Attached files
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| EX-99.2 - SCRIPT RELATED TO VALUATION OF NET ASSET VALUE PER SHARE - CNL Healthcare Properties, Inc. | d816165dex992.htm |
| 8-K - FORM 8-K - CNL Healthcare Properties, Inc. | d816165d8k.htm |
 Net Asset Value Presentation
November 2014
Exhibit 99.1
©
2014
CNL
Healthcare
Corp.
All
Rights
Reserved.
CNL
®
and
the
Squares
Within
Squares
design
trademarks are used under license from CNL Intellectual Properties, Inc.
|
 2
FOR INVESTOR USE
General Notices
CNL Healthcare Properties has filed a registration statement on Form S-11
(including a prospectus) with the Securities and Exchange Commission (SEC) on
July 15, 2010, and the registration statement became effective on June 27,
2011, for the offering to which this communication relates. Before you invest, you
should read the prospectus in the registration statement, as supplemented, and
other documents the REIT has filed with the SEC for more complete
information about the REIT and this offering. You may get these
documents
for
free
by
visiting
EDGAR
on
the
SEC
website
at
SEC.gov
or
at
CNLHealthcareProperties.com.
No offering is made to residents of New York, Maryland or any other state, except
by a prospectus filed with the Department of Law of the state of New York,
the Maryland Division of Securities or the respective state securities
administrator. Neither the U.S. Securities and Exchange Commission, the attorney
general of the state of New York, the Maryland Division of Securities, nor any
other state securities administrator has passed on or endorsed the merits of
the REIT’s offering or the adequacy or accuracy of this piece or the
REIT’s prospectus. Any representation to the contrary is unlawful.
This is not an offer to sell nor a solicitation of an offer to buy shares of the
REIT. Only the REIT’s prospectus makes such an offer. This piece
must be read in conjunction with the prospectus in order to understand fully
all of the investment objectives, risks, charges and expenses associated with an
investment in the REIT and must not be relied upon to make an investment decision.
The information herein does not supplement or revise any information in the
REIT's public filings. To the extent information herein conflicts with the
prospectus, as supplemented, the information in the prospectus shall govern.
This
piece
is
for
general
information
purposes
only
and
does
not
constitute
legal,
tax,
investment
or
other
professional advice on any subject matter. Information provided is not
all-inclusive and should not be relied upon as being
all-inclusive. ©
2014
CNL
Healthcare
Corp.
All
Rights
Reserved.
CNL
®
and
the
Squares
Within
Squares
design
trademarks
are
used
under
license
from
CNL
Intellectual
Properties,
Inc.
Built on Experience is a trademark of Ameriprise Financial, Inc.
|
 3
FOR INVESTOR USE
General Notices
This presentation may include forward-looking statements.
Forward-looking statements are based on current expectations and may be
identified by words such as believes, expects, may, could and terms of
similar substance, and speak only as of the date made. Actual results could differ
materially from those expressed or implied in the REIT’s
forward-looking statements. Important factors, among others, that could
cause the REIT's actual results to differ materially from those in its forward-looking statements
include those identified in the Risk Factors described below. Investors should not
place undue reliance on forward-looking statements. The REIT is under no
obligation to, and expressly disclaims any obligation to, update or alter
its forward-looking statements, whether as a result of new information, subsequent events
or otherwise.
Shares are offered to the public through CNL Securities, Member FINRA/SIPC, the
REIT’s managing dealer, and through other broker-dealers or with
the assistance of registered investment advisors. Broker- dealers
are
reminded
that
REIT
communications
that
are
delivered
to
any
person
must
be
accompanied
or preceded by a prospectus in accordance with the Securities Act of 1933, as
amended. An investment in the REIT is subject to significant risks, some of
which are summarized below in the Risk Factors section of this piece and are
fully detailed in the REIT’s prospectus. Investors should read and
understand all of the risks and the entire prospectus, as supplemented, before
making a decision to invest. The prospectus and supplements are available on
SEC.gov or CNLHealthcareProperties.com. ©
2014
CNL
Healthcare
Corp.
All
Rights
Reserved.
CNL
®
and
the
Squares
Within
Squares
design
trademarks
are
used
under
license
from
CNL
Intellectual
Properties,
Inc.
