UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2018
CNL HEALTHCARE PROPERTIES II, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland | 000-55777 | 47-4524619 | ||
(State or other jurisdiction of incorporation) |
(Commission File No.) |
(I.R.S. Employer Identification No.) |
450 South Orange Avenue, Orlando, FL | 32801 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code (407) 650-1000
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 8.01 | Other Events. |
Determination of Estimated Net Asset Value per Share and Offering Prices
On March 14, 2018, the board of directors (the Board) of CNL Healthcare Properties II, Inc. (referred to herein as we, us, our or the Company) unanimously approved $10.06 as the estimated net asset value (NAV) per share of each class of the Companys common stock outstanding as of December 31, 2017, based on the estimated value of our assets less the estimated value of our liabilities, divided by 3,074,396 shares issued and outstanding as of December 31, 2017, including restricted shares issued to the Companys advisor, CHP II Advisors, LLC (our Advisor). There have been no material changes between December 31, 2017 and the date of this filing that would impact the overall estimated NAV per share. Also, on that date the Companys Board unanimously approved offering prices for each class of shares of the Companys common stock to be sold in the Companys public offering based on the estimated NAV per share for each class plus applicable upfront selling commissions and dealer manager fees, effective after the close of business on March 15, 2018. Accordingly, the offering prices will be $10.99, $10.56 and $10.06 per share for the purchase of Class A, Class T and Class I shares of the Companys common stock, respectively, (the Offering Prices) in the Companys ongoing primary public offering.
In establishing the estimated NAV, the Board engaged an independent investment banking firm that specializes in providing real estate financial services, CBRE Capital Advisors, Inc. (CBRE Cap), to provide (i) property-level and aggregate valuation analyses of the Company, (ii) a range for the estimated NAV per share for each class of shares of the Companys common stock; and (iii) consideration of other information provided by the Companys Advisor.
Background
In February 2018, the Board initiated a process to update the Companys estimated NAV to (i) provide existing investors and broker-dealers with increased transparency and an estimated value of the Companys shares based on the value of the Companys current portfolio as of December 31, 2017; and (ii) furnish potential new investors and broker-dealers with updated information regarding the Companys performance and assets to enhance a better understanding of the Company. The Valuation Committee of the Board, comprised solely of independent directors, was charged with oversight of the valuation process, including review and approval of the valuation process and methodology, the consistency of the valuation methodology with real estate industry standards and practices, and the reasonableness of the assumptions utilized in the valuation. On the recommendation of the Valuation Committee and the approval of the Board, the Company engaged CBRE Cap as its independent valuation expert.
From CBRE Caps engagement through the issuance of its valuation report as of March 14, 2018, (the Valuation Report), CBRE Cap held discussions with our Advisor and conducted or commissioned such appraisals, investigations, research, review and analyses as it deemed necessary. The Valuation Committee, upon its receipt and review of the Valuation Report, concluded that the range of $9.71 and $10.40 for the Companys estimated NAV per share for each class of the Companys common stock proposed in CBRE Caps Valuation Report was reasonable, and recommended to the Board that it adopt $10.06 as the estimated NAV per share of each class of the Companys common stock, which value falls within the range determined by CBRE Cap in its Valuation Report. At a special meeting of the Board held on March 14, 2018, the Board accepted the recommendation of the Valuation Committee and approved $10.06, which is the midpoint of the range, as the estimated NAV per share of each class of the Companys common stock as of December 31, 2017, exclusive of any portfolio premium or discount. The Board also approved the Offering Prices of $10.99 per share for Class A shares, $10.56 per share for Class T shares and $10.06 per share for Class I shares, based on the estimated NAV per share for each class of the Companys common stock plus applicable upfront selling commissions and dealer manager fees, effective after close of business on March 15, 2018. CBRE Cap is not responsible for the estimated value per share approved by the Board and did not participate in the determination of the Offering Prices for each class of shares of the Companys common stock.
