Law (as hereinafter defined) or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. “Anti-Terrorism Laws” shall mean any laws relating to terrorism or money laundering, including: Executive Order No. 13224; the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or may hereafter be, renewed, extended, amended or replaced; the applicable laws comprising or implementing the Bank Secrecy Act; and the applicable laws administered

26

by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing may from time to time be amended, renewed, extended, or replaced).

[SIGNATURES APPEAR ON THE FOLLOWING PAGES]

27

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

BUYER:	SELLER:
AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company By: AR Capital, LLC, a Delaware limited liability company, its sole member By: /s/ William M. Kahane        Name: William M. Kahane        Title: Manager	ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership By: ICM VI Management, LLC, a Georgia limited liability company, its General Partner By: ICM Realty Group Ltd., an Alberta corporation, its sole Member By: /s/ Bruce Timm Name: Bruce Timm Title: President
Date: May 27, 2015	Date: May 27, 2015

THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES TO BE BOUND BY THE TERMS OF THIS AGREEMENT RELATING TO ESCROW AGENT AND THE EARNEST MONEY.

ESCROW AGENT:

FIDELITY NATIONAL TITLE INSURANCE COMPANY

By: /s/ Linda L. Hart                

Name: Linda L. Hart                

Title: AVP                    

Date: June 22, 2015                 

EXHIBITS

Exhibit A-1    -    Real Property

Exhibit A-2    -    List of Leases

Exhibit A-3    -    Rent Roll

Exhibit B    -    Form of Limited Warranty Deed

Exhibit C    -    Form of Assignment and Assumption of Leases, Guaranties and                     Security Deposits

Exhibit D    -    Form of Bill of Sale

Exhibit E    -    Form of Assignment of Contracts, Permits, Licenses and Warranties

Exhibit F    -    Form of Estoppel Certificate

Exhibit G    -    Loan Documents

Exhibit H    -    Form of Tenant Notice Letter

Exhibit I    -    Warranties    

Exhibit J    -    Contracts

Exhibit K    -    Prepaid Rents, Security Deposits and Letters of Credit

Exhibit L    -    Form of VA Estoppel

Exhibit M    -    Non-Foreign Person Affidavit

Exhibit N    -    Seller’s Bring Down Certificate

Exhibit O    -    Due Diligence Materials

EXHIBIT A-1

LEGAL DESCRIPTION OF PROPERTY

All that tract or parcel of land lying and being in Land Lot 9, 7th District, Gwinnett County, Georgia and being more particularly described as follows:

BEGINNING at an iron pin set at the northeast corner of a mitered intersection of the northerly right-of-way line of Philips Boulevard (having an 80-foot right-of-way) and the easterly right-of-way line of Katherine Oak Court (having a 60-foot right-of-way); Thence running along the easterly right-of-way line of Katherine Oak Court, South 79°02'41" West, 15.56 feet to an iron pin set; Thence, North 55°57'19" West, 250.78 feet to a ½" rebar found; Thence leaving said easterly right-of-way line of Katherine Oak Court and running, North 34°02'41" East, 87.26 feet to a ½" rebar found; Thence, North 51°26'15" East, 227.21 feet to a point; Thence, North 74°19'54" East, 304.39 feet to a point; Thence, South 72°25'50" East, 231.02 feet to a parker kalon nail set; Thence, South 15°44'52" East, 50.93 feet to an iron pin set along the northerly right-of-way line of Philip Boulevard; Thence running along the northerly right-of-way line of Philip Boulevard, South 68°24'39" West, 141.25 feet to a point; Thence, North 21°35'17" West, 4.54 Feet to a point; Thence, South 68°34'22" West, 89.34 feet to a point; Thence, South 66°53'15" West, 63.97 feet to a point; Thence, South 61°52'30" West, 61.94 feet to a point; Thence, 50.90 feet along the arc of a curve to the left having a radius of 684.47 feet and being scribed by a chord bearing South 58°02'10" West, 50.89 feet to a point; Thence, South 34°05'39" East, 3.11 feet to a point; Thence, 220.36 feet along the arc of a curve to the left having a radius of 681.36 feet and being scribed by a chord bearing South 46°38'35" West, 219.40 Feet to an iron pin set and the true POINT OF BEGINNNING.

Said tract contains 3.41 acres (148,721 square feet) more or less, as shown in a survey prepared for Grove Street Lawrenceville, LLC, ICM VI – Philip Centre, LP, RGA Reinsurance Company, its successors and/or assigns, Republic Commercial Title Company, LLC and First American Title Insurance Company by Point To Point Land Surveyors, Inc. dated July 25, 2012 and last revised September 26, 2012.

Being all of Tract I as shown on Plat entitled "A Subdivision Plat Prepared for: Grove Street Lawrenceville, LLC" recorded in Plat Book 129, Pages154-155, of the Public Records of Gwinnett County, Georgia.

TOGETHER WITH, the rights, privileges, easements and appurtenances created by the following:

a. Terms and conditions of that certain Easement Agreement between Oxford Lane JV LLC and Grove Street Lawrenceville, LLC, dated March 16, 2007, filed March 19, 2007 and recorded in Deed Book 47688, Page 63, aforesaid records.

b. Terms and condition of that certain Storm Water Easement and Maintenance Agreement between Oxford Lane JV LLC and Grove Street Lawrenceville, LLC, dated March 16, 2007, filed March 19, 2007 and recorded in Deed Book 47688, Page 50, aforesaid records.

A-1-1

c. Terms and conditions of that certain Reciprocal Easement Agreement by and between     Grove Street Lawrenceville, LLC and ICM VI-Philip Centre, LP, dated September 27,     2012 and recorded in Deed Book 51698, Page 166, aforesaid records

A-1-2

EXHIBIT A-2

LIST OF LEASES

1. Lease dated September 30, 2008 between Grove Street Lawrenceville, LLC, a Georgia limited liability company, as Landlord, and Benchmark Rehabilitation Partners, LLC, a Delaware limited liability company, as Tenant, as amended by First Amendment to Lease dated January 17, 2013 and by Second Amendment to Lease dated December 16, 2014.

2. Lease dated March 1, 2010 between Grove Street Lawrenceville, LLC, a Georgia limited liability company, as Landlord, and Kaiser Foundation Health Plan of Georgia, Inc., a Georgia nonprofit public benefit corporation, as Tenant, as amended by First Amendment to Lease dated December 31, 2014.

3. Lease dated September 27, 2011 between Grove Street Lawrenceville, LLC, a Georgia limited liability company, as Lessor, and the United States of America, as Lessee, as amended by Supplemental Lease Agreement No.1 dated September 13, 2012, Supplemental Lease Agreement No.2 dated December 20, 2012, and Supplemental Lease Agreement No.3 dated December 20, 2012.

4.    Lease Agreement dated August 14, 2013 between ICM VI – Philip Centre, LP, a Georgia     limited partnership, as Landlord, and Georgia Pain and Wellness LLC, a Georgia limited     liability company, as Tenant, as amended by First Amendment to Lease Agreement dated     November __, 2013.

5.    Lease Agreement dated October 28, 2015 between ICM VI – Philip Centre, LP, a     Georgia limited partnership, as Landlord, and Georiga Interventional Pain LLC, a     Georgia limited liability company, as Tenant.

A-2-1

EXHIBIT A-3

RENT ROLL

(attached)

A-3-1

EXHIBIT B

FORM OF LIMITED WARRANTY DEED[Subject to Local Counsel Review]

STATE OF GEORGIA        Upon recording return to:

COUNTY OF GWINNETT                        _____________________

_____________________

_____________________

_____________________

LIMITED WARRANTY DEED

THIS INDENTURE, made this ____ day of ______, 2015 by and between ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership (hereinafter referred to as “Grantor”), having an address of 3715 Northside Parkway, Building 400, Suite 475, Atlanta, GA 30327, and __________________________________, a _____________________, having an address of _____________________________________ (hereinafter referred to as “Grantee”).

WITNESSETH:

That for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, Grantor has granted, bargained, sold, assigned, transferred and conveyed and does hereby grant, bargain, sell, assign and transfer and convey to Grantee, its successors and assigns, all of that certain tract or parcel of land being more particularly described in Exhibit ”A” attached hereto and by this reference made a part hereof (hereinafter referred to as the “Property”).

TO HAVE AND TO HOLD said Property, together with all and singular the rights, members, and appurtenances thereof, to the same being, belonging or in anywise appertaining to the only proper use, benefit and behoof of Grantee and the successors and assigns of Grantee, forever, IN FEE SIMPLE.

Grantor covenants: (i) that it is lawfully seized and possessed of the Property; (ii) that title to the Property is free, clear and unencumbered (except as to those matters set forth on Exhibit “B” attached hereto); and (iii) that Grantor shall warrant and forever defend the title to said Property, unto the Grantee, its successors and assigns, against the lawful claims of all persons claiming by, through or under Grantor, except as to those matters set forth on Exhibit “B” attached hereto.

B-1

IN WITNESS WHEREOF, Grantor has hereunto set its hand and seal on the day, month and year first above written.

Signed, sealed and delivered
in the presence of: 
Unofficial Witness  
Notary Public My Commission Expires: [AFFIX NOTARIAL SEAL] GRANTOR: ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership By: ICM VI Management, LLC, a Georgia limited liability company, its General Partner By: ICM Realty Group Ltd., an Alberta corporation, its sole Member By: ________________________    Bruce Timm    Its: President

B-2

Exhibit “A”

[Legal Description]

B-3

Exhibit “B”

[Permitted Exceptions]

B-4

EXHIBIT C

FORM OF
ASSIGNMENT AND ASSUMPTION OF LEASES, GUARANTIES AND SECURITY DEPOSITS

ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership ("Assignor"), in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby assigns, transfers, sets over and conveys to ARHC PPLVLGA01, LLC, a Delaware limited liability company ("Assignee"), all of Assignor's right, title and interest in and to those leases described in Exhibit Aattached hereto and made a part hereof (as amended from time to time, the “Leases”), including any and all security deposits under the Leases, together with all of Assignor’s right, title and interest in and to those lease guaranties described in Exhibit B attached hereto and made a part hereof.

Subject to the limitations set forth below, Assignor does hereby agree to defend, indemnify and hold harmless Assignee from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignee by reason of the failure of Assignor to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the lessor, or landlord under and by virtue of the Leases arising or accruing prior to the date of this Assignment. Subject to the limitations set forth below, Assignee does hereby agree to defend, indemnify and hold harmless Assignor from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignor by reason of the failure of Assignee to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the landlord under and by virtue of the Leases arising or accruing on and after the date of this Assignment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

C-1

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment this ______ day of ______________, 2015, which Assignment is effective this date. This Assignment may be executed in counterparts, which when taken together shall be deemed one agreement.

ASSIGNOR:

ICM VI – PHILIP CENTRE, LP, a Georgia limited                             partnership

By: ICM VI Management, LLC, a Georgia limited                              liability company, its General Partner

By: ICM Realty Group Ltd., an Alberta corporation,                          its sole Member

By: ________________________

Bruce Timm

Its: President

ASSIGNEE:

ARHC PPLVLGA01, LLC, a Delaware limited liability company

By:

Name:

Title:

C-2

Exhibit A

List of Leases

[to be prepared by Seller]

C-3

Exhibit B

List of Guaranties

[to be prepared by Seller]

C-4

EXHIBIT D

FORM OF BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership (“Seller”), hereby bargains, sells, conveys and transfers to ARHC PPLVLGA01, LLC, a Delaware limited liability company (“Buyer”), all of Seller’s right, title and interest in and to those certain items of personal and intangible property (including any warranty made by third parties in connection with the same and the right to sue on any claim for relief under such warranties) (the “Personal Property”) located at or held in connection with that certain real property located in the State of Georgia, as more particularly described on Schedule A attached hereto and made a part hereof.

Seller has not made and does not make any express or implied warranty or representation of any kind whatsoever with respect to the Personal Property, including, without limitation, with respect to title, merchantability of the Personal Property or its fitness for any particular purpose, the design or condition of the Personal Property; the quality or capacity of the Personal Property; workmanship or compliance of the Personal Property with the requirements of any law, rule, specification or contract pertaining thereto; patent infringement or latent defects. Buyer accepts the Personal Property on an “as is, where is” basis.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

D-1

IN WITNESS WHEREOF, Seller has caused this instrument to be executed and delivered as of this ___ day of _______, 2015.

SELLER:

ICM VI – PHILIP CENTRE, LP, a Georgia limited                             partnership

By: ICM VI Management, LLC, a Georgia limited liability                          company, its General Partner

By: ICM Realty Group Ltd., an Alberta corporation, its sole                      Member

By: ________________________

Bruce Timm

Its: President

D-2

SCHEDULE A

TO BILL OF SALE

[Add legal description of Real Property]

D-3

EXHIBIT E

FORM OF ASSIGNMENT AND ASSUMPTION OF CONTRACTS,
PERMITS, LICENSES AND WARRANTIES

THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS, PERMITS, LICENSES AND WARRANTIES (this “Assignment”), made as of the ___ day of ________, 2015, by ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership (“Assignor”), and ARHC PPLVLGA01, LLC, a Delaware limited liability company (“Assignee”).

W I T N E S S E T H:

WHEREAS, by Agreement for Purchase and Sale of Real Property (the “Purchase Agreement”) having an effective date of _________________ ____, 2015, between Assignor and American Realty Capital VII, LLC, a Delaware limited liability company, predecessor-in-interest to Assignee, Assignee has agreed to purchase from Assignor as of the date hereof, and Assignor has agreed to sell to Assignee, that certain property located at 455 Philip Boulevard, Lawrenceville, Georgia 30046 (the “Property”);

WHEREAS, Assignor desires to assign to Assignee as of the date hereof all of Assignor’s right, title and interest in those contracts set forth on Exhibit A attached hereto, and the permits, trademarks, licenses and warranties held by Assignor in connection with the Property (collectively, the “Contracts”); and

WHEREAS, Assignor and Assignee have further agreed that Assignee shall expressly assume all of the obligations of Assignor accruing under the Contracts from and after the date of this Assignment.

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Assignor hereby assigns, sets over and transfers unto Assignee to have and to hold from and after the date hereof all of the right, title and interest of Assignor in, to and under the Contracts, and Assignee hereby assumes and agrees to observe and perform all of the obligations and duties of Assignor under each of the Contracts accruing from and after, or relating to periods from and after, but not before, the date of this Assignment. Assignor agrees without additional consideration to execute and deliver to Assignee any and all additional forms of assignment and other instruments and documents that may be reasonably necessary or desirable to transfer or evidence the transfer to Assignee of any of Assignor's right, title and interest to any of the Contracts.

This Assignment shall be governed by the laws of the State of Georgia, applicable to agreements made and to be performed entirely within said State.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

E-1

IN WITNESS WHEREOF, Assignor has duly executed this Assignment as of the date first above written.

ASSIGNOR:

ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership

By: ICM VI Management, LLC, a Georgia      limited liability company, its General Partner

By: ICM Realty Group Ltd., an Alberta corporation, its sole Member

By: ________________________

Bruce Timm

Its: President

ASSIGNEE:

ARHC PPLVLGA01, LLC, a Delaware limited liability company

By:

Name:

Title:

E-2

Exhibit “A”

Assigned Contracts

E-3

EXHIBIT F

FORM OF ESTOPPEL CERTIFICATE

The undersigned hereby certifies to AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“ARC VII”), ARHC PPLVLGA01, LLC, a Delaware limited liability company(“Approved Assignee,” and together with ARC VII, “Buyer”), [__________________] (“Lender”), and their respective successors and assigns as follows:

1.    The undersigned is the tenant under that certain [insert title of lease document] [(the “Lease”)], dated as of _________ __, ____, by and between _________________________ (“Landlord”) and _________________________ (“Tenant”) [, as amended by that certain [insert title of lease amendment document], dated as of _________ __, ____, by and between _________________________ and _________________________ (collectively, the “Lease”)], pursuant to which Tenant leases certain premises known as Suite ____, consisting of _______ rentable square feet (the “Premises”), at that real property and improvements located at _________________________________________ (the “Property”).

2.    Except as set forth above, the Lease has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived.

3.    The Lease is valid and in full force and effect on the date hereof. The Lease represents the entire agreement between Landlord and Tenant with respect to the Premises and the land on which the Premises are situated.

4.    Tenant is not entitled to, and has made no agreement with Landlord or its agents or employees concerning, free rent, partial rent, rebate of rent payments, credit or offset or reduction in rent, or any other type of rental concession including, without limitation, lease support payments, lease buy-outs, or assumption of any leasing or occupancy agreements of Tenant.

5.    The initial term of the Lease began on __________ __, _____ and expires on ________ __, 20__. The Rent Commencement Date was __________ __, ____. Tenant has accepted possession of the Premises and is open for business. Tenant has not sublet all or a portion of the Premises to any sublessee and has not assigned, transferred or encumbered any of its rights or interests under the Lease.

6.    Tenant has no outstanding options or rights to renew or extend the term of the Lease, except as follows: ________________ (if none, please state “none”). Tenant has no outstanding expansion options, other options, rights of first refusal or rights of first offer to purchase the Property or any part thereof, or rights of first offer to lease with respect to all or any part of the Property.

7.    The [Base Annual Rent] payable under the Lease is $____________ ($_________ monthly). Such [Base Annual Rent] payable under the Lease shall be adjusted during the initial term of the Lease as follows: (a) from ___________, 20__ to and including ______________, 20__, the Base Annual Rent shall be $_______ ($_______ monthly); (b) from ___________, 20___ to and including ____________, 20___ the Base Annual Rent shall be $________ ($________

F-1

monthly); [and from __________, 20__ to and including __________, 20___ the Base Annual Rent shall be $_________ ($__________ monthly)]. Such rent has been paid through and including the month of ____________, 2015. Additional rent under the Lease in the amount of $__________ has been paid through and including the month of __________, 2015. No such rent (excluding security deposits) has been paid more than one (1) month in advance of its due date.

8.    Tenant's security deposit, if any, is $_________________ (if none, please state “none”).

9.    No event has occurred and no condition exists that constitutes, or that with the giving of notice or the lapse of time or both, would constitute, a default by Tenant or, to the best knowledge of Tenant, Landlord under the Lease. Tenant has no existing defenses or offsets against the enforcement of the Lease by Landlord.

10.    (a)    All required contributions by Landlord to Tenant on account of Tenant's improvements have been received by Tenant and all of Tenant's tenant improvements have been completed in accordance with the terms of the Lease.

(b)    Landlord has satisfied all its obligations to Tenant arising out of or incurred in connection with the construction of the tenant improvements on the Premises and no off-set exists with respect to any rents or other sums payable or to become payable by the Tenant under the Lease.

11.    All licenses necessary for using and operating the Premises as a [insert permitted use] are held by Tenant and are in full force and effect.

12.    No voluntary actions or, to Tenant’s best knowledge, involuntary actions are pending against Tenant under the bankruptcy laws of the United States or any state thereof.

13.    This Certificate is delivered to induce Buyer to acquire the Property and Lender to approve Buyer’s acquisition of the Property and assumption of the mortgage loan encumbering the Property, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate.

[SIGNATURE PAGE FOLLOWS]

F-2

The undersigned is duly authorized to execute this Certificate on behalf of Tenant.

Dated: ____________, 2015

TENANT:    

____________________, a ________________

By:______________________
Name:

Title:

[DELETE THE FOLLOWING SECTION IF THE LEASE IS NOT GUARANTEED]

[_________________________, a _________________________] (“Guarantor”) certifies to and for the benefit of Buyer, Lender and their respective successors and assigns as follows:

With respect to that certain [Guaranty], dated as of ________ __, ____, by Guarantor to and for the benefit of Landlord (the “Guaranty”): (a) Guarantor is the guarantor of the Lease pursuant to the Guaranty; (b) the Guaranty has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived; (c) the Guaranty is valid and in full force and effect on the date hereof; and (d) no voluntary actions or, to Guarantor’s best knowledge, involuntary actions are pending against Guarantor under the bankruptcy laws of the United States or any state thereof. This Certificate is delivered to induce Buyer to acquire the Property and Lender to approve Buyer’s acquisition of the Property and assumption of the mortgage loan encumbering the Property, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate. The undersigned is duly authorized to execute this Certificate.

Dated: ____________, 2015

[USE FOLLOWING SIGNATURE BLOCK FOR ENTITY GUARANTOR]

GUARANTOR:    

____________________,

a ________________

By:______________________    Name:

Title:

[USE FOLLOWING SIGNATURE BLOCK FOR PERSONAL GUARANTOR]

F-3

GUARANTOR:    

______________________

Name:

F-4

EXHIBIT G

LOAN DOCUMENTS

1.    Promissory Note dated September 27, 2012 in the original principal amount of     $5,200,000.00 from ICM VI – Philip Centre, LP (“Borrower”) to RGA Reinsurance     Company (“Lender”).

2.    Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement dated     September 27, 2012 between Borrower and Lender.

3.    Assignment of Leases and Rents dated September 27, 2012 by Borrower in favor of     Lender.

4.    Environmental Indemnity Agreement dated September 27, 2012 by Borrower and Bruce     Timm (“Guarantor”) for the benefit of Lender.

5.    Assignment and Subordination of Management Agreement dated September 27, 2012 by     and among Borrower, Lender and HealthAmerica Realty Group, L.L.C.

6.    Escrow Agreement dated September 27, 2012 by and between Borrower and Lender.

7.    UCC-1 Financing Statement naming Borrower, as debtor, and Lender, as secured party,     recorded as No. 067-2012-006506 in the UCC centralized indices of the Gwinnett     County, Georgia records.

8.    UCC-1 Financing Statement naming Borrower, as debtor, and Lender, as secured party,     recorded in Deed Book 51691, Page 671 in the Gwinnett County, Georgia records.

9.    Separate Guaranty of Carveout Obligations dated September 27, 2012 by Guarantor in     favor of Lender.

G-1

EXHIBIT H

FORM OF NOTICE TO TENANT

________________ ___, 2015

TO:    [INSERT TENANT’S NOTICE ADDRESS FROM LEASE]

Re:    Notice of Change of Ownership of 455 Philip Boulevard, Lawrenceville, Georgia 30046

Ladies and Gentlemen:

YOU ARE HEREBY NOTIFIED AS FOLLOWS:

That as of the date hereof, the undersigned has transferred, sold, assigned, and conveyed all of its right, title and interest in and to the above-described property, (the “Property”) to ARHC PPLVLGA01, LLC, a Delaware limited liability company (the “New Owner”), and assigned to New Owner, all of the undersigned’s right, title and interest under that certain Lease, dated _________, between ________as tenant and ____________as landlord (the “Lease”), together with any security deposits or letters of credit held thereunder.

Accordingly, New Owner is the landlord under the Lease and future notices and correspondence with respect to your leased premises at the Property should be made to the New Owner at the following address:

ARHC PPLVLGA01, LLC

c/o American Realty Capital Healthcare Trust III, Inc.

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Attention: Regional Asset Manager

With a copy to:

ARHC PPLVLGA01, LLC

c/o American Realty Capital Healthcare Trust III, Inc.

405 Park Avenue, 14^th Floor

New York, NY 10022

Attention: General Counsel

You will receive a separate notification from New Owner regarding the new address for the payment of rent. In addition, to the extent required by the Lease, please amend all insurance policies you are required to maintain pursuant to the Lease to name New Owner as an additional insured thereunder and promptly provide New Owner with evidence thereof.

H-1

[SIGNATURE PAGE FOLLOWS]

H-2

Very truly yours,

ICM VI – PHILIP CENTRE, LP, a Georgia limited                             partnership

By: ICM VI Management, LLC, a Georgia limited                              liability company, its General Partner

By: ICM Realty Group Ltd., an Alberta corporation,                          its sole Member

By: ________________________

Bruce Timm

Its: President

H-3

EXHIBIT I

WARRANTIES

1. Everguard Diamond Pledge Roof Guarantee No. G2008-00006499 dated January 16, 2008 from GAF Materials Corporation

Everguard Diamond Pledge Roof Guarantee No. G2008-00006500 dated January 16, 2008 from GAF Materials Corporation

I-1

EXHIBIT J

CONTRACTS

(attached)

J-1

EXHIBIT K

PREPAID RENTS, SECURITY DEPOSITS AND LETTERS OF CREDIT

(attached)

K-1

EXHIBIT L

FORM OF VA ESTOPPEL

(attached)

L-1

EXHIBIT M

NON-FOREIGN PERSON AFFIDAVIT

THIS AFFIDAVIT is made this _____ day of ________________, 2015 by ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership (the “Transferor”), for the benefit of ARHC PPLVLGA01, LLC, a Delaware limited liability company (“Transferee”).

Section 1445(a) of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the “Code”), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the Transferee that withholding of tax is not required upon the disposition by Transferor of an interest in the Property described on Exhibit “A” hereto, the undersigned hereby certifies the following on behalf of Transferor:

(i)Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate or other foreign person (as those terms are defined in the Code and Income Tax Regulations);

(ii)Transferor’s U.S. Employer Identification Number or Social Security Number, as applicable, is [____________]; and

(i)Transferor’s address is 3715 Northside Parkway, Building 400, Suite 475, Atlanta, GA 30327.

Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury, the undersigned declares that he has examined this certification and, to the best of his knowledge and belief, it is true, correct and complete, and the undersigned further declares that he has authority to sign this document on behalf of Transferor.

TRANSFEROR:

ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership

By: ICM VI Management, LLC, a Georgia limited liability company,

its General Partner

By: ICM Realty Group Ltd., an Alberta corporation, its sole Member

By: ________________________

Bruce Timm

Its: President

M-1

Exhibit A

M-2

EXHIBIT N

SELLER’S BRING DOWN CERTIFICATE

Reference is made to that certain Agreement for Purchase and Sale of Real Property having an effective date of _________________ ____, 2015 (the “Agreement”) by and between American Realty Capital VII, LLC, a Delaware limited liability company, predecessor-in-interest to ARHC PPLVLGA01, LLC, a Delaware limited liability company (“Buyer”), and [ICM VI – PHILIP CENTRE, LP, a Georgia limited partnership (“Seller”). Pursuant to Section 10(p) of the Agreement, Seller hereby certifies to Buyer that all of Seller’s representations and warranties contained in Section 11 of the Agreement are true and correct in all material respects as of the date hereof.

Dated: _________________ ____, 2015.

SELLER:

ICM VI – PHILIP CENTRE, LP, a Georgia limited                             partnership

By: ICM VI Management, LLC, a Georgia limited liability                          company, its General Partner

By: ICM Realty Group Ltd., an Alberta corporation, its sole                      Member

By: ________________________

Bruce Timm

Its: President

N-1

EXHIBIT O

DUE DILIGENCE MATERIALS

1.    A complete copy of all leases affecting the Properties and all amendments thereto and of     all material correspondence relating thereto.

2.    A copy of all surveys and site plans of the Properties, including, without limitation, any     as-built surveys obtained or delivered to the Tenants of the Properties in connection with     its construction.

3.    A copy of all architectural plans and specifications and construction drawings for     improvements located on the Properties.

4.    A copy of Seller's title insurance commitment and policies relating to the Properties.

5.    A copy of the certificate of occupancy and zoning reports for the Properties and of all     governmental permits and approvals.

6.    A copy of all environmental, engineering and physical condition reports for the     Properties.

7.    The operating budget and any CAM reconciliations of the Properties for the current year     and following year, if available.

8.    The operating statements and delinquency reports of the Properties for the twenty-    four (24) month period immediately preceding the Purchase and Sale Agreement     effective date.

9.    Copies of the Propeties real estate tax bills for the current and prior two (2) tax years.

10.    All service contracts and certificates of insurance with respect to current insurance     policies which affect the Properties, if any.

11.    A copy of all warranties relating to the improvements constructed on the Properties,     including without limitation any structural slab or roof warranties.

12.    A written inventory of all items of personal properties to be conveyed to Buyer, if any.

13.    Updated set of Tenants' financials to be provided through the Closing Date to the extent     reasonably available to Seller and consistent with Tenants' reporting requirements.

14.    Complete copy of any feasibility study completed by the developer.

15.    A copy of all primary and secondary state licenses or regulatory permits for the     Properties.

O-1

16.    A copy of any documents relating to a waiver of life safety code or physical plant     requirements.

17.    A copy of all Loan Documents.

O-2

EX-10.17

Exhibit 10.17

Loan No. 73100202     

RECORDING REQUESTED BY AND

AFTER RECORDING RETURN TO:

Lisa C. Grimes

Assistant General Counsel

RGA Reinsurance Company

16600 Swingley Ridge Road

Chesterfield, Missouri 63017

CONSENT

AND ASSUMPTION AGREEMENT

WITH RELEASE

(Loan No. 73100202)

This Consent and Assumption Agreement with Release (this "Agreement") dated as of the 14th day of August, 2015, is made by and among RGA REINSURANCE COMPANY, a Missouri corporation, (“Lender”), ICM VI-PHILIP CENTRE, LP, a Georgia limited partnership, (“Seller”), BRUCE TIMM (“Original Guarantor”), ARHC PPLVLGA01, LLC, a Delaware limited liability company (“Buyer”) and AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC., a Maryland corporation (“Guarantor”) with reference to the following facts:

RECITALS

A.Seller is the owner of certain real property commonly known as 455 Philip Boulevard, located in the City of Lawrenceville, County of Gwinnett, State of Georgia and more particularly described in Exhibit A attached hereto and incorporated herein by reference together with all improvements, fixtures and personal property located thereon which, with the above described real property is collectively referred to as the "Property." The Property is encumbered by a first-lien and security interest on the fee simple interest in the Property evidenced by, among other, things, that certain Deed to Secure Debt, Assignment of Leases and Rents and Security Agreementdated September 27, 2012, executed by Seller in favor of Lender, filed and recorded in the office of the

1

Loan No. 73100202    

Clerk of the Superior Court for Gwinnett County, Georgia on October 5, 2012 in Book 51698, Page 0177 (hereinafter referred to as the "Mortgage").

B.The Mortgage secures repayment of a loan ("Loan") evidenced by an Promissory Note ("Note") dated September 27, 2012, in the original principal amount of $5,200,000.00 executed by Seller, as maker, in favor of Lender. The Mortgage further secures performance of all the obligations, covenants, and agreements contained in the Mortgage, that certain Assignment of Leases and Rents dated September 27, 2012, executed by Seller in favor of Lender and recorded in the office of the Clerk of the Superior Court for Gwinnett County, Georgia on October 5, 2012 in Book 51698, Page 0213 (the “Assignment of Rents”) that certain Environmental Indemnity Agreement dated September 27, 2012 by Seller and Original Guarantor in favor of Lender (“Original Environmental Indemnity”), that certain Separate Guranty of Carveout Obligations dated September 27, 2012 by Original Guarantor in favor of Lender (“Original Carveout Guaranty”), that certain Escrow Agreement from Seller to Lender dated September 27, 2012 (the “Escrow Agreement”), and all other documents executed by Seller and/or Original Guarantor to induce the Lender to make the Loan, perfectthe lien or security interest created by the Mortgage or otherwise evidence, secure or memoriale the Loan (such documents together with the Note, Mortgage and Assignment of Rents, are collectively referred to herein as the "Original Loan Documents"). Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Mortgage and, from and after the date hereof, capitalized terms used in the Loan Documents (as defined below) and expressly defined herein shall have the meanings given to such terms in this Agreement.

C.Seller and Buyer have entered into an Agreement for Purchase and Sale of Real Property, having an effective date of June 22, 2015 (the “Purchase Agreement”). Seller has a one-time right to transfer title to the Property subject to the lien of the Mortgage, provided the Seller and/or the transferee satisfies certain conditions, one being that the transferee execute an assumption agreement acceptable to Lender pursuant to which said transferee assumes all of the obligations of Seller under the Loan Documents (as hereinafter defined).

D.Subject to the terms and conditions of this Agreement, Lender is willing to consent to the transfer of the Property to Buyer and permit Buyer's assumption of the Loan and obligations under the Loan Documents and except as set forth herein, Lender is willing to release Seller and Original Guarantor from obligations under the Loan Documents from and after the date of the transfer of the Property to Buyer. Lender's willingness to consent to such assumption by Buyer is expressly conditioned on Buyer's agreement that it is specifically assuming all obligations under the Note and other Loan Documents and that Guarantor will agree to assume the obligations of the Original Guarantor under the Loan Documents from and after the Acquisition Date (as hereinafter defined) by executing the New Carveout Guaranty (defined below) and the New Environmental Indemnity (defined below).

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

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Loan No. 73100202    

1.GENERAL. Lender and Buyer confirm and agree that: (i) as of the date hereof the current outstanding principal balance of the Note is $5,123,943.45; and (ii) the next installment of principal and interest due under Note is due on September 1, 2015.

Buyer agrees that, unless and until Lender provides an alternative address for Lender, all Loan payments and all notices and correspondence to Lender shall be made or given to Lender c/o RGA Mortgage Loan Servicing LLC, P.O. Box 771320, St. Louis, Missouri 63177.

Seller represents and warrants that to the best of its knowledge (i) at the time of the conveyance of the Property to Buyer, all outstanding taxes and assessments due and owing with respect to the Property have been paid, (ii) all insurance required by the terms of the Mortgage (the "Required Insurance") is currently maintained on the Property and any related policies contain the non-contributory New York Standard Mortgage Clause or its equivalent in favor of Lender, its successors and/or assigns, c/o RGA Mortgage Loan Servicing LLC, P.O. Box 771320, St. Louis, Missouri 63177, and (iii) all insurance premiums for the Required Insurance have been paid. Buyer warrants that the Required Insurance will continue in place after the date the Property is conveyed to Buyer. Seller and Buyer hereby authorize Lender to transfer to Buyer any and all funds held in escrow by Lender as of the Acquisition Date.

2.CONSENT TO TRANSFER. Lender consents to the transfer of the Property from Seller to Buyer, subject to satisfaction of all of the following conditions precedent: (i) the complete execution and acknowledgment of this Agreement by all of the parties hereto and the delivery thereof to Lender for recordation concurrently with the closing of Buyer's acquisition of the Property ("Closing"); (ii) the execution and delivery of an Environmental Indemnity Agreement by Buyer and the Guarantor, in substantially the form delivered by Seller upon the closing of the Loan; (iii) the execution and delivery of a Separate Guaranty of Carveout Obligations by the Guarantor, in substantially the form delivered by the Original Guarantor upon the closing of the Loan; (iv) the delivery to Lender of satisfactory evidence that the Required Insurance is current and in force; (v) issuance to Lender, at Lender’s option, of the Title Policy, and Title Endorsements (as defined below) in form acceptable to Lender; (vi) the full release and reconveyance of any other liens or monetary encumbrances against the Property; (vii) payment of any real property taxes and assessments currently due and owing with respect to the Property; and (viii) payment to Lender of the Assumption Fee (as defined below), installment payment due under the Note and all other payments, fees and expenses required by Section 3 of this Agreement to be paid at Closing by Buyer and/or Seller.

3.ASSUMPTION FEE; INSTALLMENT PAYMENT; TITLE ENDORSEMENTS; AND EXPENSES. In consideration for Lender's consent to the transfer of the Property from Seller to Buyer, Buyer covenants and agrees to pay to Lender at Closing the sum of $51,239.44, which represents the assumption fee payable to Lender for consenting to Buyer's assumption of the Loan (the "Assumption Fee"). The Assumption Fee shall not be credited against the outstanding principal balance due under the Note. In addition, at Closing Buyer shall (i) cause Fidelity National Title Insurance Companyto issue a mortgagee's policy of title insurance covering the Mortgage, in such form as Lender may reasonably require ("Title Policy"), insuring that the Mortgage is the only monetary lien of record against the Property and that the Mortgage is in a first lien position and

3

Loan No. 73100202    

including those endorsement to the Title Policy as required by Lender (the “Title Endorsements”), (ii) pay the cost of the Title Policy and the Title Endorsements, any escrow, filing or recording fees applicable to this transaction, and (iii) pay costs and expenses, including reasonable attorneys' fees, incurred by Lender in connection with this Agreement or this transaction.

4.BUYER'S ASSUMPTION OF LOAN; NEW FINANCING STATEMENTS. Effective from and after the Acquisition Date Buyer hereby expressly assumes the obligation for repayment of the unpaid balance due and owing on the Note, together with interest thereon as provided in the Note and expressly promises to pay all installments payable thereunder as they become due. Buyer further expressly assumes all other obligations under the Note,Mortgage, Assignment of Rents and Escrow Agreement, including liability for the Carveout Obligations (as defined in the Note), arising from and after the Acquisition Date with the same force and effect as if Buyer had been specifically named therein as the original maker, borrower, grantor or trustor, as applicable; it being expressly agreed by Buyer that Lender's remedies for the Carveout Obligations shall not in any respect or extent be limited solely to the Property or any other collateral securing the obligations. In connection with the assumption of the obligations set forth in Note, Mortgage, Assignment of Rents and Escrow Agreement, Buyer and/or Guarantor, as applicable, have executed that certain Environmental Indemnity Agreement of even date herewith in favor of Lender (the “New Environmental Indemnity”), that Separate Guaranty of Carveout Obligations of even date herewith in favor of Lender (the “NewCarveout Guaranty”) and that Assignment and Subordination of Management Agreement dated on or about the date hereof and executed by property manager in favor of Lender (the “New Assignment and Subordination;” this Agreement, the Note, the Mortgage, the Assignment of Rents, the Escrow Agreement, the New Environmental Indemnity, the New Assignment and Subordination and the New Carveout Guaranty are referred to herein collectively as the “Loan Documents”). The foregoing assumption by Buyer is absolute and unconditional, is not subject to any defenses, waivers, claims or offsets nor shall it be affected or impaired by any agreement, condition, statement or representation of Seller or any other person or entity or any failure to perform the same. Buyer and Guarantor hereby relinquish, waive and release any and all such defenses, claims, offsets, and causes of action against Lender. Buyer and Guarantor, as applicable, expressly agree that they have read and approved of and will comply with and be bound by all of the terms, conditions, and provisions contained in theNote, Mortgage and other Loan Documents from and after the Acquisition Date.

Buyer hereby authorizes Lender to file one or more UCC financing statements covering fixtures and personal property collateral related to the Property and covered by the security agreement contained in the Mortgage and Buyer hereby confirms that it grants Lender a security interest in all fixtures and personal property collateral described in the Mortgage.

5.LIMITATION OF CONSENT. Lender's consent in this Agreement is strictly limited to the conveyance of the Property from Seller to Buyer, and this Agreement shall not constitute a waiver or modification of any requirement to obtain Lender's consent to any future transfer of the Property or any portion thereof or interest therein, nor shall it constitute a modification of the terms, provisions, or requirements in the Loan Documents in any respect except as expressly provided herein. Buyer specifically acknowledges that, except as expressly provided herein or in the Loan Documents, any direct or indirect transfer of any legal or beneficial ownership interest in the Property

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or any portion thereof by Buyer shall entitle Lender to accelerate the Note balance and foreclose the Mortgage and that the transfer that is the subject of this Agreement is the one time transfer allowed under Section 37 of the Mortgage and that, except as expressly provided herein or in the Loan Documents, there are no further transfers of the Property allowed under said Mortgage. The Loan Documents are hereby ratified and confirmed and except as expressly modified in this Agreement, the Note, Mortgage and other Loan Documents remain unmodified and are in full force and effect.

6.NO REPRESENTATIONS OF LENDER. Buyer recognizes and agrees that Lender has made no representations or warranty, either express or implied regarding the Property and has no responsibility whatsoever with respect to the Property, the condition of the Property or the use, occupancy, or status of the Property. To the extent Buyer has any claims which in any manner relate to the Property, the condition of the Property, or the use, occupancy, or status of the Property, the same shall not be asserted against Lender or its agents, employees, professional consultants, affiliated entities, successors or assigns, or asserted as a defense to any of the Loan Documents.

7.EFFECT OF AGREEMENT. This Agreement shall be deemed to form a part of the Loan Documents. This Agreement shall not prejudice any present or future rights, remedies or powers belonging or accruing to Lender under the Loan Documents, nor impair the lien of the Mortgage.

8.NO EFFECT ON LIENS OR PRIORITY. Nothing in this Agreement shall in any way release, diminish or affect the first position lien of the Mortgage or any liens created by, or the agreements or covenants contained in, the Loan Documents or the first-lien priority of any such liens. Buyer agrees that Note, Mortgage and other Loan Documents shall secure all other sums that may be advanced in the future by Lender pursuant to the terms of the Loan Documents.

9.SELLER'S REPRESENTATIONS & WARRANTIES. Seller hereby represents and warrants that (i) Seller is the owner of the Property and is duly authorized to execute, deliver and perform this Agreement; (ii) any court or third-party approvals necessary for Seller to enter into this Agreement have been obtained; (iii) the entities and/or persons executing this Agreement on behalf of Seller are duly authorized to execute and deliver this Agreement; (iv) this Agreement and the Loan Documents are in full force and effect and the transactions contemplated therein constitute valid and binding obligations enforceable by Lender in accordance with their terms and have not been modified either orally or in writing; (v) Lender has not waived any requirements of the Loan Documents nor any of Lender's rights thereunder; (vi) no default exists nor has any event occurred, which, as a result of the passage of time or the expiration of any cure period would constitute a default; (vii) all representations and warranties in the Purchase Agreement are true and correct; (viii) the execution and delivery of this Agreement by Seller and Seller’s compliance with the provisions hereof will not conflict with, or constitute a breach of or a default under any agreement or other instrument to which Seller is a party or by which it is bound; and (ix) all representations and warranties referred to herein shall be true as of the date of this Agreement and Closing and shall survive Closing.

10.BUYER'S AND GUARANTOR’S REPRESENTATIONS, WARRANTIES & COVENANTS. Buyer hereby represents and warrants to Lender as of the date hereof that (i) Jesse

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C. Galloway is duly authorized on behalf of Buyer to execute, deliver and perform this Agreement and any other documents requested by Lender in connection herewith; (ii) Thomas P. D’Arcy is duly authorized on behalf of Guarantor to execute, deliver and perform this Agreement, and any other documents requested by Lender in connection herewith; (iii) any court or third-party approvals necessary for Buyer to enter into this Agreement have been obtained; (iv) the entities and/or persons executing this Agreement on behalf of Buyer and Guarantor are duly authorized to execute and deliver this Agreement; (v) to Buyer’s knowledge, the Loan Documents (other than this Agreement) are in full force and effect and the transactions contemplated under this Agreement and the Loan Documents constitute valid and binding obligations of Buyer and Guarantor enforceable by Lender in accordance with their terms and have not been modified either orally or in writing; (vi) the Buyer's mailing address for all Lender’s correspondence and notices is c/o American Realty Capital Healthcare Trust III, Inc., 405 Park Avenue, 14^th Floor, New York, New York, 10022, Attn: Healthcare Counsel; (vii) the Guarantor’s mailing address for all Lender’s correspondence and notices is American Realty Capital Healthcare Trust III, Inc., 405 Park Avenue, 14^th Floor, New York, New York, 10022, Attn: Healthcare Counsel; (vii) to Buyer’s knowledge, no default exists nor has any event occurred, which, as a result of the passage of time or the expiration of any cure period would constitute a default under the Loan Documents; (viii) all representations and warranties of Buyer in the Purchase Agreement are true and correct; (ix) there is no bankruptcy or receivership proceeding pending or threatened against Buyer or Guarantor; (x) neither Buyer nor Guarantor has any intention as of the date of this Agreement to do any of the following within at least 180 days after said date: (a) seek entry of any order for relief as debtor and a proceeding under the Code (defined below), (b) seek consent to or not contest the appointment of a receiver or trustee for itself or for all or any part of its property, (c) file a petition seeking relief under any bankruptcy, arrangement, reorganization or other debtor relief laws, or (d) make a general assignment for the benefit of its creditors; (xi) to Buyer’s knowledge, there are no taxes, assessments, or levies of any type whatsoever that can be imposed upon and collected from the Property arising out of or in connection with the ownership or operation of the Property, or any public improvements in the general vicinity of the property other than the normal and customary real estate taxes that are not yet due or payable; (xii) the execution and delivery of this Agreement by Buyer and Buyer’s compliance with the provisions hereof will not conflict with, or constitute a breach of or a default under any agreement or other instrument to which Buyer is a party or by which it is bound; (xiii) Guarantor represents and warrants as of the date hereof that it has, and covenants that during the term of the Loan that it shall maintain, a minium liquidity of $3,000,000.00 and a maximum leverage of seventy five percent (75%) on an anuual basis, and (xiv) all representations warranties and covenants referred to herein shall be true as of the date of this Agreement and Closing and shall survive Closing. Lender is entitled to rely, and has relied, upon these representations and warranties in the execution and delivery of this Agreement and all other documents and instruments executed and delivered by Lender in connection with its Agreement.

11.RELEASE OF SELLER AND ORIGINAL GUARANTOR. Lender hereby releases Seller from all duties, obligations and liabilities accruing under the Original Loan Documents, including, but not limited to, the repayment of the debt evidenced by the Note, on and after the date that Buyer acquires title to the Property from Seller (the “Acquisition Date”), but nothing herein shall release Seller from any liability (i) resulting from any environmental indemnities contained in the Original Environmental Indemnity , and the Mortgage or the Carveout Obligations relating

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to the presence and/or release of hazardous materials or toxic substances which were first introduced or generated on, in or under the Property prior to the Acquisition Date; or (ii) for those Carveout Obligations identified in the Original Loan Documents accrued and outstanding prior to 11:59 p.m. on the day immediately prior to the Acquisition Date. Lender hereby releases Original Guarantor from all duties, obligations and liabilities accruing under the Original Carveout Guaranty and Original Environmental Indemnity on and after the Acquisition Date, but nothing herein shall release Original Guarantor from any liability (i) resulting from any environmental indemnities contained in Original Environmental Indemnity or the Carveout Obligations relating to the presence and/or release of hazardous materials or toxic substances which were first introduced or generated on, in or under the Property prior to the Acquisition Date; or (ii) for those Carveout Obligations identified in the Original Carveout Guaranty accrued and outstanding prior to 11:59 p.m. on the day immediately prior to the Acquisition Date. This clause is a release of liability only as to Seller (and its members and managers) and Original Guarantor and shall not act or operate to discharge any other person or entity from liability for the debt evidenced by the Note, nor shall this clause act or operate to discharge the Loan Documents. Further, nothing shall release Seller or Original Guarantor from any acts arising from fraudulent or tortious conduct, including but not limited to, intentional misrepresentation of financial data presented to Lender.

12.FURTHER ASSURANCES. Buyer agrees to do any act or execute any additional documents requested by Lender as may reasonably be required by Lender to effectuate the purposes of this Agreement or to perfect or retain its perfected security interest in the Property or the first-lien priority of any such security interest.

13.INUREMENT; NO MODIFICATION OF PURCHASE AGREEMENT. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors in interest and permitted assigns. As between Buyer and Seller, the rights and obligations of Buyer and Seller under the Purchase Agreement are not modified by this Agreement.

14.GOVERNING LAW/SEVERABILITY. This Agreement shall in all respects be governed, construed, applied and enforced in accordance with the internal laws of the State of Georgia. In the event one or more provisions of this Agreement shall be invalid, illegal or unenforceable, the validity or enforceability of the remaining provisions shall not in any way be affected.

15.INTENTIONALLY DELETED.

16.MODIFICATIONS. Neither this Agreement, nor any term or provision hereof, may be changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, discharge or termination is sought.

17.RELEASE AND WAIVER OF CLAIMS. In consideration of Lender's agreement to enter into this Agreement, Seller and Buyer hereby agree as follows:

A.General Release and Waiver of Claims. Seller and Buyer hereby jointly and severally release and forever discharge Lender, RGA Mortgage Loan Servicing LLC, and their respective

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successors, assigns, partners, directors, officers, agents, attorneys, administrators, trustees, subsidiaries, affiliates, beneficiaries, shareholders, representatives, agents, servants and employees from any and all rights, proceedings, agreements, contracts, judgments, debts, costs, expenses, promises, duties, claims, demands, cross-actions, controversies, causes of action, damages, rights, liabilities and obligations, at law or in equity whatsoever, known or unknown, suspected or unsuspected, choate or inchoate, whether past, present or future, now held, owned or possessed by Seller or Buyer, or which Seller or Buyer may hereafter hold or claim to hold from the beginning of time to the date of this Agreement under common law or statutory right, known or unknown, arising, directly or indirectly, proximately or remotely, out of the Property, the Loan or any of the Loan Documents or any of the documents, instruments or any other transactions relating thereto or the transactions contemplated thereby including, without limitation, any and all rights, proceedings, agreements, contracts, judgments, debts, expenses, promises, duties, claims, demands, cross-actions, controversies, courses of action, damages, rights, liability and obligations whether based upon tort, fraud, breach of any duty of fair dealing, breach of confidence, undue influence, duress, economic coercion, conflict of interest, negligence, bad faith, intentional or negligent infliction of mental distress, tortious interference with contractual relations, tortious interference with corporate governance or prospective business advantage, breach of contract, deceptive trade practices, libel, slander, conspiracy or any claim for wrongfully accelerating the Note or wrongfully attempting to foreclose on any collateral relating to the Note, contract or usury, but only to the extent that the foregoing arise in connection with events which occurred prior to the date of this Agreement (collectively, the "Released Claims"). Without limiting the generality of the foregoing, this release shall include the following matters: (a) all aspects of this Agreement, the Note, the Mortgage, the other Loan Documents and the negotiations between or on behalf of Buyer and/or Seller and Lender and the demands and requests by Lender of Seller or Buyer concerning this Agreement and the other Loan Documents, including, but not limited to, all meetings, telephone calls, correspondence and/or other contacts among or on behalf of Buyer and/or Seller and Lender incident to the attempts of said parties to reach an Agreement, or in connection with the Note, the Mortgage or the other Loan Documents and the attempt(s) of Lender to collect the Note, and (b) the exercise by Lender of its rights under any of the Loan Documents or any of its rights under this Agreement, the Note, the Mortgage or at law or in equity, but in each case, only to the extent that the foregoing arise in connection with events which occurred prior to the date of this Agreement.

This release is intended to release all liability of any character claimed for damages, of any type or nature, for injunctive or other relief, for attorneys' fees, interest or any other liability whatsoever, whether statutory, or contractual or tort in character, or of any other nature or character, now or henceforth in any way related to any and all matters and dealings of any nature whatsoever asserted or assertable by or on behalf of Buyer and/or Seller against Lender, including, without limitation, any loss, cost or damage in connection with, or based upon, any breach of fiduciary duty, breach of any duty of fair dealing or good faith, breach of confidence, breach of funding commitment, breach of any other duty, breach of any statutory right, fraud, usury, undue influence, duress, economic coercion, conflict of interest, negligence, bad faith, malpractice, violations of the Racketeer Influenced and Corrupt Organizations Act, intentional or negligent infliction of mental distress, tortious interference with corporate or other governance or prospective business advantage, breach of contract, deceptive trade practices, libel, slander, conspiracy or any other cause of action,

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but only to the extent that the foregoing arise in connection with events which occurred prior to the date of execution hereof.

Buyer and Seller each understand and agree that this is a full, final and complete release and agree that this release may be pleaded as an absolute and final bar to any or all suit or suits pending or which may thereafter be filed or prosecuted by Buyer or Seller, or anyone claiming by, through or under Buyer or Seller, in respect of any of the matters released hereby, and that no recovery on account of the matters described herein may hereafter be had from anyone whomsoever, and that the consideration given for this release is no admission of liability and that Buyer or Seller, nor those claiming under it will ever claim that it is.

B.Releases Binding on Affiliates of Seller and Buyer. The provisions, waivers and releases set forth are binding upon Seller, Buyer and their respective agents, employees, representatives, officers, directors, general partners, limited partners, joint shareholders, beneficiaries, trustees, administrators, subsidiaries, affiliates, employees, servants and attorneys.

18.NOTICES. All notices given in connection with this Agreement shall be in writing and shall be addressed to the intended recipient thereof at its address as set forth below their signature on this Agreement (or at such other address as such party may designate in writing from time to time by notice given to Seller, Original Guarantor, Buyer, Guarantor or Lender). Additionally, the Mortgage is supplemented to include Buyer at its address set forth below its signature on this Agreement. All notices given to any party of this transaction shall be deemed effectively given as provided for in the Loan Documents.

19.BUYER'S AND GUARANTOR’S SPECIFIC RATIFICATION, REAFFIRMATION ANDCONFIRMATION OF LOAN DOCUMENTS. Buyer, and Guarantor, as and when applicable, agree to perform each and every obligation under the Loan Documents in accordance with their respective terms and conditions. It is expressly understood that Lender will hereafter require performance of any and all terms, conditions, or requirements of all documents and agreements executed by Buyer and/or Guarantor relating to the Loan Documents. Buyer and Guarantor acknowledge and agree that any performance or non-performance of the Original Loan Documents prior to the Acquisition Date does not affect or diminish in any way the requirement of compliance with the Loan Documents from and after the Acquisition Date. Buyer and Guarantor further acknowledge and agree that the validity or priority of the liens and security interests evidenced by any of the Security Documents are not diminished in any way by this Agreement and that the Mortgage continues to be a first and superior mortgage lien and security interest on the Property. The agreements and obligations of Buyer and Guarantor under the Loan Documents are hereby ratified, brought forward, renewed and extended until the Loan shall have been fully paid and discharged. Buyer and Guarantor hereby ratify, affirm, reaffirm, acknowledge, confirm and agree that the Loan Documents represent the valid, binding and enforceable obligations of Buyer and, where applicable, Guarantor. Lender, Buyer and Guarantor hereby agree that this Agreement and the Loan Documents, as applicable are in full force and effect so that nothing contained herein shall be construed as modifying in any manner the Loan Documents, except as specifically set forth herein. Buyer specifically extends the liens and security interests of the Mortgage and other Loan Documents and agrees that the Mortgage (i) shall cover the Loan, and (ii) shall continue to be in

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full force and effect until the Loan is paid in full and all other obligations under the Loan Documents are fully performed and satisfied. Buyer hereby agrees that this Agreement in no way acts as a diminishment, impairment, release or relinquishment of the liens, power, title, security interest and rights securing or guaranteeing payment of the Loan. The Mortgage and other Loan Documents are hereby renewed, extended, ratified, confirmed and carried forward by Buyer in all respects. Nothing contained herein shall be construed as a waiver of any rights, remedies, or recourses available to Lender with respect to any default by Buyer or Guarantor under this Agreement or any of the Loan Documents, as applicable. Except as otherwise provided herein, Lender hereby preserves all of its rights against Buyer and Guarantor, all collateral, including, without limitation, the Property.

Notwithstanding anything to the contrary set forth in this Agreement or the other Loan Documents, Lender, Buyer and Guarantor agree that from and after the Acquisition Date: (i) American Realty Capital Healthcare Trust III Operating Partnership, L.P. (“ARCH OP”) shall exercise “Legal Control” (as defined in the Mortgage) over Buyer and the Property; (ii) transfers of the of the direct or indirect ownership or beneficial interests in ARCH OP shall be permitted without Lender’s consent or the payment of a fee, provided that at all times ARCH OP (a) retains Legal Control, and (b) Guarantor continues to own at least 51% of the ownership interests in ARCH OP; (iii) the offer, sale, listing, transfer or issuance of the publicly-held securities of Guarantor shall be permitted without Lender’s consent or the payment of a fee; and (iv) Buyer’s assets may be included in the consolidated financial statements of Guarantor.

20.NO JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, SELLER, ORIGINAL GUARANTOR, BUYER, GUARANTOR AND LENDER HEREBY SEVERALLY, VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING UNDER THE NOTE, MORTGAGE OR ANY OF THE OTHER LOAN DOCUMENT OR ORIGINAL LOAN DOCUMENTS CONCERNING THE OBLIGATIONS THEREUNDER AND/OR WITH REGARD TO THE PROPERTY OR PERTAINING TO ANY TRANSACTION RELATED TO OR CONTEMPLATED IN THE MORTGAGE, REGARDLESS OF WHETHER SUCH ACTION OR PROCEEDING CONCERNS ANY CONTRACTUAL OR TORTIOUS OR OTHER CLAIM.SELLER, ORIGINAL GUARANTOR, BUYER AND GUARANTOR ACKNOWLEDGE THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO LENDER IN EXTENDING THE CREDIT DESCRIBED HEREIN, THAT LENDER WOULD NOT HAVE EXTENDED SUCH CREDIT WITHOUT THIS JURY TRIAL WAIVER, AND THE SELLER, ORIGINAL GUARANTOR, BUYER AND GUARANTOR HAVE BEEN REPRESENTED BY AN ATTORNEY OR HAVE BEEN REPRESENTED BY AN ATTORNEY OR HAVE HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THE MORTGAGE AND EACH UNDERSTANDS THE LEGAL EFFECT OF THIS JURY TRIAL WAIVER.

21.BANKRUPTCY OF BUYER OR GUARANTOR. Buyer and Guarantor as a material inducement to Lender to enter into this Agreement, and in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, by its execution hereof covenant and agree that if Buyer or Guarantor shall (i) file any petition with any bankruptcy court

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or be the subject of any petition under the United States Bankruptcy Code (11 U.S.C. §101 et seq., the "Code"), (ii) file or be the subject of any petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors, (iii) have sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator, or liquidator, or (iv) be the subject of any order, judgment, or decree entered by any court of competent jurisdiction approving a petition filed against such party for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or relief for debtors, Lender shall thereupon be entitled, and Buyer and Guarantor irrevocably consent, to the entry of an order by a bankruptcy court granting to Lender relief from any automatic stay imposed by Section 362 of the Code, or otherwise, on or against the exercise of the rights and remedies otherwise available to Lender as provided in the Loan Documents, this Agreement or as otherwise provided by law or in equity, and Buyer and Guarantor hereby irrevocably waive their right to object to, attempt to enjoin or otherwise interfere with such relief and the exercise and enforcement by Lender of its rights and remedies following entry of such order. Without limiting the generality of the immediately preceding sentence, Buyer and Guarantor agree that Lender will be entitled to and they hereby consent to immediate relief from the automatic stay imposed by the Code to allow Lender to take any and all actions necessary, desirable or appropriate to enforce any rights Lender may have under the Loan Documents, including, but not limited to, the right to possession of the Property, collection of rents, and/or the commencement or continuation of an action to foreclose Lender’s liens and security interests. Buyer and Guarantor further agree that the filing of any petition for relief under the Code which postpones, prevents, delays, or otherwise hinders Lender's efforts to collect the amounts due under the Note or to liquidate any of the collateral therefor shall be deemed to have been filed in bad faith and, therefore, shall be subject to prompt dismissal or conversion to a case under Chapter 7 of the Code upon motion therefor by Lender. Further, Buyer and Guarantor agree that neither of them will seek, apply for or cause the entry of any order enjoining, staying, or otherwise prohibiting or interfering with Lender's obtaining an order granting relief from the automatic stay and enforcement of any rights which Lender may have under the Loan Documents, including, but not limited to, Lender's right to possession of the property, collection of rents and/or the commencement or continuation of an action to foreclose Lender's liens and security interests under the Loan Documents.

22.COMPLIANCE WITH INTEREST LAW. It is the intention of Seller, Buyer, and Lender to conform strictly to the Interest Law (herein defined). Accordingly, Buyer and Lender agree that any provisions contained in the Note or in any of the other Loan Documents to the contrary notwithstanding, the aggregate of all interest, or consideration constituting interest under the Interest Law, that is taken, reserved, contracted for, charged or received under the Note or under any of the aforesaid documents or otherwise in connection with this loan transaction shall under no circumstances exceed the maximum amount of interest allowed by the Interest Law. If any excess interest is provided for in the Note or in any of the other Loan Documents, then (a) the provisions of this paragraph shall govern and control, (b) neither Buyer nor Buyer's successors or assigns shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest allowed by the Interest Law, (c) any such excess shall be deemed a mistake and canceled automatically and, if theretofore paid, shall be credited against the Indebtedness (or if the

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Note shall have been paid in full, refunded to Buyer), and (d) the effective rate of interest shall be automatically subject to reduction to the Maximum Legal Rate of Interest (as hereinafter defined). To the extent permitted by the Interest Law, all sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Indebtedness shall be amortized, prorated, allocated and spread throughout the full term of the Note. For purposes of the Note, "Interest Law" shall mean any present or future law of the State of Georgia (meaning the internal laws of said state and not the laws of said state relating to choice of law), the United States of America or any other jurisdiction, which has application to the interest and other charges under the Note or under any of the other Loan Documents and to the classification of Buyer under such law. For purposes of the Note, the "Maximum Legal Rate of Interest" shall mean the maximum effective contract rate of interest that Lender may from time to time, by agreement with the Buyer, legally charge Buyer and in regard to which Buyer would be prevented from successfully raising the claim or defense of usury under the Interest Law as now or hereafter construed by courts of appropriate jurisdiction.

23.TERMS GENERALLY. Each definition contained in this or any other Article of this Agreement shall apply equally to both the singular and plural form of the term defined. Each pronoun shall include the masculine, the feminine and neuter form, which ever is appropriate to the context. The words "included", "includes" and "including" shall each be deemed to be followed by the phrase, "without limitation." The words, "herein", "hereby", "hereof", and "hereunder" shall each be deemed to refer to this entire Agreement and not to any particular Article or Section hereof. Notwithstanding the foregoing, if any law is amended so as to broaden the meaning of any term defined in it, such broader meaning shall apply subsequent to the effective date of such amendment. Where a defined term derives its meaning from a statutory reference, any regulatory definition is broader than the statutory reference and any reference or citation to a statute or regulation shall be deemed to include any amendments to that statue or regulation and judicial and administrative interpretations of it

24.SECURITIES ACT OF 1933. Neither Buyer, Seller nor any agent acting on behalf of either Buyer or Seller has offered the Note or any similar obligation of the Buyer or Seller for sale to or solicited any offers to buy the Note or any similar obligation of the Buyer or Seller from any person or party other than Lender, and neither Buyer, Seller nor any agent acting on behalf of either Buyer or Seller will take any action which would subject the sale of the Note to the provisions of Section 5 of the Securities Act of 1933, as amended.

25.COMPLIANCE WITH ERISA. As of the date of this Agreement, the Buyer maintains no employee benefit plans that require compliance with ERISA. If at any time the Buyer shall institute any employee benefit plans, the Buyer shall at all times comply with the requirements of ERISA.

26.DOCUMENTATION REQUIREMENTS, SUFFICIENCY OF CONSENTS AND APPROVALS. Each written instrument required by this Agreement or any of the other Loan Documents to be furnished to Lender shall be duly executed by the person or party specified (or where no particular person or party is specified, by such person or party as Lender shall require), duly acknowledged where required by Lender and, in the case of affidavits and similar sworn instruments, duly sworn to and subscribed before a notary public duly authorized to act in the

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premises by governmental authority; shall be furnished to Lender in one or more copies as required by Lender; and shall in all respects be in form and substance satisfactory to Lender and its legal counsel. All title policies, surveys, appraisals, and other evidence, information or documentation required by Lender shall be in form and substance satisfactory to Lender and its legal counsel in all respects.

27.EVIDENTIARY REQUIREMENTS. Where evidence of the existence or non-existence of any circumstance or condition is required by this Agreement or any of the other Loan Documents to be furnished to Lender, such evidence shall in all respects be in form and substance satisfactory to Lender, and the duty to furnish such evidence shall not be considered satisfied until Lender shall have acknowledged in writing that it is satisfied therewith.

28.NUMBER, ORDER AND CAPTIONS IMMATERIAL. The numbering, order and captions or headings of the several articles, sections and paragraphs of this Agreement, the Note, the Mortgage and the other Loan Documents are for convenience of reference only and shall not be considered in construing such instruments.

29.ENTIRE AGREEMENT. THIS AGREEMENT, AND THE LOAN DOCUMENTS CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES HERETO WITH RESPECT TO THE ASSUMPTION OF THE LOAN BY BUYER AND LENDER'S CONSENT TO THE TRANSFER OF THE PROPERTY TO BUYER, AND SUPERSEDES ANY PRIOR WRITTEN OR ORAL AGREEMENTS BETWEEN THEM CONCERNING SAID SUBJECT MATTER. THERE ARE NO REPRESENTATIONS, AGREEMENTS, ARRANGEMENTS, OR UNDERSTANDINGS, ORAL OR WRITTEN, BETWEEN AND AMONG THE PARTIES HERETO, RELATING TO THE SUBJECT MATTER CONTAINED IN THE AGREEMENT, WHICH ARE NOT FULLY EXPRESSED HEREIN OR IN THE LOAN DOCUMENTS. THIS AGREEMENT MAY BE EXECUTED AND ACKNOWLEDGED IN MULTIPLE COUNTERPARTS FOR THE CONVENIENCE OF THE PARTIES, WHICH TOGETHER SHALL CONSTITUTE ONE AGREEMENT, AND THE COUNTERPART SIGNATURE AND ACKNOWLEDGMENT PAGES MAY BE DETACHED FROM THE VARIOUS COUNTERPARTS AND ATTACHED TO ONE COPY OF THIS AGREEMENT TO SIMPLIFY THE RECORDATION OF THIS AGREEMENT. THE REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THIS AGREEMENT SHALL CONTINUE AND SURVIVE THE TRANSFER OF THE PROPERTY TO BUYER.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE

SEE NEXT PAGE FOR SIGNATURES

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IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of the day and date first written above.

	SELLER:
Signed, sealed and delivered	ICM VI – PHILIP CENTRE,
in the presence of:	LP, a Georgia limited     partnership
Unofficial Witness	By: ICM VI Management, LLC, a Georgia limited
	liability company, its General Partner
Notary Public
	By: ICM Realty Group Ltd., an Alberta corporation,
	its sole Member
My Commission Expires:	By: /s/ Bruce Timm
	Bruce Timm
	Its: President
[AFFIX NOTARIAL SEAL]
	Date: 8/14/15
	Tax ID #: 35-2455485
	Mailing Address:
	#114, 280 Midpark Way SE
	Calgary, AB T2X 1J6, Canada
	ORIGINAL GUARANTOR:
Signed, sealed and delivered
in the presence of:	/s/ Bruce Timm
	Bruce Timm
Unofficial Witness
	Date: ___________________
Notary Public	Tax ID #: 9030784847
	Mailing Address:
	#114, 280 Midpark Way SE
	Calgary, AB T2X 1J6, Canada
My Commission Expires:
[AFFIX NOTARIAL SEAL]

SEE NEXT PAGE FOR ADDITIONAL SIGNATURES

Assumption Agreement – Signature Page

Loan No. 73100202    

	BUYER:
Signed, sealed and delivered	ARHC PPLVLGA01, LLC, a Delaware
in the presence of:	limited liability company
Unofficial Witness
	By: /s/ Jesse Galloway
Notary Public	Print Name: Jesse Galloway
	Title: Authorized Signatory
	Date: 8/14/15
	Tax ID #: 47-4367541
My Commission Expires:	Mailing Address: 405 Park Avenue, 14thFloor, New
	York, NY 10022
[AFFIX NOTARIAL SEAL]
	GUARANTOR:
Signed, sealed and delivered	AMERICAN REALTY CAPITAL HEALTHCARE
in the presence of:	TRUST III, INC., a Maryland corporation
	By: /s/ Thomas P. D’Arcy
Unofficial Witness	Title: Chief Executive Officer and President
	Print Name: Thomas P. D’Arcy
Notary Public	Date: 8/14/15
	Tax ID #: 38-3930747
	Mailing Address: 405 Park Avenue, 14th Floor, New
	York, NY 10022
My Commission Expires:
[AFFIX NOTARIAL SEAL]

SEE NEXT PAGE FOR ADDITIONAL SIGNATURE

Assumption Agreement – Signature Page

Loan No. 73100202    

	LENDER:
Signed, sealed and delivered	RGA REINSURANCE COMPANY, a Missouri
in the presence of:	corporation
	By: /s/ Michael McLellan
Unofficial Witness	Print Name: Michael McLellan
	Title: Senior Vice President
Notary Public	Notice Address of Lender:
	P.O. Box 771320
	St. Louis, Missouri 63177
	Attention: RGA Mortgage Loan Servicing LLC
My Commission Expires:
[AFFIX NOTARIAL SEAL]

Assumption Agreement – Signature Page

EXHIBIT A

LEGAL DESCRIPTION CONTINUED

EXHIBIT A

LEGAL DESCRIPTION

All that tract or parcel of land lying and being in Land Lot 9, 7th District, Gwinnett County, Georgia and being more particularly described as follows:

BEGINNING at an iron pin set at the northeast corner of a mitered intersection of the northerly right-of-way line of Philips Boulevard (having an 80-foot right-of-way) and the easterly right-of-way line of Katherine Oak Court (having a 60-foot right-of-way); Thence running along the easterly right-of-way line of Katherine Oak Court, South 79°02'41" West, 15.56 feet to an iron pin set; Thence, North 55°57'19" West, 250.78 feet to a :W' rebar found; Thence leaving said easterly right-of-way line of Katherine Oak Court and running, North 34°02'41" East, 87.26 feet to a %" rebar found; Thence, North 51°26'15" East, 227.21 feet to a point; Thence, North 74°19'54" East, 304.39 feet to a point; Thence, South 72°25'50" East, 231.02 feet to a parker kalon nail set; Thence, South 15°44'52" East, 50.93 feet to an iron pin set along the northerly right-of-way line of Philip Boulevard; Thence running along the northerly right-of-way line of Philip Boulevard, South 68°24'39" West, 141.25 feet to a point; Thence, North 21°35'17" West, 4.54 Feet to a point; Thence, South 68°34'22" West, 89.34 feet to a point; Thence, South 66°53'15" West, 63.97 feet to a point; Thence, South 61°52'30" West, 61.94 feet to a point; Thence, 50.90 feet along the arc of a curve to the left having a radius of 684.47 feet and being scribed by a chord bearing South 58°02'10" West, 50.89 feet to a point; Thence, South 34°05'39" East, 3.11 feet to a point; Thence, 220.36 feet along the arc of a curve to the left having a radius of 681.36 feet and being scribed by a chord bearing South 46°38'35" West, 219.40 Feet to an iron pin set and the true POINT OF BEGINNNING.

Said tract contains 3.41 acres (148,721 square feet) more or less, as shown in a survey prepared for Grove Street Lawrenceville, LLC, ICM VI - Philip Centre, LP, RGA Reinsurance Company, its successors and/or assigns, Republic Commercial Title Company, LLC and First American Title Insurance Company by Point To Point Land Surveyors, Inc. dated July 25, 2012 and last revised September 26, 2012.

Being all of Tract I as shown on Plat entitled "A Subdivision Plat Prepared for: Grove Street Lawrenceville, LLC" recorded in Plat Book 129, Page 154, 155of the

Public Records of Gwinnett County, Georgia.

TOGETHER WITH, the rights, privileges, easements and appurtenances created by the

following:

a. Terms and conditions of that certain Easement Agreement between Oxford Lane JV LLC and Grove Street Lawrenceville, LLC, dated March 16, 2007, filed March 19, 2007 and recorded in Deed Book 47688, Page 63, aforesaid records.

EXHIBIT A

LEGAL DESCRIPTION CONTINUED

b. Terms and condition of that certain Storm Water Easement and Maintenance

Agreement between Oxford Lane JV LLC and Grove Street Lawrenceville, LLC, dated March 16, 2007, filed March 19, 2007 and recorded in Deed Book 47688, Page 50, aforesaid records.

c. Terms and conditions of that certain Reciprocal Easement Agreement by and between Grove Street Lawrenceville, LLC and ICM VI-Philip Centre, LP, dated September 27, 2012 and recorded in Deed Book 51698, Page 177 aforesaid records.

EX-10.18

Exhibit 10.18

ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT

THIS ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT (this “Agreement”) is made as of August 14, 2015, by and among ARHC PPLVLGA01, LLC, a Delaware limited liability company, having an office at 405 Park Avenue, 14^th Floor, New York, New York, 10022, Attn: Healthcare Counsel (“Borrower”), CADDIS MANAGEMENT COMPANY, LLC, a Texas limited liability company, having an office at _______________ (“Manager”), and RGA REINSURANCE COMPANY, having its address c/o RGA Mortgage Loan Servicing LLC, P.O. Box 771320, St. Louis, Missouri 63177 (“Lender”).

RECITALS OF FACT

The following recitals of fact are a material part of this Agreement:

A.    Borrower has assumed a loan made by ICM VI- Philip Center, LP, a Georgia limited partnership (the “Original Borrower”) evidenced by that certain Promissory Note in favor of Lender dated September 27, 2012 in the principal sum of $5,200,000.00 (the “Loan”).

B.    The Loan is secured, in part, by that certain Deed to Secure Debt, Assignment of Leases and Rents and Security Agreementdated September 27, 2012, executed by Original Borrower in favor of Lender, filed and recorded in the office of the Clerk of the Superior Court for Gwinnett County, Georgia (the “Recorder’s Office”) on October 5, 2012 in Book 51698, Page 0177 (the “Security Instrument”) and encumbering the property commonly known as 455 Philip Boulevard, located in the City of Lawrenceville, County of Gwinnett, State of Georgia and legally described on Exhibit “A” attached hereto and by this reference made a part hereof (the real estate, together with all improvements thereon and personal property associated therewith, is hereinafter collectively called the “Property”).

C.    The Security Instrument, the Note evidencing the Loan, that certain Assignment of Leases and Rents dated September 27, 2012, executed by Original Borrower in favor of Lender and recorded with the Recorder’s Office on October 5, 2012, in Book 51698, Page 0213 (the “Assignment of Rents”), this Assignment and Subordination of Management Agreement, the Separate Guaranty of Carveout Obligations of even date herewith executed American Realty Capital Healthcare Trust III, Inc. (“Guarantor”) in favor of Lender, and the Environmental Indemnity Agreement dated on or about the date hereof and executed by Borrower and Guarantor in favor of Lender and that certain Consent and Assumption Agreement With Release dated of even date herewith executed by, among others, Lender, Borrower and Guarantor are sometimes herein collectively referred to as the “Loan Documents.” Any capitalized term defined in any other Loan Document and not otherwise defined herein shall have the same meaning when used in this Agreement.

D.    Pursuant to a certain Management Agreement dated __________, 2015 between Borrower and Manager (the “Management Agreement”) (a true and complete copy of which Management Agreement, together with any and all amendments and modifications thereof, is attached hereto as Exhibit A), Borrower retained Manager to manage the Property on behalf of Borrower and Manager is entitled to certain management and other fees (the “Management Fees”) thereunder.

D.    Lender has required that Borrower cause the Management Agreement to be fully subordinated to the Note, the Security Instrument and the other Loan Documents as provided herein, and that Borrower and Manager enter into this Agreement with the Lender.

E.    Manager has agreed to subordinate the Management Agreement to the Note, the Security Instrument and the other Loan Documents and to comply with the other provisions of this Agreement, all as set forth below.

Agreement

In consideration of the Loan from Lender to Borrower, the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree as follows:

1.    Assignment of Management Agreement. Borrower hereby transfers and collaterally assigns to Lender all of Borrower’s right, title and interest in, to and arising from the Management Agreement, and in and to any operating accounts contemplated by the Management Agreement. This assignment is made for the purpose of securing performance by Borrower of the obligations of Borrower under the Loan Documents. Manager hereby acknowledges and consents to such assignment by Borrower to Lender.

2.    Subordination. The Management Agreement and all claims Manager may now have or may hereafter acquire against Borrower on account of services or obligations to be performed by Manager under the Management Agreement shall be and hereby are subordinated to the Note, the Security Instrument and the other Loan Documents, including, without limitation, all indebtedness and any interest, fees, costs or expenses thereon due or to become due to Lender under the Note, Security Instrument, or any other Loan Document. Notwithstanding anything to the contrary in this Agreement or the Management Agreement, Manager has no obligation to continue as Manager under the Management Agreement if Manager is not timely receiving compensation for its services thereunder, and upon any delay or termination of such payments, Manager may terminate the Management Agreement immediately upon notice to Borrower and Lender, without limitation of any other rights it may have with respect to such nonpayment, subject only to the rights to notice and opportunity to cure set forth in the Management Agreement and this Agreement.

3.    Covenants. Notwithstanding any provision of the Management Agreement seemingly to the contrary:

(a)    Borrower and Manager will not assign, alter, amend, or modify the Management Agreement and Borrower shall not terminate the Management Agreement without the prior written consent of Lender;

(b)    Borrower and Manager agree that, if: (i) the Property or any part thereof is sold upon foreclosure of the Security Instrument, or (ii) the Property or any part thereof is conveyed to Lender (or a nominee or entity designated by Lender) by deed in lieu of foreclosure, then in either such event, Lender (or the purchaser or person or entity taking title to the Property, as the case may be) shall have the right to terminate the Management Agreement upon giving not less than ten (10) days prior written notice of such termination to Manager;

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(c)    The parties agree that neither Lender nor any person or entity taking title to the Property or any part thereof shall be:

(i)    bound by any amendment or modification of the Management Agreement made without the consent of Lender;

(ii)    liable for any act or omission or breach of Borrower under the Management Agreement; or

(iii)    subject to any claims, liabilities, offsets or defenses which Manager might have against Borrower; and

(d)    Borrower and Manager agree that, if: (i) a default by Manager shall occur under the Management Agreement, which default is not cured within any applicable grace or cure period, or (ii) the bankruptcy or insolvency of the Manager of the property shall occur, Lender shall have the right to immediately terminate, or to direct Borrower to immediately terminate, such Manager and to retain, or to direct Borrower to retain, a new manager approved by Lender.

4.    Default by Borrower Under Management Agreement. If Borrower defaults under the Management Agreement, Manager shall, before exercising any remedy, give written notice to Lender specifying the default and the steps necessary to cure same and Lender shall have thirty (30) days after delivery of such notice to cure such default or cause it to be cured if Lender elects to do so. Other than the foregoing notice requirement, nothing herein shall be construed to diminish, alter, or otherwise modify Manager’s right to terminate the Management Agreement in accordance with its terms. Without limiting the foregoing, the parties agree that, notwithstanding anything to the contrary herein or the Management Agreement, after the occurrence of an Event of Default, Manager may terminate the Management Agreement by delivering fifteen (15) days’ written notice to Borrower and Lender, unless prior to delivery of such notice Lender has agreed in writing to assume the obligations of “Owner” under the Management Agreement in accordance with Section 6(c). Notwithstanding anything in the Management Agreement to the contrary, the bankruptcy or insolvency of Borrower shall not terminate the Management Agreement if Manager continues to be timely paid all Management Fees (including applicable reimbursements) in accordance with the terms of the Management Agreement.