Built on Experience is a trademark of Ameriprise Financial, Inc.
|
 4
FOR INVESTOR USE
Risk Factors
Investing in a non-traded REIT is a higher-risk, longer term investment and
is not suitable for all investors. Due
to
the
risks
involved
in
the
ownership
of
real
estate,
there
is
no
guarantee
of
any
return
on
investment. The shares may lose value or investors could lose their entire
investment. The shares are not FDIC-insured, nor bank guaranteed.
The REIT and its advisor were recently organized and have limited operating
histories on which investors may evaluate the REIT’s operations and
prospects for the future. Non-traded
REITs
are
illiquid.
There
is
no
public
trading
market
for
the
shares.
The
REIT
has
no
obligation to list on any public securities market and does not expect to list the
shares in the near future. If investors
are
able
to
sell
their
shares,
it
would
likely
be
at
a
substantial
discount.
There
are
significant
limitations
on
the
redemption
of
investors’
shares
under
the
REIT’s
Amended
and
Restated Redemption Plan. Funds available for redemption, if any, are within the
REIT’s sole discretion and are not expected to exceed the proceeds of
the REIT’s Distribution Reinvestment Plan, unless the board of
directors chooses to use other sources to redeem shares. The REIT can determine not to
redeem any shares, or only a portion of the shares for which redemption is
requested. In no event will more
than
5
percent
of
the
outstanding
shares
be
redeemed
in
any
12-month
period.
The
REIT
may
suspend, terminate or modify the redemption plan at any time.
This is a blind pool offering. The REIT has not identified all of the investments
that it will make in the future, and investors will not have the opportunity
to evaluate future investments before they are made. Investors must rely on
the REIT’s advisor and board of directors to evaluate, structure and implement
future investments.
If the REIT fails to maintain its qualification as a REIT for any taxable year, it
will be subject to federal income
tax
on
taxable
income
at
regular
corporate
rates.
In
such
event,
net
earnings
available
for
investment or distributions would be reduced.
©
2014
CNL
Healthcare
Corp.
All
Rights
Reserved.
CNL
®
and
the
Squares
Within
Squares
design
trademarks
are
used
under
license
from
CNL
Intellectual
Properties,
Inc.
Built on Experience is a trademark of Ameriprise Financial, Inc.
|
 5
FOR INVESTOR USE
Risk Factors
Since April 1, 2013, the advisor and its affiliated property manager have provided
expense support to the REIT, and forgoing the payment of fees in cash in
exchange for shares of restricted stock for services as defined in the
Expense Support Agreement. The expense support amount will be determined for each
calendar quarter on a non-cumulative basis, and may be terminated at any time
by the advisor. Decreases
in
the
support
amount
from
the
advisor
will
reduce
our
cash
flow
available
for
distributions.
The use of leverage to acquire assets may hinder the REIT’s ability to pay
distributions and/or decrease the
value
of
stockholders’
investment
in
the
event
income
from
or
the
value
of
the
property
securing
the
debt declines.
The
REIT’s
public
offering
is
a
“best
efforts”
offering.
The
managing
dealer
and
participating
brokers
are
only required to use their best efforts to sell shares, and are not required to
sell any specific number of shares. If the REIT raises substantially less
than the maximum offering amount, the REIT’s portfolio of properties
may be less diversified and your investment will be subject to greater risk.
There are significant risks associated with the senior housing and healthcare
sectors including market risk impacting demand, litigation risk and the cost
of being responsive to changing government regulations. The REIT’s
success in these sectors is dependent, in part, upon the ability to evaluate local conditions,
identify appropriate opportunities, and find qualified tenants or, where properties
are acquired through a taxable REIT subsidiary, to engage and retain
qualified independent managers. The REIT is obligated to pay substantial fees
to its advisor, managing dealer, property manager and their respective
affiliates based upon agreements which have not been negotiated at arm’s length, and some of
which are payable based upon factors other than the quality of services. These fees
could influence their advice
and
judgment
in
performing
services.
In
addition,
certain
officers
and
directors
of
the
advisor
also
serve as the REIT’s officers and directors, as well as officers and directors
of competing programs, resulting in conflicts of interest. Those persons
could take actions more favorable to other entities. ©
2014
CNL
Healthcare
Corp.