Valuation Methodologies
In preparing the Valuation Report, CBRE Cap, among other things:
| reviewed financial and operating information requested from or provided by the Companys Advisor; |
| reviewed and discussed with senior management of the Company and its Advisor the historical and anticipated future financial performance of the Companys properties, including forecasts prepared by the Advisor; |
| commissioned restricted use appraisals which contained analysis on the Companys real property assets (the MAI Appraisals) and performed analyses and studies for the properties; |
| conducted or reviewed CBRE Cap proprietary research, including market and sector capitalization rate surveys; |
| reviewed third-party research, including Wall Street equity reports and online data providers; |
| compared financial information of the Company to similar information of companies that CBRE Cap deemed to be comparable; |
| reviewed the Companys reports filed with the U.S. Securities and Exchange Commission; and |
| reviewed the unaudited financial statements for the period ended December 31, 2017. |
The MAI Appraisals were performed in accordance with Uniform Standards of Professional Appraisal Practice (USPAP). The MAI Appraisals were commissioned by CBRE Cap from CBRE Valuation and Advisory Services, a CBRE affiliate that conducts appraisals and valuations of real properties. The MAI Appraisals were prepared by personnel who are members of the Appraisal Institute and have the Member of Appraisal Institute (MAI) designations. CBRE Appraisal Group is not responsible for the estimated value per share approved by the Companys Board and did not participate in the determination of the Offering Prices for each class of shares of the Companys common stock.
As of December 31, 2017, the Company owned two real estate investments consisting of a seniors housing community in Pensacola, Florida and a medical office building in Overland Park, Kansas.
The Companys real estate properties were classified as wholly owned operating assets in the Valuation Report. The Board considered the following valuation methodologies with respect to such asset class, which were applied by CBRE Cap and summarized in its Valuation Report:
Operating Assets. Unlevered, ten-year discounted cash flow analysis from MAI Appraisals were created for the Companys wholly owned, fully operational properties. The terminal capitalization rate method was used to calculate terminal value of the asset, with such rate based on the specific geographic location of the assets and other relevant factors.
Debt. The Companys debt from its December 31, 2017 balance sheet, with certain adjustments related to amortized loan costs and was reviewed for reasonableness by CBRE Cap and utilized in its Valuation Report.
Valuation Summary; Material Assumptions
The valuation process used by the Company to determine an estimated NAV was designed generally in accordance with certain recommendations of the Investment Program Association, a trade association for non-listed direct investment vehicles (the IPA), in the Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the IPA in April, 2013.
The following table summarizes the key assumptions that were employed by CBRE Cap in the discounted cash flow model to estimate the value of our operating assets as of December 31, 2017.
TABLE OF MAJOR INPUTS | ||
Assumptions |
December 31, 2017 Amount / Range | |
Discount rates |
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Wholly Owned Properties |
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Senior Housing |
8.71% - 8.29% | |
Medical Office |
6.92% - 6.58% | |
Terminal capitalization rates |
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Wholly Owned Properties |
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Senior Housing |
7.69% - 7.31% | |
Medical Office |
6.41% - 6.09% |
In its Valuation Report, CBRE Cap included an estimate of the December 31, 2017 value of the Companys assets, including cash and other assets net of payables, accruals and other liabilities. Such values were derived from the Companys adjusted balance sheet as of December 31, 2017.
In its Valuation Report, CBRE Cap estimated the value of the Companys real estate portfolio to be in the range of $37.8 million to $39.9 million and the Companys net asset value to range from between $29.8 million and $32.0 million, or between $9.71 and $10.40 per share, based on a share count of 3,074,396 shares issued and outstanding as of December 31, 2017, including restricted shares issued to the Companys Advisor.