5.    Event of Default Under Loan Documents.

(a)    Upon the occurrence of a default under any of the Loan Documents, as determined by Lender in its sole discretion (an “Event of Default”), Lender shall give written notice of such Event of Default to Manager (a “Default Notice”). Until Manager’s receipt of written notice from Lender stating that such Event of Default has been cured, Manager will not demand, collect, or enforce against Borrower or accept from Borrower or any person for Borrower’s account, the payment of sums owing on account of the Management Agreement which may be earned after Manager’s receipt of the Default Notice regarding the Event of Default, unless and until the Note has been fully satisfied.

(b)    If Manager should at any time receive any payment on account of the Management Agreement which is not permitted by this Agreement, Manager will hold such

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payment as trustee for Lender and will promptly notify Lender thereof and will pay the same to Lender promptly upon demand, to be applied to the payment of the Note. Notwithstanding anything herein to the contrary, Manager shall have the right to receive, retain and use and not be obligated to return or refund to Lender any Management Fee or other fee, commission, reimbursement or other amount already received or earned by Manager prior to the date of Manager’s receipt of the Default Notice and to which Manager was entitled under this Agreement.

6.    Remedies of Lender. Lender shall not exercise any of its rights under this Section 6 until the occurrence of an Event of Default, but effective upon such occurrence:

(a)    Borrower hereby appoints Lender, its agents, employees, successors and assigns, Borrower’s true and lawful attorneys, such power being coupled with an interest, irrevocably with full power in the name and on behalf of Borrower or otherwise to do, execute, and perform any other act, matter, or thing whatsoever that, in the reasonable opinion of Lender, ought to be done, executed, and performed in connection with the Management Agreement, as fully as Borrower could do in such situation;

(b)    At Lender’s option, Lender may deliver a Default Notice to Manager and thereafter exercise in its own name any and all rights of Borrower under the Management Agreement, including without limitation, the right to direct that all rents, security deposits, issues, proceeds and profits of the Property collected by Manager, after payment of all costs and expenses of operating the Property, shall be applied in accordance with Lender’s written directions to Manager;

(c)    At Lender’s option, Lender may assume the obligations of Borrower under the Management Agreement and, upon delivery to Manager of written notice of such event, Manager will continue performance of its duties under the Management Agreement provided Lender fulfills all of the obligations of Borrower from and after such election by Lender in accordance with the Management Agreement; and

(d)At Lender’s option, Lender may, upon no less than thirty (30) days prior written notice from Lender to Manager, terminate the Management Agreement and require Manager to transfer its responsibility for management of the Property to a management company selected by Lender in Lender’s discretion.

7.    Lender’s Right to Replace Manager. In addition to the foregoing, in the event that Lender, in Lender’s discretion, at any time during the term of this Agreement, determines that the Property is not being managed in accordance with generally accepted management practices for properties similar to the Property, Lender shall deliver written notice thereof to Borrower and Manager, which shall specify the grounds for Lender’s determination. If Lender reasonably determines that the conditions specified in Lender’s notice are not remedied to Lender’s satisfaction by Borrower or Manager within thirty (30) days from receipt of such notice or that Borrower or Manager has failed to diligently undertake correcting such conditions within such 30-day period, Lender may direct Borrower to terminate the Management Agreement and replace Manager with a management company acceptable to Lender in Lender’s discretion or as otherwise permitted under the Security Instrument.

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8.    Termination of Management Agreement Without Liability to Lender. Any termination of the Management Agreement by or at the request of Lender pursuant to this Agreement shall be without penalty, cost, liability or premium to Lender, notwithstanding anything set forth in the Management Agreement to the contrary.

9.    No Obligations of Lender. Notwithstanding anything herein contained to the contrary, (a) Borrower shall remain liable under the Management Agreement to perform all of Borrower’s obligations thereunder in accordance with and pursuant to the terms and provisions thereof, and Borrower agrees to perform such obligations at its sole cost and expense; (b) any obligations of Borrower under the Management Agreement may be performed by Lender or its nominee or other assignee without releasing Borrower therefrom (or from its other obligations under the Management Agreement) and without resulting in any assumption of said obligation (or of such other obligations) by Lender; and (c) Lender shall have no obligation or liability under or with respect to the Management Agreement or any covenants of Borrower thereunder by reason of or arising out of the assignment herein, nor shall Lender be required or obligated in any manner to perform or fulfill any obligations of Borrower under or pursuant to the Management Agreement unless and until Lender assumes the obligations of Borrower pursuant to the terms of Section 6(c) or otherwise.

10.    Representations and Warranties. Borrower and Manager represent and warrant to Lender that: (a) all Management Fees and other sums, if any, required to be paid as of the date hereof under the terms of the Management Agreement have been paid; (b) the Management Agreement has not been modified, amended or supplemented (except by instruments, if any, included as a part of Exhibit A hereto) and is in full force and effect and is enforceable in accordance with its terms; (c) there is no presently existing default by either party under the Management Agreement or other event which with notice and/or the passage of time may be a default by either party thereunder; (d) the Management Agreement has not been assigned to anyone other than Lender; and (e) Borrower’s right, title and interest of, in and to the Management Agreement is not now subject to any liens, encumbrances or security interests.

11.    Lender’s Agreement. Unless and until Manager receives a Default Notice, Lender agrees that Manager shall be entitled to render performance under the Management Agreement to and as directed by Borrower, notwithstanding this assignment and any sums due to Borrower or Manager under the Management Agreement shall be paid directly to Borrower or Manager, as per the terms thereof.

12.    Notices. All notices required or permitted hereunder shall be given as provided in the Security Instrument, provided that the address of the Manager for any such notice shall be the address set forth on the first page of this Agreement.

13.    Termination. Upon the (a) full performance and satisfaction of all obligations of Borrower under the Loan Documents, including the payment in full of the Note; and (b) the release of record of the Security Instrument, this Agreement shall terminate.

14.    Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of Borrower, Manager and Lender and their respective successors and assigns. Neither Borrower nor Manager shall assign any of its rights and obligations under this Agreement without the prior written consent of Lender.

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15.    Governing Law. This Agreement shall be governed by the laws of the state where the Property is located.

16.    Determinations by Lender. In any instance where the judgment, consent, approval or discretion of Lender is required under this Agreement for any matter or thing or Lender shall have an option, election or right of determination or any other power to decide any matter relating to the terms and conditions of this Agreement, including any right to determine that something is satisfactory or not (“Decision Power”), such Decision Power shall be exercised in the sole and absolute discretion of Lender unless otherwise expressly stated to be reasonably exercised. Such Decision Power and each other power granted to Lender pursuant to this Agreement or any other Loan Document may be exercised by Lender or by any authorized agent of Lender (including any servicer and/or attorney in fact), and Borrower hereby expressly agrees to recognize the exercise of such Decision Power by such authorized agent.

17.    Entire Agreement; Amendment and Waiver. This is the entire agreement among the parties with respect to the matters set forth herein, and all prior oral and written agreements with respect to the matters set forth herein are superseded by the terms of this Agreement. This Agreement, including the provisions of this Section, may not be modified except by written amendment to this Agreement signed by the parties affected by the same, and the parties hereby: (a) expressly agree that it shall not be reasonable for either of them to rely on any alleged, non-written amendment to this Agreement; (b) irrevocably waive any and all right to enforce any alleged, non-written amendment to this Agreement; and (c) expressly agree that it shall be beyond the scope of authority (apparent or otherwise) for any of their respective agents to agree to any non-written modification of this Agreement. No specific waiver of any of the terms of this Agreement shall be considered as a general waiver. Borrower, Lender and Manager agree that in the event of any inconsistency or conflict with the provisions of this Agreement and the provisions of the Management Agreement, the provisions of this Agreement shall control.

18.    Severability. The invalidity, illegality or unenforceability of any provision of this Agreement pursuant to judicial decree shall not affect the validity or enforceability of any other provision of this Agreement, all of which shall remain in full force and effect.

19.    Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. The failure of any party hereto to execute this Agreement shall not relieve the other signatories from their obligations hereunder.

SEE NEXT PAGE FOR SIGNATURES

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IN WITNESS WHEREOF, the parties hereto have executed, or have caused their respective duly authorized officers to execute, this Agreement.

ARHC PPLVLGA01, LLC

a Delaware limited liability company

By:/s/ Jesse C. Galloway

Name: Jesse C. Galloway
Its: Authorized Signatory

CADDIS MANAGEMENT COMPANY, LLC

a Texas limited liability company

By: /s/ Jason L. Signor

Name: Jason L. Signor
Its: Manager

RGA REINSURANCE COMPANY

By: /s/ Michael McLellan

Name: Michael McLellan

Title: SVP

7

EXHIBIT A

COPY OF MANAGEMENT AGREEMENT

EX-10.19

Exhibit 10.19

ENVIRONMENTAL INDEMNITY AGREEMENT

(Loan No. 73100202)

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Indemnity”) is made and entered into effective as of this 14^th day of August, 2015 by ARHC PPLVLGA01, LLC, a Delaware limited liability company (“Borrower”) whose address is 405 Park Avenue, 14^th Floor, New York, New York, 10022, Attn: Healthcare Counsel, and AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC., a Maryland corporation, whose address is 405 Park Avenue, 14^th Floor, New York, New York, 10022, Attn: Healthcare Counsel (“Co-Indemnitor”) (Borrower and Co-Indemnitor are sometimes hereinafter collectively and individually referred to as “Indemnitor”), for the benefit of RGA REINSURANCE COMPANY, a Missouri corporation, its successors and assigns (“Lender”), whose address is c/o RGA Mortgage Loan Servicing LLC, P.O. Box 771320, St. Louis, Missouri 63177 and is made with reference to the recitals set forth below, and in consideration of the covenants and agreements set forth below, and other valuable consideration, the receipt and sufficiency of which are acknowledged.

Recitals of Fact

The following recitals are a material part of this instrument:

A.    Borrower has assumed a loan made by ICM VI- Philip Center, LP, a Georgia limited partnership (the “Original Borrower”) evidenced by that certain Promissory Note in favor of Lender dated September 27, 2012 in the principal sum of $5,200,000.00 (the “Loan”).

B.    The Loan is secured, in part, by that certain Deed to Secure Debt, Assignment of Leases and Rents and Security Agreementdated September 27, 2012, executed by Original Borrower in favor of Lender, filed and recorded in the office of the Clerk of the Superior Court for Gwinnett County, Georgia (the “Recorder’s Office”) on October 5, 2012 in Book 51698, Page 0177 (the “Security Instrument”) and encumbering the property commonly known as 455 Philip Boulevard, located in the City of Lawrenceville, County of Gwinnett, State of Georgia and legally described on Exhibit “A” attached hereto and by this reference made a part hereof (the real estate, together with all improvements thereon and personal property associated therewith, is hereinafter collectively called the “Property”).

C.     The Security Instrument, the Note evidencing the Loan, that certain Assignment of Leases and Rents dated September 27, 2012, executed by Original Borrower in favor of Lender and recorded with the Recorder’s Office on October 5, 2012, in Book 51698, Page 0213 (the “Assignment of Rents”), this Indemnity, the Separate Guaranty of Carveout Obligations of even date herewith executed by Co-Indemnitor in favor of Lender, the Assignment and Subordination of Management Agreement dated on or about the date hereof and executed by Borrower and property manager in favor of Lender and that certain Consent and Assumption Agreement With Release dated of even date herewith executed by, among others, Lender and Indemnitors are sometimes herein collectively referred to as the “Loan Documents.” The Loan Documents are hereby incorporated by this reference as if fully set forth in this Indemnity.

Loan No. 73100202

C.    As a condition to Lender’s consent to the assumption of the Loan by Borrower, Lender is requiring one or more financially substantial persons or entities to be liable under this Indemnity. Those parties executing this Indemnity in addition to Borrower have a financial or other significant interest in Borrower. Lender has therefore required that Borrower and Co-Indemnitor execute and deliver this Indemnity, and each Indemnitor has agreed to do so on the terms and conditions set forth herein.

Agreement

NOW THEREFOR IN CONSIDERATION of the foregoing and of Lender making the Loan, and other valuable consideration, the receipt of which is hereby acknowledged, Indemnitor hereby agrees as follows:

1.Definitions. As used in this Indemnity, the following terms shall have the following meanings:

“Debt” shall mean (a) the Note; (b) all indebtedness and obligations arising under the Security Instrument and the other Loan Documents; (c)  any and all renewals or extensions of any such item of indebtedness or obligation or any part thereof; (d) any future advances which may be made by Lender to Borrower, whether made to protect the security for the repayment of the Note or otherwise, and whether or not evidenced by additional promissory notes or other evidences of indebtedness; and (e) all interest due on all of the same. Nothing herein shall be construed to obligate Lender to make any renewals or additional loans or advances, including, without limitation, increasing the amount of the Note as referred to herein.

“Environmental Laws” means, both collectively and individually, any and all present and future federal, state and local statutes, laws, ordinances, rules, regulations, rulings, orders, permits, and other requirements of governmental agencies or authorities relating to health, the environment or to any Hazardous Substance (as hereinafter defined) or Hazardous Substance Activity (as hereinafter defined), including without limitation the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.A. § 9601, et seq. (“CERCLA”); the Resource Conservation and Recovery Act of 1976, 42 U.S.C.A. § 6901, et seq. (“RCRA”); the Hazardous Materials Transportation Act, 49 U.S.C.A. § 1801, et seq. (the “Hazardous Materials Transportation Act”); the Clean Water Act, 33 U.S.C.A. § 1251, et seq. (the “Clean Water Act”); the Clean Air Act, 42 U.S.C.A. § 7401, et seq.; and all environmental statutes, laws, ordinances, rules, regulations, rulings, orders, permits and other requirements of the State, County and City in which the Property is located.

“Hazardous Substance” or “Hazardous Substances” shall mean, at any time, one or more of the following substances:

(i)    those substances included within the definitions of “hazardous substances,” “pollutants,” “contaminants,” “hazardous materials,” “toxic substances,” or “solid waste” in any of the Environmental Laws or described, controlled or regulated under any of the Environmental Laws;

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Loan No. 73100202

(ii)    those substances listed by the Environmental Protection Agency (or any successor agency) as hazardous substances (40 CFR Part 302.4 and amendments thereto); and

(iii)    any material, waste or substance which is: (A) asbestos or which contains asbestos; (B) polychlorinated biphenyls or which contain the same, including transformers or other equipment containing dielectric fluid; (C) designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act, or listed pursuant to Section 307 of the Clean Water Act; (D) hydrocarbons, oil or petroleum, petroleum products, petroleum distillate or petroleum byproducts; (E) explosives; (F) radioactive materials; (G) radon gas; or (H) formaldehyde, including urea formaldehyde foam insulation.

“Hazardous Substance Activity” means any actual, proposed or threatened storage, holding, existence, release, emission, discharge, generation, processing, abatement, removal, disposition, handling or transportation of any Hazardous Substance from, under, into or on the Property or surrounding property(ies).

“Losses” means any and all losses, liabilities, damages, demands, claims, actions, judgments, causes of action, assessments, penalties, fines, punitive damages, fees, costs and expenses of any kind or nature (including, without limitation, remediation and clean-up costs), and the reasonable fees and disbursements of engineers, environmental consultants, legal counsel, accountants, and environmental specialists) and all foreseeable and unforeseeable consequential damages.

2.Representations and Warranties. Borrower represents and warrants to Lender that to the best of Borrower’s knowledge, that except as may have been previously disclosed to Lender in the environmental report delivered by Borrower to Lender in connection with this Loan prior to the date of this Indemnity, except as set forth on Exhibit “B” attached hereto and incorporated herein by this reference, and except as commonly used in the operation and maintenance of properties of similar kind and nature to the Property in accordance with prudent business management practices and in a manner that does not result in any contamination of the Property:

(a)no Hazardous Substances exist on, under or about the Property;

(b)no Hazardous Substances have been at any time transported to or from the Property or used, generated, manufactured, stored, discharged, released or disposed of on, under or about the Property;

(c)the Property is not in violation of any Environmental Laws and there are no past, current, or threatened claims relating to Hazardous Substances or the Environmental Laws;

(d)there are no aboveground or below ground storage tanks on the Property; and

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Loan No. 73100202

(e)all necessary permits and licenses, if any, have been obtained with regard to the use of any Hazardous Substances in, on or about the Property.

3.Covenants. Borrower shall:

(a)comply, and use its best efforts to require all tenants or occupants of the Property to comply, with all Environmental Laws;

(b)not install, use, generate, manufacture, store, treat, release or dispose of, nor permit the installation, use, generation, storage, treatment, release or disposal of, any Hazardous Substances on, under or about the Property, nor transport any Hazardous Substances to or across the Property, except in full accordance with the Environmental Laws;

(c)submit to Lender, upon Lender’s written request, copies of any reports or documentation relating to the installation, use, generation, storage, treatment, release or disposal of, or transportation of, any Hazardous Substances on, under or about the Property;

(d)promptly advise Lender in writing of any and all (i) claims or assertions which may be received by Borrower or of which any Indemnitor may become aware, relating to alleged violations of any of the Environmental Laws; (ii) spills, releases, contaminations or other actions indicating the presence of Hazardous Substances on, under or about the Property; (iii) any remedial action taken by Indemnitor, or any tenants or occupants of the Property, in response to any of the items described in subsection (ii) above; and (iv) environmental conditions on neighboring or adjoining properties, of which Indemnitor becomes aware, which could possibly cause the Property to be subject to any restrictions or compliance obligations under any of the Environmental Laws;

(e)not install or allow to be installed any fuel tanks, whether aboveground or below ground, on the Property;

(f)not create or permit to continue in existence any lien upon the Property imposed under any Environmental Law;

(g)not make any change in the use or condition of the Property which might lead to the presence on, under or about the Property of any Hazardous Substances which is not in accordance with any applicable Environmental Law, without the prior written consent of Lender; and

(h)not make any change in the use or condition of the Property which would require, under any applicable Environmental Law, notice be given to or approval be obtained from any governmental agency in the event of a transfer of ownership or control of the Property, without the prior written consent of Lender.

4.Notices from Indemnitor. Each Indemnitor shall provide Lender with prompt written notices of: (i) any proceeding or inquiry by any governmental or nongovernmental entity or person with respect to a Hazardous Substance Activity or the presence of any Hazardous Substance

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on, under, from or about the Property, or the migration of such Hazardous Substance from or to other property(ies), (ii) all claims made or threatened by any third party against Indemnitor or the Property, or any other owner, tenant, or operator of the Property relating to any Environmental Laws, loss or injury resulting from any Hazardous Substance or Hazardous Substance Activity, and (iii) any Indemnitor’s discovery of any occurrence or condition on any real property adjoining or surrounding the Property that could cause the Property, or any portion thereof, to be subject to any investigation or cleanup of the Property pursuant to any Environmental Law, or that could result in Borrower or any Indemnitor becoming liable for any cost related to any investigation or cleanup of such Property. Borrower shall deliver to Lender any documentation or records as Lender may reasonably request and which are susceptible of being obtained by Borrower without undue cost or expense and without the necessity for initiating legal proceedings to obtain the same.

5.License. Borrower grants to Lender and its employees, agents, consultants and contractors, an irrevocable license and authorization to enter upon the Property (upon reasonable prior notice) and inspect the Property, and perform such tests (including without limitation soils and subsurface testing) as Lender in its reasonable discretion deems necessary or desirable for the purpose of determining or verifying the presence or absence of Hazardous Substances on, under or about the Property, and verifying compliance with this Indemnity by Borrower and the tenants and occupants of the Property. Lender agrees not to undertake such inspections and tests unless Lender has a reasonable good faith belief, based upon the receipt of information from an outside source, that Hazardous Substances may be present on, under or about the Property, or that a violation of the Environmental Laws may have occurred. If Lender discovers the presence of any Hazardous Substances which were not previously disclosed by Indemnitor, then Indemnitor shall pay Lender’s actual costs for such inspections and tests, upon demand. Lender shall be authorized, but shall not be required by Indemnitor, to release any information obtained through its inspections and testing to any governmental agency or authority which may demand the same. Lender shall defend and indemnify Borrower against any losses, costs, expenses or liabilities incurred by Borrower as the result of any intentional act or gross negligence committed by Lender or its authorized agents or employees as a result of any activities of Lender or such employees or agents on or about the Property and pursuant to this Indemnity.

6.Remedial Work. Borrower shall promptly perform all necessary remedial work in response to the presence of any Hazardous Substances on the Property, any violation of any Environmental Laws, or any claims or requirements made by any governmental agency or authority. All such work shall be conducted by licensed and reputable contractors pursuant to written plans approved by the agency or authority in question (if applicable), under proper permits and licenses (if applicable) with such insurance coverage as is customarily maintained by prudent property owners in similar situations. If the cost of the work exceeds $50,000, then Lender shall have the right of prior approval over the environmental contractor and plans, which shall not be unreasonably withheld or delayed. All costs and expenses of the remedial work shall be promptly paid by Indemnitor. In the event Borrower fails to undertake the remedial work, or fails to complete the same within a reasonable time period after the same is undertaken, and if Lender is of the good faith opinion that Lender’s security in the Property is jeopardized thereby, then Lender shall have the right to undertake or complete the remedial work itself. In such event all costs of Lender in doing so, including all fees and expenses of environmental consultants, engineers, attorneys, accountants

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and other professional advisors, shall become a part of the Loan described above and shall be due and payable from Indemnitor upon demand. Such amount shall be secured by the Loan Documents, and failure to pay the same shall be an event of default under the Loan Documents. In the event any Hazardous Substances are removed from the Property, either by Borrower or Lender, the number assigned by the United States Environmental Protection Agency to such Hazardous Substances shall be solely in the name of Borrower, and Borrower shall have any and all liability for such removed Hazardous Substances. Promptly following completion the remedial work, Borrower shall obtain and deliver to Lender, an environmental report in form and substance acceptable to Lender from an environmental consultant acceptable to Lender, stating that all required action has been taken, and that upon completion of such action, the Property is, to the knowledge of such professional, then in compliance with the applicable Environmental Laws.

7.Indemnity Agreement. Each Indemnitor, jointly and severally, agrees to defend, unconditionally indemnify, and hold Lender harmless from and against any and all Losses which may occur as a result of any Hazardous Substance Activity or results directly or indirectly from the presence of Hazardous Substances on, under or around the Property, unless the Loss is the result of any intentional act or gross negligence committed by Lender or its authorized agents as a result of any activities of Lender or such agents on the Property.

Indemnitor shall assume the burden and expense of defending all suits, administrative proceedings and disputes of any description with all persons, entities, political subdivisions or government agencies arising out of the matters to be indemnified under this Indemnity. Indemnitor shall pay, promptly upon entry, any nonappealable order, judgment or other final resolution of any claim or dispute arising out of the matters to be indemnified under this Indemnity and shall pay promptly when due any fines, penalties or agreed settlements arising out of the matters to be indemnified under this Indemnity. In the event that such payment is not made, Lender, at its sole discretion, may proceed to file suit against Indemnitor to compel such payment.

8.Payment of Lender’s Expenses. Indemnitor shall pay to Lender all costs and expenses (including, without limitation, the reasonable fees and disbursements of Lender’s engineers, consultants, environmental specialists and the reasonable charges of Lender’s in‑house legal counsel) incurred by Lender in connection with this Indemnity or the enforcement hereof. Indemnitor shall also pay to Lender all costs and expenses associated with Lender’s retention of outside counsel for advice or other representation in any litigation, contest, dispute, suit or proceeding (whether instituted by Lender, Borrower, or any other party, including any governmental agency charged with enforcement of any Environmental Law) in any way relating to this Indemnity or the enforcement hereof.

9.Independent Liability. The obligations of each Indemnitor under this Indemnity are independent of, and shall not be measured, limited or affected by (i) any amounts at any time owing under the Loan or secured by any of the Loan Documents, (ii) the sufficiency or insufficiency of any collateral (including, without limitation, the Property) given to Lender to secure repayment of the Loan, (iii) the consideration given by Lender or any other party in order to acquire the Property, or any portion thereof, if Lender has acquired title to or any interest in the Property, (iv) the modification, expiration or termination of the Note or any other Loan Document, (v) the discharge

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Loan No. 73100202

or repayment in full of the Loan (including, without limitation, by amounts paid or credit bid at a foreclosure sale or by discharge in connection with a deed in lieu of foreclosure), or (vi) any indemnity contained in any of the Loan Documents which is similar or in addition hereto.

10.Survival of Obligations. Each Indemnitor’s obligations hereunder shall survive Borrower’s payment of the Debt and the subsequent sale or other transfer of the Property. The rights of Lender under this Indemnity shall be in addition to any other rights and remedies of Lender against each Indemnitor under any other document or instrument now or hereafter executed by such Indemnitor, or at law or in equity (including, without limitation, any right of reimbursement or contribution pursuant to CERCLA), and shall not in any way be deemed a waiver of any such rights. Indemnitor agrees that it shall have no right of contribution (including, without limitation, any right of contribution under CERCLA) or subrogation against Lender or any other party unless and until all obligations of Indemnitor hereunder have been satisfied and the Debt is repaid in full. Each Indemnitor further agrees that, to the extent that the waiver of its rights of subrogation and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation or contribution of Indemnitor shall be junior and subordinate to the rights of Lender against Indemnitor hereunder.

11.Payment of Obligations. All obligations of Borrower hereunder shall be deemed a part of the Debt and the repayment of such obligations shall be secured by the same security that exists with respect to the Debt. All such obligations shall be payable on demand, and any amount due and payable hereunder to Lender by any Indemnitor which is not paid within thirty (30) days after written demand therefor from Lender, with an explanation of the amounts demanded, shall bear interest from the date of such demand at the Default Rate as defined in the Note. If Indemnitor consists of more than one person or entity, then the obligations and liabilities of each person or entity shall be joint and several.

12.Recourse. Borrower’s liability hereunder shall not be subject to, limited by or affected in any way by any “non-recourse” provisions, if any, contained in the Loan Documents. Borrower agrees that the obligations of Borrower hereunder are separate, independent of and in addition to the undertakings of Borrower under the Note. Indemnitor agrees that a separate action may be brought to enforce the provisions of this Indemnity which shall in no way be deemed to be an action on the Note, whether or not Lender would be entitled to a deficiency judgment following a judicial foreclosure or sale under the Security Instrument and Indemnitor waives any right to require that any action be brought by Lender against Borrower or any other person or that any other remedy under the Loan Documents be exercised. Lender may, at its option, proceed against Borrower to collect monies when due or to obtain performance under this Indemnity, without first proceeding against the Borrower and without first resorting to the Note and Security Instrument or any other remedy under the Loan Documents.

13.Obligations Absolute.

(a)The obligations of Indemnitor hereunder shall remain in full force without regard to, and shall not be impaired by the following, any of which may be taken in such manner, upon such terms and at such times as Lender, in its sole discretion, deems advisable without the consent of, or notice to, Borrower, nor shall any of the following give Borrower

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any recourse or right of action against Lender: (1) any express or implied amendment, modification, renewal, addition, supplement, extension or acceleration of or to the Note, the Security Instrument or any of the Loan Documents; (2) any exercise or non-exercise by Lender of any right or privilege under any of the Documents; (3) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to any indemnitors or borrower, or any affiliate of Borrower or any action taken with respect to this Indemnity by any trustee or receiver, or by any court, in any such proceeding, whether or not Borrower shall have had notice of knowledge of any of the foregoing; (4) any release, waiver or discharge of the Borrower or any endorser from liability under any of the Loan Documents or any Borrower’s grant to Lender of a security interest, lien or encumbrance in any of the Borrower’s property; (5) any subordination, compromise settlement, release (by operation of law or otherwise), discharge, compound, collection, or liquidation of any of the Loan Documents or any collateral described in any of the Documents or otherwise, or any substitution with respect thereto; (6) any assignment or other transfer of any of the Documents by Lender, in whole or in part; (7) any acceptance of partial performance of any of the obligations of Borrower under the Documents; and (8) any bid or purchase at any sale of the collateral described in the Loan Documents or otherwise.

(b)Indemnitor unconditionally waives any defense to the enforcement of this Indemnity including, without limitation: (1) all presentments, demands, demands for performance, notices of nonperformance, protests, notices of protest, dishonor, nonpayment, partial payment, default and protest, notices of acceptance of this Indemnity and all other notices and formalities to which Indemnitor may be entitled, except as specifically provided for herein; (2) any right to require Lender to proceed against or exhaust any collateral described in the Loan Documents or to pursue any other remedy whatsoever; (3) any defense arising by reason of any invalidity or unenforceability of any of the Loan Documents or of the manner in which Lender has exercised its remedies under the Loan Documents; and (4) any defense based upon an election of remedies by Lender including, without limitation, any election to proceed by judicial or nonjudicial foreclosure of any security, whether real property or personal property security, or by deed in lieu thereof, and whether or not every aspect of any foreclosure sale is commercially reasonable, or any election of remedies, including but not limited to remedies relating to real property or personal property security, which destroys or otherwise impairs the subrogation rights of Indemnitor.

14.Successors and Assigns. This Indemnity shall be binding upon each Indemnitor, its heirs, personal representatives, successors and assigns, and shall inure to the benefit of and shall be enforceable by Lender and its successors, endorsees and assigns and by any transferee of the Loan or (after foreclosure or deed in lieu thereof) the Property, by any party to whom Lender assigns this Indemnity.

15.Governing Law/Jurisdiction and Venue. This Indemnity shall be governed by and construed in accordance with the laws of jurisdiction in which the Property is located without regard to the conflicts of law provisions thereof (“Governing State”). EACH INDEMNITOR HEREBY CONSENTS TO PERSONAL JURISDICTION IN THE GOVERNING STATE. VENUE OF ANY ACTION BROUGHT TO ENFORCE THIS INDEMNITY OR ANY OTHER

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LOAN DOCUMENT OR ANY ACTION RELATING TO THE LOAN OR THE RELATIONSHIPS CREATED BY OR UNDER THE LOAN DOCUMENTS (“ACTION”) SHALL, AT THE ELECTION OF LENDER, BE IN (AND IF ANY ACTION IS ORIGINALLY BROUGHT IN ANOTHER VENUE, THE ACTION SHALL AT THE ELECTION OF LENDER BE TRANSFERRED TO) A STATE OR FEDERAL COURT OF APPROPRIATE JURISDICTION LOCATED IN THE GOVERNING STATE. INDEMNITOR HEREBY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF THE GOVERNING STATE AND OF FEDERAL COURTS LOCATED IN THE GOVERNING STATE IN CONNECTION WITH ANY ACTION AND HEREBY WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN SUCH STATE FOR PURPOSES OF ANY ACTION. Each Indemnitor hereby waives and agrees not to assert, as a defense to any Action or a motion to transfer venue of any Action, (i) any claim that it is not subject to such jurisdiction, (ii) any claim that any Action may not be brought against it or is not maintainable in those courts or that this Indemnity may not be enforced in or by those courts, or that it is exempt or immune from execution, (iii) that the Action is brought in an inconvenient forum, or (iv) that the venue for the Action is in any way improper.

16.Severability. Every provision of this Indemnity is intended to be severable. If any provision of this Indemnity or the application of any provision hereof to any party or circumstance is declared to be illegal, invalid or unenforceable for any reason whatsoever by a court of competent jurisdiction, such invalidity shall not affect the balance of the terms and provisions hereof or the application of the provision in question to any other party or circumstance, all of which shall continue in full force and effect.

17.Waivers. No failure or delay on the part of Lender to exercise any power, right or privilege under this Indemnity shall impair any such power, right or privilege, or be construed to be a waiver of any default or an acquiescence therein, nor shall any single or partial exercise of such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No provision of this Indemnity, including but not limited to this Section, may be changed, waived, discharged or terminated except by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought, and the parties hereby: (a) expressly agree that it shall not be reasonable for any of them to rely on any alleged, non-written amendment to this Indemnity; (b) irrevocably waive any and all right to enforce any alleged, non-written amendment to this Indemnity; and (c) expressly agree that it shall be beyond the scope of authority (apparent or otherwise) for any of their respective agents to agree to any non-written modification of this Indemnity.

18.Notices. All notices hereunder shall be in writing. All notices to be given hereunder (including, without limitation, notices of sale or default) may be given by any of the following means: (i) personal service, (ii) overnight delivery by a reliable nationally-recognized overnight courier, (iii) U.S. Mail, postage thereon prepaid, return receipt requested, or (iv) facsimile transmission, followed by U.S. Mail. Written notice shall be deemed effective as follows: (i) if by personal service or overnight delivery, upon delivery or first attempted delivery (whether or not actually received), (ii) if by U.S. Mail, three (3) days after deposit in the U.S. Mail, and (iii) if by facsimile transmission, followed by U.S. Mail, upon electronic confirmation of receipt in the

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recipient’s office prior to 5:00 p.m. local time at the recipient’s office. Notices to Indemnitor or Lender shall be addressed to the mailing address for the applicable party shown in the caption hereof, and a copy of any notice to Lender shall also be delivered to Lender at 16600 Swingley Ridge Road, Chesterfield, Missouri 63017, “Attention: Global Legal Services.” Each of the parties may hereafter designate a different address for notices hereunder by providing notice of such designation to the other parties pursuant to the procedures set forth above.

19.Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,EACH INDEMNITOR AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION-BASED ON THE LOAN OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE LOAN, THIS INDEMNITY, THE NOTE, THE SECURITY INSTRUMENT, OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN), OR ACTION OF ANY INDEMNITOR OR LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER’S MAKING OF THE LOAN.

20.No Waiver. Notwithstanding any provision herein or in the Loan Documents, or any rights or remedies granted by the Loan Documents, Lender does not waive and expressly reserves all rights and benefits now or hereafter accruing to Lender under the “security interest” or “secured creditor” exception under applicable Environmental Laws, as the same may be amended. No action taken by Lender pursuant to the Loan Documents shall be deemed or construed to be a waiver or relinquishment of any such rights or benefits under the “security interest exception.”

21.Counterparts. This Indemnity may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one in the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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Loan No. 73100202

IN WITNESS WHEREOF, this Indemnity is executed effective as of the day and year first written above.

BORROWER:

ARHC PPLVLGA01, LLC, a Delaware

limited liability company

By:    /s/ Jesse C. Galloway

Print Name: Jesse C. Galloway

Title: Authorized Signatory

CO-INDEMNITOR:

AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC., a Maryland corporation

By:    /s/ Thomas P. D’Arcy

Print Name: Thomas P. D’Arcy

Title: President

Environmental Indemnity Agreement – Signature Page

Loan No. 73100202

Exhibit “A”

Environmental Indemnity Agreement

EXHIBIT A

LEGAL DESCRIPTION

All that tract or parcel of land lying and being in Land Lot 9, 7th District, Gwinnett County, Georgia and being more particularly described as follows:

BEGINNING at an iron pin set at the northeast corner of a mitered intersection of the northerly right-of-way line of Philips Boulevard (having an 80-foot right-of-way) and the easterly right-of-way line of Katherine Oak Court (having a 60-foot right-of-way); Thence running along the easterly right-of-way line of Katherine Oak Court, South 79°02'41" West, 15.56 feet to an iron pin set; Thence, North 55°57'19" West, 250.78 feet to a :W' rebar found; Thence leaving said easterly right-of-way line of Katherine Oak Court and running, North 34°02'41" East, 87.26 feet to a %" rebar found; Thence, North 51°26'15" East, 227.21 feet to a point; Thence, North 74°19'54" East, 304.39 feet to a point; Thence, South 72°25'50" East, 231.02 feet to a parker kalon nail set; Thence, South 15°44'52" East, 50.93 feet to an iron pin set along the northerly right-of-way line of Philip Boulevard; Thence running along the northerly right-of-way line of Philip Boulevard, South 68°24'39" West, 141.25 feet to a point; Thence, North 21°35'17" West, 4.54 Feet to a point; Thence, South 68°34'22" West, 89.34 feet to a point; Thence, South 66°53'15" West, 63.97 feet to a point; Thence, South 61°52'30" West, 61.94 feet to a point; Thence, 50.90 feet along the arc of a curve to the left having a radius of 684.47 feet and being scribed by a chord bearing South 58°02'10" West, 50.89 feet to a point; Thence, South 34°05'39" East, 3.11 feet to a point; Thence, 220.36 feet along the arc of a curve to the left having a radius of 681.36 feet and being scribed by a chord bearing South 46°38'35" West, 219.40 Feet to an iron pin set and the true POINT OF BEGINNNING.

Said tract contains 3.41 acres (148,721 square feet) more or less, as shown in a survey prepared for Grove Street Lawrenceville, LLC, ICM VI - Philip Centre, LP, RGA Reinsurance Company, its successors and/or assigns, Republic Commercial Title Company, LLC and First American Title Insurance Company by Point To Point Land Surveyors, Inc. dated July 25, 2012 and last revised September 26, 2012.

Being all of Tract I as shown on Plat entitled "A Subdivision Plat Prepared for: Grove Street Lawrenceville, LLC" recorded in Plat Book 129, Page 154, 155of the

Public Records of Gwinnett County, Georgia.

TOGETHER WITH, the rights, privileges, easements and appurtenances created by the

following:

Loan No. 73100202

a. Terms and conditions of that certain Easement Agreement between Oxford Lane JV LLC and Grove Street Lawrenceville, LLC, dated March 16, 2007, filed March 19, 2007 and recorded in Deed Book 47688, Page 63, aforesaid records.

b. Terms and condition of that certain Storm Water Easement and Maintenance

Agreement between Oxford Lane JV LLC and Grove Street Lawrenceville, LLC, dated March 16, 2007, filed March 19, 2007 and recorded in Deed Book 47688, Page 50, aforesaid records.

c. Terms and conditions of that certain Reciprocal Easement Agreement by and between Grove Street Lawrenceville, LLC and ICM VI-Philip Centre, LP, dated September 27, 2012 and recorded in Deed Book 51698, Page 177 aforesaid records.

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Loan No. 73100202

Exhibit “B”

Environmental Indemnity Agreement

Exceptions to Representations and Warranties

None.

Exhibit “B” - 1

EX-10.20

Exhibit 10.20

Loan No. 73100202

SEPARATE GUARANTY OF CARVEOUT OBLIGATIONS

(Loan No. 73100202)

This Separate Guaranty of Carveout Obligations (the “Guaranty”) is made as of the 14th day of August, 2015 (the “Effective Date”), by AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC., a Maryland corporation, whose address is 405 Park Avenue, 14^th Floor, New York, New York, 10022, Attn: Healthcare Counsel (the “Guarantor”), in favor of RGA REINSURANCE COMPANY, a Missouri corporation, whose address is c/o RGA Mortgage Loan Servicing LLC, P.O. Box 771320, St. Louis, Missouri 63177, and its successors and assigns (the “Lender”).

For and in consideration of the premises set forth herein and in order to induce the Lender to consent to the assumption of the loan evidenced that certain Promissory Note dated September 27, 2012 (the “Note”) in the principal amount of $5,200,000.00 (the “Loan”) by ARHC PPLVLGA01, LLC, a Delaware limited liability company (“Borrower”) pursuant to that certain Consent and Assumption Agreement With Release dated of even date herewith executed by, among others, Lender, Borrower and Guarantor (the “Assumption Agreement”), being recorded on or about the date hereof in the office of the Clerk of the Superior Court for Gwinnett County, Georgia (the “Recorder’s Office”), which Note was originally made by ICM VI- Philip Center, LP, a Georgia limited partnership (the “Original Borrower”) in favor of Lender, the Guarantor hereby agrees as follows:

1.GUARANTEE OF CARVEOUT OBLIGATIONS

In consideration of Lender agreeing to make the Loan, Guarantor hereby irrevocably, absolutely, unconditionally and jointly and severally guarantees the full and prompt payment to Lender of all amounts due or arising from or in connection with the following obligations (the “Carve out Obligations”): (a) the obligation to pay any amounts advanced or expenses incurred by Lender under the Note, the Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement dated September 27, 2012, executed by Original Borrower in favor of Lender and recorded in the Recorder’s Office on October 5, 2012 in Book 51698, Page 0177 securing the Note (the “Security Instrument”) or any other instrument executed by Borrower or, to the extent assumed by Borrower, Original Borrower in connection with or given as security for the Note, including but not limited to, that certain Environmental Indemnity Agreement dated of even date herewith executed by Borrower and Guarantor in favor of Lender and the Assumption Agreement (the “Loan Documents”) with respect to any of those matters set forth in (i) through (x) below (the “Carveouts”), (b) the obligation to defend and hold Lender harmless from and against any claims, judgments, causes of action or proceedings arising from any of the Carveouts; (c) the obligation to indemnify Lender with respect to any costs, damages, losses, including attorney’s fees, suffered or incurred by Lender in connection with or arising from any of the Carveouts, and (d) the obligation to repay the entire indebtedness evidenced by the Note, the Security Instrument and other Loan Documents, if Lender’s exculpation of Borrower from personal liability has become void as set forth in the Loan Documents. The Carveouts are:

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Loan No. 73100202    

(i)material written misrepresentation by the Borrower with respect to the Loan;

(ii)waste of the property described in the Security Instrument (the “Property”) (which shall include damage, destruction or disrepair of the Property caused by a willful act or grossly negligent omission of the Borrower, but shall exclude ordinary wear and tear in the absence of gross negligence);

(iii)misappropriation of tenant security deposits (including proceeds of tenant letters of credit), insurance proceeds or condemnation proceeds with regard to the Property;

(iv)failure to pay ground rent, property taxes, assessments or other lienable impositions with regard to the Property, except to the extent funds for payment of such items were placed and remain in escrow with the Lender;

(v)failure to pay to the Lender (a) all rents, income and profits collected more than one month in advance, and (b) all rents, income and profits (including any rent for the last month of the lease term under any lease in force at the time of default), received with respect to the Property during any period when there exists a default under the Note or any of the Loan Documents, net of amounts used to pay the reasonable and customary operating and maintenance expenses of the Property;

(vi)removal of fixtures or Personal Property (as defined in the Security Instrument) from the Property, unless replaced in a commercially reasonable manner;

(vii)any amounts expended by Lender in connection with the foreclosure of the Security Instrument or expenses incurred by Lender in connection with any proceeding brought to enforce the terms of the other Loan Documents following default;

(viii)terminating or amending a lease of the Property in violation of the Loan Documents;

(ix)failure to maintain all insurance as required by the Security Instrument, except to the extent funds for payment of said insurance premiums were placed and remain in escrow with the Lender; and

(x)liability of the Borrower under the Environmental Indemnity Agreement or the provisions set forth in the Security Instrument pertaining to hazardous materials or toxic substances found in, on or under the Property.

Guarantor acknowledges that the Loan is made solely for business purposes and that the Guarantor will be liable for a deficiency judgment after any foreclosure or trustee’s sale or deed in lieu of foreclosure or trustee’s sale that the Lender elects to prosecute or accept, to the extent that liability for the Carveout Obligations have remained unsatisfied. Any such deficiency or any

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judgment therefor shall bear interest at the Default Rate (as defined in the Note) from and after the date of such foreclosure or trustee’s sale or the Lender’s or its affiliate’s acceptance of a deed in lieu thereof until and including the date the deficiency or judgment is paid.

2.INDEMNITY AND HOLD HARMLESS

Guarantor jointly and severally agree to indemnify the Lender and hold it harmless, to the extent of the Lender’s actual damages and losses, with respect to any circumstance or event comprising a Carveout Obligation. This obligation includes the protection of the Lender from, and the defense of the Lender against, any and all actions, suits, proceedings, demands, assessments, adjustments, penalties or other assertions of liability arising as a result of or in connection with the Carveouts, and the indemnification of the Lender from and against all out‑of-pocket costs and expenses sustained by the Lender in enforcing this Guaranty, including reasonable attorneys’ fees and expenses, actually incurred.

3.CONDITIONAL GUARANTEE OF ENTIRE INDEBTEDNESS

Notwithstanding anything herein to the contrary set forth herein or in any instrument given as security for the Note, Guarantor hereby irrevocably, absolutely, unconditionally and jointly and severally guarantees the full and prompt payment to Lender of the entire indebtedness evidenced by the Note and secured by the Loan Documents in the event of (a) any fraud or intentional misrepresentation by the Borrower, (b) a voluntary transfer or encumbrance of the Property, or any direct or indirect beneficial ownership interest therein, in violation of the Loan Documents, or (c) Borrower’s filing of a voluntary petition for reorganization under Title 11 of the United States Code (or under any other present or future law, domestic or foreign, relating to bankruptcy, insolvency, reorganization proceedings or otherwise similarly affecting the rights of creditors), unless, prior to filing, Borrower offers to enter into Lender’s choice of either an agreement to permit an uncontested foreclosure, or an agreement to deliver a deed in lieu of foreclosure, Lender accepts Borrower’s offer and the agreement is consummated within sixty (60) days of Lender’s acceptance of the offer. After the Lender accepts such an offer, default by the Borrower in fulfilling the terms of the accepted offer shall trigger personal liability of the Borrower for the entire indebtedness due under the Note and other Loan Documents and Guarantor’s guarantee thereof. No such offer shall be conditioned on any payment by the Lender, on the release of Borrower or any Guarantor from any obligation or liability under the Loan Documents, or on any other concession. Guarantor’s personal liability for the Carveout Obligations shall survive foreclosure of the Security Instrument (or Lender’s acquisition of the Property by a deed in lieu of foreclosure).

This Guaranty is not a guarantee of collection, but rather is an irrevocable, absolute and unconditional, continuing guarantee of payment and performance. In this regard, the Guarantor hereby acknowledges and consents that the guarantee set forth in this Guaranty may not be revoked as to any present or future advances to or existing or additional liability incurred by the Borrower under the terms of the Note or any of the Loan Documents. The guarantee set forth in this Section shall terminate when the Note and the indebtedness evidenced thereby has been paid in full.

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Loan No. 73100202    

Guarantor hereby recognizes and acknowledges that they will derive substantial economic benefit from the loan from Lender to Borrower in accordance with said Note and Security Instrument and, in consideration therefore, Guarantor has agreed to enter into this Guaranty.

4.REPRESENTATIONS AND WARRANTIES

The Guarantor hereby covenants, represents and warrants to the Lender as follows:

(a)The execution and performance of this Guaranty and all guaranties, indemnities and covenants herein will not result in any breach of, or constitute a default under, any contract, guarantee, document or other instrument to which any of the Guarantor is a party or by which the Guarantor may be bound or affected, and do not and will not violate or contravene any law to which the Guarantor is subject; nor do any such other instruments impose or contemplate any obligations which are or will be inconsistent with this Guaranty.

(b)No approval by, authorization of, or filing with any federal, state or municipal or other governmental commission, board or agency or other governmental authority is necessary in connection with the authorization, execution and delivery of this Guaranty.

(c)This Guaranty has been duly executed and delivered and constitutes the legal, valid and binding obligations of the Guarantor, and is enforceable against the Guarantor in accordance with its terms.

(d)All financial information furnished by the Guarantor to Lender is true, correct and complete in all material respects and does not omit to state any fact or circumstance necessary to make the statements contained therein not misleading.

(e)The financial statement of each of the Guarantor furnished to Lender is true and accurate as of its date. There has been no material adverse change in the Guarantor’s financial condition since the date of said financial statement.

(f)No Guarantor is currently the subject of, nor intends to take any action to become the subject of any bankruptcy court filing, insolvency proceeding, receivership, composition or assignment for the benefit of creditors.

(g)There are no material actions, suits or proceedings pending or, to the actual knowledge of the Guarantor, threatened against or affecting any Guarantor.

5.FINANCIAL REPORTS

On or before March 31 of each year hereafter during the term of the Loan, Guarantor shall deliver to the Lender, its successors and assigns or authorized servicer, copies of their financial statements. The Guarantor shall certify that such statements are true and correct, and are based upon records compiled in conformity with recognized accounting practices. Lender expressly reserves the right to require such a certification by an independent certified public accountant if it

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Loan No. 73100202    

has reason to believe that any previously provided financial statement is misleading in any material respect.

6.DEFAULT

A “Default” shall exist under this Guaranty if any of the following events occur:

(a)Any Guarantor shall fail to pay any monetary obligation resulting from the Agreement within five (5) business days after written notice and demand by Lender.

(b)Any Guarantor shall fail to perform, observe, or comply with any non‑monetary covenant under this Guaranty, other than those specifically identified below in this Section 6, within thirty (30) days after written notice from the Lender demanding such performance, observance, or compliance; provided, however, if Guarantor is diligently in good faith pursuing the cure within such thirty (30) day period, and thereafter diligently in good faith pursues the same to completion, the cure period shall be extended as necessary but not more than sixty (60) days from the date of written notice.

(c)Any Guarantor shall file a petition in bankruptcy or for relief from creditors under any present or future law that affords general protection from creditors; or any other person shall file an involuntary petition in bankruptcy against any Guarantor; or the filing of any other action that may result in a composition of debts, provide for the marshaling of assets for the satisfaction of such Guarantor debts, or result in the judicially ordered sale of assets for the purpose of satisfying obligations to creditors (unless a motion for the dismissal of the petition or other action is filed within ten (10) days and results in its dismissal within sixty (60) days of the filing of the petition or other action).

(d)The dissolution, liquidation or winding up of any Guarantor that is not a natural person shall commence, or its legal existence shall cease, or any Guarantor who is a natural person shall die, unless either (A) following the related event, any one or more of the remaining Guarantors have an aggregate net worth equal to or in excess of the Guarantors’ aggregate net worth (excluding the value of the Carveout Guarantors’ equity in the Property) represented to the Lender as of the date hereof (“Guarantor Net Worth Requirement”), or (B) the Lender is promptly advised of the event, and the Borrower or remaining Guarantors (or the executor of their estate, as applicable) succeed in obtaining a replacement Guarantor acceptable to Lender, in its sole discretion (a “Replacement Guarantor”), within one hundred eighty (180) days of the subject event. If required for the determination of compliance with the Guarantor Net Worth Requirement, the Guarantors and any prospective replacement Guarantors shall have the burden of proving their compliance by providing current financial statements. Any Replacement Guarantor shall jointly and severally assume the obligations of the Guarantor under this Guaranty and the Environmental Indemnity Agreement, in a written agreement approved in writing by Lender, so that the other Guarantors and all Replacement Guarantors in the aggregate meet the Guarantor Net Worth Requirement.

7.APPLICATION OF PAYMENTS

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All payments with respect to the indebtedness evidenced by the Note received by the Lender from the Borrower, or any party other than the Guarantor, may be applied by the Lender to the indebtedness evidenced by the Note and secured by the Loan Documents in such manner and order as the Lender desires, in its sole discretion, whether or not such application reduces the liability of the Guarantor with respect to the Carveout Obligations. If a foreclosure sale of the property securing the Note (the “Property”) takes place, the proceeds of the sale (whether received in cash or by credit bid) shall be applied first to reduce that portion of the indebtedness which is not guaranteed under this Guaranty.

8.UNSECURED OBLIGATION

This Guaranty is not secured by any of the Loan Documents securing the Loan.

9.WAIVERS

9.1Subrogation Rights Against Borrower

The Guarantor waives (a) any right of reimbursement, subrogation, exoneration, contribution, or indemnity from or by the Borrower with respect to the satisfaction by the Guarantors of any obligation of the Borrower, and (b) any “claim,” as that term is defined in the Bankruptcy Code, which the Guarantor might now have or hereafter acquire against the Borrower by virtue of the Guarantor’s performance of any obligation of the Borrower. In connection with the waiver set forth in clause (a), the Guarantor expressly waives (i) any and all rights to subrogation to the Lender against the Borrower and (ii) any rights to enforce any remedy which the Lender may have against the Borrower and any right of participate in any collateral for the Loan. In addition, the Guarantor hereby subordinates any and all indebtedness of the Borrower now or hereafter owed to the Guarantor to all indebtedness of the Borrower to the Lender, and covenant with the Lender not to demand or accept any payment of principal or interest on any such indebtedness while any default exists under the terms of any of the Loan Documents.

9.2Waiver of Jury Trial

TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY IS HEREBY WAIVED BY THE GUARANTOR, AND IT IS AGREED BY THE GUARANTOR THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.

9.3Marshaling of Assets

The Guarantor waives any right to cause a marshaling of the Borrower’s assets.

9.4Homestead Laws and Exemptions

The Guarantor waives all rights and exemptions under homestead and similar laws.

9.5Valuation of Collateral

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The Guarantor waives any right to assert that the amount paid for the property securing the Note at a lawfully conducted judicial or nonjudicial foreclosure sale is less than the value of the Property.

9.6Protest, Demand, Dishonor

The Guarantor waives all rights of protest, demand, dishonor, presentment or any other notices or demands which might otherwise be required by any statute or rule of law now or hereafter in effect with respect to this Guaranty or any of the Carveouts.

9.7Additional Waivers

The Guarantor waives (A) any defense based upon the Lender’s election of any remedy, (B) any defense of the statute of limitations and (C) any defense based on the Lender’s failure to disclose any information concerning the financial condition of the Borrower or any other circumstances bearing on the ability of the Borrower to pay and perform its obligations under the Loan Documents, or the Lender’s failure to provide notice of any act or omission by the Borrower from which any liability for a Carveout Obligation may have arisen.

10.MISCELLANEOUS

10.1Independence of Obligations

The Guarantor shall be fully and personally liable for the Carveout Obligations, and the Lender shall be entitled to maintain an independent action against the Guarantor regardless of whether Lender has commenced or completed any action against the Borrower or the Property. The Guarantor disclaims any status as beneficiaries of any obligation of the Lender to the Borrower to provide notice of default under the Loan Documents. If the Lender has initiated any action against the Borrower to enforce the Loan Documents, the Lender may join the Guarantor or refrain from doing so, at its sole and absolute discretion. The liability of the Guarantor under this Guaranty shall be reinstated with respect to any amount at any time paid to Lender by the Borrower on account of the Carveout Obligations which shall thereafter be required to be restored or returned by the Lender upon the bankruptcy, insolvency or reorganization of the Borrower or any other Guarantor other than the party against whom the Lender has sought to enforce this Guaranty, as though such amount had not been paid. Except as expressly agreed in writing by the Lender, Guarantor’s liability for the Carveout Obligations shall not be released, diminished, impaired, reduced or otherwise affected by (a) the reconveyance of the interest created by the Security Instrument, (b) the consent by the Lender to any transfer of a direct or indirect interest in the Property (whether through sale of the Property, transfers of interests in the Borrower, or a change in the form of business organization of the Borrower), or (c) any forbearance by the Lender to exercise any rights under the Loan Documents, unless those rights are expressly waived or modified in a written instrument duly executed by the Lender; provided, however, that any written modification of the Loan that affects the amount of the indebtedness evidenced by the Note may be considered in ascertaining the amount of the indebtedness for purposes of determining the amount of the Guarantor’s liability arising under Section 3 of this Guaranty, absent fraud or material written misrepresentation in connection with such a modification.

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Loan No. 73100202    

10.2Offsets and Defenses

No liability of the Guarantor under this Guaranty shall be released, diminished, impaired, reduced or otherwise affected by any existing or future offset, claim, or defense of the Guarantor against the Lender. No liability of any Guarantor shall be affected because the liability of any other guarantor is limited, impaired or released by reason of a trustee’s sale or any other agreement is made or remedy is exercised by Lender, whether such limitation, impairment or release results from such person also being the Borrower or liable by reason of being any entity, natural person or general partner comprising Borrower or otherwise.

10.3Notices

All notices hereunder shall be in writing. All notices to be given hereunder (including, without limitation, notices of sale or default) may be given by any of the following means: i) personal service, ii) overnight delivery by a nationally-recognized overnight courier, iii) U.S. Mail, postage thereon prepaid, return receipt requested, or iv) facsimile transmission, followed by U.S. Mail. Written notice shall be deemed effective as follows: i) if by personal service or overnight delivery, upon delivery or first attempted delivery, ii) if by U.S. Mail, two (2) days after deposit in the U.S. Mail, and iii) if by facsimile transmission, followed by U.S. Mail, upon electronic confirmation of receipt in the recipient’s office prior to 5:00 p.m. local time at the recipient’s office. Notices to Guarantor or Lender shall be addressed to the mailing address for the applicable party shown in the caption hereof, and a copy of any notice to the Lender shall also be delivered to Lender at the following address: 16600 Swingley Ridge Road, Chesterfield, Missouri 63017 “Attention: Global Legal Services.” Each of the parties may hereafter designate a different address for notices hereunder by providing notice of such designation to the other parties pursuant to the procedures set forth above.

10.4Entire Guaranty and Modification

This Guaranty contains the entire agreement of the Guarantor relating to the subject matter hereof, and all prior guaranties relative hereto which are not contained herein are hereby terminated. This Guaranty may not be amended, revised, waived, discharged, released or terminated orally but only by a written instrument or instruments executed by the Lender. Any alleged amendment, revision, waiver, discharge, release or termination that is not so documented shall not be effective as to the Lender.

10.5Counterparts

This Guaranty may be executed in multiple counterparts, all of which taken together shall constitute one and the same Guaranty.

10.6Governing Law

This Guaranty shall be construed and enforced according to, and governed by, the laws of Georgia without reference to conflicts of laws provisions which, but for this provision, would require the application of the law of any other jurisdiction.

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10.7Cumulative Remedies

Every right and remedy provided in this Guaranty shall be cumulative of every other right or remedy of the Lender whether herein or by law conferred and may be enforced concurrently with any such right or remedy. No acceptance of performance of any Carveout Obligation as to which the Guarantor shall be in Default, or waiver of particular or single performance of any obligation or observance of any covenant, shall be construed as a waiver of the obligation or covenant or as a waiver of any other Default then, theretofore or thereafter existing.

10.8Severability

In the event that any one or more of the provisions of this Guaranty shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part, or in any respect, or in the event that any one or more of the provisions of this Guaranty shall operate, or would prospectively operate, to invalidate this Guaranty, then, and in any such event, such provision or provisions only shall be deemed to be null and void and of no force or effect and shall not affect any other provision of this Guaranty, and the remaining provisions of this Guaranty shall remain operative and in full force and effect and shall in no way be affected, prejudiced or disturbed thereby.

10.9Settlements

Upon the Lender’s request, the Guarantor shall participate in good faith and in a commercially reasonable manner in any settlement between the Borrower and the Lender which includes or may include a deed in lieu of a foreclosure or of a trustee’s sale.

10.10Reference to Particulars

The scope of a general statement made in this Guaranty shall not be construed as having been reduced through the inclusion of references to particular items that would be included within the statement’s scope. Therefore, unless the relevant provision of this Guaranty contains specific language to the contrary, the term “include” shall mean “include, but shall not be limited to” and the term “including” shall mean “including, without limitation.”

10.11Assignment

The Lender may assign its rights under this Guaranty without notice to any holder of the Note and assignee of the Lender’s rights under the Loan Documents.

10.12Survival

Except as otherwise provided in Section 6, all obligations under this Guaranty shall be binding upon the Guarantor’s heirs, personal representatives, successors and assigns, and shall survive foreclosure of the Property, delivery and acceptance of a deed to the Property in lieu of foreclosure, and the repayment of the Indebtedness.

10.13Costs and expenses

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In addition to all other amounts payable by Guarantor hereunder, the Guarantor hereby jointly and severally agrees to pay to Lender upon demand any and all costs and expenses, including court costs and reasonable attorney’s fees which the Lender may incur in preparing to enforce, or in enforcing the obligations of the Guarantor hereunder, whether or not suit or action is filed.

SEE NEXT PAGE FOR SIGNATURE

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Loan No. 73100202    

IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed as of the Effective Date.

GUARANTOR:

AMERICAN REALTY CAPITAL

HEALTHCARE TRUST III, INC.,

a Maryland corporation

By: /s/ Thomas P. D’Arcy

Print Name: Thomas P. D’Arcy

Title: President

Page 11

EX-10.21

Exhibit 10.21

EXECUTION COPY

ASSET PURCHASE AGREEMENT

By and Between

AMERICAN REALTY CAPITAL VII, LLC

AS “PURCHASER”

AND

CEDARHURST OF COLLINSVILLE, LLC

AS “SELLER”

Property Name and Location:

CEDARHURST OF COLLINSVILLE – COLLINSVILLE, ILLINOIS

Dated as of

June 23, 2015

TABLE OF CONTENTS

				Page
ARTICLE 1 DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION				1
	SECTION	1.1	DEFINED TERMS.	1
	SECTION	1.2	CERTAIN DEFINITIONS.	4
	SECTION	1.3	RULES OF CONSTRUCTION.	5
ARTICLE 2 PURCHASE AND SALE OF THE PURCHASED PROPERTY				5
	SECTION	2.1	SALE OF BUSINESS	5
	SECTION	2.2	PURCHASED PROPERTY.	6
	SECTION	2.3	EXCLUDED PROPERTY.	7
	SECTION	2.4	TITLE TO REAL PROPERTY AND SURVEY.	8
	SECTION	2.5	ASSUMED LIABILITIES.	11
	SECTION	2.6	EXCLUDED LIABILITIES.	11
ARTICLE 3 PURCHASE PRICE; PAYMENT OF PURCHASE PRICE; ALLOCATION				12
	SECTION	3.1	PURCHASE PRICE AND DEPOSIT.	12
	SECTION	3.2	PAYMENT OF PURCHASE PRICE.	12
	SECTION	3.3	PRORATIONS.	13
ARTICLE 4 CERTAIN OTHER COVENANTS AND AGREEMENTS				15
	SECTION	4.1	INSPECTION AND DUE DILIGENCE.	15
	SECTION	4.2	CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE.	17
	SECTION	4.3	NOTIFICATION OF CERTAIN MATTERS.	18
	SECTION	4.4	EMPLOYEES.	19
	SECTION	4.5	CONFIDENTIALITY.	19
	SECTION	4.6	EXPENSES AND TAXES.	20
	SECTION	4.7	WAIVER OF BULK SALES AND INDEMNIFICATION.	21
	SECTION	4.8	EXCLUSIVITY.	21
	SECTION	4.9	CONSENTS; COOPERATION.	21
	SECTION	4.10	FURTHER ASSURANCES.	22
	SECTION	4.11	NON-SOLICITATION OF EMPLOYEES.	22
	SECTION	4.12	DELIVERY OF SCHEDULES.	22
	SECTION	4.13	INVESTIGATION; RELIANCE; RELEASE.	23
ARTICLE 5 CLOSING				24
	SECTION	5.1	CLOSING.	24
	SECTION	5.2	CONDITIONS TO SELLER’S OBLIGATIONS.	25
	SECTION	5.3	CONDITIONS TO PURCHASER’S OBLIGATIONS.	25
	SECTION	5.4	DELIVERIES BY SELLER.	26
	SECTION	5.5	DELIVERIES BY PURCHASER.	28
	SECTION	5.6	NON-FULFILLMENT OF CLOSING CONDITIONS.	29
	SECTION	5.7	POST-CLOSING ACTIONS.	31
	SECTION	5.8	TERMINATION DURING DUE DILIGENCE.	31

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TABLE OF CONTENTS (cont’d)

				Page
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER				32
	SECTION	6.1	ORGANIZATION AND STANDING.	32
	SECTION	6.2	VALID AND BINDING OBLIGATIONS.	32
	SECTION	6.3	TITLE; PURCHASED PROPERTY COMPLETE.	32
	SECTION	6.4	TAXES AND TAX RETURNS.	32
	SECTION	6.5	EXECUTION AND DELIVERY.	33
	SECTION	6.6	CONTRACTS AND LEASES.	33
	SECTION	6.7	RESIDENCY AGREEMENTS AND RELATED MATTERS.	34
	SECTION	6.8	PERMITS AND LICENSES.	34
	SECTION	6.9	INSURANCE.	35
	SECTION	6.10	EMPLOYEES.	35
	SECTION	6.11	SELLER BENEFIT PLANS.	35
	SECTION	6.12	LITIGATION.	37
	SECTION	6.13	COMPLIANCE WITH LAWS.	37
	SECTION	6.14	FINANCIAL STATEMENTS.	37
	SECTION	6.15	REAL PROPERTY.	37
	SECTION	6.16	ENVIRONMENTAL MATTERS.	28
	SECTION	6.17	BROKERS, FINDERS.	28
	SECTION	6.18	FIRPTA.	28
	SECTION	6.19	SOLVENCY.	28
	SECTION	6.20	CONSENT OF THIRD PARTIES.	28
	SECTION	6.21	NO GOVERNMENTAL APPROVALS.	39
	SECTION	6.22	ASSESSMENTS.	39
	SECTION	6.23	TITLE ENCUMBRANCES.	39
	SECTION	6.24	AFFORDABLE HOUSING UNITS.	39
	SECTION	6.25	LOANS AND DEBTS.	39
	SECTION	6.26	NO OTHER WARRANTIES.	39
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PURCHASER				40
	SECTION	7.1	ORGANIZATION AND STANDING.	40
	SECTION	7.2	EXECUTION AND DELIVERY.	40
	SECTION	7.3	SOLVENCY.	40
	SECTION	7.4	CONSENT OF THIRD PARTIES.	41
	SECTION	7.5	NO GOVERNMENTAL APPROVALS.	41
	SECTION	7.6	BROKERS, FINDERS.	41
ARTICLE 8 INDEMNIFICATION				41
	SECTION	8.1	INDEMNIFICATION BY SELLER.	41
	SECTION	8.2	INDEMNIFICATION BY PURCHASER.	42
	SECTION	8.3	INDEMNIFICATION LIMITS; SURVIVAL.	42
	SECTION	8.4	PROCEDURES REGARDING THIRD PARTY CLAIMS.	44
	SECTION	8.5	PROCEDURES REGARDING DIRECT CLAIMS.	45
	SECTION	8.6	GENERAL QUALIFICATIONS ON INDEMNIFICATION.	45
	SECTION	8.7	EFFECTIVE UPON CLOSING.	46

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TABLE OF CONTENTS (cont’d)

				Page
	SECTION	8.8	EXCLUSIVE REMEDIES.	46
ARTICLE 9 TERMINATION				47
ARTICLE 10 MISCELLANEOUS				47
	SECTION	10.1	ACCESS TO BOOKS AND RECORDS AFTER CLOSING.	47
	SECTION	10.2	NOTICES.	48
	SECTION	10.3	GOOD FAITH; COOPERATION.	49
	SECTION	10.4	ASSIGNMENT; EXCHANGE COOPERATION; SUCCESSORS IN INTEREST.	49
	SECTION	10.5	NO THIRD PARTY BENEFICIARIES.	49
	SECTION	10.6	SEVERABILITY.	49
	SECTION	10.7	PURCHASER RECORDS RIGHTS.	50
	SECTION	10.8	CONTROLLING LAW; INTEGRATION; AMENDMENT; WAIVER.	50
	SECTION	10.9	TIME.	51
	SECTION	10.10	SURVIVAL.	51
	SECTION	10.11	EMINENT DOMAIN ‑ CONDEMNATION.	51
	SECTION	10.12	RISK OF LOSS.	51
	SECTION	10.13	ATTORNEYS’ FEES.	51
	SECTION	10.14	COVENANT NOT TO COMPETE.	52
	SECTION	10.15	POST-CLOSING.	52
	SECTION	10.16	WAIVER OF JURY TRIAL.	52
	SECTION	10.17	CONSTRUCTION.	52
	SECTION	10.18	EXECUTION IN COUNTERPARTS.	52

Exhibits

Exhibit	Description
Exhibit A	Escrow Agreement
Exhibit B	Post-Closing Escrow Agreement
Exhibit C	Deed
Exhibit D	Bill of Sale and Assignment
Exhibit E	Transition Period Sublease
Exhibit F	Assumption Agreement
Exhibit G	Due Diligence Materials

-iii-

Schedules

Schedule	Title
Schedule 1.1(a)	Assumed Contracts and Leases
Schedule 1.1(b)	Legal Description of Purchased Real Property
Schedule 2.2(c)	Prepaids and Deposits
Schedule 2.2(d)	Seller Vehicles
Schedule 2.4(g)	Licenses, Leases Easements and Other Rights Related to Real Property
Schedule 3.3	Purchase Price Allocation
Schedule 5.4(o)	Third Party Consents
Schedule 6.3	Material Assets or Rights Not Included in Purchased Property
Schedule 6.5	Execution and Delivery – No Contravention
Schedule 6.6	Contracts and Leases
Schedule 6.7	Residency Agreements; Refunds and Deposits; Resident Details
Schedule 6.8	Permits and Licenses
Schedule 6.9	Insurance; Three Year Claim History
Schedule 6.10	Employees, etc.
Schedule 6.11	Benefit Plans
Schedule 6.12	Litigation, etc.
Schedule 6.13	Compliance with Laws
Schedule 6.14	Financial Statements
Schedule 6.15	Real Property Compliance
Schedule 6.16	Environmental Matters
Schedule 6.20	Seller Third Party Consents
Schedule 6.21	Seller Government Approvals
Schedule 6.23	Title Encumbrances
Schedule 6.25	Loans and Debts
Schedule 6.20	Purchaser Third Party Consents
Schedule 6.21	Purchaser Government Approvals
Schedule 10.7	Audit Materials

-i-

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this“Agreement”) is made and entered into this 23^rd day of June, 2015 (the “Effective Date”), by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Purchaser”)and CEDARHURST OF COLLINSVILLE, LLC, an Illinois limited liability company (the “Seller”).

RECITALS:

Seller desires to sell, transfer and assign to Purchaser, and Purchaser desires to purchase from Seller, substantially all of the assets, properties and business of Seller, consisting of the Purchased Property described herein.

This Agreement sets forth the terms and conditions to which the parties have agreed.

AGREEMENTS:

NOW, THEREFORE, in consideration of the premises and the mutual promises set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

ARTICLE 1DEFINITIONS AND
CERTAIN RULES OF CONSTRUCTION

Section 1.1Defined Terms. The following capitalized terms shall have the meanings specified in this section. Other terms are defined in the text of this Agreement, and throughout this Agreement, those terms shall have the meanings respectively ascribed to them.

“Affiliate” of a person means any other person that, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Assumed Contracts and Leases” are those contracts, leases and agreements listed on Schedule 1.1(a) attached hereto, to the extent assignable and for which applicable third party consents have been obtained or waived by Purchaser.

“Assumed Liabilities” are (i) all of Seller’s obligations and liabilities under the Assumed Contracts and Leases which arise or accrue at any time after 11:59 PM on the date immediately preceding the Closing Date; (ii)the Prepaids and Deposits described on Schedule 2.2(c); and (iii) Seller’s obligations with respect to accrued vacation and other paid time off for Employees (as defined herein) to the extent of Purchaser’s obligations pursuant to Section 4.4(d) hereof.

“Business” means all aspects of the operation of the Facility as an independent living, assisted living and memory care facility.

“Closing” means the consummation of the transactions contemplated by this Agreement. Neither party will need to be present at Closing, it being anticipated that the parties will deliver all Closing documents and deliverables in escrow to the Escrow Agent (as defined herein) (or if both Purchaser and Seller agree, to Purchaser’s and/or Seller’s counsel) prior to the date of Closing.

“Closing Date” shall have the meaning set forth in Section 5.1 hereof.

“Environmental Laws” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601 etseq., Hazardous Materials Transportation Act, 49 U.S.C. § 1802, the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 etseq., the Toxic Substance Control Act of 1976, as amended, 15 U.S.C. § 2601 etseq., or any other federal, state, local or other governmental legislation, statute, law, code, rule, regulation or ordinance identified by its terms as pertaining to the protection of the environment, including laws relating to the treatment, storage or disposal of Hazardous Substances, in each case as in effect on the Effective Date.

“Facility”means the assisted living and memory care facility known as “Cedarhurst of Collinsville” and consisting of sixty-six (66) total residential units, and seventy-one (71) total beds, including fifty-one (51) assisted living units and fifteen (15) memory care units.

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“Government Program” means the federal Medicare program, any state Medicaid program, and such other similar federal, state, or local reimbursement or governmental programs for which any Facility is eligible.

“Hazardous Substance” means petroleum, including crude oil or any fraction thereof, flammable explosives, radioactive materials, asbestos, urea formaldehyde foam insulation, any material containing polychlorinated biphenyls, and any of the substances defined as “hazardous substances” or “toxic substances” or otherwise identified and regulated under any Environmental Laws.

“Holdback Amount” means an amount equal to two percent (2.0%) of the Purchase Price paid at Closing for the Facility.

“Improvements” means all buildings, facilities, and other improvements constructed on the Purchased Property as of the date of Closing.

“Intellectual Property” means all trademarks, trademark applications, service marks, trade names, copyrights, trade secrets, licenses, domain names, websites, web content, mask works, patents, patent applications, information and proprietary rights and processes and all goodwill related to the aforementioned.

“IRC” means the Internal Revenue Code of 1986, as amended, and any regulations or guidance issued thereunder.

“Lien” means any mortgage, deed to secure debt, deed of trust, pledge, hypothecation, title defect, right of first refusal, security or other adverse interest, encumbrance, claim, option, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction.

“Material Adverse Change” means:

(a)     any occurrence between the Effective Date and the Closing Date which results in, or is reasonably likely to result in, a material adverse change in the assets, financial condition, or results of operations of the Facility, taken as a whole; provided, however, that (without limiting subsections (b) and (c) below in this definition) none of the following shall in any event be deemed a Material Adverse Change: (i) any adverse change, event or effect arising from general business, political or economic conditions or the financial, credit or securities markets, including any change or event arising from any war, acts of terrorism or similar events that do not affect Seller in a disproportionate manner, (ii) changes in accounting rules applicable to Seller, (iii) any action taken by Seller on or after the date of this Agreement at the written request of Purchaser, (iv) any change, effect or circumstance resulting from an action required by this Agreement, (v) any change, effect or circumstance resulting from the announcement of this Agreement in accordance with

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its terms or otherwise, (viii) any adverse changes in Law or interpretations thereof by any Governmental Body that do not affect Seller in a disproportionate manner, or (ix) a change in management company for the Facility from Provisions Living to Seller’s Affiliate, Cedarhurst Living, LLC;

(b)     a reduction in a reduction in the trailing 30-day average occupancy of the available units within the Facility below eighty-seven percent (87.0%) of the available units in the Facility for any reason; or

(c)    if, for any reason, the Net Operating Income (as such term is defined and measured in the April 2015 Financial Statement set forth on Schedule 6.14) drops below $66,600 for any full month after the Effective Date and prior to the Closing Date. For purposes of this definition, “Net Operating Expenses” shall be calculated in accordance with Seller’s standard accounting principles on a modified accrual basis consistent with past practices including those practices used in compiling the April 2015 Financial Statement.

“Operator” means CEDARHURST OF COLLINSVILLE OPERATOR, LLC, which currently operates the Business pursuant to a lease agreement between Operator and Seller.

“Permitted Encumbrances” means (i) liens for taxes not yet due and payable, or which are being contested in good faith and by appropriate proceedings and which are satisfied or discharged of record at or prior to Closing pursuant to Section 2.4(f) below; (ii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings and which are satisfied or discharged of record at or prior to Closing pursuant to Section 2.4(f) below, and (iii) the Permitted Title Exceptions.

“Plans” shall have the meaning set forth in Section 6.11.

“Purchased Personal Property” is the Purchased Property other than the Real Property, including intangible Purchased Property.

“Purchased Property” is the property of Seller to be sold to Purchaser pursuant to this Agreement as set forth in Section 2.2 hereof.

“Real Property” shall mean that certain parcel of real estate located at located at 1207 Vandalia St., Collinsville, Illinois, as more particularly described in Schedule 1.1(b) attached hereto, together with all the buildings, fixtures, structures, and improvements thereon, and all easements and rights of way serving or benefiting such property.

“Residency Agreement” means any agreement between Operator and an individual contracting for such individual’s residency at the Facility.

“Seller’s Knowledge”means the actual knowledge of each of the principals and officers of Cedarhurst Living, LLC.

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Section 1.2Certain Definitions. For purposes of this Agreement:

“herein,” “hereunder,” “hereof,” “hereinbefore,” “hereinafter” and other equivalent words refer to this Agreement in its entirety and not solely to the particular portion of this Agreement in which such word is used, and references to “this article,” “this section,” “this paragraph,” “this subparagraph” or similar references to a specific part of this Agreement shall refer to the particular article, section, paragraph, subparagraph or specific part in which such reference appears;

“party” or “parties” means each or all, as appropriate, of the entities who have executed and delivered this Agreement, each permitted successor or assign of a party, and when appropriate to effect the binding nature of this Agreement for the benefit of another party, any other successor or assign of a party;

“person” means any individual, sole proprietorship, partnership, joint venture, corporation, estate, trust, unincorporated organization, association, limited liability company, institution or other entity, including any that is a governmental authority; and

“business day” is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government.  Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day.  When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day.

Section 1.3Rules of Construction. For purposes of this Agreement:

(a)“including” and any other words or phrases of inclusion shall not be construed as terms of limitation, so that references to “included” matters shall be regarded as non-exclusive, non-characterizing illustrations; “copy” or “copies” means that the copy or copies of the material to which it relates are true, correct and complete;

(b)“shall,”“will,” and “agrees” are mandatory, and “may” is permissive;

(c)titles and captions of or in this Agreement are inserted only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any of its provisions;

(d)whenever the context so requires, the singular includes the plural and the plural includes the singular, and the gender of any pronoun includes the other gender;

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(e)each Exhibit and Schedule referred to in this Agreement and each attachment to any of them or this Agreement is hereby incorporated by reference into this Agreement and is made a part of this Agreement as if set out in full in the first place that reference is made to it; and

(f)every covenant, term and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any party hereto, regardless of which party was more responsible for the preparation of this Agreement.

ARTICLE 2Purchase and Sale of the Purchased Property

Section 2.1Sale of Business. Subject to the provisions of this Agreement, Purchaser shall purchase from Seller, and Seller shall sell to Purchaser, all of the Purchased Property, free and clear of all Liens and liabilities whatsoever, except for the Assumed Liabilities and the Permitted Encumbrances.