All
Rights
Reserved.
CNL
®
and
the
Squares
Within
Squares
design
trademarks
are
used
under
license
from
CNL
Intellectual
Properties,
Inc.
Built on Experience is a trademark of Ameriprise Financial, Inc.
|
 6
FOR INVESTOR USE
Risk Factors
The REIT has paid and intends to continue to pay distributions on a quarterly
basis; however, there is no guarantee of the amount of future distributions,
or if distributions can be sustained at all. The amount and basis of
distributions are determined by and at the discretion of the board of directors and are dependent
upon
a
number
of
factors,
including
but
not
limited
to,
expected
and
actual
net
operating
cash
flow,
funds
from operations, financial condition, capital requirements, avoidance of
volatility of distributions, and retaining qualification as a REIT for
federal income tax purposes. To date, the REIT has experienced cumulative
net losses, and accordingly, no distributions have been funded from earnings. Until the REIT
generates sufficient operating cash flow or funds from operations, the REIT may
continue to pay distributions from other sources and/or in stock.
Funding distributions from offering proceeds or borrowings
will
reduce
cash
available
for
investment,
may
lower
investors’
overall
return,
and
is
not
sustainable. Stock distributions paid to earlier investors will be dilutive to
later investors. The REIT has not established a limit on the extent
to which it may use borrowings, offering proceeds or stock to pay
distributions.
For
the
six
months
ended
June
30,
2014,
approximately
51
percent
of
distributions
were
funded
by
offering proceeds and 49 percent were covered by operating cash flow. For the year
ended Dec. 31, 2013, approximately 87 percent of distributions were funded
by offering proceeds and 13 percent were covered by operating cash flow.
For the years ended Dec. 31, 2011 and 2012, the REIT’s first two years
of operations, distributions were not covered by operating cash flow and were 100
percent funded by offering
proceeds.
Cash
flows
from
operating
activities
has
been
impacted
by
high
levels
of
acquisition
costs and fees during the REIT’s growth phase, as well as its strategy to
develop new properties and acquire newer existing properties prior to being
fully leased and stabilized. The REIT’s long-term strategy is to
fully invest its capital, complete its development/value add properties and work toward the goal of
being leased up to a stabilized level of occupancy. The REIT believes that this
will potentially generate higher
levels
of
cash
flows
from
operating
activities
to
support
its
distribution.
©
2014
CNL
Healthcare
Corp.
All
Rights
Reserved.
CNL
®
and
the
Squares
Within
Squares
design
trademarks
are
used
under
license
from
CNL
Intellectual
Properties,
Inc.
Built on Experience is a trademark of Ameriprise Financial, Inc.
|
 7
FOR INVESTOR USE
The offering price of our shares is based on our estimated net asset value per
share, plus selling commissions and marketing support fees, and may not be
indicative of the price at which our shares would trade if they were
actively traded. Our share price is primarily based on the estimated per
share value of our shares, but also based upon subjective judgments,
assumptions and opinions by management, which may or may not turn out to be
correct. Therefore, our share price may not reflect the amount that might be paid
to you for your shares in a market transaction.
In determining our estimated net asset value per share, we primarily relied upon a
valuation of our portfolio of properties as of September 30, 2014.
Valuations and appraisals of our properties are estimates of fair value and
may not necessarily correspond to realizable value upon the sale of such
properties, therefore our estimated net asset value per share may not reflect the
amount that would be realized upon a sale of each of our properties.
We may not perform a subsequent calculation of our net asset value per share for
our shares prior to the end of this offering, therefore, you may not be
able to determine the net asset value of your shares on an ongoing basis
during this offering. Valuation Disclosures
©
2014
CNL
Healthcare
Corp.
All
Rights
Reserved.
CNL
®
and
the
Squares
Within
Squares
design
trademarks
are
used
under
license
from
CNL
Intellectual
Properties,
Inc.