The valuation range was calculated by varying the discount rates and terminal capitalization rates by 2.5% in either direction, which represents a 5% sensitivity. CBRE Cap set the range at a weighted average of approximately 39 basis points on the discount rate and approximately 35 basis points on the terminal capitalization rate. The terminal capitalization rates were used to calculate the terminal value of the assets and were sourced from MAI Appraisals, which were based on location, asset quality and supply and demand metrics.
Taking into consideration the reasonableness of the valuation methodologies, assumptions and estimated range of values contained in CBRE Caps Valuation Report, the Valuation Committee recommended that the Board approve $10.06 as the estimated NAV per share and the Board ultimately approved $10.06 as the estimated NAV per share of each class of the Companys common stock. As with any valuation methodology, the methodologies considered by the Valuation Committee and the Board, in reaching an estimate of the value of the Companys shares, are based upon all of the foregoing estimates, assumptions, judgments and opinions that may, or may not, prove to be correct. The use of different estimates, assumptions, judgments or opinions may have resulted in significantly different estimates of the value of the Companys shares.
The following table summarizes the material components of the Companys estimated NAV as of December 31, 2017 compared to those as of June 30, 2017:
Table of Value Estimates for Components of Net Asset Value
Value as of 12/31/17 ($ in 000s) |
Value as of 12/31/17 Per Share (1) |
Value as of 6/30/17 ($ in 000s) |
Value as of 6/30/17 Per Share (2) |
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Present value of wholly owned operating asset(s) |
$ | 38,880 | $ | 12.65 | $ | 23,600 | $ | 14.44 | ||||||||
Cash and cash equivalents |
12,422 | 4.04 | 9,525 | 5.82 | ||||||||||||
Other assets |
189 | 0.06 | 196 | 0.12 | ||||||||||||
Wholly-owned debt outstanding |
(19,813 | ) | (6.44 | ) | (16,363 | ) | (10.01 | ) | ||||||||
Accounts payable and other accrued expenses |
(478 | ) | (0.16 | ) | (480 | ) | (0.29 | ) | ||||||||
Other liabilities |
(287 | ) | (0.09 | ) | (121 | ) | (0.08 | ) | ||||||||
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Net asset value |
$ | 30,914 | $ | 10.06 | $ | 16,358 | $ |
10.00 |
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(1) | Based on approximately 3.07 million shares outstanding as of December 31, 2017. |
(2) | Based on approximately 1.63 million shares outstanding as of June 30, 2017. |
Additional Information Regarding the Valuation, Limitations of Estimated Share Value and the Engagement of CBRE Cap
Throughout the valuation process, the Valuation Committee, the Companys Advisor and senior members of management reviewed, confirmed and approved the processes and methodologies and their consistency with real estate industry standards and best practices.
CBRE Caps Valuation Report was based upon market, economic, financial and other information, circumstances and conditions existing prior to December 31, 2017, and any material change in such information, circumstances and/or conditions may have a material effect on the Companys estimated NAV. CBRE Caps valuation materials were addressed solely to the Companys Board to assist it in establishing an estimated value of each class of the Companys common stock. CBRE Caps valuation materials were not addressed to the public and should not be relied upon by any other person to establish an estimated value of each class of the Companys common stock. CBRE Caps Valuation Report does not constitute a recommendation by CBRE Cap to purchase or sell any shares of the Companys common stock.
In connection with its review, while CBRE Cap reviewed for reasonableness the information supplied or otherwise made available to it by the Company or its Advisor, CBRE Cap assumed and relied upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to it by any other party, and did not undertake any duty or responsibility to verify independently any of such information. With respect to financial forecasts and other information and data provided to or otherwise reviewed by or discussed with CBRE Cap, CBRE Cap assumed that such forecasts and other information and data were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management of the Company, and relied upon the Company to advise CBRE Cap promptly if any information previously provided became inaccurate or was required to be updated during the period of its review. In preparing its valuation materials, CBRE Cap did not, and was not requested to, solicit third party indications of interest for the Company in connection with possible purchases of the Companys securities or the acquisition of all or any part of the Company.