Section 2.2Purchased Property. The Purchased Property shall include all of the assets of Seller solely used in, arising from or related to the Business as of the Closing Date other than Excluded Property (as defined herein), including the following:

(g)all inventory and supplies on hand at the Facility on the Closing Date (including food, beverages, office and kitchen supplies);

(h)all of Seller’s right, title and interest in and to the Assumed Contracts and Leases, to the extent assignable;

(i)all pre-paid amounts paid by a resident pursuant to any Residency Agreement for or attributable to the periods from and after the Closing Date as well as any security deposits paid to Seller as of the Closing Date under the Residency Agreements (to the extent such deposits can be transferred in accordance with applicable law) together with any interest thereon to the extent such interest is or may be payable to the residents (or their respective representatives, successors, heirs or assigns) at any time following the Closing Date each as more particularly described on Schedule 2.2(c) (collectively “Prepaids and Deposits”);

(j)all of Seller’s tangible personal property (including without limitation equipment, furniture, fixtures, signage and vehicles (including, without limiting this provision, those vehicles described on Schedule 2.2(d)) used in, arising from or related to the Business as of the Closing Date;

(k)the Real Property as more particularly described on Schedule 1.1(b) attached hereto and the Facility described herein;

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(l)subject to applicable laws and regulations, all transferable licenses, permits, certificates, approvals, and other governmental or regulatory authorizations necessary for or incident to the ownership or operation of the Purchased Property in the manner in which they are owned and operated by Seller as of the Closing Date;

(m)all original books, records, accounts, files, logs, ledgers, journals, and other documents and other materials of Seller (or copies thereof) including any electronic data stored on disc, tape or other electronic format relating to the ownership, use, operation or management of the Business, to the extent within the possession or control of Seller (although Seller may retain copies thereof for the preparation of tax returns, compliance with applicable laws, and other business purposes);

(n)all warranties and guarantees regarding the installation, application, manufacture, composition and/or inspection of the Purchased Property, and all other manufacturer and third-party warranties and guarantees relating to any of the Purchased Property, to the extent such warranties and guarantees remain in effect and are assignable by Seller;

(o)all telephone and facsimile numbers of the Facility;

(p)all goodwill of the Business as a going concern;

(q)all records of all residents at the Facility, whether or not such resident was in occupancy prior to or on the Closing Date in the possession or control of Seller or Operator, to the extent transfer to Purchaser is not prohibited, and subject to Section 10.1 (although Seller or Operator may retain copies thereof for compliance with applicable laws and other business purposes);

(r)all intangible personal property of Seller, including all registrations, applications and licenses therefor, that is not specifically included in the Excluded Property, to the extent assignable and for which any third party consents required for such assignment have been obtained;

(s)all rights in and to any claims or causes of action to the extent they are in the nature of enforcing a guaranty, warranty, or a contract obligation to complete the Improvements, make repairs, or deliver services to the Purchased Property other than (i) claims for damages or other monetary loss incurred by Seller prior to the Closing Date and (ii) claims relating to Excluded Liabilities or Excluded Property; and

(t)any other tangible or intangible assets, property or rights of any kind or nature not otherwise described above in this Section 2.2 and now owned or hereafter acquired between the Effective Date and the Closing Date

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by Seller and used in connection with the operation of the Business (other than Excluded Property and rights relating solely to the Excluded Liabilities).

To the extent any of the foregoing Purchased Property is available in electronic format, Seller shall provide Purchaser with same in such electronic format, in addition to physical copies of same.

Section 2.3Excluded Property. “Excluded Property” means the following categories of properties, which although they may currently form part of the Business, are excluded from the Purchased Property:

(a)cash, cash equivalents, marketable securities, bank accounts, reserves and escrow funds, and other investments (other than the Prepaids and Deposits);

(b)Seller’s accounts receivable for rent or services provided prior to 11:59 p.m. on the date immediately preceding the Closing Date;

(c)Seller’s operating agreement, minute books, membership ledgers, income tax records and other organizational documents;

(d)any rights of Seller with respect to federal, state or local tax refunds or credits;

(e)the Seller Plans (as defined herein), the assets and insurance policies relating to the Seller Plans, and any records relating thereto;

(f)all contracts of insurance and claims and interests in any insurance, insurance claims, escrows, revenues or right to indemnity from third parties or other rights relating to the Excluded Liabilities;

(g)Seller’s rights and interests under this Agreement;

(h)all rights to the name “Cedarhurst of Collinsville” and all derivations thereof and all goodwill related thereto, including without limitation all Intellectual Property related to such name and all derivations thereof, and all other Intellectual Property owned by Seller; and

(i)security deposits and utility deposits, to the extent not added to the Purchase Price at Closing pursuant to Section 3.2.

Section 2.4Title to Real Property and Survey. At Closing, Seller agrees to convey fee simple title to the Real Property to Purchaser by special warranty deed(the “Deed”), subject to the Permitted Encumbrances. The legal description of the Real Property to be contained in the Deed shall be the same legal description as is attached hereto in the applicable subsection of Schedule 1.1(b). In the event the legal description as disclosed by the Survey, as defined in Section 5.4(a), differs from the legal description in the applicable subsection of Schedule 1.1(b), or the Initial Commitment reveals any errors or omissions in the legal descriptions, then Seller shall also

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provide a quitclaim deed (or other appropriate recordable instrument) utilizing such Survey legal description.

(a)Purchaser shall promptly order from Stewart Title Guaranty Company (the “Title Company”), an ALTA Form 2006 Commitment (or such other form as is acceptable to Purchaser), with such endorsements as Purchaser shall reasonably require and with insurance coverage over any “gap” period (the “Initial Commitment”) for an owner’s title insurance policy (the “Title Policy”) in an amount no less than the Purchase Price allocated to the Real Property. The Initial Commitment shall evidence that Seller is vested with fee simple title to the Real Property, free and clear of all liens, encumbrances, exceptions or qualifications whatsoever save and except for those exceptions specified and shown on Schedule B, Section II of the Initial Commitment (the “Title Exceptions”). The Initial Commitment shall also evidence that upon the execution, delivery and recordation of the deeds to be delivered at Closing and the satisfaction of all requirements specified in Schedule B, Section I of the Initial Commitment, Purchaser shall acquire fee simple title to the Real Property, subject only to the Title Exceptions. The cost of the Title Policy shall be at Seller’s expense, however, any costs associated with endorsements shall be at the sole expense of Purchaser (other than any endorsements obtained by Seller to cure a Title Defect, which shall be the sole expense of Seller).

(b)If Purchaser or its attorneys shall determine that the Initial Commitment does not meet the requirements specified above, that the Title Exceptions are not acceptable to Purchaser, or that title to the Real Property is unsatisfactory to Purchaser for reasons other than the existence of Title Exceptions, then Purchaser shall notify Seller by the end of the Due Diligence Period (as herein defined) of those Title Exceptions which are unsatisfactory to Purchaser and are not contemplated by this Agreement to be discharged by Seller at or before Closing, and any such liens, encumbrances, exceptions or qualifications shall be hereinafter referred to as “Title Defects.” Any Title Exceptions which are not timely declared as Title Defects are referred to herein as “Permitted Title Exceptions”.

(c)Purchaser, at Purchaser’s expense, may order an update to the survey of the Real Property (the “Survey”) previously provided to Purchaser and Seller hereby grants Purchaser and Purchaser’s agents the right to access the Real Property as may be reasonably required to perform such work. The Survey shall be prepared by a land surveyor duly licensed and registered as such in the state the Real Property is located, (i) shall be certified by such surveyor to Purchaser, Seller, each parties’ legal counsel and the Title Company, (ii) shall reference the Initial Commitment file number, (iii) shall set forth the legal description of the Real Property precisely as it appears in the Initial Commitment (or the Initial Commitment must be endorsed so that the insured legal description mirrors the legal description in the Survey, if applicable), (iv) shall identify whether or not each Title Exception referenced in the Initial Commitment applies to the Real Property, (v) shall depict the boundaries of each such item that is capable of being depicted on the Survey, (v) shall depict any Improvements located upon the Real Property, (vi) shall show all easements, rights-of-way, setback lines, encroachments and other matters affecting the use or development of the Real Property (vii) shall include the original signature and seal of the surveyor, and (viii) shall be in a form satisfactory to the Title Company to eliminate the standard survey exceptions from the title insurance policy to be issued at Closing. Purchaser shall notify Seller in writing by the end of the Due Diligence

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Period or within fifteen (15) business days after receipt of the Survey, whichever is earlier, of any matters shown on the Survey which were not set forth on the survey previously delivered to Purchaser and which adversely affect, in Purchaser’s reasonable determination, the title to the Real Property and the same shall thereupon be deemed to be Title Defects hereunder. Failure to timely notify Seller of such Title Defects shall mean that Purchaser is satisfied with the matters shown in the Survey.

(d)Within five (5) business days of receipt from Purchaser of a written notice of any Title Defects, together with a copy thereof, Seller shall notify Purchaser as to whether it will cure such objection, and if it elects to cure any such objection, it shall in good faith diligently endeavor to satisfy or correct, at Seller’s expense, such objection on or before the Closing Date to the reasonable satisfaction of Purchaser and the Title Company in such manner to permit the Title Company to either endorse the Initial Commitment or to issue a replacement commitment to eliminate the Title Defect therefrom. Failure of Seller to give such notice within such five (5) business day period shall be deemed to be an election not to cure such objection. In the event Seller does not elect to satisfy or cure any objection of which it is notified, then within five (5) business days after receipt of written notice of Seller’s election, or within five (5) business days after the expiration of Seller’s five (5) business day notification period if Seller fails to give any such notice, Purchaser shall by written notice to Seller elect one of the following:

(i)to accept Seller’s interest in the Purchased Property subject to such Title Defects, in which event such Title Defect shall become part of the Permitted Title Exceptions, and to close the transaction contemplated hereby in accordance with the terms of this Agreement; or

(ii)to terminate this Agreement in its entirety and receive a refund of the Deposit.

The failure of Purchaser to give written notice of its election to either accept the Purchased Property subject to such objections or to terminate this Agreement within the applicable five (5) dayperiod shall be deemed an election to terminate this Agreement and to receive a refund of the Deposit.

(e)In the event Seller elects in writing to cure any Title Defect and thereafter is unable, after acting diligently and in good faith, to effect such cure, on or before the Closing Date, then Purchaser shall have, as its sole remedy, the options described in Section 2.4(d) above. Seller shall have no obligation under this Section 2.4(e) to expend monies or to institute litigation to cure Title Defects except those which may be satisfied solely by the payment of money prior to or at Closing.

(f)Notwithstanding anything in this Agreement to the contrary, Seller covenants and agrees that at or prior to Closing, Seller shall (i) pay in full and cause to be canceled and discharged or otherwise bond and discharge as liens against the Purchased Property all mechanics’, materialmen’s, repairmen’s, contractors’ or other similar Liens which encumber the Purchased Property as of the date hereof created by, through or under Seller or which may be filed against the Purchased Property after the date hereof created by, through or under Seller and on or prior to the Closing Date (ii) pay in full all past due ad valorem taxes and assessments of any kind constituting a lien against the Purchased Property which are due and payable, and (iii) pay in full or cause to be canceled and discharged all security deeds or other security instruments encumbering the Purchased

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Property and all judgments which have attached to and become a lien against the Purchased Property by, through or under the acts or omissions of Seller. In the event Seller fails to cause such liens and encumbrances to be paid and canceled at or prior to Closing and Purchaser has given written notice to Seller of such liens and encumbrances and such liens and encumbrances are not disputed by Seller in good faith, Purchaser shall be entitled to pay such reasonable amount to the holder thereof as may be required to pay and cancel same, and to credit against the Purchase Price the amount so paid; provided, however, that Purchaser shall not be entitled to a credit against the Purchase Price in excess of $100,000 pursuant to this Section 2.4(f).

(g)Except as set forth on Schedule 2.4(g), Seller has not granted any license which cannot be terminated as of the Closing Date, lease, easement or other possessory right relating to the use or possession of the Real Property (except (i) under the Residency Agreements existing as of the Effective Date and entered into by Seller in the ordinary course of business in accordance with Section 4.2 hereof; or (ii) as may be set forth in the Title Commitment), and Seller agrees that, other than as expressly permitted by Section 4.2 hereof, it shall not grant any such right prior to Closing without the prior written approval of Purchaser, which may be withheld in Purchaser’s sole and absolute discretion.

Section 2.5Assumed Liabilities. Subject to the terms and conditions of this Agreement, on the Closing Date, Purchaser shall assume and agrees to pay, perform or discharge only the Assumed Liabilities. Other than the Assumed Liabilities, Purchaser shall not assume any of Seller’s debts, obligations or liabilities, of any kind or nature, including without limitation any civil claims or other legal proceedings or legal or regulatory investigations or actions arising out of or during Seller’s ownership, use, operation or management of the Business or any of the Purchased Property or the Excluded Property, all of which Seller shall pay, perform and discharge when due. Nothing in this Section 2.5 shall be deemed to preclude either party from contesting any liability or obligation in good faith through the appropriate process.

Section 2.6Excluded Liabilities. All of Seller’s debts, obligations and liabilities, other than the Assumed Liabilities, including any liability, obligation, claim, action, suit, or proceeding pending as of the Closing Date, or any subsequent claim, action, suit, or proceeding arising out of or relating to any such other event occurring prior to the Closing, with respect to the ownership or operation of its businesses prior to the Closing Date, including, without limitation, any obligation of Seller for compliance with applicable federal, state, county, and local tax laws or regulations, including the obligations under such laws for the payment of taxes and the filing of tax returns, under Part 6 of Title I of ERISA and Section 4980B of the IRC, as amended (commonly known as “COBRA”), the Seller Plans, the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Occupational Safety and Health Act, the Age Discrimination in Employment Act of 1967, the Americans With Disabilities Act, the Family and Medical Leave Act, or state worker’s compensation and unemployment compensation laws, as now or hereafter amended, and any liabilities related to any overpayment (regardless of reason for such overpayment), adjustment of payments received or non-compliance under any Government Program, are collectively referred to herein as the “Excluded Liabilities;” provided, however, that actions commenced following the Closing under the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et.seq. or similar

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state law seeking remedial action with regard to the Purchased Property, shall not be deemed an Excluded Liability and Seller shall have no liability with respect to any such action.

ARTICLE 3PURCHASE PRICE; PAYMENT OF PURCHASE PRICE; ALLOCATION

Section 3.1Purchase Price and Deposit.

(u)Purchase Price. Subject to any adjustments and prorations expressly provided for in this Agreement, including those described in Section 3.3 and Section 4.4 (collectively, “Adjustments”), the purchase price (the “Purchase Price”) for the Purchased Property shall be a total of Eleven Million Six Hundred Thousand and No/100 U.S. Dollars ($11,600,000.00).

(v)Deposit. The parties acknowledge that within three (3) business days after the Effective Date, Purchaser shall deliver to Stewart Title Guaranty Company (or any other mutually acceptable escrowee) (the “Escrow Agent”) Five Hundred Thousand and No/100 U.S. Dollars ($500,000) (the “Deposit”). The Escrow Agent shall hold the Deposit in an interest bearing account pursuant to an escrow agreement in the form attached hereto as Exhibit A. All interest payable on the Deposit shall be paid over to Seller at Closing (in addition to, not as a credit against, the Purchase Price), unless the Deposit is required to be returned to Purchaser pursuant to this Agreement, in which event such interest shall be paid to Purchaser.

(w)The Deposit shall be paid and returned to Purchaser upon the occurrence of the circumstances described in Section 2.4(d)(ii), Section 5.6(b), Section 5.6(c), Section 5.6(e), Section 5.8, ARTICLE 9(a), ARTICLE 9(b), ARTICLE 9(d), ARTICLE 9(e), Section 10.11 and Section 10.12 in each instance, upon proper written demand of Purchaser to Seller and the Escrow Agent stating the reason for such termination and referencing the section of this Agreement providing Purchaser with the right to do so. Unless Seller in good faith disputes Purchaser’s right to terminate this Agreement, upon receipt of such written demand by Seller, Seller and Purchaser shall direct the Escrow Agent, by joint written instruction, to pay and disburse the Deposit immediately to Purchaser (whereupon this Agreement shall terminate and neither party shall have any further rights or obligations hereunder, except as otherwise expressly provided herein).

(x)The Deposit shall be paid to Seller: (i) at the Closing, should the Closing occur, in partial satisfaction of the Purchase Price as provided in Section 3.2(b) hereof; or (ii) as liquidated damages (and not as a penalty) under the circumstances described in Section 5.6(a). In each such instance, Seller and Purchaser shall direct the Escrow Agent, in writing, to pay and disburse the Deposit immediately to Seller (whereupon this Agreement shall terminate and neither party shall have any further right or obligations hereunder, except as otherwise expressly provided herein).

(y)Without limiting Purchaser’s other rights and remedies hereunder, Purchaser may terminate this Agreement for any reason or for no reason whatsoever during the Due Diligence Period and upon any such termination the Deposit shall be returned to Purchaser.

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Section 3.2Payment of Purchase Price. The Purchase Price shall be paid by Purchaser, at Closing, as follows:

(j)Eleven Million Six Hundred Thousand and No/100 U.S. Dollars ($11,600,000.00), as adjusted for (i) any Adjustments pursuant to Section 3.1(a), (ii) the mutually agreed upon value of the accrued vacation and other paid time off included in the Assumed Liabilities, and (iii) any credits and additions described in Section 3.2(b) below, shall be paid at Closing by wire transfer in accordance with wire instructions provided by Seller at least three (3) business days before Closing.

(k)Purchaser shall receive a credit against payment of the Purchase Price by the amount of (i) the Deposit actually paid to Seller on the Closing Date, (ii) the accrued vacation and sick pay amounts included in the Assumed Liabilities, and(iii) unless otherwise paid by Seller, the amounts to be paid by Seller under Section 2.4(a) and Section 4.6(b) of this Agreement. If, at Purchaser’s request, Seller leaves any of Seller’s security deposits or utility deposits in place following Closing, then the amount of any such security deposit or utility deposit shall be added to the Purchase Price and paid to Seller pursuant to Section 3.2(a).

(l)Purchaser shall deposit the Holdback Amount into an interest-bearing escrow account with the Escrow Agent pursuant to an Escrow Agreement in substantially the form attached hereto as Exhibit B (the “Post-Closing Escrow Agreement”). The funds held pursuant to the Post-Closing Escrow Agreement shall be available according to the terms of the Post-Closing Escrow Agreement to secure any obligations of Seller to Purchaser pursuant to Section 3.3(d) and Section 8.1 hereof. The Holdback Amount shall be released to Seller at the end of the twelfth (12th) calendar month following the Closing Date, less any amounts claimed by Purchaser prior to such distribution date, which shall be held in accordance with the terms of the Post-Closing Escrow Agreement until finally adjudicated.

(m)Purchaser shall assume the Assumed Liabilities.

(n)The parties acknowledge that the transactions contemplated hereunder must be reported in accordance with Section 1060 of the IRC. The parties shall report the transactions contemplated hereunder for all purposes in accordance with the purchase price allocation set forth on Schedule 3.3 hereto, which will be determined prior to the end of the Due Diligence Period. The parties shall share information and cooperate to the extent necessary to permit the transactions to be properly, timely, and consistently reported.

Section 3.3Prorations.

(h)The following items related to the Purchased Property shall be prorated between Seller and Purchaser as of 11:59 p.m. on the date immediately preceding the Closing Date (the “Proration Date”); prorations credited to Purchaser shall reduce the Purchase Price and prorations credited to Seller shall increase the Purchase Price at Closing as follows:

(i)city, state, and county ad valorem taxes for the Purchased Property, calculated upon the basis of the most current tax information available;

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(ii)sanitary sewer taxes and utility charges, if any; provided, however, that Purchaser or Seller may elect, prior to Closing, to require that the meters for all utility charges be read and terminated as of the end of the last business day preceding the Closing Date, in which case Seller shall be responsible for and shall pay for all such charges first accruing or relating to the period prior to the Closing Date;

(iii)all payment obligations under the Assumed Contracts and Leases; and

(iv)resident rents and other revenues (including credits for Prepaids and Deposits, if any).

Purchaser and Seller shall prepare a proposed schedule (the “Proration Schedule”) prior to Closing, including the items listed above and any other items the parties determine necessary. Such Proration Schedule shall include all applicable income and expenses with regard to the Purchased Property. Seller and Purchaser will use best efforts to finalize and agree upon the Proration Schedule at least two (2) business days prior to Closing.

(i)Seller shall receive all income from the Purchased Property attributable to the period prior to the Proration Date and shall, unless otherwise provided for in this Agreement, be responsible for all expenses of the Purchased Property attributable to the period prior to the Proration Date. In the event Purchaser receives any payment from a resident for rent due for any period prior to the Proration Date or payment of any other receivable of Seller, Purchaser shall forward such payment to Seller. Payments received from a resident shall be allocated first to any current balances due from such resident that have accrued since the Proration Date and any costs of collection of such amounts incurred by Purchaser. For the avoidance of doubt, Seller’s obligation for real property taxes for the Facility shall apply to all such taxes attributable to all days up to and including the Proration Date even if such taxes are to be paid in arrears after the Closing Date.

(j)Purchaser shall receive all income from the Purchased Property attributable to the period from and after the Proration Date and shall, except as otherwise provided for in this Agreement, be responsible for all expenses of the Purchased Property attributable to the period from and after the Proration Date. In the event Seller or Seller’s Affiliates receive any payment from a resident for rent due for any period from and after the Proration Date, Seller shall forward such payment to Purchaser.

(k)The parties agree that any amounts that may become due under this Section 3.3 shall be paid at Closing as can best be determined. A post-Closing reconciliation of prorated items, excluding real estate taxes (unless final information regarding the amount thereof is available), shall be made by the parties within ninety (90) days after the Closing Date and any amounts due at that time shall be promptly forwarded to the respective party to whom such amounts are due in a lump sum payment. Any additional amounts which may become due after such determination shall be forwarded at the time they are received. Any amounts due under this Section 3.3 which cannot be determined within ninety (90) days after the Closing Date (such as, for example, fiscal year-end real estate taxes) shall be reconciled as soon thereafter as such amounts can be determined. Purchaser and Seller agree that each shall have the right to audit the records of the other in connection

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with any such post-Closing reconciliation. Any payments made pursuant to this Section 3.3 shall be treated as a purchase price adjustment for income tax purposes.

ARTICLE 4CERTAIN OTHER COVENANTS AND AGREEMENTS

Section 4.1Inspection and Due Diligence.

(o)Prior to Closing, Purchaser (including its agents and representatives), at its sole cost and expense, shall be permitted to inspect the Facility and the Purchased Property. The first thirty-five (35) days following the Effective Date, ending at 5:00 P.M., Eastern time on the thirty-fifth (35^th) day following the Effective Date or, if such day is not a business day, on the next business day following such day, shall be known as the “Due Diligence Period” for purposes of this Agreement, but Purchaser shall be entitled to continue all such inspections during and after the Due Diligence Period. Such inspections may include an independent appraisal and environmental assessments (including Phase I assessments and Phase II assessments if Seller consents to any such Phase II assessment which consent shall not be unreasonably withheld, conditioned or delayed), impact study and detailed architectural and engineering inspections of buildings and mechanical systems located on the Real Property and any other inspections which may reasonably be required by potential lenders or investors. Purchaser shall not conduct any drilling, boring, soil testing or other physically intrusive inspections without Seller’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, if done in connection with any Phase II assessment. Seller shall allow Purchaser and its authorized representatives reasonable access during normal business hours and until the Closing to Seller’s executive personnel, properties and records, shall permit examination and testing, and shall furnish Purchaser and its authorized representatives such information concerning the Purchased Property and the Facility as Purchaser reasonably requests; provided, however, that Purchaser give no less than two (2) days’ notice prior to any site visits or contact with personnel and any such investigation shall be conducted under the supervision of Seller’s appointed agent and in such a manner as not to interfere with the normal operations of the Business. Purchaser and its authorized representatives shall have the right to review and copy all such books, accounts, records, agreements or other documents as it may reasonably deem advisable. Seller shall, upon reasonable request by Purchaser, make available to Purchaser by electronic data room or otherwise, copies of all records, files, correspondence, invoices, resident lists, supplier lists, blueprints, specifications, designs, drawings, business records and plans, operating and financial data, environmental assessments, property reports, permits and regulatory files and other data associated with or used by Seller in connection with its operation of the Business or its ownership or operation of the Purchased Property, including without limitation all of the information described in Section 4.1(b) below,to the extent Seller or the Operator has possession and control of such information, and in the form in which Seller maintains such information in the ordinary course of its business. Seller shall have no obligation to prepare any summaries, abstracts, compilations or reports in connection with Purchaser’s investigation that Seller or the Operator does not maintain or compile in the ordinary course of Seller’s or the Operator’s business. For purposes of this Agreement, all documents and information made available on the Companies’ electronic data room maintained within www.________________.com(collectively, the “Data Room Information”), shall be deemed

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“delivered”, “made available” or “provided to” to Purchaser. Purchaser shall notify Seller not less than two (2) days in advance of any site visits by Purchaser or its contractors or representatives. All site visits and contacts with Seller or Operator personnel shall be coordinated exclusively through Josh Stevens (phone number 314-932-2260, e-mail address stevens@dovercapital.com) or Seller’s counsel, and Purchaser shall not contact any Seller or Operator personnel, residents or service providers directly under any circumstances, without Seller’s prior written consent.

(p)Within five (5) business days of the receipt of the Deposit has been confirmed by the Escrow Agent (the “Diligence Materials Due Date”), Seller shall provide Purchaser with all of the materials in Seller’s or Operator’s possession or control listed in Exhibit G of this Agreement (collectively, the “Requested Diligence Materials”). In the event that Seller’s delivery of a material portion of the Requested Diligence Materials is delayed beyond the Diligence Materials Due Date, Purchaser shall promptly deliver written notice to Seller (for such purposes, email correspondence from Purchaser’s attorney to Seller’s attorney shall constitute sufficient written notice) identifying with specificity the material portion of the Requested Diligence Materials that has not been delivered, and the Due Diligence Period shall be extended by the total number of days which elapse between the Diligence Materials Due Date and the date upon which all Requested Diligence Materials have actually been provided to Purchaser or Purchaser has been advised by Seller that such Diligence Materials are not available to Seller, or, as applicable, any insufficient response to the requirements of this Section 4.1(b) has been corrected to Purchaser’s reasonable satisfaction (inclusive of the Diligence Materials Due Date and the last applicable date of delivery or correction, as applicable).

(q)Purchaser shall pay all costs incurred for any such inspections of the Facility and the Purchased Property initiated by Purchaser. Purchaser shall indemnify and hold Seller harmless from and against any and all claims arising out of or as a result of the acts or omissions of Purchaser, Purchaser’s authorized representatives, or designees of Purchaser pursuant to the provisions of this Section 4.1. Purchaser, as well as its consultants and contractors, shall at Seller’s request provide evidence of sufficient insurance reasonably acceptable to Seller to protect Seller from any losses it might incur as a result of Purchaser’s activities incurred in connection with such inspections.

(r)The parties hereto acknowledge that Seller may possess or have access to certain information subject to the Health Insurance Portability and Accountability Act of 1996 and any regulations promulgated thereunder (“HIPAA”). Notwithstanding any other provision of this Agreement, Seller shall have no obligation under this Agreement to disclose to Purchaser any information which would violate or put Seller in a position of noncompliance with any city, county, state or federal privacy or security act, law, or regulation or the provisions of HIPAA or which would result in Seller breaching any contractual provisions imposed on Seller with respect to the requirements of HIPAA and/or any such city, county, state, or federal act, law or regulation.

(s)Purchaser may perform or cause to be performed a Phase I Environmental Site Assessment of a portion of the Real Property (the “Phase I ESA”). Purchaser shall provide Seller with a copy of the Phase I ESAs within five (5) business days of completion and receipt of each

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by Purchaser. Any subsequent amendments thereto will also be provided to Seller within five (5) business days after completion and receipt by Purchaser thereof.

(t)If the Phase I ESA, or any update thereof, reveals the evidence of a recognized environmental condition that, in Purchaser’s sole opinion, warrant further investigation, Purchaser may, at its discretion, request Seller’s consent to commence a Phase II Environmental Site Assessment of the applicable portion of the Real Property (“Phase II ESA”; collectively, the “ESAs”). A Phase II ESA consists of further investigation of recognized environmental conditions identified in the Phase I ESA including sampling and analysis of soil and groundwater necessary to determine whether or not contamination has occurred. Seller’s consent to conduct and the scope of work for a Phase II ESA shall be given or withheld in Seller’s sold and absolute discretion. If Seller permits Purchaser to conduct a Phase II ESA, Seller will be provided a copy of the Phase II ESA within five (5) business days of completion and receipt by Purchaser. Any subsequent amendments and/or reports relating to the Phase II ESA shall also be delivered to Seller and Purchaser.

(u)The costs of the Phase I ESA and the costs of the Phase II ESA and any updates thereof shall be paid by Purchaser.

Section 4.2Conduct of Business Prior to the Closing Date. Seller covenants and agrees with Purchaser that from the Effective Date hereof through the Closing Date, except as otherwise expressly contemplated in this Agreement, unless Purchaser otherwise consents in writing (which consent shall not be unreasonably withheld, conditioned or delayed) Seller shall, and shall cause the Operator in its capacity as Operator of the Business to:

(l)Use good faith efforts to operate the Business in all material respects in the ordinary course of business in a commercially reasonable manner, including (i) incurring expenses consistent with Seller’s past practices in the operation of the Business and (ii) using commercially reasonable efforts to preserve the Business’ present business operations, organization and goodwill and its relationships with customers, employees, advertisers, suppliers and other contractors.

(m)Operate the Business and otherwise conduct business in all material respects in accordance with the terms or conditions of all applicable licenses and permits, all applicable rules and regulations of the state where the Facility is located, and all other rules, regulations, laws, and orders of all governmental authorities having jurisdiction over any aspect of the operation of the Business and all applicable insurance requirements; provided, however, that the foregoing shall not impose on Seller any obligation to make unbudgeted capital improvements or repairs, or to incur any cost or expense in order to comply with any of the foregoing to the extent Seller was not in compliance as of the Effective Date, except to the extent Seller is ordered to do so by a governmental authority having jurisdiction over Seller.

(n)Maintain the books, records, and financial statements for the Business consistent with past practices.

(o)Timely comply in all material respects with all contracts and agreements with third parties related to the Facility or the operation of the Business.

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(p)Not sell, lease, grant any rights in or to or otherwise dispose of or otherwise relinquish control of, or agree to sell, lease or otherwise dispose of, the Purchased Property in whole or in part except for Residency Agreements entered into in the ordinary course and dispositions of assets that are in the ordinary course of business, and if material, are replaced by similar assets of substantially equal or greater value and utility.

(q)Take commercially reasonable efforts to maintain the Purchased Property in the same condition as it exists as of the Effective Date, except for ordinary wear and tear, in a manner consistent with past practices.

(r)Not default on any loans to Seller which are not fully cured or satisfied at Closing.

(s)Not enter into any contracts other than (i) contracts which impose no obligation on Purchaser following the Closing or (ii) Residency Agreements in the ordinary course of business.

(t)Not make any alterations or improvements to the Real Property or make any capital expenditure with respect to the Real Property in excess of $10,000 other than those that are currently budgeted for completion, or are required by law, necessary to preserve the coverage under or comply with the terms of any insurance policy with respect to the Business or are in Seller’s business judgment necessary to address emergency conditions or to maintain the goodwill and competitive standing of the Business.

(u)Maintain normal levels of inventory and supplies on hand for the Business (including food, beverages, office and kitchen supplies), consistent with past practice.

(v)Make available to Purchaser copies of all internally generated monthly financial reports.

(w)Inform Purchaser promptly regarding the resignation, termination or hiring of the Executive Director or assistant director, if any, of the Facility.

Section 4.3Notification of Certain Matters. Seller shall give prompt written notice to Purchaser, and Purchaser shall give prompt written notice to Seller, to the extent either such party becomes aware of (i) the occurrence, or failure to occur, of any event that would be likely to cause any of their respective representations or warranties contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Closing Date, and (ii) any failure on their respective parts to comply with or satisfy, in any material respect, any covenant, condition, or agreement to be complied with or satisfied by any of them under this Agreement.

Section 4.4Employees.

(a)For purposes of this Section 4.4, all references to employment by an entity include both direct employment by such entity, employment by an Affiliate of such entity, or employment through one or more employee leasing or similar arrangements that such entity or its Affiliate has entered into with a third party.

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(b)Seller shall be responsible for complying with the continuation health care coverage requirements of COBRA with respect to any individual who became a “qualified beneficiary” as of or prior to the Closing Date, including as a result of this transaction.

(c)Seller shall pay any severance costs payable with respect to the termination of employment by Seller or the Operator (as applicable) of any Employee, including Employees who are offered post-Closing employment by the manager engaged by the Purchaser to operate the Facility following the Closing (the “Post-Closing Manager”), pursuant to any severance policies or plans or required by law, including the WARN Act (if applicable). Seller shall be solely responsible for WARN Act compliance for all Employees.

(d)As to any Employee that the Purchaser desires the Post-Closing Manager to hire for the Business post-Closing (collectively, “Hired Employees”), to the extent Seller controls such matter, Seller shall cause the release of such Hired Employee from any contractual provision with Seller to the extent that such provision would impair the utility of such Hired Employee’s services to the Post-Closing Manager in conducting the Business following the Closing in substantially the same manner it is conducted by Seller or the Operator immediately prior to the Closing Date, or to the extent that such provision would impose upon such Hired Employee any monetary or other obligation to Seller for violation of restrictive covenants or confidentiality provisions with respect to the Business (other than any such restrictive covenants or confidentiality provisions contained in Assumed Contracts and Leases being transferred to Purchaser or any such covenant mandating the return to Seller or the Operator of property not being transferred to Purchaser hereunder). The Post-Closing Manager, at Purchaser’s expense, shall be responsible for the vacation and other paid time off for Hired Employees accrued through the Proration Date to the extent of the credit provided by Seller to Purchaser for such amounts and reflected in the closing statement executed by Seller and Purchaser prior to Closing.

Section 4.5Confidentiality.

(a)Confidential Information. The results of the ESAs and any and all non-public information of any type or description, including, but not limited to, financial statements and projections of Seller, proprietary or trade secret information, whether written or verbal, or any information given to Purchaser by Seller in connection with the transactions contemplated by this Agreement, is proprietary to Seller and confidential in nature, and shall be treated as such by Purchaser, except with the prior written consent of Seller and except to the extent enforcement of its terms and applicable law require public disclosure. This provision shall not apply following the Closing to any such information pertaining to the Purchased Property or the Business, nor to any information that is or becomes publicly available through no fault of Purchaser. Purchaser shall have the right to disclose any such information to its professional advisors, lenders, investors and other third parties who need to know such information for the purposes of assisting Purchaser with the negotiation and consummation of this Agreement, provided Purchaser advises such parties of their confidential obligations under this Agreement, and provided Purchaser remains responsible for any violations by such parties. Purchaser shall also have the right to discuss the possibility of future employment with all active and full-time employees of the Business, provided that such

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discussions shall not occur prior to the expiration of the Due Diligence Period and shall be subject to the procedural requirements set forth in Section 4.1(a).

(b)Confidentiality of Agreement. The terms of this Agreement and the results of the ESAs shall remain confidential, except with the prior written consent of Seller and Purchaser and except to the extent that enforcement of its terms or applicable law require public disclosure. Neither party shall make any public announcement of the transactions contemplated herein without the express written approval of the other party, which approval shall not be unreasonably withheld. This provision will not apply to Purchaser following any Closing. Purchaser shall permit Seller to review in advance and comment on any public announcement of the Closing of the transactions contemplated herein.

(c)Return of Confidential Information. Purchaser agrees that promptly upon the termination of this Agreement, whether by mutual termination or otherwise (other than upon Closing), Purchaser shall cause all materials and property (originals and copies) of Seller to be immediately returned to Seller, or, at Purchaser’s election, destroyed provided Purchaser provides written certification of such destruction, provided that Purchaser shall be entitled to retain such information to the extent required in order to comply with applicable law, regulation, bona fide document retention policy of Purchaser, or any public disclosure obligations promulgated by the Securities and Exchange Commission any applicable to Purchaser, or until any litigation between Purchaser and Seller arising out of the termination of this Agreement has been finally resolved.

(d)Survival of Confidentiality. This Section 4.5 shall survive the Closing to the extent provided above and shall survive in the event this Agreement is terminated prior to Closing.

(e)Supersedes Previous Agreements. The provisions of this Section 4.5 supersede any prior agreements between the parties relating to confidentiality.

Section 4.6Expenses and Taxes.

(a)Each party shall pay its own expenses and costs incurred in connection with the negotiation and consummation of this Agreement and the transactions contemplated by this Agreement.

(b)Notwithstanding the foregoing:

(i)Purchaser shall pay fees and costs relating to the transfer of motor vehicles included in the Purchased Property;

(ii)Seller shall pay applicable real estate transfer tax and mansion taxes (if applicable);

(iii)Purchaser shall pay the costs of recording the Deeds and all other filing and recording costs; and

(iv)Seller shall pay the cost of the owner’s basic title policy premiums and Seller’s search charges, the cost of filing any documents to cure any Title Defects that Seller elects

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to cure, and any applicable Seller’s closing protection letter charges. All other costs attributable to the issuance of the Title Policy, including without limitation, any endorsements to the Title Policy, shall be paid by Purchaser (other than endorsements obtained at Seller’s election to cure Title Defects, which shall by Seller’s expense).

This Section 4.6 shall survive Closing.

Section 4.7Waiver of Bulk Sales and Indemnification. Purchaser hereby waives compliance by Seller and Seller hereby waives compliance by Purchaser, with the requirements of any applicable bulk sales laws and similar laws, if and to the extent applicable. Seller shall indemnify and hold harmless Purchaser from any and all claims, liabilities, or costs, including reasonable attorneys’ fees, arising out of the parties’ failure to comply with any bulk sales laws and similar laws applicable to the transactions contemplated hereby as provided in Section 8.1(d). The foregoing indemnification shall survive the Closing.

Section 4.8Exclusivity. During the period from the Effective Date to the Closing Date or termination of this Agreement according to the terms hereof, Seller shall not take any action, directly or indirectly, to encourage, initiate or engage or participate in discussions or negotiations with, or provide any information to, any party other than Purchaser, concerning a potential transaction involving the purchase and sale of the Business or any Purchased Property, the purchase and sale of all or substantially all of the ownership interest of Seller, or any transaction similar to the foregoing.

Section 4.9Consents; Cooperation. Seller will use its reasonable best efforts prior to the Closing to obtain all consents that may be required from third parties with respect to the Assumed Contracts and Leases and any of the other Purchased Property and Purchaser shall cooperate therewith. Purchaser shall use its reasonable best efforts to diligently pursue the issuance or transfer of any of the governmental licenses or permits required for Purchaser to operate the Business following the Closing, and Seller agrees to provide reasonable cooperation and assistance to Purchaser in obtaining such licenses and permits. Notwithstanding the foregoing, (i) neither party will be required to pay or commit to pay any amount to (or incur any liability or obligation to) a person or entity from whom or which a consent may be required (other than payment by Seller of past due amounts under Assumed Contracts and Leases or past due taxes, or payment by Purchaser of any fees or other costs imposed by governmental authorities with respect to licenses and permits, or transfer fees, if any, required by the express terms of any Assumed Contracts and Leases) or otherwise enter into or modify any agreement with such person or entity that involves any cost, liability or obligation, and (ii) to the extent Purchaser determines, in its sole discretion, that the governmental licenses or permits required for the Purchaser to operate the Business following the Closing will not be obtained prior to Closing, Seller agrees to enter into a Transition Period Sublease (as defined herein) with Purchaser or its designee for the continued operation of the Business by Seller or its Affiliates, as applicable, until Purchaser or its designee obtains such licenses and permits. Each of the parties have independently determined, based upon the advice of their own respective counsel, that the pre-merger filing requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), do not apply to the transactions contemplated under this Agreement.

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Section 4.10Further Assurances. Each party covenants and agrees that, following the Closing, it will execute, deliver and acknowledge (or cause to be executed, delivered and acknowledged), from time to time, at the reasonable request of the other party and without further consideration, all such further instruments and take all such further action as may be reasonably necessary or appropriate to transfer more effectively to Purchaser, or to perfect or record Purchaser’s title to or interest in the Purchased Property or to enable Purchaser to use or otherwise to confirm or carry out the provisions and intent of this Agreement. This Section 4.10 shall survive Closing.

Section 4.11Non-Solicitation of Employees.

Section 4.12Delivery of Schedules. Seller shall provide all Schedules required by this Agreement (other than those required by ARTICLE 7 hereof, which will be provided by Purchaser on or before the Schedule Due Date) on or before the date that is within ten (10) calendar days following receipt of the Deposit has been confirmed by the Escrow Agent (the “Schedule Due Date”). In the event that Seller’s delivery of the Schedules is delayed beyond the Schedule Due Date, Purchaser shall promptly deliver written notice Seller (for such purposes, email correspondence from Purchaser’s attorney to Seller’s attorney shall constitute sufficient written notice) to Seller identifying with specificity the portion of the Schedules that has not been delivered, and the Due Diligence Period shall be extended by the total number of days which elapse between the Schedule Due Date and the date upon which all required Schedules have actually been provided to Purchaser, or, as applicable, any insufficiently completed Schedules have been corrected to Purchaser’s reasonable satisfaction (inclusive of the last applicable date of delivery or correction, as applicable). Any fact or item disclosed on any Schedule to this Agreement shall be deemed disclosed with regard to all other representations and warranties to which such fact or item may reasonably apply to the extent such disclosure would provide notice to a reasonable person that the information disclosed would also qualify, or constitute an exception to, such other representations and warranties. Seller may from time to time supplement and update such Schedules to reflect any changes since the date of delivery of the original Schedules or any matters of which Seller’s Knowledge was first acquired following the original delivery date of such Schedules. Any such updates or supplements shall be deemed to amend the Schedules for all purposes retroactively to the Effective Date, except that (i) no amendment to Schedules1.1(a),2.2(d), and 2.4(a) may be made without Purchaser’s written consent, (ii) any amendments shall not result in any extension of the Due Diligence Period, and (iii) any amendments permitted above shall be disregarded (x) in determining if the conditions to Closing set forth in Section 5.3(a) or Section 5.3(e) below have been satisfied, and (y) for all purposes under this Agreement if Seller intentionally omitted such information from the original Schedules.

Section 4.13Investigation; Reliance; Release.

(a)Purchaser (i) has made its own inquiry into and investigation of the Purchased Property and the Business, and based thereon has formed an independent judgment concerning the Purchased Property and the Business; (ii) has been furnished with or given adequate access to all information concerning the Purchased Property and the Business as

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Purchaser has requested; and (iii) has addressed in this Agreement any matters arising out of its investigation to the extent it has deemed appropriate. Seller has not made nor shall it be deemed to have made, nor has Purchaser relied on, any representation, warranty, covenant or agreement, express or implied, with respect to Purchased Property or the Business or the transactions contemplated herein, other than those explicitly set forth in this Agreement(including the related portions of the Schedules), including, without limitation, the physical condition of the Purchased Property, title to or the boundaries of the Real Property, pest control matters, soil condition, hazardous waste, toxic substance, molds or other environmental matters, compliance with the Americans with Disabilities Act of 1990, Fair Housing Act of 1968 (as amended) or other building, health, safety, land use and zoning laws, regulations and orders, structural and other engineering characteristics, traffic patterns and all other information pertaining to the Purchased Property. Except for claims arising from the representations, warranties, covenants andagreements expressly contained in this Agreement, Purchaser shall not assert any claim against Seller, Operator or, as applicable, any of their respective directors, officers, employees, attorneys, investment bankers, brokers, advisors, consultants, agents, representatives, or any Affiliate of any of the foregoing, or hold Seller, Operator or any such personsliable, for any inaccuracies, misstatements or omissions with respect to information furnished by Seller, Operator or any such persons(including Data Room Information) to Purchaser. Purchaser further acknowledges that it has not received from Seller any accounting, tax, legal, architectural, engineering, property management or other advice with respect to the Purchased Property or the transactions herein contemplated and is relying solely upon the advice of its own accounting, tax, legal, architectural, engineering, property management and other advisors.  Without limiting the express representations, warranties and covenants of Seller contained herein, Purchaser agrees that the Purchased Property is otherwise to be sold to and accepted by Purchaser as of the Closing Date, in its “AS IS” condition, WITH ALL FAULTS, WITHOUT WARRANTY OF ANY KIND (OTHER THAN THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN), on the Closing Date and assumes every risk of adverse physical, environmental, economic or legal conditions may not have been revealed by its investigation and Inspections.

(b)Except with respect to any claims arising out of any breach of covenants, representations or warranties set forth herein and as otherwise provided in Article 8 hereof, Purchaser, for itself and its agents, Affiliates, successors and assigns, hereby releases and forever discharges Seller, Operator and their respective agents, partners, affiliates, successors and assigns from any and all rights, claims and demands at law or in equity, whether known or unknown at the time of this Agreement, which Purchaser has or may have in the future, arising out of the physical, environmental,

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economic or legal condition of the Purchased Property. Purchaser hereby specifically acknowledges that Purchaser has carefully reviewed this subsection and discussed its import with legal counsel and that the provisions of this subsection are a material part of this Agreement.

ARTICLE 5CLOSING

Section 5.1Closing.

Section 5.2Conditions to Seller’s Obligations. Subject to Section 5.6(a), except as may be waived in writing by Seller, Seller’s obligation to make its deliveries at the Closing and to effect and consummate the transactions contemplated hereby shall be subject to the following conditions:

(a)Representations and Warranties True and Correct. Each of Purchaser’s representations and warranties contained in this Agreement, taken as whole, shall be true in all material respects as of the Closing Date with the same effect as though made on such date (except for representations and warranties made as of a specified date, which shall have been true and correct as of such date with the same effect as though made on such date), and Purchaser shall have executed and delivered to Seller at Closing a certificate confirming the foregoing.

(b)Agreements Complied With. Each of Purchaser’s covenants and agreements contained in this Agreement to be performed at or prior to the Closing shall have been performed in all material respects at or prior to the Closing, and Purchaser shall have executed and delivered to Seller at Closing a certificate confirming the foregoing.

(c)Deliveries Made. Purchaser shall have delivered, and where applicable shall have duly executed, all the documents, certificates and other instruments required to be delivered at the Closing in accordance with Section 5.5 or any other express provision of this Agreement.

Section 5.3Conditions to Purchaser’s Obligations. Subject to Section 5.6, except as may be waived in writing by Purchaser, Purchaser’s obligation to make its deliveries at the Closing and to effect and consummate the transactions contemplated hereby shall be subject to the following conditions:

(e)Representations and Warranties True and Correct. Each of Seller’s representations and warranties contained in this Agreement, taken as a whole, shall be true in all material respects as of the Closing Date with the same effect as though made on such date (except for representations and warranties made as of a specified date, which shall have been true and correct

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as of such date), and Seller shall have executed and delivered to Purchaser at Closing a certificate confirming the foregoing.

(f)Agreements Complied With. Each of Seller’s covenants and agreements contained in this Agreement to be performed at or prior to the Closing shall have been performed in all material respects at or prior to the Closing, and Seller shall have executed and delivered to Purchaser at the Closing a certificate confirming the foregoing.

(g)Deliveries Made. Seller shall have delivered, and where applicable shall have duly executed, all the documents, certificates and other instruments required to be delivered at the Closing in accordance with Section 5.4 or any other express provision of this Agreement.

(h)Licenses and Permits. Purchaser a shall have (i) obtained all governmental licenses and permits required for Purchaser to own and operate the Facility as an assisted living and memory care facility in the same manner in which Seller is currently operating the Business (ii) or shall have completed diligence reasonably acceptable to Purchaser indicating that Purchaser’s submission of applications for such licenses and permits shall result, post-Closing, in the issuance of applicable governmental licenses and permits and Purchaser and Seller shall have entered into a Transition Period Sublease effective as of the Closing Date.

(i)No Material Adverse Change. No Material Adverse Change shall have occurred during the period between the Effective Date and the Closing Date.

(j)Termination of Existing Leases and/or Management Agreements. Any existing real property leases and/or management agreements, if any, relating to the Purchased Property which are not Assumed Contracts and Leases or Residency Agreements shall have been terminated without fee or cost to Purchaser, and Seller shall have provided Purchaser reasonable evidence of same.

(k)No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction, or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect. No action shall have been taken nor any statute, rule, or regulation shall have been enacted by any governmental agency that makes the consummation of the transactions contemplated hereby illegal.

Section 5.4Deliveries by Seller. Seller shall deliver to Purchaser on or before the Closing the following:

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(f)Deed. The Deed substantially in the form ofExhibit C attached hereto, duly executed by Seller. In addition, in the event Purchaser elects to have a new survey of the applicable Real Property (the “Survey”) prepared, Seller agrees to provide a quitclaim deed at closing conveying title to the applicable Real Property based on the metes and bounds description shown on the Survey.

(g)Bill of Sale and Assignment. A bill of sale and assignment with Seller’s warranty of title in the form of Exhibit D attached hereto (the “Bill of Sale and Assignment”) with respect to the Purchased Personal Property located at the Facility, duly executed by Seller.

(h)Other Instruments. Such further instruments of conveyance and transfer as Purchaser may reasonably require to consummate the transactions contemplated by this Agreement to vest all of the Business with respect to the Facility in Purchaser and to facilitate the transfer of such Business from Seller to Purchaser, including the assignment of the applicable Assumed Contracts and Leases, in form and substance reasonably acceptable to Purchaser.

(i)Owner’s Affidavit. An Owner’s Affidavit in a form acceptable to the Title Company to the extent required to issue the Title Policy.

(j)Releases. Documents releasing or nullifying any title exceptions (or providing reasonable evidence of such release or nullification) (relating to the applicable Real Property) which Seller is obligated to release or nullify pursuant to Section 2.4hereof.

(k)Resolutions. A certified copy of the company resolutions authorizing consummation of this Agreement and authorizing Seller’s to execute all documents necessary for Closing as provided herein.

(l)Closing Certificate. The certificates required pursuant to Section 5.3(a) and Section 5.3(b), identifying such changes to the representations and warranties as shall be necessary to make such representations true, complete and accurate in all material respects as of the date and time of Closing.

(m)1099S. A completed Form 1099S, or effective equivalent thereof, describing the sale of the applicable Purchased Property.

(n)Withholding Affidavit. If a Withholding Affidavit is required by the Escrow Agent, Seller shall deliver the Withholding Affidavit to the Escrow Agent prior to Closing.

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(o)Non-Foreign Status Affidavit. A certificate of non-foreign status pursuant to Treasury Regulation Section 1.1445-2(b)(2) signed by Seller under penalties of perjury stating Seller’s name, address and U.S. taxpayer identification number and stating that Seller is not a foreign person as defined by Section 1445(f)(3) of the IRC.

(p)Good Standing Certificate. A certificate of existence, certified by the Secretary of State of Illinois as of a date which is within fifteen (15) days of Closing, reflecting the Seller’s good standing as an Illinois limited liability company.

(q)Rent Roll. A true, correct, and complete rent roll certified by an officer of Seller, for the Facility listing each resident as of a date which is within three (3) business days prior to the Closing Date, the unit, bed or room number of such resident, and the amount of the monthly fees to be paid by such resident (including room, meal and other applicable monthly fees), the amount of security deposit, if any, date of Residency Agreement and the expiration date of such Residency Agreement, if applicable.

(r)Transition Period Sublease. The Transition Period Sublease, if applicable, in form and substance attached as Exhibit E (the “Transition Period Sublease”).

(s)Third Party Consents. The third party consents listed on Schedule 5.4(o).

(t)Opinion of Counsel. An opinion of Seller’s counsel in a form acceptable to Purchaser in it reasonable discretion.

(u)Title Commitment. A title commitment in accordance with Section 2.4(a), subject only to the Permitted Title Exceptions and endorsed by the Title Company.

(v)Books and Records. Possession and control of books and records included as part of the Purchased Property which are not physically located at the Real Property as of the Closing Date.

(w)Post-Closing Escrow Agreement. The Post-Closing Escrow Agreement, duly executed by Seller.

Section 5.5Deliveries by Purchaser. Purchaser shall deliver to Seller on or before the Closing the following:

(c)Payment Items. The items described in Section 3.2 hereof representing payment of the Purchase Price.

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(d)Assumption Agreement. An instrument of assumption of the Assumed Liabilities, substantially the form attached as Exhibit F.

(e)Post-Closing Escrow Agreement. The Post-Closing Escrow Agreement, duly executed by Purchaser.

(f)Transition Period Sublease. The Transition Period Sublease, if applicable, substantially in the form attached hereto as Exhibit E.

(g)Closing Certificate. The certificates required pursuant to Section 5.2(a) and Section 5.2(b).

(h)Access Easement. An access easement in form reasonably acceptable to Seller, duly executed by Purchaser, granting an easement over the Real Property to access certain parcels of real property which shall continue to be owned by Seller. Such access easement shall be executed and recorded prior to recording of any mortgage upon the Real Property securing a loan to Purchaser.

Section 5.6Non-Fulfillment of Closing Conditions. Notwithstanding anything in this Agreement to the contrary, the following shall apply exclusively if any of the conditions in Section 5.2 and Section 5.3 are not fulfilled as of the Scheduled Closing Date:

(a)Except as otherwise provided in the last sentence of this Section 5.6(a), if any of the conditions set forth in Section 5.2have not been fulfilled as of the Scheduled Closing Date, but all the conditions set forth in Section 5.3(a), Section 5.3(b), Section 5.3(e), Section 5.3(f) and Section 5.3(g) have been fulfilled or expressly waived by Purchaser, Seller may elect (i) to proceed to Closing and waive such failure for all purposes hereunder; or (ii) terminate this Agreement, in which case the Deposit shall be disbursed to Seller as liquidated damages, and Purchaser shall have no further liability to Seller except with respect to the surviving provisions described in ARTICLE 9. Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Purchaser. In no event under this Section 5.6 or otherwise shall Purchaser be liable to Seller for any punitive, speculative or consequential damages. Notwithstanding the foregoing, if any of the conditions in Section 5.2 or Section 5.3 are not satisfied, then Seller’s rights under this Section 5.6(a) are subject to Purchaser’s rights under Section 5.6(b)-Section 5.6(e) below.

(b)If all of the conditions in Section 5.2(a) and Section 5.2(b)have been fulfilled as of the Scheduled Closing Date, but the conditions set forth in Section 5.3(a) have not been fulfilled as of the Scheduled Closing Date, then Purchaser shall give Seller written notice of such failure, which notice shall state Purchaser’s election: (i) to proceed with the Closing and

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waive any such failure to fulfill one or more of the requirements of Section 5.3(a) for all purposes hereunder; or (ii) to extend the Scheduled Closing Date for an additional thirty (30) days in order to provide Seller the opportunity to fulfill such condition and if such condition is not fulfilled within such thirty (30) day additional period Purchaser may terminate this Agreement, in which case the Deposit shall be returned to Purchaser and Seller shall reimburse Purchaser for Purchaser’s actual third party expenses incurred by Purchaser in connection with its due diligence on the applicable Purchased Property; provided, however, such reimbursements shall not exceed Twenty Five Thousand and No/100 U.S. Dollars ($25,000), and after which Seller shall have no additional liability to Purchaser for such failure, except for the surviving provisions described in ARTICLE 9; or (iii) exercise any other legal or equitable remedies to which Purchaser may be entitled.

(c)If all of the conditions in Section 5.2(a) and Section 5.2(b)have been fulfilled as of the Scheduled Closing Date, but any of the conditions set forth in Section 5.3(b), Section 5.3(c) or Section 5.3(f) have not been fulfilled as of the Scheduled Closing Date, Purchaser may elect (i) to proceed with Closing and waive such failure for all purposes hereunder; (ii) extend the Scheduled Closing Date for an additional thirty (30) days in order to allow such conditions to be fulfilled and if such condition is not fulfilled within such thirty (30) day additional period, Purchaser may terminate this Agreement, in which case the Deposit shall be returned to Purchaser and Seller shall reimburse Purchaser for Purchaser’s actual third party expenses incurred by Purchaser in connection with its due diligence on the applicable Purchased Property; provided, however, such reimbursements shall not exceed Twenty Five Thousand and No/100 U.S. Dollars ($25,000), and after which Seller shall have no additional liability to Purchaser for such failure, except for the surviving provisions described in ARTICLE 9; (iii) enforce specific performance if applicable; or (iv) exercise any other legal or equitable remedies to which Purchaser may be entitled.

(d)If all of the conditions in Section 5.2(a) and Section 5.2(b)have been fulfilled as of the Scheduled Closing Date, but if the condition set forth in Section 5.3(d)has not been fulfilled as of the Scheduled Closing Date (including but not limited to non-fulfillment caused by unavailability of insurance required to obtain such licenses or permits) and Purchaser has used diligent good faith efforts to obtain such licenses and permits, Purchaser may at its election proceed with the Closing on the Scheduled Closing Date, but simultaneously with the Closing, Purchaser (or its Affiliate) and Seller will enter into the Transition Period Sublease substantially in the form attached hereto as Exhibit E; provided, however, that if any regulatory authority having jurisdiction over such licenses and permits raises objections to the form or substance of the Transition Period Sublease, the parties will negotiate in good faith to reach an arrangement which is acceptable to such

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regulatory authority and most closely follows the essential substance of the Transition Period Sublease shown as Exhibit E.

(e)If all of the conditions in Section 5.2(a) and Section 5.2(b)have been fulfilled as of the Scheduled Closing Date, but any of the conditions set forth Section 5.3(e) or Section 5.3(g) have not been fulfilled as of the Scheduled Closing Date, Purchaser may elect (i) to proceed with Closing and waive such failure for all purposes hereunder; or (ii) extend the Scheduled Closing Date for an additional thirty (30) days in order to allow such conditions to be fulfilled and if such condition is not fulfilled within such thirty (30) day additional period, Purchaser may terminate this Agreement, in which case the Deposit shall be returned to Purchaser and Seller shall reimburse Purchaser for Purchaser’s actual third party expenses incurred by Purchaser in connection with its due diligence on the applicable Purchased Property; provided, however, such reimbursements shall not exceed Twenty Five Thousand and No/100 U.S. Dollars ($25,000), and after which Seller shall have no additional liability to Purchaser for such failure, except for the surviving provisions described in ARTICLE 9.

(f)If the Closing Conditions as set forth in ARTICLE 5 have not been satisfied on or before October 1, 2015, either Seller or Purchaser shall have the absolute right to terminate this Agreement, in which case the Deposit shall be paid to Seller and no party shall have no additional liability to the other hereunder following such termination except for the surviving provisions described in ARTICLE 9.

Section 5.7Post-Closing Actions. Seller shall promptly deliver to Purchaser the original of any mail or other communication received by it after the Closing Date pertaining to the Purchased Property or the Business, and any payments to which Purchaser is entitled. Purchaser shall promptly deliver to Seller the original of any mail or other communication received by Purchaser after the Closing Date and addressed to Seller which does not pertain to the Purchased Property or the Business, or to any payments to which Seller is entitled.

Section 5.8Termination During Due Diligence. Notwithstanding anything herein to the contrary, Purchaser shall have the right to terminate this Agreement at any time during the Due Diligence Period for any reason or for no reason whatsoever. Upon any such termination, the Deposit shall be returned to Purchaser, and the parties shall have no further liability or obligation to one another arising from such termination except for the surviving provisions described in ARTICLE 9.

ARTICLE 6REPRESENTATIONS AND WARRANTIES OF SELLER

The following representations and warranties are given by the Seller. The Seller hereby represents and warrants to Purchaser that as of the Effective Date:

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Section 6.1Organization and Standing. The Seller is an Illinois limited liability company duly organized, validly existing, and in good standing under the laws of the State of Illinois and has the requisite power and authority to own, sell, lease and operate its properties and to carry on its businesses as now being conducted. The Seller has the limited liability company power and authority to execute and deliver this Agreement and to consummate the transactions and perform the obligations contemplated by the Agreement.

Section 6.2Valid and Binding Obligations. The execution, delivery and performance of this Agreement and all other agreements and instruments to be executed and delivered by Seller hereunder, and the consummation of the transactions contemplated by this Agreement, have been duly authorized by all necessary company action of Seller. This Agreement constitutes, and all instruments required to be executed and delivered by Seller before or at the Closing will constitute, the valid and binding obligations of Seller, enforceable against Seller, in accordance with their respective terms. All persons who have executed this Agreement on behalf of Seller have been duly authorized to do so by all necessary company action of Seller and all persons who execute instruments required to be executed and delivered by Seller before or at the Closing shall have been duly authorized to do so by all necessary company action of Seller.

Section 6.3Title; Purchased Property Complete.

(a)Seller has good title to all of the Purchased Personal Property, and at the Closing, Seller shall transfer the Purchased Personal Property to Purchaser, free and clear of all liabilities, liens and, encumbrances except for the Assumed Liabilities and the Permitted Encumbrances. Seller has the unrestricted right to convey and assign the Purchased Personal Property. Purchaser acknowledges with respect to the Real Property, that Purchaser will rely solely upon (i) Seller’s warranties contained in the Deed and (ii) Purchaser’s owner’s policy of title insurance, and that Seller gives no other warranty regarding title to real property.

(b)Except for the Excluded Property or as otherwise set forth in Schedule 6.3, the Purchased Property comprises all material assets, rights or property used by Seller in the operation of the Business as currently conducted.

Section 6.4Taxes and Tax Returns. Seller and Operator have filed when due or will file when due in correct form all federal and state income tax returns for all periods ending on or prior to the Closing Date which are required to be filed by Seller and/or Operator on or prior to the Closing Date. Other than extensions to file Seller’s or Operator’s tax returns, there are no agreements by Seller or Operator for the extension of time for the assessment of any tax. All federal, state, county and local taxes due and payable by Seller and/or Operator on or before the Effective Date have been paid and any taxes due and payable at any time between the Effective Date through the Closing will be paid prior to Closing, and there are no federal, state or local tax liens pending or threatened against Seller, Operator or the Purchased Property. There is no open audit of any of Seller’s and/or Operator’s federal, state, local income, sales use or property tax returns pending, and Seller has received no notice of the pendency of any such audit or examination.

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Neither Seller nor Operator holds or had held a certificate or other authorization issued by any tax collection body for the purpose of avoiding the payment by Seller or Operator of sales and use taxes upon Seller’s or Operator’s purchases of goods and services, nor has Seller or Operator applied for such a certificate or other authorization.

Section 6.5Execution and Delivery. Except as set forth in Schedule 6.5, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will:

(g)violate any provisions of the articles of organization or operating agreement of Seller;

(h)violate any contract or agreement relating to borrowed money, or any judgment, order, injunction, decree or award against, or binding upon Seller or upon the property or business of Seller, which violation would prevent, delay or materially hinder consummation of the transactions contemplated by this Agreement;

(i)result in the creation of any material lien, charge or encumbrance upon any of the Purchased Property pursuant to the terms of any agreement or instrument to which Seller is a party or by or to which Seller, Operator or any of the Purchased Property may be bound, subject or affected;

(j)violate any judgment, order, injunction, decree or award against, or binding upon, Seller, Operator, or upon the Purchased Property or Business of Seller; or

(k)result in any breach, violation, default or cancellation of any contract, agreement, mortgage, deed to secure debt, or lease to which Seller or Operator is a party or by which Seller or Operator is bound or the Purchased Property is subject that could have a material adverse effect on the Purchased Property or the operations of the Business.

Section 6.6Contracts and Leases. Schedule 6.6 hereto sets forth all contracts, leases or agreements, including the Assumed Contracts and Leases, to which Seller or Operator is a party, written or oral, currently in effect that are material to the operation or management of the Business or the ownership and use of the Purchased Property, other than the Residency Agreements described in Section 6.7. Each of the Assumed Contracts and Leases is in full force and effect in accordance with its terms. Seller has made available to Purchaser true and correct copies of all Assumed Contracts and Leases, including all material amendments or modifications to same. Seller is not in material breach, default or violation of any of the Assumed Contracts and Leases and, to Seller’s Knowledge, no other party to any such contract or lease is in material breach, default or violation thereof. No event has occurred and no condition exists that with the passage of time or the giving of notice, or both, would constitute a material default by Seller or, to Seller’s Knowledge, by any other party to any Assumed Contracts and Leases.

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Section 6.7Residency Agreements and Related Matters. Schedule 6.7 contains a list of all of the Residency Agreements currently in effect.

Section 6.8Permits and Licenses. Schedule 6.8 contains a complete list of all material governmental permits, licenses, certificates and authorizations held by Seller and Operator that relate to the ownership, use, operation or management of the Facility, the Purchased Property and/or the Business (the “Permits and Licenses”).

Section 6.9Insurance. Schedule 6.9 lists all of Seller’s and Operator’s policies of property and casualty insurance and liability insurance currently in effect and covering the Facility, the Business and/or the Purchased Property, copies of which have been made available for review by Purchaser.

Section 6.10Employees. Schedule 6.10 contains a complete and correct list of employees who perform services for the Business or the Facility as of June 19, 2015 (whether as employees of Seller, Operator, or both), including their respective positions, the Facility where they are employed, pay rates, bonus arrangements (if any), dates of hire (including the Executive Director and any Assistant Director of the Facility, and any employees who are currently employed by the Seller for the benefit of the Business) (collectively, the “Employees”). Except as described on Schedule 6.10, neither Seller nor Operator is a party to any employment contract or other written agreement with any Employee. Neither Seller nor Operator has made any binding promise or commitment to increase the compensation of any Employee after the Effective Date, except as otherwise set forth on Schedule 6.10 hereto. Seller and Operator have complied in all material respects with all laws and regulations dealing with employment of Employees. Schedule 6.10 provides a list and brief description of all litigation or administrative claims filed by Employees or former employees who performed services for the Business against Seller or Operator during the past three (3) years, if any. Except as otherwise set forth on Schedule 6.10 (i) neither Seller nor Operator is a party to any collective bargaining agreement with respect to any employees, and (ii) to Seller’s Knowledge, there have been no efforts to organize a collective bargaining agreement or any other type of union activity with respect to the employees of the Business within the last three (3) years.

Section 6.11Seller Benefit Plans.

(a)Schedule 6.11 sets forth a complete list of each “employee benefit plan,” as that term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) regardless of whether such plan is subject to ERISA, and each bonus, deferred, or incentive compensation, stock purchase, stock option, severance, and termination pay plan or program,that is maintained or contributed to by Seller or Operator for the benefit of Employees or pursuant to which Seller or Operator has any liability with respect to Employees (“Seller Plans”). With respect to each of the Seller Plans, Seller has or will make available to Purchaser (or will deliver to Purchaser prior to Closing) correct and complete copies of each of the following documents: (i) the Seller Plans and related trust or other funding documents (including all amendments thereto), (ii) the

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most recent Form 5500 annual report, including all attachments thereto, filed with the Internal Revenue Service with respect to each such Seller Plan, (iii) the most recent trust report, if any, prepared with respect to each such Seller Plan, and (iv) the summary plan description prepared for each such Seller Plan.

(b)Each Seller Plan has been administered and operated in material compliance with its terms and the applicable requirements of ERISA and the IRC, including the requirement to file an annual report. No Seller Plan is intended to be qualified under Section 401 of the IRC as a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) or as a “multiple employer” plan (within the meaning of Section 4063 or 4064 of ERISA).

(c)Except as set forth on Schedule 6.11, there are no pending or, to Seller’s Knowledge, threatened claims of any Employees (or former employees who provided services to the Business) against or otherwise involving any of the Seller Plans (other than routine claims for benefits).

(d)There are no Employees or former employees who provided services to the Business, who are entitled to (i) any pension benefit that is unfunded, or (ii) any benefit to be paid after termination of employment other than required by Section 601 of ERISA, pursuant to a Seller Plan intending to be qualified under Section 401(a) of the IRC, or identified as providing a benefit described in this Section 6.11 orSchedule 6.11. Each Seller Plan that is an employee welfare benefit plan as defined in Section 3(1) of ERISA is either unfunded or funded through an insurance company contract. There is no liability in the nature of a retroactive rate adjustment or loss-sharing or similar arrangement with respect to any such Seller Plan.

(e)Neither Seller, Operator, nor, to Seller’s Knowledge, any other person, including any fiduciary, has engaged in any “prohibited transaction” as defined in Section 4975 of the IRC or Section 406 of ERISA that could subject Seller, Operator, or any person whom Seller has an obligation to indemnify to any tax or penalty imposed under Section 4975 of the IRC or Section 502 of ERISA.

(f)Neither Seller nor Operator has at any time (x) maintained, contributed to, or been required to contribute or had any liability (that has not been satisfied in full) to any Seller Plan subject to Title IV of ERISA, (y) incurred or expected to incur any liability to the Pension Benefit Guaranty Corporation or otherwise under Title IV of ERISA, or (z) incurred or expected to incur liability in connection with an “accumulated funding deficiency” within the meaning of Section 412 of the IRC, whether or not waived.

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Section 6.12Litigation. Except as described on Schedule 6.12, there is no litigation, action, suit, or other proceeding currently pending, or to Seller’s Knowledge, threatened against Seller, Operator and/or the Facility, at law or in equity, or before any federal, state, municipal, local or other governmental or quasi-governmental authority, or before any arbitrator. To Seller’s Knowledge, there is no pending investigation of Seller, Operator and/or the Facility by any governmental or quasi-governmental authority. Seller is not subject to any judgment, injunction, order, writ or decree of any court or other governmental authority or agency relating specifically to Seller or to the ownership, operation or management of the Purchased Property, the Facility and/or the operations of the Business.

Section 6.13Compliance with Laws. Except as otherwise noted on Schedule 6.13, or in any inspection or survey report of any governmental authority made available to Purchaser, Seller and Operator are in compliance in all material respects with all applicable laws, rules or regulations in connection with its ownership, use, operation or management of the Purchased Property, the Facility and the Business, including without limitation all laws, rules and regulations related to Government Programs, and neither Seller nor Operator has received notice of any violation thereof which has not been cured as of the Effective Date.

Section 6.14Financial Statements. Seller’s financial statements pertaining to the operations of the Business for the period ended December 31, 2014 (the “2014 Financial Statement”) and for the four months ended April 30, 2015 (the “April 2015 Financial Statement”) are attached hereto as Schedule 6.14 (the 2014 Financial Statement and the April 2015 Financial Statement collectively, the “Financial Statements”).

Section 6.15Real Property. To Seller’s Knowledge, and except as may be disclosed on Schedule 6.15, Seller’s and Operator’s use of the Real Property complies in all material respects with applicable zoning and land use laws, rules and regulations and with all applicable building codes, and neither Seller nor Operator has received written notice of any zoning, land use or building code violation relative to the Real Property which has not been cured prior to the date hereof. To Seller’s Knowledge (unless Seller is a party thereto), there is no pending litigation or dispute concerning the location of the lines and corners of the Real Property. Seller has received no written notice of, and has no other Knowledge of, pending, threatened or contemplated actions by any governmental authority or agency having the power of eminent domain, which might result in any part of the Real Property being taken by condemnation or conveyed in lieu thereof. To Seller’s Knowledge, there is no claim of adverse possession with respect to any part of the Real Property. Except as may be disclosed on Schedule 6.15, there are no ongoing improvements, construction projects or similar development of the Real Property that is currently in process or otherwise uncompleted.

Section 6.16Environmental Matters. Except as disclosed on Schedule 6.16, or in any environmental audit or inspection report made available by Seller to Purchaser or the ESAs generated by Purchaser’s environmental consultants, to Seller’s Knowledge: (a) no areas exist on the Real Property where Hazardous Substances have been generated, disposed of, released, stored or found in violation of any Environmental Laws, and Seller has no Knowledge and has received no notice of the existence of any such areas for the generation, storage or disposal of any

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Hazardous Substances on the Real Property in violation of any Environmental Laws; (b) neither Seller, Operator nor any of their respective agents have violated in any material respect any of the applicable Environmental Laws relating to or affecting the Real Property; (c) the Real Property is presently in compliance in all material respects with all Environmental Laws; (d) Seller and Operator have obtained all material licenses, permits and/or other governmental or regulatory approvals necessary to comply with Environmental Laws relating to its use of the Real Property, and Seller and Operator are in compliance in all material respects with the terms and provisions of all such licenses, permits and/or other governmental or regulatory approvals; (e) no underground storage tanks are currently located on the Real Property; (f) the Real Property has not been previously used as a landfill or as a dump for garbage or refuse; and (g) no asbestos containing building material or lead based paint are present in any structures located on the Real Property.

Section 6.17Brokers, Finders. Other than Blueprint Healthcare Real Estate Advisors, Seller has not retained any broker or finder in connection with the transactions contemplated hereby so as to give rise to any claim against Purchaser for any brokerage or finder’s commissions, fee, or similar compensation.

Section 6.18FIRPTA. Seller is not a “foreign person” as that term is defined in the Internal Revenue Code of 1986, as amended, and the regulations promulgated pursuant thereto, and Purchaser has no obligation under Internal Revenue Code Section 1445 to withhold and pay over to the Internal Revenue Service any part of the amount realized by Seller in the transaction contemplated hereby (as such term is defined in the regulations issued under IRC Section 1445).

Section 6.19Solvency. Seller is not now insolvent, and will not be rendered insolvent by completion of the transactions contemplated herein. For purposes of the preceding sentence, “insolvent” means, upon completion of the Closing, (i) that the fair market value of Seller’s assets is less than the sum of Seller’s debts and other liabilities or (ii) Seller has inadequate cash flow to service its debts as they come due. Upon the completion of the transactions contemplated herein, Seller will have adequate capital for the purposes of engaging in any business or transaction in which Seller is or will engage.

Section 6.20Consent of Third Parties. Except as otherwise set forth on Schedule 6.20, no consent of any third party is required as a condition to the entering into, performance or delivery of this Agreement by Seller, other than such consents as would not, in any individual case or in the aggregate, have a material adverse effect upon Purchaser’s ability to complete the purchase of the Purchased Property and operate the Business in the manner in which it is currently being operated by Seller.

Section 6.21No Governmental Approvals. To Seller’s Knowledge, except as set forth in on Schedule 6.21, and the requirement for Purchaser to obtain the licenses and permits described in Section 5.3(d), no order, permission, consent, approval, license,authorization, registration or validation of, or filing with, or exemption by, any governmental agency, commission, board or public authority is required to authorize, or is required in connection with the execution, delivery and performance by Seller of this Agreement or the taking of any action contemplated by this Agreement, which has not been obtained. Notwithstanding the foregoing, Seller makes no

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representation or warranty regarding applicability of the HSR Act to the transactions contemplated herein.

Section 6.22Assessments. To Seller’s Knowledge, there are no (i) special or other assessments for public improvements or otherwise now affecting any of the Purchased Property, (ii) any pending or threatened special assessments affecting the Purchased Property, or (iii) any contemplated improvements affecting any of the Purchased Property that may result in special assessments affecting any of the Purchased Property.

Section 6.23Title Encumbrances. Except as described on Schedule 6.23, Seller is not in default under any of its material obligations under any recorded agreement, easement or instrument encumbering title to the Real Property, and to Seller’s Knowledge, there is no default on the part of any other party thereto.

Section 6.24Affordable Housing Units. No bedroom or unit at the Facility is leased or reserved for lease as an affordable housing unit or for low or moderate income residents. The Facility is not required to lease or reserve any unit or bedroom as an affordable housing unit or bedroom or for low or moderate income residents pursuant to a presently existing agreement or requirement of law.

Section 6.25Loans and Debts. There are no loans or debts secured by any of the Purchased Property except for (i) the loans and debts described on Schedule 6.25 or (ii) loans and debts reflected on the Title Policy.

Section 6.26No Other Warranties. Except for the express representations and warranties of Seller contained in this ARTICLE 6 or in the Deed or Bill of Sale and Assignment, Purchaser acknowledges that Seller has not made, and Purchaser has not relied upon, any other representation or warranty, express or implied, with respect to Seller, the Business, the Purchased Property or the transactions contemplated herein.

ARTICLE 7REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

Section 7.1Organization and Standing. Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Purchaser has the limited liability company power and authority to execute and deliver this Agreement and to consummate the transactions and to perform its obligations contemplated by this Agreement.

Section 7.2Execution and Delivery. The execution and delivery of this Agreement, and the consummation of the transactions contemplated by this Agreement, have been duly authorized by all necessary limited liability company action of Purchaser. This Agreement constitutes, and all instruments required to be executed and delivered by Purchaser before or at the

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Closing will constitute, the valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms. All persons who have executed this Agreement on behalf of Purchaser have been duly authorized to do so by all necessary company action of Purchaser and all persons who execute instruments required to be executed and delivered by Purchaser before or at the Closing shall have been duly authorized to do so by all necessary company action of Purchaser. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will:

(c)violate any provisions of the articles of organization or operating agreement of Purchaser;

(d)violate any contract or agreement relating to borrowed money, or any judgment, order, injunction, decree or award against, or binding upon Purchaser or upon the property or business of Purchaser, which violation would prevent, delay or materially hinder consummation of the transactions contemplated by this Agreement;

(e)violate any judgment, order, injunction, decree or award against, or binding upon, Purchaser; or

(f)result in any breach, violation, default or cancellation of any contract, agreement, mortgage, deed to secure debt, or lease to which Purchaser is a party or by which Seller is bound and that could have a material adverse effect upon Purchaser’s ability to consummate the transactions described herein.

Section 7.3Solvency. Purchaser is not now insolvent, and will not be rendered insolvent by completion of the transactions contemplated herein. For purposes of the preceding sentence, “insolvent” means, upon completion of the Closing, (i) that the fair market value of Purchaser’s assets is less than the sum of Purchaser’s debts and other liabilities or (ii) Purchaser has inadequate cash flow to service its debts as they come due. Upon the completion of the transactions contemplated herein, Purchaser will have adequate capital for the purposes of engaging in the Business and any business or transaction in which Purchaser is or will engage.

Section 7.4Consent of Third Parties. Except as otherwise set forth on Schedule 7.4, except for the licenses and permits described in Section 5.3(d), no consent of any third party is required as a condition to the entering into, performance or delivery of this Agreement by Purchaser, other than such consents as would not, in any individual case or in the aggregate, have a material adverse effect upon Purchaser’s ability to consummate the transactions contemplated by this Agreement.

Section 7.5No Governmental Approvals. To Purchaser’s knowledge, except as set forth on Schedule 7.5and the requirement for Purchaser to obtain the licenses and permits described in Section 5.3(d), no order, permission, consent, approval, license,authorization, registration or validation of, or filing with, or exemption by, any governmental agency, commission, board or public authority is required to authorize, or is required in connection with the execution,

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delivery and performance by Purchaser of this Agreement or the taking of any action contemplated by this Agreement, which has not been obtained. Notwithstanding the foregoing, Purchaser makes no representation or warranty regarding applicability of the HSR Act to the transactions contemplated herein.

Section 7.6Brokers, Finders. Purchaser has not retained any broker or finder in connection with the transactions contemplated hereby so as to give rise to any valid claim against Seller for any brokerage or finder’s commission, fee, or similar compensation.

ARTICLE 8INDEMNIFICATION

Section 8.1Indemnification by Seller. Following the Closing, the Seller shall indemnify, hold harmless and defend Purchaser from and against any and all losses, damages, costs, expenses, liabilities, obligations and claims of any kind (including, without limitation, reasonable attorneys’ fees and other legal costs and expenses) (collectively, “Losses”) which Purchaser may at any time suffer or incur, or become subject to, as a result of or in connection with:

(g)any breach or inaccuracy of any of the representations and warranties made by Seller in this Agreement;

(h)any failure by Seller to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement;

(i)the Excluded Liabilities;

(j)the failure to comply with applicable bulk sales laws; or

(k)any federal, state, or local income, payroll, sales and use, ad valorem or other taxes payable by Seller or for which Seller is liable in connection with any period prior to the Closing Date, and any interest or penalties thereon.