Built on Experience is a trademark of Ameriprise Financial, Inc.
|
  8
Senior Housing & Healthcare Focus
CNL Healthcare Properties may also invest in other income-producing
assets. Senior Housing
Medical Office
Post-Acute Care
Acute Care
•
Active Adult
Communities
•
Medical Office
Buildings
•
Skilled Nursing
Facilities
•
General Acute Care
Hospitals
•
Independent Living
•
Diagnostic Service
Providers
•
Long-term Acute Care
Hospitals
•
Specialty Surgical
Hospitals
•
Assisted Living
•
Specialty Medical
•
Inpatient Rehabilitation
•
Memory Care
•
Surgery Centers
•
Continuing Care
Retirement
Communities
•
Outpatient
Rehabilitation |
 9
Asset Class Diversification
(by purchase price)
Portfolio Snapshot
1
Geographic Diversification
(87 assets across 26 states)
1
As of Sept. 30, 2014.
$1.5B+
67%
18%
8%
7%
Senior Housing
Medical Office
Post-Acute Care
Acute
Senior Housing
Medical Office
Post-Acute Care
Acute Care |
 10
Estimated NAV &
Methodology |
 11
Consistent with IPA Valuation Guidelines
1
Use of independent investment banking firm
Engaged CBRE Capital Advisors, Inc. (“CBRE Cap”) an
independent investment banking firm, as valuation expert
Utilized discounted cash flow method
Tested for reasonableness using direct capitalization and
sales comparison approaches
Range provided by stressing key assumptions
Discount rates and terminal capitalization (“terminal cap.”) rates
Disclosure of key assumptions & methodology
Individual MAI property appraisals
(no enterprise/portfolio premiums)
Provided estimate of value as of Sept. 30, 2014
Utilized preliminary balance sheet as of Sept. 30, 2014.
Estimated Net Asset Value (NAV)
1
There is no assurance that IPA Guidelines are acceptable to FINRA or under ERISA
for compliance with reporting requirements. |
 12
Valuation based on cash flow projections and an unlevered
10-year discounted cash flow analysis from MAI appraisals for
each of the Company’s wholly-owned operating assets
Terminal cap. rate method was used to calculate terminal
value (forward year’s NOI / terminal cap. rate) of the assets
Wholly Owned Properties
Properties
with
third-party
leases
–
valuation
represents
leased
fee
value
Non-stabilized
Properties
–
lease-up
discount
and
costs
to
complete,
where
applicable,
were
applied
to
discounted
cash
flow
to
arrive
at
“as
is”
value.
A valuation range was calculated by varying the discount rate and
terminal cap. rate by 2.5% in either direction (represents a 5% range)
Terminal cap. rates vary by location, asset quality and supply/demand
dynamics |
 13
Stabilized
Properties
–
Assumed
a
sale
of
the
partially-owned
properties on Sept. 30, 2014, to capture the specific JV promote
structures (after debt repayment) and properly reflect the Company’s
economic interest in each asset.
Non-stabilized
Properties
–
Four-year
discounted
levered
free
cash
flows to capture the specific JV promote structures (after debt
service
and
the
repayment
of
debt)
of
each
asset
to
properly
reflect
the Company’s economic interest in each asset
JV Properties & Vacant Land
Relied on discounted cash flow value indications from MAI appraisals
A valuation range was calculated by varying the discount rate and
terminal cap. rate by 2.5% in either direction (represents a 5% range)
Relied on cash flow projections from MAI appraisals
A valuation range was calculated by varying the discount rate and
terminal cap. rate by 2.5% in either direction (represents a 5% range)
Lease-up discount and cost to complete were applied
|
 14
Terminal cap. rate method was used to calculate terminal
value (forward year’s NOI / terminal cap. rate) of the JV
assets
Vacant land was valued based on market comparables
JV Properties & Vacant Land
Terminal cap. rates vary by location, asset quality and supply/demand
dynamics |
 15
CBRE
Cap.
created
a
valuation
range
by
varying
the
discount
rate
utilized
and
the
terminal
cap.
rate of each real estate asset
CBRE Cap. utilized a Sept. 30, 2014, share count of 94,221,929
Valuation Summary
CBRE Valuation (Discount and Terminal Cap. Rates Based on CBRE Appraisals)
Sector
Discount Rate Range
Terminal Cap Rate Range
Medical Office Properties
8.03% -
8.44%
7.11% -
7.48%
Post-Acute & Acute Care Properties
8.36% -
8.79%
7.39% -
7.77%
Senior Housing Properties
8.39% -
8.82%
7.42% -
7.80%
JV Properties
9.07% -
9.53%
7.46% -
7.84%
Vacant Land
$65K-$940K per acre
The range was set at 40-50bps on the discount rate and 40-50bps on the
terminal cap. rate of each asset
Represents an approximate 5% sensitivity on the discount rate and terminal cap.
rate ranges |
 16
Estimated NAV Per Share Build-Up
1
The estimated NAV per share is a snapshot in time and is not
necessarily indicative of the value the Company or stockholders
may receive if the Company were to list its shares or liquidate its
assets, now or in the future.