In performing its analyses, CBRE Cap made numerous assumptions as of various points in time with respect to industry performance, general business, economic and regulatory conditions, current and future rental market for the Companys operating properties and other matters, many of which are necessarily subject to change and beyond the control of CBRE Cap and the Company. The analyses performed by CBRE Cap are not necessarily indicative of actual values, trading values or actual future results of the Companys common stock that might be achieved, all of which may be significantly more or less favorable than suggested by the Valuation Report. The analyses do not purport to be appraisals or to reflect the prices at which the properties may actually be sold, and such estimates are inherently subject to uncertainty. The actual value of the Companys common stock may vary significantly depending on numerous factors that generally impact the price of securities, the financial condition of the Company and the state of the real estate industry more generally. Accordingly, with respect to the estimated NAV of each class of the Companys common stock, neither we nor CBRE Cap can give any assurance that:
| a stockholder would be able to resell his or her shares at this estimated value for the respective class of shares; |
| a stockholder would ultimately realize distributions per share equal to our estimated NAV for the respective class of shares of common stock upon liquidation of our assets and settlement of our liabilities or a sale of the Company; |
| our shares would trade at a price equal to or greater than the estimated NAV for the respective class of shares if we listed them on a national securities exchange; or |
| the methodology used to estimate our NAV would be acceptable to FINRA or under ERISA for compliance with its reporting requirements. |
The December 31, 2017, estimated NAV was determined by our Board at a special meeting held on March 14, 2018. The value of the Companys shares will fluctuate over time as a result of, among other things, developments related to individual assets and responses to the real estate and capital markets. We currently expect to continue to determine our estimated NAV at least annually.
CBRE Group, Inc., (CBRE) is a Fortune 500 and S&P 500 company headquartered in Los Angeles, California and one of the worlds largest commercial real estate services and investment firms (in terms of 2017 revenue). CBRE Cap, a FINRA registered broker-dealer and a subsidiary of CBRE, is an investment banking firm that specializes in providing real estate financial services. CBRE Cap and affiliates possess substantial experience in the valuation of assets similar to those owned by the Company and regularly undertake the valuation of securities in connection with public offerings, private placements, business combinations and similar transactions. For the preparation of the Valuation Report, we paid CBRE Cap a customary fee for services of this nature, no part of which was contingent relating to the provision of services or specific findings. The Company has not engaged CBRE Cap for any other services.
During the past four years the Company and affiliates of the Company have engaged CBRE Cap and other affiliates of CBRE for various real estate-related services and/or to serve as a third-party valuation advisor. The Company anticipates that CBRE Cap and other affiliates of CBRE will continue to provide similar services to the Company and its affiliates in the future. In addition, the Company may in its discretion engage CBRE Cap to assist the Board in future determinations of the Companys estimated NAV. The Company is not affiliated with CBRE, CBRE Cap or any of their affiliates. While the Company and affiliates of the Company have engaged and/or may engage in the future CBRE, CBRE Cap or their affiliates for commercial real estate services of various kinds, the Company believes that there are no material conflicts of interest with respect to the Companys engagement of
CBRE Cap. In the ordinary course of its business, CBRE, its affiliates, directors and officers may structure and effect transactions for its own account or for the accounts of its customers in commercial real estate assets of the same kind and in the same markets as the Companys assets.
Distribution Reinvestment Plan Share Price
The Company will continue to offer shares of each class of its common stock pursuant to its Distribution Reinvestment Plan (DRP). Effective March 29, 2018, the price for sales of shares under the DRP will be equal to the updated estimated NAV per share for each class of shares of the Companys common stock, as applicable.
Redemption Plan
The Companys Amended and Restated Redemption Plan continues to provide eligible stockholders with limited interim liquidity by enabling them to sell shares back to the Company prior to any listing of the Companys shares.