Section 8.2Indemnification by Purchaser. Following the Closing, Purchaser shall indemnify and hold harmless Seller from and against, and reimburse Seller for, any and all Losses which Seller may at any time suffer or incur, or become subject to, as a result of or in connection with:

(a)any breach or inaccuracy of any representations and warranties made by Purchaser in or pursuant to this Agreement;

(b)any failure by Purchaser to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement; or

(c)the Assumed Liabilities.

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Section 8.3Indemnification Limits; Survival.

(l)Purchaser Indemnification Limits; Survival. Purchaser shall not be entitled to any indemnification from Seller under Section 8.1(a) or Section 8.1(b) unless and until the aggregate amount of indemnifiable claims of Purchaser under this Agreement exceeds Fifty Thousand and No/100 U.S. Dollars ($50,000) (the “Seller Threshold”), at which point Seller shall be liable for all indemnifiable claims of Purchaser under Section 8.1(a) and Section 8.1(b). Seller’s liability for indemnification under Section 8.1(a) and Section 8.1(b) shall not in any case exceed two percent (2.0%) of the total Purchase Price (the “Indemnification Cap”); provided, however, that neither the Seller Threshold nor the Indemnification Cap shall apply in the case of: (i) fraud on the part of Seller (which for purposes of clarification will require a finding of actual intent to defraud as opposed to recklessness); (ii) any claims arising under Section 8.1(a) with respect to the representations and warranties contained in Section 6.1, Section 6.2, Section 6.3(a), Section 6.5, Section 6.17, or Section 6.18, each of which shall be limited to the Purchase Price; or (iii) any claims arising under Section 8.1(c), Section 8.1(d), or Section 8.1(e). All of Seller’s representations and warranties under this Agreement shall survive for a period of twelve (12) months following the Closing Date. Purchaser’s right to make any claim for indemnification against Seller under Section 8.1(a), Section 8.1(b) and Section 8.1(d) shall expire at the end of the twelfth (12^th) month following the Closing; provided, however, that any claim for which Purchaser has given written notice prior to expiration of such twelve (12) monthanniversary shall survive until finally adjudicated; and further provided that Purchaser’s right to make any claim for indemnification pursuant to Section 8.1(c) shall not expire and any claim for indemnification pursuant to Section 8.1(e) shall survive for the applicable statute of limitations period for collection of the applicable tax.

(m)Seller Indemnification Limits; Survival. Seller shall not be entitled to any indemnification from Purchaser under Section 8.2(a) or Section 8.2(b) unless and until the aggregate amount of indemnifiable claims of Seller under this Agreement, exceeds Twenty-Five Thousand and No/100 U.S. Dollars ($25,000) (the “Purchaser Threshold”), at which point Purchaser shall be liable for all indemnifiable claims of Seller under Section 8.2(a) and Section 8.2(b). Purchaser’s liability for indemnification under Section 8.2(a) and Section 8.2(b) shall not in any case exceed two percent (2.0%) of the total Purchase Price (the “Purchaser Indemnification Cap”); provided, however, that neither the Purchaser Threshold nor the Purchaser Indemnification Cap shall apply in the case of: (i) fraud on the part of Purchaser; (ii) any claims arising under Section 8.2(a) with respect to the representations and warranties contained in Section 7.1, Section 7.2, and Section 7.6 (which shall be limited to the Purchase Price); or (iii) any claims arising under Section 8.2(c). All of Purchaser’s representations and

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warranties under this Agreement shall survive for a period of twelve (12) months following the Closing Date provided, however, that any claim for which Seller has given written notice prior to expiration of such twelve (12) monthanniversary shall survive until finally adjudicated; and further provided that Seller’s right to make any claim for indemnification pursuant to Section 8.2(c) shall not expire.

(n)For purposes of determining the amount of Losses that are subject to indemnification hereunder with respect to any events, facts or circumstances, after determining whether or not such facts, events or circumstances give rise to a breach of a representation or warranty (after giving full effect to any qualifications as to materiality or similar standards, or of lack of “material adverse effect,” contained in such representation and warranty), except for breaches under Section 6.14 (Financial Statements), the determination of the amount of Losses for such breach of representation and warranty, as it relates to such facts, events or circumstances, shall be made without giving effect to any qualifications as to materiality or similar standards, or the lack of “material adverse effect” contained in such representation or warranty.

(o)Any payments made pursuant to ARTICLE 8 of this Agreement shall be treated as a purchase price adjustment for income tax purposes.

Section 8.4Procedures Regarding Third Party Claims. The procedures to be followed by Purchaser and Seller with respect to indemnification hereunder regarding claims by third parties shall be as follows:

(a)Promptly after receipt by Purchaser or Seller, as the case may be, of notice of the commencement of any action or proceeding or the assertion of any claim by any person who is not a party to this Agreement or an Affiliate of a Party to this Agreement or a Representative of the foregoing (a “Third Party Claim”), which the party receiving such notice has reason to believe may result in a claim by it for indemnity pursuant to this Agreement, such Person(the “Indemnified Party”) shall give notice of such action, proceeding or claim to the party against whom indemnification is sought (the “Indemnifying Party”), setting forth in reasonable detail the nature of such action or claim, including copies of any written correspondence from such third person to such Indemnified Party.

(b)The Indemnifying Party shall be entitled, at its own expense, to assume and control such defense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval shall not be unreasonably withheld or delayed. The Indemnified Party shall be entitled to participate in such defense after such assumption at the Indemnified Party’s own expense. Upon assuming such defense, the Indemnifying Party shall

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have full rights to enter into any monetary compromise or settlement which is dispositive of the matters involved; provided that such settlement is paid in full by the Indemnifying Party and will not have any continuing material adverse effect upon the Indemnified Party.

(c)With respect to any action, proceeding or claim as to which the Indemnifying Party shall not have exercised its right to assume the defense, the Indemnified Party may assume and control the defense of and contest such action, proceeding or claim with counsel chosen by it. The Indemnifying Party shall be entitled to participate in the defense of such action, the cost of such participation to be at its own expense. The Indemnifying Party shall be obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified Party to the extent that such fees and expenses relate to claims as to which indemnification is due under Section 8.1 or Section 8.2 hereof, as the case may be. The Indemnified Party shall have full rights to dispose of such action and enter into any monetary compromise or settlement; provided, however, in the event that the Indemnified Party shall settle or compromise any claims involved in the action insofar as they relate to, or arise out of, the same facts as gave rise to any claim for which indemnification is due under Section 8.1 or Section 8.2 hereof, as the case may be, it shall act reasonably and in good faith in doing so.

(d)Both the Indemnifying Party and the Indemnified Party shall cooperate fully with one another in connection with the defense, compromise or settlement of any such claim, proceeding or action, including, without limitation, by making available to the other all pertinent information and witnesses within its control.

Section 8.5Procedures Regarding Direct Claims. Any claim by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail and shall indicate the estimated amount of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing to such Direct Claim (provided, however, that the Indemnified Party may also give the Escrow Agent notice of such Direct Claim prior to the Indemnifying Party’s response). The Indemnified Party shall allow the Indemnifying Party and its Representatives to investigate the matter or circumstance alleged to give rise to the Direct Claim. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have accepted such

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claim, in which case the Indemnifying Party shall be liable for the payment of such Direct Claim in accordance with the terms and conditions of this Agreement.

Section 8.6General Qualifications on Indemnification. Notwithstanding any provision to the contrary, the indemnification rights set forth in Section 8.1 and Section 8.2 shall be subject to the following:

(a)The liability of an Indemnifying Party with respect to any indemnification claim shall be reduced by the amount of any tax benefit actually realized or any insurance proceeds received by Indemnified Party as a result of any damages, upon which such claim is based, and shall include any tax detriment actually suffered by the Indemnified Party as a result of such damages. The amount of such tax benefit or detriment shall be determined by taking into account the effect, if any, and to the extent determinable, of timing differences resulting from the acceleration or deferral of items of gain or loss resulting from such damages.

(b)Damages shall only include actual damages and shall not include any special, punitive, multiplied or consequential damages, lost profits or diminution in value, except to the extent the same are included in a third-party judgment against the Indemnified Party.

(c)Upon payment in full of any indemnification claim, the Indemnifying Party shall be subrogated to the extent of such payment to the rights of the Indemnified Party against any person or entity with respect to the subject matter of such indemnification claim.

(d)An Indemnified Party may not recover for any losses otherwise indemnifiable under Section 8.1(a), Section 8.1(b), Section 8.2(a) or Section 8.2(b) if such Indemnified Party had actual (and not imputed) knowledge prior to Closing of the breach, inaccuracy or failure giving rise to such losses.

(e)An Indemnifying Party shall be relieved of its duty to indemnify an Indemnified Party hereunder if and to the extent the Indemnified Party fails to use commercially reasonable efforts in good faith to mitigate its damages, including, but not limited to, failure to give timely notice to its insurance carriers and to pursue recovery under applicable policies of insurance.

(f)Any amounts due to Purchaser from Seller pursuant to this ARTICLE 8 shall be paid first from the Holdback Amount in accordance with the Post-Closing Escrow Agreement, until the Holdback Amount has been exhausted or released.

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Section 8.7Effective Upon Closing. The provisions of this ARTICLE 8 shall become effective upon completion of the Closing, and shall have no force and effect prior to the Closing or if this Agreement is terminated prior to Closing.

Section 8.8Exclusive Remedies. The parties hereto acknowledge and agree that from and after Closing their sole and exclusive remedy with respect to any and all claims for any breach of any representation or warranty of Seller or Purchaser, as applicable, set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article8. In furtherance of the foregoing, each party hereby waives effective as of the Closing and to the fullest extent permitted under applicable law, any and all rights, claims and causes of action for any breach of any representation or warranty set forth herein o it may have against the other parties hereto and their Affiliates and each of their respective representatives arising under or based upon any applicable law, except pursuant to the indemnification provisions set forth in this Article8. For the avoidance of doubt this provision shall not limit the remedies of either party under this Agreement prior to Closing or with respect to breaches of their respective obligations to each other hereunder post-Closing.

ARTICLE 9Termination

This Agreement and the transactions contemplated hereby may be terminated at any time prior to Closing as follows:

(d)by mutual agreement of Seller and Purchaser;

(e)by Purchaser, as and to the extent permitted pursuant to Section 2.4(d)(ii), Section 5.6(b), Section 5.6(c), Section 5.6(e), Section 5.6(e),Section 5.8, Section 10.11 or Section 10.12;

(f)by Seller, as and to the extent permitted pursuant to Section 5.6(a) and Section 5.6(e);

(g)if a court of competent jurisdiction or other governmental agency shall have issued an order, decree, or ruling or taken any other action (which order, decree or ruling the parties hereto shall use their best efforts to lift), in each case permanently restraining, enjoining, or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling, or other action shall have become final and nonappealable; or

(h)by the Purchaser if the Seller shall have breached any of its representations, warranties, covenants or agreements contained in this Agreement (other than the conditions contained in Section 5.2 hereof), which breach cannot be or has not been cured within five (5) business days after the giving of written notice by the Purchaser to the Seller specifying such breach.

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Upon termination of this Agreement prior to Closing, except as otherwise expressly provided herein, the parties shall have no further liability hereunder except that the following provisions shall survive any such termination: Section 4.1(c), Section 4.5 and Section 4.7 In the event of any termination of this Agreement pursuant to ARTICLE 9(e) above, the Deposit shall be returned to Purchaser and Purchaser shall be entitled to reimbursement by Seller of all of its costs and expenses related to the potential acquisition of the Facility, including without limitation legal fees and fees paid to third parties related to Purchaser’s due diligence review of the Facility; provided, however, such reimbursements shall not exceed Fifty Thousand and No/100 U.S. Dollars ($50,000), and after which Seller shall have no additional liability to Purchaser for such breach, except for the surviving provisions described in this Article 9.

ARTICLE 10MISCELLANEOUS

Section 10.1Access to Books and Records after Closing. Following the Closing, Purchaser shall give Seller or its authorized representatives access, during normal business hours and upon prior notice, to such books and records constituting or relating to the Purchased Property as shall be reasonably requested by Seller in connection with the preparation and filing of the party’s tax returns, to comply with regulatory requirements, to defend or discharge the Excluded Liabilities, or for any other valid business purpose, and to make extracts and copies of such books and records. Purchaser agrees to retain all books and records included as part of the Purchased Property for at least one (1) yearfollowing the Closing Date.

Section 10.2Notices. All notices, requests, demands and other communications under this Agreement and related post-Closing notices, requests, demands, and other communications, shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the party to whom notice is to be given, (ii) on the day of transmission if (A) sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission, or (B) if sent via electronic mail (e.g. email), (iii) on the day after delivery to FedEx or similar overnight courier, or (iv) on the tenth (10^th) day after mailing, if mailed to the party to whom notice is to be given, by first-class mail, registered or certified, return receipt requested, postage prepaid and properly addressed, to the party as follows:

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If to Purchaser:	American Realty VII, LLC Attn: Thomas D’Arcy 405 Park Avenue, 14th Floor New York, New York 10022 Email: td’arcy@arlcap.com
With a copy (which will not constitute notice) to:	Jesse Galloway American Realty Capital VII, LLC 405 Park Avenue, 14th Floor New York, New York 10022 Email: jgalloway@arlcap.com
With a copy (which will not constitute notice) to:	Foley & Lardner LLP Attn: Michael A. Okaty           Taylor C. Pancake 111 North Orange Avenue Suite 1800 Orlando, Florida 32801 Email: tpancake@foley.com
If to Seller:	Cedarhurst of Collinsville, LLCc/o Dover Capital, LLCAttn: Joshua Jennings 120 South Central Avenue, Suite 725 Clayton, Missouri 63105Email: Jennings@dovercapital.com and stevens@dovercapital.com
With a copy (which will not constitute notice) to:	Greensfelder, Hemker and Gale, P.C. Attention: Patrick Sweeney 10 South Broadway, Ste. 2000 St. Louis, MO 63102 E-mail: pjs@greensfelder.com

Any party may change the address to which notices are to be sent to it by giving written notice of such change of address to the other parties in the manner herein provided for giving notice.

Section 10.3Good Faith; Cooperation. The parties shall in good faith undertake to perform their obligations in this Agreement, to satisfy all conditions and to cause the transactions contemplated by this Agreement to be carried out promptly in accordance with its terms. The parties shall cooperate fully with each other and their respective representatives in connection with any actions required to be taken as part of their respective obligations under this Agreement.

Section 10.4Assignment; Exchange Cooperation; Successors in Interest. Neither Purchaser nor Seller may assign any of their respective rights hereunder, except with the prior written consent of the other (which shall not be unreasonably withheld or delayed); provided,

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however, that without additional consent from Seller (i) prior to the Closing Purchaser may assign its rights, in whole or in part, to any Affiliate or related entity of Purchaser, including without limitation the Delaware limited liability companies ARHC CHCOLIL01, LLC and ARHC CHCOLIL01 TRS, LLC, and (ii) Purchaser may at Purchaser’s election assign any of its rights related to the Purchased Personal Property to the Post-Closing Manager or its designee; provided that Purchaser shall remain liable under this Agreement notwithstanding any such permitted assignment. This Agreement is binding upon the parties and their respective successors or assigns and inures to the benefit of the parties and their permitted successors and assigns.

Section 10.5No Third Party Beneficiaries. The parties do not intend to confer any benefit under this Agreement on anyone other than the parties, and nothing contained in this Agreement shall be deemed to confer any such benefit on any other person, including any current or former employee or agent of Seller or any dependent or beneficiary of any of them.

Section 10.6Severability. Any determination by any court of competent jurisdiction of the invalidity of any provision of this Agreement that is not essential to accomplishing its purposes shall not affect the validity of any other provision of this Agreement, which shall remain in full force and effect and which shall be construed as to be valid under applicable law.

Section 10.7Purchaser Records Rights.

(g)Upon Purchaser’s request, for a period of one (1) year after Closing, Seller shall make the operating statements and any and all books, records, correspondence, financial data, leases, delinquency reports, including independent documentation supporting the books and records including but not limited to invoices, statements, check copies, contracts or other supporting documentation, and all other documents and matters maintained by Seller or its agents and relating to receipts and expenditures reasonably necessary to complete an audit, including a representation letter to the independent audit firm issuing the audit opinion as to the completeness and accuracy in all material respects of the information provided among other representations pertaining to the Purchased Property for the three (3) most recent full calendar years and the interim period of the current calendar year (collectively, the “Records”) available to Purchaser for inspection, copying and audit by Purchaser’s designated accountants, and at Purchaser’s expense. Seller shall provide Purchaser, but without expense to Seller, with copies of, or access to, such factual and financial information as may be reasonably requested by Purchaser or its designated accountants, and in the possession or control of Seller, to enable Purchaser to file any filings required by the Securities and Exchange Commission (the “SEC”) in connection with the purchase of the Purchased Property. Seller understands and acknowledges that Purchaser is required to file audited financial statements related to the Purchased Property with the SEC within seventy-one (71) days of the Closing Date and agrees to provide any records on a timely basis to facilitate Purchaser’s timely submission of such audited financial statements.

(h)Seller has provided, or to the extent not provided represents to Purchaser that it has in its possession or is otherwise able to obtain the materials from Seller’s vendors, banks, lenders, agents, accountants, auditors and/or counsel, all of the materials listed in Schedule 10.7 to this Agreement. Seller acknowledges that such materials will be used by Purchaser to make the filings

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described in Section 10.7(a) above, and represents and warrants to Purchaser that all such materials are, or shall be when delivered, true, correct and complete in all material respects.

Section 10.8Controlling Law; Integration; Amendment; Waiver.

(a)This Agreement shall be governed by and construed in accordance with the laws and case decisions of the State in which the Real Property is located applicable to contracts made and to be performed therein.

(b)This Agreement and the other contracts, documents and instruments to be delivered pursuant to this Agreement supersede all prior negotiations, agreements, information memoranda, letters of intent and understandings between the parties with respect to their subject matter, whether written or oral, constitute the entire agreement of the parties with respect to their subject matter, and may not be altered or amended except in writing signed by Purchaser and Seller. Neither of the parties has made or relied upon any representation, warranty or assurances in connection with the transactions contemplated hereunder other than those expressly made herein.

(c)The failure of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect its right to enforce the same, and no waiver by any party of any provision (or of a breach of any provision) of this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed or construed either as a further or continuing waiver of any such provision or breach or as a waiver of any other provision (or of a breach of any other provision) of this Agreement.

Section 10.9Time. Time is of the essence with respect to this Agreement.

Section 10.10 Survival. For the avoidance of doubt and notwithstanding anything contrary in this Agreement, Section 4.5, Section 4.6, Section 4.7, Section 4.10, Section 4.11, Section 5.7, ARTICLE 8, and ARTICLE 10 of this Agreement shall survive the Closing of this Agreement.

Section 10.11 Eminent Domain ‑ Condemnation. If, prior to Closing, all or portion of Real Property comprising at least five percent (5%) of the Real Property is subject to an eminent domain or condemnation proceeding which will result in a loss of such portion of the Real Property by Seller or Purchaser, Seller, immediately upon learning thereof, shall give written notice to Purchaser. Thereafter, Purchaser shall have a period of thirty (30) days within which to elect, by written notice to Seller, to terminate this Agreement. Upon any such termination the Deposit shall be returned to Purchaser and the Agreement shall become null and void in its entirety. If no such election is timely made, Purchaser shall be deemed to have waived its rights under this paragraph, except that, if the transaction contemplated hereby closes, Purchaser shall be entitled to the proceeds or the right to negotiate, settle and collect the proceeds of such condemnation award, and Seller shall execute and deliver all documents reasonably requested of Seller in order to effectuate this section.

Section 10.12 Risk Of Loss. Seller assumes all risks and liability for loss, damage, destruction or injury by fire, storm, accident or any other casualty to the Real Property

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from all causes until the Closing has been consummated. In the event of any damage or destruction prior to Closing with an estimated repair cost of greater than Fifty Thousand and No/100 U.S. Dollars ($50,000) for the Facility, Purchaser shall have the option exercisable by written notice to Seller within thirty (30) days after Purchaser is notified of such casualty, to terminate this Agreement by notice thereof to Seller, in which case the parties shall have no further rights or obligations under the Agreement and the Deposit shall be returned to Purchaser; or Purchaser may elect to close this transaction and, in such event Purchaser shall be entitled to receive the full amount of any proceeds of such insurance payable on account of loss, damage or destruction after the date hereof and Seller shall be liable for the payment to Purchaser of all deductibles under applicable insurance policies. Seller covenants to execute such assignments, drafts and other instruments as may be required to effectuate this section.

Section 10.13 Attorneys’ Fees. In the event either party brings an action to enforce or interpret any of the provisions of this Agreement, the “prevailing party” in such action shall, in addition to any other recovery, be entitled to its reasonable attorneys’ fees and expenses arising from such action and any appeal or any bankruptcy action related thereto, whether or not such matter proceeds to court. For purposes of this Agreement, “prevailing party” shall mean, in the case of a person asserting a claim, such person is successful in obtaining substantially all of the relief sought, and in the case of a person defending against or responding to a claim, such person is successful in denying substantially all of the relief sought.

Section 10.14 Covenant Not to Compete. For a period of three (3) years following the Closing, the Seller agrees that neither Seller nor any of its Affiliates or other entities which the Seller or any of its Affiliates controls, is controlled by or is under common control with shall, directly or indirectly, develop, own, invest in, finance, manage or franchise any facility similar to the Business within a radius of eight (8) miles from any portion of the Real Property. For the avoidance of doubt and without limitation, any facility operating as a skilled nursing facility, assisted living facility, memory care facility and/or independent living facility intended for seniors shall be deemed to be similar to the Business for purposes of this Section 10.14. The provisions of this Section 10.14 shall survive Closing.

Section 10.15 Post-Closing. Seller will provide reasonable cooperation and assistance to Purchaser and its assigns in arranging for, at Purchaser’s sole cost and expense, a transition team to assist Purchaser and its assigns as reasonably necessary in the orderly establishment and transition of Purchaser and its assigns as the owner and manager of the Business, including but not limited to assisting in personnel matters, reimbursement issues, program development, regulatory compliance and other relevant matters as they arise.

Section 10.16Waiver of Jury Trial. The parties agree that no party to this Agreement shall seek a jury trial in any lawsuit, proceeding, counterclaim or other litigation based upon, or arising out of, this Agreement or the dealings or the relationship between them.

Section 10.17Construction. This Agreement shall not be construed more strictly against one party than against the other merely by virtue of the fact that it may have been prepared by counsel for one of the parties, it being recognized that both Seller and Purchaser have contributed with the advice of counsel to the preparation of this Agreement.

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Section 10.18 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. This Agreement may be executed by counterpart signatures and all counterpart signature pages shall constitute a part of this Agreement. Delivery of a counterpart hereof via facsimile transmission or by electronic mail transmission, including but not limited to an Adobe file format document (also known as a PDF file), shall be as effective as delivery of a manually executed counterpart hereof.

[ Signatures commence on the following page. ]

IN WITNESS WHEREOF, each of the parties hereto has signed and sealed this Asset Purchase Agreement as of the day and year first above written.

SELLER:

CEDARHURST OF COLLINSVILLE, LLCan Illinois limited liability company

By: METRO MANAGER, LLC, an Illinois limited liability company, its Manager

By: /s/ Joshua R. JenningsName:    Joshua R. Jennings
Title:     Managing Member

PURCHASER:

AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company

By: AR CAPITAL, LLC, a Delaware limited liability company

By: /s/ William M. KahaneName:    William M. Kahane
Title:     Manager

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SIGNATURE PAGE TO

ASSET PURCHASE AGREEMENT

1

EXHIBIT A

Escrow Agreement

[See attached.]

EXHIBIT B

Post-Closing Escrow Agreement

EXHIBIT C

Deed

[ See attached. ]

2

EXHIBIT D

Bill of Sale and Assignment

[ See attached. ]

EXHIBIT E

Transition Period Sublease

[ See attached. ]

EXHIBIT F

Assumption Agreement

[ See attached. ]

EXHIBIT G

Due Diligence Materials

[ See attached. ]

SCHEDULE 10.7

3-05 Audit Materials

1. Detailed general ledger that ties to the financial statements

2. Trial balances with account numbers or other identifier as to classification of account as asset, liability, equity, income or expense

3. Internal control narratives

4. Accounts receivable, accounts payable and fixed asset subledgers

5. Rent rolls

6. Occupancy reports

7. Accounts receivable aging report

8. Account reconciliations of all balance sheet and income statement accounts

9. Schedule of intercompany balances as of each balance sheet date

10. Schedule of restricted deposits

11. Accounts payable aging

12. Payroll registers

13. Copies of invoices to support all general ledger entries for all balance sheet, equity and income statement accounts

14. Copies of monthly bank statements

15. Copies of contracts with residents

16. Copies of checks received from tenants/residents

17. Copies of all management agreements and vendor contracts

18. Copies of all vendor invoices

19. Copies of checks to support the payment of vendor invoices

20. Copies of checks supporting contributions and distributions to the entities to support equity

21. Real estate tax invoices

22. Copies of insurance contracts

23. Mortgage or other debt agreements specifying the terms of the debt arrangements

24. Mortgage statements

25. Bank and mortgage confirmations directly with the lenders

26. Cash account confirmations

27. Note statements and confirmations directly with the lenders, partners, etc.

28. Mortgage settlement statements

29. Purchase and sale agreements and appraisals

30. Contactor development agreements

31. Support for historical cost of fixed assets (land, building, fixtures) including, settlement statements, invoices, check copies, progress payment support or other support.

32. Detail depreciation schedules

33. HUD forms

34. Confirmation from legal counsel of pending or outstanding claims

35. Copies of tax returns

36. Articles of incorporation, partnership/corporate agreements

37. Representation letter to the accounting firm performing the audit as to the completeness and accuracy of the books and records provided, among other routine audit representations

EX-10.22

Exhibit 10.22

AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

GALESBURG ILLINOIS MEDICAL OFFICE PORTFOLIO

310 HOME BOULEVARD AND 336 HOME BOULEVARD

GALESBURG, ILLINOIS 61401

THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Agreement”) is made and entered into as of the Effective Date by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), and 310 HOME BOULEVARD, GALESBURG, IL – DAVESSA VENTURE, LLC, an Iowa limited liability company (the “310 Seller”) and 336 HOME BOULEVARD, GALESBURG, IL – S.J. RUSSELL, LLC, an Iowa limited liability company (the “336 Seller” together with the 310 Seller, the “Seller”).

BACKGROUND

A. 310 Seller is the fee owner of the Land (defined below) described on Exhibit A-1-1 attached hereto and made a part hereof (the “310 Land”).

B. 336 Seller is the fee owner of the Land described on Exhibit A-1-2 attached hereto and made a part hereof (the “336 Land”).

C. Buyer desires to purchase the Property (defined below) from the Seller and Seller desires to sell the Property to Buyer on the terms and conditions set forth in this Agreement.

In consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Terms and Definitions. The terms listed below shall have the respective meaning given them as set forth adjacent to each term.

(a)“310 Property” shall mean the 310 Land and all matters described in (ii)-(vii) of the definition of “Property” in connection with the 310 Land.

(b)“336 Property” shall mean the 336 Land and all matters described in (ii)-(vii) of the definition of “Property” in connection with the 336 Land.

(c)“Broker” shall mean Newmark Grubb Knight Frank.

(d)“Closing” shall mean the consummation of the transaction contemplated herein, which shall occur, subject to any applicable extension periods set forth in this Agreement, on or after August 25, 2015. The date of Closing is sometimes hereinafter referred to as the “Closing Date.” Neither party will need to be present at Closing, it being anticipated that the parties will

deliver all Closing documents and deliverables in escrow to the Escrow Agent prior to the date of Closing.

(e) “Due Diligence Period” shall mean the period beginning upon the Effective Date and extending until 11:59 PM ET on the date that is thirty (30) days thereafter or the date on which Seller receives written notice of Buyer’s waiver of the Due Diligence Period. Seller shall deliver to Buyer all of the Due Diligence Materials within five (5) business days after the Effective Date, and for each day that passes thereafter until all of the Due Diligence Materials are delivered to Buyer, the Due Diligence Period and the Closing Date shall be extended by one (1) business day.

(f)“Earnest Money” shall mean Three Hundred Thousand and 00/100 Dollars ($300,000.00). The Earnest Money shall be delivered to Escrow Agent within two (2) business days after the Effective Date. The Earnest Money shall be deposited by Buyer in escrow with Escrow Agent, to be applied as part payment of the Purchase Price at the time of Closing, or disbursed as agreed upon in accordance with the terms of this Agreement. Seller and Buyer each shall pay one-half of all reasonable escrow fees charged by Escrow Agent.

(g) “Effective Date” This Agreement shall be signed by both Seller and Buyer. The date that is one (1) business day after the date of execution and delivery of this Agreement by both Seller and Buyer shall be the “Effective Date” of this Agreement.

(h)“Escrow Agent” shall mean Stewart Title Guaranty Company, whose address is One Washington Mall – Suite 1400, Boston, MA 02108, Attention: Annette Comer, Telephone: 617-933-2441, Telecopy: 617-727-8372; E-Mail: acomer@stewart.com. The parties agree that the Escrow Agent and Buyer’s title agent, if any, shall be responsible for (x) organizing the issuance of the Title Commitment (hereinafter defined) and Title Policy (hereinafter defined), (y) preparation of the closing statement, and (z) collections and disbursement of the funds.

(i)“Guarantor” shall mean each guarantor, if any, of the Leases.

(j)“Guaranty” shall mean each Lease guaranty executed by a Guarantor.

(k)“Leases” shall mean those certain leases described on Exhibit A-2 attached hereto and made a part hereof and referred to in Section 6(b)(i) of this Agreement between Seller, as landlord, and the tenants described on Exhibit A-2 attached hereto, as tenant (each tenant, individually, a “Tenant”, and collectively, the “Tenants”), as amended. Each of the Leases may be referred to herein individually as a “Lease” or the “Lease”.

(l)“Property” shall collectively mean (i) the 310 Land and 336 Land, together with all right, title and interest of Seller, if any, in and to the land lying in the bed of any street or highway in front of or adjoining such real property, and all appurtenances and all the estate and rights of Seller, if any, in and appurtenant to such parcels of real property, including, without limitation, all appurtenant easements and rights-of-way, and Buildings (as hereinafter defined) and all other improvements thereon, and all air and subsurface rights appurtenant to such parcels of real property, as the case may be (such parcels of real property, together with all such rights and appurtenances, being collectively referred to herein as the “Land”); (ii) all of the buildings

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(collectively called the “Buildings”), facilities and other improvements situated on the Land or required to be constructed under the respective Leases (collectively, the “Improvements”); (iii) all right, title and interest of Seller, if any, in and to the lighting, electrical, mechanical, plumbing and heating, ventilation and air conditioning systems used in connection with the Land and the Buildings, and all carpeting, draperies, appliances and other fixtures and equipment attached or appurtenant to the Land together with all personal property (other than furniture, equipment not necessary to operate the Buildings or building systems and not permanently affixed to the Buildings or Land, trade fixtures and inventory) owned by Seller and located on the Land or on and/or in the Buildings (collectively, the “Personal Property”); (iv) all right, title and interest of Seller in and to all plans and specifications, architectural drawings, building permits and other permits issued in connection with the construction, operation, use or occupancy of the Improvements, and all warranties and guaranties respecting the Buildings and Personal Property; (v) to the extent not otherwise described in subsection (i), all right, title and interest of Seller in and to all leases respecting the Buildings and Personal Property, including, without limitation, all prepaid rent or security or other deposits thereunder and all right, title and interest of the Affiliates under the Guaranties; (vi) all right, title and interest of Seller in and to all licenses, permits, authorizations and approvals issued by any governmental agency or authority which pertain to the Land and the Buildings, to the extent they exist and are transferable and assignable; and (vii) to the extent the same are assignable, all site plans, surveys, and plans which relate to the Land. Any references to “Property” in the singular, such as references to “a Property” or “each Property”, refer to an individual parcel of Land and all matters described in (ii)-(vii) in connection with such Land.

(m)“Purchase Price” shall mean Six Million Thirty Thousand and 00/100 Dollars ($6,030,000.00). The Purchase Price is based upon information made available to Buyer by Seller and its representatives and is subject to change if such information is inaccurate or additional information is discovered during the Due Diligence Period.

(n)“Real Estate Taxes” shall mean all real estate taxes, rollback taxes, personal property taxes, water and sewer use charges, or payments in lieu of taxes, and any other charges and assessments constituting a lien on the Property.

(o)Seller and Buyer’s Notice address

(i)“Seller’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

310 Home Boulevard, Galesburg, IL – Davessa Venture, LLC

4600 E. 53^rd Street

Davenport, IA 52807

Attn: Jim Russell

Tel. No.: (563) 459-4600

Email: Russell@russellco.com

336 Home Boulevard, Galesburg, IL – S.J. Russell, LC

4600 E. 53^rd Street

Davenport, IA 52807

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Attn: Jim Russell

Tel. No.: (563) 459-4600

Email: Russell@russellco.com

And to:

Jen Belby

4600 East 53^rd Street

Davenport, IA 52807

Tel. No.: (563) 459-4652

Email: jbelby@russellco.com

(ii)“Buyer’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

Thomas P. D’Arcy

c/o American Realty Capital VII, LLC

405 Park Avenue, 14^th Floor

New York, NY 10022

Tel. No.: (212) 415-6500

Fax No.: (646) 861-7805

Email: tdarcy@arlcap.com

And to:

Jeremy Eichel

c/o American Realty Capital VII, LLC

405 Park Avenue, 14^th Floor

New York, NY 10022

Tel. No.: (212) 415-6551

Email: jeichel@arlcap.com

And Due Diligence Materials (if provided by email) to:

duediligence@arlcap.com

With hard copies and/or cds to:

James A. (Jim) Mezzanotte

c/o American Realty Capital VII, LLC

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Tel. No.: (704) 626-4400

Fax No.: (212) 415-6507

Email: jmezzanotte@arlcap.com

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2.Purchase and Sale of the Property. Subject to the terms of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property for the Purchase Price.

3.Payment of Purchase Price.

(a)The Purchase Price to be paid by Buyer to Seller shall be paid by wire transfer of immediately available funds in the amount of the Purchase Price plus or minus prorations, credits and adjustments as provided in Section 4 in this Agreement to Escrow Agent, at the time of Closing, or as otherwise agreed to between Buyer and Seller.

(b)The parties agree that the value of the Personalty is de minimis, and no part of the Purchase Price is allocated to it.

4.Proration of Expenses and Payment of Costs and Recording Fees.

(a)All real estate taxes, rollback taxes, personal property taxes, water and sewer use charges, and any other charges and assessments constituting a lien on the Property (collectively “Taxes and Assessments”) due and payable on or before the Closing Date shall be remitted to the collecting authorities or to the Escrow Agent by Seller prior to or at Closing. At Closing there shall be no adjustments between Buyer and Seller for Taxes and Assessments not yet due and payable on the Closing Date unless the payment of such Taxes and Assessments under the terms of the Lease is not the obligation of the Tenant, in which case Taxes and Assessments shall be prorated as of the Closing Date with Seller responsible for the period prior to the Closing Date and Buyer responsible for the period from and after the Closing Date. For the avoidance of doubt, Seller’s obligation for Taxes and Assessments shall apply to all such Taxes and Assessments attributable to all days up to the Closing Date even if such Taxes and Assessments are to be paid in arrears after the Closing Date.

(b)All rents shall be prorated as of the Closing Date with Buyer being credited for rent attributable to the day of Closing through and including the last day of the calendar month in which the Closing Date occurs.

(c)All security deposits under the Leases collected and not properly applied by Seller as of the Closing (and interest thereon if required by law or contract) must be transferred or credited to Buyer at Closing. As of the Closing, Buyer will assume each Seller’s obligations related to the security deposits but only to the extent they are credited or transferred to Buyer.

(d)Seller shall pay or be charged with the following costs and expenses in connection with this transaction:

(i)100% of all Title Policy premiums, including search costs and a survey endorsement, but excluding any other endorsements issued in connection with such policies other than endorsements that Seller elects to purchase to cover title issues, if any;

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(ii)Any transfer taxes and conveyance fees on the sale and transfer of the Property;

(iii)Broker’s commission payments, in accordance with Section 24 of this Agreement;

(iv)All fees relating to the granting, executing and recording of the Deed for the Property;

(v)Any unpaid leasing commissions, tenant improvement allowances or outstanding rent concessions related to the Leases, whether or not due and payable.

(e)Buyer shall pay or be charged with the following costs and expenses in connection with this transaction:

(i)Title Policy premiums for any endorsements issued in connection with such policies other than a survey endorsement and endorsements that Seller elects to purchase to cover title issues, if any; and

(ii)Buyer shall pay for the cost of its own survey, Phase I environmental study and due diligence investigations.

(i)    Each party shall pay its own legal fees incidental to the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

5.Title. At Closing, Seller agrees to convey to Buyer fee simple marketable title to the Property by special warranty deed, free and clear of all liens, defects of title, conditions, easements, assessments, restrictions, and encumbrances except for Permitted Exceptions (as hereinafter defined).

6.Examination of Property. Seller and Buyer hereby agree as follows:

(a)Buyer shall order a title commitment (the “Title Commitment”) from Escrow Agent, a survey and a zoning report for the Property promptly after the date hereof. All matters shown in the Title Commitment, survey or zoning report (“Title Matters”) with respect to which Buyer fails to object prior to the expiration of the Due Diligence Period shall be deemed “Permitted Exceptions”. However, Permitted Exceptions shall not include, and Seller shall be obligated to remove of record prior to or at Closing, any mechanic’s lien or any monetary lien, fine or penalty, or any deeds of trust, mortgage, or other loan documents secured by the Property, other than the Loan Documents (defined below), or any judgments and federal and state tax liens (collectively, “Liens”). Seller shall be required to cure or remove all Liens (by payment, bond deposit or indemnity acceptable to Escrow Agent). Seller agrees to remove or cure any objections of Buyer which are of a nature that are capable of being cured with reasonable efforts prior to Closing, including the payment of a sum of money in connection therewith up to an amount of $100,000.00. Seller shall have no obligation to cure any Title Matter objected to, except the Liens

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as aforesaid, provided Seller notifies Buyer of any objections which Seller elects not to remove or cure within five (5) business days following receipt of Buyer’s objections. In the event that Seller refuses to remove or cure any objections, Buyer shall have the right to terminate this Agreement upon written notice to Seller given within five (5) business days after receipt of Seller’s notice, upon which termination the Earnest Money, and all interest earned thereon, shall be returned to Buyer and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein. If any matter not revealed in the Title Commitment is discovered by Buyer or by the Escrow Agent and is added to the Title Commitment by the Escrow Agent at or prior to Closing, Buyer shall have until the earlier of (i) ten (10) days after the Buyer’s receipt of the updated, revised Title Commitment showing the new title exception, together with a legible copy of any such new matter, or (ii) the Closing Date, to provide Seller with written notice of its objection to any such new title exception (an “Objection”). If Seller does not remove or cure such Objection prior to the Closing Date, Buyer may terminate this Agreement, in which case the Earnest Money, together with all interest earned thereon, shall be returned to Buyer, and in the event such Objection was created, consented to or affirmatively permitted by Seller after the Effective Date, Seller shall reimburse Buyer for all reasonable out of pocket costs and expenses incurred hereunder up to $25,000.00, and upon such termination neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein.

(b)Within five (5) business days following the Effective Date, Seller shall provide to Buyer, to the extent not already delivered, copies of the following documents and materials pertaining to the Property to the extent within Seller’s or its affiliates’ or agents’ possession or reasonably obtainable by Seller or Seller’s counsel: (i) a complete copy of all leases and lease guaranties affecting the Property and all amendments thereto and of all material correspondence relating thereto; (ii) a copy of all surveys and site plans of the Property, including without limitation any as-built survey obtained or delivered to tenants of the Property in connection with its construction; (iii) a copy of all architectural plans and specifications and construction drawings and contracts for improvements located on the Property; (iv) a copy of Seller’s title insurance commitments and policies relating to the Property; (v) a copy of the certificate of occupancy (or local equivalent) and zoning reports for the Property and of all governmental permits/approvals; (vi) a copy of all environmental, engineering and physical condition reports for the Property; (vii) the operating budget and any CAM reconciliations of the Property for the current year and following year, if available; (viii) the operating statements of the Property from the date upon which the Tenants took occupancy up until the Effective Date; (ix) copies of the Property’s real estate tax bills for the current and prior tax years; (x) all service contracts and insurance policies which affect the Property, if any; (xi) a copy of all warranties relating to the improvements constructed on the Property, including without limitation any structural slab or roof warranties; (xii) Tenant financials for each Tenant, to the extent reasonably available to Seller and consistent with such Tenant’s reporting requirements; and (xiii) any existing property management agreement relating to the day to day management and operations of the Property (collectively, the “Due Diligence Materials”). Seller shall deliver any other documents relating to the Property reasonably requested by Buyer, to the extent within Seller’s or its affiliates’ or agents’ possession or reasonably obtainable by Seller, within three (3) business days following such request. Additionally, during the term of this Agreement, Buyer, its agents and designees, shall have the right to enter the Property for the purposes of inspecting the Property, conducting soil tests, and making surveys, mechanical and structural

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engineering studies, inspecting construction, and conducting any other investigations and inspections as Buyer may reasonably require to assess the condition and suitability of the Property; provided, however, that such activities by or on behalf of Buyer on the Property shall not damage the Property nor materially interfere with construction on the Property or the conduct of business by Tenants under the Leases; and provided further, however, that Buyer shall indemnify and hold Seller harmless from and against any and all claims or damages to the extent resulting from the activities of Buyer on the Property, and Buyer shall repair any and all damage caused, in whole or in part, by Buyer and return the Property to substantially its condition prior to such damage, which obligation shall survive Closing or any termination of this Agreement. Seller shall reasonably cooperate with the efforts of Buyer and the Buyer’s representatives to inspect the Property. After the Effective Date, Buyer shall be permitted to speak and meet with the Tenants in connection with Buyer’s due diligence upon two (2) days prior written notice. Upon signing this Agreement, Seller shall provide Buyer with the name of a contact person(s) for the purpose of arranging site visits. Buyer shall give Seller reasonable written notice (which in any event shall not be less than two (2) business days) before entering the Property, and Seller may have a representative present during any and all examinations, inspections and/or studies on the Property. Buyer shall have the unconditional right, for any reason or no reason, to terminate this Agreement by giving written notice thereof to Seller and the Escrow Agent prior to the expiration of the Due Diligence Period, in which event this Agreement shall become null and void, Buyer shall receive a refund of the Earnest Money, together with all interest earned thereon, and all rights, liabilities and obligations of the parties under this Agreement shall expire, except as otherwise expressly set forth herein. From and after the expiration of the Due Diligence Period, Seller shall be entitled to payment of the Earnest Money pursuant to the terms of Section 9(a) hereof.

(c)It shall be a condition of Closing that Seller shall have obtained estoppel certificates from each Tenant and Guarantor, certified to Buyer, its lender and their successors and assigns, in the form attached hereto as Exhibit F (the “Estoppel Certificate”). Within two (2) business days following the Effective Date, Seller shall deliver to Buyer, for Buyer’s review and approval, draft Estoppel Certificates for the Leases. Seller shall promptly deliver to Buyer a photocopy or pdf file of the executed Estoppel Certificate when Seller receives the same. Within two (2) business days following the Effective Date, Seller shall request a waiver of any right of first refusal, right of first offer or other purchase option, if any, that any party may have to purchase the Property (and simultaneously provide Buyer with copies of such requests).

(d)Seller shall use good faith efforts to obtain a subordination, non-disturbance and attornment agreement from each Tenant in form and substance reasonably acceptable to Buyer and its lender, if applicable (each such agreement, an “SNDA”).

(e)Seller shall use good faith efforts to obtain estoppel certificates with respect to reciprocal easement agreements affecting the Property, as may be reasonably requested by Buyer.

(f)On or before the expiration of the Due Diligence Period, Buyer shall notify Seller in writing if Buyer elects not to assume at Closing any of the Contracts (defined below). If Buyer does not notify Seller prior to the expiration of the Due Diligence Period that it elects not to assume any of the Contracts, Buyer shall be deemed to have accepted and agreed to assume all of

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the Contracts. If Buyer exercises its right not to assume one or more Contracts at Closing, Seller shall give notice of termination of such disapproved Contract(s); provided, if by the terms of the disapproved Contract Seller has no right to terminate same on or prior to Closing, Buyer shall be required at Closing to assume all obligations thereunder until the effective date of the termination; provided, further, if any fee or other compensation is due under any disapproved Contract as a result of such termination, whether payable before or after the Closing Date, Seller shall remain obligated to pay the contractor or to reimburse Buyer for the payment of the termination charge. Notwithstanding the foregoing, Seller shall, without notice from Buyer, terminate any and all property management and listing agreements prior to Closing at Seller’s sole cost and expense.

(g)Seller shall cause its property manager to complete the Property Manager Questionnaire in the form attached hereto as Exhibit L and return the same to Buyer within ten (10) days following the Effective Date.

7.Risk of Loss/Condemnation. Upon an occurrence of a casualty, condemnation or taking, Seller shall notify Buyer in writing of same. Until Closing, the risk of loss or damage to the Property, except as otherwise expressly provided herein, shall be borne by Seller. In the event all or any portion of the Property is damaged in any casualty or condemned or taken (or notice of any condemnation or taking is issued) so that: (a) any Tenant has a right of termination or abatement of rent under its Leases, whether or not the restoration work shall be timely completed or (b) with respect to any casualty, if the cost to repair such casualty would exceed $50,000, or (c) with respect to any condemnation, any Improvements or access to the Property or more than five percent (5%) of the Property is (or will be) condemned or taken, then, Buyer may elect to terminate this Agreement by providing written notice of such termination to Seller within ten (10) business days after Buyer’s receipt of written notice of such condemnation, taking or damage, upon which termination, the Earnest Money, together with all interest earned thereon, shall be returned to the Buyer and neither party hereto shall have any further rights, obligations or liabilities under this Agreement, except as otherwise expressly set forth herein. With respect to any condemnation or taking (of any notice thereof), if Buyer does not elect to cancel this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the awards, if any, for the condemnation or taking, and Buyer shall be entitled to receive and keep all such awards. With respect to a casualty, if Buyer does not elect to terminate this Agreement or does not have the right to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the proceeds under Seller’s insurance policies covering such Property with respect to such damage or destruction (or pay to Buyer any such proceeds received prior to Closing) and pay to Buyer the amount of any deductible with respect thereto, and Buyer shall be entitled to receive and keep any monies to the extent they are received from such insurance policies.

8.Earnest Money Disbursement. The Earnest Money shall be held by Escrow Agent, in trust, and disposed of only in accordance with the following provisions:

(a)If the Closing occurs, Escrow Agent shall deliver the Earnest Money to, or upon the instructions of, Seller and Buyer on the Closing Date to be applied as part payment of the Purchase Price. If for any reason the Closing does not occur, Escrow Agent shall deliver the Earnest

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Money to Seller or Buyer only upon receipt of a written demand therefor from such party, subject to the following provisions of this clause (a). Subject to the last sentence of this clause (a), if for any reason the Closing does not occur and either party makes a written demand (the “Demand”) upon Escrow Agent for payment of the Earnest Money, Escrow Agent shall give written notice to the other party of the Demand within one (1) business day after receipt of the Demand. If Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) business days after the giving of such notice by Escrow Agent, Escrow Agent is hereby authorized to make the payment set forth in the Demand. If Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court. Notwithstanding the foregoing provisions of this clause (a), if Buyer delivers a notice to Escrow Agent and Seller stating that Buyer has terminated this Agreement on or prior to the expiration of the Due Diligence Period, then Escrow Agent shall immediately return the Earnest Money, together with all interest earned thereon, to Buyer without the necessity of delivering any notice to, or receiving any notice from Seller.

(b)The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent’s mistake of law respecting the scope or nature of Escrow Agent’s duties. Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent’s duties hereunder, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement or involving negligence on the part of Escrow Agent. Escrow Agent has executed this Agreement in the place indicated on the signature page hereof in order to confirm that Escrow Agent shall hold the Earnest Money in escrow and shall disburse the Earnest Money pursuant to the provisions of this Section 8.

9.Default

(a)In the event that Seller is ready, willing and able to close in accordance with the terms and provisions hereof, and Buyer defaults in any of its obligations undertaken in this Agreement, Seller shall be entitled, as its sole and exclusive remedy, to either: (i) if Buyer is willing to proceed to Closing, waive such default and proceed to Closing in accordance with the terms and provisions hereof; or (ii) declare this Agreement to be terminated, and Seller shall be entitled to immediately receive all of the Earnest Money, together with all interest earned thereon, as liquidated damages as and for Seller’s sole remedy. Upon such termination, neither Buyer nor Seller shall have any further rights, obligations or liabilities hereunder, except as otherwise expressly provided herein. Seller and Buyer agree that (a) actual damages due to Buyer’s default hereunder would be difficult and inconvenient to ascertain and that such amount is not a penalty and is fair and reasonable in light of all relevant circumstances, (b) the amount specified as liquidated damages is not disproportionate to the damages that would be suffered and the costs that would be incurred by

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Seller as a result of having withdrawn the Property from the market, and (c) Buyer desires to limit its liability under this Agreement to the amount of the Earnest Money paid in the event Buyer fails to complete Closing, and such amount shall be paid to Seller as liquidated damages and as Seller’s sole remedy hereunder. Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer. In no event under this Section or otherwise shall Buyer be liable to Seller for any punitive, speculative or consequential damages.

(b)In the event of a default in the obligations herein taken by Seller with respect to the Property, Buyer may, as its sole and exclusive remedy, either: (i) waive any unsatisfied conditions and proceed to Closing in accordance with the terms and provisions hereof; (ii) terminate this Agreement by delivering written notice thereof to Seller no later than Closing, upon which termination the Earnest Money, together with all interest earned therein, shall be refunded to Buyer, Seller shall pay to Buyer all of the out-of-pocket costs and expenses incurred by Buyer in connection with this Agreement, which return and payment shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof; (iii) enforce specific performance of Seller’s obligations hereunder; or (iv) by notice to Seller given on or before the Closing Date, extend the Closing Date for a period of up to thirty (30) days (the “Closing Extension Period”) to permit Seller to remedy any such default, and the “Closing Date” shall be moved to the last day of the Closing Extension Period. If Buyer so extends the Closing Date, then Seller may, but shall not be obligated to, cause said conditions to be satisfied during the Closing Extension Period. If Seller does not cause said conditions to be satisfied during the Closing Extension Period, then Buyer shall have the remedies set forth in Section 9(b) (i) through (iii) above, except that the term “Closing” shall read “Extended Closing.”

Notwithstanding the foregoing, in the event of a willful or intentional default of Seller hereunder, Buyer shall, in addition to the foregoing remedies, be permitted to pursue any and all rights and remedies available to Buyer at law or in equity; provided, however, in no event shall Seller be liable to Buyer for any punitive, speculative or indirect consequential damages.

10.Closing. The Closing shall consist of the execution and delivery of documents by Seller and Buyer, as set forth below, and delivery by Buyer to Seller of the Purchase Price in accordance with the terms of this Agreement. Seller shall deliver to Escrow Agent for the benefit of Buyer at Closing the following executed documents for each Property:

(a)A Special Warranty Deed in the form attached hereto as Exhibit B (the “Deed”);

(b)An Assignment and Assumption of Leases, Guaranties and Security Deposits, in the form attached hereto as Exhibit C;

(c)A Bill of Sale for the Personalty, if any, in the form attached hereto as Exhibit D;

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(d)An Assignment of Contracts, Permits, Licenses and Warranties in the form of Exhibit E;

(e)An original of each Estoppel Certificate from each Tenant and, as applicable, Guarantor, dated no earlier than thirty (30) days prior to the date of Closing. Each Estoppel Certificate must (i) reflect the business terms of the Lease, (ii) not disclose any defaults, (iii) be fully completed, dated and executed, (iv) be certified to Buyer and its lender, and (v) be otherwise acceptable in form and substance to Buyer in Buyer’s reasonable discretion. As to any Lease, if the Lease and any amendments, bearing the original signatures of the landlord and tenant thereunder have not been delivered to Buyer previously, a copy thereof confirming that the copy is true, correct and complete shall be attached to the Estoppel Certificate;

(f)To the extent obtained by Seller, estoppel certificates with respect to reciprocal easement agreements as may be reasonably requested by Buyer;

(g)A settlement statement setting forth the Purchase Price, all prorations and other adjustments to be made pursuant to the terms hereof, and the funds required for Closing as contemplated hereunder;

(h)All transfer tax statements, declarations and filings as may be necessary or appropriate for purposes of recordation of the Deed;

(i)Good standing certificates and corporate resolutions or member or partner consents, as applicable, and such other documents as reasonably requested by Escrow Agent;

(j)Originals of the Warranties (as hereinafter defined);

(k)A certificate pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended, or the regulations issued pursuant thereto, certifying the non-foreign status of Seller in the form attached hereto as Exhibit M;

(l)An owner’s title affidavit as to mechanics’ liens and possession and other matters in customary form reasonably acceptable to Buyer and Escrow Agent;

(m)An original SNDA from each Tenant fully executed and notarized by such Tenant, if requested by Buyer;

(n)With respect to each Tenant, aLetter to Tenant in form of Exhibit H attached hereto, with such changes as Buyer might reasonably require;

(o)An updated Rent Roll (defined below), arrears report and schedule of security deposits and letters of credit, certified by Seller to be true and correct;

(p)A bring down certificate with respect to Seller’s representations and warranties provided herein in the form attached hereto as Exhibit N;

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(q)Certificates of insurance or other evidence reasonably satisfactory to Buyer memorializing and confirming that the Tenants are then maintaining policies of insurance of the types and in the amounts required by the Leases, which shall name Buyer and its mortgagee as additional insured parties and/or as loss payees and/or mortgagees, as appropriate, as their respective interests may appear;

(r)All records (including originals) within Seller’s or Seller’s managing agent’s possession or reasonably obtainable by such parties reasonably required for the continued operation of the Property, including but not limited to, service contracts, plans, surveys, the Leases, Guaranties, lease files, licenses, permits, warranties, guaranties, and records of current expenditures for repairs and maintenance; and

(s)Such other instruments as are reasonably required by Escrow Agent to close the escrow and consummate the purchase of the Property in accordance with the terms hereof.

At Closing, Buyer shall instruct Escrow Agent to deliver the Earnest Money, together with all interest earned thereon, to Seller, which shall be applied to the Purchase Price, shall deliver the balance of the Purchase Price to Seller and shall execute and deliver execution counterparts of the closing documents referenced in clauses (b), (g), (h), and (m). Buyer shall have the right to advance the Closing upon five (5) days’ prior written notice to Seller; provided that all conditions precedent to both Buyer’s and Seller’s respective obligations to proceed with Closing under this Agreement have been satisfied (or, if there are conditions to a party’s obligation to proceed with Closing that remain unsatisfied, such conditions have been waived by such party). The Closing shall be held through the mail, by delivery in escrow of the closing documents to the Escrow Agent, on or prior to the Closing or such other place or manner as the parties hereto may mutually agree.

11.Representations by Seller. For the purpose of inducing Buyer to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, Seller makes the following representations and warranties to Buyer as of the date hereof and as of the Closing Date:

(a)Seller is duly organized (or formed), validly existing and in good standing under the laws of its state of organization, and to the extent required by law, the State in which the Property is located. Seller has the power and authority to execute and deliver this Agreement and all closing documents to be executed by Seller, and to perform all of Seller’s obligations hereunder and thereunder. Neither the execution and delivery of this Agreement and all closing documents to be executed by Seller, nor the performance of the obligations of Seller hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Seller or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Seller is bound. The execution, delivery and performance of this Agreement does not require the consent or approval of any court, administrative or governmental authority and does not result in the creation or imposition of any lien or equity of any kind whatsoever upon, or give to any other person any interest or right (including any right of termination or cancellation) in or with respect to, any material agreement to which Seller is a party or the business or operations of Seller or any of its properties or assets;

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(b)Seller has not received any written notice of any current or pending litigation, condemnation proceeding or tax appeals affecting Seller or the Property and Seller does not have any knowledge of any pending litigation or tax appeals against Seller or the Property; Seller has not initiated, nor is Seller participating in, any action for a change or modification in the current subdivision, site plan, zoning or other land use permits for the Property;

(c)Attached hereto as Exhibit J is a true, correct and complete list of all contracts and agreements relating to the operation or maintenance of the Property, including, but not limited to, any property management agreements, listing agreements and/or leasing agreements relating to the Property (the “Contracts”). Other than the Leases and Contracts, Seller has not entered into any agreements affecting the Property which will be binding upon Buyer after the Closing;

(d)Except for violations which have been cured or remedied on or before the date hereof, Seller has not received any written notice from (or delivered any notice to) any governmental authority regarding any violation of any law applicable to the Property and Seller does not have knowledge of any such violations, and the Property shall be delivered free from all violations at Closing;

(e)Seller has fee simple title to the Property free and clear of all liens and encumbrances except for Permitted Exceptions and Seller is the sole owner of the entire lessor’s interest in each Lease. The Property constitutes one or more separate tax parcels for purposes of ad valorem taxation;

(f)Attached hereto as Exhibit A-2 is a true, correct and complete list of all leases and subleases affecting the Property, including all amendments to such leases and subleases.

(g)With respect to each Lease: (i) the Lease forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Lease; (ii) the Lease is in full force and effect and there is no default thereunder; (iii) no brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the current term of the Lease or any extension or renewal thereof; (iv) Seller has no outstanding obligation to provide Tenant with an allowance to construct, or to construct at its own expense, any tenant improvements; (v) intentionally deleted; (vi) Tenant is not entitled to rental concessions or abatements for any period subsequent to the scheduled date of Closing; (vii) Tenant has not prepaid any rents as of the date hereof nor has Tenant delivered a security deposit, letter of credit or other security in connection with the Lease, except as set forth on Exhibit K attached hereto; (viii) Tenant has not made any request for any assignment, transfer, or subletting in connection with all or a portion of the premises demised to Tenant which is presently pending or under consideration by Seller; (ix) all specified work required to be performed by the landlord under the Leaseup to the date of Closing has been completed or will be completed, at Seller’s expense, prior to the Closing; (x) Seller has not received and has no knowledge of any pending notices from Tenant electing to vacate the premises leased to Tenant or exercising any right of Tenant to terminate the Lease; and (xi) Seller has heretofore billed Tenant for all fixed rent and additional rent due under the Lease as of the date hereof;

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(h)Attached hereto as Exhibit A-3 and made a part hereof is a true, correct and complete copy of the rent roll for the Property (the “Rent Roll”);

(i)There are no occupancy rights, leases or tenancies affecting the Property other than the Leases. Neither this Agreement nor the consummation of the transactions contemplated hereby is subject to any right of first refusal, right of first offer or other purchase right in favor of any other person or entity; and apart from this Agreement, Seller has not entered into any written agreements for the purchase or sale of the Property, or any interest therein which has not been terminated;

(j)The transactions contemplated hereby either (i) will not constitute a sale of all or substantially all the assets of Seller, or (ii) if such transaction does constitute a sale of all or substantially all the assets of any Seller, Seller shall provide to Buyer at Closing an excise tax lien waiver or such other reasonably obtainable instruments evidencing compliance with laws or payment of taxes to the extent required by the law of the relevant state, or an indemnification from a party reasonably acceptable to Buyer for any resulting liability with respect to the period prior to the Closing;

(k)To Seller’s knowledge, except as set forth in the environmental reports previously delivered by Seller to Buyer, no hazardous substances have been generated, stored, released, or disposed of on or about the Property in violation of any law, rule or regulation applicable to the Property which regulates or controls matters relating to the environment or public health or safety (collectively, “Environmental Laws”) and no adverse environmental condition exists at the Property. Seller has not received any written notice from (nor delivered any notice to) any federal, state, county, municipal or other governmental department, agency or authority (1) concerning any petroleum product or other hazardous substance discharge or seepage at, on, around or under the Property, or migrating from the Property, in violation of any Environmental Laws or; (2) of any pending actions, suits, claims and/or proceedings claiming that Seller, any Tenant or the Property is in violation of any Environmental Laws. For purposes of this Subsection, “hazardous substances” shall mean any substance or material which is defined or deemed to be hazardous or toxic pursuant to any Environmental Laws. To Seller’s knowledge, there are no underground storage tanks located on the Property;

(l)Exhibit I attached hereto is a true, correct and complete listing of all warranties in effect for the Property (the “Warranties”);

(m)Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code;

(n)There presently exists no unrestored casualty or condemnation affecting the Property;

(o)With respect to each Guaranty: (a) the Guaranty forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Guaranty; and (b) the Guaranty is in full force and effect and there is no default thereunder; and

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(p)To Seller’s actual knowledge and except for Seller’s confidential materials, Seller has provided Buyer with access to all certificates, licenses, permits, Leases, Contracts, books, records, documents and information relating to the Property and the ownership and operation thereof which are in the possession of Seller. Seller represents and warrants that such Due Diligence Materials are true and correct copies of the same materials in Seller’s files.

The representations and warranties of Seller shall survive Closing for a period of one (1) year.

12.Representationsby Buyer. Buyer represents and warrants to, and covenants with, Seller as follows:

(a)Buyer is duly formed, validly existing and in good standing under the laws of Delaware, is authorized to consummate the transaction set forth herein and fulfill all of its obligations hereunder and under all closing documents to be executed by Buyer, and has all necessary power to execute and deliver this Agreement and all closing documents to be executed by Buyer, and to perform all of Buyer’s obligations hereunder and thereunder. This Agreement and all closing documents to be executed by Buyer have been duly authorized by all requisite corporate or other required action on the part of Buyer and are the valid and legally binding obligation of Buyer, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement and all closing documents to be executed by Buyer, nor the performance of the obligations of Buyer hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Buyer or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Buyer is bound.

The representations and warranties of Buyer shall survive Closing for a period of one (1) year.

13.Conditions Precedent to Buyer’s Obligations. Buyer’s obligation to pay the Purchase Price, and to accept title to the Property, shall be subject to compliance by Seller with the following conditions precedent on and as of the date of Closing:

(a)Seller shall deliver to Buyer on or before the Closing the items set forth in Section 10 above;

(b)Buyer shall receive from Escrow Agent or any other title insurer approved by Buyer in its judgment and discretion, a current ALTA owner’s form of title insurance policy, or irrevocable and unconditional binder to issue the same, with extended coverage for the Real Property and the Improvements (including any beneficial easements) in the amount of the Purchase Price, dated, or updated to, the date of the Closing, insuring, or committing to insure, at its ordinary premium rates Buyer’s good and marketable title in fee simple to the Real Property and the Improvements and otherwise in such form and with such endorsements as provided in the title commitment approved by Buyer pursuant to Section 6 hereof and subject only to the Permitted Exceptions (the “Title Policy”);

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(c)Buyer shall have received a valid and permanent final certificate of occupancy (or the equivalent thereof) for the Property which shall not contain any contingencies or require any additional work to be completed;

(d)Each Tenant shall be in possession of the premises demised under its respective Lease, open for business to the public and paying full and unabated rent under such Lease and no Tenant shall have assigned its Lease or sublet the Property;

(e)The representations and warranties of Seller contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Seller shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Seller prior to or at the Closing;

(f)Seller shall have delivered to Buyer a written waiver from any party of any right of first refusal, right of first offer or other purchase option that such party may have, pursuant to the Leases or otherwise, to purchase the Property from Seller; and

(g)Seller shall have made all contributions, payments and/or reimbursements and completed any and all work required by any governmental authority in connection with the construction and development of the Property, including, without limitation, as required by any variance or site plan approval.

In the event that any of the foregoing conditions precedent have not been satisfied as of the Closing Date, Buyer shall have the right terminate this Agreement by delivering written notice thereof to Seller no later than the date which is fifteen (15) days after the Closing Date, upon which termination the Earnest Money shall be refunded to Buyer, and with respect to a failure under Sections (a), (e) or (f) above, Seller shall pay to Buyer upon receipt of reasonable documentary evidence thereof all of the out-of-pocket costs and expenses actually incurred by Buyer in connection with this Agreement, which return and payment shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof.

14.Conditions Precedent to Seller’s Obligations. Seller’s obligation to deliver title to the Property shall be subject to compliance by Buyer with the following conditions precedent on and as of the date of Closing:

(a)Buyer shall deliver to Escrow Agent on the Closing Date the remainder of the Purchase Price, subject to adjustment of such amount pursuant to Section 4 hereof; and

(b)The representations and warranties of Buyer contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Buyer shall have performed and complied in all material respects with all covenants, agreements and

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conditions required by this Agreement to be performed or complied with by Buyer prior to or at the Closing.

15.Notices. Unless otherwise provided herein, all notices and other communications which may be or are required to be given or made by any party to the other in connection herewith shall be in writing and shall be deemed to have been properly given and received on the date: (i) delivered by facsimile transmission or by electronic mail (e.g. email), (ii) delivered in person, (iii) deposited in the United States mail, registered or certified, return receipt requested, or (iv) deposited with a nationally recognized overnight courier, to the addresses set out in Section 1, or at such other addresses as specified by written notice delivered in accordance herewith. Notwithstanding the foregoing, Seller and Buyer agree that notice may be given on behalf of each party by the counsel for each party and notice by such counsel in accordance with this Section 15 shall constitute notice under this Agreement.

16.Seller Covenants. Seller agrees that it: (a) shall continue to operate and manage the Property in the same manner in which Seller has previously operated and managed the Property; (b) shall, subject to Section 7 hereof and subject to reasonable wear and tear, maintain the Property in the same condition as exists on the date hereof; and (c) shall not, without Buyer’s prior written consent, which, after the expiration of the Due Diligence Period may be withheld in Buyer’s sole discretion: (i) amend the Leases or Guaranties in any manner or enter into any new lease, license agreement or other occupancy agreement with respect to the Property; (ii) consent to an assignment of any Lease or a sublease of the premises demised thereunder or a termination or surrender thereof; (iii) terminate any Lease or release any guarantor of or security for any Lease unless required by the express terms of such Lease; (iv) enter into any contracts unless terminable by Seller without penalty upon not more than thirty (30) days’ prior notice; and/or (v) cause, permit or consent to an alteration of the premises demised under the Leases (unless such consent is non-discretionary). Seller shall promptly inform Buyer in writing of any material event adversely affecting the ownership, use, occupancy or maintenance of the Property, whether insured or not.

17.Intentionally Deleted.

18.Performance on Business Days. A "business day" is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government. Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day.

19.Entire Agreement. This Agreement constitutes the sole and entire agreement among the parties hereto and no modification of this Agreement shall be binding unless in writing and signed by all parties hereto. No prior agreement or understanding pertaining to the subject matter hereof (including, without limitation, any letter of intent executed prior to this Agreement) shall be valid or of any force or effect from and after the date hereof.

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20.Severability. If any provision of this Agreement, or the application thereof to any person or circumstance, shall be invalid or unenforceable, at any time or to any extent, then the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. Each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

21.No Representations or Warranties. Buyer hereby acknowledges, understands and agrees that it has an opportunity to inspect the Property as set forth in Section 6 herein, and except as set forth in this Agreement, the Property shall be conveyed at Closing to Buyer in “as-is” condition with no representation or warranties whatsoever.

22.Applicable Law. This Agreement shall be construed under the laws of the State or Commonwealth in which the Property is located, without giving effect to any state's conflict of laws principles.

23.Tax-Deferred Exchange. Buyer and Seller respectively acknowledge that the purchase and sale of the Property contemplated hereby may be part of a separate exchange (an “Exchange”) being made by each party pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated with respect thereto. In the event that either party (the “Exchanging Party”) desires to effectuate such an exchange, then the other party (the “Non-Exchanging Party”) agrees to cooperate fully with the Exchanging Party in order that the Exchanging Party may effectuate such an exchange; provided, however, that with respect to such Exchange (a) all additional costs, fees and expenses related thereto shall be the sole responsibility of, and borne by, the Exchanging Party; (b) the Non-Exchanging Party shall incur no additional liability as a result of such exchange; (c) the contemplated exchange shall not delay any of the time periods or other obligations of the Exchanging Party hereby, and without limiting the foregoing, the scheduled date for Closing shall not be delayed or adversely affected by reason of the Exchange; (d) the accomplishment of the Exchange shall not be a condition precedent or condition subsequent to the Exchanging Party's obligations under the Agreement; and (e) the Non-Exchanging Party shall not be required to hold title to any land other than the Property for purposes of the Exchange. The Exchanging Party agrees to defend, indemnify and hold the Non-Exchanging Party harmless from any and all liability, damage or cost, including, without limitation, reasonable attorney's fees that may result from Non-Exchanging Party's cooperation with the Exchange. The Non-Exchanging Party shall not, by reason of the Exchange, (i) have its rights under this Agreement, including, without limitation, any representations, warranties and covenants made by the Exchanging Party in this Agreement (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller), or in any of the closing documents (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller) contemplated hereby, adversely affected or diminished in any manner, or (ii) be responsible for compliance with or deemed to have warranted to the Exchanging Party that the Exchange complies with Section 1031 of the Code.

24.Broker’s Commissions. Buyer and Seller each hereby represent that, except for the Broker listed herein, there are no other brokers involved or that have a right to proceeds in this transaction. Seller shall be responsible for payment of commissions to the Broker pursuant to a

19

separate written agreement executed by Seller. Seller and Buyer each hereby agree to indemnify and hold the other harmless from all loss, cost, damage or expense (including reasonable attorneys' fees at both trial and appellate levels) incurred by the other as a result of any claim arising out of the acts of the indemnifying party (or others on its behalf) for a commission, finder's fee or similar compensation made by any broker, finder or any party who claims to have dealt with such party (except that Buyer shall have no obligations hereunder with respect to any claim by Broker). The representations, warranties and indemnity obligations contained in this section shall survive the Closing or the earlier termination of this Agreement.

25.Assignment. Buyer may assign its rights under this Agreement, provided, however, that no such assignment shall relieve Buyer of any of its obligations hereunder until Closing is complete. Buyer is entering into this Agreement for and on behalf of two related special purpose entities titled ARHC VAGBGIL01, LLC, with respect to the 310 Property, and ARHC CCGBGIL01, LLC, with respect to the 336 Property (individually and collectively, “Approved Assignee”) and intends to assign Approved Assignee its rights hereunder prior to Closing.

26.Attorneys’ Fees. In any action between Buyer and Seller as a result of failure to perform or a default under this Agreement, the prevailing party shall be entitled to recover from the other party, and the other party shall pay to the prevailing party, the prevailing party’s reasonable attorneys’ fees and disbursements and court costs incurred in such action.

27.Time of the Essence. Time is of the essence with respect to each of Buyer’s and Seller’s obligations hereunder.

28.Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Agreement which are transmitted electronically shall be valid for all purposes.

29.Anti-Terrorism. Neither Buyer or Seller, nor any of their affiliates, are in violation of any Anti-Terrorism Law (as hereinafter defined) or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. “Anti-Terrorism Laws” shall mean any laws relating to terrorism or money laundering, including: Executive Order No. 13224; the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or may hereafter be, renewed, extended, amended or replaced; the applicable laws comprising or implementing the Bank Secrecy Act; and the applicable laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing may from time to time be amended, renewed, extended, or replaced).

[SIGNATURES APPEAR ON THE FOLLOWING PAGES]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

BUYER:	310 SELLER:
AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company	310 HOME BOULEVARD, GALESBURG, IL – DAVESSA VENTURE, LLC, an Iowa limited liability company
By: AR Capital, LLC,    a Delaware limited liability company,    its sole member	By: /s/ James V. Russell       Name: James V. Russell       Title: Member
	336 SELLER:
By:/s/ William M. Kahane Name: William M. Kahane Title: Manager	336 HOME BOULEVARD, GALESBURG, IL – S.J. RUSSELL, LLC, an Iowa limited liability company
	By: /s/ James V. Russell       Name: James V. Russell       Title: Managing Member
Date: July 1, 2015	Date: July 1, 2015

THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES TO BE BOUND BY THE TERMS OF THIS AGREEMENT RELATING TO ESCROW AGENT AND THE EARNEST MONEY.

ESCROW AGENT:

STEWART TITLE GUARANTY COMPANY

By: /s/Annette M. Comer

Name: Annette M. Comer

Title: Vice President

Date: July 3, 2015

EXHIBITS

Exhibit A-1-1    -    Real Property – 310 Land

Exhibit A-1-2    -    Real Property – 336 Land

Exhibit A-2    -    List of Leases

Exhibit A-3    -    Rent Roll

Exhibit B    -    Form of Special Warranty Deed

Exhibit C    -    Form of Assignment and Assumption of Leases, Guaranties and Security Deposits

Exhibit D    -    Form of Bill of Sale

Exhibit E    -    Form of Assignment of Contracts, Permits, Licenses and Warranties

Exhibit F    -    Form of Estoppel Certificate

Exhibit G    -    Intentionally Omitted

Exhibit H    -    Form of Tenant Notice Letter

Exhibit I    -    Warranties    

Exhibit J    -    Contracts

Exhibit K    -    Prepaid Rents, Security Deposits and Letters of Credit

Exhibit L    -    Property Manager Questionnaire

Exhibit M    -    Non-Foreign Person Affidavit

Exhibit N    -    Seller’s Bring Down Certificate

EXHIBIT A-1-1

LEGAL DESCRIPTION OF REAL PROPERTY

310 Land

Lot 1 GALEVA Subdivision, a Resubdivision of Lot 2 in IHMVCU Subdivision (per plat recorded in plat book 43 at page 39, Knox County Records), being a part of the northwest quarter of section 3, in township 11 North, Range 1 east of the fourth principal meridian, in the City of Galesburg, Knox County, Illinois.

A-1-1-1

EXHIBIT A-1-2

LEGAL DESCRIPTION OF REAL PROPERTY

336 Land

Lot 2 GALEVA Subdivision, a Resubdivision of Lot 2 in IHMVCU Subdivision (per plat recorded in plat book 43 at page 39, Knox County Records), being a part of the northwest quarter of section 3, in township 11 North, Range 1 east of the fourth principal meridian, in the City of Galesburg, Knox County, Illinois.

A-1-2-1

EXHIBIT A-2

LIST OF LEASES

310 Land

1. Lease No. VA263-12-L-0127, dated as of September 28, 2012, by and between Davessa Venture, LLC, as landlord and The United States of America, Department of Veterans Affairs, Network 23 Contracting office, as tenant, as amended by that certain Supplemental Lease Agreement No. P00001, effective as of February 2, 2013, and further amended by that certain Lease Amendment No. P00002, effective as of July 25, 2013.

336 Land

1. Lease, dated as of December 11, 2013, by and between S.J. Russell, L.C., as landlord, and Illinois Cancercare, P.C., as tenant.

A-2-1

EXHIBIT A-3

RENT ROLL

[Attached]

A-3-1

EXHIBIT B

FORM OF SPECIAL WARRANTY DEED[Subject to Local Counsel Review]

This document prepared by:

___________________________
___________________________
___________________________
___________________________

After recording, return to:

ARHC [___________], LLC

c/o American Realty Capital Healthcare Trust III, Inc.

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Attention: Erin Corbett

Tax Parcel No. ______________________________

SPECIAL WARRANTY DEED

THIS INDENTURE, made on the _____ day of ______________, 2015, by and between [______________________________], a [_______________] ("Grantor"), and ARHC [___________], LLC, a Delaware limited liability company, whose address is 106 York Road, Jenkintown, Pennsylvania 19046 ("Grantee")

W I T N E S S E T H:

THAT Grantor, in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, does by these presents, sell and convey unto the said Grantee, its successors and assigns, the lots, tracts or parcels of land lying, being and situated in the County of Knox, State of Illinois, and more fully described on Exhibit "A" attached hereto and incorporated herein by reference, together with all buildings, facilities and other improvements, located thereon and (a) all right, title and interest, if any, of Grantor in and to any streets and roads abutting the above described premises to the center lines thereof and (b) the appurtenances and all the estate and rights of Grantor in and to said premises.

B-1

TO HAVE AND TO HOLD the premises aforesaid with all and singular, the rights, easements, privileges, appurtenances and immunities thereto belonging or in any wise appertaining unto the said Grantee and unto Grantee's successors and assigns forever, the said Grantor hereby covenanting that Grantor will warrant and defend the title to said premises unto the said Grantee and unto Grantee's successors and assigns, against the lawful claims and demands of all persons claiming by, under or through Grantor, but not otherwise.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

B-2

IN WITNESS WHEREOF, Grantor has executed this Special Warranty Deed the day and year first above written.

GRANTOR:

[_______________], a [_______________]

By:    

By:

Name:

Title:

[ACKNOWLEDGMENT]

B-3

Exhibit A

B-4

EXHIBIT C

FORM OF
ASSIGNMENT AND ASSUMPTION OF LEASES, GUARANTIES AND SECURITY DEPOSITS

[_______________], a [_______________] ("Assignor"), in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby assigns, transfers, sets over and conveys to ARHC [___________], LLC, a Delaware limited liability company ("Assignee"), all of Assignor's right, title and interest in and to those leases described in Exhibit A attached hereto and made a part hereof (as amended from time to time, the “Leases”), including any and all security deposits under the Leases, together with all of Assignor’s right, title and interest in and to those lease guaranties described in Exhibit B attached hereto and made a part hereof.

Subject to the limitations set forth below, Assignor does hereby agree to defend, indemnify and hold harmless Assignee from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignee by reason of the failure of Assignor to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the lessor, or landlord under and by virtue of the Leases arising or accruing prior to the date of this Assignment. Subject to the limitations set forth below, Assignee does hereby agree to defend, indemnify and hold harmless Assignor from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignor by reason of the failure of Assignee to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the landlord under and by virtue of the Leases arising or accruing on and after the date of this Assignment.

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C-1

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment this ______ day of ______________, 2015, which Assignment is effective this date. This Assignment may be executed in counterparts, which when taken together shall be deemed one agreement.