Table of Value Estimates for Components of Net Asset Value
(as of Sept. 30, 2014)
Value
($ in 000’s)
Per Share
Present value of equity in wholly owned and partially
owned operating assets and vacant land
$1,688,526
$17.92
Cash and cash equivalents
$83,483
$0.89
Other assets
$18,691
$0.20
Fair market value of debt
($869,792)
($9.23)
Accounts payable and other accrued expenses
($18,257)
($0.19)
Other liabilities
($6,095)
($0.06)
Estimated net asset value
¹
$ 9.52
$896,556 |
 17
Estimated NAV per share of $9.52
No enterprise or portfolio premium
Offering price per share of $10.58
Estimated NAV grossed up for sales
commissions and marketing support fees
Distribution Reinvestment Plan (DRP)
Purchase price is 95% of the new offering
price or $10.06
Redemption Plan
Redemption priced at estimated NAV, not to
exceed original share purchase price
Repricing of Shares
1
1
As of Sept. 30, 2014 |
 18
Increased the amount of distributions to
maintain the historical distribution rate of
4% cash, 3% stock for a total of 7% on
each outstanding share of common
stock, based on the new offering price.
This includes:
An increase in the monthly cash distributions to
$0.0353 per share
Monthly stock distributions of
0.0025 shares
Increase in Distributions
1
1
For the six months ended June 30, 2014, approximately 51 percent of distributions were funded by
offering proceeds and 49 percent were covered by operating cash flow. For the year ended Dec.
31, 2013, approximately 87 percent of distributions were funded by offering proceeds and 13 percent were covered by
operating cash flow. For the years ended Dec. 31, 2011 and 2012, the REIT’s first two years of
operations, distributions were not covered by operating cash flow and were 100 percent funded
by offering proceeds. Cash flows from operating activities has been impacted by high levels of acquisition costs and fees during the
REIT’s growth phase, as well as its strategy to develop new properties and acquire newer existing
properties prior to being fully leased and stabilized. The REIT’s long-term strategy
is to fully invest its capital, complete its development/value add properties and work toward the goal of being leased up to a stabilized level of
occupancy. The REIT believes that this will potentially generate higher levels of cash flows from
operating activities to support its distribution. Distributions are not guaranteed and may be
suspended, modified or terminated at the discretion of the board of directors. Distributions may include return or principal or borrowed
funds which may lower overall returns to the investor and may not be sustainable. Stock distributions
paid to earlier investors will be dilutive to later investors. |
 19
Summary |
 20
New subscriptions received after 3:00 p.m. CST,
Nov. 4, 2014
Processed at the new offering price of $10.58
Received and date stamped prior to Nov. 4, 2014, but not in good
order
Processed at the new offering price of $10.58, once all requirements
have been met
Rescissions
Accepted up until Nov. 18, 2014, 3:00 p.m. (CST) so long as
subscription agreements are received between Oct. 28, 2014, and
Nov. 18, 2014, 3:00 p.m. (CST) by DST Systems, Inc. our transfer
agent
New distribution rates will be effective in the fourth
quarter 2014 distributions
Operational Summary & Timing |
 21
Continue to grow and diversify our portfolio based on our
investment strategy.
Close existing pipeline of senior housing and medical office
transactions.
Invest in select development opportunities and actively drive
value-add.
Maximize operating performance at the individual asset level.
Close initial offering on or about Jan. 30, 2015, and transition
to the follow-on offering. Anticipate raising equity through the
end of 2015 in the follow-on.