Effective March 29, 2018, under the Amended and Restated Redemption Plan, all shares of common stock or fractions thereof that have been held for at least one year may be submitted for redemption at an amount equal to the Companys updated estimated NAV per share for each class, as applicable, as of the redemption date.
There is no assurance that there will be sufficient funds available for redemption or that we will redeem shares and, accordingly, a stockholders shares may not be redeemed. The Amended and Restated Redemption Plan does not limit the Companys ability to repurchase shares from stockholders by any other legally available means for any reason that the Advisor, in its discretion, deems to be in the Companys best interests. None of the Companys sponsor, Advisor, any member of the Board, or any of their affiliates will receive any fee in connection with the repurchase of shares by the Company under the Amended and Restated Redemption Plan.
The Company is furnishing (i) as Exhibit 99.1 to this Current Report on Form 8-K a copy of the Company-issued press release announcing the recent determination of the estimated NAV of the Companys common stock and (ii) as Exhibit 99.2 to this Current Report on Form 8-K a copy of the notice mailed to our stockholders registered representatives or investment advisers regarding, among other things, the recent determination of the estimated NAV of the Companys common stock. Such press release shall not be deemed to be filed with the U.S. Securities and Exchange Commission (the SEC) or incorporated by reference into any other filing with the SEC.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 | CNL Healthcare Properties II, Inc. Press Release dated as of March 15, 2018. | |
99.2 | Correspondence with financial advisors of shareholders of CNL Healthcare Properties II, Inc. |
Caution Concerning Forward-Looking Statements
Certain statements in this document may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). The Company intends that all such forward-looking statements be covered by the safe-harbor provisions for forward-looking statements of Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable.
All statements, other than statements that relate solely to historical facts, including, among others, statements regarding the Companys future financial position, business strategy, projected levels of growth, projected costs and projected financing needs, are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the 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, continues, pro forma or similar expressions. Forward-looking statements are not guarantees of future performance and actual results may differ materially from those contemplated by such forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to, the factors detailed in our annual report for the year ended December 31, 2016, and other documents filed from time to time with the Securities and Exchange Commission.
Many of these factors are beyond the Companys ability to control or predict. Such factors include, but are not limited to: changes in general economic conditions in the U.S. or globally (including financial market fluctuations); risks associated with our investment strategy; risks associated with the real estate markets in which the Company invests; risks associated with the use of debt to finance the Companys business activities, including refinancing and interest rate risk and the Companys failure to comply with its debt covenants; the Companys failure to obtain, renew or extend necessary financing or to access the debt or equity markets; competition for properties and/or tenants in the markets in which the Company engages in business; the impact of current and future environmental, zoning and other governmental regulations affecting the Companys properties; the Companys ability to make necessary improvements to properties on a timely or cost-efficient basis; risks related to development projects or acquired property value-add conversions, if applicable (including construction delays, cost overruns, the Companys inability to obtain necessary permits and/or public opposition to these activities); defaults on or non-renewal of leases by tenants; failure to lease properties at all or on favorable rents and terms; unknown liabilities in connection with acquired properties or liabilities caused by property managers or operators; the Companys failure to successfully manage growth or integrate acquired properties and operations; increases in operating costs and other expense items and costs, uninsured losses or losses in excess of the Companys insurance coverage; the impact of outstanding or potential litigation; risks associated with the Companys tax structuring; the Companys failure to qualify and maintain its status as a real estate investment trust; and the Companys ability to protect its intellectual property and the value of its brands.
Management believes these forward-looking statements are reasonable; however, such statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and the Company may not be able to realize them. Investors are cautioned not to place undue reliance on any forward-looking statements which are based on current expectations. All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made and the Company undertakes 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 otherwise required by law.
For further information regarding risks and uncertainties associated with our business, please refer to the Managements Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors sections of our documents filed from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q, and our registration statement on Form S-11 and the sticker supplements and amendments thereto, copies of which may be obtained from our website at http://www.cnlhealthcarepropertiesII.com.