ASSIGNOR:

[_______________], a [_______________]

By:    

By:

Name:

Title:

ASSIGNEE:

ARHC [___________], LLC, a Delaware limited liability company

By:

Name:

Title:

C-2

Exhibit A

List of Leases

[to be prepared by Seller]

C-3

Exhibit B

List of Guaranties

[to be prepared by Seller]

C-4

EXHIBIT D

FORM OF BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, [_______________], a [_______________] (“Seller”), hereby bargains, sells, conveys and transfers to ARHC [___________], LLC, a Delaware limited liability company (“Buyer”), all of Seller’s right, title and interest in and to those certain items of personal and intangible property (including any warranty made by third parties in connection with the same and the right to sue on any claim for relief under such warranties) (the “Personal Property”) located at or held in connection with that certain real property located in the State of Illinois, as more particularly described on Schedule A attached hereto and made a part hereof.

Seller has not made and does not make any express or implied warranty or representation of any kind whatsoever with respect to the Personal Property, including, without limitation, with respect to title, merchantability of the Personal Property or its fitness for any particular purpose, the design or condition of the Personal Property; the quality or capacity of the Personal Property; workmanship or compliance of the Personal Property with the requirements of any law, rule, specification or contract pertaining thereto; patent infringement or latent defects. Buyer accepts the Personal Property on an “as is, where is” basis.

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D-1

IN WITNESS WHEREOF, Seller has caused this instrument to be executed and delivered as of this ___ day of _______, 2015.

SELLER:

[_______________], a [_______________]

By:    

By:

Name:

Title:

D-2

SCHEDULE A

TO BILL OF SALE

[Add legal description of Real Property]

D-3

EXHIBIT E

FORM OF ASSIGNMENT OF CONTRACTS,
PERMITS, LICENSES AND WARRANTIES

THIS ASSIGNMENT, made as of the ___ day of ________, 2015, by [_______________], a [_______________] (“Assignor”), to ARHC [___________], LLC, a Delaware limited liability company (“Assignee”).

W I T N E S S E T H:

WHEREAS, by Agreement for Purchase and Sale of Real Property (the “Purchase Agreement”) having an effective date of _________________ ____, 2015, between Assignor and American Realty Capital VII, LLC, a Delaware limited liability company, predecessor-in-interest to Assignee, Assignee has agreed to purchase from Assignor as of the date hereof, and Assignor has agreed to sell to Assignee, that certain property located at [___] Home Boulevard, Galesburg, IL 61401 (the “Property”); and

WHEREAS, Assignor desires to assign to Assignee as of the date hereof all of Assignor’s right, title and interest in those contracts set forth on Exhibit A attached hereto, and the permits, trademarks, licenses and warranties held by Assignor in connection with the Property (collectively, the “Contracts”).

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Assignor hereby assigns, sets over and transfers unto Assignee to have and to hold from and after the date hereof all of the right, title and interest of Assignor in, to and under the Contracts. Assignor agrees without additional consideration to execute and deliver to Assignee any and all additional forms of assignment and other instruments and documents that may be reasonably necessary or desirable to transfer or evidence the transfer to Assignee of any of Assignor's right, title and interest to any of the Contracts.

This Assignment shall be governed by the laws of the State of Illinois, applicable to agreements made and to be performed entirely within said State.

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E-1

IN WITNESS WHEREOF, Assignor has duly executed this Assignment as of the date first above written.

ASSIGNOR:

[_______________], a [_______________]

By:    

By:

Name:

Title:

E-2

Exhibit “A”

Assigned Contracts

E-3

EXHIBIT F

FORM OF ESTOPPEL CERTIFICATE

The undersigned hereby certifies to AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“ARC VII”), ARHC [___________], LLC, a Delaware limited liability company(“Approved Assignee,” and together with ARC VII, “Buyer”), [__________________] (“Lender”), and their respective successors and assigns as follows:

1.    The undersigned is the tenant under that certain [insert title of lease document] [(the “Lease”)], dated as of _________ __, ____, by and between _________________________ (“Landlord”) and _________________________ (“Tenant”) [, as amended by that certain [insert title of lease amendment document], dated as of _________ __, ____, by and between _________________________ and _________________________ (collectively, the “Lease”)], pursuant to which Tenant leases certain premises known as Suite ____, consisting of _______ rentable square feet (the “Premises”), at that real property and improvements located at [___] Home Boulevard, Galesburg, IL 61401 (the “Property”).

2.    Except as set forth above, the Lease has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived.

3.    The Lease is valid and in full force and effect on the date hereof. The Lease represents the entire agreement between Landlord and Tenant with respect to the Premises and the land on which the Premises are situated.

4.    Tenant is not entitled to, and has made no agreement with Landlord or its agents or employees concerning, free rent, partial rent, rebate of rent payments, credit or offset or reduction in rent, or any other type of rental concession including, without limitation, lease support payments, lease buy-outs, or assumption of any leasing or occupancy agreements of Tenant.

5.    The initial term of the Lease began on __________ __, _____ and expires on ________ __, 20__. The Rent Commencement Date was __________ __, ____. Tenant has accepted possession of the Premises and is open for business. Tenant has not sublet all or a portion of the Premises to any sublessee and has not assigned, transferred or encumbered any of its rights or interests under the Lease.

6.    Tenant has no outstanding options or rights to renew or extend the term of the Lease, except as follows: ________________ (if none, please state “none”). Tenant has no outstanding expansion options, other options, rights of first refusal or rights of first offer to purchase the Property or any part thereof, or rights of first offer to lease with respect to all or any part of the Property.

7.    The [Base Annual Rent] payable under the Lease is $____________ ($_________ monthly). Such [Base Annual Rent] payable under the Lease shall be adjusted during the initial term of the Lease as follows: (a) from ___________, 20__ to and including ______________, 20__, the Base Annual Rent shall be $_______ ($_______ monthly); (b) from ___________, 20___ to and including ____________, 20___ the Base Annual Rent shall be $________ ($________

F-1

monthly); [and from __________, 20__ to and including __________, 20___ the Base Annual Rent shall be $_________ ($__________ monthly)]. Such rent has been paid through and including the month of ____________, 2015. Additional rent under the Lease in the amount of $__________ has been paid through and including the month of __________, 2015. No such rent (excluding security deposits) has been paid more than one (1) month in advance of its due date.

8.    Tenant's security deposit, if any, is $_________________ (if none, please state “none”).

9.    No event has occurred and no condition exists that constitutes, or that with the giving of notice or the lapse of time or both, would constitute, a default by Tenant or, to the best knowledge of Tenant, Landlord under the Lease. Tenant has no existing defenses or offsets against the enforcement of the Lease by Landlord.

10.    (a)    All required contributions by Landlord to Tenant on account of Tenant's improvements have been received by Tenant and all of Tenant's tenant improvements have been completed in accordance with the terms of the Lease.

(b)    Landlord has satisfied all its obligations to Tenant arising out of or incurred in connection with the construction of the tenant improvements on the Premises and no off-set exists with respect to any rents or other sums payable or to become payable by the Tenant under the Lease.

11.    All licenses necessary for using and operating the Premises as a [insert permitted use] are held by Tenant and are in full force and effect.

12.    No voluntary actions or, to Tenant’s best knowledge, involuntary actions are pending against Tenant under the bankruptcy laws of the United States or any state thereof.

13.    This Certificate is delivered to induce Buyer to acquire the Property and Lender to provide financing in connection with such acquisition, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate.

[SIGNATURE PAGE FOLLOWS]

F-2

The undersigned is duly authorized to execute this Certificate on behalf of Tenant.

Dated: ____________, 2015

TENANT:    

____________________, a ________________

By:______________________
Name:

Title:

[DELETE THE FOLLOWING SECTION IF THE LEASE IS NOT GUARANTEED]

[_________________________, a _________________________] (“Guarantor”) certifies to and for the benefit of Buyer, Lender and their respective successors and assigns as follows:

With respect to that certain [Guaranty], dated as of ________ __, ____, by Guarantor to and for the benefit of Landlord (the “Guaranty”): (a) Guarantor is the guarantor of the Lease pursuant to the Guaranty; (b) the Guaranty has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived; (c) the Guaranty is valid and in full force and effect on the date hereof; and (d) no voluntary actions or, to Guarantor’s best knowledge, involuntary actions are pending against Guarantor under the bankruptcy laws of the United States or any state thereof. This Certificate is delivered to induce Buyer to acquire the Property and Lender to provide financing in connection with such acquisition, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate. The undersigned is duly authorized to execute this Certificate.

Dated: ____________, 2015

[USE FOLLOWING SIGNATURE BLOCK FOR ENTITY GUARANTOR]

GUARANTOR:    

____________________,

a ________________

By:______________________    Name:

Title:

[USE FOLLOWING SIGNATURE BLOCK FOR PERSONAL GUARANTOR]

F-3

GUARANTOR:    

______________________

Name:

EXHIBIT G

INTENTIONALLY OMITTED

G-1

EXHIBIT H

FORM OF NOTICE TO TENANT

________________ ___, 2015

TO:    [INSERT TENANT’S NOTICE ADDRESS FROM LEASE]

Re:    Notice of Change of Ownership of [___] Home Boulevard, Galesburg, Illinois 61401

Ladies and Gentlemen:

YOU ARE HEREBY NOTIFIED AS FOLLOWS:

That as of the date hereof, the undersigned has transferred, sold, assigned, and conveyed all of its right, title and interest in and to the above-described property, (the “Property”) to ARHC [___________], LLC, a Delaware limited liability company (the “New Owner”), and assigned to New Owner, all of the undersigned’s right, title and interest under that certain Lease, dated _________, between ________as tenant and ____________as landlord (the “Lease”), together with any security deposits or letters of credit held thereunder.

Accordingly, New Owner is the landlord under the Lease and future notices and correspondence with respect to your leased premises at the Property should be made to the New Owner at the following address:

ARHC [___________], LLC

c/o American Realty Capital Healthcare Trust III, Inc.

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Attention: Regional Asset Manager

With a copy to:

ARHC [___________], LLC

c/o American Realty Capital Healthcare Trust III, Inc.

405 Park Avenue, 14^th Floor

New York, NY 10022

Attention: General Counsel

You will receive a separate notification from New Owner regarding the new address for the payment of rent. In addition, to the extent required by the Lease, please amend all insurance policies you are required to maintain pursuant to the Lease to name New Owner as an additional insured thereunder and promptly provide New Owner with evidence thereof.

H-1

[SIGNATURE PAGE FOLLOWS]

H-2

Very truly yours,

[_______________], a [_______________]

By:    

By:

Name:

Title:

H-3

EXHIBIT I

WARRANTIES

310 Land – General Warranty Expired 7-25-2013

Scope of Work	Contractor	Warranty Expiration Date
Landscape - plants	Don Owen Landscaping	July 25, 2016
Signage – Defects including material, fabrication and installation	ACME Sign Co.	July 25, 2015
Signage – Color fading	ACME Sign Co.	July 25, 2020
Roofing – Versico Total Roofing System	Sterling Commercial Roofing	July 25, 2028
Roofing – PAC-CLAD Coating (no chalking, color change)	Sterling Commercial Roofing	July 25, 2023
Roofing – PAC-CLAD Coating (no cracking, peeling)	Sterling Commercial Roofing	July 25, 2033
Schlage Lockset – mechanical warranty	Doors Inc.	Lifetime
Schlage Lockset – finish	Doors Inc.	July 25, 2023
Graham Wood Doors	Doors Inc.	Lifetime
Mid-Lite Insulating Glass	Mid-American Glazing Systems	July 25, 2023
Kawneer – Curtainwall/Storefront (defects)	Mid-American Glazing Systems	July 25, 2015
Kawneer – Painted Finish	Mid-American Glazing Systems	July 25, 2018
IPC Door and Wall Protection Systems	InPro	Lifetime
Rhino Window Hermetic Seal of Insulated Glass – free from failure (except breakage)	Preferred Building Products	February 1, 2022
Rhino Window Frame and Sash	Preferred Building Products	February 1, 2017
Rhino Window – finish warranty (cracking, chipping, peeling)	Preferred Building Products	February 1, 2017
Patcraft – Shaw Carpet Tile (defect)	Vonderheidi Flooring	Lifetime Commercial Limited Warranty
Armstrong Rejuvenations Flooring (defect)	Vonderheidi Flooring	February 1, 2018
Johnsonsite Base	Vonderheidi Flooring	February 1, 2018
Lafayette Venetian Blind-Window Shades (defects)	Columbia Decorating	July 25, 2018
Baby Changing Station	Sandberg Co.	July 25, 2018
JL Fire Extinguishers (defects)	Sandberg Co.	July 25, 2019

I-1

Delta Faucets (defects)	Hometown Plumbing & Heating	February 1, 2018
Chicago Faucets (defects)	Hometown Plumbing & Heating	Lifetime Faucet Warranty
Chicago Faucets (Cartridge)	Hometown Plumbing & Heating	February 1, 2018
Sloan Water Closet –Urinal Flushometer	Hometown Plumbing & Heating	July 25, 2016
Elkay Barrier Free Water Cooler (compressor and hermetically sealed refrigeration system)	Hometown Plumbing & Heating	February 1, 2018
AO Smith Water Heater (leak)	Hometown Plumbing & Heating	July 25, 2016
Guardian G1775 Eye/Face Wash (defects)	Hometown Plumbing & Heating	July 25, 2015
Tyco Sprinkler Cabinets	Ahern Fire Protection	July 25, 2023
Tyco CPVC Pipe and Fittings	Ahern Fire Protection	July 25, 2023
Mitsubishi Electric Split Ductless A/C & Heat Pumps (parts and defects)	Mechanical Services, Inc.	July 25, 2018
Mitsubishi Electric Split Ductless A/C & Heat Pumps (compressor)	Mechanical Services, Inc.	July 25, 2020

336 Land – General Warranty Expires 8-11-2015

Scope of Work	Contractor	Warranty Expiration Date
Graham Wood Doors	Doors Inc	Varies
Rixson Door Controls	Doors Inc	Varies
Sargent ASSA Boy	Doors Inc.	Varies
Gerking Windows	Preferred Building Products	Varies
Kawneer Storefront	Mid American Glazing Systems	August 11, 2016
Firestone Roofing Warranty	Sterling Commercial Roofing	August 11, 2034
Teknoflor Resilient Floor	Vonderheidi Flooring	August 11, 2022
Patcraft-Shaw Carpet Weave Modular Floor	Vonderheidi Flooring	Lifetime Limited
Patcraft Ecoworx Tile Backing	Vonderheidi Flooring	Lifetime Limited
Mohawk Modular Carpet	Vonderheidi Flooring	Lifetime Limited
Mannington Modular Floor	Vonderheidi Flooring	Lifetime Limited
Activar Fire Extinguisher Warranty	Sandberg Co	August 11, 2019
ASI Toilet Accessories	Sandberg Co	Varies
MechoSystems MechoShade	Columbia Decorating	August 11, 2024
Delta Lavatory Faucets	Hometown Plumbing & Heating	August 11, 2019
Delta Deckmount Faucets	Hometown Plumbing & Heating	August 11, 2019
Chicago Faucets	Hometown Plumbing & Heating	August 11, 2019
Guardian Eye-Fash Wash Station	Hometown Plumbing & Heating	August 11, 2019
A.O. Smith Water Heater	Hometown Plumbing & Heating	August 11, 2017
Lithonia LED Recessed Downlighting	Accurate Electric	August 11, 2019
Halo ML56 LED Downlighting System	Accurate Electric	August 11, 2019
Lithonia LED Exit/Unit Combo	Accurate Electric	August 11, 2016
Lithonia Emergency Lighting	Accurate Electric	August 11, 2016
Emergency Exit	Accurate Electric	August 11, 2019

EXHIBIT J

CONTRACTS

310 Land

Janitorial – Royal Cleaning

Garbage Collection – Waste Management

Pest Control – Four Seasons

Lawn Care – McCormick’s

Snow Removal – McCormick’s

Security – Dakota Security Systems

Fire Alarm Testing – Annually – Midwest Fire Alarm Testing

Fire Extinguisher Inspection – Ahern or Getz Fire Equipment

HVAC – Mechanical Service, Inc.   

336 Land

Pest Control – Four Seasons

Lawn Care – McCormick’s

Security – Dakota Security Systems

Fire Extinguisher Inspection – Ahern or Getz Fire Equipment

J-1

EXHIBIT K

PREPAID RENTS, SECURITY DEPOSITS AND LETTERS OF CREDIT

None.

K-1

EXHIBIT L

PROPERTY MANAGER QUESTIONNAIRE

(attached)

L-1

EXHIBIT M

NON-FOREIGN PERSON AFFIDAVIT

THIS AFFIDAVIT is made this _____ day of ________________, 2015 by [_______________], a [_______________] (the “Transferor”), for the benefit of ARHC [___________], LLC, a Delaware limited liability company (“Transferee”).

Section 1445(a) of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the “Code”), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the Transferee that withholding of tax is not required upon the disposition by Transferor of an interest in the Property described on Exhibit “A” hereto, the undersigned hereby certifies the following on behalf of Transferor:

(i)Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate or other foreign person (as those terms are defined in the Code and Income Tax Regulations);

(ii)Transferor’s U.S. Employer Identification Number or Social Security Number, as applicable, is [____________]; and

(iii)Transferor’s address is [SELLER’S ADDRESS].

Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

M-1

Under penalties of perjury, the undersigned declares that he has examined this certification and, to the best of his knowledge and belief, it is true, correct and complete, and the undersigned further declares that he has authority to sign this document on behalf of Transferor.

TRANSFEROR:

[_______________], a [_______________]

By:    

By:         

Name:

Title:

M-2

Exhibit A

M-3

EXHIBIT N

SELLER’S BRING DOWN CERTIFICATE

Reference is made to that certain Agreement for Purchase and Sale of Real Property having an effective date of _________________ ____, 2015 (the “Agreement”) by and between American Realty Capital VII, LLC, a Delaware limited liability company, predecessor-in-interest to ARHC [___________], LLC, a Delaware limited liability company (“Buyer”), and [_______________], a [_______________] (“Seller”). Pursuant to Section 10(p) of the Agreement, Seller hereby certifies to Buyer that all of Seller’s representations and warranties contained in the Agreement are true and correct as of the date hereof.

Dated: _________________ ____, 2015.

[_______________], a [_______________]

By:    

By:

Name:

Title:

N-1

EX-10.23

Exhibit 10.23

FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

THIS FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Amendment”) is made as of August 3, 2015, by and among AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), DAVESSA VENTURE, LLC, an Iowa limited liability company (the “310 Seller”), S.J. RUSSELL, LLC, an Iowa limited liability company (the “336 Seller” and, together with the 310 Seller, the “OriginalSellers”), and GALEVA LLC, an Illinois limited liability company (“Galeva”).

WHEREAS, Buyer and Original Sellers entered into that certain Agreement for Purchase and Sale of Real Property, having an effective date as of July 2, 2015 (the “Agreement”), with regard to the Property, as more particularly described in the Agreement; the parties hereto acknowledging that the entities constituting the Original Sellers were inaccurately named in the Agreement as “310 HOME BOULEVARD, GALESBURG, IL – DAVESSA VENTURE, LLC, an Iowa limited liability company,” and “336 HOME BOULEVARD, GALESBURG, IL – S.J. RUSSELL, LLC, an Iowa limited liability company,” (emphasis added);

WHEREAS, Galeva, not the Original Sellers, is the fee title owner to the Property and should have been named as the “Seller” party under the Agreement;

WHEREAS, Galeva desires to assume all of Original Sellers’ rights, title, obligations, liabilities and interest in, to and under the Agreement as of the Effective Date with the same force and effect as if Galeva had initially been named as the Seller under the Agreement; and

WHEREAS, Buyer, Original Sellers and Galeva wish to amend the Agreement as provided herein;

NOW, THEREFORE, in consideration of the mutual promise contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree that the Agreement shall be amended as follows:

1. Amendment to the Agreement. The Agreement is hereby amended as follows:

a. The defined term “310 Seller” set forth in the preamble of the Agreement is hereby modified by deleting the words “310 Home Boulevard, Galesburg, IL – Davessa Venture, LLC, an Iowa limited liability company” and substituting “Galeva LLC, an Illinois limited liability company” in lieu thereof. For the avoidance of doubt, all references in the Agreement to the 310 Seller or the Seller with respect to the 310 Land shall mean Galeva.

b. The defined term “336 Seller” set forth in the preamble of the Agreement is hereby modified by deleting the words “336 Home Boulevard, Galesburg, IL – S.J. Russell, LLC, an Iowa limited liability company” and substituting “Galeva LLC, an Illinois limited liability company” in lieu thereof. For the avoidance

of doubt, all references in the Agreement to the 336 Seller or the Seller with respect to the 336 Land shall mean Galeva.

c. Section 6 of the Agreement is hereby modified by adding the following new subsection:

“(h) Seller and Davessa Venture, LLC shall complete and execute such documents as may be required to effectuate the assignment to Buyer of that certain Lease, dated September 29, 2012, by and between Davessa Venture, LLC, as landlord, and The United States of America, Department of Veterans Affairs, Network 23 Contracting Office, as tenant, as amended.”

d. Section 10 of the Agreement is hereby modified by adding the following new subsection:

“(t) A fully executed and effective termination of the ground lease of the 310 Land between Galeva LLC, as landlord, and Davessa Venture, LLC, as tenant.”

2. Galeva Assumption. Original Sellers hereby transfer and assign to Galeva all of Original Sellers’ rights, title, obligations, liabilities and interest in, to and under the Agreement as of the Effective Date. Galeva hereby assumes all of the Original Sellers’ rights, title, obligations, liabilities and interest in, to and under the Agreement as of the Effective Date, with the same force and effect as if Galeva had initially been named as the Seller under the Agreement.

3. Miscellaneous. Except as expressly modified hereby the terms of the Agreement shall remain in full force and effect as written. Capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Agreement. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Amendment which are transmitted electronically shall be valid for all purposes, however any party shall deliver an original signature of this Amendment to the other party upon request.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first set forth above.

BUYER:	ORIGINAL SELLERS:
AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company	DAVESSA VENTURE, LLC, an Iowa limited liability company By:/s/ Kathryn Halter    Name: Kathryn Halter    Title: Managing Member
By: AR Capital, LLC, a Delaware limited liability company, its sole member By:/s/ William M. Kahane    Name: William Kahane    Title: Manager
	S.J. RUSSELL, LLC, an Iowa limited liability company By:/s/ Kathryn Halter Name: Kathryn Halter Title: Managing Member
	GALEVA:
	GALEVA LLC, an Illinois limited liability company By:/s/ Kathryn Halter Name: Kathryn Halter Title: Managing Member

EX-10.24

Exhibit 10.24

SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

THIS SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Amendment”) is made as of August 24, 2015, by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), and GALEVA LLC, an Illinois limited liability company (“Seller”).

WHEREAS, Buyer, Davessa Venture, LLC, an Iowa limited liability company (the “310 Seller”), S.J. Russell, LLC, an Iowa limited liability company (the “336 Seller” and, together with the 310 Seller, the “OriginalSellers”), entered into that certain Agreement for Purchase and Sale of Real Property, having an effective date as of July 2, 2015 (the “Original Agreement”), as amended by that certain First Amendment to Agreement for Purchase and Sale of Real Property, dated August 3, 2015, by and among Buyer, Original Sellers and Seller (the Original Agreement, as amended, is hereinafter referred to as the “Agreement”), with regard to the Property, as more particularly described in the Agreement; and

WHEREAS, Buyer and Seller wish to amend the Agreement as provided herein;

NOW, THEREFORE, in consideration of the mutual promise contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree that the Agreement shall be amended as follows:

1. Rent Proration. Section 4(b) of the Original Agreement is hereby amended by adding the following sentences at the end thereof:

“Buyer and Seller hereby acknowledge that the Tenant of the 310 Property pays rent (the ‘VA Rent’) in arrears, and agree that if, as of the Closing Date, Seller has not received VA Rent for the month in which Closing occurs, the VA Rent shall not be prorated on the Closing Date. If, following the Closing Date, Buyer receives the VA Rent for the month in which Closing occurred, Buyer shall remit to Seller Seller’s pro-rated portion of such VA Rent within ten (10) business days after receipt thereof. If, following the Closing Date, Seller receives any VA Rent which is attributable to the month in which the Closing occurred or any period after the Closing Date, Seller will notify Buyer of such fact and will remit to Buyer Buyer’s pro-rated portion of such VA Rent within ten (10) business days after receipt thereof. The provisions of this subparagraph 4(b) shall survive Closing.”

2. Purchase Price. Buyer and Seller hereby agree that the Purchase Price shall be allocated $3,400,000.00 for the 336 Property and $2,630,000.00 for the 310 Property.

3. Miscellaneous. Except as expressly modified hereby the terms of the Agreement shall remain in full force and effect as written. Capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Agreement. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Amendment which are transmitted electronically shall be valid for all purposes, however any party shall deliver an original signature of this Amendment to the other party upon request.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first set forth above.

BUYER:	SELLER:
AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company	GALEVA LLC, an Illinois limited liability company By:/s/ James V. Russell Name: James V. Russell Title: Manager
By: AR Capital, LLC, a Delaware limited liability company, its sole member By:/s/ William M. Kahane    Name: William Kahane    Title: Manager

EX-10.25

Exhibit 10.25

ASSET PURCHASE AGREEMENT

By and Between

AMERICAN REALTY CAPITAL VII, LLC

AS “PURCHASER”

AND

ARCADIAN COVE, LLC

ARCADIAN ASSISTED LIVING, LLC

AS “SELLER”

Property Name and Location:

ARCADIAN COVE – RICHMOND, KENTUCKY

Dated as of

July 6, 2015

TABLE OF CONTENTS

			Page
ARTICLE 1 DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION			1
	SECTION 1.1	DEFINED TERMS.	1
	SECTION 1.2	CERTAIN DEFINITIONS.	4
	SECTION 1.3	RULES OF CONSTRUCTION.	4
ARTICLE 2 PURCHASE AND SALE OF THE PURCHASED PROPERTY			5
	SECTION 2.1	SALE OF BUSINESS.	5
	SECTION 2.2	PURCHASED PROPERTY.	5
	SECTION 2.3	EXCLUDED PROPERTY	7
	SECTION 2.4	TITLE TO REAL PROPERTY AND SURVEY.	8
	SECTION 2.5	ASSUMED LIABILITIES.	11
	SECTION 2.6	EXCLUDED LIABILITIES.	11
ARTICLE 3 PURCHASE PRICE; PAYMENT OF PURCHASE PRICE; ALLOCATION			11
	SECTION 3.1	PURCHASE PRICE AND DEPOSIT.	11
	SECTION 3.2	PAYMENT OF PURCHASE PRICE.	12
	SECTION 3.3	PRORATIONS.	13
ARTICLE 4 CERTAIN OTHER COVENANTS AND AGREEMENTS			14
	SECTION 4.1	INSPECTION AND DUE DILIGENCE.	14
	SECTION 4.2	CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE.	17
	SECTION 4.3	NOTIFICATION OF CERTAIN MATTERS.	18
	SECTION 4.4	EMPLOYEES.	18
	SECTION 4.5	CONFIDENTIALITY.	19
	SECTION 4.6	EXPENSES AND TAXES.	20
	SECTION 4.7	WAIVER OF BULK SALES AND INDEMNIFICATION.	21
	SECTION 4.8	EXCLUSIVITY.	21
	SECTION 4.9	CONSENTS; COOPERATION.	21
	SECTION 4.10	FURTHER ASSURANCES.	22
	SECTION 4.11	NON-SOLICITATION OF EMPLOYEES.	22
	SECTION 4.12	DELIVERY OF SCHEDULES.	22
ARTICLE 5 CLOSING			23
	SECTION 5.1	CLOSING.	23
	SECTION 5.2	CONDITIONS TO SELLER’S OBLIGATIONS.	23
	SECTION 5.3	CONDITIONS TO PURCHASER’S OBLIGATIONS.	24
	SECTION 5.4	DELIVERIES BY SELLER.	25
	SECTION 5.5	DELIVERIES BY PURCHASER.	27
	SECTION 5.6	NON-FULFILLMENT OF CLOSING CONDITIONS.	27

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TABLE OF CONTENTS (cont’d)

			Page
	SECTION 5.7	POST-CLOSING ACTIONS.	29
	SECTION 5.8	TERMINATION DURING DUE DILIGENCE.	29
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER			29
	SECTION 6.1	ORGANIZATION AND STANDING.	29
	SECTION 6.2	VALID AND BINDING OBLIGATIONS.	30
	SECTION 6.3	TITLE; PURCHASED PROPERTY COMPLETE.	30
	SECTION 6.4	TAXES AND TAX RETURNS.	30
	SECTION 6.5	EXECUTION AND DELIVERY.	31
	SECTION 6.6	CONTRACTS AND LEASES.	31
	SECTION 6.7	RESIDENCY AGREEMENTS AND RELATED MATTERS.	31
	SECTION 6.8	PERMITS AND LICENSES.	32
	SECTION 6.9	INSURANCE.	32
	SECTION 6.10	EMPLOYEES.	32
	SECTION 6.11	SELLER BENEFIT PLANS.	33
	SECTION 6.12	LITIGATION.	34
	SECTION 6.13	COMPLIANCE WITH LAWS.	34
	SECTION 6.14	FINANCIAL STATEMENTS.	35
	SECTION 6.15	REAL PROPERTY.	35
	SECTION 6.16	ENVIRONMENTAL MATTERS.	35
	SECTION 6.17	BROKERS, FINDERS.	36
	SECTION 6.18	FIRPTA.	36
	SECTION 6.19	SOLVENCY.	36
	SECTION 6.20	CONSENT OF THIRD PARTIES.	36
	SECTION 6.21	NO GOVERNMENTAL APPROVALS.	36
	SECTION 6.22	ASSESSMENTS.	36
	SECTION 6.23	TITLE ENCUMBRANCES.	36
	SECTION 6.24	AFFORDABLE HOUSING UNITS.	37
	SECTION 6.25	LOANS AND DEBTS.	37
	SECTION 6.26	NO OTHER WARRANTIES.	37
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PURCHASER			37
	SECTION 7.1	ORGANIZATION AND STANDING.	37
	SECTION 7.2	EXECUTION AND DELIVERY.	37
	SECTION 7.3	SOLVENCY.	38
	SECTION 7.4	CONSENT OF THIRD PARTIES.	38
	SECTION 7.5	NO GOVERNMENTAL APPROVALS.	38
	SECTION 7.6	BROKERS, FINDERS.	38
ARTICLE 8 INDEMNIFICATION			39
	SECTION 8.1	INDEMNIFICATION BY SELLER.	39
	SECTION 8.2	INDEMNIFICATION BY PURCHASER.	39

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TABLE OF CONTENTS (cont’d)

			Page
	SECTION 8.3	INDEMNIFICATION LIMITS; SURVIVAL.	39
	SECTION 8.4	PROCEDURES REGARDING THIRD PARTY CLAIMS.	41
	SECTION 8.5	GENERAL QUALIFICATIONS ON INDEMNIFICATION.	42
	SECTION 8.6	EFFECTIVE UPON CLOSING.	43
ARTICLE 9 TERMINATION			43
ARTICLE 10 MISCELLANEOUS			44
	SECTION 10.1	ACCESS TO BOOKS AND RECORDS AFTER CLOSING.	44
	SECTION 10.2	NOTICES.	44
	SECTION 10.3	GOOD FAITH; COOPERATION.	45
	SECTION 10.4	ASSIGNMENT; EXCHANGE COOPERATION; SUCCESSORS IN INTEREST.	46
	SECTION 10.5	NO THIRD PARTY BENEFICIARIES.	46
	SECTION 10.6	SEVERABILITY.	46
	SECTION 10.7	PURCHASER RECORDS RIGHTS.	46
	SECTION 10.8	CONTROLLING LAW; INTEGRATION; AMENDMENT; WAIVER.	47
	SECTION 10.9	TIME.	47
	SECTION 10.10	SURVIVAL.	47
	SECTION 10.11	EMINENT DOMAIN ‑ CONDEMNATION.	47
	SECTION 10.12	RISK OF LOSS.	48
	SECTION 10.13	ATTORNEYS’ FEES.	48
	SECTION 10.14	COVENANT NOT TO COMPETE.	48
	SECTION 10.15	POST-CLOSING.	48
	SECTION 10.16	WAIVER OF JURY TRIAL.	49
	SECTION 10.17	CONSTRUCTION.	49
	SECTION 10.18	EXECUTION IN COUNTERPARTS.	49

Exhibits

Exhibit	Description
Exhibit A	Escrow Agreement
Exhibit B	Post-Closing Escrow Agreement
Exhibit C	Deed
Exhibit D	Bill of Sale and Assignment
Exhibit E	Transition Period Sublease
Exhibit F	Assumption Agreement
Exhibit G	Due Diligence Materials

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Schedules

Schedule	Title
Schedule 1.1(a)	Assumed Contracts and Leases
Schedule 1.1(b)	Legal Description of Purchased Real Property
Schedule 2.2(c)	Prepaids and Deposits
Schedule 2.2(d)	Seller Vehicles
Schedule 2.4(a)	Permitted Title Exceptions
Schedule 2.4(g)	Licenses, Leases Easements and Other Rights Related to Real Property
Schedule 3.3	Purchase Price Allocation
Schedule 5.4(o)	Third Party Consents
Schedule 6.3	Material Assets or Rights Not Included in Purchased Property
Schedule 6.5	Execution and Delivery – No Contravention
Schedule 6.6	Contracts and Leases
Schedule 6.7	Residency Agreements; Refunds and Deposits; Resident Details
Schedule 6.8	Permits and Licenses
Schedule 6.9	Insurance; Three Year Claim History
Schedule 6.10	Employees, etc.
Schedule 6.11	Benefit Plans
Schedule 6.12	Litigation, etc.
Schedule 6.13	Compliance with Laws
Schedule 6.14	Financial Statements
Schedule 6.15	Real Property Compliance
Schedule 6.16	Environmental Matters
Schedule 6.20	Seller Third Party Consents
Schedule 6.21	Seller Government Approvals
Schedule 6.23	Title Encumbrances
Schedule 6.25	Loans and Debts
Schedule 6.20	Purchaser Third Party Consents
Schedule 6.21	Purchaser Government Approvals
Schedule 10.7	Audit Materials

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this“Agreement”) is made and entered into this 6th day of July, 2015 (the “Effective Date”), by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Purchaser”)and ARCADIAN COVE, LLC, a Kentucky limited liability company (the “Owner”) and ARCADIAN ASSISTED LIVING, LLC, a Kentucky limited liability company (“Operator,” and Owner and Operator are hereinafter sometimes referred to as the “Seller”).

RECITALS:

Seller desires to sell, transfer and assign to Purchaser, and Purchaser desires to purchase from Seller, substantially all of the assets, properties and business of Seller, consisting of the Purchased Property described herein.

This Agreement sets forth the terms and conditions to which the parties have agreed.

AGREEMENTS:

NOW, THEREFORE, in consideration of the premises and the mutual promises set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

ARTICLE 1DEFINITIONS AND
CERTAIN RULES OF CONSTRUCTION

Section 1.1Defined Terms. The following capitalized terms shall have the meanings specified in this section. Other terms are defined in the text of this Agreement, and throughout this Agreement, those terms shall have the meanings respectively ascribed to them.

“Assumed Contracts and Leases” are those contracts, leases and agreements listed on Schedule 1.1(a) attached hereto, to the extent assignable and for which applicable third party consents have been obtained or waived by Purchaser.

“Assumed Liabilities” are (i) all of Seller’s obligations and liabilities under the Assumed Contracts and Leases which arise or accrue at any time after 11:59 PM on the date immediately preceding the Closing Date; (ii)the Prepaids and Deposits described on Schedule 2.2(c); and (iii) Sellers’ obligations with respect to accrued vacation and other paid time off for Employees (as defined herein) to the extent of Purchaser’s obligations pursuant to Section 4.4(d) hereof.

“Business” means all aspects of the operation of the Facility as an assisted living facility.

“Closing” means the consummation of the transactions contemplated by this Agreement. Neither party will need to be present at Closing, it being anticipated that the parties will deliver all Closing documents and deliverables in escrow to the Escrow Agent (as defined herein) (or if both Purchaser and Seller agree, to Purchaser’s and/or Seller’s counsel) prior to the date of Closing.

“Closing Date” shall have the meaning set forth in Section 5.1 hereof.

“Environmental Laws” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601 etseq., Hazardous Materials Transportation Act, 49 U.S.C. § 1802, the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 etseq., the Toxic Substance Control Act of 1976, as amended, 15 U.S.C. § 2601 etseq., or any other federal, state, local or other governmental legislation, statute, law, code, rule, regulation or ordinance identified by its terms as pertaining to the protection of the environment, including laws relating to the treatment, storage or disposal of Hazardous Substances, in each case as in effect on the Effective Date.

“Facility”means the assisted living facility known as “Arcadian Cove” and consisting of forty-nine (49) total assisted living units.

“Government Program” means the federal Medicare program, any state Medicaid program, and such other similar federal, state, or local reimbursement or governmental programs for which any Facility is eligible.

“Hazardous Substance” means petroleum, including crude oil or any fraction thereof, flammable explosives, radioactive materials, asbestos, urea formaldehyde foam insulation, any material containing polychlorinated biphenyls, and any of the substances defined as “hazardous

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substances” or “toxic substances” or otherwise identified and regulated under any Environmental Laws.

“Holdback Amount” means an amount equal to four percent (4.0%) of the Purchase Price paid at Closing for the Facility.

“Improvements” means all buildings, facilities, and other improvements constructed on the Purchased Property as of the date of Closing.

“Intellectual Property” means all trademarks, trademark applications, service marks, trade names, copyrights, trade secrets, licenses, domain names, mask works, patents, patent applications, information and proprietary rights and processes.

“IRC” means the Internal Revenue Code of 1986, as amended, and any regulations or guidance issued thereunder.

“Lien” means any mortgage, deed to secure debt, deed of trust, pledge, hypothecation, title defect, right of first refusal, security or other adverse interest, encumbrance, claim, option, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction.

“Material Adverse Change” means

(a)any occurrence between the Effective Date and the Closing Date which results in, or is reasonably likely to result in, a material adverse change in the assets, financial condition, or results of operations of the Facility, taken as a whole; provided, however, that none of the following shall in any event be deemed a Material Adverse Change: (i) any change resulting from changes in any law or regulation following the Effective Date; (ii) any change resulting from announcement or pendency of the transactions contemplated herein; or (iii) any change made pursuant to the terms of this Agreement or with Purchaser’s express written consent; or

(b) a reduction in the trailing 30 day average occupancy of the available units within the Facility (the “Average Occupancy”) below forty four (44) out of forty nine (49) units for any reason; or

(c)a reduction of ten percent (10%) or more, for any reason, in Net Operating Income, as such term is defined and measured in the April 2015 Financial Statement set forth on Schedule 6.14. For purposes of this definition, “Net Operating Income” shall be calculated in accordance with standard accounting principles on a modified accrual basis consistent with past practices including those practices used in compiling the April 2015 Financial Statement.

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“Operator” means the current Arcadian Assisted Living, LLC., a Kentucky limited liability company, the operator of the Business, which operates the Business pursuant to a lease agreement between Seller and the Operator.

“Permitted Encumbrances” means (i) liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings and which are satisfied or discharged of record at or prior to Closing pursuant to Section 2.4(f) below; (ii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings and which are satisfied or discharged of record at or prior to Closing pursuant to Section 2.4(f) below, and (iii) the Permitted Title Exceptions.

“Plans” shall have the meaning set forth in Section 6.11.

“Purchased Personal Property” is the Purchased Property other than the Real Property, including intangible Purchased Property.

“Purchased Property” is the property of Seller to be sold to Purchaser pursuant to this Agreement as set forth in Section 2.2 hereof.

“Real Property” shall mean that certain parcel of real estate located at located at 532 Cady Dr., Richmond, Kentucky 40475, as more particularly described in Schedule 1.1(b) attached hereto, together with all the buildings, fixtures, structures, and improvements thereon, and all easements and rights of way serving or benefiting such property.

“Residency Agreement” means any agreement between Seller and an individual contracting for such individual’s residency at the Facility.

“Seller’s Knowledge”means the knowledge of Kimo Von Oelhoffen and Jackie Sielaff, following reasonable inquiry of and consultation with the Executive Director of the Facility (the “Executive Director”), and each of the department heads of the Facility, in connection with the execution of this Agreement and the preparation of Schedules to this Agreement prior to Closing.

Section 1.2Certain Definitions. For purposes of this Agreement:

“herein,” “hereunder,” “hereof,” “hereinbefore,” “hereinafter” and other equivalent words refer to this Agreement in its entirety and not solely to the particular portion of this Agreement in which such word is used, and references to “this article,” “this section,” “this paragraph,” “this subparagraph” or similar references to a specific part of this Agreement shall refer to the particular article, section, paragraph, subparagraph or specific part in which such reference appears;

“party” or “parties” means each or all, as appropriate, of the entities who have executed and delivered this Agreement, each permitted successor or assign of a party, and when appropriate to effect the binding nature of this Agreement for the benefit of another party, any other successor or assign of a party;

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“person” means any individual, sole proprietorship, partnership, joint venture, corporation, estate, trust, unincorporated organization, association, limited liability company, institution or other entity, including any that is a governmental authority; and

“business day” is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government.  Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day.  When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day.

“Seller” means each entity comprising the Seller (as defined above) collectively and individually.

Section 1.3Rules of Construction. For purposes of this Agreement:

(a)“including” and any other words or phrases of inclusion shall not be construed as terms of limitation, so that references to “included” matters shall be regarded as non-exclusive, non-characterizing illustrations; “copy” or “copies” means that the copy or copies of the material to which it relates are true, correct and complete;

(b)“shall,”“will,” and “agrees” are mandatory, and “may” is permissive;

(c)titles and captions of or in this Agreement are inserted only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any of its provisions;

(d)whenever the context so requires, the singular includes the plural and the plural includes the singular, and the gender of any pronoun includes the other gender;

(e)each Exhibit and Schedule referred to in this Agreement and each attachment to any of them or this Agreement is hereby incorporated by reference into this Agreement and is made a part of this Agreement as if set out in full in the first place that reference is made to it; and

(f)every covenant, term and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any party hereto, regardless of which party was more responsible for the preparation of this Agreement.

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ARTICLE 2Purchase and Sale of the Purchased Property

Section 2.1Sale of Business. Subject to the provisions of this Agreement, Seller shall sell all of the Purchased Property to Purchaser, free and clear of all Liens and liabilities whatsoever, except for the Assumed Liabilities and the Permitted Encumbrances.

Section 2.2Purchased Property. The Purchased Property shall include all of the assets of Seller used in, arising from or related to the Business as of the Closing Date other than Excluded Property (as defined herein), including the following:

(g)all inventory and supplies on hand at the Facility on the Closing Date (including food, beverages, office and kitchen supplies);

(h)all of Seller’s right, title and interest in and to the Assumed Contracts and Leases, to the extent assignable;

(i)all pre-paid amounts paid by a resident pursuant to any Residency Agreement for or attributable to the periods from and after the Closing Date as well as any security deposits paid to Seller as of the Closing Date under the Residency Agreements (to the extent such deposits can be transferred in accordance with applicable law) together with any interest thereon to the extent such interest is or may be payable to the residents (or their respective representatives, successors, heirs or assigns) at any time following the Closing Date each as more particularly described on Schedule 2.2(c) (collectively “Prepaids and Deposits”);

(j)all of Seller’s tangible personal property (including without limitation equipment, furniture, fixtures, signage and vehicles (including, without limiting this provision, those vehicles described on Schedule 2.2(d)) used in, arising from or related to the Business as of the Closing Date;

(k)the Real Property as more particularly described on Schedule 1.1(b) attached hereto and the Facility described herein;

(l)subject to applicable laws and regulations, all transferable licenses, permits, certificates, approvals, and other governmental or regulatory authorizations necessary for or incident to the ownership or operation of the Purchased Property in the manner in which they are owned and operated by Seller as of the Closing Date;

(m)all original books, records, accounts, files, logs, ledgers, journals, and other documents and other materials of Seller (or copies thereof) including any electronic data stored on disc, tape or other electronic format relating to the ownership, use, operation or management of the Business, to the extent within the possession or control of Seller (although Seller may

6

retain copies thereof for the preparation of tax returns, compliance with applicable laws, and other business purposes);

(n)all marketing and promotional materials in Seller’s possession or control, which relate exclusively to the Business, if any, or the services they provide, to the extent of Seller’s rights in such materials, including without limitation brochures, renderings, photographs and signage (although Seller may retain copies thereof for compliance with applicable laws);

(o)all warranties and guarantees regarding the installation, application, manufacture, composition and/or inspection of the Purchased Property, and all other manufacturer and third-party warranties and guarantees relating to any of the Purchased Property, to the extent such warranties and guarantees remain in effect and are assignable by Seller;

(p)all telephone and facsimile numbers of the Facility, and Seller’s email addresses;

(q)all goodwill of the Business as a going concern;

(r)all rights to the name “Arcadian Cove” and all derivations thereof, including without limitation all Intellectual Property related to such name and all derivations thereof, and all other Intellectual Property owned by Seller and necessary to the conduct of the Business as now conducted by Seller;

(s)all records of all residents at the Facility, whether or not such resident was in occupancy prior to or on the Closing Date in the possession or control of Seller, to the extent transfer to Purchaser is not prohibited, and subject to Section 10.1;

(t)all intangible personal property of Seller used in, arising from, or related to the Business as of the Closing Date, including all registrations, applications and licenses therefor, that is not specifically included in the Excluded Property, to the extent assignable and for which any third party consents required for such assignment have been obtained;

(u)all rights in and to any claims or causes of action to the extent they are in the nature of enforcing a guaranty, warranty, or a contract obligation to complete the Improvements, make repairs, or deliver services to the Purchased Property other than (i) claims for damages or other monetary loss incurred by Seller prior to the Closing Date and (ii) claims relating to Excluded Liabilities or Excluded Property; and

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(v)any other tangible or intangible assets, property or rights of any kind or nature not otherwise described above in this Section 2.2 and now owned or hereafter acquired between the Effective Date and the Closing Date by Seller and used in connection with the operation of the Business (other than Excluded Property and rights relating solely to the Excluded Liabilities).

To the extent any of the foregoing Purchased Property is available in electronic format, Seller shall provide Purchaser with same in such electronic format, in addition to physical copies of same.

Section 2.3Excluded Property. “Excluded Property” means the following categories of properties, which although they may currently form part of the Business, are excluded from the Purchased Property:

(a)cash, cash equivalents or other investments (other than the Prepaids and Deposits);

(b)Seller’s accounts receivable for rent or services provided prior to 11:59 p.m. on the date immediately preceding the Closing Date;

(c)Seller’s operating agreement, minute books, membership ledgers and income tax records;

(d)any rights of Seller with respect to federal, state or local tax refunds or credits;

(e)the Seller Plans (as defined herein), the assets and insurance policies relating to the Seller Plans, and any records relating thereto;

(f)all contracts of insurance and claims and interests in any insurance, insurance claims, escrows, revenues or right to indemnity from third parties or other rights relating to the Excluded Liabilities;

(g)Seller’s rights and interests under this Agreement;

(h)security deposits and utility deposits, to the extent not added to the Purchase Price at Closing pursuant to Section 3.2.

Section 2.4Title to Real Property and Survey. At Closing, Owner agrees to convey marketable and insurable fee simple title to the Real Property to Purchaser by special warranty deed(the “Deed”), subject only to the Permitted Encumbrances. The legal description of the Real Property to be contained in the Deed shall be the same legal description as is attached hereto in the applicable subsection of Schedule 1.1(b). In the event the legal description as disclosed by the Survey, as defined in Section 5.4(a), differs from the legal description in the applicable subsection of Schedule 1.1(b), or the Initial Commitment reveals any errors or omissions in the legal descriptions, then Seller shall also provide a quitclaim deed (or other appropriate recordable instrument) utilizing such Survey legal description.

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(a)Seller shall promptly order, at Seller’s expense, from Stewart Title Guaranty Company (the “Title Company”), an ALTA Form 2006 Commitment (or such other form as is acceptable to Purchaser), with such endorsements as Purchaser shall reasonably require and with insurance coverage over any “gap” period (the “Initial Commitment”) for an owner’s title insurance policy (the “Title Policy”) in an amount no less than the Purchase Price allocated to the Real Property evidencing that Owner is vested with fee simple title to the Real Property, free and clear of all liens, encumbrances, exceptions or qualifications whatsoever save and except for (a) those exceptions specified as permitted exceptions listed on Schedule 2.4(a) attached hereto (the “Permitted Title Exceptions”), (b) those exceptions evidenced in writing as being otherwise acceptable to Purchaser in its sole discretion which shall thereafter be deemed Permitted Title Exceptions, and (c) those exceptions to title which are to be discharged by Seller at or before closing. The Initial Commitment shall also evidence that upon the execution, delivery and recordation of the deeds to be delivered at Closing and the satisfaction of all requirements specified in Schedule B, Section I of the Initial Commitment, Purchaser shall acquire fee simple title to the Real Property, subject only to the Permitted Title Exceptions.

(b)If Purchaser or its attorneys shall determine that the Initial Commitment does not meet the requirements specified above, or that title to the Real Property is unsatisfactory to Purchaser for reasons other than the existence of Permitted Title Exceptions or exceptions which are to be discharged by Seller at or before Closing, then Purchaser shall notify Seller by the end of the Due Diligence Period (as defined herein) of those liens, encumbrances, exceptions or qualifications to title which either are not Permitted Title Exceptions, are unsatisfactory to Purchaser or are not contemplated by this Agreement to be discharged by Seller at or before Closing, and any such liens, encumbrances, exceptions or qualifications shall be hereinafter referred to as “Title Defects.”

(c)Purchaser, at Purchaser’s expense, may order an update to the survey of the Real Property (the “Survey”) previously provided to Purchaser and Seller hereby grants Purchaser and Purchaser’s agents the right to access the Real Property as may be reasonably required to perform such work. The Survey shall be prepared by a land surveyor duly licensed and registered as such in the state the Real Property is located, (i) shall be certified by such surveyor to Purchaser, Seller, each parties’ legal counsel and the Title Company, (ii) shall reference the Initial Commitment file number, (iii) shall set forth the legal description of the Real Property precisely as it appears in the Initial Commitment (or the Initial Commitment must be endorsed so that the insured legal description mirrors the legal description in the Survey, if applicable), (iv) shall identify whether or not each matter referenced in the Initial Commitment applies to the Real Property, (v) shall depict the boundaries of each such item that is capable of being depicted on the Survey, (v) shall depict any Improvements located upon the Real Property, (vi) shall show all easements, rights-of-way, setback lines, encroachments and other matters affecting the use or development of the Real Property (vii) shall include the original signature and seal of the surveyor, and (viii) shall be in a form satisfactory to the Title Company to eliminate the standard survey exceptions from the title insurance policy to be issued at Closing. Purchaser shall notify Seller in writing within ten (10) business daysafter receipt of the Survey of any Title Defects specifying any matters shown on the Survey which was not set forth on the survey previously delivered to Purchaser and which adversely affect the title to the Real Property and the same shall thereupon be deemed to be Title Defects hereunder.

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(d)Within five (5) business days of receipt from Purchaser of a written notice of any Title Defects, together with a copy thereof, Seller shall notify Purchaser as to whether it will cure such objection, and if it elects to cure any such objection, it shall in good faith diligently endeavor to satisfy or correct, at Seller’s expense, such objection on or before the date of Closing to the satisfaction of Purchaser and the Title Company in such manner to permit the Title Company to either endorse the Initial Commitment or to issue a replacement commitment to eliminate the Title Defect therefrom. Failure of Seller to give such notice within such five (5) business day period shall be deemed to be an election not to cure such objection. In the event Seller does not elect to satisfy or cure any objection of which it is notified, then within five (5) business days after receipt of written notice of Seller’s election, or within five (5) business days after the expiration of Seller’s five (5) business day notification period if Seller fails to give any such notice, Purchaser shall by written notice to Seller elect one of the following:

(i)to accept Seller’s interest in the Purchased Property subject to such objections, in which event such title and survey objections shall become part of the Permitted Title Exceptions, and to close the transaction contemplated hereby in accordance with the terms of this Agreement; or

(ii)to terminate this Agreement in its entirety and receive a refund of the Deposit.

The failure of Purchaser to give written notice of its election to either accept the Purchased Property subject to such objections or to terminate this Agreement within the applicable five (5) dayperiod shall be deemed an election to terminate this Agreement and to receive a refund of the Deposit.

(e)In the event Seller elects in writing to cure any title or survey objection and thereafter is unable, after acting diligently and in good faith, to effect such cure, on or before the date of Closing, then Purchaser shall have, as its sole remedy, the options described in Section 2.4(d) above. Seller shall have no obligation under this Section 2.4(e) to expend monies or to institute litigation to cure Title Defects except those which may be satisfied solely by the payment of money prior to or at Closing.

(f)Notwithstanding anything in this Agreement to the contrary, Seller covenants and agrees that at or prior to Closing, Seller shall (i) pay in full and cause to be canceled and discharged or otherwise bond and discharge as liens against the Purchased Property all mechanics’ materialmen’s, repairmen’s, contractors’ or other similar Liens which encumber the Purchased Property as of the date hereof created by, through or under Seller or which may be filed against the Purchased Property after the date hereof created by, through or under Seller and on or prior to the Closing Date (ii) pay in full all past due ad valorem taxes and assessments of any kind constituting a lien against the Purchased Property which are due and payable, and (iii) pay in full or cause to be canceled and discharged all mortgages, security deeds or other security instruments encumbering the Purchased Property and all judgments which have attached to and become a lien against the Purchased Property by, through or under Seller. In the event Seller fails to cause such liens and encumbrances to be paid and canceled at or prior to Closing, Purchaser shall be entitled to pay such reasonable amount to the holder thereof as may be required to pay and cancel same, and to credit against the Purchase Price the amount so paid.

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(g)Except as set forth on Schedule 2.4(g), Seller has not granted any license, lease, easement or other right relating to the use or possession of the Real Property (except (i) under the Residency Agreements existing as of the Effective Date and entered into by Seller in the ordinary course of business in accordance with Section 4.2 hereof; or (ii) as may be set forth in the Title Commitment), and Seller agrees that, other than as expressly permitted by Section 4.2 hereof, it shall not grant any such right prior to Closing without the prior written approval of Purchaser, which may be withheld in Purchaser’s sole and absolute discretion.

Section 2.5Assumed Liabilities. Subject to the terms and conditions of this Agreement, on the Closing Date, Purchaser shall assume and agrees to pay, perform or discharge only the Assumed Liabilities. Other than the Assumed Liabilities, Purchaser shall not assume any of Seller’s debts, obligations or liabilities, of any kind or nature, including without limitation any civil claims or other legal proceedings or legal or regulatory investigations or actions arising out of or during Seller’s ownership, use, operation or management of the Business or any of the Purchased Property or the Excluded Property, all of which Seller shall pay, perform and discharge when due. Nothing in this Section 2.5 shall be deemed to preclude either party from contesting any liability or obligation in good faith through the appropriate process.

Section 2.6Excluded Liabilities. All of Seller’s debts, obligations and liabilities, other than the Assumed Liabilities, including any liability, obligation, claim, action, suit, or proceeding pending as of the Closing Date, or any subsequent claim, action, suit, or proceeding arising out of or relating to any such other event occurring prior to the Closing, with respect to the ownership or operation of its businesses prior to the Closing Date, including, without limitation, any obligation of Seller for compliance with applicable federal, state, county, and local tax laws or regulations, including the obligations under such laws for the payment of taxes and the filing of tax returns, under Part 6 of Title I of ERISA and Section 4980B of the IRC, as amended (commonly known as “COBRA”), the Seller Plans, the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Occupational Safety and Health Act, the Age Discrimination in Employment Act of 1967, the Americans With Disabilities Act, the Family and Medical Leave Act, or state worker’s compensation and unemployment compensation laws, as now or hereafter amended, and any liabilities related to any overpayment (regardless of reason for such overpayment), adjustment of payments received or non-compliance under any Government Program, are collectively referred to herein as the “Excluded Liabilities;” provided, however, that actions commenced following the Closing under the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et.seq. or similar state law seeking remedial action with regard to the Purchased Property, shall not be deemed an Excluded Liability and Seller shall have no liability with respect to any such action.

ARTICLE 3PURCHASE PRICE; PAYMENT OF PURCHASE PRICE; ALLOCATION

Section 3.1Purchase Price and Deposit.

(w)Purchase Price. Subject to any adjustments and prorations expressly provided for in this Agreement, including those described in Section 3.3 and Section 4.4 (collectively, “Adjustments”), the purchase price (the “Purchase Price”) for the Purchased Property shall be

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a total of Four Million Seven Hundred Seventy-Five Thousand and No/100 U.S. Dollars ($4,775,000.00).

(x)Deposit. The parties acknowledge that within three (3) business days after the Effective Date, if the this Agreement has not been terminated in accordance with its terms, Purchaser shall deliver to Stewart Title Guaranty Company (or any other mutually acceptable escrowee) (the “Escrow Agent”) One Hundred Fifty Thousand and No/100 U.S. Dollars ($150,000) (the “Deposit”). The Escrow Agent shall hold the Deposit in a non-interest bearing account pursuant to an escrow agreement in the form attached hereto as Exhibit A.

(y)The Deposit shall be paid and returned to Purchaser upon the occurrence of the circumstances described in Section 2.4(d)(ii), Section 5.6(b), Section 5.6(c), Section 5.6(e), Section 5.8, ARTICLE 9(a), ARTICLE 9(b), ARTICLE 9(d), ARTICLE 9(e), Section 10.11 and Section 10.12 in each instance, upon proper written demand of Purchaser to Seller and the Escrow Agent stating the reason for such termination and referencing the section of this Agreement providing Purchaser with the right to do so. Upon receipt of such written demand by Seller, Seller and Purchaser shall direct the Escrow Agent, in writing, to pay and disburse the Deposit immediately to Purchaser (whereupon this Agreement shall terminate and neither party shall have any further rights or obligations hereunder, except as otherwise expressly provided herein).

(z)The Deposit shall be paid to Seller: (i) at the Closing, should the Closing occur, in partial satisfaction of the Purchase Price as provided in Section 3.2(b) hereof; or (ii) as liquidated damages (and not as a penalty) under the circumstances described in Section 5.6(a). In each such instance, Seller and Purchaser shall direct the Escrow Agent, in writing, to pay and disburse the Deposit immediately to Seller (whereupon this Agreement shall terminate and neither party shall have any further right or obligations hereunder, except as otherwise expressly provided herein).

(aa)Without limiting Purchaser’s other rights and remedies hereunder, Purchaser may terminate this Agreement for any reason or for no reason whatsoever during the Due Diligence Period and upon any such termination the Deposit shall be returned to Purchaser.

Section 3.2Payment of Purchase Price. The Purchase Price shall be paid by Purchaser, at Closing, as follows:

(i)Four Million Seven Hundred Seventy-Five Thousand and No/100 U.S. Dollars ($4,775,000.00), as adjusted for (i) any Adjustments pursuant to Section 3.1(a), (ii) the mutually agreed upon value of the accrued vacation and other paid time off included in the Assumed Liabilities, and (iii) any credits and additions described in Section 3.2(b) below, shall be paid at Closing by wire transfer in accordance with wire instructions provided by Seller at least three (3) business days before Closing.

(j)Purchaser shall receive a credit against payment of the Purchase Price by the amount of (i) the Deposit, (ii) the accrued vacation and sick pay amounts included in the Assumed Liabilities, and(iii) unless otherwise paid by Seller, the amounts to be paid by Seller under Section 2.4(a) and Section 4.6(b) of this Agreement. If, at Purchaser’s request, Seller leaves any of Seller’s security deposits or utility deposits in place following Closing, then the amount of any such security

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deposit or utility deposit shall be added to the Purchase Price and paid to Seller pursuant to Section 3.2(a).

(k)Purchaser shall deposit the Holdback Amount into an interest-bearing escrow account with the Escrow Agent pursuant to an Escrow Agreement in substantially the form attached hereto as Exhibit B (the “Post-Closing Escrow Agreement”). The funds held pursuant to the Post-Closing Escrow Agreement shall be available according to the terms of the Post-Closing Escrow Agreement to secure any obligations of Seller to Purchaser pursuant to Section 3.3(d) and Section 8.1 hereof. The Holdback Amount shall be released to Seller at the end of the twelfth (12th) calendar month following the Closing Date, less any amounts claimed by Purchaser prior to such distribution date, which shall be held in accordance with the terms of the Post-Closing Escrow Agreement until finally adjudicated.

(l)Purchaser shall assume the Assumed Liabilities.

(m)The parties acknowledge that the transactions contemplated hereunder must be reported in accordance with Section 1060 of the IRC. The parties shall report the transactions contemplated hereunder for all purposes in accordance with the purchase price allocation set forth on Schedule 3.3 hereto, which will be determined prior to the end of the Due Diligence Period. The parties shall share information and cooperate to the extent necessary to permit the transactions to be properly, timely, and consistently reported.

Section 3.3Prorations.

(h)The following items shall be prorated between Seller and Purchaser as of 11:59 p.m. on the date immediately preceding the Closing Date (the “Proration Date”); prorations credited to Purchaser shall reduce the Purchase Price and prorations credited to Seller shall increase the Purchase Price at Closing as follows:

(i)city, state, and county ad valorem taxes for the year in which the Closing occurs based on the ad valorem tax bills for the Purchased Property, if then available for such year, or if not, then on the basis of the ad valorem tax bill for the Purchased Property for the immediately preceding year. (If such proration is based on an ad valorem tax bill for the immediately preceding year and should such proration prove to be inaccurate on receipt of the ad valorem tax bill for the Purchased Property for the year of Closing, then either Seller or Purchaser, as applicable, may demand at any time after Closing a payment from the other party in an amount sufficient to correct such malapportionment);

(ii)sanitary sewer taxes and utility charges, if any; provided, however, that Purchaser may elect, prior to Closing, to require that the meters for all utility charges be read and terminated as of the end of the last business day preceding the Closing Date, in which case Seller shall be responsible for and shall pay for all such charges first accruing or relating to the period prior to the Closing Date;

(iii)all payment obligations under the Assumed Contracts and Leases; and

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(iv)resident rents and other revenues (including Prepaids and Deposits, if any).

Purchaser and Seller shall prepare a proposed schedule (the “Proration Schedule”) prior to Closing, including the items listed above and any other items the parties determine necessary. Such Proration Schedule shall include all applicable income and expenses with regard to the Purchased Property. Seller and Purchaser will use all reasonable efforts to finalize and agree upon the Proration Schedule at least two (2) business days prior to Closing.

(i)Seller shall receive all income from the Purchased Property attributable to the period prior to the Proration Date and shall, unless otherwise provided for in this Agreement, be responsible for all expenses of the Purchased Property attributable to the period prior to the Proration Date. In the event Purchaser receives any payment from a resident for rent due for any period prior to the Proration Date or payment of any other receivable of Seller, Purchaser shall forward such payment to Seller. Payments received from a resident shall be allocated first to any current balances due from such resident that have accrued since the Proration Date and any costs of collection of such amounts incurred by Purchaser.

(j)Purchaser shall receive all income from the Purchased Property attributable to the period from and after the Proration Date and shall, except as otherwise provided for in this Agreement, be responsible for all expenses of the Purchased Property attributable to the period from and after the Proration Date. In the event Seller or Seller’s affiliates receive any payment from a resident for rent due for any period from and after the Proration Date, Seller shall forward such payment to Purchaser.

(k)The parties agree that any amounts that may become due under this Section 3.3 shall be paid at Closing as can best be determined. A post-Closing reconciliation of prorated items shall be made by the parties within ninety (90) days after the Closing Date and any amounts due at that time shall be promptly forwarded to the respective party to whom such amounts are due in a lump sum payment. Any additional amounts which may become due after such determination shall be forwarded at the time they are received. Any amounts due under this Section 3.3 which cannot be determined within ninety (90) days after the Closing Date (such as, for example, fiscal year-end real estate taxes) shall be reconciled as soon thereafter as such amounts can be determined. Purchaser and Seller agree that each shall have the right to audit the records of the other in connection with any such post-Closing reconciliation. Any payments made pursuant to this Section 3.3 shall be treated as a purchase price adjustment for income tax purposes.

ARTICLE 4CERTAIN OTHER COVENANTS AND AGREEMENTS

Section 4.1Inspection and Due Diligence.

(n)Prior to Closing, Purchaser (including its agents and representatives) shall be permitted to inspect the Facility and the Purchased Property. The first thirty-five (35) days following the Effective Date, ending at 5:00 P.M., Eastern time on the thirty-fifth (35^th) day following the Effective Date or, if such day is not a business day, on the next business day following such day, shall be known as the “Due Diligence Period” for purposes of this Agreement, but

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Purchaser shall be entitled to continue all such inspections during and after the Due Diligence Period. Such inspections may include an independent appraisal and environmental assessments (including Phase I assessments and Phase II assessments if Seller consents to any such Phase II assessment which consent shall not be unreasonably withheld, conditioned or delayed), impact study and detailed architectural and engineering inspections of buildings and mechanical systems located on the Real Property and any other inspections which may reasonably be required by potential lenders or investors. Purchaser shall not conduct any drilling, boring, soil testing or other physically intrusive inspections without Seller’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, if done in connection with any Phase II assessment. Seller shall allow Purchaser and its authorized representatives reasonable access upon prior notice during normal business hours and until the Closing to Seller’s executive personnel, properties and records, shall permit examination and testing, and shall furnish Purchaser and its authorized representatives such information concerning the Purchased Property and the Facility as Purchaser reasonably requests. Purchaser and its authorized representatives shall have the right to review and copy all such books, accounts, records, agreements or other documents as it may reasonably deem advisable. Seller shall, upon reasonable request by Purchaser, make available to Purchaser by electronic data room or otherwise, copies of all records, files, correspondence, invoices, resident lists, supplier lists, blueprints, specifications, designs, drawings, business records and plans, operating and financial data, environmental assessments, property reports, permits and regulatory files and other data associated with or used by Seller in connection with its operation of the Business or its ownership or operation of the Purchased Property, including without limitation all of the information described in Section 4.1(b) below,to the extent Seller has possession and control of such information, and in the form in which Seller maintains such information in the ordinary course of its business. Seller shall have no obligation to prepare any summaries, abstracts, compilations or reports in connection with Purchaser’s investigation that Seller does not maintain or compile in the ordinary course of Seller’s business. For purposes of this Agreement, documents or information shall be deemed to have been “made available” to Purchaser if copies have been delivered or viewed by Purchaser in tangible or electronic form, or if such documents or information have been made available at the Facility or on an internet or electronic data site to which Seller has granted Purchaser or its representatives access. Purchaser shall notify Seller in advance of any site visits by Purchaser or its contractors or representatives. All site visits and contacts with Seller personnel shall be coordinated through Jackie Sielaff (cell phone number 541-720-9638, e-mail address jackie@vonoinc.com or Seller’s counsel, and Purchaser shall not contact any Seller personnel, residents or service providers directly.

(o)Within five (5) business days of the Effective Date (the “Diligence Materials Due Date”), Seller shall provide Purchaser with all of the materials in Seller’s possession or control listed in Exhibit G of this Agreement (collectively, the “Requested Diligence Materials”). In the event that Seller’s delivery of any Requested Diligence Materials is delayed beyond the Diligence Materials Due Date, or in the event Purchaser has provided notice to Seller that any purported response to the requirements of this Section 4.1(b) is insufficient in Purchaser’s reasonable discretion, the Due Diligence Period shall be extended by the total number of days which elapse between the Diligence Materials Due Date and the date upon which all Requested Diligence Materials have actually been provided to Purchaser or Purchaser has been advised by Seller that such Diligence Materials are not available to Seller, or, as applicable, any insufficient

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response to the requirements of this Section 4.1(b) has been corrected to Purchaser’s reasonable satisfaction (inclusive of the Diligence Materials Due Date and the last applicable date of delivery or correction, as applicable).

(p)In the event that the Due Diligence Materials disclose any matters which need completion or correction, such matters shall be completed or corrected by Seller as a condition to Purchaser’s obligation to close the transactions contemplated hereunder.

(q)Purchaser shall pay all costs incurred for any such inspections of the Facility and the Purchased Property initiated by Purchaser. Purchaser shall indemnify and hold Seller harmless from and against any and all claims for death of or injury to persons or damage to property to the extent arising out of or as a result of the negligent or wrongful acts or omissions of Purchaser, Purchaser’s authorized representatives, or designees of Purchaser pursuant to the provisions of this Section 4.1. Purchaser, as well as its consultants and contractors, shall at Seller’s request provide evidence of sufficient insurance to protect Seller from any losses it might incur as a result of Purchaser’s activities incurred in connection with such inspections.

(r)The parties hereto acknowledge that Seller may possess or have access to certain information subject to the Health Insurance Portability and Accountability Act of 1996 and any regulations promulgated thereunder (“HIPAA”). Notwithstanding any other provision of this Agreement, Seller shall have no obligation under this Agreement to disclose to Purchaser any information which would violate or put Seller in a position of noncompliance with any city, county, state or federal privacy or security act, law, or regulation or the provisions of HIPAA or which would result in Seller breaching any contractual provisions imposed on Seller with respect to the requirements of HIPAA and/or any such city, county, state, or federal act, law or regulation.

(s)Purchaser may perform or cause to be performed a Phase I Environmental Site Assessment of a portion of the Real Property (the “Phase I ESA”). Purchaser shall provide Seller with a copy of the Phase I ESAs within five (5) business days of completion and receipt of each by Purchaser. Any subsequent amendments thereto will also be provided to Seller within five (5) business days after completion and receipt by Purchaser thereof.

(t)If the Phase I ESA, or any update thereof, reveals areas of environmental concern that, in Purchaser’s sole opinion, warrant further investigation, Purchaser may, at its discretion, request Seller’s consent to commence a Phase II Environmental Site Assessment of the applicable portion of the Real Property (“Phase II ESA”; collectively, the “ESAs”). A Phase II ESA consists of further investigation of recognized environmental conditions identified in the Phase I ESA including sampling and analysis of soil and groundwater necessary to determine whether or not contamination has occurred. Seller’s consent to conduct a Phase II ESA shall not be unreasonably withheld, conditioned or delayed. If Seller permits Purchaser to conduct a Phase II ESA, Seller will be provided a copy of the Phase II ESA within five (5) business days of completion and receipt by Purchaser. Any subsequent amendments and/or reports relating to the Phase II ESA shall also be delivered to Seller and Purchaser.

(u)The costs of the Phase I ESA and the costs of the Phase II ESA and any updates thereof shall be paid by Purchaser.

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(v)Seller acknowledges that Purchaser intends to lease the Facility upon Closing to a third-party that is not affiliated with Purchaser (the “Third-Party Tenant”). Accordingly, notwithstanding any provision of this Agreement to the contrary, to the extent that a potential Third-Party Tenant requests or requires to perform diligence related to the Business and the Facility, Purchaser is permitted to share with such potential Third-Party Tenant all reports and information obtained or compiled by Purchaser with respect to the Business and/or the Facility. Purchaser shall inform Third-Party Tenant of the requirements of Sections 4.1(a) and 4.1(e) of this Agreement and shall be responsible for any breach of such provisions by Third-Party Tenant.

Section 4.2Conduct of Business Prior to the Closing Date. Seller covenants and agrees with Purchaser that from the Effective Date hereof through the Closing Date, except as otherwise expressly contemplated in this Agreement, unless Purchaser otherwise consents in writing (which consent shall not be unreasonably withheld, conditioned or delayed) Seller shall, and shall cause the Operator in its capacity as Operator of the Business to:

(l)Use good faith efforts to operate the Business in all material respects in the ordinary course of business in a commercially reasonable manner, including (i) incurring expenses consistent with Seller’s past practices in the operation of the Business and (ii) using commercially reasonable efforts to preserve the Business’ present business operations, organization and goodwill and its relationships with customers, employees, advertisers, suppliers and other contractors.

(m)Operate the Business and otherwise conduct business in all material respects in accordance with the terms or conditions of all applicable licenses and permits, all applicable rules and regulations of the state where the Facility is located, and all other rules, regulations, laws, and orders of all governmental authorities having jurisdiction over any aspect of the operation of the Business and all applicable insurance requirements; provided, however, that the foregoing shall not impose on Seller any obligation to make unbudgeted capital improvements or repairs, or to incur any cost or expense in order to comply with any of the foregoing to the extent Seller was not in compliance as of the Effective Date, except to the extent Seller is ordered to do so by a governmental authority having jurisdiction over Seller.

(n)Maintain the books, records, and financial statements for the Business consistent with past practices.

(o)Timely comply in all material respects with all contracts and agreements with third parties related to the Facility or the operation of the Business.

(p)Not sell, lease, grant any rights in or to or otherwise dispose of or otherwise relinquish control of, or agree to sell, lease or otherwise dispose of, the Purchased Property in whole or in part except for Residency Agreements entered into in the ordinary course and dispositions of assets that are in the ordinary course of business, and if material, are replaced by similar assets of substantially equal or greater value and utility.

(q)Take commercially reasonable efforts to maintain the Purchased Property in the same condition as it exists as of the Effective Date, except for ordinary wear and tear, in a manner consistent with past practices.

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(r)Not default on any loans to Seller which are not fully cured or satisfied at Closing.

(s)Not enter into any contracts other than contracts which impose no obligation on Purchaser following the Closing or Residency Agreements in the ordinary course of business.

(t)Not make any alterations or improvements to the Real Property or make any capital expenditure with respect to the Real Property in excess of $10,000 other than those that are currently budgeted for completion, or are required by law, necessary to preserve the coverage under or comply with the terms of any insurance policy with respect to the Business or are in Seller’s business judgment necessary to address emergency conditions or to maintain the goodwill and competitive standing of the Business.

(u)Maintain normal levels of inventory and supplies on hand for the Business (including food, beverages, office and kitchen supplies), consistent with past practice.

(v)Make available to Purchaser copies of all internally generated monthly financial reports.

(w)Inform Purchaser promptly regarding the resignation, termination or hiring of the Executive Director or assistant director (“Assistant Director”), if any, of the Facility.

Section 4.3Notification of Certain Matters. Seller shall give prompt written notice to Purchaser, and Purchaser shall give prompt written notice to Seller, to the extent either such party becomes aware of (i) the occurrence, or failure to occur, of any event that would be likely to cause any of their respective representations or warranties contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Closing Date, and (ii) any failure on their respective parts to comply with or satisfy, in any material respect, any covenant, condition, or agreement to be complied with or satisfied by any of them under this Agreement.

Section 4.4Employees.

(a)For purposes of this Section 4.4, all references to employment by an entity include both direct employment by such entity, employment by an affiliate of such entity, or employment through one or more employee leasing or similar arrangements that such entity or its affiliate has entered into with a third party.

(b)Seller shall be responsible for complying with the continuation health care coverage requirements of COBRA with respect to any individual who became a “qualified beneficiary” as of or prior to the Closing Date, including as a result of this transaction.

(c)Seller shall pay any severance costs payable with respect to the termination of employment by Seller (as applicable) of any Employee, including Employees who are offered post-Closing employment by the Third-Party Tenant, pursuant to any severance policies or plans or required by law, including the WARN Act (if applicable). Seller shall be solely responsible for WARN Act compliance for all Employees.

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(d)As to any Employee that the Purchaser desires the Third-Party Tenant to hire for the Business post-Closing (collectively, “Hired Employees”), Seller shall cause the release of such Hired Employee from any contractual provision with Seller to the extent that such provision would impair the utility of such Hired Employee’s services to the Third-Party Tenant in conducting the Business following the Closing in substantially the same manner it is conducted by Seller immediately prior to the Closing Date, or to the extent that such provision would impose upon such Hired Employee any monetary or other obligation to Seller for violation of restrictive covenants or confidentiality provisions with respect to the Business (other than any such restrictive covenants or confidentiality provisions contained in Assumed Contracts and Leases being transferred to Purchaser or any such covenant mandating the return to Seller of property not being transferred to Purchaser hereunder). The Third-Party Tenant, at Purchaser’s expense, shall be responsible for the vacation and other paid time off for Hired Employees accrued through the Proration Date to the extent of the credit provided by Sellers to Purchaser for such amounts and reflected in the closing statement executed by Sellers and Purchaser prior to Closing.

Section 4.5Confidentiality.

(a)Confidential Information. Any and all non-public information of any type or description, including, but not limited to, financial statements and projections of Seller, proprietary or trade secret information, whether written or verbal, or any information given to Purchaser by Seller in connection with the transactions contemplated by this Agreement, is proprietary to Seller and confidential in nature, and shall be treated as such by Purchaser, except with the prior written consent of Seller and except to the extent enforcement of its terms and applicable law require public disclosure. This provision shall not apply following the Closing to any such information pertaining to the Purchased Property or the Business, nor to any information that is or becomes publicly available through no fault of Purchaser. Purchaser shall have the right to disclose any such information to its professional advisors, lenders, investors and other third parties who need to know such information for the purposes of assisting Purchaser with the negotiation and consummation of this Agreement, provided Purchaser advises such parties of their confidential obligations under this Agreement, and provided Purchaser remains responsible for any violations by such parties. After the expiration of the Due Diligence Period Purchaser shall also have the right to discuss the possibility of future employment with all active and full-time employees of the Business.

(b)Confidentiality of Agreement. The terms of this Agreement shall remain confidential, except with the prior written consent of Seller and Purchaser and except to the extent that enforcement of its terms or applicable law require public disclosure. Neither party shall make any public announcement of the transactions contemplated herein without the express written approval of the other party, which approval shall not be unreasonably withheld. This provision will not apply to Purchaser following any Closing. Purchaser shall permit Seller to review in advance and comment on any public announcement of the Closing of the transactions contemplated herein.

(c)Return of Confidential Information. Purchaser agrees that promptly upon the termination of this Agreement, whether by mutual termination or otherwise (other than upon

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Closing), Purchaser shall cause all materials and property (originals and copies) of Seller to be immediately returned to Seller, or, at Purchaser’s election, destroyed provided Purchaser provides written certification of such destruction, provided that Purchaser shall be entitled to retain such information to the extent required in order to comply with applicable law, regulation, bona fide document retention policy of Purchaser, or any public disclosure obligations promulgated by the Securities and Exchange Commission any applicable to Purchaser, or until any litigation between Purchaser and Seller arising out of the termination of this Agreement has been finally resolved.

(d)Survival of Confidentiality. This Section 4.5 shall survive the Closing to the extent provided above and shall survive in the event this Agreement is terminated prior to Closing.

(e)Supersedes Previous Agreements. The provisions of this Section 4.5 supersede any prior agreements between the parties relating to confidentiality.

Section 4.6Expenses and Taxes.

(a)Each party shall pay its own expenses and costs incurred in connection with the negotiation and consummation of this Agreement and the transactions contemplated by this Agreement.