Looking Ahead
1
1
A registration statement relating to the common stock of CNL Healthcare Properties is filed with the
Securities and Exchange Commission. The offering of CNL Healthcare Properties’ common
stock is being made solely by means of a written prospectus. This presentation is not an offer to sell and is not soliciting an offer
to buy these securities in any state where such offer or sale is not permitted. Neither the SEC, the
Attorney General of the State of New York nor any other regulatory agency has passed on or
endorsed the merits of this offering. Any representation to the contrary is a criminal offense.
There is no assurance these objectives will be met. Forward-looking statements are based on
current expectations and may be identified by words such as “believes,”
“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 REIT’s ability to control or accurately predict. Investors
should not place undue reliance on forward-looking statements.
|
 22
Offering Summary
Maximum Offering Size
$3 billion in common stock
Offering Price Per Share
$10.58
Minimum Investment
$5,000 for individuals, $4,000 for qualified plans
Asset Focus
Senior housing, medical office, post-acute care, acute care and other
income-producing assets Geographic Diversification
United States, with the opportunity for limited international acquisitions
Return Objective
Income & Growth
Distributions
Cash,
stock
or
combination
of
the
two
Distribution Payment Schedule
Declared
monthly
and
paid
quarterly
Distribution Reinvestment Price
$10.06 (Approximately 95% of the current offering price per share)
Redemption Price Per Share
The
lesser
of
the
then
estimated
net
asset
value,
or
stockholder’s
purchase
price
Exit Strategy
On
or
before
June
27,
2018,
the
board
of
directors
will
consider
liquidity
event
options
Suitability Standards
$250,000 net worth (excluding home, furnishings and personal automobiles) or
$70,000 net worth and $70,000 annual gross income. (Some states, including
but not limited to AL, CA, IA, KS, KY, MA, ME, MI, MO, ND, NE, NJ, OH, OR,
PA and TN have additional standards. See the “Suitability Standards”
section of the prospectus.)
See the "Risk Factors" section of this presentation and in the prospectus for additional
information about the REIT's distributions, Distribution Reinvestment Plan and Amended and
Restated Redemption Plan. 1
There is no assurance these objectives will be met. 3
For the six months ended June 30, 2014, approximately 51 percent of distributions were funded by
offering proceeds and 49 percent were covered by operating cash flow. For the year ended Dec.
31, 2013, approximately 87 percent of distributions were funded by offering proceeds and 13 percent were covered by
operating cash flow. For the years ended Dec. 31, 2011 and 2012, the REIT’s first two years of
operations, distributions were not covered by operating cash flow and were 100 percent funded
by offering proceeds. The interest of later investors in our common stock will be diluted as a result of our stock distribution policy.
3
In no event will more than 5 percent of the outstanding shares be redeemed in any 12-month period.
The REIT may suspend, terminate or reduce the redemption plan at any time. Non-traded REITs
are illiquid. There are significant restrictions and limitations on your ability to have all or any portion of your shares redeemed.
1
2
2
3
1 |
 Investors
To obtain additional information about CNL Healthcare
Properties, please consult your Financial Advisor. Or you
may visit CNLHealthcareProperties.com.
Financial Professionals
For more information about CNL Healthcare Properties,
please contact our managing dealer, CNL Securities,
Member FINRA/SIPC at 866-650-0650 or visit
CNLSecurities.com.
For More Information
23
©
2014
CNL
Healthcare
Corp.
All
Rights
Reserved.
CNL
®
and
the
Squares
Within
Squares
design
trademarks
are
used
under
license
from
CNL
Intellectual
Properties,
Inc.
Built on Experience is a trademark used under license from Ameriprise
Financial, Inc. This is not an offer. Securities can be offered only by prospectus.
Dissemination to prospective or current investors is prohibited. Broker/Dealers are reminded that all
communications, including this presentation, sent or delivered to any person must be accompanied or
preceded by a prospectus in accordance with the Securities Act of 1933, as amended.
Investments in non-traded real estate investment trusts (REITs) are subject to significant risks. These risks include limited operating histories,
reliance on the advisors, conflicts of interests, use of leverage, payment of substantial fees to the
advisors and their affiliates, illiquidity and liquidations at less than the original amounts
invested. Investing in these products may not be suitable for all investors. Investors should consult a financial professional to determine whether risks
associated with an investment in the shares are compatible with their investment objectives.
|