We undertake no obligation to publicly release the results of any revisions to these forward looking-statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CNL Healthcare Properties II, Inc. | ||||||||
March 15, 2018 |
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By: |
/s/ Stephen H. Mauldin | |||||||
Stephen H. Mauldin | ||||||||
Chief Executive Officer, President and Chairman |
Exhibit 99.1
News Release
For information contact:
Colleen Johnson
Vice President, Communications
CNL Financial Group
407-650-1223
CNL HEALTHCARE PROPERTIES II ANNOUNCES
ESTIMATED NET ASSET VALUE PER SHARE OF $10.06
(ORLANDO, Fla.) March 15, 2018 CNL Healthcare Properties II, a non-traded real estate investment trust (REIT) focused on seniors housing and healthcare properties, announced today that the board of directors approved an estimated net asset value (NAV) per share of $10.06 for all share classes as of Dec. 31, 2017. The per share public offering price for each class of common stock in the current offering will be $10.99 for Class A shares, $10.56 for Class T shares and $10.06 for Class I shares effective after the close of business on March 15, 2018.
While CNL Healthcare Properties II was not required to conduct a valuation until June 30, 2018, this is the second voluntary valuation conducted by the company. In September 2017, the board of directors approved a NAV of $10.00 per share for all share classes, as of June 30, 2017. This most recent valuation was conducted to align with the recommendation of the Investment Program Association (IPA), a trade association, to estimate the NAV per share as of calendar year-end. CNL Healthcare Properties II expects to update its estimated NAV at least annually.
Our second NAV was positively impacted by a number of factors, including the continued strong performance of our seniors housing property and the acquisition of the Mid-America Surgery Center in December, said Stephen H. Mauldin, chairman, president and CEO of CNL Healthcare Properties II. The valuation both reflects the high quality of our investments early in the companys life, as well as the unmatched financial support that our advisor is providing to the company and our shareholders through the waiver or subordination of significant amounts of fees and expenses.
The company engaged CBRE Capital Advisors, Inc. (CBRE Cap), an independent investment banking firm, to conduct the valuation. The valuation committee, comprised exclusively of independent board members, directed and reviewed the valuation process and recommended an estimated NAV per share of $10.06, which is at the midpoint of the range of values provided by CBRE Cap. The recommendation was unanimously approved by the full board of directors. CBRE Cap is not responsible for the estimated value per share approved by the board of directors and did not participate in the determination of the offering prices for each class of shares of the companys common stock.
-- page 1 of 3 --
Page 2/ CNL Healthcare Properties II announces estimated net asset value per share of $10.06
The estimated NAV is based on the estimated value of the companys assets minus the estimated value of its liabilities divided by the approximate number of shares outstanding on a fully diluted basis, calculated as of Dec. 31, 2017. The valuation process was completed in compliance with the companys valuation policy and certain methodologies promoted by the IPA.
About CNL Healthcare Properties II
CNL Healthcare Properties II intends to qualify as a real estate investment trust (REIT) for federal income tax purposes beginning with the year ending Dec. 31, 2017, or the first year in which it commences material operations. Based in Orlando, Florida, CNL Healthcare Properties II intends to invest in the seniors housing, medical office, acute care and post-acute care sectors. For more information, visit cnlhealthcarepropertiesii.com.
About CNL Financial Group
CNL Financial Group (CNL) is a private investment management firm providing real estate and alternative investments. Since inception in 1973, CNL and/or its affiliates have formed or acquired companies with more than $34 billion in assets. CNL is headquartered in Orlando, Florida. For more information, visit cnl.com.
About CBRE
CBRE Group, Inc., (CBRE) is a Fortune 500 and S&P 500 company headquartered in Los Angeles, California, and one of the worlds largest commercial real estate services and investment firms (in terms of 2017 revenue). CBRE Cap, a FINRA registered broker-dealer and a subsidiary of CBRE, is an investment banking firm that specializes in providing real estate financial services. CBRE Cap and affiliates possess substantial experience in the valuation of assets similar to those owned by the Company and regularly undertake the valuation of securities in connection with public offerings, private placements, business combinations and similar transactions.