(b)Notwithstanding the foregoing:

(i)Seller shall pay fees and costs relating to the transfer of motor vehicles included in the Purchased Property;

(ii)Seller shall pay the real estate transfer tax, mansion taxes (if applicable) costs of recording the Deeds and all other filing and recording costs; and

(iii)Seller shall pay the premiums or other costs attributable to the issuance of the Title Policy.

(iv)Purchaser shall pay any person who is entitled to any brokerage commission or finder’s fee in connection with any of the transactions contemplated by this Agreement by reason of any act or omission of Purchaser, and shall indemnify Seller and hold Seller harmless against any claims for such commissions or finder’s fees. Seller shall pay Senturian Senior Housing and Mark Lee and any other person who is entitled to any brokerage commission or finder’s fee in connection with any of the transactions contemplated by this Agreement by reason of any act or omission of Seller, and shall indemnify Purchaser and hold Purchaser harmless against any claims for such commissions or finder’s fees.

This Section 4.6 shall survive Closing.

Section 4.7Waiver of Bulk Sales and Indemnification. Purchaser hereby waives compliance by Seller and Seller hereby waives compliance by Purchaser, with the requirements of any applicable bulk sales laws and similar laws, if and to the extent applicable. Seller shall indemnify and hold harmless Purchaser from any and all claims, liabilities, or costs, including reasonable attorneys’ fees, arising out of the parties’ failure to comply with any bulk sales

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laws and similar laws applicable to the transactions contemplated hereby as provided in Section 8.1(d). The foregoing indemnification shall survive the Closing.

Section 4.8Exclusivity. During the period from the Effective Date to the Closing Date or termination of this Agreement according to the terms hereof, Seller shall not take any action, directly or indirectly, to encourage, initiate or engage or participate in discussions or negotiations with, or provide any information to, any party other than Purchaser, concerning a potential transaction involving the purchase and sale of the Business or any Purchased Property, the purchase and sale of all or substantially all of the ownership interest of Seller, or any transaction similar to the foregoing.

Section 4.9Consents; Cooperation. Seller will use its reasonable best efforts prior to the Closing to obtain all consents that may be required from third parties with respect to the Assumed Contracts and Leases and any of the other Purchased Property and Purchaser shall cooperate therewith. Purchaser shall, or shall request Third-Party Tenant to, use its reasonable best efforts to diligently pursue the issuance or transfer of any of the governmental licenses or permits required for Purchaser or Third-Party Tenant, as applicable, to operate the Business following the Closing, and Seller agrees to provide reasonable cooperation and assistance to Purchaser in obtaining such licenses and permits. Purchaser shall make reasonable efforts to cause Third-Party Tenant to submit application for issuance of any governmental licenses or permits within five (5) days of the expiration of the Due Diligence Period, although Third Party Tenant may, and shall be encouraged to, submit such applications as soon as possible following the Effective Date. Notwithstanding the foregoing, (i) neither party will be required to pay or commit to pay any amount to (or incur any liability or obligation to) a person or entity from whom or which a consent may be required (other than payment by Seller of past due amounts under Assumed Contracts and Leases or past due taxes, or payment by Purchaser of any fees or other costs imposed by governmental authorities with respect to licenses and permits, or transfer fees, if any, required by the express terms of any Assumed Contracts and Leases) or otherwise enter into or modify any agreement with such person or entity that involves any cost, liability or obligation, and (ii) to the extent Purchaser determines, in its sole discretion, that the governmental licenses or permits required for the Third-Party Tenant to operate the Business following the Closing will not be obtained by Third-Party Tenant or its affiliates prior to Closing, Seller agrees to enter into a Transition Period Sublease (as defined herein) with Purchaser or Third-Party Tenant for the continued operation of the Business by Seller or its affiliates, as applicable, until Third-Party Tenant obtains such licenses and permits. Neither party makes any representation or warranty to the other regarding the extent to which the pre-merger filing requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”) apply to the transactions contemplated under this Agreement.

Section 4.10Further Assurances. Each party covenants and agrees that, following the Closing, it will execute, deliver and acknowledge (or cause to be executed, delivered and acknowledged), from time to time, at the reasonable request of the other party and without further consideration, all such further instruments and take all such further action as may be reasonably necessary or appropriate to transfer more effectively to Purchaser, or to perfect or record Purchaser’s title to or interest in the Purchased Property or to enable Purchaser to use or otherwise

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to confirm or carry out the provisions and intent of this Agreement. This Section 4.10 shall survive Closing.

Section 4.11Non-Solicitation of Employees. For a period of one (1) year following the Closing Date, neither Seller nor any affiliate under the control of, or commonly controlled with, Seller shall attempt, directly or indirectly, to solicit any employee of the Business to leave the employ of the Business in order to take employment with Seller, Seller’s affiliates or any other party. This Section 4.11 shall survive Closing.

Section 4.12Delivery of Schedules. Seller shall provide all Schedules required by this Agreement (other than those required by ARTICLE 7 hereof, which will be provided by Purchaser on or before the Schedule Due Date) on or before the date that is within ten (10) calendar days following the Effective Date (the “Schedule Due Date”). If applicable, the Due Diligence Period shall be extended by the total number of days which elapse between the Schedule Due Date and the date upon which all required Schedules have actually been provided to Purchaser, or, as applicable, any insufficiently completed Schedules have been corrected to Purchaser’s reasonable satisfaction (inclusive of the Schedule Due Date and the last applicable date of delivery or correction, as applicable). Any fact or item disclosed on any Schedule to this Agreement shall be deemed disclosed with regard to all other representations and warranties to which such fact or item may reasonably apply to the extent such disclosure would provide notice to a reasonable person that the information disclosed would also qualify, or constitute an exception to, such other representations and warranties. Seller may from time to time supplement and update such Schedules to reflect any changes since the date of delivery of the original Schedules or any matters of which Seller’s Knowledge was first acquired following the original delivery date of such Schedules. Any such updates or supplements shall be deemed to amend the Schedules for all purposes retroactively to the Effective Date, except that (i) no amendment to Schedules1.1(a),2.2(d), and 2.4(a) may be made without Purchaser’s written consent, and (ii) any amendments permitted above shall be disregarded (i) in determining if the conditions to Closing set forth in Section 5.3(a) or Section 5.3(e) below have been satisfied, and (ii) for all purposes under this Agreement if Seller intentionally omitted such information from the original Schedules.

ARTICLE 5CLOSING

Section 5.1Closing. The Closing of the transactions contemplated by this Agreement shall occur remotely, upon the exchange of signatures to the documents contemplated by this Agreement and the other required deliveries of each party hereto described below ten (10) business days following Purchaser’s and Third-Party Tenant’s receipt (or, as applicable, receipt by their respective affiliates or assignee) of all governmental approvals necessary for Purchaser to own and for the Third-Party Tenant to manage the Facility, unless extended by mutual agreement of Purchaser and Seller or pursuant to Section 5.6, Section 10.11, or Section 10.12. Additionally, Purchaser shall be entitled in its sole discretion to delay the scheduled date of Closing by up to thirty (30) business days. The date on which the Closing is scheduled to occur (as such date may be extended from time to time pursuant to this Agreement) shall be the “Scheduled Closing Date”

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hereunder. The date on which the Closing actually occurs shall be the “Closing Date” for purposes of this Agreement.

Section 5.2Conditions to Seller’s Obligations. Subject to Section 5.6(a), except as may be waived in writing by Seller, Seller’s obligation to make its deliveries at the Closing and to effect and consummate the transactions contemplated hereby shall be subject to the following conditions:

(a)Representations and Warranties True and Correct. Each of Purchaser’s representations and warranties contained in this Agreement, taken as whole, shall be true in all material respects as of the Closing Date with the same effect as though made on such date (except for representations and warranties made as of a specified date, which shall have been true and correct as of such date with the same effect as though made on such date), and Purchaser shall have executed and delivered to Seller at Closing a certificate confirming the foregoing.

(b)Agreements Complied With. Each of Purchaser’s covenants and agreements contained in this Agreement to be performed at or prior to the Closing shall have been performed in all material respects at or prior to the Closing, and Purchaser shall have executed and delivered to Seller at Closing a certificate confirming the foregoing.

(c)Deliveries Made. Purchaser shall have delivered, and where applicable shall have duly executed, all the documents, certificates and other instruments required to be delivered at the Closing in accordance with Section 5.5 or any other express provision of this Agreement.

Section 5.3Conditions to Purchaser’s Obligations. Subject to Section 5.6, except as may be waived in writing by Purchaser, Purchaser’s obligation to make its deliveries at the Closing and to effect and consummate the transactions contemplated hereby shall be subject to the following conditions:

(e)Representations and Warranties True and Correct. Each of Seller’s representations and warranties contained in this Agreement, taken as a whole, shall be true in all material respects as of the Closing Date with the same effect as though made on such date (except for representations and warranties made as of a specified date, which shall have been true and correct as of such date), and Seller shall have executed and delivered to Purchaser at Closing a certificate confirming the foregoing.

(f)Agreements Complied With. Each of Seller’s covenants and agreements contained in this Agreement to be performed at or prior to the Closing shall have been performed in all material respects at or prior to the Closing, and Seller shall have executed and delivered to Purchaser at the Closing a certificate confirming the foregoing.

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(g)Deliveries Made. Seller shall have delivered, and where applicable shall have duly executed, all the documents, certificates and other instruments required to be delivered at the Closing in accordance with Section 5.4 or any other express provision of this Agreement.

(h)Licenses and Permits. Purchaser and the Third-Party Tenant shall have (i) obtained all governmental licenses and permits required for Purchaser to own the Facility, and for the Third-Party Tenant to operate the Business as an assisted living facility in the same manner in which Seller is currently operating the Business (ii) or shall have completed diligence reasonably acceptable to Purchaser indicating that Third-Party Tenant’s submission of applications for such licenses and permits shall result, post-Closing, in the issuance of applicable governmental licenses and permits and Purchaser and Seller shall have entered into a Transition Period Sublease effective as of the Closing Date.

(i)No Material Adverse Change. No Material Adverse Change shall have occurred during the period between the Effective Date and the Closing Date.

(j)Lease Agreement. The Third-Party Tenant and Purchaser (or a subsidiary or affiliate of Purchaser), shall have entered into a Lease Agreement facilitating the Third-Party Tenant’s occupancy of the Facility in a form acceptable to Purchaser.

(k)Termination of Existing Leases and/or Management Agreements. Any existing real property leases and/or management agreements, if any, relating to the Purchased Property which are not Assumed Contracts and Leases or Residency Agreements shall have been terminated without fee or cost to Purchaser, and Seller shall have provided Purchaser reasonable evidence of same.

(l)No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction, or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect. No action shall have been taken nor any statute, rule, or regulation shall have been enacted by any governmental agency that makes the consummation of the transactions contemplated hereby illegal.

Section 5.4Deliveries by Seller. Seller shall deliver to Purchaser on or before the Closing the following:

(f)Deed. The Deed substantially in the form ofExhibit C attached hereto, duly executed by Owner. In addition, in the event Purchaser elects to have a new survey of the applicable Real Property (the “Survey”)

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prepared, Owner agrees to provide a quitclaim deed at closing conveying title to the applicable Real Property based on the metes and bounds description shown on the Survey.

(g)Bill of Sale and Assignment. A bill of sale and assignment with Seller’s warranty of title in the form of Exhibit D attached hereto (the “Bill of Sale and Assignment”) with respect to the Purchased Personal Property located at the Facility, duly executed by Seller.

(h)Other Instruments. Such further instruments of conveyance and transfer as Purchaser may reasonably require to consummate the transactions contemplated by this Agreement to vest all of the Business with respect to the Facility in Purchaser and to facilitate the transfer of such Business from Seller to Purchaser, including the assignment of the applicable Assumed Contracts and Leases, in form and substance reasonably acceptable to Purchaser.

(i)Owner’s Affidavit. An Owner’s Affidavit in a form acceptable to the Title Company to the extent required to issue the Title Policy.

(j)Releases. Documents releasing or nullifying any title exceptions (or providing reasonable evidence of such release or nullification) (relating to the applicable Real Property) which Seller is obligated to release or nullify pursuant to Section 2.4hereof.

(k)Resolutions. A certified copy of the company resolutions authorizing consummation of this Agreement and authorizing Seller’s to execute all documents necessary for Closing as provided herein.

(l)Closing Certificate. The certificates required pursuant to Section 5.3(a) and Section 5.3(b), identifying such changes to the representations and warranties as shall be necessary to make such representations true, complete and accurate in all material respects as of the date and time of Closing.

(m)1099S. A completed Form 1099S, or effective equivalent thereof, describing the sale of the applicable Purchased Property.

(n)Withholding Affidavit. If a Withholding Affidavit is required by the Escrow Agent, Seller shall deliver the Withholding Affidavit to the Escrow Agent prior to Closing.

(o)Non-Foreign Status Affidavit. A certificate of non-foreign status pursuant to Treasury Regulation Section 1.1445-2(b)(2) signed by Seller under penalties of perjury stating Seller’s name, address and U.S.

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taxpayer identification number and stating that Seller is not a foreign person as defined by Section 1445(f)(3) of the IRC.

(p)Good Standing Certificate. A certificate of existence, certified by the Secretary of State of Kentucky as of a date which is within fifteen (15) days of Closing, reflecting the Seller’s good standing as a Kentucky limited liability company.

(q)Rent Roll. A true, correct, and complete rent roll certified by an officer of Seller, for the Facility listing each resident as of a date which is within three (3) business days prior to the Closing Date, the unit, bed or room number of such resident, and the amount of the monthly fees to be paid by such resident (including room, meal and other applicable monthly fees), the amount of security deposit, if any, date of Residency Agreement and the expiration date of such Residency Agreement, if applicable.

(r)Transition Period Sublease. The Transition Period Sublease, if applicable, in form and substance attached as Exhibit E (the “Transition Period Sublease”).

(s)Third Party Consents. The third party consents listed on Schedule 5.4(o).

(t)Opinion of Counsel. An opinion of Seller’s counsel in a form acceptable to Purchaser in it reasonable discretion.

(u)Title Commitment. A title commitment in accordance with Section 2.4(a), subject only to the Permitted Title Exceptions and endorsed by the Title Company.

(v)Books and Records. Possession and control of books and records included as part of the Purchased Property which are not physically located at the Real Property as of the Closing Date.

(w)Post-Closing Escrow Agreement. The Post-Closing Escrow Agreement, duly executed by Seller.

Section 5.5Deliveries by Purchaser. Purchaser shall deliver to Seller on or before the Closing the following:

(c)Payment Items. The items described in Section 3.2 hereof representing payment of the Purchase Price.

(d)Assumption Agreement. An instrument of assumption of the Assumed Liabilities, substantially the form attached as Exhibit F.

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(e)Post-Closing Escrow Agreement. The Post-Closing Escrow Agreement, duly executed by Purchaser.

(f)Transition Period Sublease. The Transition Period Sublease, if applicable, substantially in the form attached hereto as Exhibit E.

(g)Closing Certificate. The certificates required pursuant to Section 5.2(a) and Section 5.2(b).

Section 5.6Non-Fulfillment of Closing Conditions. Notwithstanding anything in this Agreement to the contrary, the following shall apply exclusively if any of the conditions in Section 5.2 and Section 5.3 are not fulfilled as of the Scheduled Closing Date:

(a)Except as otherwise provided in the last sentence of this Section 5.6(a), if any of the conditions set forth in Section 5.2have not been fulfilled as of the Scheduled Closing Date, but all the conditions set forth in Section 5.3 have been fulfilled or expressly waived by Purchaser, Seller may elect (i) to proceed to Closing and waive such failure for all purposes hereunder; or (ii) terminate this Agreement, in which case the Deposit shall be disbursed to Seller as liquidated damages, and Purchaser shall have no further liability to Seller except with respect to the surviving provisions described in ARTICLE 9. Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Purchaser. In no event under this Section 5.6 or otherwise shall Purchaser be liable to Seller for any punitive, speculative or consequential damages. Notwithstanding the foregoing, if any of the conditions in Section 5.2 or Section 5.3 are not satisfied, then Seller’s rights under this Section 5.6(a) are subject to Purchaser’s rights under Section 5.6(b)-Section 5.6(e) below.

(b)If the conditions set forth in Section 5.3(a) have not been fulfilled as of the Scheduled Closing Date, then Purchaser shall give Seller written notice of such failure, which notice shall state Purchaser’s election: (i) to proceed with the Closing and waive any such failure to fulfill one or more of the requirements of Section 5.3(a) for all purposes hereunder; (ii) to extend the Scheduled Closing Date for an additional thirty (30) days in order to provide Seller the opportunity to fulfill such condition and if such condition is not fulfilled within such thirty (30) day additional period Purchaser may terminate this Agreement, in which case the Deposit shall be returned to Purchaser and Seller shall reimburse Purchaser for Purchaser’s actual third party expenses incurred by Purchaser in connection with its due diligence on the applicable Purchased Property; provided, however, such reimbursements shall not exceed Fifty Thousand and No/100 U.S. Dollars ($50,000), and after which Seller shall have no additional liability to Purchaser for such failure, except for the surviving provisions described in

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ARTICLE 9; or (iii) exercise any other legal or equitable remedies to which Purchaser may be entitled.

(c)If any of the conditions set forth in Section 5.3(b), Section 5.3(c), Section 5.3(e), Section 5.3(g) or Section 5.3(h) or have not been fulfilled as of the Scheduled Closing Date, Purchaser may elect (i) to proceed with Closing and waive such failure for all purposes hereunder; (ii) extend the Scheduled Closing Date for an additional thirty (30) days in order to allow such conditions to be fulfilled and if such condition is not fulfilled within such thirty (30) day additional period, Purchaser may terminate this Agreement, in which case the Deposit shall be returned to Purchaser and Seller shall reimburse Purchaser for Purchaser’s actual third party expenses incurred by Purchaser in connection with its due diligence on the applicable Purchased Property; provided, however, such reimbursements shall not exceed Fifty Thousand and No/100 U.S. Dollars ($50,000), and after which Seller shall have no additional liability to Purchaser for such failure, except for the surviving provisions described in ARTICLE 9; (iii) enforce specific performance if applicable; or (iv) exercise any other legal or equitable remedies to which Purchaser may be entitled.

(d)If the condition set forth in Section 5.3(d)has not been fulfilled as of the Scheduled Closing Date (including but not limited to non-fulfillment caused by unavailability of insurance required to obtain such licenses or permits) and Purchaser has used diligent good faith efforts to obtain such licenses and permits, Purchaser may at its election proceed with the Closing on the Scheduled Closing Date, but simultaneously with the Closing, Purchaser (or its affiliate) and Seller will enter into the Transition Period Sublease substantially in the form attached hereto as Exhibit E; provided, however, that if any regulatory authority having jurisdiction over such licenses and permits raises objections to the form or substance of the Transition Period Sublease, the parties will negotiate in good faith to reach an arrangement which is acceptable to such regulatory authority and most closely follows the essential substance of the Transition Period Sublease shown as Exhibit E.

(e)If the Closing Conditions as set forth in ARTICLE 5 have not been satisfied on or before October 1, 2015, Purchaser shall have the absolute right to terminate this Agreement, in which case the Deposit shall be returned to Purchaser and no party shall have no additional liability to the other hereunder following such termination except for the surviving provisions described in ARTICLE 9.

Section 5.7Post-Closing Actions. Seller shall promptly deliver to Purchaser the original of any mail or other communication received by it after the Closing Date pertaining to the Purchased Property or the Business, and any payments to which Purchaser is

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entitled. Purchaser shall promptly deliver to Seller the original of any mail or other communication received by Purchaser after the Closing Date and addressed to Seller which does not pertain to the Purchased Property or the Business, or to any payments to which Seller is entitled. This Section 5.7 shall survive Closing.

Section 5.8Termination During Due Diligence. Notwithstanding anything herein to the contrary, Purchaser shall have the right to terminate this Agreement at any time during the Due Diligence Period for any reason or for no reason whatsoever. Upon any such termination, the Deposit shall be returned to Purchaser, and the parties shall have no further liability or obligation to one another arising from such termination except for the surviving provisions described in ARTICLE 9.

ARTICLE 6REPRESENTATIONS AND WARRANTIES OF SELLER

The following representations and warranties are given by the Seller. Each entity comprising the Seller, jointly and severally, hereby represents and warrants to Purchaser that as of the Effective Date:

Section 6.1Organization and Standing. Each entity comprising the Seller is a Kentucky limited liability company duly organized, validly existing, and in good standing under the laws of the State of Kentucky and has the requisite power and authority to own, sell, lease and operate its properties and to carry on its businesses as now being conducted. The Seller has the limited liability company power and authority to execute and deliver this Agreement and to consummate the transactions and perform the obligations contemplated by the Agreement.

Section 6.2Valid and Binding Obligations. The execution, delivery and performance of this Agreement and all other agreements and instruments to be executed and delivered by Seller hereunder, and the consummation of the transactions contemplated by this Agreement, have been duly authorized by all necessary company action of Seller. This Agreement constitutes, and all instruments required to be executed and delivered by Seller before or at the Closing will constitute, the valid and binding obligations of Seller, enforceable against Seller, in accordance with their respective terms. All persons who have executed this Agreement on behalf of Seller have been duly authorized to do so by all necessary company action of Seller and all persons who execute instruments required to be executed and delivered by Seller before or at the Closing shall have been duly authorized to do so by all necessary company action of Seller.

Section 6.3Title; Purchased Property Complete. Seller has good title to all of the Purchased Personal Property, and at the Closing, Seller shall transfer the Purchased Personal Property to Purchaser, free and clear of all liabilities, liens and, encumbrances except for the Assumed Liabilities and the Permitted Encumbrances. Seller has the unrestricted right to convey and assign the Purchased Personal Property. Purchaser acknowledges with respect to the Real Property, that Purchaser will rely solely upon (i) Seller’s warranties contained in the Deed and (ii) Purchaser’s owner’s policy of title insurance, and that Seller gives no other warranty regarding title to real

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property. Except for the Excluded Property or as otherwise set forth in Schedule 6.3, the Purchased Property comprises all material assets, rights or property used by Seller in the operation of the Business as currently conducted.

Section 6.4Taxes and Tax Returns. Seller has filed when due or will file when due in correct form all federal and state income tax returns for all periods ending on or prior to the Closing Date which are required to be filed by Seller on or prior to the Closing Date. Other than extensions to file Seller’s tax returns, there are no agreements by Seller for the extension of time for the assessment of any tax. All federal, state, county and local taxes due and payable by Seller on or before the Effective Date have been paid and any taxes due and payable at any time between the Effective Date through the Closing will be paid prior to Closing, and there are no federal, state or local tax liens pending or threatened against Seller or the Purchased Property. There is no open audit of any of Seller’s federal, state, local income, sales use or property tax returns pending, and Seller has received no notice of the pendency of any such audit or examination. Seller does not hold and has not in the past held a certificate or other authorization issued by any tax collection body for the purpose of avoiding the payment by Seller of sales and use taxes upon Seller’s purchases of goods and services, nor has Seller applied for such a certificate or other authorization.

Section 6.5Execution and Delivery. Except as set forth in Schedule 6.5, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will:

(f)violate any provisions of the articles of organization or operating agreement of Seller;

(g)violate any contract or agreement relating to borrowed money, or any judgment, order, injunction, decree or award against, or binding upon Seller or upon the property or business of Seller, which violation would prevent, delay or materially hinder consummation of the transactions contemplated by this Agreement;

(h)result in the creation of any material lien, charge or encumbrance upon any of the Purchased Property pursuant to the terms of any agreement or instrument to which Seller is a party or by or to which Seller or any of the Purchased Property may be bound, subject or affected;

(i)violate any judgment, order, injunction, decree or award against, or binding upon, Seller or upon the Purchased Property or Business of Seller; or

(j)result in any breach, violation, default or cancellation of any contract, agreement, mortgage, deed to secure debt, or lease to which Seller is a party or by which Seller is bound or the Purchased Property is subject that could have a material adverse effect on the Purchased Property or the operations of the Business.

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Section 6.6Contracts and Leases. Schedule 6.6 hereto sets forth all contracts, leases or agreements, including the Assumed Contracts and Leases, to which Seller is a party, written or oral, currently in effect that are material to the operation or management of the Business or the ownership and use of the Purchased Property, other than the Residency Agreements described in Section 6.7. Each of the Assumed Contracts and Leases is in full force and effect in accordance with its terms. Seller has made available to Purchaser true and correct copies of all Assumed Contracts and Leases, including all material amendments or modifications to same. Seller is not in material breach, default or violation of any of the Assumed Contracts and Leases and, to Seller’s Knowledge, no other party to any such contract or lease is in material breach, default or violation thereof. No event has occurred and no condition exists that with the passage of time or the giving of notice, or both, would constitute a material default by Seller or, to Seller’s Knowledge, by any other party to any Assumed Contracts and Leases.

Section 6.7Residency Agreements and Related Matters. Schedule 6.7 contains a list of all of the Residency Agreements currently in effect.

Section 6.8Permits and Licenses. Schedule 6.8 contains a complete list of all material governmental permits, licenses, certificates and authorizations held by Seller that relate to the ownership, use, operation or management of the Facility, the Purchased Property and/or the Business (the “Permits and Licenses”).

Section 6.9Insurance. Schedule 6.9 lists all of Seller’s policies of property and casualty insurance and liability insurance currently in effect and covering the Facility, the Business and/or the Purchased Property, copies of which have been made available for review by Purchaser.

Section 6.10Employees. Schedule 6.10 contains a complete and correct list of employees who perform services for the Business or the Facility as of July 1, 2015 (whether as employees of Seller, or any other party), including their respective positions, pay rates, bonus arrangements (if any), dates of hire (including the Executive Director and any Assistant Director of the Facility, and any employees who are currently employed by the Seller for the benefit of the Business) (collectively, the “Employees”). Except as described on Schedule 6.10, Seller is not a party to any employment contract or other written agreement with any Employee. Seller has not made any binding promise or commitment to increase the compensation of any Employee after the Effective Date, except as otherwise set forth on Schedule 6.10 hereto. Seller has complied in all material respects with all laws and regulations dealing with employment of Employees. Schedule 6.10 provides a list and brief description of all litigation or administrative claims filed by Employees or former employees who performed services for the Business against Seller during the past three (3) years, if any. Except as otherwise set forth on Schedule 6.10 (i) Seller is not a party to any collective bargaining agreement with respect to any employees, and (ii) to Seller’s Knowledge, there have been no efforts to organize a collective bargaining agreement or any other type of union activity with respect to the employees of the Business within the last three (3) years.

Section 6.11Seller Benefit Plans.

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(a)Schedule 6.11 sets forth a complete list of each “employee benefit plan,” as that term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) regardless of whether such plan is subject to ERISA, and each bonus, deferred, or incentive compensation, stock purchase, stock option, severance, and termination pay plan or program,that is maintained or contributed to by Seller for the benefit of Employees or pursuant to which Seller has any liability with respect to Employees (each a “Seller Plan” and collectively, the “Seller Plans”). With respect to each of the Seller Plans, Seller has or will make available to Purchaser (or will deliver to Purchaser prior to Closing) correct and complete copies of each of the following documents: (i) the Seller Plans and related trust or other funding documents (including all amendments thereto), (ii) the most recent Form 5500 annual report, including all attachments thereto, filed with the Internal Revenue Service with respect to each such Seller Plan, (iii) the most recent trust report, if any, prepared with respect to each such Seller Plan, and (iv) the summary plan description prepared for each such Seller Plan.

(b)Each Seller Plan has been administered and operated in material compliance with its terms and the applicable requirements of ERISA and the IRC, including the requirement to file an annual report. No Seller Plan is intended to be qualified under Section 401 of the IRC as a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) or as a “multiple employer” plan (within the meaning of Section 4063 or 4064 of ERISA).

(c)Except as set forth on Schedule 6.11, there are no pending or, to Seller’s Knowledge, threatened claims of any Employees (or former employees who provided services to the Business) against or otherwise involving any of the Seller Plans (other than routine claims for benefits).

(d)There are no Employees or former employees who provided services to the Business, who are entitled to (i) any pension benefit that is unfunded, or (ii) any benefit to be paid after termination of employment other than required by Section 601 of ERISA, pursuant to a Seller Plan intending to be qualified under Section 401(a) of the IRC, or identified as providing a benefit described in this Section 6.11 orSchedule 6.11. Each Seller Plan that is an employee welfare benefit plan as defined in Section 3(1) of ERISA is either unfunded or funded through an insurance company contract. There is no liability in the nature of a retroactive rate adjustment or loss-sharing or similar arrangement with respect to any such Seller Plan.

(e)Neither Seller, nor, to Seller’s Knowledge, any other person, including any fiduciary, has engaged in any “prohibited transaction” as defined in Section 4975 of the IRC or Section 406 of ERISA that could subject

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Seller, or any person whom Seller has an obligation to indemnify to any tax or penalty imposed under Section 4975 of the IRC or Section 502 of ERISA.

(f)Seller has not at any time (i) maintained, contributed to, or been required to contribute or had any liability (that has not been satisfied in full) to any Seller Plan subject to Title IV of ERISA, (ii) incurred or expected to incur any liability to the Pension Benefit Guaranty Corporation or otherwise under Title IV of ERISA, or (z) incurred or expected to incur liability in connection with an “accumulated funding deficiency” within the meaning of Section 412 of the IRC, whether or not waived.

Section 6.12Litigation. Except as described on Schedule 6.12, there is no litigation, action, suit, or other proceeding currently pending, or to Seller’s Knowledge, threatened against Seller and/or the Facility, at law or in equity, or before any federal, state, municipal, local or other governmental or quasi-governmental authority, or before any arbitrator. To Seller’s Knowledge, there is no pending investigation of Seller and/or the Facility by any governmental or quasi-governmental authority. Seller is not subject to any judgment, injunction, order, writ or decree of any court or other governmental authority or agency relating specifically to Seller or to the ownership, operation or management of the Purchased Property, the Facility and/or the operations of the Business.

Section 6.13Compliance with Laws. Except as otherwise noted on Schedule 6.13, or in any inspection or survey report of any governmental authority made available to Purchaser, Seller is in compliance in all material respects with all applicable laws, rules or regulations in connection with its ownership, use, operation or management of the Purchased Property, the Facility and the Business, including without limitation all laws, rules and regulations related to Government Programs, Seller has not received notice of any violation thereof which has not been cured as of the Effective Date.

Section 6.14Financial Statements. Seller’s financial statements pertaining to the operations of the Business for the period ended December 31, 2014 (the “2014 Financial Statement”) and for the four months ended April 30, 2015 (the “April 2015 Financial Statement”) are attached hereto as Schedule 6.14 (the 2014 Financial Statement and the April 2015 Financial Statement collectively, the “Financial Statements”).

Section 6.15Real Property. To Seller’s Knowledge, and except as may be disclosed on Schedule 6.15, Seller’s use of the Real Property complies in all material respects with applicable zoning and land use laws, rules and regulations and with all applicable building codes, and Seller has not received written notice of any zoning, land use or building code violation relative to the Real Property which has not been cured prior to the date hereof. To Seller’s Knowledge (unless Seller is a party thereto), there is no pending litigation or dispute concerning the location of the lines and corners of the Real Property. Seller has received no written notice of, and has no other Knowledge of, pending, threatened or contemplated actions by any governmental authority or agency having the power of eminent domain, which might result in any part of the Real Property being taken by condemnation or conveyed in lieu thereof. To Seller’s Knowledge, there is no claim of adverse possession with respect to any part of the Real Property. Except as may be disclosed on

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Schedule 6.15, there are no ongoing improvements, construction projects or similar development of the Real Property that is currently in process or otherwise uncompleted.

Section 6.16Environmental Matters. Except as disclosed on Schedule 6.16, or in any environmental audit or inspection report made available by Seller to Purchaser or the ESAs generated by Purchaser’s environmental consultants, to Seller’s Knowledge: (a) no areas exist on the Real Property where Hazardous Substances have been generated, disposed of, released, stored or found in violation of any Environmental Laws, and Seller has no Knowledge and has received no notice of the existence of any such areas for the generation, storage or disposal of any Hazardous Substances on the Real Property in violation of any Environmental Laws; (b) neither Seller, nor any of their respective agents, have violated in any material respect any of the applicable Environmental Laws relating to or affecting the Real Property; (c) the Real Property is presently in compliance in all material respects with all Environmental Laws; (d) Seller has obtained all material licenses, permits and/or other governmental or regulatory approvals necessary to comply with Environmental Laws relating to its use of the Real Property, and Seller is in compliance in all material respects with the terms and provisions of all such licenses, permits and/or other governmental or regulatory approvals; (e) no underground storage tanks are currently located on the Real Property; (f) the Real Property has not been previously used as a landfill or as a dump for garbage or refuse; and (g) no asbestos containing building material or lead based paint are present in any structures located on the Real Property.

Section 6.17Brokers, Finders. Other than Senturian Senior Housing and Mark Lee and its affiliates, whose commissions and other charges shall be the sole responsibility of Seller, Seller has not retained any broker or finder in connection with the transactions contemplated hereby so as to give rise to any claim against Purchaser for any brokerage or finder’s commissions, fee, or similar compensation.

Section 6.18FIRPTA. Seller is not a “foreign person” as that term is defined in the Internal Revenue Code of 1986, as amended, and the regulations promulgated pursuant thereto, and Purchaser has no obligation under Internal Revenue Code Section 1445 to withhold and pay over to the Internal Revenue Service any part of the amount realized by Seller in the transaction contemplated hereby (as such term is defined in the regulations issued under IRC Section 1445).

Section 6.19Solvency. Seller is not now insolvent, and will not be rendered insolvent by completion of the transactions contemplated herein. For purposes of the preceding sentence, “insolvent” means, upon completion of the Closing, (i) that the fair market value of Seller’s assets is less than the sum of Seller’s debts and other liabilities or (ii) Seller has inadequate cash flow to service its debts as they come due. Upon the completion of the transactions contemplated herein, Seller will have adequate capital for the purposes of engaging in any business or transaction in which Seller is or will engage.

Section 6.20Consent of Third Parties. Except as otherwise set forth on Schedule 6.20, no consent of any third party is required as a condition to the entering into, performance or delivery of this Agreement by Seller, other than such consents as would not, in any individual case or in the aggregate, have a material adverse effect upon Purchaser’s ability to

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complete the purchase of the Purchased Property and operate the Business in the manner in which it is currently being operated by Seller.

Section 6.21No Governmental Approvals. To Seller’s Knowledge, except as set forth in on Schedule 6.21, and the requirement for Purchaser to obtain the licenses and permits described in Section 5.3(d), no order, permission, consent, approval, license,authorization, registration or validation of, or filing with, or exemption by, any governmental agency, commission, board or public authority is required to authorize, or is required in connection with the execution, delivery and performance by Seller of this Agreement or the taking of any action contemplated by this Agreement, which has not been obtained. Notwithstanding the foregoing, Seller makes no representation or warranty regarding applicability of the HSR Act to the transactions contemplated herein.

Section 6.22Assessments. To Seller’s Knowledge, there are no (i) special or other assessments for public improvements or otherwise now affecting any of the Purchased Property, (ii) any pending or threatened special assessments affecting the Purchased Property, or (iii) any contemplated improvements affecting any of the Purchased Property that may result in special assessments affecting any of the Purchased Property.

Section 6.23Title Encumbrances. Except as described on Schedule 6.23, Seller is not in default under any of its material obligations under any recorded agreement, easement or instrument encumbering title to the Real Property, and to Seller’s Knowledge, there is no default on the part of any other party thereto.

Section 6.24Affordable Housing Units. No bedroom or unit at the Facility is leased or reserved for lease as an affordable housing unit or for low or moderate income residents. The Facility is not required to lease or reserve any unit or bedroom as an affordable housing unit or bedroom or for low or moderate income residents pursuant to a presently existing agreement or requirement of law.

Section 6.25Loans and Debts. There are no loans or debts secured by any of the Purchased Property except for (i) the loans and debts described on Schedule 6.25 or (ii) loans and debts reflected on the Title Policy.

Section 6.26No Other Warranties. Except for the express representations and warranties of Seller contained in this ARTICLE 6 or in the Deed or Bill of Sale and Assignment, Purchaser acknowledges that Seller has not made, and Purchaser has not relied upon, any other representation or warranty, express or implied, with respect to Seller, the Business, the Purchased Property or the transactions contemplated herein.

ARTICLE 7REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

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Section 7.1Organization and Standing. Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Purchaser has the power and authority to execute and deliver this Agreement and to consummate the transactions and to perform its obligations contemplated by this Agreement.

Section 7.2Execution and Delivery. The execution and delivery of this Agreement, and the consummation of the transactions contemplated by this Agreement, have been duly authorized by all necessary action of Purchaser. This Agreement constitutes, and all instruments required to be executed and delivered by Purchaser before or at the Closing will constitute, the valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms. All persons who have executed this Agreement on behalf of Purchaser have been duly authorized to do so by all necessary company action of Purchaser and all persons who execute instruments required to be executed and delivered by Purchaser before or at the Closing shall have been duly authorized to do so by all necessary company action of Purchaser. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will:

(a)violate any provisions of the articles of organization or operating agreement of Purchaser;

(b)violate any contract or agreement relating to borrowed money, or any judgment, order, injunction, decree or award against, or binding upon Purchaser or upon the property or business of Purchaser, which violation would prevent, delay or materially hinder consummation of the transactions contemplated by this Agreement;

(c)violate any judgment, order, injunction, decree or award against, or binding upon, Purchaser; or

(d)result in any breach, violation, default or cancellation of any contract, agreement, mortgage, deed to secure debt, or lease to which Purchaser is a party or by which Seller is bound and that could have a material adverse effect upon Purchaser’s ability to consummate the transactions described herein.

Section 7.3Solvency. Purchaser is not now insolvent, and will not be rendered insolvent by completion of the transactions contemplated herein. For purposes of the preceding sentence, “insolvent” means, upon completion of the Closing, (i) that the fair market value of Purchaser’s assets is less than the sum of Purchaser’s debts and other liabilities or (ii) Purchaser has inadequate cash flow to service its debts as they come due. Upon the completion of the transactions contemplated herein, Purchaser will have adequate capital for the purposes of engaging in the Business and any business or transaction in which Purchaser is or will engage.

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Section 7.4Consent of Third Parties. Except as otherwise set forth on Schedule 7.4, except for the licenses and permits described in Section 5.3(d), no consent of any third party is required as a condition to the entering into, performance or delivery of this Agreement by Purchaser, other than such consents as would not, in any individual case or in the aggregate, have a material adverse effect upon Purchaser’s ability to consummate the transactions contemplated by this Agreement.

Section 7.5No Governmental Approvals. To Purchaser’s knowledge, except as set forth on Schedule 7.5and the requirement for Purchaser to obtain the licenses and permits described in Section 5.3(d), no order, permission, consent, approval, license,authorization, registration or validation of, or filing with, or exemption by, any governmental agency, commission, board or public authority is required to authorize, or is required in connection with the execution, delivery and performance by Purchaser of this Agreement or the taking of any action contemplated by this Agreement, which has not been obtained. Notwithstanding the foregoing, Purchaser makes no representation or warranty regarding applicability of the HSR Act to the transactions contemplated herein.

Section 7.6Brokers, Finders. Purchaser has not retained any broker or finder in connection with the transactions contemplated hereby so as to give rise to any valid claim against Seller for any brokerage or finder’s commission, fee, or similar compensation.

ARTICLE 8INDEMNIFICATION

Section 8.1Indemnification by Seller. Following the Closing, the Seller shall indemnify, hold harmless and defend Purchaser from and against any and all losses, damages, costs, expenses, liabilities, obligations and claims of any kind (including, without limitation, reasonable attorneys’ fees and other legal costs and expenses) (collectively, “Losses”) which Purchaser may at any time suffer or incur, or become subject to, as a result of or in connection with:

(e)any breach or inaccuracy of any of the representations and warranties made by Seller in this Agreement;

(f)any failure by Seller to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement;

(g)the Excluded Liabilities;

(h)the failure to comply with applicable bulk sales laws; or

(i)any federal, state, or local income, payroll, sales and use, ad valorem or other taxes payable by Seller or for which Seller is liable in connection with any period prior to the Closing Date, and any interest or penalties thereon.

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Section 8.2Indemnification by Purchaser. Following the Closing, Purchaser shall indemnify and hold harmless Seller from and against, and reimburse Seller for, any and all Losses which Seller may at any time suffer or incur, or become subject to, as a result of or in connection with:

(a)any breach or inaccuracy of any representations and warranties made by Purchaser in or pursuant to this Agreement;

(b)any failure by Purchaser to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement; or

(c)the Assumed Liabilities.

Section 8.3Indemnification Limits; Survival.

(k)Purchaser Indemnification Limits; Survival. Purchaser shall not be entitled to any indemnification from Seller under Section 8.1(a) or Section 8.1(b) unless and until the aggregate amount of indemnifiable claims of Purchaser under this Agreement exceeds Twenty-Five Thousand and No/100 U.S. Dollars ($25,000) (the “Seller Threshold”), at which point Seller shall be liable for all indemnifiable claims of Purchaser under Section 8.1(a) and Section 8.1(b). Seller’s liability for indemnification under Section 8.1(a) and Section 8.1(b) shall not in any case exceed four percent (4%) of the total Purchase Price (the “Indemnification Cap”); provided, however, that neither the Seller Threshold nor the Indemnification Cap shall apply in the case of: (i) fraud on the part of Seller; (ii) any claims arising under Section 8.1(a) with respect to the representations and warranties contained in Section 6.1, Section 6.2, Section 6.3, Section 6.5, Section 6.17, or Section 6.18 (which shall be limited to the Purchase Price); or (iii) any claims arising under Section 8.1(c), Section 8.1(d), or Section 8.1(e). All of Seller’s representations and warranties under this Agreement shall survive for a period of twenty-four (24) months following the Closing Date. Purchaser’s right to make any claim for indemnification against Seller under Section 8.1(a), Section 8.1(b) and Section 8.1(d) shall expire at the end of the twenty-fourth (24^th) month following the Closing; provided, however, that any claim for which Purchaser has given written notice prior to expiration of such twenty-four (24) monthanniversary shall survive until finally adjudicated; and further provided that Purchaser’s right to make any claim for indemnification pursuant to Section 8.1(c) shall not expire and any claim for indemnification pursuant to Section 8.1(e) shall survive for the applicable statute of limitations period for collection of the applicable tax.

(l)Seller Indemnification Limits; Survival. Seller shall not be entitled to any indemnification from Purchaser under Section 8.2(a) or Section 8.2(b) unless and until the aggregate amount of indemnifiable claims

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of Seller under this Agreement, exceeds Twenty-Five Thousand and No/100 U.S. Dollars ($25,000) (the “Purchaser Threshold”), at which point Purchaser shall be liable for all indemnifiable claims of Seller under Section 8.2(a) and Section 8.2(b). Purchaser’s liability for indemnification under Section 8.2(a) and Section 8.2(b) shall not in any case exceed four percent (4%) of the total Purchase Price (the “Purchaser Indemnification Cap”); provided, however, that neither the Purchaser Threshold nor the Purchaser Indemnification Cap shall apply in the case of: (i) fraud on the part of Purchaser; (ii) any claims arising under Section 8.2(a) with respect to the representations and warranties contained in Section 7.1, Section 7.2, and Section 7.6 (which shall be limited to the Purchase Price); or (iii) any claims arising under Section 8.2(c). All of Purchaser’s representations and warranties under this Agreement shall survive for a period of twenty-four (24) months following the Closing Date.

(m)For purposes of determining the amount of Losses that are subject to indemnification hereunder with respect to any events, facts or circumstances, after determining whether or not such facts, events or circumstances give rise to a breach of a representation or warranty (after giving full effect to any qualifications as to materiality or similar standards, or of lack of “material adverse effect,” contained in such representation and warranty), the determination of the amount of Losses for such breach of representation and warranty, as it relates to such facts, events or circumstances, shall be made without giving effect to any qualifications as to materiality or similar standards, or the lack of “material adverse effect” contained in such representation or warranty.

(n)Any payments made pursuant to ARTICLE 8 of this Agreement shall be treated as a purchase price adjustment for income tax purposes.

Section 8.4Procedures Regarding Third Party Claims. The procedures to be followed by Purchaser and Seller with respect to indemnification hereunder regarding claims by third parties shall be as follows:

(a)Promptly after receipt by Purchaser or Seller, as the case may be, of notice of the commencement of any action or proceeding or the assertion of any claim by a third person, which the party receiving such notice has reason to believe may result in a claim by it for indemnity pursuant to this Agreement, such person (the “Indemnified Party”) shall give notice of such action, proceeding or claim to the party against whom indemnification is sought (the “Indemnifying Party”), setting forth in reasonable detail the nature of such action or claim, including copies of any written correspondence from such third person to such Indemnified Party.

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(b)The Indemnifying Party shall be entitled, at its own expense, to assume and control such defense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval shall not be unreasonably withheld or delayed. The Indemnified Party shall be entitled to participate in such defense after such assumption at the Indemnified Party’s own expense. Upon assuming such defense, the Indemnifying Party shall have full rights to enter into any monetary compromise or settlement which is dispositive of the matters involved; provided that such settlement is paid in full by the Indemnifying Party and will not have any continuing material adverse effect upon the Indemnified Party.

(c)With respect to any action, proceeding or claim as to which the Indemnifying Party shall not have exercised its right to assume the defense, the Indemnified Party may assume and control the defense of and contest such action, proceeding or claim with counsel chosen by it. The Indemnifying Party shall be entitled to participate in the defense of such action, the cost of such participation to be at its own expense. The Indemnifying Party shall be obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified Party to the extent that such fees and expenses relate to claims as to which indemnification is due under Section 8.1 or Section 8.2 hereof, as the case may be. The Indemnified Party shall have full rights to dispose of such action and enter into any monetary compromise or settlement; provided, however, in the event that the Indemnified Party shall settle or compromise any claims involved in the action insofar as they relate to, or arise out of, the same facts as gave rise to any claim for which indemnification is due under Section 8.1 or Section 8.2 hereof, as the case may be, it shall act reasonably and in good faith in doing so.

(d)Both the Indemnifying Party and the Indemnified Party shall cooperate fully with one another in connection with the defense, compromise or settlement of any such claim, proceeding or action, including, without limitation, by making available to the other all pertinent information and witnesses within its control.

Section 8.5General Qualifications on Indemnification. Notwithstanding any provision to the contrary, the indemnification rights set forth in Section 8.1 and Section 8.2 shall be subject to the following:

(a)The liability of an Indemnifying Party with respect to any indemnification claim shall be reduced by the amount of any tax benefit actually realized or any insurance proceeds received by Indemnified Party as a result of any damages, upon which such claim is based, and shall include any tax detriment actually suffered by the Indemnified Party as a result of such damages. The amount of such tax benefit or detriment shall be

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determined by taking into account the effect, if any, and to the extent determinable, of timing differences resulting from the acceleration or deferral of items of gain or loss resulting from such damages.

(b)Damages shall include actual damages and shall not include any special, punitive, multiplied or consequential damages, or lost profits, except to the extent the same are included in a third-party judgment against the Indemnified Party.

(c)Upon payment in full of any indemnification claim, the Indemnifying Party shall be subrogated to the extent of such payment to the rights of the Indemnified Party against any person or entity with respect to the subject matter of such indemnification claim.

(d)An Indemnified Party may not recover for any losses otherwise indemnifiable under Section 8.1(a), Section 8.1(b), Section 8.2(a) or Section 8.2(b) if such Indemnified Party had actual (and not imputed) knowledge prior to Closing of the breach, inaccuracy or failure giving rise to such losses.

(e)An Indemnifying Party shall be relieved of its duty to indemnify an Indemnified Party hereunder if and to the extent the Indemnified Party fails to use commercially reasonable efforts in good faith to mitigate its damages, including, but not limited to, failure to give timely notice to its insurance carriers and to pursue recovery under applicable policies of insurance.

(f)Any amounts due to Purchaser from Seller pursuant to this ARTICLE 8 shall be paid first from the Holdback Amount in accordance with the Post-Closing Escrow Agreement, until the Holdback Amount has been exhausted or released.

Section 8.6Effective Upon Closing. The provisions of this ARTICLE 8 shall become effective upon completion of the Closing, and shall have no force and effect prior to the Closing or if this Agreement is terminated prior to Closing.

ARTICLE 9Termination

This Agreement and the transactions contemplated hereby may be terminated at any time prior to Closing as follows:

(d)by mutual agreement of Seller and Purchaser;

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(e)by Purchaser, as and to the extent permitted pursuant to Section 2.4(d)(ii), Section 5.6(b), Section 5.6(c), Section 5.6(e), Section 5.8, Section 10.11 or Section 10.12;

(f)by Seller, as and to the extent permitted pursuant to Section 5.6(a);

(g)if a court of competent jurisdiction or other governmental agency shall have issued an order, decree, or ruling or taken any other action (which order, decree or ruling the parties hereto shall use their best efforts to lift), in each case permanently restraining, enjoining, or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling, or other action shall have become final and nonappealable; or

(h)by the Purchaser if the Seller shall have breached any of its representations, warranties, covenants or agreements contained in this Agreement (other than the conditions contained in Section 5.2 hereof), which breach cannot be or has not been cured within five (5) business days after the giving of written notice by the Purchaser to the Seller specifying such breach.

Upon termination of this Agreement prior to Closing, except as otherwise expressly provided herein, the parties shall have no further liability hereunder except that the following provisions shall survive any such termination: Section 4.1(d), Section 4.5 and Section 4.7 In the event of any termination of this Agreement pursuant to ARTICLE 9(e) above, the Deposit shall be returned to Purchaser and Purchaser shall be entitled to reimbursement by Seller of all of its costs and expenses related to the potential acquisition of the Facility, including without limitation legal fees and fees paid to third parties related to Purchaser’s due diligence review of the Facility.

ARTICLE 10MISCELLANEOUS

Section 10.1Access to Books and Records after Closing. Following the Closing, Purchaser shall give Seller or its authorized representatives access, during normal business hours and upon prior notice, to such books and records constituting or relating to the Purchased Property as shall be reasonably requested by Seller in connection with the preparation and filing of the party’s tax returns, to comply with regulatory requirements, to defend or discharge the Excluded Liabilities, or for any other valid business purpose, and to make extracts and copies of such books and records. Purchaser agrees to retain all books and records included as part of the Purchased Property for at least one (1) yearfollowing the Closing Date.

Section 10.2Notices. All notices, requests, demands and other communications under this Agreement and related post-Closing notices, requests, demands, and

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other communications, shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the party to whom notice is to be given, (ii) on the day of transmission if (A) sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission, or (B) if sent via electronic mail (e.g. email), (iii) on the day after delivery to FedEx or similar overnight courier, or (iv) on the tenth (10^th) day after mailing, if mailed to the party to whom notice is to be given, by first-class mail, registered or certified, return receipt requested, postage prepaid and properly addressed, to the party as follows:

If to Purchaser:	American Realty Capital VII, LLC Attn: Thomas D’Arcy 405 Park Avenue, 14th Floor New York, New York 10022 Email: td’arcy@arlcap.com
With a copy (which will not constitute notice) to:	Jesse Galloway American Realty Capital VII, LLC 405 Park Avenue, 14th Floor New York, New York 10022 Email: jgalloway@arlcap.com
With a copy (which will not constitute notice) to:	Foley & Lardner LLP Attn: Michael A. Okaty           Taylor C. Pancake 111 North Orange Avenue Suite 1800 Orlando, Florida 32801 Email: tpancake@foley.com
If to Seller:	Arcadian Cove, LLC 132 Keene Road Suite 201 Richland, Washington 99352 Attn: Jackie Sielaff Email: jackie@vonoinc.com
With a copy (which will not constitute notice) to:	Sword, Floyd & Moody, PLLC Attn: Michael R. Eaves 218 W. Main Street Richmond, Kentucky 40475 Email: eaves@sfmky.com ,

Any party may change the address to which notices are to be sent to it by giving written notice of such change of address to the other parties in the manner herein provided for giving notice.

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Section 10.3Good Faith; Cooperation. The parties shall in good faith undertake to perform their obligations in this Agreement, to satisfy all conditions and to cause the transactions contemplated by this Agreement to be carried out promptly in accordance with its terms. The parties shall cooperate fully with each other and their respective representatives in connection with any actions required to be taken as part of their respective obligations under this Agreement.

Section 10.4Assignment; Exchange Cooperation; Successors in Interest. Neither Purchaser nor Seller may assign any of their respective rights hereunder, except with the prior written consent of the other (which shall not be unreasonably withheld or delayed); provided, however, that without additional consent from Seller (i) prior to the Closing Purchaser may assign its rights, in whole or in part, to any affiliate or related entity of Purchaser, including without limitation the Delaware limited liability company ARHC ACRICKY01, LLC, and (ii) Purchaser may at Purchaser’s election assign any of its rights related to the Purchased Personal Property to the Third-Party Tenant or its designee. This Agreement is binding upon the parties and their respective successors or assigns and inures to the benefit of the parties and their permitted successors and assigns.

Section 10.5No Third Party Beneficiaries. The parties do not intend to confer any benefit under this Agreement on anyone other than the parties, and nothing contained in this Agreement shall be deemed to confer any such benefit on any other person, including any current or former employee or agent of Seller or any dependent or beneficiary of any of them.

Section 10.6Severability. Any determination by any court of competent jurisdiction of the invalidity of any provision of this Agreement that is not essential to accomplishing its purposes shall not affect the validity of any other provision of this Agreement, which shall remain in full force and effect and which shall be construed as to be valid under applicable law.

Section 10.7Purchaser Records Rights.

(g)Upon Purchaser’s request, for a period of one (1) year after Closing, Seller shall make the operating statements and any and all books, records, correspondence, financial data, leases, delinquency reports, including independent documentation supporting the books and records including but not limited to invoices, statements, check copies, contracts or other supporting documentation, and all other documents and matters maintained by Seller or its agents and relating to receipts and expenditures reasonably necessary to complete an audit, including a representation letter to the independent audit firm issuing the audit opinion as to the completeness and accuracy of the information provided among other representations pertaining to the Purchased Property for the three (3) most recent full calendar years and the interim period of the current calendar year (collectively, the “Records”) available to Purchaser for inspection, copying and audit by Purchaser’s designated accountants, and at Purchaser’s expense. Seller shall provide Purchaser, but without expense to Seller, with copies of, or access to, such factual and financial information as may be reasonably requested by Purchaser or its designated accountants, and in the possession or control of Seller, to enable Purchaser to file any filings required by the Securities and Exchange Commission (the “SEC”) in connection with the purchase of the Purchased Property. Seller understands and acknowledges that Purchaser is required to file audited financial statements related to the Purchased Property with the SEC within seventy-one (71) days of the Closing Date and

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agrees to provide any records on a timely basis to facilitate Purchaser’s timely submission of such audited financial statements.

(h)Seller has provided, or to the extent not provided represents to Purchaser that it has in its possession or is otherwise able to obtain the materials from Seller’s vendors, banks, lenders, agents, accountants, auditors and/or counsel, all of the materials listed in Schedule 10.7 to this Agreement. Seller acknowledges that such materials will be used by Purchaser to make the filings described in Section 10.7(a) above, and represents and warrants to Purchaser that all such materials are, or shall be when delivered, true, correct and complete.

Section 10.8Controlling Law; Integration; Amendment; Waiver.

(a)This Agreement shall be governed by and construed in accordance with the laws and case decisions of the State in which the Real Property is located applicable to contracts made and to be performed therein.

(b)This Agreement and the other contracts, documents and instruments to be delivered pursuant to this Agreement supersede all prior negotiations, agreements, information memoranda, letters of intent and understandings between the parties with respect to their subject matter, whether written or oral, constitute the entire agreement of the parties with respect to their subject matter, and may not be altered or amended except in writing signed by Purchaser and Seller. Neither of the parties has made or relied upon any representation, warranty or assurances in connection with the transactions contemplated hereunder other than those expressly made herein.

(c)The failure of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect its right to enforce the same, and no waiver by any party of any provision (or of a breach of any provision) of this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed or construed either as a further or continuing waiver of any such provision or breach or as a waiver of any other provision (or of a breach of any other provision) of this Agreement.

Section 10.9Time. Time is of the essence with respect to this Agreement.

Section 10.10 Survival. For the avoidance of doubt and notwithstanding anything contrary in this Agreement, Section 4.5, Section 4.6, Section 4.7, Section 4.10, Section 4.11, Section 5.7, ARTICLE 8, and ARTICLE 10 of this Agreement shall survive the Closing of this Agreement.

Section 10.11 Eminent Domain ‑ Condemnation. If, prior to Closing, all or portion of Real Property comprising at least five percent (5%) of the Real Property is subject to an eminent domain or condemnation proceeding which will result in a loss of such portion of the Real Property by Seller or Purchaser, Seller, immediately upon learning thereof, shall give written notice to Purchaser. Thereafter, Purchaser shall have a period of thirty (30) days within which to elect, by written notice to Seller, to terminate this Agreement. Upon any such termination the Deposit shall be returned to Purchaser and the Agreement shall become null and void in its entirety. If no such election is timely made, Purchaser shall be deemed to have waived its rights under this

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paragraph, except that, if the transaction contemplated hereby closes, Purchaser shall be entitled to the proceeds or the right to negotiate, settle and collect the proceeds of such condemnation award, and Seller shall execute and deliver all documents reasonably requested of Seller in order to effectuate this section.

Section 10.12 Risk Of Loss. Seller assumes all risks and liability for loss, damage, destruction or injury by fire, storm, accident or any other casualty to the Real Property from all causes until the Closing has been consummated. In the event of any damage or destruction prior to Closing with an estimated repair cost of greater than Fifty Thousand and No/100 U.S. Dollars ($50,000) for the Facility, Purchaser shall have the option exercisable by written notice to Seller within thirty (30) days after Purchaser is notified of such casualty, to terminate this Agreement by notice thereof to Seller, in which case the parties shall have no further rights or obligations under the Agreement and the Deposit shall be returned to Purchaser; or Purchaser may elect to close this transaction and, in such event Purchaser shall be entitled to receive the full amount of any proceeds of such insurance payable on account of loss, damage or destruction after the date hereof and Seller shall be liable for the payment to Purchaser of all deductibles under applicable insurance policies. Seller covenants to execute such assignments, drafts and other instruments as may be required to effectuate this section.

Section 10.13 Attorneys’ Fees. In the event either party brings an action to enforce or interpret any of the provisions of this Agreement, the “prevailing party” in such action shall, in addition to any other recovery, be entitled to its reasonable attorneys’ fees and expenses arising from such action and any appeal or any bankruptcy action related thereto, whether or not such matter proceeds to court. For purposes of this Agreement, “prevailing party” shall mean, in the case of a person asserting a claim, such person is successful in obtaining substantially all of the relief sought, and in the case of a person defending against or responding to a claim, such person is successful in denying substantially all of the relief sought.

Section 10.14 Covenant Not to Compete. For a period of three (3) years following the Closing, the Seller agrees that neither Seller nor any of its affiliates or other entities which the Seller or any of its affiliates controls, is controlled by or is under common control with shall, directly or indirectly, develop, own, invest in, finance, manage or franchise any facility similar to the Business within a radius of twenty (20) miles from any portion of the Real Property. For the avoidance of doubt and without limitation, any facility operating as a skilled nursing facility, assisted living facility, memory care facility and/or independent living facility intended for seniors shall be deemed to be similar to the Business for purposes of this Section 10.14. The provisions of this Section 10.14 shall survive Closing.

Section 10.15 Post-Closing. Seller will provide reasonable cooperation and assistance to Purchaser and its assigns in arranging for, at Purchaser’s sole cost and expense, a transition team to assist Purchaser and its assigns as reasonably necessary in the orderly establishment and transition of Purchaser and its assigns as the owner and manager of the Business, including but not limited to assisting in personnel matters, reimbursement issues, program development, regulatory compliance and other relevant matters as they arise.

Section 10.16Waiver of Jury Trial.

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The parties agree that no party to this Agreement shall seek a jury trial in any lawsuit, proceeding, counterclaim or other litigation based upon, or arising out of, this Agreement or the dealings or the relationship between them.

Section 10.17Construction.

This Agreement shall not be construed more strictly against one party than against the other merely by virtue of the fact that it may have been prepared by counsel for one of the parties, it being recognized that both Seller and Purchaser have contributed with the advice of counsel to the preparation of this Agreement.

Section 10.18 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. This Agreement may be executed by counterpart signatures and all counterpart signature pages shall constitute a part of this Agreement. Delivery of a counterpart hereof via facsimile transmission or by electronic mail transmission, including but not limited to an Adobe file format document (also known as a PDF file), shall be as effective as delivery of a manually executed counterpart hereof.

[ Signatures commence on the following page. ]

IN WITNESS WHEREOF, each of the parties hereto has signed and sealed this Asset Purchase Agreement as of the day and year first above written.

	SELLER:
ARCADIAN COVE, LLC,	ARCADIAN ASSISTED LIVING, LLC,
a Kentucky limited liability company	a Kentucky limited liability company
By: /s/ Kimo Von Oelhoffen	By: /s/ Kimo Von Oelhoffen
Name:    Kimo Von Oelhoffen	Name:    Kimo Von Oelhoffen
Title: Member	Title: Member
By: /s/ Jackie Sielaff	By: /s/ Jackie Sielaff
Name:    Jackie Sielaff	Name:    Jackie Sielaff
Title: Member	Title: Member
	PURCHASER:
	AMERICAN REALTY CAPITAL VII, LLC, a
	Delaware limited liability company
	By: /s/ William M. Kahane
	Name:    William M. Kahane
	Title:     Manager

47

SIGNATURE PAGE TO

ASSET PURCHASE AGREEMENT

1

EXHIBIT A

Escrow Agreement

[ See attached. ]

EXHIBIT B

Post-Closing Escrow Agreement

[ See attached. ]

EXHIBIT C

Deed

[ See attached. ]

EXHIBIT D

Bill of Sale and Assignment

[ See attached. ]

EXHIBIT E

Transition Period Sublease

[ See attached. ]

EXHIBIT F

Assumption Agreement

[ See attached. ]

EXHIBIT G

Due Diligence Materials

1. A complete copy of all leases affecting the Property and all amendments thereto and of all material correspondence relating thereto.

2. A copy of all surveys and site plans of the Property, including, without limitation, any as-built surveys obtained or delivered to tenants of the Property in connection with its construction.

3. A copy of all architectural plans and specifications and construction drawings for improvements located on the Property.

4. A copy of Seller's title insurance policies relating to the Property.

5. A copy of the certificate of occupancy and zoning reports in Seller's possession for the Property and of all governmental permits and approvals.

6. A copy of all existing environmental, engineering and physical condition reports in Seller's possession for the Property.

7. The operating budgets and operating statements of the Property for the thirty-six (36) month period immediately preceding the Purchase and Sale Agreement effective date or such shorter period from the commencement of rent under the leases.

8. Copies of the Property's real estate tax bills and all utility bills for the current and prior two (2) tax years.

9. All service contracts and insurance policies which affect the Property, if any.

10. A copy of all inspections of and warranties in Seller's possession relating to the improvements constructed on the Property and systems serving the Property, including without limitation any structural slab, roof, electrical, plumbing, heating, air conditioning and elevator inspections and warranties.

11. A written inventory of all items of personal property, if any, to be conveyed to Buyer.

12. Updated set of financials to be provided through the Closing Date to extent reasonably available to Seller.

13. Complete copy of any feasibility study completed by the senior housing operator, if any.

14. Operator records of payor-mix for patients/residents at the Property.

15. A copy of all primary and secondary state licenses or regulatory permits for the Property.

16. A copy of any third-party accreditation (i.e. Joint Commission) which affect the Property, if any.

17. A list and description of events reportable to an accreditation entity during the past five (5) years.

18. A copy of all Medicare and Medicaid provider agreements and provider numbers for the Property, if applicable.

19. A copy of all Medicare and Medicaid cost reports for the previous three years, if applicable.

20. A copy of any certificate of need documentation for the Property, if any.

21. A copy of all licensing inspection reports (and related plans of corrections) from state regulators related to operation of the Property for the past five (5) years, and a summary of actions taken to correct deficiencies identified in any such reports.

22. A copy of all regulatory correspondence relating to enforcement actions imposed or threatened for the past five (5) years.

23. A copy of any consent order imposed on the Property.

24. A copy of all regulatory correspondence relating to any physical plant or life safety code deficiencies for the Property.

25. A copy of any documents relating to a waiver of life safety code or physical plant requirements for the Property.

26. Summary of all capital expenditures for the thirty-six (36) month period immediately preceding the Purchase and Sale Agreement effective date.

27. All pest control inspection reports of the Property for the preceding thirty-six (36) months.

28. Copy of any ADA Survey report for the Property in the possession of Seller.

29. Copies of all maintenance and service reports in the possession of Seller for the Property for the preceding thirty-six (36) months.

30. List and description of all pending, threatened and concluded claim, litigation, arbitration, mediation and administrative proceedings that relate to the applicability of, or compliance with applicable laws, regulations, rules or ordinances that is or was pending, threatened or resolved within the last five (5) years.

31. Correspondence with any governmental entity relating to the applicability of, or compliance with applicable laws, regulations, rules or ordinances.

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32. Documents and a description of all investigations, inquiries or allegations of any governmental entity pending or threatened prior to the date hereof.

33. Copy of all compliance plans, policies and procedures thereto (including, without limitation, policies and procedures for reviewing employees for inclusion on a state or federal list of excluded providers), and all updates and amendments thereto.

34. A list of all complaints or inquiries made under any compliance reporting process during the past three (3) years.

35. Copy of all policies and procedures, training manuals, reports, memoranda analyzing applicability of the Health Insurance Portability Act of 1996, P.L. 104-191 (“HIPAA”) rules to a particular business practice, and other documents pertaining to compliance with HIPAA.

36. A list and description of any reportable HIPAA security breach during the past two (2) years.

37. Provider number applications, certification documents and other documents that relate to eligibility to participate in state and federal health care programs (including, without limitation, CMS 855A forms filed in the last five (5) years).

38. Copies of all contracts pertaining to the operation of the facility , including but not limited to - third party payor, medical director, physicians, nurses, ambulance, laboratory, optometry, ophthalmology, hospice, infusion therapy, respite care, nutrition, dental, pharmacy, x-ray, psychology, psychiatrist, physical, speech, occupational and respiratory therapy, dialysis, oxygen, podiatrist, audiology, and durable medical equipment.

39. Copies of any Corporate Integrity Agreements or any other agreements restricting the business from doing business or competing in any manner in any business or geographical area.

40. Any and all agreements, arrangements or understandings with individuals or entities who have or may refer patients/clients to the business.

3

SCHEDULE 10.7

3-05 Audit Materials

1. Detailed general ledger that ties to the financial statements

2. Trial balances with account numbers or other identifier as to classification of account as asset, liability, equity, income or expense

3. Internal control narratives

4. Accounts receivable, accounts payable and fixed asset subledgers

5. Rent rolls

6. Occupancy reports

7. Accounts receivable aging report

8. Account reconciliations of all balance sheet and income statement accounts

9. Schedule of intercompany balances as of each balance sheet date

10. Schedule of restricted deposits

11. Accounts payable aging

12. Payroll registers

13. Copies of invoices to support all general ledger entries for all balance sheet, equity and income statement accounts

14. Copies of monthly bank statements

15. Copies of contracts with residents

16. Copies of checks received from tenants/residents

17. Copies of all management agreements and vendor contracts

18. Copies of all vendor invoices

19. Copies of checks to support the payment of vendor invoices

20. Copies of checks supporting contributions and distributions to the entities to support equity

21. Real estate tax invoices

22. Copies of insurance contracts

23. Mortgage or other debt agreements specifying the terms of the debt arrangements

24. Mortgage statements

25. Bank and mortgage confirmations directly with the lenders

26. Cash account confirmations

27. Note statements and confirmations directly with the lenders, partners, etc.

28. Mortgage settlement statements

29. Purchase and sale agreements and appraisals

30. Contactor development agreements

31. Support for historical cost of fixed assets (land, building, fixtures) including, settlement statements, invoices, check copies, progress payment support or other support.

32. Detail depreciation schedules

33. HUD forms

34. Confirmation from legal counsel of pending or outstanding claims

35. Copies of tax returns

36. Articles of incorporation, partnership/corporate agreements

37. Representation letter to the accounting firm performing the audit as to the completeness and accuracy of the books and records provided, among other routine audit representations

EX-10.26

Exhibit 10.26

FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT

THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this “First Amendment”) is made and entered effective as of August 25, 2015 (the “Effective Date”), by and among AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Purchaser”)and COVE DEVELOPMENT, LLC, a Kentucky limited liability company, formerly known as ARCADIAN COVE, LLC, (the “Owner”) and ARCADIAN ASSISTED LIVING, LLC, a Kentucky limited liability company (“Operator,” and Owner and Operator are collectively referred to as the “Seller”)).

WHEREAS, Seller and Purchaser entered into that certain Asset Purchase Agreement dated July 6, 2015 (the “Agreement”), and Seller and Purchaser desire to further amend the Agreement as hereinafter set forth.

NOW, THEREFORE, in consideration of the agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

1. Recitals and Defined Terms. The foregoing recitals are true and correct and are incorporated herein by reference. All capitalized terms used herein and not expressly defined shall have the meaning given to them in the Agreement.

2. Schedules to the Agreement. For the avoidance of Doubt, the Schedules to the Agreement as of the Effective Date are attached hereto as Exhibit A.

3. Agreement Remains In Effect. The Agreement, as previously amended and modified by this First Amendment, is hereby ratified and affirmed as binding and in full force and effect.

4. Counterparts. This First Amendment may be executed in any number of counterparts, each of which shall be deemed an original. This First Amendment may be executed by counterpart signatures and all counterpart signature pages shall constitute a part of this Agreement. Delivery of a counterpart hereof via facsimile transmission or by electronic mail transmission, including but not limited to an Adobe file format document (also known as a PDF file), shall be as effective as delivery of a manually executed counterpart hereof.

[Signature Pages Follow.]

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Asset Purchase Agreement as of the date first above written.

	SELLER:
COVE DEVELOPMENT, LLC,	ARCADIAN ASSISTED LIVING, LLC,
a Kentucky limited liability company	a Kentucky limited liability company
By: /s/ Jackie Sielaff	By: /s/ Jackie Sielaff
Name:    Jackie Sielaff	Name:    Jackie Sielaff
Title: Member	Title: Member
	PURCHASER:
	AMERICAN REALTY CAPITAL VII, LLC, a
	Delaware limited liability company
	By:AR CAPITAL, LLC, a Delaware limited liability company limited
	By: /s/ William M. Kahane
	Name:    William M. Kahane
	Title:     Manager

[signature page to First Amendment to Asset Purchase Agreement]

EXHIBIT A

Separately attached.

[signature page to First Amendment to Asset Purchase Agreement]

EX-10.27

Exhibit 10.27

AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

WOODLAKE OFFICE CENTER

2090 WOODWINDS DRIVE, WOODBURY, MINNESOTA 55125

THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Agreement”) is made and entered into as of the Effective Date by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), and KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation(“Seller”).

In consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Terms and Definitions. The terms listed below shall have the respective meaning given them as set forth adjacent to each term.

(a)“Broker” shall mean Brown Gibbons Lang Real Estate Partners, as Seller’s agent.

(b)“Closing” shall mean the consummation of the transaction contemplated herein, which shall occur, subject to any applicable extension periods set forth in this Agreement, on the date that is five (5) business days after the last day of the Due Diligence Period (as defined herein) unless the Buyer waives the full Due Diligence Period and elects to close earlier by providing written notice thereof to Seller. The date of Closing is sometimes hereinafter referred to as the “Closing Date.” Neither party will need to be present at Closing, it being anticipated that the parties will deliver all Closing documents and deliverables in escrow to the Escrow Agent prior to the date of Closing.

(c) “Due Diligence Period” shall mean the period beginning on the Effective Date and extending until 11:59 PM EST on the date that is the earlier of (a) thirty (30) days thereafter or (b) the date on which Seller receives written notice of Buyer’s waiver of the Due Diligence Period. Seller shall deliver to Buyer all of the Due Diligence Materials within five (5) business days after the Effective Date, and for each day that passes thereafter until all of the Due Diligence Materials are delivered to Buyer, the Due Diligence Period shall be extended by one (1) business day.

(d)“Earnest Money” shall mean Seven Hundred Fifty Thousand and 00/100 Dollars ($750,000.00). The Earnest Money shall be delivered to Escrow Agent within three (3) business days after the Effective Date. The Earnest Money shall be deposited by Buyer in escrow with Escrow Agent, to be applied as part payment of the Purchase Price at the time of Closing, or disbursed as agreed upon in accordance with the terms of this Agreement. Seller and Buyer each shall pay one-half of all reasonable escrow fees charged by Escrow Agent.

(e) “Effective Date” This Agreement shall be signed by both Seller and Buyer. The date that is one (1) business day after the date of execution and delivery of this Agreement by both Seller and Buyer shall be the “Effective Date” of this Agreement.

(f)“Escrow Agent” shall mean Stewart Title Guaranty Company, whose address is One Washington Mall - Suite 1400, Boston, MA 02108, Attention: Annette Comer, Telephone: 617-933-2441, Telecopy: 617-727-8372; E-Mail: acomer@stewart.com. The parties agree that the Escrow Agent and Buyer’s title agent, if any, shall be responsible for (x) organizing the issuance of the Title Commitment (hereinafter defined) and Title Policy (hereinafter defined), (y) preparation of the closing statement, and (z) collections and disbursement of the funds.

(g)“Guarantor” shall mean each guarantor, if any, of the Leases.

(h)“Guaranty” shall mean each Lease guaranty executed by a Guarantor.

(i)“Leases” shall mean those certain leases described on Exhibit A-2 attached hereto and made a part hereof and referred to in Section 6(b)(i) of this Agreement between Seller, as landlord, and the tenants described on Exhibit A-2 attached hereto, as tenant (each tenant, individually, a “Tenant”, and collectively, the “Tenants”), as amended. Each of the Leases may be referred to herein individually as a “Lease” or the “Lease”.

(j)“Property” shall mean (1) that certain real property located at 2090 Woodwinds Drive, Woodbury, MN 55125, being more particularly described on Exhibit A-1, attached hereto and incorporated herein (the “Real Property”) together with all buildings, facilities and other improvements located thereon (collectively, the “Improvements”); (1) all right, title and interest of Seller under the Leases and all security deposits (if any) that Seller is holding pursuant to the Leases; (1) all right, title and interest of Seller in all machinery, furniture, lighting, electrical, mechanical, plumbing and heating, ventilation and air conditioning systems and other equipment used in connection with operation of the Real Property and the Improvements, and all carpeting, draperies, appliances and other fixtures and equipment attached or appurtenant to the Real Property and Improvements, and items of personal property of Seller attached or appurtenant to, located on or used in the ownership, use, operation or maintenance of the Property or the Improvements (collectively, the “Personalty”); (1) all right, title and interest of Seller, if any, to any unpaid award for (1) any taking or condemnation of the Property or any portion thereof, or (1) any damage to the Property or the Improvements by reason of a change of grade of any street or highway; (e) all easements, licenses, rights-of-way, air and subsurface rights and appurtenances relating to any of the foregoing, including, without limitation, any reciprocal easement agreements and parking lot agreements; (f) all right, title and interest of Seller in and to any warranties and guaranties respecting the Improvements and Personalty; (g) all right, title and interest of Seller in and to all licenses, permits, authorizations and approvals issued by any governmental agency or authority which pertain to the Real Property and the Improvements, to the extent they exist and are transferable and assignable; (h) to the extent the same are assignable, all site plans, surveys, and plans which relate to the Real Property; and (i) all right, title and interest of Seller in and to any tradenames, logos (including any federal or state trademark or tradename registrations), or other identifying name or mark now used in connection with the Real Property and/or the Improvements, but expressly excluding any such property to the extent owned by any Tenant.

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(k)“Purchase Price” shall mean Fourteen Million Nine Hundred Thousand and 00/100 Dollars ($14,900,000.00).

(l)“Real Estate Taxes” shall mean all real estate taxes, rollback taxes, personal property taxes, water and sewer use charges, or payments in lieu of taxes, and any other charges and assessments constituting a lien on the Property.

(m)Seller and Buyer’s Notice address

(i)“Seller’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

Kraus-Anderson, Incorporated

4210 West Old Shakopee Road

Bloomington, MN 55437

Attn: Michael Korsh

Tel. No.: (952) 948-9421

Email: mkorsh@karealty.com

And to:

James E. Schmeckpeper, Esq.

Kraus-Anderson Companies, Inc.

523 S. 8^th Street

Minneapolis, MN 55404

Tel. No.: (612) 335-2772

Email: jim.schmeckpeper@krausanderson.com

(ii)“Buyer’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

Thomas P. D’Arcy

c/o American Realty Capital Healthcare Trust III, Inc.

405 Park Avenue, 14^th Floor

New York, NY 10022

Tel. No.: (212) 415-6500

Fax No.: (646) 861-7805

Email: tdarcy@arlcap.com

And to:

Jesse Galloway, Esq.

c/o American Realty Capital Healthcare Trust III, Inc.

405 Park Avenue, 14^th Floor

New York, NY 10022

Tel. No.: (212) 415-6516

Fax No.: (646) 861-7751

Email: jgalloway@arlcap.com

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And Due Diligence Materials (if provided by email) to:

duediligence@arlcap.com

With hard copies and/or cds to:

James A. (Jim) Mezzanotte

c/o American Realty Capital Healthcare Trust III, Inc.

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Tel. No.: (704) 626-4400

Fax No.: (212) 415-6507

Email: jmezzanotte@arlcap.com

2.Purchase and Sale of the Property. Subject to the terms of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property for the Purchase Price.

3.Payment of Purchase Price.

(a)    The Purchase Price to be paid by Buyer to Seller shall be paid by wire transfer of immediately available funds in the amount of the Purchase Price plus or minus prorations, credits and adjustments as provided in Section 4 and elsewhere in this Agreement to Escrow Agent, at the time of Closing, or as otherwise agreed to between Buyer and Seller.

(b)    The parties agree that the value of the Personalty is de minimis, and no part of the Purchase Price is allocated to it.

4.Proration of Expenses and Payment of Costs and Recording Fees.

(a)Prorations. The following items will be prorated as of 12:01 A.M. on the Closing Date, with all items of income and expense for the Property being borne by Buyer from and after (and including) the Closing Date: Tenant Receivables (hereinafter defined) and other income and rents that have been collected by Seller as of Closing; fees and assessments; prepaid expenses and obligations under service contracts which are assigned, if any; accrued operating expenses; Real Estate Taxes; and any assessments by private covenant for the then-current calendar year of Closing.