Cautionary Note Regarding Forward-Looking Statements
Statements above that are not statements of historical or current fact may constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. CNL Healthcare Properties II (the Company) intends that such forward-looking statements be subject to the safe harbor created by Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that do not relate strictly to historical or current facts, but reflect managements current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of the Companys business and its performance, the economy, and other future conditions and forecasts of future events, and circumstances. Forward-looking statements are typically identified by words such as believes, expects, anticipates, intends, estimates, plans, continues, pro forma, may, will, seeks, should and could, and words and terms of similar substance in connection with discussions of future operating or financial performance, business strategy and portfolios, projected growth prospects, cash flows, costs and financing needs, legal proceedings, amount and timing of anticipated future distributions, and/or other matters. The Companys forward-looking statements are not guarantees of future performance. While the Companys management believes its forward-looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances. As with any projection or forecast, forward-looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise, and may not be realized. The Companys forward-looking statements are based on managements current expectations and a variety of risks,
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Page 3/ CNL Healthcare Properties II announces estimated net asset value per share of $10.06
uncertainties and other factors, many of which are beyond the Companys ability to control or accurately predict. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Companys actual results could differ materially from those set forth in the forward-looking statements due to a variety of risks, uncertainties and other factors. These risks include that CNL Healthcare Properties II has limited operating history and there is no assurance that it will be able to achieve its investment objectives; that the board of directors may amend or revise investment and other policies without stockholder consent; that it may have difficulty funding distributions with funds provided by cash flows from operating activities; and that market and business conditions may affect its success, including changes in general or local economic or market conditions and changing demographics. Given these uncertainties, the Company cautions you not to place undue reliance on such statements.
All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by this cautionary note. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to, and expressly disclaims any obligation to, publicly release the results of any revisions to its forward-looking statements to reflect new information, changed assumptions, the occurrence of unanticipated subsequent events or circumstances, or changes to future operating results over time, except as otherwise required by law.
###
Exhibit 99.2
FA Email
Subject: CNL Healthcare Properties II Announces Updated Net Asset Valuation Results
March 15, 2018
FOR BROKER-DEALER AND RIA USE ONLY. Not for general use with the public
We are pleased to announce that CNL Healthcare Properties II1 board of directors has approved an updated estimated net asset value (NAV)2 per share of $10.06 for all share classes of the companys common stock, which is available in every state except Pennsylvania, as of Dec. 31, 2017.
| The price per share for each class of common stock in the current offering will be $10.99 for Class A shares, $10.56 for Class T shares, and $10.06 for Class I shares, based on the estimated NAV and as approved by the board of directors. The public offering prices are effective after the close of business on March 15, 2018. The updated estimated NAV per share will be reflected on shareholders second quarter statements. |
| The company shifted to a calendar year-end measurement date to align more closely with recommendations of the Investment Program Association (IPA), 3 a trade association for non-listed direct investment vehicles. The companys first estimated NAV was as of June 30, 2017. |
| CNL Healthcare Properties II continues to be encouraged by the results of its current and prior estimated NAV per share. This current estimated NAV was achieved from the operating performance of the companys two assets, the permanent waiver of organizational and offering expenses by its advisor, and the Expense Support Agreement between the company and its advisor. |
| On March 29, 2018, the price for the repurchase of shares under the Redemption Plan and the price for sales of shares under the Distribution Reinvestment Plan will be equal to $10.06 per share for each class, as applicable. Any price change will be reflected in the reinvestment of shareholders second quarter distributions, once approved by the board of directors, estimated to be paid on or about June 7, 2018. |