(b)Taxes

(i)If Real Estate Taxes for the year of Closing are not known or cannot be reasonably estimated, Real Estate Taxes will be prorated based on Real Estate Taxes for the year prior to Closing. Any additional Real Estate Taxes in the nature of “roll back” taxes or relating to the year of Closing arising out of a change in the use of the Land and Improvements or a change in ownership shall be paid by Seller when due and payable, and Seller will indemnify Buyer from and against any and all such Real Estate Taxes arising out of the transfer of the Property, which indemnification obligation will survive the Closing.

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(ii)    If Seller has engaged or will engage prior to the expiration of the Due Diligence Period, consultants for the purpose of protesting the amount of taxes or the assessed valuation for certain tax periods for the Property (“Protest Proceedings”), any cash refunds or proceeds actually distributed (collectively, “Cash Refunds”) will be apportioned as described below. Any Cash Refunds (including interest thereon) on account of a favorable determination, after deduction of costs and expenses incurred for such Protest Proceedings, shall be: (A) the property of Seller to the extent such Cash Refunds were for Real Estate Taxes paid by Seller applicable to a period prior to the Closing Date; (B) prorated between Buyer and Seller for taxes paid for a period during which the Closing Date occurred; and (C) the property of Buyer for Real Estate Taxes for a period after the Closing Date. Seller and Buyer agree to notify the other in writing of any receipt of a Cash Refund within fifteen (15) business days of receipt of such Cash Refund. To the extent either party obtains a Cash Refund, a portion of which is owed to the other party, the receiving party shall deliver the Cash Refund to the other party within fifteen (15) Business Days of its receipt. Buyer agrees and acknowledges that Seller has the right to initiate proceedings to protest the valuation of any of the Property prior to the expiration of the Due Diligence Period. Seller agrees to give Buyer notice of Seller’s intent to initiate such proceedings prior to initiation of such proceedings and at any time subsequent to the end of the Due Diligence Period shall obtain Buyer’s consent to initiation of such proceedings, which consent may be unreasonably withheld.    

(c)Utilities. Buyer will take all steps necessary to effectuate the transfer of all utilities to its name as of the Closing Date, and where necessary, post deposits with the utility companies. The Seller will ensure that all utility meters are read as of the Closing Date. Seller will be entitled to recover any and all deposits held by any utility company as of the Closing Date.

(d)Tenant Receivables. Rents due from Tenants under the Leases (including operating expense and real estate tax contributions or reimbursements and similar charges (collectively, “Pass-Through Expenses”)), set-offs due or required to be paid under or by reason of the Leases (collectively called “Tenant Receivables”) shall be adjusted by appropriate credit to the Seller or Buyer (as the case may be) on the Closing Date. If, at the Closing Date, any Tenant is in arrears in the payment of rents (“Uncollected Delinquent Tenant Receivables”), Seller will disclose the same to Buyer in writing or on the rent roll to be delivered to Buyer pursuant to Section 10 hereof and such amounts shall not be adjusted on the Closing Date. Prior to the Closing Date, Seller shall use Seller’s current business practices to collect Uncollected Delinquent Tenant Receivables. If Buyer shall collect Uncollected Delinquent Tenant Receivables within ninety (90) days after the Closing Date, then Buyer shall turn over to Seller the arrearages so collected, less the reasonable cost of collection thereof, if any; provided, however, Seller may continue to seek to collect the Uncollected Delinquent Tenant Receivables by legal action following the Closing Date. All rents collected by Buyer after the Closing Date (except for amounts specifically billed and paid as end of year reconciliation payments for Pass-Through Expenses, which shall be separately accounted for and allocated, pro rata, between Seller and Buyer as their interest may appear) shall be first applied to rents due and payable after the Closing Date and only the excess thereof shall be paid over to Seller on account of the Uncollected Delinquent Tenant Receivables. Seller shall prepare the reconciliation for Pass-Through Expenses for the Property and provide such reconciliation to Buyer and Buyer’s property manager. Buyer agrees to cause its property manager to cooperate with Seller in preparing such reconciliation. To the extent that items to be apportioned hereunder may

5

be required to be paid directly by a Tenant under its Lease, the same shall not be apportioned, provided, however, that such items shall have been paid by such Tenant currently through the month including the Closing Date. The provisions of this subparagraph 4(d) shall survive Closing and the delivery of the Deed (hereinafter defined), and shall survive the expiration or earlier termination of this Agreement. Seller expressly agrees that if Seller receives any amounts after the Closing Date which are attributable, in whole or in part, to any period after the Closing Date, Seller will notify Buyer of such fact and will remit to Buyer that portion of the monies so received by Seller to which Buyer is entitled within ten (10) business days after receipt thereof. With respect to unbilled Tenant Receivables, Buyer covenants and agrees to cause its property manager to (A) bill the same in the ordinary course of its business and (B) cooperate with Seller to determine the correct amount of operating expenses and/or taxes due.

A reconciliation or determination of Pass-Through Expenses, Uncollected Delinquent Tenant Receivables and unbilled Tenant Receivables due under the Leases shall be made at Closing to the extent possible. To the extent such information is not available at Closing, the foregoing shall be subject to adjustment following the Closing in accordance with the terms of Section 4(e), below. The provisions of this Section 4(d) will survive the Closing.

(e)If final bills are not available or cannot be issued prior to Closing for any item being prorated under Section 4(a) through (d), then, for each separate item for which an adjustment is to be made, the following will apply: (i) initially the matter subject to allocation at Closing (including without limitation the Pass-Through Expenses) shall be re-prorated within sixty (60) days following the Closing; (ii) a further adjustment of prorated items shall occur one hundred twenty (120) days following the close of the calendar year in which the Closing occurs; and (iii) a final adjustment shall occur not later than thirty-six (36) months after the Closing. All such rights and obligations under this Section 4(e) will survive the Closing.

(f)All security deposits under the Leases collected and not properly applied by Seller as of the Closing (and interest thereon if required by law or contract) must be transferred or credited to Buyer at Closing. As of the Closing, Buyer will assume each Seller’s obligations related to the security deposits, but only to the extent they are credited or transferred to Buyer.

(g)Seller shall pay or be charged with the following costs and expenses in connection with this transaction:

(i)100% of all Title Policy premiums, including search costs and a survey endorsement, but excluding any other endorsements issued in connection with such policies other than endorsements that Seller elects to purchase to cover title issues, if any;

(ii)Any transfer taxes and conveyance fees on the sale and transfer of the Property;

(iii)Broker’s commission payments, in accordance with Section 24 of this Agreement;

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(iv)All fees relating to the granting, executing and recording of the Deed for the Property and for any costs incurred in connection with the release of existing debt, including, but not limited to, prepayment penalty fees and recording fees for documents providing for the release of the applicable Property from the existing debt; and

(v)Any unpaid leasing commissions or tenant improvement allowances or outstanding rent concessions related to the Leases, whether or not due and payable.

(h)Buyer shall pay or be charged with the following costs and expenses in connection with this transaction:

(i)Title Policy premiums for any endorsements issued in connection with such policies other than a survey endorsement and endorsements that Seller elects to purchase to cover title issues, if any;

(ii)all costs and expenses in connection with Buyer’s financing, including appraisal, points, commitment fees and the like and costs for the filing of all documents necessary to complete such financing and related documentary stamp tax and intangibles tax; and

(iii)Buyer shall pay for the cost of its own survey, Phase I environmental study and due diligence investigations.

(i)    Each party shall pay its own legal fees incidental to the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

5.Title. At Closing, Seller agrees to convey to Buyer fee simple marketable title to the Property by special warranty deed, free and clear of all liens, defects of title, conditions, easements, assessments, restrictions, and encumbrances except for Permitted Exceptions (as hereinafter defined).

6.Examination of Property. Seller and Buyer hereby agree as follows:

(a)Buyer shall order a title commitment (the “Title Commitment”) from Escrow Agent, a survey and a zoning report for the Property promptly after the date hereof. All matters shown in the Title Commitment, survey or zoning report (“Title Matters”) with respect to which Buyer fails to object prior to the expiration of the Due Diligence Period shall be deemed “Permitted Exceptions”. However, Permitted Exceptions shall not include, and Seller shall be obligated to remove of record prior to or at Closing, any mechanic’s lien or any monetary lien, fine or penalty, or any deeds of trust, mortgage, or other loan documents secured by the Property or any judgments and federal and state tax liens (collectively, “Liens”). Seller shall be required to cure or remove all Liens (by payment, bond deposit or indemnity acceptable to Escrow Agent). Seller agrees to remove or cure any objections of Buyer which are of a nature that are capable of being cured with reasonable efforts prior to Closing, including the payment of a sum of money in connection therewith. Seller shall have no obligation to cure any Title Matter objected to, except the Liens as aforesaid, provided Seller notifies Buyer of any objections which Seller elects not to

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remove or cure within five (5) business days following receipt of Buyer’s objections. In the event that Seller refuses to remove or cure any objections, Buyer shall have the right to terminate this Agreement upon written notice to Seller given within five (5) business days after receipt of Seller’s notice, upon which termination the Earnest Money, and all interest earned thereon, shall be returned to Buyer and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein. If any matter not revealed in the Title Commitment is discovered by Buyer or by the Escrow Agent and is added to the Title Commitment by the Escrow Agent at or prior to Closing, Buyer shall have until the earlier of (i) ten (10) days after the Buyer’s receipt of the updated, revised Title Commitment showing the new title exception, together with a legible copy of any such new matter, or (ii) the Closing Date, to provide Seller with written notice of its objection to any such new title exception (an “Objection”). If Seller does not remove or cure such Objection prior to the Closing Date, Buyer may terminate this Agreement, in which case the Earnest Money, together with all interest earned thereon, shall be returned to Buyer, Seller shall reimburse Buyer for all out of pocket costs and expenses incurred hereunder and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein.

(b)Within five (5) business days after the Effective Date, Seller shall provide to Buyer copies of the following documents and materials pertaining to the Property to the extent within Seller’s possession or reasonably obtainable by Seller or Seller’s counsel: (i) a complete copy of all leases and lease guaranties affecting the Property and all amendments thereto and of all material correspondence relating thereto; (ii) a copy of all surveys and site plans of the Property, including without limitation any as-built survey obtained or delivered to tenants of the Property in connection with its construction; (iii) a copy of all architectural plans and specifications and construction drawings and contracts for improvements located on the Property; (iv) a copy of Seller’s title insurance commitments and policies relating to the Property; (v) a copy of the certificate of occupancy (or local equivalent) and zoning reports for the Property; and of all governmental permits/approvals; (vi) a copy of all environmental, engineering and physical condition reports for the Property; (vii) copies of the Property’s real estate tax bills for the current and prior two (2) tax years or, if the Property has been owned by Seller for less than two (2) tax years, for the period of ownership; (viii) the operating budget and any common area maintenance (CAM) reconciliations of the Property for the current year and following year, if available; (ix) the operating statements and delinquency reports of the Property for the current calendar year, plus the year-end financials for the previous calendar year; (x) all service contracts and insurance policies which affect the Property, if any; (xi) a copy of all warranties relating to the improvements constructed on the Property, including without limitation any structural slab or roof warranties; (xii) a written inventory of all items of personal property to be conveyed to Buyer, if any; (xiii) Tenant financials for each Tenant, to the extent reasonably available to Seller and consistent with such Tenant’s reporting requirements; (xiv) Guarantor financials for each Guarantor, to the extent reasonably available to Seller and consistent with each such Guarantor’s reporting requirements; (xv) a complete copy of any feasibility study completed by the developer of the Property; (xvi) a copy of all primary and secondary state licenses or regulatory permits for the Property, if any; and (xvii) a copy of any documents relating to a waiver of life safety code or physical plant requirements, if any (collectively, the “Due Diligence Materials”). Seller shall deliver any other documents relating to the Property reasonably requested by Buyer, to the extent within Seller’s or its affiliates’ or agents’ possession or reasonably obtainable by Seller, within five (5) business days following such request. Additionally, during the term of

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this Agreement, Buyer, its agents and designees, shall have the right to enter the Property for the purposes of inspecting the Property, conducting soil tests, and making surveys, mechanical and structural engineering studies, inspecting construction, and conducting any other investigations and inspections as Buyer may reasonably require to assess the condition and suitability of the Property; provided, however, that such activities by or on behalf of Buyer on the Property shall not damage the Property nor materially interfere with construction on the Property or the conduct of business by Tenants under the Leases; and provided further, however, that Buyer shall indemnify and hold Seller harmless from and against any and all claims or damages to the extent resulting from the activities of Buyer on the Property, and Buyer shall repair any and all damage caused, in whole or in part, by Buyer and return the Property to substantially its condition prior to such damage, which obligation shall survive Closing or any termination of this Agreement. Seller shall reasonably cooperate with the efforts of Buyer and the Buyer’s representatives to inspect the Property. After the Effective Date, Buyer shall be permitted to speak and meet with the Tenants in connection with Buyer’s due diligence. Upon signing this Agreement, Seller shall provide Buyer with the name of a contact person(s) for the purpose of arranging site visits. Buyer shall give Seller reasonable written notice (which in any event shall not be less than five (5) business days) before entering the Property, and Seller must have a representative present during any and all examinations, inspections and/or studies on the Property. Buyer shall have the unconditional right, for any reason or no reason, to terminate this Agreement by giving written notice thereof to Seller and the Escrow Agent prior to the expiration of the Due Diligence Period, in which event this Agreement shall become null and void, Buyer shall receive a refund of the Earnest Money, together with all interest earned thereon, and all rights, liabilities and obligations of the parties under this Agreement shall expire, except as otherwise expressly set forth herein.

(c)It shall be a condition of Closing that Seller shall have obtained estoppel certificates from each Tenant and Guarantor, certified to Buyer, its lender and their successors and assigns, in the form attached hereto as Exhibit F (the “Estoppel Certificate”). Within five (5) business days following the Effective Date, Seller shall deliver to Buyer, for Buyer’s review and approval, draft Estoppel Certificates for the Leases. Seller shall promptly deliver to Buyer a photocopy or pdf file of the executed Estoppel Certificate when Seller receives the same. Within five (5) business days following the Effective Date, Seller shall request a waiver of any right of first refusal, right of first offer or other purchase option, if any, that any party may have to purchase the Property (and simultaneously provide Buyer with copies of such requests).

(d)Seller shall use good faith efforts to obtain a subordination, non-disturbance and attornment agreement from each Tenant in form and substance reasonably acceptable to Buyer and Buyer’s Lender, if applicable (each such agreement, an “SNDA”).

(e)Seller shall use good faith efforts to obtain estoppel certificates with respect to reciprocal easement agreements affecting the Property, as may be reasonably requested by Buyer.

(f)On or before the expiration of the Due Diligence Period, Buyer shall notify Seller in writing if Buyer elects not to assume at Closing any of the Contracts (defined below). If Buyer does not notify Seller prior to the expiration of the Due Diligence Period that it elects not to assume any of the Contracts, Buyer shall be deemed to have accepted and agreed to assume all of

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the Contracts. If Buyer exercises its right not to assume one or more Contracts at Closing, Seller shall give notice of termination of such disapproved Contract(s); provided, if by the terms of the disapproved Contract Seller has no right to terminate same on or prior to Closing, Buyer shall be required at Closing to assume all obligations thereunder until the effective date of the termination; provided, further, if any fee or other compensation is due under any disapproved Contract as a result of such termination, whether payable before or after the Closing Date, Seller shall remain obligated to pay the contractor or to reimburse Buyer for the payment of the termination charge. Notwithstanding the foregoing, Seller shall, without notice from Buyer, terminate any and all property management and listing agreements prior to Closing at Seller’s sole cost and expense.

(g)Seller shall cause its property manager to complete the Property Manager Questionnaire in the form attached hereto as Exhibit L and return the same to Buyer within ten (10) days following the Effective Date.

7.Risk of Loss/Condemnation. Upon an occurrence of a casualty, condemnation or taking, Seller shall notify Buyer in writing of same. Until Closing, the risk of loss or damage to the Property, except as otherwise expressly provided herein, shall be borne by Seller. In the event all or any portion of the Property is damaged in any casualty or condemned or taken (or notice of any condemnation or taking is issued) so that: (a) any Tenant has a right of termination or abatement of rent under its Leases, whether or not the restoration work shall be timely completed or (b) with respect to any casualty, if the cost to repair such casualty would exceed $50,000, or (c) with respect to any condemnation, any Improvements or access to the Property or more than five percent (5%) of the Property is (or will be) condemned or taken, then, Buyer may elect to terminate this Agreement by providing written notice of such termination to Seller within ten (10) business days after Buyer’s receipt of written notice of such condemnation, taking or damage, upon which termination, the Earnest Money, together with all interest earned thereon, shall be returned to the Buyer and neither party hereto shall have any further rights, obligations or liabilities under this Agreement, except as otherwise expressly set forth herein. With respect to any condemnation or taking (of any notice thereof), if Buyer does not elect to cancel this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the awards, if any, for the condemnation or taking, and Buyer shall be entitled to receive and keep all such awards. With respect to a casualty, if Buyer does not elect to terminate this Agreement or does not have the right to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the proceeds under Seller’s insurance policies covering such Property with respect to such damage or destruction (or pay to Buyer any such proceeds received prior to Closing) and pay to Buyer the amount of any deductible with respect thereto, and Buyer shall be entitled to receive and keep any monies received from such insurance policies.

8.Earnest Money Disbursement. The Earnest Money shall be held by Escrow Agent, in trust, and disposed of only in accordance with the following provisions:

(a)If the Closing occurs, Escrow Agent shall deliver the Earnest Money to, or upon the instructions of, Seller and Buyer on the Closing Date to be applied as part payment of the Purchase Price. If for any reason the Closing does not occur, Escrow Agent shall deliver the Earnest

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Money to Seller or Buyer only upon receipt of a written demand therefor from such party, subject to the following provisions of this clause (a). Subject to the last sentence of this clause (a), if for any reason the Closing does not occur and either party makes a written demand (the “Demand”) upon Escrow Agent for payment of the Earnest Money, Escrow Agent shall give written notice to the other party of the Demand within one (1) business day after receipt of the Demand. If Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) business days after the giving of such notice by Escrow Agent, Escrow Agent is hereby authorized to make the payment set forth in the Demand. If Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court. Notwithstanding the foregoing provisions of this clause (a), if Buyer delivers a notice to Escrow Agent and Seller stating that Buyer has terminated this Agreement on or prior to the expiration of the Due Diligence Period, then Escrow Agent shall immediately return the Earnest Money, together with all interest earned thereon, to Buyer without the necessity of delivering any notice to, or receiving any notice from Seller.

(b)The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent’s mistake of law respecting the scope or nature of Escrow Agent’s duties. Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent’s duties hereunder, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement or involving negligence on the part of Escrow Agent. Escrow Agent has executed this Agreement in the place indicated on the signature page hereof in order to confirm that Escrow Agent shall hold the Earnest Money in escrow and shall disburse the Earnest Money pursuant to the provisions of this Section 8.

9.Default

(a)In the event that Seller is ready, willing and able to close in accordance with the terms and provisions hereof, and Buyer defaults in any of its obligations undertaken in this Agreement, Seller shall be entitled, as its sole and exclusive remedy, to either: (i) if Buyer is willing to proceed to Closing, waive such default and proceed to Closing in accordance with the terms and provisions hereof; or (ii) declare this Agreement to be terminated, and Seller shall be entitled to immediately receive all of the Earnest Money as liquidated damages as and for Seller’s sole remedy. Upon such termination, neither Buyer nor Seller shall have any further rights, obligations or liabilities hereunder, except as otherwise expressly provided herein. Seller and Buyer agree that (a) actual damages due to Buyer’s default hereunder would be difficult and inconvenient to ascertain and that such amount is not a penalty and is fair and reasonable in light of all relevant circumstances, (b) the amount specified as liquidated damages is not disproportionate to the damages that would be suffered and the costs that would be incurred by Seller as a result of having withdrawn the

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Property from the market, and (c) Buyer desires to limit its liability under this Agreement to the amount of the Earnest Money paid in the event Buyer fails to complete Closing, and such amount shall be paid to Seller as liquidated damages and as Seller’s sole remedy hereunder. Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer. In no event under this Section or otherwise shall Buyer be liable to Seller for any punitive, speculative or consequential damages.

(b)In the event of a default in the obligations herein taken by Seller, Buyer may, as its sole and exclusive remedy, either: (i) waive any unsatisfied conditions and proceed to Closing in accordance with the terms and provisions hereof; (ii) terminate this Agreement by delivering written notice thereof to Seller no later than Closing, upon which termination the Earnest Money, together with all interest earned therein, shall be refunded to Buyer, Seller shall pay to Buyer all of the out-of-pocket costs and expenses incurred by Buyer up to an amount of $20,000.00 in connection with this Agreement, which return and payment shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof; (iii) enforce specific performance of Seller’s obligations hereunder; or (iv) by notice to Seller given on or before the Closing Date, extend the Closing Date for a period of up to thirty (30) days (the “Closing Extension Period”) to permit Seller to remedy any such default, and the “Closing Date” shall be moved to the last day of the Closing Extension Period. If Buyer so extends the Closing Date, then Seller may, but shall not be obligated to, cause said conditions to be satisfied during the Closing Extension Period. If Seller does not cause said conditions to be satisfied during the Closing Extension Period, then Buyer shall have the remedies set forth in Section 9(b) (i) through (iii) above, except that the term “Closing” shall read “Extended Closing.”

Notwithstanding the foregoing, in the event of a willful or intentional default of Seller hereunder, Buyer shall, in addition to the foregoing remedies, be permitted to pursue any and all rights and remedies available to Buyer at law or in equity; provided, however, in no event shall Seller be liable to Buyer for any punitive, speculative or indirect consequential damages.

10.Closing. The Closing shall consist of the execution and delivery of documents by Seller and Buyer, as set forth below, and delivery by Buyer to Seller of the Purchase Price in accordance with the terms of this Agreement. Seller shall deliver to Escrow Agent for the benefit of Buyer at Closing the following executed documents:

(a)A Special Warranty Deed in the form attached hereto as Exhibit B (the “Deed”);

(b)An Assignment and Assumption of Leases, Guaranties and Security Deposits, in the form attached hereto as Exhibit C;

(c)A Bill of Sale for the Personalty, if any, in the form attached hereto as Exhibit D;

(d)An Assignment of Contracts, Permits, Licenses and Warranties in the form of Exhibit E;

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(e)Intentionally Deleted;

(f)To the extent obtained by Seller, estoppel certificates with respect to reciprocal easement agreements as may be reasonably requested by Buyer;

(g)A settlement statement setting forth the Purchase Price, all prorations and other adjustments to be made pursuant to the terms hereof, and the funds required for Closing as contemplated hereunder;

(h)All transfer tax statements, declarations and filings as may be necessary or appropriate for purposes of recordation of the deed;

(i)Good standing certificates and corporate resolutions or member or partner consents, as applicable, and such other documents as reasonably requested by Escrow Agent;

(j)Originals of the Warranties (as hereinafter defined) re-issued at Seller’s expense to Buyer, as requested by Buyer;

(k)A certificate pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended, or the regulations issued pursuant thereto, certifying the non-foreign status of Seller in the form attached hereto as Exhibit M;

(l)An owner’s title affidavit as to mechanics’ liens and possession and other matters in customary form reasonably acceptable to Seller, Buyer and Escrow Agent;

(m)An original SNDA from each Tenant fully executed and notarized by such Tenant, if requested by Buyer;

(n)With respect to each Tenant, aLetter to Tenant in form of Exhibit H attached hereto, with such changes as Buyer might reasonably require;

(o)An updated Rent Roll (defined below), arrears report and schedule of security deposits and letters of credit, certified by Seller to be true and correct;

(p)A bring down certificate with respect to Seller’s representations and warranties provided herein in the form attached hereto as Exhibit N;

(q)Certificates of insurance or other evidence reasonably satisfactory to Buyer memorializing and confirming that the Tenants are then maintaining policies of insurance of the types and in the amounts required by the Leases;

(r)All records (including originals) within Seller’s or Seller’s managing agent’s possession or reasonably obtainable by such parties reasonably required for the continued operation of the Property, including but not limited to, service contracts, plans, surveys, the Leases, Guaranties, lease files, licenses, permits, warranties, guaranties, and records of current expenditures for repairs and maintenance; and

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(s)Such other instruments as are reasonably required by Escrow Agent to close the escrow and consummate the purchase of the Property in accordance with the terms hereof.

At Closing, Buyer shall instruct Escrow Agent to deliver the Earnest Money, together with all interest earned thereon, to Seller, which shall be applied to the Purchase Price, shall deliver the balance of the Purchase Price to Seller and shall execute and deliver execution counterparts of the closing documents referenced in clauses (b), (g), (h) and (m). Buyer shall have the right to advance the Closing upon five (5) days’ prior written notice to Seller; provided that all conditions precedent to both Buyer’s and Seller’s respective obligations to proceed with Closing under this Agreement have been satisfied (or, if there are conditions to a party’s obligation to proceed with Closing that remain unsatisfied, such conditions have been waived by such party). Buyer shall have a one-time right to extend the Closing for up to fifteen (15) business days upon written notice to Seller to be received by Seller on or prior to the date scheduled for the Closing. If Buyer timely exercises this right to extend, any document that Seller is obligated to provide that is “time sensitive” does not need to be provided again by Seller. The Closing shall be held through the mail, by delivery in escrow of the closing documents to the Escrow Agent, on or prior to the Closing or such other place or manner as the parties hereto may mutually agree.

11.Representations by Seller. For the purpose of inducing Buyer to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, Seller makes the following representations and warranties to Buyer as of the date hereof and as of the Closing Date:

(a)Seller is duly organized (or formed), validly existing and in good standing under the laws of its state of organization, and to the extent required by law, the State in which the Property is located. Seller has the power and authority to execute and deliver this Agreement and all closing documents to be executed by Seller, and to perform all of Seller’s obligations hereunder and thereunder. Neither the execution and delivery of this Agreement and all closing documents to be executed by Seller, nor the performance of the obligations of Seller hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Seller or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Seller is bound. The execution, delivery and performance of this Agreement does not require the consent or approval of any court, administrative or governmental authority and does not result in the creation or imposition of any lien or equity of any kind whatsoever upon, or give to any other person any interest or right (including any right of termination or cancellation) in or with respect to, any material agreement to which Seller is a party or the business or operations of Seller or any of its properties or assets;

(b)Seller has not received any written notice of any current or pending litigation, condemnation proceeding or tax appeals affecting Seller or the Property and Seller does not have any knowledge of any pending litigation or tax appeals against Seller or the Property; Seller has not initiated, nor is Seller participating in, any action for a change or modification in the current subdivision, site plan, zoning or other land use permits for the Property;

(c)Attached hereto as Exhibit J is a true, correct and complete list of all contracts and agreements relating to the operation or maintenance of the Property (the “Contracts”). Other

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than the Leases and Contracts, Seller has not entered into any agreements affecting the Property which will be binding upon Buyer after the Closing;

(d)Except for violations which have been cured or remedied on or before the date hereof, Seller has not received any written notice from (or delivered any notice to) any governmental authority regarding any violation of any law applicable to the Property and Seller does not have knowledge of any such violations, and the Property shall be delivered free from all violations at Closing;

(e)Seller has fee simple title to the Property free and clear of all liens and encumbrances except for Permitted Exceptions and Seller is the sole owner of the entire lessor’s interest in each Lease. The Property constitutes one or more separate tax parcels for purposes of ad valorem taxation;

(f)Attached hereto as Exhibit A-2 is a true, correct and complete list of all leases and subleases affecting the Property, including all amendments to such leases and subleases.

(g)With respect to each Lease: (i) the Lease forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Lease; (ii) the Lease is in full force and effect and there is no default thereunder; (iii) no brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the current term of the Lease or any extension or renewal thereof; (iv) Seller has no outstanding obligation to provide Tenant with an allowance to construct, or to construct at its own expense, any tenant improvements; (v) intentionally deleted; (vi) Tenant is not entitled to rental concessions or abatements for any period subsequent to the scheduled date of Closing; (vii) Tenant has not prepaid any rents as of the date hereof nor has Tenant delivered a security deposit, letter of credit or other security in connection with the Lease, except as set forth on Exhibit K attached hereto; (viii) Tenant has not made any request for any assignment, transfer, or subletting in connection with all or a portion of the premises demised to Tenant which is presently pending or under consideration by Seller; (ix) all specified work required to be performed by the landlord under the Leaseup to the date of Closing has been completed or will be completed, at Seller’s expense, prior to the Closing; (x) Seller has not received and has no knowledge of any pending notices from Tenant electing to vacate the premises leased to Tenant or exercising any right of Tenant to terminate the Lease; and (xi) Seller has heretofore billed Tenant for all fixed rent and additional rent due under the Lease as of the date hereof;

(h)Attached hereto as Exhibit A-3 and made a part hereof is a true, correct and complete copy of the rent roll for the Property (the “Rent Roll”);

(i)There are no occupancy rights, leases or tenancies affecting the Property other than the Leases. Neither this Agreement nor the consummation of the transactions contemplated hereby is subject to any right of first refusal or other purchase right in favor of any other person or entity; and apart from this Agreement, Seller has not entered into any written agreements for the purchase or sale of the Property, or any interest therein which has not been terminated;

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(j)The transactions contemplated hereby either (i) will not constitute a sale of all or substantially all the assets of Seller, or (ii) if such transaction does constitute a sale of all or substantially all the assets of any Seller, Seller shall provide to Buyer at Closing an excise tax lien waiver or such other reasonably obtainable instruments evidencing compliance with laws or payment of taxes to the extent required by the law of the relevant state, or an indemnification from a party reasonably acceptable to Buyer for any resulting liability with respect to the period prior to the Closing;

(k)To Seller’s knowledge, except as set forth in the environmental reports previously delivered by Seller to Buyer, no hazardous substances have been generated, stored, released, or disposed of on or about the Property in violation of any law, rule or regulation applicable to the Property which regulates or controls matters relating to the environment or public health or safety (collectively, “Environmental Laws”) and no adverse environmental condition exists at the Property. Seller has not received any written notice from (nor delivered any notice to) any federal, state, county, municipal or other governmental department, agency or authority (1) concerning any petroleum product or other hazardous substance discharge or seepage at, on, around or under the Property, or migrating from the Property, in violation of any Environmental Laws or; (2) of any pending actions, suits, claims and/or proceedings claiming that Seller, any Tenant or the Property is in violation of any Environmental Laws. For purposes of this Subsection, “hazardous substances” shall mean any substance or material which is defined or deemed to be hazardous or toxic pursuant to any Environmental Laws. To Seller’s knowledge, there are no underground storage tanks located on the Property;

(l)Exhibit I attached hereto is a true, correct and complete listing of all warranties in effect for the Property (the “Warranties”);

(m)Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code;

(n)There presently exists no unrestored casualty or condemnation affecting the Property;

(o)With respect to each Guaranty: (a) the Guaranty forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Guaranty; and (b) the Guaranty is in full force and effect and there is no default thereunder; and

(p)To Seller’s actual knowledge and except for Seller’s confidential materials, Seller has provided Buyer with access to all certificates, licenses, permits, Leases, Contracts, books, records, documents and information relating to the Property and the ownership and operation thereof which are in the possession of Seller. Seller represents and warrants that such Due Diligence Materials are true and correct copies of the same materials in Seller’s files.

The representations and warranties of Seller shall survive Closing for a period of nine (9) months.

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12.Representationsby Buyer. Buyer represents and warrants to, and covenants with, Seller as follows:

(a)Buyer is duly formed, validly existing and in good standing under the laws of Delaware, is authorized to consummate the transaction set forth herein and fulfill all of its obligations hereunder and under all closing documents to be executed by Buyer, and has all necessary power to execute and deliver this Agreement and all closing documents to be executed by Buyer, and to perform all of Buyer’s obligations hereunder and thereunder. This Agreement and all closing documents to be executed by Buyer have been duly authorized by all requisite corporate or other required action on the part of Buyer and are the valid and legally binding obligation of Buyer, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement and all closing documents to be executed by Buyer, nor the performance of the obligations of Buyer hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Buyer or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Buyer is bound.

The representations and warranties of Buyer shall survive Closing for a period of nine (9) months.

13.Conditions Precedent to Buyer’s Obligations. Buyer’s obligation to pay the Purchase Price, and to accept title to the Property, shall be subject to compliance by Seller with the following conditions precedent on and as of the date of Closing:

(a)Seller shall deliver to Buyer on or before the Closing the items set forth in Section 10 above;

(b)Buyer shall receive from Escrow Agent or any other title insurer approved by Buyer in its judgment and discretion, a current ALTA owner’s form of title insurance policy, or irrevocable and unconditional binder to issue the same, with extended coverage for the Real Property and the Improvements (including any beneficial easements) in the amount of the Purchase Price, dated, or updated to, the date of the Closing, insuring, or committing to insure, at its ordinary premium rates Buyer’s good and marketable title in fee simple to the Real Property and the Improvements and otherwise in such form and with such endorsements as provided in the title commitment approved by Buyer pursuant to Section 6 hereof and subject only to the Permitted Exceptions (the “Title Policy”);

(c)Intentionally Deleted;

(d)Each Tenant shall be in possession of the premises demised under its respective Lease, open for business to the public and paying full and unabated rent under such Lease and no Tenant shall have assigned its Lease or sublet the Property;

(e)The representations and warranties of Seller contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Seller shall have performed and complied in all material respects with all covenants, agreements and

17

conditions required by this Agreement to be performed or complied with by Seller prior to or at the Closing;

(f)Seller shall have delivered to Buyer a written waiver from any party of any right of first refusal, right of first offer or other purchase option that such party may have, pursuant to the Leases or otherwise, to purchase the Property from Seller;

(g)Seller shall have made all contributions, payments and/or reimbursements and completed any and all work required by any governmental authority in connection with the construction and development of the Property, including, without limitation, as required by any variance or site plan approval; and

(h)An original of each Estoppel Certificate from each Tenant and, as applicable, Guarantor, dated no earlier than thirty (30) days prior to the date of Closing. Each Estoppel Certificate must (i) reflect the business terms of the Lease, (ii) not reflect any defaults, (iii) be fully completed, dated and executed, (iv) be certified to Buyer and its lender, and (v) be otherwise acceptable in form and substance to Buyer in Buyer’s reasonable discretion. As to any Lease, if the Lease and any amendments, bearing the original signatures of the landlord and tenant thereunder have not been delivered to Buyer previously, a copy thereof confirming that the copy is true, correct and complete shall be attached to the Estoppel Certificate.

In the event the conditions precedent set forth above in Section 13(b), (d), (f) and/or (h) have not been satisfied at Closing, Buyer may, in its sole discretion, elect to: (i) either terminate this Agreement in its entirety by delivering notice to Seller on or before the Closing Date, in which case, Escrow Agent shall refund the Earnest Money to Buyer, and neither party shall have any further rights or obligations hereunder except as expressly provided herein, or (ii) waive such non-satisfaction of such condition(s) precedent and proceed to close the transaction contemplated by this Agreement. In the event the conditions precedent set forth above in Section 13(a), (e) and/or (g) have not been satisfied at Closing, Buyer may, in its sole discretion, elect to: (i) either terminate this Agreement in its entirety by delivering notice to Seller on or before the Closing Date, in which case, Escrow Agent shall refund the Earnest Money to Buyer, and neither party shall have any further rights or obligations hereunder except as expressly provided herein, (ii) proceed to enforce its rights or remedies set forth in Section 9(b) of this Agreement, or (iii) waive such non-satisfaction of such condition(s) precedent and proceed to close the transaction contemplated by this Agreement.

14.Conditions Precedent to Seller’s Obligations. Seller’s obligation to deliver title to the Property shall be subject to compliance by Buyer with the following conditions precedent on and as of the date of Closing:

(a)Buyer shall deliver to Escrow Agent on the Closing Date the remainder of the Purchase Price, subject to adjustment of such amount pursuant to Section 4 hereof; and

(b)The representations and warranties of Buyer contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of

18

Closing as if such representations and warranties were made at and as of the Closing, and Buyer shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Buyer prior to or at the Closing.

15.Notices. Unless otherwise provided herein, all notices and other communications which may be or are required to be given or made by any party to the other in connection herewith shall be in writing and shall be deemed to have been properly given and received on the date: (i) delivered by facsimile transmission or by electronic mail (e.g. email), (ii) delivered in person, (iii) deposited in the United States mail, registered or certified, return receipt requested, or (iv) deposited with a nationally recognized overnight courier, to the addresses set out in Section 1, or at such other addresses as specified by written notice delivered in accordance herewith. Notwithstanding the foregoing, Seller and Buyer agree that notice may be given on behalf of each party by the counsel for each party and notice by such counsel in accordance with this Section 15 shall constitute notice under this Agreement.

16.Seller Covenants. Seller agrees that it: (a) shall continue to operate and manage the Property in the same manner in which Seller has previously operated and managed the Property; (b) shall, subject to Section 7 hereof and subject to reasonable wear and tear, maintain the Property in the same (or better) condition as exists on the date hereof; and (c) shall not, without Buyer’s prior written consent, which, after the expiration of the Due Diligence Period may be withheld in Buyer’s sole discretion: (i) amend the Leases in any manner or enter into any new lease, license agreement or other occupancy agreement with respect to the Property; (ii) consent to an assignment of any Lease or a sublease of the premises demised thereunder or a termination or surrender thereof; (iii) terminate any Lease or release any guarantor of or security for any Lease unless required by the express terms of such Lease; (iv) enter into any contracts unless terminable by Seller without penalty upon not more than thirty (30) days’ prior notice; and/or (v) cause, permit or consent to an alteration of the premises demised under the Leases (unless such consent is non-discretionary). Seller shall promptly inform Buyer in writing of any material event adversely affecting the ownership, use, occupancy or maintenance of the Property, whether insured or not.

314 Audit. Upon Buyer’s request, for a period of one (1) year after Closing, Seller shall make the financial statements, including balance sheets, income statements, stockholders’ equity statements and cash flow statements and related notes prepared in accordance with United States generally accepted accounting standards, and any and all books, records, correspondence, financial data, leases, delinquency reports and all other documents and matters (other than confidential and privileged information) maintained by Seller or their agents and relating to receipts, expenditures, contributions and distributions reasonably necessary to complete an audit pertaining to the Property for the three (3) most recent full calendar years and the interim period of the current calendar year (collectively, the “Records”) available to Buyer and/or its auditors for inspection, copying and audit by Buyer’s designated accountants, and at Buyer’s expense. Seller shall provide Buyer and/or its auditors, but without expense to Seller, with copies of, or access to, such factual and financial information as may be reasonably requested by Buyer or its designated accountants, and in the possession or control of Seller, to enable Buyer to file any filings required by the Securities and Exchange Commission (the “SEC”) in connection with the purchase of the Property. Seller

19

understands and acknowledges that Buyer is required to file audited financial statements related to the Property with the SEC within seventy-one (71) days of the Closing Date and agrees to provide any Records and requested reasonable representations and/or certifications to the Buyer’s auditors, on a timely basis to facilitate Buyer’s timely submission of such audited financial statements.

17.Performance on Business Days. A "business day" is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government. Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day.

18.Entire Agreement. This Agreement constitutes the sole and entire agreement among the parties hereto and no modification of this Agreement shall be binding unless in writing and signed by all parties hereto. No prior agreement or understanding pertaining to the subject matter hereof (including, without limitation, any letter of intent executed prior to this Agreement) shall be valid or of any force or effect from and after the date hereof.

19.Severability. If any provision of this Agreement, or the application thereof to any person or circumstance, shall be invalid or unenforceable, at any time or to any extent, then the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. Each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

20.No Representations or Warranties. Buyer hereby acknowledges, understands and agrees that it has an opportunity to inspect the Property as set forth in Section 6 herein, and except as set forth in this Agreement, the Property shall be conveyed at Closing to Buyer in “as-is” condition with no representation or warranties whatsoever.

21.Applicable Law. This Agreement shall be construed under the laws of the State or Commonwealth in which the Property is located, without giving effect to any state's conflict of laws principles.

22.Tax-Deferred Exchange. Buyer and Seller respectively acknowledge that the purchase and sale of the Property contemplated hereby may be part of a separate exchange (an “Exchange”) being made by each party pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated with respect thereto. In the event that either party (the “Exchanging Party”) desires to effectuate such an exchange, then the other party (the “Non-Exchanging Party”) agrees to cooperate fully with the Exchanging Party in order that the Exchanging Party may effectuate such an exchange; provided, however, that with respect to such Exchange (a) all additional costs, fees and expenses related thereto shall be the sole responsibility of, and borne by, the Exchanging Party; (b) the Non-Exchanging Party shall incur no additional liability as a result of such exchange; (c) the contemplated exchange shall not delay any of the time periods or other obligations of the Exchanging Party hereby, and without limiting the foregoing,

20

the scheduled date for Closing shall not be delayed or adversely affected by reason of the Exchange; (d) the accomplishment of the Exchange shall not be a condition precedent or condition subsequent to the Exchanging Party's obligations under the Agreement; and (e) the Non-Exchanging Party shall not be required to hold title to any land other than the Property for purposes of the Exchange. The Exchanging Party agrees to defend, indemnify and hold the Non-Exchanging Party harmless from any and all liability, damage or cost, including, without limitation, reasonable attorney's fees that may result from Non-Exchanging Party's cooperation with the Exchange. The Non-Exchanging Party shall not, by reason of the Exchange, (i) have its rights under this Agreement, including, without limitation, any representations, warranties and covenants made by the Exchanging Party in this Agreement (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller), or in any of the closing documents (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller) contemplated hereby, adversely affected or diminished in any manner, or (ii) be responsible for compliance with or deemed to have warranted to the Exchanging Party that the Exchange complies with Section 1031 of the Code.

23.Broker’s Commissions. Buyer and Seller each hereby represent that, except for the Broker listed herein, there are no other brokers involved or that have a right to proceeds in this transaction. Seller shall be responsible for payment of commissions to the Broker pursuant to a separate written agreement executed by Seller. Seller and Buyer each hereby agree to indemnify and hold the other harmless from all loss, cost, damage or expense (including reasonable attorneys' fees at both trial and appellate levels) incurred by the other as a result of any claim arising out of the acts of the indemnifying party (or others on its behalf) for a commission, finder's fee or similar compensation made by any broker, finder or any party who claims to have dealt with such party (except that Buyer shall have no obligations hereunder with respect to any claim by Broker). The representations, warranties and indemnity obligations contained in this section shall survive the Closing or the earlier termination of this Agreement.

24.Assignment. Buyer may assign its rights under this Agreement, provided, however, that no such assignment shall relieve Buyer of any of its obligations hereunder until Closing is complete. Buyer is entering into this Agreement for and on behalf of a related special purpose entity titled ARHC WLWBYMN01, LLC (“Approved Assignee”) and intends to assign Approved Assignee its rights hereunder prior to Closing.

25.Attorneys’ Fees. In any action between Buyer and Seller as a result of failure to perform or a default under this Agreement, the prevailing party shall be entitled to recover from the other party, and the other party shall pay to the prevailing party, the prevailing party’s reasonable attorneys’ fees and disbursements and court costs incurred in such action.

26.Time of the Essence. Time is of the essence with respect to each of Buyer’s and Seller’s obligations hereunder.

27.Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Agreement which are transmitted electronically shall be valid for all

21

purposes, however any party shall deliver an original signature on this Agreement to the other party upon request.

28.Anti-Terrorism. Neither Buyer or Seller, nor any of their affiliates, are in violation of any Anti-Terrorism Law (as hereinafter defined) or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. “Anti-Terrorism Laws” shall mean any laws relating to terrorism or money laundering, including: Executive Order No. 13224; the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or may hereafter be, renewed, extended, amended or replaced; the applicable laws comprising or implementing the Bank Secrecy Act; and the applicable laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing may from time to time be amended, renewed, extended, or replaced).

[SIGNATURES APPEAR ON THE FOLLOWING PAGES]

22

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

BUYER:	SELLER:
AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company	KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation
By: AR Capital, LLC,    a Delaware limited liability company,    its sole member	By: /s/ Bruce W. Engelsma Name: Bruce W. Engelsma Title: Chief Executive Officer
By:/s/ William M. Kahane Name: William M. Kahane Title: Manager
Date: July 31, 2015	Date: July 28, 2015

THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES TO BE BOUND BY THE TERMS OF THIS AGREEMENT RELATING TO ESCROW AGENT AND THE EARNEST MONEY.

ESCROW AGENT:

STEWART TITLE GUARANTY COMPANY

By: /s/Annette M. Comer            

Name: Annette M. Comer            

Title: Vice President                

Date: July 31, 2015                 

EXHIBITS

Exhibit A-1    -    Real Property

Exhibit A-2    -    List of Leases

Exhibit A-3    -    Rent Roll

Exhibit B    -    Form of Special Warranty Deed

Exhibit C    -    Form of Assignment and Assumption of Leases, Guaranties and                     Security Deposits

Exhibit D    -    Form of Bill of Sale

Exhibit E    -    Form of Assignment of Contracts, Permits, Licenses and Warranties

Exhibit F    -    Form of Estoppel Certificate

Exhibit G    -    Intentionally Omitted

Exhibit H    -    Form of Tenant Notice Letter

Exhibit I    -    Warranties    

Exhibit J    -    Contracts

Exhibit K    -    Prepaid Rents, Security Deposits and Letters of Credit

Exhibit L    -    Property Manager Questionnaire

Exhibit M    -    Non-Foreign Person Affidavit

Exhibit N    -    Seller’s Bring Down Certificate

EXHIBIT A-1

LEGAL DESCRIPTION OF PROPERTY

Lot 2, Block 1, Woodlake Office Park, Washington County, Minnesota

Together with the non-exclusive easements for access, parking, waterline and storm sewer contained in Reciprocal Easement and Operating Agreement dated June 11, 2002, filed June 28, 2002 as Document No. 3246517.

A-1-1

EXHIBIT A-2

LIST OF LEASES

1. Lease with Summit Orthopedics, Ltd. dated June 23, 2008, as amended by First Amendment to Lease dated October 10, 2008 and by Second Amendment to Lease dated October 30, 2009

A-2-1

EXHIBIT A-3

RENT ROLL

[Attached]

A-3-1

EXHIBIT B

FORM OF SPECIAL WARRANTY DEED[Subject to Local Counsel Review]

This document prepared by:
(and return to :)

___________________________
___________________________
___________________________
___________________________

Tax Parcel No. ______________________________

SPECIAL WARRANTY DEED

THIS INDENTURE, made on the _____ day of ______________, 2015, by and between KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation ("Grantor"), and ARHC WLWBYMN01, LLC, a Delaware limited liability company, whose address is 106 York Road, Jenkintown, Pennsylvania 19046 ("Grantee")

W I T N E S S E T H:

THAT Grantor, in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, does by these presents, sell and convey unto the said Grantee, its successors and assigns, the lots, tracts or parcels of land lying, being and situated in the County of Washington, State of Minnesota, and more fully described on Exhibit "A" attached hereto and incorporated herein by reference, together with all buildings, facilities and other improvements, located thereon and (a) all right, title and interest, if any, of Grantor in and to any streets and roads abutting the above described premises to the center lines thereof and (b) the appurtenances and all the estate and rights of Grantor in and to said premises.

TO HAVE AND TO HOLD the premises aforesaid with all and singular, the rights, easements, privileges, appurtenances and immunities thereto belonging or in any wise appertaining unto the said Grantee and unto Grantee's successors and assigns forever, the said Grantor hereby covenanting that Grantor will warrant and defend the title to said premises unto the said Grantee and unto Grantee's successors and assigns, against the lawful claims and demands of all persons claiming by, under or through Grantor, but not otherwise.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

B-1

Grantor certifies that the Grantor does not know of any wells on the described real property.

IN WITNESS WHEREOF, Grantor has executed this Special Warranty Deed the day and year first above written.

GRANTOR:

KRAUS-ANDERSON, INCORPORATED, a Minnesota Corporation

By:

Name:

Title:

[ACKNOWLEDGMENT]

B-2

Exhibit A

B-3

EXHIBIT C

FORM OF
ASSIGNMENT AND ASSUMPTION OF LEASES, GUARANTIES AND SECURITY DEPOSITS

KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation ("Assignor"), in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby assigns, transfers, sets over and conveys to ARHC WLWBYMN01, LLC, a Delaware limited liability company ("Assignee"), all of Assignor's right, title and interest in and to those leases described in Exhibit A attached hereto and made a part hereof (as amended from time to time, the “Leases”), including any and all security deposits under the Leases, together with all of Assignor’s right, title and interest in and to those lease guaranties described in Exhibit B attached hereto and made a part hereof.

Subject to the limitations set forth below, Assignor does hereby agree to defend, indemnify and hold harmless Assignee from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignee by reason of the failure of Assignor to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the lessor, or landlord under and by virtue of the Leases arising or accruing prior to the date of this Assignment. Subject to the limitations set forth below, Assignee does hereby agree to defend, indemnify and hold harmless Assignor from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignor by reason of the failure of Assignee to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the landlord under and by virtue of the Leases arising or accruing on and after the date of this Assignment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

C-1

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment this ______ day of ______________, 2015, which Assignment is effective this date. This Assignment may be executed in counterparts, which when taken together shall be deemed one agreement.

ASSIGNOR:

KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation

By:

Name:

Title:

ASSIGNEE:

ARHC WLWBYMN01, LLC, a Delaware limited liability company

By:

Name:    Jesse C. Galloway        

Title:     Authorized Signatory        

C-2

Exhibit A

List of Leases

1. Lease with Summit Orthopedics, Ltd. dated June 23, 2008, as amended by First Amendment to Lease dated October 10, 2008 and by Second Amendment to Lease dated October 30, 2009

C-3

Exhibit B

List of Guaranties

None

C-4

EXHIBIT D

FORM OF BILL OF SALE

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation (“Seller”), hereby bargains, sells, conveys and transfers to ARHC WLWBYMN01, LLC, a Delaware limited liability company (“Buyer”), all of Seller’s right, title and interest in and to those certain items of personal and intangible property (including any warranty made by third parties in connection with the same and the right to sue on any claim for relief under such warranties) (the “Personal Property”) located at or held in connection with that certain real property located in the State of Minnesota, as more particularly described on Schedule A attached hereto and made a part hereof.

Seller has not made and does not make any express or implied warranty or representation of any kind whatsoever with respect to the Personal Property, including, without limitation, with respect to title, merchantability of the Personal Property or its fitness for any particular purpose, the design or condition of the Personal Property; the quality or capacity of the Personal Property; workmanship or compliance of the Personal Property with the requirements of any law, rule, specification or contract pertaining thereto; patent infringement or latent defects. Buyer accepts the Personal Property on an “as is, where is” basis.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

D-1

IN WITNESS WHEREOF, Seller has caused this instrument to be executed and delivered as of this ___ day of _______, 2015.

SELLER:

KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation

By:

Name:

Title:

D-2

SCHEDULE A

TO BILL OF SALE

Lot 2, Block 1, Woodlake Office Park, Washington County, Minnesota

Together with the non-exclusive easements for access, parking, waterline and storm sewer contained in Reciprocal Easement and Operating Agreement dated June 11, 2002, filed June 28, 2002 as Document No. 3246517.

D-3

EXHIBIT E

FORM OF ASSIGNMENT OF CONTRACTS,
PERMITS, LICENSES AND WARRANTIES

THIS ASSIGNMENT, made as of the ___ day of ________, 2015, by KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation (“Assignor”), to ARHC WLWBYMN01, LLC, a Delaware limited liability company (“Assignee”).

W I T N E S S E T H:

WHEREAS, by Agreement for Purchase and Sale of Real Property (the “Purchase Agreement”) having an effective date of ________, 2015, between Assignor and AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company, predecessor-in-interest to Assignee, Assignee has agreed to purchase from Assignor as of the date hereof, and Assignor has agreed to sell to Assignee, that certain property located at 2090 Woodwinds Drive, Woodbury, MN 55125 (the “Property”); and

WHEREAS, Assignor desires to assign to Assignee as of the date hereof all of Assignor’s right, title and interest in those contracts set forth on Exhibit A attached hereto, and the permits, trademarks, licenses and warranties held by Assignor in connection with the Property (collectively, the “Contracts”).

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Assignor hereby assigns, sets over and transfers unto Assignee to have and to hold from and after the date hereof all of the right, title and interest of Assignor in, to and under the Contracts. Assignor agrees without additional consideration to execute and deliver to Assignee any and all additional forms of assignment and other instruments and documents that may be reasonably necessary or desirable to transfer or evidence the transfer to Assignee of any of Assignor's right, title and interest to any of the Contracts.

This Assignment shall be governed by the laws of the State of Minnesota, applicable to agreements made and to be performed entirely within said State.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

E-1

IN WITNESS WHEREOF, Assignor has duly executed this Assignment as of the date first above written.

ASSIGNOR:

KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation

By:

Name:

Title:

E-2

Exhibit “A”

Assigned Contracts

E-3

EXHIBIT F

FORM OF ESTOPPEL CERTIFICATE

The undersigned hereby certifies to ARHC WLWBYMN01, LLC, a Delaware limited liability company(“Buyer”), KeyBank National Association (“Lender”), and their respective successors and assigns as follows:

1.    The undersigned is the tenant under that certain [insert title of lease document] [(the “Lease”)], dated as of _________ __, ____, by and between _________________________ (“Landlord”) and _________________________ (“Tenant”) [, as amended by that certain [insert title of lease amendment document], dated as of _________ __, ____, by and between _________________________ and _________________________ (collectively, the “Lease”)], pursuant to which Tenant leases certain premises known as Suite ____, consisting of _______ rentable square feet (the “Premises”), at that real property and improvements located at _________________________________________ (the “Property”).

2.    Except as set forth above, the Lease has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived.

3.    The Lease is valid and in full force and effect on the date hereof. The Lease represents the entire agreement between Landlord and Tenant with respect to the Premises and the land on which the Premises are situated.

4.    Tenant is not entitled to, and has made no agreement with Landlord or its agents or employees concerning, free rent, partial rent, rebate of rent payments, credit or offset or reduction in rent, or any other type of rental concession including, without limitation, lease support payments, lease buy-outs, or assumption of any leasing or occupancy agreements of Tenant.

5.    The initial term of the Lease began on __________ __, _____ and expires on ________ __, 20__. The Rent Commencement Date was __________ __, ____. Tenant has accepted possession of the Premises and is open for business. Tenant has not sublet all or a portion of the Premises to any sublessee and has not assigned, transferred or encumbered any of its rights or interests under the Lease.

6.    Tenant has no outstanding options or rights to renew or extend the term of the Lease, except as follows: ________________ (if none, please state “none”). Tenant has no outstanding expansion options, other options, rights of first refusal or rights of first offer to purchase the Property or any part thereof, or rights of first offer to lease with respect to all or any part of the Property.

7.    The [Base Annual Rent] payable under the Lease is $____________ ($_________ monthly). Such [Base Annual Rent] payable under the Lease shall be adjusted during the initial term of the Lease as follows: (a) from ___________, 20__ to and including ______________, 20__, the Base Annual Rent shall be $_______ ($_______ monthly); (b) from ___________, 20___ to and including ____________, 20___ the Base Annual Rent shall be $________ ($________ monthly); [and from __________, 20__ to and including __________, 20___ the Base Annual Rent

F-1

shall be $_________ ($__________ monthly)]. Such rent has been paid through and including the month of ____________, 2015. Additional rent under the Lease in the amount of $__________ has been paid through and including the month of __________, 2015. No such rent (excluding security deposits) has been paid more than one (1) month in advance of its due date.

8.    Tenant's security deposit, if any, is $_________________ (if none, please state “none”).

9.    No event has occurred and no condition exists that constitutes, or that with the giving of notice or the lapse of time or both, would constitute, a default by Tenant or, to the best knowledge of Tenant, Landlord under the Lease. Tenant has no existing defenses or offsets against the enforcement of the Lease by Landlord.

10.    (a)    All required contributions by Landlord to Tenant on account of Tenant's improvements have been received by Tenant and all of Tenant's tenant improvements have been completed in accordance with the terms of the Lease.

(b)    Landlord has satisfied all its obligations to Tenant arising out of or incurred in connection with the construction of the tenant improvements on the Premises and no off-set exists with respect to any rents or other sums payable or to become payable by the Tenant under the Lease.

11.    All licenses necessary for using and operating the Premises as a [insert permitted use] are held by Tenant and are in full force and effect.

12.    No voluntary actions or, to Tenant’s best knowledge, involuntary actions are pending against Tenant under the bankruptcy laws of the United States or any state thereof.

13.    This Certificate is delivered to induce Buyer to acquire the Premises and Lender to provide certain financing, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate.

[SIGNATURE PAGE FOLLOWS]

F-2

The undersigned is duly authorized to execute this Certificate on behalf of Tenant.

Dated: ____________, 2015

TENANT:    

____________________, a ________________

By:______________________
Name:

Title:

[

F-3

EXHIBIT G

INTENTIONALLY OMITTED

G-1

EXHIBIT H

FORM OF NOTICE TO TENANT

________________ ___, 2015

TO:    [INSERT TENANT’S NOTICE ADDRESS FROM LEASE]

Re:    Notice of Change of Ownership of 2090 Woodwinds Drive, Woodbury, MN 55125

Ladies and Gentlemen:

YOU ARE HEREBY NOTIFIED AS FOLLOWS:

That as of the date hereof, the undersigned has transferred, sold, assigned, and conveyed all of its right, title and interest in and to the above-described property, (the “Property”) to ARHC WLWBYMN01, LLC, a Delaware limited liability company (the “New Owner”), and assigned to New Owner, all of the undersigned’s right, title and interest under that certain Lease, dated _________, between ________as tenant and ____________as landlord (the “Lease”), together with any security deposits or letters of credit held thereunder.

Accordingly, New Owner is the landlord under the Lease and future notices and correspondence with respect to your leased premises at the Property should be made to the New Owner at the following address:

ARHC WLWBYMN01, LLC

c/o American Realty Capital VII, LLC

7621 Little Avenue, Suite 200

Charlotte, North Carolina 28226

Attention: Regional Asset Manager

With a copy to:

ARHC WLWBYMN01, LLC

c/o American Realty Capital VII, LLC

405 Park Avenue, 14^th Floor

New York, NY 10022

Attention: General Counsel

You will receive a separate notification from New Owner regarding the new address for the payment of rent. In addition, to the extent required by the Lease, please amend all insurance policies you are required to maintain pursuant to the Lease to name New Owner as an additional insured thereunder and promptly provide New Owner with evidence thereof.

H-1

[SIGNATURE PAGE FOLLOWS]

H-2

Very truly yours,

KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation

By:

Name:

Title:

H-3

EXHIBIT I

WARRANTIES

Roof:    Top-All Roofing, Inc.

Firestone-Red Shield Warranty

I-1

EXHIBIT J

CONTRACTS

LICENSE AGREEMENT    Comcast Cable Communications Mgmt., LLC

FIRE SPRINKLER INSPECTION CONTRACT     Summit Fire Protection

RPZ INSPECTION SERVICES CONTRACT    Summit Companies

LAWNCARE & IRRIGATION SERVICE AGREEMENT    Bradley & Sons Maintenance Service

SNOW PLOWING    Bradley & Sons Maintenance Service

PARKING LOT SWEEPING SERVICES AGREEMENT    American Lot Maintenance, LLC

PARKING LOT STRIPING SERVICES AGREEMENT     Superior Striping, Inc.

JANITORIAL SERVICES AGREEMENT    ABM Onsite Services-Midwest Inc.

HVAC    NS/I Horwitz

MAINTENANCE    The Maintenance Team

FIRE ALARM INSPECTIONS/MONITORING    Life Safety Systems/Int’l Response Center

J-1

EXHIBIT K

PREPAID RENTS, SECURITY DEPOSITS AND LETTERS OF CREDIT

None

K-1

EXHIBIT L

PROPERTY MANAGER QUESTIONNAIRE

(Attached)

L-1

EXHIBIT M

NON-FOREIGN PERSON AFFIDAVIT

THIS AFFIDAVIT is made this _____ day of ________________, 20__ by KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation (the “Transferor”), for the benefit of ARHC WLWBYMN01, LLC, a Delaware limited liability company (“Transferee”).

Section 1445(a) of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the “Code”), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the Transferee that withholding of tax is not required upon the disposition by Transferor of an interest in the Property described on Exhibit “A” hereto, the undersigned hereby certifies the following on behalf of Transferor:

(i)Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate or other foreign person (as those terms are defined in the Code and Income Tax Regulations);

(ii)Transferor’s U.S. Employer Identification Number or Social Security Number, as applicable, is ____________; and

(iii)Transferor’s address is523 South 8^th Street, Minneapolis, Minnesota 55404.

Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury, the undersigned declares that he has examined this certification and, to the best of his knowledge and belief, it is true, correct and complete, and the undersigned further declares that he has authority to sign this document on behalf of Transferor.

TRANSFEROR:

KRAUS-ANDERSON, INCORPORATED, a

Minnesota corporation

By:

Name:

Title:

M-1

Exhibit A

M-2

EXHIBIT N

SELLER’S BRING DOWN CERTIFICATE

Reference is made to that certain Agreement for Purchase and Sale of Real Property having an effective date of __________________, 2015 (the “Agreement”) by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company, predecessor-in-interest to ARHC WLWBYMN01, LLC, a Delaware limited liability company (“Buyer”), and KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation (“Seller”). Pursuant to Section 10(p) of the Agreement, Seller hereby certifies to Buyer that all of Seller’s representations and warranties contained in the Agreement are true and correct as of the date hereof.

Dated: ________ ___, 2015.

KRAUS-ANDERSON, INCORPORATED, a Minnesota Corporation

By:

Name:

Title:

N-1

EX-10.28

Exhibit 10.28

FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

THIS FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Amendment”) is made as of August 31, 2015, by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), and KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation (“Seller”).

WHEREAS, Buyer and Seller entered into that certain Agreement for Purchase and Sale of Real Property, having an effective date as of August 3, 2015 (the “Agreement”), with regard to the Property, as more particularly described in the Agreement. Buyer and Seller wish to amend the Agreement as provided herein.

NOW, THEREFORE, in consideration of the mutual promise contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree that the Agreement shall be amended as follows:

1. Due Diligence Period. Notwithstanding anything in the Agreement to the contrary or any other agreements or understandings to the contrary between Buyer and Seller, the Due Diligence Period shall expire at 11:59 P.M. ET on September 8, 2015.

2. Legal Description. Exhibit A-1 to the Agreement is hereby deleted in its entirety and replaced by Exhibit A-1, attached hereto and made a part hereof.

3. Miscellaneous. Except as expressly modified hereby the terms of the Agreement shall remain in full force and effect as written. Capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Agreement. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Amendment which are transmitted electronically shall be valid for all purposes, however any party shall deliver an original signature of this Amendment to the other party upon request.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first set forth above.

BUYER:	SELLER:
American Realty Capital VII, LLC, a Delaware limited liability company	KRAUS-ANDERSON, INCORPORATED, a Minnesota corporation
By: AR Capital, LLC, a Delaware limited liability company, its sole member By:/s/ William M. Kahane    Name: William Kahane    Title: Manager	By:/s/ Bruce W. Engelsma Name: Bruce W. Engelsma Title: Chief Executive Officer

EXHIBIT A-1

REAL PROPERTY

Lot 2, Block 1, Woodlake Office Park, Washington County, Minnesota

Together with the non-exclusive easements for access, parking, waterline and storm sewer contained in the Amended and Restated Reciprocal Easement and Operating Agreement dated December 21, 2010, filed March 14, 2011 as Document No. 3834595.

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER

THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Thomas P. D'Arcy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American Realty Capital Healthcare Trust III, Inc.;

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 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)) 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) [Omitted];

(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 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.

Dated this 10th day of November, 2015	/s/ Thomas P. D'Arcy
	Thomas P. D'Arcy
	Chief Executive Officer, President and Secretary
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER

THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Edward F. Lange, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American Realty Capital Healthcare Trust III, Inc.;

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 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)) 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) [Omitted];

(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 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.

Dated this 10th day of November, 2015	/s/ Edward F. Lange, Jr.
	Edward F. Lange, Jr.
	Chief Financial Officer, Chief Operating Officer and Treasurer
	(Principal Financial Officer and Principal Accounting Officer)

EX-32

Exhibit 32

SECTION 1350 CERTIFICATIONS

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

The undersigned, who are the Chief Executive Officer and Chief Financial Officer of American Realty Capital Healthcare Trust III, Inc. (the “Company”), each hereby certify as follows:

The quarterly report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated this 10th day of November, 2015

/s/ Thomas P. D'Arcy

Thomas P. D'Arcy

Chief Executive Officer, President and Secretary

(Principal Executive Officer)

/s/ Edward F. Lange, Jr.

Edward F. Lange, Jr.

Chief Financial Officer, Chief Operating Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

XML

Mortgage Notes Payable (Mortgage Notes) (Details) $ in Thousands	Sep. 30, 2015 USD ($) property	Dec. 31, 2014 USD ($)
Debt Instrument [Line Items]
Mortgage note payable	$ 5,108	$ 0
Real estate investments relating to notes payable	9,200
Mortgages
Debt Instrument [Line Items]
Mortgage note payable	$ 5,108
Philip Professional Center - Lawrenceville, GA | Mortgages
Debt Instrument [Line Items]
Encumbered Properties | property	2
Mortgage note payable	$ 5,108
Effective Interest Rate	4.00%

XML

Net Loss Per Share (Antidilutive Securities) (Details) - shares	5 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	2,666	6,879
Unvested restricted shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	2,666	5,332
OP Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	0	90
Class B units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	0	1,457

XML

Related Party Transactions and Arrangements (Fees Paid in Connection With the Operations of the Company) (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($) $ / shares shares
Related Party Transaction [Line Items]
Share price, net (in dollars per share)	$ 22.50
Advisor
Related Party Transaction [Line Items]
Shares approved for issuance (in shares) | shares	1,457
American Realty Capital Healthcare III Advisors, LLC | Contract Purchase Price | Advisor
Related Party Transaction [Line Items]
Acquisition fees as a percentage of benchmark	1.50%
Reimbursed fees to related party, percentage of benchmark, expected third party acquisition costs	0.50%
Total one-time operating fees earned by related party, percentage of benchmark, fee cap	4.50%
Quarterly asset management fee earned	0.1875%
American Realty Capital Healthcare III Advisors, LLC | Advance on Loan or Other Investment | Advisor
Related Party Transaction [Line Items]
Acquisition fees as a percentage of benchmark	1.50%
Reimbursed fees to related party, percentage of benchmark, expected third party acquisition costs	0.50%
Total one-time operating fees earned by related party, percentage of benchmark, fee cap	4.50%
American Realty Capital Healthcare III Advisors, LLC | Contract Purchase Price, All Assets Acquired | Advisor
Related Party Transaction [Line Items]
Acquisition fees and financing coordination fees, fee cap earned by related party, percentage of benchmark	2.00%
American Realty Capital Healthcare III Advisors, LLC | Amount Available or Outstanding Under Financing Arrangement | Advisor
Related Party Transaction [Line Items]
Financing coordination fees	0.75%
American Realty Capital Healthcare III Advisors, LLC | Gross Revenue, Stand-alone Single-tenant Net Leased Properties | Advisor
Related Party Transaction [Line Items]
Property management fees	1.50%
American Realty Capital Healthcare III Advisors, LLC | Gross Revenue, Excluding Stand-alone Single-tenant Net Leased Properties | Advisor
Related Party Transaction [Line Items]
Property management fees	2.50%
Maximum | American Realty Capital Healthcare III Advisors, LLC | Contract Purchase Price | Advisor
Related Party Transaction [Line Items]
Reimbursed legal fees to related party, percentage of benchmark	0.10%
Maximum | American Realty Capital Healthcare III Advisors, LLC | Advance on Loan or Other Investment | Advisor
Related Party Transaction [Line Items]
Reimbursed legal fees to related party, percentage of benchmark	0.10%
Maximum | American Realty Capital Healthcare III Advisors, LLC | Gross Revenue, Managed Properties | Advisor
Related Party Transaction [Line Items]
Oversight fees earned by related party	1.00%
Greater Of | Maximum | American Realty Capital Healthcare III Advisors, LLC | Average Invested Assets | Advisor
Related Party Transaction [Line Items]
Operating expenses as a percentage of benchmark	2.00%
Greater Of | Maximum | American Realty Capital Healthcare III Advisors, LLC | Net Income, Excluding Additions to Non-cash Reserves and Gains on Sales of Assets | Advisor
Related Party Transaction [Line Items]
Operating expenses as a percentage of benchmark	25.00%
Greater Of | Maximum | American Realty Capital Healthcare III Advisors, LLC | Average Invested Assets and Net Income Excluding Additions to Non-Cash Reserves and Gains on Sales | Advisor
Related Party Transaction [Line Items]
Operating expenses limitation | $	$ 0.8

XML

Segment Reporting (Reconciliation of Segment Activity) (Details) $ in Thousands	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2015 USD ($) segment	Sep. 30, 2014 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) segment
Segment Reporting Information [Line Items]
Number of reportable segments | segment	3			3
Rental income	$ 1,025	$ 0	$ 0	$ 1,195
Operating expense reimbursements	140	0	0	173
Resident services and fee income	19	0	0	19
Revenues	1,184	0	0	1,387
Property operating and maintenance	382	0	0	418
Net operating income	802			969
Operating fees to affiliate	(15)	0	0	(15)
Acquisition and transaction related	(1,415)	0	0	(1,888)
General and administrative	(440)	(28)	(44)	(975)
Depreciation and amortization	(464)	0	0	(543)
Interest expense	(25)	0	0	(25)
Income tax benefit	(4)	$ 0	$ 0	(4)
Net loss attributable to stockholders	(1,561)			(2,481)
Operating Segments | Medical Office Buildings
Segment Reporting Information [Line Items]
Rental income	690			860
Operating expense reimbursements	140			173
Resident services and fee income	0			0
Revenues	830			1,033
Property operating and maintenance	184			220
Net operating income	646			813
Operating Segments | Triple-Net Leased Healthcare Facilities
Segment Reporting Information [Line Items]
Rental income	43			43
Operating expense reimbursements	0			0
Resident services and fee income	0			0
Revenues	43			43
Property operating and maintenance	0			0
Net operating income	43			43
Operating Segments | Seniors Housing Communities
Segment Reporting Information [Line Items]
Rental income	292			292
Operating expense reimbursements	0			0
Resident services and fee income	19			19
Revenues	311			311
Property operating and maintenance	198			198
Net operating income	$ 113			$ 113

XML

Related Party Transactions and Arrangements (Fees Paid in Connection with the IPO, Selling Commissions and Dealer Manager Fees) (Details) - USD ($) $ in Thousands	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Due to affiliate	$ 314			$ 314	$ 1,895
Realty Capital Securities, LLC | Total commissions and fees incurred from and due to the Dealer Manager | Dealer Manager
Related Party Transaction [Line Items]
Total commissions and fees incurred from the Dealer Manager	4,663	$ 0	$ 0	11,942
Due to affiliate	$ 81			$ 81	$ 0

XML

Real Estate Investments (Narrative) (Details) $ in Thousands									3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 11, 2015 USD ($)	Aug. 25, 2015 USD ($)	Aug. 21, 2015 USD ($)	Aug. 14, 2015 USD ($)	Aug. 03, 2015 USD ($)	Jul. 24, 2015 USD ($)	Jun. 11, 2015 USD ($)	Apr. 20, 2015 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) property
Business Acquisition [Line Items]
Number of properties purchased | property												13
Acquisition and transaction related									$ 1,415	$ 0	$ 0	$ 1,888
RAI Clearwater
Business Acquisition [Line Items]
Contract purchase price								$ 4,800
Acquisition and transaction related								$ 100
Rockwall Medical Plaza
Business Acquisition [Line Items]
Contract purchase price							$ 6,600
Acquisition and transaction related							$ 200
Decatur Medical Office Building
Business Acquisition [Line Items]
Contract purchase price						$ 5,100
Acquisition and transaction related						$ 100
Buckeye Health Center
Business Acquisition [Line Items]
Contract purchase price					$ 5,600
Acquisition and transaction related					$ 100
Philip Professional Center
Business Acquisition [Line Items]
Contract purchase price				$ 9,000
Payments to acquire businesses				3,900
Mortgage debt assumed				5,100
Acquisition and transaction related				$ 200
Cedarhurst of Collinsville
Business Acquisition [Line Items]
Contract purchase price			$ 11,600
Acquisition and transaction related			$ 300
Arcadian Cove Assisted Living
Business Acquisition [Line Items]
Contract purchase price		$ 4,800
Acquisition and transaction related		$ 200
Woodlake Office Center
Business Acquisition [Line Items]
Contract purchase price	$ 14,900
Acquisition and transaction related	$ 300

XML

Commitments and Contingencies (Summary of Operating Lease Agreements) (Details) $ in Thousands	Sep. 30, 2015 USD ($)
Commitments and Contingencies Disclosure [Abstract]
October 1, 2015 — December 31, 2015	$ 8
2016	32
2017	33
2018	34
2019	35
Thereafter	106
Total	$ 248

XML

Related Party Transactions and Arrangements (Tables)

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Schedule of Selling Commissions and Dealer Manager Fees Payable to Affiliate

The following table details total selling commissions and dealer manager fees incurred from and due to the Dealer Manager as of and for the periods presented:

	Three Months Ended September 30,				Nine Months Ended		For the Period from April 24, 2014 (date of inception) to		Payable as of
(In thousands)	2015		2014		September 30, 2015		September 30, 2014		September 30, 2015		December 31, 2014
Total commissions and fees incurred from and due to the Dealer Manager	$	4,663	$	—	$	11,942	$	—	$	81	$	—

Schedule Of Offering Costs Reimbursements to Related Party

The following table details reimbursable offering costs incurred from and due to the Advisor and Dealer Manager as of and for the periods presented:

	Three Months Ended September 30,				Nine Months Ended		For the Period from April 24, 2014 (date of inception) to		Payable as of
(In thousands)	2015		2014		September 30, 2015		September 30, 2014		September 30, 2015		December 31, 2014
Fees and expense reimbursements incurred from and due to the Advisor	$	721	$	43	$	782	$	43	$	42	$	66
Fees and expense reimbursements incurred from and due to the Dealer Manager	422		233		1,239		237		164		619
Fees and expense reimbursements incurred from and due to the Sponsor	7		—		7		—		—		—
Total fees and expense reimbursements incurred from and due to the Advisor and Dealer Manager	$	1,150	$	276	$	2,028	$	280	$	206	$	685

Schedule of Amount Contractually Due and Forgiven in Connection With Operation Related Services

The following table details amounts incurred, forgiven and payable in connection with the Company's operations-related services described above as of and for the period presented.