| Monthly cash distributions remain unchanged at $0.0480 per share for all share classes, less class-specific expenses, and monthly stock dividends remain unchanged at 0.00100625 shares on each outstanding share of common stock for all share classes. Distributions will continue to be evaluated monthly based on the overall long-term financial position of the company.4 |
ADDITIONAL INFORMATION
| The estimated NAV per share represents the midpoint in the range of values, $9.71 to $10.40, provided by CBRE Capital Advisors, Inc. (CBRE Cap), an independent investment banking firm. CBRE Cap is not responsible for the estimated value per share approved by the board of directors. |
| The estimated NAV is a snapshot in time and not indicative of the value the company or shareholders may receive if the company were to list its shares or liquidate its assets, now or in the future. Please review the companys latest financial filings for more details on performance metrics. |
| A supplement to the prospectus (available at cnlhealthcarepropertiesii.com) will be filed to incorporate the estimated NAV determination. |
| CBRE Cap assisted the valuation committee with the preparation of the estimated NAV per share of its common stock as of Dec. 31, 2017. The estimated NAV per share was determined generally in accordance with the companys valuation policy and certain methodologies of the Investment Program Association (IPA), a trade association for non-listed direct investment vehicles, as set forth in IPA Practice Guideline 2013-01 Valuations of Publicly Registered Non-Listed REITs. |
For additional information, please review the Form 8-K filed on March 15, 2018, contact your sales representative directly or call CNL Client Services at 866-650-0650, option 2.
1 | CNL Healthcare Properties II has limited operating history and intends to qualify and elect REIT tax status commencing with the taxable year ending Dec. 31, 2017, or the first year in which it commences material operations. If the company fails to meet the REIT qualification standards now or in the future, the company will be subject to increased taxes, which will decrease investors returns. |
2 | The estimated NAV per share is only an estimate and is based on a number of assumptions and estimates that may not be correct. The NAV is based on numerous assumptions and estimates with respect to industry, business, economic and regulatory conditions, all of which are subject to changes. Throughout the valuation process, the valuation committee, the companys advisor and senior members of management reviewed, confirmed and approved the processes and methodologies and their consistency with real estate industry standards and best practices. CHPII will have the potential for greater volatility due to the substantial portion of assets invested in a limited number of properties. |
3 | There is no assurance that CNL Healthcare Properties II adherence to any of the methodologies set forth in IPA Practice Guideline 2013-01 satisfies applicable compliance or other requirements of the SEC, FINRA or under ERISA with respect to the preparation and disclosure of its estimated NAV per share. |
4 | There is no guarantee of future cash distributions or if distributions will be paid at all. Due to the high levels of investment costs and fees incurred during the companys initial phase, distributions will not be fully covered by cash flows from operating activities and will be paid from expense waivers, borrowings and offering proceeds, which is not sustainable over the long term and may reduce investors return. |
For the year ended Dec. 31, 2017, approximately 30 percent of cash distributions were covered by operating cash flow and 70 percent were funded by offering proceeds. For the year ended Dec. 31, 2016, distributions were not covered by operating cash flow and were 100 percent funded by offering proceeds. Distributions paid from sources other than operating cash flow, now and in the future, are not sustainable and can reduce investors overall return.
FOR BROKER-DEALER AND RIA USE ONLY. Not for general use with the public
There is no assurance the stated objectives will be met.
Please review the prospectus and the companys SEC filings for complete details. This information is derived from the issuers public filings and does not replace or supersede any information provided therein.
Forward-looking statements are based on current expectations and may be identified by words such as believes, anticipates, expects, may, could and terms of similar substance, and speak only as of the date made. Actual results could differ materially due to risks and uncertainties that are beyond the companys ability to control or accurately predict, including the amount and timing of anticipated future distributions, estimated per share net asset value of the companys stock and/or other matters. The companys forward-looking statements are not guarantees of future performance. Stockholders and financial advisors should not place undue reliance on forward-looking statements.
CHPII-0318-00418-003-BD