	Three Months Ended September 30,								Nine Months Ended				For the Period from April 24, 2014 (date of inception) to
	2015				2014				September 30, 2015				September 30, 2014				Payable as of
(In thousands)	Incurred		Forgiven		Incurred		Forgiven		Incurred		Forgiven		Incurred		Forgiven		September 30, 2015		December 31, 2014
One-time fees and reimbursements:
Acquisition fees	$	855	$	—	$	—	$	—	$	1,091	$	—	$	—	$	—	$	—	$	—
Acquisition cost reimbursements	285		—		—		—		364		—		—		—		—		—
Financing coordination fees	38		—		—		—		38		—		—		—		—		—
Ongoing fees and reimbursements:
Property management fees	15		—		—		—		15		3		—		—		15		—
Professional fees and reimbursements	81		—		—		—		277		—		—		—		12		—
Total related party operating fees and reimbursements	$	1,274	$	—	$	—	$	—	$	1,785	$	3	$	—	$	—	$	27	$	—

XML

Related Party Transactions and Arrangements (Fees Paid in Connection with a Listing or the Liquidation of the Company's Real Estate Assets) (Details)	Sep. 30, 2015
American Realty Capital Healthcare III Advisors, LLC | Pre-tax Non-compounded Return on Capital Contribution | Advisor
Related Party Transaction [Line Items]
Subordinated performance fee as a percentage of benchmark	15.00%
Cumulative capital investment return to investors as a percentage of benchmark	6.00%
American Realty Capital Healthcare III Special Limited Partnership, LLC | Excess of Adjusted Market Value of Real Estate Assets Plus Distributions Over Aggregate Contributed Investor Capital | Special Limited Partner
Related Party Transaction [Line Items]
Subordinated participation fees as a percentage of benchmark	15.00%
Distribution upon nonrenewal of advisory agreement	15.00%
American Realty Capital Healthcare III Special Limited Partnership, LLC | Net Sale Proceeds, after Return of Capital Contributions and Annual Targeted Investor Return | Special Limited Partner
Related Party Transaction [Line Items]
Subordinated performance fee as a percentage of benchmark	15.00%
Annual Targeted Investor Return | American Realty Capital Healthcare III Special Limited Partnership, LLC | Pre-tax Non-compounded Return on Capital Contribution | Special Limited Partner
Related Party Transaction [Line Items]
Cumulative capital investment return to investors as a percentage of benchmark	6.00%
Maximum | American Realty Capital Healthcare III Advisors, LLC | Pre-tax Non-compounded Return on Capital Contribution | Advisor
Related Party Transaction [Line Items]
Subordinated performance fee as a percentage of benchmark	10.00%
Maximum | American Realty Capital Healthcare III Advisors, LLC | Contract Sales Price | Advisor
Related Party Transaction [Line Items]
Real estate commissions as a percentage of benchmark	2.00%
Maximum | Brokerage Commission Fees | American Realty Capital Healthcare III Advisors, LLC | Contract Sales Price | Advisor
Related Party Transaction [Line Items]
Real estate commissions as a percentage of benchmark	50.00%
Maximum | Real Estate Commissions | American Realty Capital Healthcare III Advisors, LLC | Contract Sales Price | Advisor
Related Party Transaction [Line Items]
Real estate commissions as a percentage of benchmark	6.00%

XML

Common Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands		5 Months Ended	8 Months Ended	9 Months Ended	17 Months Ended
	Jan. 29, 2015	Sep. 30, 2014	Dec. 31, 2014	Sep. 30, 2015	Sep. 30, 2015	Aug. 20, 2014
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)			11,554	5,625,853	5,625,853
Proceeds from issuance of common stock		$ 200	$ 200	$ 136,361	$ 138,454
Dividends declared per day (in dollars per share)	$ 0.0042808219
Short term trading fee				2.00%
Repurchase price as a percent of shares outstanding				5.00%	5.00%
Common stock issued through distribution reinvestment plan		$ 0		$ 989
Common stock, par value (in usd per share)			$ 0.01	$ 0.01	$ 0.01	$ 0.01
Maximum | One Year
Class of Stock [Line Items]
Share repurchase price (in dollars per share)				$ 23.13	$ 23.13
Repurchase price as a percent of share price				92.50%	92.50%
Maximum | Two Years
Class of Stock [Line Items]
Share repurchase price (in dollars per share)				$ 23.75	$ 23.75
Repurchase price as a percent of share price				95.00%	95.00%
Common Stock
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)			11,554	5,600,000	5,600,000
Common stock issued through distribution reinvestment plan (in shares)				41,656

XML

Real Estate Investments (Customer Concentration) (Details) - Sales Revenue, Net - Customer Concentration Risk	9 Months Ended
	Sep. 30, 2015
Summit Orthopedics Ltd
Concentration Risk [Line Items]
Concentration risk, percentage	14.20%
United States of America
Concentration Risk [Line Items]
Concentration risk, percentage	11.30%

XML

Equity-Based Compensation (Activity) (Details) - Restricted Share Plan - Unvested restricted shares	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning Balance (in shares) | shares	2,666
Granted (in shares) | shares	2,666
Vested (in shares) | shares	0
Forfeitures (in shares) | shares	0
Ending Balance (in shares) | shares	5,332
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning Balance, Weighted-Average Issue Price (usd per share)	$ 22.50
Granted, Weighted-Average Issue Price (usd per share)	22.50
Vested, Weighted-Average Issue Price (usd per share)	0.00
Forfeitures, Weighted-Average Issue Price (usd per share)	0.00
Ending Balance, Weighted-Average Issue Price (usd per share)	$ 22.50

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Related Party Transactions and Arrangements (Fees Paid in Connection with the IPO, Offering Costs and Reimbursements) (Details) - USD ($) $ in Thousands	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Due to affiliate	$ 314			$ 314	$ 1,895
Fees and Expense Reimbursement, Stock Offering | American Realty Capital Healthcare III Advisors, LLC | Advisor
Related Party Transaction [Line Items]
One-time fees and reimbursements:	721	$ 43	$ 43	782
Due to affiliate	42			42	66
Fees and Expense Reimbursement, Stock Offering | Realty Capital Securities, LLC | Dealer Manager
Related Party Transaction [Line Items]
One-time fees and reimbursements:	422	233	237	1,239
Due to affiliate	164			164	619
Fees and Expense Reimbursement, Stock Offering | Realty Capital Securities, LLC | Sponsor
Related Party Transaction [Line Items]
One-time fees and reimbursements:	7	0	0	7
Due to affiliate	0			0	0
Fees and Expense Reimbursement, Stock Offering | American Realty Capital Healthcare III Advisors, LLC and Realty Capital Securities, LLC | Advisor and Dealer Manager
Related Party Transaction [Line Items]
One-time fees and reimbursements:	1,150	$ 276	$ 280	2,028
Due to affiliate	$ 206			$ 206	$ 685

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Real Estate Investments

9 Months Ended

Sep. 30, 2015

Real Estate Investments, Net [Abstract]

Real Estate Investments

Real Estate Investments

The Company owned 13 properties as of September 30, 2015. The Company focuses on investing in MOBs, seniors housing communities and other healthcare-related facilities primarily to expand and diversify its portfolio and revenue base. The rentable square feet or annualized straight-line rental income of the following acquisitions represent 5% or more of the Company's total portfolio rentable square feet or annualized straight-line rental income as of September 30, 2015:

On April 20, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building located in Clearwater, Florida ("RAI Clearwater"). The seller of RAI Clearwater was R.H.C. Investments I, Inc., which had no preexisting relationship with the Company. The contract purchase price of RAI Clearwater was $4.8 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of RAI Clearwater as a business combination and incurred acquisition related costs of $0.1 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On June 11, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building located in Rockwall, Texas ("Rockwall Medical Plaza"). The seller of Rockwall Medical Plaza was Rockwall Medical Properties, L.P., which had no preexisting relationship with the Company. The contract purchase price of Rockwall Medical Plaza was $6.6 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Rockwall Medical Plaza as a business combination and incurred acquisition related costs of $0.2 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On July 24, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building and a leasehold interest in an adjacent parking lot located in Decatur, Georgia ("Decatur Medical Office Building"). The seller of Decatur Medical Office Building was GCS Stemmer Properties, LLC, which had no preexisting relationship with the Company. The contract purchase price of Decatur Medical Office Building was $5.1 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Decatur Medical Office Building as a business combination and incurred acquisition related costs of $0.1 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On August 3, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building located in Cleveland, Ohio ("Buckeye Health Center"). The seller of Buckeye Health Center was 200 E. 18^th LLC, which had no preexisting relationship with the Company. The contract purchase price of Buckeye Health Center was $5.6 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Buckeye Health Center as a business combination and incurred acquisition related costs of $0.1 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On August 14, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in two adjacent medical office buildings located in Lawrenceville, Georgia ("Philip Professional Center"). The seller of Philip Professional Center was ICM VI – Philip Centre, LP, which had no preexisting relationship with the Company. The contract purchase price of Philip Professional Center was $9.0 million and was funded with $3.9 million in proceeds from the Company's ongoing IPO and the assumption of $5.1 million in existing mortgage debt. The Company accounted for the purchase of Philip Professional Center as a business combination and incurred acquisition related costs of $0.2 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On August 21, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a seniors housing community located in Collinsville, Illinois ("Cedarhurst of Collinsville"). The seller of Cedarhurst of Collinsville was Cedarhurst of Collinsville, LLC, which had no preexisting relationship with the Company. The contract purchase price of Cedarhurst of Collinsville was $11.6 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Cedarhurst of Collinsville as a business combination and incurred acquisition related costs of $0.3 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On August 25, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a seniors housing community located in Richmond, Kentucky ("Arcadian Cove Assisted Living"). The sellers of Arcadian Cove Assisted Living were Arcadian Cove, LLC and Arcadian Assisted Living, LLC, neither of which had any preexisting relationship with the Company. The contract purchase price of Arcadian Cove Assisted Living was $4.8 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Arcadian Cove Assisted Living as a business combination and incurred acquisition related costs of $0.2 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

On September 11, 2015, the Company, through a wholly owned subsidiary, completed the acquisition of the fee simple interest in a medical office building located in Woodbury, Minnesota ("Woodlake Office Center"). The seller of Woodlake Office Center was Kraus-Anderson, Incorporated, which had no preexisting relationship with the Company. The contract purchase price of Woodlake Office Center was $14.9 million and was funded with proceeds from the Company's ongoing IPO. The Company accounted for the purchase of Woodlake Office Center as a business combination and incurred acquisition related costs of $0.3 million, which are reflected in the acquisition and transaction related line item on the accompanying unaudited consolidated statements of operations and comprehensive loss.

The following table presents the allocation of the assets acquired during the nine months ended September 30, 2015. There were no assets acquired or liabilities assumed during the period from April 24, 2014 (date of inception) to September 30, 2014.

	Nine Months Ended
(Dollar amounts in thousands)	September 30, 2015
Real estate investments, at cost:
Land	$	7,192
Buildings, fixtures and improvements	57,073
Total tangible assets	64,265
Acquired intangibles:
In-place leases (1)	8,655
Market lease assets (1)	1,362
Market lease liabilities (1)	(1,418		)
Total assets acquired, net	72,864
Mortgage note payable assumed to acquire real estate investment	(5,124		)
Premium on mortgage assumed	(172		)
Other liabilities assumed	(11		)
Cash paid for acquired real estate investments	$	67,557
Number of properties purchased	13

_______________

(1) Weighted-average remaining amortization periods for in-place leases, market lease assets and market lease liabilities acquired during the nine months ended September 30, 2015 were 7.4, 11.0 and 16.7 years, respectively, as of each property's respective acquisition date.

The following table presents unaudited pro forma information as if the acquisitions that were completed during the nine months ended September 30, 2015 had been consummated on April 24, 2014 (date of inception). Additionally, the unaudited pro forma net income (loss) was adjusted to reclassify acquisition and transaction related expenses of $1.9 million from the nine months ended September 30, 2015 to the period from April 24, 2014 (date of inception) to September 30, 2014.

	Nine Months Ended		For the Period from April 24, 2014 (date of inception) to
(In thousands, except for per share information)	September 30, 2015		September 30, 2014
Pro forma revenues (1)(2)	$	6,562	$	3,846
Pro forma net income (loss) (1)(2)	$	334	$	(1,156	)
Basic weighted average shares outstanding	2,291,631		7,389
Basic pro forma net income (loss) per share	$	0.15	$	(156.45	)
Diluted weighted average shares outstanding	2,295,078		7,389
Diluted pro forma net income (loss) per share	$	0.10	$	(156.45	)

_______________

(1) For the nine months ended September 30, 2015, aggregate revenues and net income derived from the Company's 2015 acquisitions (for the Company's period of ownership) were $1.4 million and $0.4 million, respectively.

(2) During the period from October 1, 2015 to November 6, 2015, the Company completed its acquisition of two properties. As of the date that these unaudited consolidated financial statements were available to be issued, the Company was still reviewing the financial information of these properties and, as such, it was impractical to include in these unaudited consolidated financial statements the pro forma effect of these acquisitions (see Note 13 — Subsequent Events).

The following table presents future minimum base rental cash payments due to the Company over the next five years and thereafter as of September 30, 2015. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.

(In thousands)	Future Minimum Base Rent Payments
October 1, 2015 — December 31, 2015	$	1,183
2016	4,760
2017	4,833
2018	4,905
2019	4,748
Thereafter	23,375
	$	43,804

The following table lists the tenants (including for this purpose, all affiliates of such tenant) whose annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income for all properties on a straight-line basis as of September 30, 2015. The Company did not own any properties and had no tenant concentrations as of September 30, 2014.

Tenant	September 30, 2015
Summit Orthopedics, Ltd.	14.2%
United States of America	11.3%

The following table lists the states where the Company has a concentration of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis as of September 30, 2015. The Company did not own any properties and had no state concentrations as of September 30, 2014.

State	September 30, 2015
Georgia	19.2%
Illinois	40.6%
Minnesota	14.2%

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Common Stock (Cumulative Share Repurchases) (Details) $ / shares in Units, $ in Thousands	2 Months Ended	9 Months Ended		27 Months Ended	36 Months Ended
	Nov. 30, 2015 USD ($)	Sep. 30, 2015 USD ($) request $ / shares shares		Dec. 31, 2014 request $ / shares shares	Sep. 30, 2015 request $ / shares shares
Class of Stock [Line Items]
Number of Requests | request		1	[1]	0	1	[1]
Number of shares repurchased (in shares) | shares		1,021	[1]	0	1,021	[1]
Average price per share (in usd per share)		$ 24.97	[1]	$ 0.00	$ 24.97	[1]
Number of unfulfilled repurchase requests | request		1
Remaining number of shares authorized to be repurchased | shares		1,021			1,021
Common stock repurchases | $		$ 25
Unfilled requests, average cost per share (in usd per share)		$ 24.97
Subsequent Event
Class of Stock [Line Items]
Common stock repurchases | $	$ 25

[1] Includes one unfulfilled repurchase request consisting of 1,021 shares for approximately $25,000 and an average repurchase price per share of $24.97, which was approved for repurchase as of September 30, 2015 and was completed in October 2015. The accrual for this unfulfilled repurchase request is reflected in the accounts payable and accrued expenses line item in the accompanying unaudited consolidated balance sheets.

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Commitments and Contingencies Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Operating Leases Disclosure

These amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes among other items.

(In thousands)	Future Minimum Base Rental Payments
October 1, 2015 — December 31, 2015	$	8
2016	32
2017	33
2018	34
2019	35
Thereafter	106
	$	248

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following tables reconcile the segment activity to consolidated net loss for the three and nine months ended September 30, 2015.

	Three Months Ended September 30, 2015									Nine Months Ended September 30, 2015
(In thousands)	Medical Office Buildings		Triple-Net Leased Healthcare Facilities		Seniors Housing — Operating Properties		Consolidated			Medical Office Buildings		Triple-Net Leased Healthcare Facilities		Seniors Housing — Operating Properties		Consolidated
Revenues:
Rental income	$	690	$	43	$	292	$	1,025		$	860	$	43	$	292	$	1,195
Operating expense reimbursements	140		—		—		140			173		—		—		173
Resident services and fee income	—		—		19		19			—		—		19		19
Total revenues	830		43		311		1,184			1,033		43		311		1,387
Property operating and maintenance	184		—		198		382			220		—		198		418
Net operating income	$	646	$	43	$	113	802			$	813	$	43	$	113	969
Operating fees to related party							(15		)							(15		)
Acquisition and transaction related							(1,415		)							(1,888		)
General and administrative							(440		)							(975		)
Depreciation and amortization							(464		)							(543		)
Interest expense							(25		)							(25		)
Income tax expense							(4		)							(4		)
Net loss							$	(1,561	)							$	(2,481	)

The following table reconciles the segment activity to consolidated total assets as of the periods presented:

	September 30,		December 31,
(In thousands)	2015		2014
	(Unaudited)
ASSETS
Investments in real estate, net:
Medical office buildings	$	57,464	$	—
Triple-net leased healthcare facilities	4,761		—
Seniors housing — operating properties	11,494		—
Total investments in real estate, net	73,719		—
Cash	48,330		187
Restricted cash	45		—
Receivable for sale of common stock	930		—
Prepaid expenses and other assets	1,420		59
Deferred costs, net	115		—
Total assets	$	124,559	$	246

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Segment Reporting (Reconciliation of Segment Activity to Assets) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Apr. 23, 2014
Segment Reporting Information [Line Items]
Investments in real estate:	$ 73,719	$ 0
Cash	48,330	187	$ 1	$ 0
Restricted cash	45	0
Receivable for sale of common stock	930	0
Prepaid expenses and other assets	1,420	59
Deferred costs, net	115
Total assets	124,559	246
Operating Segments
Segment Reporting Information [Line Items]
Investments in real estate:	73,719	0
Operating Segments | Medical Office Buildings
Segment Reporting Information [Line Items]
Investments in real estate:	57,464	0
Operating Segments | Triple-Net Leased Healthcare Facilities
Segment Reporting Information [Line Items]
Investments in real estate:	4,761	0
Operating Segments | Seniors Housing Communities
Segment Reporting Information [Line Items]
Investments in real estate:	$ 11,494	$ 0

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Related Party Transactions and Arrangements (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares)	5,625,853	11,554
Due to affiliate	$ 314	$ 1,895
American Realty Capital Healthcare III Special Limited Partnership, LLC | Special Limited Partner
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares)	8,888	8,888

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Subsequent Events (Tables)

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Schedule of Subsequent Events

The following table presents certain information about the properties that the Company acquired from October 1, 2015 to November 6, 2015:

	Number of Properties	Rentable Square Feet	Base Purchase Price (1)
			(In thousands)
Portfolio, September 30, 2015	13	273,620	$	72,719
Acquisitions	2	52,663	12,275
Portfolio, November 6, 2015	15	326,283	$	84,994

________________________

(1) Contract purchase price, excluding acquisition fees of $1.3 million and other acquisition related costs.

Total capital raised to date, including shares issued under the DRIP, is as follows:

Source of Capital (In thousands)	Inception to September 30, 2015		October 1, 2015 to October 31, 2015		Total
Common stock	$	138,454	$	17,205	$	155,659

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Organization (Narrative) (Details)		5 Months Ended	8 Months Ended	9 Months Ended	17 Months Ended
	Feb. 11, 2015 USD ($)	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) ft² property state $ / shares shares	Sep. 30, 2015 USD ($) ft² state $ / shares shares	Aug. 20, 2014 USD ($) $ / shares shares
Operations [Line Items]
Common stock, shares authorized (in shares)			300,000,000	300,000,000	300,000,000
Common stock, par value (in usd per share) | $ / shares			$ 0.01	$ 0.01	$ 0.01	$ 0.01
Subscriptions required to break escrow | $	$ 2,000,000.0
Common stock, shares outstanding (in shares)			11,554	5,625,853	5,625,853
Proceeds from issuance of common stock | $		$ 200,000	$ 200,000	$ 136,361,000	$ 138,454,000
Trading days after second year anniversary of the escrow break for determining net asset value price				150 days
Number of properties purchased | property				13
Number of states Company operates in | state				7	7
Area of real estate property | ft²				273,620	273,620
American Realty Capital Healthcare III Advisors, LLC | Advisor
Operations [Line Items]
Limited partners' contributed capital | $				$ 2,020	$ 2,020
Limited partner capital accounts (in shares)				90	90
Common Stock
Operations [Line Items]
Share Price (in usd per share) | $ / shares						$ 25.0
Shares available for issuance under a distribution reinvestment plan (in shares)						26,300,000.0
Common stock, shares outstanding (in shares)			11,554	5,600,000	5,600,000
Common Stock | Minimum
Operations [Line Items]
Share Price, DRIP (in usd per share) | $ / shares				$ 23.75	$ 23.75
Share Price, DRIP, percentage of estimated value of common stock				95.00%	95.00%
IPO
Operations [Line Items]
Common stock, shares authorized (in shares)						125,000,000.0
Stock available for issuance in public offering | $						$ 3,125,000,000.000

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results for the entire year or any subsequent interim period.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of December 31, 2014, and for the period from April 24, 2014 (date of inception) to December 31, 2014, which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 31, 2015. As the Company was formed on April 24, 2014, there are no comparative consolidated statements of operations and comprehensive loss or consolidated statements of cash flows for the nine months ended September 30, 2014. There have been no significant changes to the Company's significant accounting policies during the nine months ended September 30, 2015 other than the updates described below.

Reclassifications

The Company has reclassified $0.1 million from cash flows from operating activities to cash flows from financing activities within the unaudited consolidated statement of cash flows for the period from April 24, 2014 (date of inception) to September 30, 2015 to conform with the current year presentation.

Revenue Recognition

The Company's rental income is primarily related to rent received from tenants in MOBs and other healthcare-related facilities and from residents in seniors housing — operating properties ("SHOP") held using a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA"). Rent from tenants is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease. Because many of the leases provide for rental increases at specified intervals, GAAP requires the Company to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. Rental income from residents in the Company's SHOPs is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. The Company defers the revenue related to lease payments received from tenants and residents in advance of their due dates.

The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company records an increase in the allowance for uncollectible accounts or records a direct write-off of the receivable in the consolidated statements of operations.

Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.

Resident services and fee income relates to ancillary services performed for residents in the Company's SHOPs. Fees for ancillary services are recorded in the period in which the services are performed.

Reportable Segments

The Company has determined that it has three reportable segments, with activities related to investing in MOBs, triple-net leased healthcare facilities, and SHOPs. Management evaluates the operating performance of the Company's investments in real estate and SHOPs on an individual property level.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued revised guidance relating to revenue recognition. Under the revised guidance, an entity is required to recognize revenue when it transfers 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 revised guidance was to become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption was not permitted under GAAP. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. In July 2015, the FASB deferred the effective date of the revised guidance by one year to annual reporting periods beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as of the original effective date. The Company has not yet selected a transition method and is currently evaluating the impact of this new guidance.

In January 2015, the FASB issued updated guidance that eliminates from GAAP the concept of an event or transaction that is unusual in nature and occurs infrequently being treated as an extraordinary item. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Any amendments may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company has elected to adopt this new guidance as of September 30, 2015. The Company has assessed the impact from the adoption of this revised guidance and has determined that there is no impact to its financial position, results of operations and cash flows.

In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are variable interest entities ("VIEs") or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. If the Company decides to early adopt the revised guidance in an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes the interim period. The Company is currently evaluating the impact of this new guidance.

In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendment requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not previously been issued. If the Company decides to early adopt the revised guidance in an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes the interim period. The Company is currently evaluating the impact of this new guidance.

In September 2015, the FASB issued an update that eliminates the requirement to adjust provisional amounts from a business combination and the related impact on earnings by restating prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of measurement period adjustments on current and prior periods, including the prior period impact on depreciation, amortization and other income statement items and their related tax effects, shall be recognized in the period the adjustment amount is determined. The cumulative adjustment would be reflected within the respective financial statement line items affected. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company has elected to adopt this new guidance as of September 30, 2015. The adoption of this guidance had no impact on the Company’s consolidated financial position, results of operations or cash flows.

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Summary of Significant Accounting Policies (Narrative) (Details) $ in Millions	3 Months Ended	9 Months Ended	17 Months Ended
	Sep. 30, 2015 segment	Sep. 30, 2015 segment	Sep. 30, 2015 USD ($)
Accounting Policies [Abstract]
Reclassification adjustment			$ 0.1
Number of reportable segments | segment	3	3

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Mortgage Notes Payable (Mortgage Principal Payments) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Secured Debt	$ 5,108	$ 0
Mortgages
Debt Instrument [Line Items]
October 1, 2015 — December 31, 2015	16
2016	96
2017	100
2018	104
2019	4,792
Thereafter	0
Secured Debt	$ 5,108

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Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2015
Earnings Per Share [Abstract]
Net loss	$ (1,561)	$ (28)	$ (44)	$ (2,481)
Basic and diluted weighted average shares outstanding (in shares)	4,614,153	8,888	7,389	2,291,631
Basic and diluted net loss per share (in usd per share)	$ (0.34)	$ (3.15)	$ (5.95)	$ (1.08)

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CONSOLIDATED BALANCE SHEET - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Real estate investments, at cost:
Land	$ 7,192	$ 0
Buildings and improvements	57,073	0
Acquired intangible lease assets	10,017	0
Total real estate investments, at cost	74,282	0
Less: accumulated depreciation and amortization	(563)	0
Total real estate investments, net	73,719	0
Cash	48,330	187
Restricted cash	45	0
Receivable for sale of common stock	930	0
Prepaid expenses and other assets	1,420	59
Deferred costs, net	115
Total assets	124,559	246
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Mortgage note payable	5,108	0
Mortgage premium, net	166	0
Market lease intangible liabilities, net	1,393	0
Accounts payable and accrued expenses (including $314 and $1,895 due to related parties as of September 30, 2015 and December 31, 2014, respectively)	1,061	2,520
Deferred rent	289	0
Distributions payable	688	0
Total liabilities	8,705	2,520
Preferred stock, $0.01 par value, 50,000,000 authorized, none issued and outstanding	0	0
Common stock, $0.01 par value, 300,000,000 shares authorized, 11,554 shares of common stock issued and outstanding as of September 30, 2014	56	0
Additional paid-in capital	121,115	(2,094)
Accumulated deficit	(5,317)	(180)
Total stockholder's equity (deficit)	115,854	(2,274)
Total liabilities and stockholder's equity (deficit)	$ 124,559	$ 246

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Related Party Transactions and Arrangements (Fees Paid in Connection with the IPO) (Details) $ in Millions	Sep. 30, 2015 USD ($)
Related Party Transaction [Line Items]
Cumulative offering costs	$ 17.3
Dealer Manager
Related Party Transaction [Line Items]
Aggregate costs borne by related party	$ 2.6
Maximum
Related Party Transaction [Line Items]
Liability for offering and related costs from IPO	2.00%
Realty Capital Securities, LLC | Gross Proceeds, Common Stock | Maximum | Dealer Manager
Related Party Transaction [Line Items]
Sales commissions as a percentage of benchmark	7.00%
Option One | Realty Capital Securities, LLC | Gross Proceeds, Common Stock | Maximum | Dealer Manager
Related Party Transaction [Line Items]
Fee earned by related party, percentage of benchmark	3.00%
Option Two | Realty Capital Securities, LLC | Gross Proceeds, Common Stock | Dealer Manager
Related Party Transaction [Line Items]
Fee earned by related party, percentage of benchmark	2.50%
Transaction Fee Upon Consummation of the Sale | Option Two | Gross Proceeds, Common Stock | Maximum | Participating Broker-Dealer
Related Party Transaction [Line Items]
Brokerage fee as a percentage of benchmark	2.50%
Gross Proceeds, Common Stock | Option Two | Gross Proceeds, Common Stock | Maximum | Participating Broker-Dealer
Related Party Transaction [Line Items]
Brokerage fee as a percentage of benchmark	7.50%
Fee Paid at Anniversary of Sale | Option Two | Gross Proceeds, Common Stock | Maximum | Participating Broker-Dealer
Related Party Transaction [Line Items]
Brokerage fee as a percentage of benchmark	1.00%
Cumulative Offering Costs | Dealer Manager
Related Party Transaction [Line Items]
Maximum cumulative offering costs for IPO	15.00%

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	5 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2015
Cash flows from operating activities:
Net loss	$ (44)	$ (2,481)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	0	543
Amortization of deferred financing costs	0	4
Amortization of mortgage premium	0	(6)
Amortization of market lease intangibles	0	(5)
Equity-based compensation	1	12
Changes in assets and liabilities:
Prepaid expenses and other assets	0	(486)
Accounts payable and accrued expenses	25	508
Deferred rent and other liabilities	0	289
Restricted cash	0	(45)
Net cash used in operating activities	(18)	(1,667)
Cash flows from investing activities:
Investments in real estate and other assets	0	(67,557)
Deposits paid for real estate acquisitions	0	(875)
Net cash used in investing activities	0	(68,432)
Cash flows from financing activities:
Payments of mortgage note payable	0	(16)
Payments of deferred financing costs	0	(119)
Proceeds from issuance of common stock	200	136,361
Payments of offering costs and fees related to common stock issuances	(994)	(15,795)
Distributions paid	0	(979)
Advances from affiliate	813	(1,210)
Net cash used by financing activities	19	118,242
Net change in cash	1	48,143
Cash, beginning of period	0	187
Cash, end of period	1	48,330
Supplemental disclosure of cash flow information:
Cash paid for interest	0	27
Supplemental disclosures of cash flow information:
Receivable for sale of common stock	0	930
Payable and accrued offering costs	781	436
Unfulfilled repurchase requests included in accounts payable, accrued expenses and other liabilities	0	25
Assumption of mortgage note payable used to acquire investment in real estate	0	5,124
Premium on assumed mortgage note payable	0	172
Liabilities assumed in real estate acquisitions	0	11
Common stock issued through distribution reinvestment plan	$ 0	$ 989

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Subsequent Events (Sale of Common Stock) (Details) - USD ($) $ in Thousands	1 Months Ended	5 Months Ended	6 Months Ended	8 Months Ended	9 Months Ended	17 Months Ended
	Oct. 31, 2015	Sep. 30, 2014	Oct. 31, 2015	Dec. 31, 2014	Sep. 30, 2015	Sep. 30, 2015
Subsequent Event [Line Items]
Common stock, shares outstanding (in shares)				11,554	5,625,853	5,625,853
Proceeds from issuance of common stock		$ 200		$ 200	$ 136,361	$ 138,454
Subsequent Event
Subsequent Event [Line Items]
Common stock, shares outstanding (in shares)	6,300,000		6,300,000
Proceeds from issuance of common stock	$ 17,205		$ 155,659

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Real Estate Investments (Pro Forma Information) (Details) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended		5 Months Ended	9 Months Ended
		Nov. 06, 2015 property	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2014 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) property $ / shares shares
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Pro forma revenues	[1],[2]				$ 3,846	$ 6,562
Pro forma net loss	[1],[2]				$ (1,156)	$ 334
Basic weighted average shares outstanding (in shares) | shares					7,389	2,291,631
Basic pro forma net income (loss) per share (in usd per share) | $ / shares					$ (156.45)	$ 0.15
Diluted weighted average shares outstanding (in shares) | shares					7,389	2,295,078
Diluted pro forma net income (loss) per share (in usd per share) | $ / shares					$ (156.45)	$ 0.10
Total revenues			$ 1,184	$ 0	$ 0	$ 1,387
Net loss					$ (44)	$ (2,481)
Number of properties purchased | property						13
2015 Acquisitions
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Total revenues						$ 1,400
Net loss						$ 400
Subsequent Event
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Number of properties purchased | property		2

[1] During the period from October 1, 2015 to November 6, 2015, the Company completed its acquisition of two properties. As of the date that these unaudited consolidated financial statements were available to be issued, the Company was still reviewing the financial information of these properties and, as such, it was impractical to include in these unaudited consolidated financial statements the pro forma effect of these acquisitions (see Note 13 — Subsequent Events).

[2] For the nine months ended September 30, 2015, aggregate revenues and net income derived from the Company's 2015 acquisitions (for the Company's period of ownership) were $1.4 million and $0.4 million, respectively.

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Mortgage Notes Payable (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The following table reflects the Company's mortgage note payable as of September 30, 2015. The Company had no mortgage notes payable as of December 31, 2014.

	Encumbered Properties	Outstanding Loan Amount as of		Effective Interest Rate		Interest Rate
Portfolio		September 30, 2015					Maturity
		(In thousands)
Philip Professional Center — Lawrenceville, GA	2	$	5,108	4.0	%	Fixed	Oct. 2019

Schedule of Maturities of Long-term Debt

The following table summarizes the scheduled aggregate principal payments on the Company's mortgage note payable for the five years subsequent to September 30, 2015:

(In thousands)	Future Principal Payments
October 1, 2015 — December 31, 2015	$	16
2016	96
2017	100
2018	104
2019	4,792
Thereafter	—
	$	5,108

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Real Estate Investments (Future Minimum Payments) (Details) $ in Thousands	Sep. 30, 2015 USD ($)
Real Estate Investments, Net [Abstract]
October 1, 2015 — December 31, 2015	$ 1,183
2016	4,760
2017	4,833
2018	4,905
2019	4,748
Thereafter	23,375
Total	$ 43,804

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Common Stock Common Stock (Tables)

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Class of Treasury Stock

The following table reflects the number of shares repurchased cumulatively through September 30, 2015:

	Number of Requests	Number of Shares Repurchased	Average Price per Share
Cumulative repurchases as of December 31, 2014	—	—	$	—
Nine Months Ended September 31, 2015(1)	1	1,021	24.97
Cumulative repurchases as of September 31, 2015(1)	1	1,021	$	24.97

_______________

(1) Includes one unfulfilled repurchase request consisting of 1,021 shares for approximately $25,000 and an average repurchase price per share of $24.97, which was approved for repurchase as of September 30, 2015 and was completed in October 2015. The accrual for this unfulfilled repurchase request is reflected in the accounts payable and accrued expenses line item in the accompanying unaudited consolidated balance sheets.

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Organization

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

American Realty Capital Healthcare Trust III, Inc. (including, as required by context, American Realty Capital Healthcare III Operating Partnership, L.P., and its subsidiaries, the "Company") was incorporated on April 24, 2014 as a Maryland corporation that intends to elect and qualify to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") beginning with its taxable year ending December 31, 2015. On August 20, 2014, the Company commenced its ongoing initial public offering (the "IPO") on a "reasonable best efforts" basis of up to 125.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $3.1 billion, pursuant to a registration statement on Form S-11 (File No. 333-196302) (as amended, the "Registration Statement"), filed with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended. The Registration Statement also covers up to 26.3 million shares of common stock available pursuant to a distribution reinvestment plan (the "DRIP") under which common stockholders may elect to have their distributions reinvested in additional shares of common stock.

On February 11, 2015, the Company received and accepted aggregate subscriptions in excess of the minimum offering amount for the IPO of $2.0 million in shares of common stock, broke general escrow and issued shares to its initial investors, who were admitted as stockholders of the Company. As of September 30, 2015, the Company had 5.6 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO of $138.5 million. Until the net asset value ("NAV") pricing date (as described below), the per share purchase price in the IPO will be up to $25.00 per share (including the maximum allowed to be charged for commissions and fees) and the purchase price for shares issued under the DRIP will be equal to $23.75 per share, which is equal to 95% of the offering price in the IPO. Beginning with the NAV pricing date, the per share price for shares in the IPO and under the DRIP will vary quarterly and will be equal to the Company’s per share NAV as determined by American Realty Capital Healthcare III Advisors, LLC (the “Advisor”), plus applicable commissions and fees, in the case of the IPO, and the per share purchase price in the DRIP will be equal to the NAV per share. The Company reserves the right to reallocate shares covered in the Registration Statement between the IPO and the DRIP. The NAV pricing date means the date that the Company first publishes an estimated per share NAV, which will be on or prior to July 11, 2017, which is 150 days following the second anniversary of the date that the Company broke escrow in the IPO.

The Company was formed to primarily acquire a diversified portfolio of healthcare-related assets including medical office buildings ("MOB"), seniors housing communities and other healthcare-related facilities for investment purposes. All such properties may be acquired and operated by the Company alone or jointly with another party. The Company may also originate or acquire first mortgage loans secured by real estate. The Company purchased its first property and commenced real estate operations in March 2015. As of September 30, 2015, the Company owned 13 properties located in 7 states and comprised of 273,620 rentable square feet.

Substantially all of the Company's business is conducted through American Realty Capital Healthcare III Operating Partnership, L.P. (the "OP"), a Delaware limited partnership. The Company is the sole general partner and holds substantially all of the units of limited partner interests in the OP ("OP Units"). Additionally, the Advisor contributed $2,020 to the OP in exchange for 90 OP Units, which represents a nominal percentage of the aggregate OP ownership. A holder of limited partner interests has the right to convert OP Units for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, as allowed by the limited partnership agreement of the OP. The remaining rights of the holders of limited partner interests in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.

The Company has no direct employees. The Advisor has been retained to manage the Company's affairs on a day-to-day basis. The Company also has retained American Realty Capital Healthcare III Properties, LLC (the "Property Manager") to serve as the Company's property manager. Realty Capital Securities, LLC (the "Dealer Manager") serves as the dealer manager of the IPO. The Advisor, the Property Manager and the Dealer Manager are under common control with AR Capital, LLC ("ARC"), the parent of the Company's sponsor, American Realty Capital VII, LLC (the "Sponsor"), as a result of which they are related parties, and each will receive compensation, fees and other expense reimbursements from the Company for services related to the IPO and the investment and management of the Company's assets. The Advisor, Property Manager and Dealer Manager will receive fees during the Company's offering, acquisition, operational and liquidation stages.

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CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Due to affiliates	$ 314	$ 1,895
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	5,625,853	11,554
Common stock, shares outstanding (in shares)	5,625,853	11,554

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Segment Reporting

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

During the three and nine months ended September 30, 2015, the Company operated in three reportable business segments for management and internal financial reporting purposes: medical office buildings, triple-net leased healthcare facilities and seniors housing — operating properties. During the three months ended September 30, 2014 and the period from April 24, 2014 (date of inception) to September 30, 2014, the Company did not own any properties and had not commenced real estate operations.

These operating segments are the segments of the Company for which separate financial information is available and for which segment results are evaluated by the Company's executive officers in deciding how to allocate resources and in assessing performance. The medical office building segment primarily consists of MOBs leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses. The triple-net leased healthcare facilities segment primarily consists of investments in seniors housing communities, hospitals, inpatient rehabilitation facilities and skilled nursing facilities under long-term leases, under which tenants are generally responsible to directly pay property-related expenses. The SHOP segment consists of direct investments in seniors housing communities, primarily providing assisted living, independent living and memory care services, which the Company operates through engaging independent third-party managers. The Company evaluates performance of the combined properties in each segment based on net operating income. Net operating income is defined as total revenues less property operating and maintenance expenses. There are no intersegment sales or transfers. The Company uses net operating income to evaluate the operating performance of real estate investments and to make decisions concerning the operation of the properties. The Company believes that net operating income is useful to investors in understanding the value of income-producing real estate. Net income (loss) is the GAAP measure that is most directly comparable to net operating income; however, net operating income should not be considered as an alternative to net income as the primary indicator of operating performance as it excludes certain items such as operating fees to the Advisor and Property Manager, acquisition and transaction related expenses, general and administrative expenses, depreciation and amortization expense, interest expense and income tax expense. Additionally, net operating income as defined by the Company may not be comparable to net operating income as defined by other REITs or companies.

The following tables reconcile the segment activity to consolidated net loss for the three and nine months ended September 30, 2015.

	Three Months Ended September 30, 2015									Nine Months Ended September 30, 2015
(In thousands)	Medical Office Buildings		Triple-Net Leased Healthcare Facilities		Seniors Housing — Operating Properties		Consolidated			Medical Office Buildings		Triple-Net Leased Healthcare Facilities		Seniors Housing — Operating Properties		Consolidated
Revenues:
Rental income	$	690	$	43	$	292	$	1,025		$	860	$	43	$	292	$	1,195
Operating expense reimbursements	140		—		—		140			173		—		—		173
Resident services and fee income	—		—		19		19			—		—		19		19
Total revenues	830		43		311		1,184			1,033		43		311		1,387
Property operating and maintenance	184		—		198		382			220		—		198		418
Net operating income	$	646	$	43	$	113	802			$	813	$	43	$	113	969
Operating fees to related party							(15		)							(15		)
Acquisition and transaction related							(1,415		)							(1,888		)
General and administrative							(440		)							(975		)
Depreciation and amortization							(464		)							(543		)
Interest expense							(25		)							(25		)
Income tax expense							(4		)							(4		)
Net loss							$	(1,561	)							$	(2,481	)

The following table reconciles the segment activity to consolidated total assets as of the periods presented:

	September 30,		December 31,
(In thousands)	2015		2014
	(Unaudited)
ASSETS
Investments in real estate, net:
Medical office buildings	$	57,464	$	—
Triple-net leased healthcare facilities	4,761		—
Seniors housing — operating properties	11,494		—
Total investments in real estate, net	73,719		—
Cash	48,330		187
Restricted cash	45		—
Receivable for sale of common stock	930		—
Prepaid expenses and other assets	1,420		59
Deferred costs, net	115		—
Total assets	$	124,559	$	246

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 31, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC.
Entity Central Index Key	0001609234
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		6,322,180

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company has entered into an operating lease agreement related to a certain acquisition under a leasehold interest arrangement. The following table reflects the minimum base cash rental payments due from the Company over the next five years and thereafter under this arrangement. These amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes among other items.

(In thousands)	Future Minimum Base Rental Payments
October 1, 2015 — December 31, 2015	$	8
2016	32
2017	33
2018	34
2019	35
Thereafter	106
	$	248

Total rental expense from the Company's operating lease was approximately $6,000 during the three and nine months ended September 30, 2015. The Company did not own any real estate investments and therefore had no operating lease agreements or related expense during the the three months ended September 30, 2014 or for the period from April 24, 2014 (date of inception) to September 30, 2014.

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2015
Revenues:
Rental income	$ 1,025	$ 0	$ 0	$ 1,195
Operating expense reimbursements	140	0	0	173
Resident services and fee income	19	0	0	19
Revenues	1,184	0	0	1,387
Expenses:
Property operating and maintenance	382	0	0	418
Operating fees to related party	15	0	0	15
Acquisition and transaction related	1,415	0	0	1,888
General and administrative	440	28	44	975
Depreciation and amortization	464	0	0	543
Total expenses	2,716	28	44	3,839
Operating loss	(1,532)	(28)	(44)	(2,452)
Interest expense	(25)	0	0	(25)
Total other expense	(25)	0	0	(25)
Loss before income taxes	(1,557)	(28)	(44)	(2,477)
Income tax expense	(4)	0	0	(4)
Net loss	(1,561)	(28)	(44)	(2,481)
Comprehensive loss	$ (1,561)	$ (28)	$ (44)	$ (2,481)
Basic and diluted weighted average shares outstanding (in shares)	4,614,153	8,888	7,389	2,291,631
Basic and diluted net loss per share (in usd per share)	$ (0.34)	$ (3.15)	$ (5.95)	$ (1.08)
Distributions declared per share (in usd per share)	$ 0.39			$ 0.86

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Common Stock

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Common Stock

Common Stock

The Company had 5.6 million and 11,554 shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds of $138.5 million and $0.2 million as of September 30, 2015 and December 31, 2014, respectively.

On January 29, 2015, the Company's board of directors authorized, and the Company declared, distributions payable to stockholders of record each day during the applicable period at a rate equal to $0.0042808219 per day. Distributions began to accrue on March 15, 2015. Distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.

Share Repurchase Program

The Company's board of directors has adopted a Share Repurchase Program (“SRP”) that enables stockholders to sell their shares to the Company in limited circumstances. The SRP permits investors to sell their shares back to the Company after they have held them for at least one year, subject to significant conditions and limitations described below.

Prior to the time that the Company’s shares are listed on a national securities exchange and until the Company begins to calculate NAV, the repurchase price per share will depend on the length of time investors have held such shares as follows: after one year from the purchase date — the lower of $23.13 or 92.5% of the amount they actually paid for each share, and after two years from the purchase date — the lower of $23.75 or 95% of the amount they actually paid for each share (in each case, as adjusted for any stock distributions, combinations, splits and recapitalizations).

Once the Company begins to calculate NAV, the price per share that the Company will pay to repurchase the Company’s shares will be the Company's NAV per share of common stock for the quarter. Subject to limited exceptions, stockholders who redeem their shares of the Company's common stock within the first four months from the date of purchase will be subject to a short-term trading fee of 2% of the aggregate NAV per share of the shares of common stock received. Because the Company's NAV per share will be calculated quarterly, the repurchase price may fluctuate between the redemption request day and the date on which the Company pays redemption proceeds.

The Company is only authorized to repurchase shares pursuant to the SRP using the proceeds received from the DRIP and will limit the amount spent to repurchase shares in a given quarter to the amount of proceeds received from the DRIP in that same quarter. In addition, the board of directors may reject a request for redemption at any time. Due to these limitations, the Company cannot guarantee that it will be able to accommodate all repurchase requests. Purchases under the SRP by the Company will be limited in any calendar year to 5% of the weighted average number of shares outstanding on December 31 of the previous calendar year.

When a stockholder requests a repurchase and the repurchase is approved, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation. Shares purchased under the SRP will have the status of authorized but unissued shares. The following table reflects the number of shares repurchased cumulatively through September 30, 2015:

	Number of Requests	Number of Shares Repurchased	Average Price per Share
Cumulative repurchases as of December 31, 2014	—	—	$	—
Nine Months Ended September 31, 2015(1)	1	1,021	24.97
Cumulative repurchases as of September 31, 2015(1)	1	1,021	$	24.97

_______________

(1) Includes one unfulfilled repurchase request consisting of 1,021 shares for approximately $25,000 and an average repurchase price per share of $24.97, which was approved for repurchase as of September 30, 2015 and was completed in October 2015. The accrual for this unfulfilled repurchase request is reflected in the accounts payable and accrued expenses line item in the accompanying unaudited consolidated balance sheets.

The SRP will immediately terminate if the Company's shares are listed on any national securities exchange. In addition, our board of directors may amend, suspend (in whole or in part) or terminate the SRP at any time upon 30 days’ prior written notice to our stockholders.

Distribution Reinvestment Plan

Pursuant to the DRIP, stockholders may elect to reinvest distributions by purchasing shares of common stock in lieu of receiving cash. No dealer manager fees or selling commissions are paid with respect to shares purchased under the DRIP. Participants purchasing shares pursuant to the DRIP have the same rights and are treated in the same manner as if such shares were issued pursuant to the IPO. The board of directors may designate that certain cash or other distributions be excluded from reinvestment pursuant to the DRIP. The Company has the right to amend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants. Shares issued under the DRIP are recorded to equity in the accompanying unaudited consolidated balance sheets in the period distributions are declared. During the nine months ended September 30, 2015, the Company issued 41,656 shares of common stock pursuant to the DRIP, with a value of $1.0 million and a par value of $0.01 per share.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 — Unobservable inputs that reflect the entity's own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, receivable for sale of common stock, prepaid expenses and other assets, accounts payable and accrued expenses, deferred rent and distributions payable approximates their carrying value on the unaudited consolidated balance sheets due to their short-term nature. The fair value of the Company's remaining financial instrument that is not reported at fair value on the unaudited consolidated balance sheet is reported below:

		Carrying Amount(1) at		Fair Value at
(In thousands)	Level	September 30, 2015		September 30, 2015
Mortgage note payable and premium, net	3	$	5,274	$	5,321

_______________

(1) Carrying value includes mortgage note payable of $5.1 million and mortgage premium, net of $0.2 million as of September 30, 2015.

The fair value of the mortgage note payable is estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of borrowing arrangements.

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

The fair value of the Company's remaining financial instrument that is not reported at fair value on the unaudited consolidated balance sheet is reported below:

		Carrying Amount(1) at		Fair Value at
(In thousands)	Level	September 30, 2015		September 30, 2015
Mortgage note payable and premium, net	3	$	5,274	$	5,321

_______________

(1) Carrying value includes mortgage note payable of $5.1 million and mortgage premium, net of $0.2 million as of September 30, 2015.

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Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for the following transactions:

Sales of Common Stock

As of October 31, 2015, the Company had 6.3 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, from total gross proceeds from the IPO and the DRIP of $155.7 million.

Total capital raised to date, including shares issued under the DRIP, is as follows:

Source of Capital (In thousands)	Inception to September 30, 2015		October 1, 2015 to October 31, 2015		Total
Common stock	$	138,454	$	17,205	$	155,659

Acquisitions

The following table presents certain information about the properties that the Company acquired from October 1, 2015 to November 6, 2015:

	Number of Properties	Rentable Square Feet	Base Purchase Price (1)
			(In thousands)
Portfolio, September 30, 2015	13	273,620	$	72,719
Acquisitions	2	52,663	12,275
Portfolio, November 6, 2015	15	326,283	$	84,994

________________________

(1) Contract purchase price, excluding acquisition fees of $1.3 million and other acquisition related costs.

Sponsor Transaction

On November 9, 2015, ARC advised the Company that ARC and Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, “Apollo”) have mutually agreed to terminate an agreement, dated as of August 6, 2015, pursuant to which Apollo would have purchased a controlling interest in a newly formed company that would have owned a majority of the ongoing asset management business of AR Capital, including the Advisor and the Property Manager.  The termination has no effect on the Company’s current management team.

Also on November 9, 2015, RCS Capital Corporation (“RCS Capital”), the parent of the Dealer Manager and a company under common control with ARC, and Apollo announced that they have mutually agreed to amend an agreement, dated as of August 6, 2015, pursuant to which RCS Capital will sell its wholesale distribution business, including the Dealer Manager, to an affiliate of Apollo. This transaction is subject to customary closing conditions and regulatory approvals and is expected to close early in the first quarter of 2016. American National Stock Transfer, LLC and RCS Advisory Services, LLC will remain as subsidiaries of RCS Capital.

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Equity-Based Compensation

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation

Equity-Based Compensation

Restricted Share Plan

The Company has an employee and director incentive restricted share plan (the "RSP"), which provides for the automatic grant of 1,333 restricted shares of common stock to each of the independent directors, without any further action by the Company's board of directors or the stockholders, after initial election to the board of directors and after each annual stockholder's meeting, with such shares vesting annually beginning with the one year anniversary of initial election to the board of directors and the date of the next annual meeting, respectively. Restricted shares issued to independent directors will vest over a five-year period in increments of 20.0% per annum. The RSP provides the Company with the ability to grant awards of restricted shares to the Company's directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company. The total number of common shares granted under the RSP may not exceed 5.0% of the Company's outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 6.3 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).

Restricted share awards entitle the recipient to receive common shares from the Company under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives. Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient's employment or other relationship with the Company. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in common shares shall be subject to the same restrictions as the underlying restricted shares. The following table reflects restricted share award activity for the period presented:

	Number of Common Shares	Weighted-Average Issue Price
Unvested December 31, 2014	2,666	$	22.50
Granted	2,666	22.50
Vested	—	—
Forfeitures	—	—
Unvested, September 30, 2015	5,332	$	22.50

As of September 30, 2015, the Company had $0.1 million of unrecognized compensation cost related to unvested restricted share award grants under the Company's RSP. That cost is expected to be recognized over a weighted average period of 3.8 years. The fair value of the restricted shares is being expensed on a straight-line basis over the service period of five years. Compensation expense related to restricted shares was approximately $6,000 and $12,000 for the three and nine months ended September 30, 2015, respectively. Compensation expense related to restricted shares was approximately $1,000 for the three months ended September 30, 2014 and the period from April 24, 2014 (date of inception) to September 30, 2014. Compensation expense related to restricted shares is recorded as general and administrative expense in the accompanying unaudited consolidated statements of operations and comprehensive loss.

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Subsequent Events (Acquisitions) (Details) $ in Thousands		1 Months Ended	3 Months Ended		5 Months Ended	9 Months Ended
		Nov. 06, 2015 USD ($) ft² property	Sep. 30, 2015 USD ($) ft² property	Sep. 30, 2014 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) ft² property
Property Acquisition [Roll Forward]
Number of properties, beginning balance | property		13
Rentable square feet, beginning balance | ft²		273,620
Base purchase price, beginning balance	[1]	$ 72,719
Number of properties acquired | property						13
Number of properties, Ending balance | property			13			13
Rentable square feet, ending balance | ft²			273,620			273,620
Base purchase price, ending balance	[1]		$ 72,719			$ 72,719
Incurred
Property Acquisition [Roll Forward]
One-time fees and reimbursements:			1,274	$ 0	$ 0	1,785
Nonrecurring Fees | Incurred | Acquisition fees
Property Acquisition [Roll Forward]
One-time fees and reimbursements:			$ 855	$ 0	$ 0	$ 1,091
Subsequent Event
Property Acquisition [Roll Forward]
Number of properties acquired | property		2
Rentable square feet acquired | ft²		52,663
Base purchase price acquired	[1]	$ 12,275
Number of properties, Ending balance | property		15
Rentable square feet, ending balance | ft²		326,283
Base purchase price, ending balance	[1]	$ 84,994
Subsequent Event | Nonrecurring Fees | Incurred | Acquisition fees
Property Acquisition [Roll Forward]
One-time fees and reimbursements:		$ 1,300

[1] Contract purchase price, excluding acquisition fees of $1.3 million and other acquisition related costs.Sponsor TransactionOn November 9, 2015, ARC advised the Company that ARC and Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, “Apollo”) have mutually agreed to terminate an agreement, dated as of August 6, 2015, pursuant to which Apollo would have purchased a controlling interest in a newly formed company that would have owned a majority of the ongoing asset management business of AR Capital, including the Advisor and the Property Manager. The termination has no effect on the Company’s current management team.Also on November 9, 2015, RCS Capital Corporation (“RCS Capital”), the parent of the Dealer Manager and a company under common control with ARC, and Apollo announced that they have mutually agreed to amend an agreement, dated as of August 6, 2015, pursuant to which RCS Capital will sell its wholesale distribution business, including the Dealer Manager, to an affiliate of Apollo. This transaction is subject to customary closing conditions and regulatory approvals and is expected to close early in the first quarter of 2016. American National Stock Transfer, LLC and RCS Advisory Services, LLC will remain as subsidiaries of RCS Capital.

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Related Party Transactions and Arrangements

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions and Arrangements

Related Party Transactions and Arrangements

As of September 30, 2015 and December 31, 2014, American Realty Capital Healthcare III Special Limited Partnership, LLC (the "Special Limited Partner"), an entity controlled by the Sponsor, owned 8,888 shares of the Company's outstanding common stock. The Advisor and its affiliates may incur and pay costs and fees on behalf of the Company. As of September 30, 2015 and December 31, 2014, the Company had $0.3 million and $1.9 million, respectively, payable to related parties.

Fees Paid in Connection with the IPO

The Dealer Manager is paid fees and compensation in connection with the sale of the Company's common stock in the IPO. The Dealer Manager is paid a selling commission of up to 7.0% of the per share purchase price of the IPO proceeds before reallowance of commissions earned by participating broker-dealers. In addition, the Dealer Manager receives up to 3.0% of the gross proceeds from the sale of shares, before reallowance to participating broker-dealers, as a dealer manager fee. The Dealer Manager may reallow its dealer manager fee to such participating broker-dealers. A participating broker dealer may elect to receive a fee equal to 7.5% of the gross proceeds from the sale of shares (not including selling commissions and dealer manager fees) by such participating broker dealer, with 2.5% thereof paid at the time of such sale and 1.0% thereof paid on each anniversary of the closing of such sale up to and including the fifth anniversary of the closing of such sale. If this option is elected, the dealer manager fee will be reduced to 2.5% of gross proceeds (not including selling commissions and dealer manager fees). The following table details total selling commissions and dealer manager fees incurred from and due to the Dealer Manager as of and for the periods presented:

	Three Months Ended September 30,				Nine Months Ended		For the Period from April 24, 2014 (date of inception) to		Payable as of
(In thousands)	2015		2014		September 30, 2015		September 30, 2014		September 30, 2015		December 31, 2014
Total commissions and fees incurred from and due to the Dealer Manager	$	4,663	$	—	$	11,942	$	—	$	81	$	—

The Advisor and its affiliates receive compensation and reimbursement for services relating to the IPO, including transfer agent services provided by an affiliate of the Dealer Manager. All offering costs incurred by the Company and the Advisor or its affiliates on behalf of the Company are charged to additional paid-in capital on the accompanying unaudited consolidated balance sheet as of September 30, 2015. The following table details reimbursable offering costs incurred from and due to the Advisor and Dealer Manager as of and for the periods presented:

	Three Months Ended September 30,				Nine Months Ended		For the Period from April 24, 2014 (date of inception) to		Payable as of
(In thousands)	2015		2014		September 30, 2015		September 30, 2014		September 30, 2015		December 31, 2014
Fees and expense reimbursements incurred from and due to the Advisor	$	721	$	43	$	782	$	43	$	42	$	66
Fees and expense reimbursements incurred from and due to the Dealer Manager	422		233		1,239		237		164		619
Fees and expense reimbursements incurred from and due to the Sponsor	7		—		7		—		—		—
Total fees and expense reimbursements incurred from and due to the Advisor and Dealer Manager	$	1,150	$	276	$	2,028	$	280	$	206	$	685

The Company is responsible for offering and related costs from the IPO, excluding selling commissions and dealer manager fees, up to a maximum of 2.0% of gross proceeds received from the IPO, measured at the end of the IPO. Offering costs, excluding selling commissions and dealer manager fees, in excess of the 2.0% cap as of the end of the IPO are the Advisor's responsibility. As of September 30, 2015, offering and related costs, excluding commissions and dealer manager fees, exceeded 2.0% of gross proceeds received from the IPO by $2.6 million.

After the general escrow break, the Advisor caps cumulative offering costs for the IPO, including selling commissions and dealer manager fees, incurred by the Company, net of unpaid amounts, to 15.0% of gross common stock proceeds during the offering period of the IPO. As of September 30, 2015, cumulative offering costs were $17.3 million. As of September 30, 2015, cumulative offering costs, net of unpaid amounts, were less than 15.0% of gross common stock proceeds.

Fees and Participations Paid in Connection With the Operations of the Company

The Advisor receives an acquisition fee of 1.5% of the contract purchase price of each property acquired and 1.5% of the amount advanced for a loan or other investment. The Advisor is also reimbursed for services provided for which it incurs investment-related expense, or insourced expenses. Such insourced expenses may not exceed 0.5% of the contract purchase price of each acquired property and 0.5% of the amount advanced for a loan or other investment. Additionally, the Company reimburses the Advisor for third party acquisition expenses. The Company also reimburses the Advisor for legal expenses it or its affiliates incur in connection with the selection, evaluation and acquisition of assets, in an amount not to exceed 0.1% of the contract purchase price of each property or 0.1% of the amount advanced for each loan or other investment. Once the proceeds from the IPO have been fully invested, the aggregate amount of acquisition fees and any financing coordination fees (as described below) may not exceed 2.0% of the contract purchase price and the amount advanced for a loan or other investment for all the assets acquired. In no event will the total of all acquisition fees, acquisition expenses and any financing coordination fees payable with respect to a particular investment exceed 4.5% of the contract purchase price of the Company's portfolio to be measured at the close of the acquisition phase or 4.5% of the amount advanced for all loans or other investments.

If the Advisor provides services in connection with the origination or refinancing of any debt that the Company obtains and uses to acquire properties or to make other permitted investments, or that is assumed, directly or indirectly, in connection with the acquisition of properties, the Company will pay the Advisor a financing coordination fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations.

For its asset management services, the Company pays the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the board of directors) to the Advisor performance-based restricted, forfeitable partnership units of the OP designated as "Class B Units." The Class B Units are intended to be profit interests and will vest, and no longer be subject to forfeiture, at such time as any one of the following events occur: (1) the termination of the advisory agreement by an affirmative vote of a majority of the Company's independent directors without cause; (2) a listing of the Company's common stock on a national securities exchange; or (3) a transaction to which the Company or the OP is a party, as a result of which OP Units or the Company's common stock are or will be exchanged for or converted into the right, or the holders of such securities will otherwise be entitled, to receive cash, securities or other property or any combination thereof; provided that the Advisor, pursuant to the advisory agreement, is providing services to the Company immediately prior to the occurrence of an event of the type described therein (the "performance condition"). Such Class B Units will be forfeited immediately if the advisory agreement is terminated for any reason other than a termination without cause.

When and if approved by the board of directors, the Class B Units are expected to be issued to the Advisor quarterly in arrears pursuant to the terms of the limited partnership agreement of the OP. The number of Class B Units issued in any quarter is an amount equal to: (i) the excess of (A) the product of (y) 0.1875% multiplied by (z) the cost of the Company's assets (until the NAV pricing date, then the lower of the cost of assets and the fair value of the Company’s assets) over (B) any amounts payable as an oversight fee (as described below) for such calendar quarter; divided by (ii) the value of one share of common stock as of the last day of such calendar quarter, which is equal initially to $22.50 (the IPO price minus the selling commissions and dealer manager fees). The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the performance condition to be probable. The Advisor will receive distributions on unvested Class B Units equal to the distribution received on the Company's common stock. Such distributions on issued Class B Units will be expensed in the consolidated statements of operations and comprehensive loss until the performance condition is considered probable to occur. As of September 30, 2015, the Company's board of directors had approved the issuance of 1,457 Class B Units to the Advisor in connection with this arrangement.

Unless the Company contracts with a third party, the Company will pay the Property Manager a property management fee of 1.5% of gross revenues from the Company's single-tenant net leased properties and 2.5% of gross revenues from all other types of properties. The Company will also reimburse the Property Manager for property level expenses. If the Company contracts directly with third parties for such services, the Company will pay them customary market fees and will pay the Property Manager an oversight fee of up to 1.0% of the gross revenues of the property managed. In no event will the Company pay the Property Manager or any affiliates of the Property Manager both a property management fee and an oversight fee with respect to any particular property. Property management fees are recorded to operating fees to related party in the accompanying unaudited consolidated statements of operations and comprehensive loss.

The Dealer Manager and its affiliates also provide other general professional services. The Advisor pays general and administrative expenses on behalf of the Company, for which, the Company subsequently reimburses the Advisor. These fees and reimbursements are included in general and administrative expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss.

The following table details amounts incurred, forgiven and payable in connection with the Company's operations-related services described above as of and for the period presented.

	Three Months Ended September 30,								Nine Months Ended				For the Period from April 24, 2014 (date of inception) to
	2015				2014				September 30, 2015				September 30, 2014				Payable as of
(In thousands)	Incurred		Forgiven		Incurred		Forgiven		Incurred		Forgiven		Incurred		Forgiven		September 30, 2015		December 31, 2014
One-time fees and reimbursements:
Acquisition fees	$	855	$	—	$	—	$	—	$	1,091	$	—	$	—	$	—	$	—	$	—
Acquisition cost reimbursements	285		—		—		—		364		—		—		—		—		—
Financing coordination fees	38		—		—		—		38		—		—		—		—		—
Ongoing fees and reimbursements:
Property management fees	15		—		—		—		15		3		—		—		15		—
Professional fees and reimbursements	81		—		—		—		277		—		—		—		12		—
Total related party operating fees and reimbursements	$	1,274	$	—	$	—	$	—	$	1,785	$	3	$	—	$	—	$	27	$	—

The Company reimburses the Advisor's costs of providing administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company's operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairments or other similar non-cash expenses and excluding any gain from the sale of assets for that period (the "2%/25% Limitation"), unless the Company's independent directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, in which case the excess amount may be reimbursed to the Advisor in subsequent periods. Additionally, the Company will reimburse the Advisor for personnel costs in connection with other services during the operational stage; however, the Company may not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives acquisition fees or real estate commissions or for persons serving as executive officers of the Company. No reimbursement was incurred from the Advisor for providing such services during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or during the period from April 24, 2014 (date of inception) to September 30, 2014. For the four preceding fiscal quarters, the Company's operating expenses exceeded the 2%/25% Limitation by $0.8 million. The Company's board of directors concluded that the expenses in excess of the 2%/25% Limitation were due to unusual and non-recurring factors caused by the Company's limited operating history and were, therefore, justified. No reimbursement of operating expenses in excess of the 2%/25% Limitation was made by the Advisor to the Company during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

In order to improve operating cash flows and the ability to pay distributions from operating cash flows, the Advisor may elect to waive certain fees. If the Advisor waives certain fees, cash flow from operations that would have been paid to the Advisor may be available to pay distributions to stockholders. The fees that may be forgiven are not deferrals and accordingly, will not be paid to the Advisor in cash. In certain instances, to improve the Company's working capital, the Advisor may elect to absorb a portion of the Company's general and administrative costs. No expenses were absorbed by the Advisor during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

Fees and Participations Paid in Connection with a Listing or the Liquidation of the Company's Real Estate Assets

The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of the Company's total return to stockholders, payable annually in arrears, such that for any year in which the Company's total return on stockholder's capital exceeds 6.0% per annum, the Advisor will be entitled to 15.0% of the excess total return but not to exceed 10.0% of the aggregate total return for such year. This fee will be payable only upon the sale of assets, distributions or other event which results in the return on stockholder's capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

The Company will pay the Advisor a real estate commission on the sale of property, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third party broker is also involved; provided, however, that in no event may the real estate commissions paid to the Advisor, its affiliates and agents and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission. Real estate commissions will only be payable to the Advisor if the Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. No such fees were incurred during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

The Company will pay the Special Limited Partner a subordinated participation in the net sales proceeds of the sale of real estate assets of 15.0% of remaining net sale proceeds after return of capital contributions to investors plus payment to investors of a 6.0% cumulative, pre-tax non-compounded annual return on the capital contributed by investors. The Special Limited Partner will not be entitled to the subordinated participation in the net sales proceeds unless investors have received a return of their capital plus a return equal to a 6.0% cumulative non-compounded annual return on their capital contributions. No participation in net sales proceeds was incurred during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014.

If the Company's shares of common stock are listed on a national securities exchange, the Special Limited Partner will receive a subordinated incentive listing distribution from the OP equal to 15.0% of the amount by which the Company's market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Company cannot assure that it will provide this 6.0% annual return but the Special Limited Partner will not be entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distribution was incurred during the three and nine months ended September 30, 2015, the three months ended September 30, 2014 or the period from April 24, 2014 (date of inception) to September 30, 2014. Neither the Special Limited Partner nor any of its affiliates can earn both the subordinated participation in the net sales proceeds and the subordinated listing distribution.

Upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, the Special Limited Partner will be entitled to receive distributions from the OP equal to 15% of the amount by which the sum of the Company's market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to an annual 6.0% cumulative, pre-tax, non-compounded annual return to investors. The Special Limited Partner may elect to defer its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.

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Economic Dependency

9 Months Ended

Sep. 30, 2015

Economic Dependency [Abstract]

Economic Dependency

Economic Dependency

Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common ownership with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, the sale of shares of the Company's common stock available for issue, transfer agency services, as well as other administrative responsibilities for the Company including accounting services, transaction management services and investor relations.

As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

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Net Loss Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

The following is a summary of the basic and diluted net loss per share computation for the three and nine months ended September 30, 2015, the three months ended September 30, 2014 and for the period from April 24, 2014 (date of inception) to September 30, 2014:

	Three Months Ended September 30,						Nine Months Ended September 30,			For the Period from April 24, 2014 (date of inception) to
(In thousands)	2015			2014			2015			September 30, 2014
Net loss	$	(1,561	)	$	(28	)	$	(2,481	)	$	(44	)
Basic and diluted weighted average shares outstanding	4,614,153			8,888			2,291,631			7,389
Basic and diluted net loss per share	$	(0.34	)	$	(3.15	)	$	(1.08	)	$	(5.95	)

The Company had the following potentially dilutive securities as of September 30, 2015 and 2014, which were excluded from the calculation of diluted loss per share attributable to stockholders as their effect would have been antidilutive:

	September 30,
	2015	2014
Unvested restricted shares	5,332	2,666
OP Units	90	—
Class B Units	1,457	—
Total potentially dilutive securities	6,879	2,666

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Real Estate Investments (Acquired Assets) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) property
Real estate investments
Land	$ 7,192
Buildings, fixtures and improvements	57,073
Total tangible assets	64,265
Total assets acquired, net	72,864
Mortgage note payable assumed to acquire real estate investment	(5,124)
Premium on mortgage assumed	(172)
Other liabilities assumed	(11)
Cash paid for acquired real estate investments	$ 67,557
Number of properties purchased | property	13
In-place leases
Real estate investments
Acquired intangibles:	$ 8,655	[1]
Amortization period	7 years 4 months 24 days
Above Market Leases
Real estate investments
Acquired intangibles:	$ 1,362
Amortization period	11 years
Market lease liabilities
Real estate investments
Market lease liabilities	$ (1,418)	[1]
Amortization period	16 years 8 months 12 days

[1] Weighted-average remaining amortization periods for in-place leases, market lease assets and market lease liabilities acquired during the nine months ended September 30, 2015 were 7.4, 11.0 and 16.7 years, respectively, as of each property's respective acquisition date.

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Equity-Based Compensation (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation			$ 1	$ 12
Restricted Share Plan | Unvested restricted shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted automatically upon election to board of directors (in shares)	1,333			1,333
Vesting period				5 years
Periodic vesting percentage	20.00%			20.00%
Maximum authorized amount as a percentage of shares authorized				5.00%
Number of shares authorized (in shares)	6,300,000.0			6,300,000.0
Unrecognized compensation costs	$ 100			$ 100
Weighted average period of recognition				3 years 9 months 18 days
Equity-based compensation	$ 6	$ 1	$ 1	$ 12

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Real Estate Investments (Tables)

9 Months Ended

Sep. 30, 2015

Real Estate Investments, Net [Abstract]

Schedule of Business Acquisitions, by Acquisition

The following table presents the allocation of the assets acquired during the nine months ended September 30, 2015. There were no assets acquired or liabilities assumed during the period from April 24, 2014 (date of inception) to September 30, 2014.

	Nine Months Ended
(Dollar amounts in thousands)	September 30, 2015
Real estate investments, at cost:
Land	$	7,192
Buildings, fixtures and improvements	57,073
Total tangible assets	64,265
Acquired intangibles:
In-place leases (1)	8,655
Market lease assets (1)	1,362
Market lease liabilities (1)	(1,418		)
Total assets acquired, net	72,864
Mortgage note payable assumed to acquire real estate investment	(5,124		)
Premium on mortgage assumed	(172		)
Other liabilities assumed	(11		)
Cash paid for acquired real estate investments	$	67,557
Number of properties purchased	13

_______________

(1) Weighted-average remaining amortization periods for in-place leases, market lease assets and market lease liabilities acquired during the nine months ended September 30, 2015 were 7.4, 11.0 and 16.7 years, respectively, as of each property's respective acquisition date.

Business Acquisition, Pro Forma Information

The following table presents unaudited pro forma information as if the acquisitions that were completed during the nine months ended September 30, 2015 had been consummated on April 24, 2014 (date of inception). Additionally, the unaudited pro forma net income (loss) was adjusted to reclassify acquisition and transaction related expenses of $1.9 million from the nine months ended September 30, 2015 to the period from April 24, 2014 (date of inception) to September 30, 2014.

	Nine Months Ended		For the Period from April 24, 2014 (date of inception) to
(In thousands, except for per share information)	September 30, 2015		September 30, 2014
Pro forma revenues (1)(2)	$	6,562	$	3,846
Pro forma net income (loss) (1)(2)	$	334	$	(1,156	)
Basic weighted average shares outstanding	2,291,631		7,389
Basic pro forma net income (loss) per share	$	0.15	$	(156.45	)
Diluted weighted average shares outstanding	2,295,078		7,389
Diluted pro forma net income (loss) per share	$	0.10	$	(156.45	)

_______________

(1) For the nine months ended September 30, 2015, aggregate revenues and net income derived from the Company's 2015 acquisitions (for the Company's period of ownership) were $1.4 million and $0.4 million, respectively.

(2) During the period from October 1, 2015 to November 6, 2015, the Company completed its acquisition of two properties. As of the date that these unaudited consolidated financial statements were available to be issued, the Company was still reviewing the financial information of these properties and, as such, it was impractical to include in these unaudited consolidated financial statements the pro forma effect of these acquisitions (see Note 13 — Subsequent Events).

Schedule of Future Minimum Rental Payments for Operating Leases

The following table presents future minimum base rental cash payments due to the Company over the next five years and thereafter as of September 30, 2015. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.

(In thousands)	Future Minimum Base Rent Payments
October 1, 2015 — December 31, 2015	$	1,183
2016	4,760
2017	4,833
2018	4,905
2019	4,748
Thereafter	23,375
	$	43,804

Schedule of Annualized Rental Income by Major Tenants

The following table lists the tenants (including for this purpose, all affiliates of such tenant) whose annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income for all properties on a straight-line basis as of September 30, 2015. The Company did not own any properties and had no tenant concentrations as of September 30, 2014.

Tenant	September 30, 2015
Summit Orthopedics, Ltd.	14.2%
United States of America	11.3%

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

The following table lists the states where the Company has a concentration of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis as of September 30, 2015. The Company did not own any properties and had no state concentrations as of September 30, 2014.

State	September 30, 2015
Georgia	19.2%
Illinois	40.6%
Minnesota	14.2%

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Equity-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

The following table reflects restricted share award activity for the period presented:

	Number of Common Shares	Weighted-Average Issue Price
Unvested December 31, 2014	2,666	$	22.50
Granted	2,666	22.50
Vested	—	—
Forfeitures	—	—
Unvested, September 30, 2015	5,332	$	22.50

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Related Party Transactions and Arrangements (Fees Paid in Connection With the Operations of the Company, Incurred, Forgiven and Payable) (Details) - USD ($) $ in Thousands	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Due to affiliate	$ 314			$ 314	$ 1,895
Incurred
Related Party Transaction [Line Items]
One-time fees and reimbursements:	1,274	$ 0	$ 0	1,785
Forgiven
Related Party Transaction [Line Items]
One-time fees and reimbursements:	0	0	0	3
Payable
Related Party Transaction [Line Items]
Due to affiliate	27			27	0
Nonrecurring Fees | Incurred | Acquisition fees
Related Party Transaction [Line Items]
One-time fees and reimbursements:	855	0	0	1,091
Nonrecurring Fees | Incurred | Acquisition cost reimbursements
Related Party Transaction [Line Items]
One-time fees and reimbursements:	285	0	0	364
Nonrecurring Fees | Incurred | Financing coordination fees
Related Party Transaction [Line Items]
One-time fees and reimbursements:	38	0	0	38
Nonrecurring Fees | Forgiven | Acquisition fees
Related Party Transaction [Line Items]
One-time fees and reimbursements:	0	0	0	0
Nonrecurring Fees | Forgiven | Acquisition cost reimbursements
Related Party Transaction [Line Items]
One-time fees and reimbursements:	0	0	0	0
Nonrecurring Fees | Forgiven | Financing coordination fees
Related Party Transaction [Line Items]
One-time fees and reimbursements:	0	0	0	0
Nonrecurring Fees | Payable | Acquisition fees
Related Party Transaction [Line Items]
Due to affiliate	0			0	0
Nonrecurring Fees | Payable | Acquisition cost reimbursements
Related Party Transaction [Line Items]
Due to affiliate	0			0	0
Nonrecurring Fees | Payable | Financing coordination fees
Related Party Transaction [Line Items]
Due to affiliate	0			0	0
Recurring Fees | Incurred | Property management fees
Related Party Transaction [Line Items]
One-time fees and reimbursements:	15	0	0	15
Recurring Fees | Incurred | Professional fees and reimbursements
Related Party Transaction [Line Items]
One-time fees and reimbursements:	81	0	0	277
Recurring Fees | Forgiven | Property management fees
Related Party Transaction [Line Items]
One-time fees and reimbursements:	0	0	0	3
Recurring Fees | Forgiven | Professional fees and reimbursements
Related Party Transaction [Line Items]
One-time fees and reimbursements:	0	$ 0	$ 0	0
Recurring Fees | Payable | Property management fees
Related Party Transaction [Line Items]
Due to affiliate	15			15	0
Recurring Fees | Payable | Professional fees and reimbursements
Related Party Transaction [Line Items]
Due to affiliate	$ 12			$ 12	$ 0

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable		$ 5,108	$ 0
Mortgage premium, net		166	$ 0
Mortgages
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable		5,108
Significant Unobservable Inputs Level 3 | Mortgages | Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, fair value	[1]	5,274
Significant Unobservable Inputs Level 3 | Mortgages | Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument, fair value		$ 5,321

[1] Carrying value includes mortgage note payable of $5.1 million and mortgage premium, net of $0.2 million as of September 30, 2015.

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2014		11,554
Beginning balance at Dec. 31, 2014	$ (2,274)	$ 0	$ (2,094)	$ (180)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock (in shares)		5,570,998
Issuance of common stock	137,291	$ 56	137,235
Common stock offering costs	(15,002)		(15,002)
Common stock issued through distribution reinvestment plan (in shares)		41,656
Common stock issued through distribution reinvestment plan	989		989
Common stock repurchases (in shares)		(1,021)
Common stock repurchases	(25)		(25)
Equity-based compensation (in shares)		2,666
Equity-based compensation	12		12
Distributions declared	(2,656)			(2,656)
Net loss	(2,481)			(2,481)
Ending balance (in shares) at Sep. 30, 2015		5,625,853
Ending balance at Sep. 30, 2015	$ 115,854	$ 56	$ 121,115	$ (5,317)

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Mortgage Notes Payable

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Mortgage Notes Payable

Mortgage Note Payable

The following table reflects the Company's mortgage note payable as of September 30, 2015. The Company had no mortgage notes payable as of December 31, 2014.

	Encumbered Properties	Outstanding Loan Amount as of		Effective Interest Rate		Interest Rate
Portfolio		September 30, 2015					Maturity
		(In thousands)
Philip Professional Center — Lawrenceville, GA	2	$	5,108	4.0	%	Fixed	Oct. 2019

Real estate investment, at cost, of $9.2 million at September 30, 2015 related to the mortgage note payable at September 30, 2015 has been pledged as collateral and is not available to satisfy our debts and obligations unless first satisfying the mortgage note payable on the property. The Company makes payments of principal and interest on its mortgage note payable on a monthly basis.

The following table summarizes the scheduled aggregate principal payments on the Company's mortgage note payable for the five years subsequent to September 30, 2015:

(In thousands)	Future Principal Payments
October 1, 2015 — December 31, 2015	$	16
2016	96
2017	100
2018	104
2019	4,792
Thereafter	—
	$	5,108

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Commitments and Contingencies (Narrative) (Details) - USD ($)	3 Months Ended		5 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 6,000	$ 0	$ 0	$ 6,000

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following is a summary of the basic and diluted net loss per share computation for the three and nine months ended September 30, 2015, the three months ended September 30, 2014 and for the period from April 24, 2014 (date of inception) to September 30, 2014:

	Three Months Ended September 30,						Nine Months Ended September 30,			For the Period from April 24, 2014 (date of inception) to
(In thousands)	2015			2014			2015			September 30, 2014
Net loss	$	(1,561	)	$	(28	)	$	(2,481	)	$	(44	)
Basic and diluted weighted average shares outstanding	4,614,153			8,888			2,291,631			7,389
Basic and diluted net loss per share	$	(0.34	)	$	(3.15	)	$	(1.08	)	$	(5.95	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The Company had the following potentially dilutive securities as of September 30, 2015 and 2014, which were excluded from the calculation of diluted loss per share attributable to stockholders as their effect would have been antidilutive:

	September 30,
	2015	2014
Unvested restricted shares	5,332	2,666
OP Units	90	—
Class B Units	1,457	—
Total potentially dilutive securities	6,879	2,666

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Real Estate Investments (Geographic Concentrations) (Details) - Geographic Concentration Risk - Sales Revenue, Net	9 Months Ended
	Sep. 30, 2015
Georgia
Concentration Risk [Line Items]
Concentration risk, percentage	19.20%
Illinois
Concentration Risk [Line Items]
Concentration risk, percentage	40.60%
Minnesota
Concentration Risk [Line Items]
Concentration risk, percentage	14.20%

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Revenue Recognition

Revenue Recognition

The Company's rental income is primarily related to rent received from tenants in MOBs and other healthcare-related facilities and from residents in seniors housing — operating properties ("SHOP") held using a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA"). Rent from tenants is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease. Because many of the leases provide for rental increases at specified intervals, GAAP requires the Company to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. Rental income from residents in the Company's SHOPs is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. The Company defers the revenue related to lease payments received from tenants and residents in advance of their due dates.

The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company records an increase in the allowance for uncollectible accounts or records a direct write-off of the receivable in the consolidated statements of operations.

Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.

Resident services and fee income relates to ancillary services performed for residents in the Company's SHOPs. Fees for ancillary services are recorded in the period in which the services are performed.

Reportable Segments

Reportable Segments

The Company has determined that it has three reportable segments, with activities related to investing in MOBs, triple-net leased healthcare facilities, and SHOPs. Management evaluates the operating performance of the Company's investments in real estate and SHOPs on an individual property level.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued revised guidance relating to revenue recognition. Under the revised guidance, an entity is required to recognize revenue when it transfers 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 revised guidance was to become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption was not permitted under GAAP. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. In July 2015, the FASB deferred the effective date of the revised guidance by one year to annual reporting periods beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as of the original effective date. The Company has not yet selected a transition method and is currently evaluating the impact of this new guidance.

In January 2015, the FASB issued updated guidance that eliminates from GAAP the concept of an event or transaction that is unusual in nature and occurs infrequently being treated as an extraordinary item. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Any amendments may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company has elected to adopt this new guidance as of September 30, 2015. The Company has assessed the impact from the adoption of this revised guidance and has determined that there is no impact to its financial position, results of operations and cash flows.

In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are variable interest entities ("VIEs") or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. If the Company decides to early adopt the revised guidance in an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes the interim period. The Company is currently evaluating the impact of this new guidance.

In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendment requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not previously been issued. If the Company decides to early adopt the revised guidance in an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes the interim period. The Company is currently evaluating the impact of this new guidance.

In September 2015, the FASB issued an update that eliminates the requirement to adjust provisional amounts from a business combination and the related impact on earnings by restating prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of measurement period adjustments on current and prior periods, including the prior period impact on depreciation, amortization and other income statement items and their related tax effects, shall be recognized in the period the adjustment amount is determined. The cumulative adjustment would be reflected within the respective financial statement line items affected. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company has elected to adopt this new guidance as of September 30, 2015. The adoption of this guidance had no impact on the Company’s consolidated financial position, results of operations or cash flows.