CNL HEALTHCARE PROPERTIES, INC. Item 1.01 Entry into a Material Definitive Agreement
The information appearing in Item 2.03 of this Current Report is incorporated by reference herein and made a part of this Item 1.01.
Item 2.03 Creation of Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant
KeyBank Term Loan Agreement
As previously reported in its Current Report on Form 8-K filed on
On
The Term Loan Amendment and the Credit Agreement Amendment are filed as Exhibits
10.1 and 10.2, respectively, to this Current Report on Form 8-K and are
incorporated herein by reference solely for the purposes of this 2.03
disclosure. For additional information on the Company's credit and term loan
facilities, review the Company's Current Reports on Form 8-K filed on
Item 7.01 Regulation FD Disclosure.
On or around
Pursuant to the rules and regulations of the
By furnishing the information contained in this Item 7.01 disclosure, including Exhibits 99.1 and 99.2, the Company makes no admission as to the materiality of such information.
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Item 8.01 Other Events. First Quarter Distribution
On
Determination of Net Asset Value per Share as of
Background and Conclusion
On
To assist the Board and the Company's valuation committee, which is comprised
solely of the Company's independent directors (the "Valuation Committee"), in
establishing a new estimated NAV per share of the Company's common stock as of
The Valuation Committee and the Board reviewed the Valuation Report and
considered the material assumptions and valuation methodologies applied and
described therein. Upon due consideration, on
Other than the adjustment for estimated transaction costs, the Board's
determination of the 2021 NAV was undertaken in accordance with the Company's
valuation policy and the recommendations and methodologies of the
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The 2021 NAV represents a snapshot in time as of
The Company will hold a webinar on
Valuation Methodologies and Major Assumptions
As of the Valuation Date, the Company's real estate portfolio consisted of
interests in 73 properties, including 71 seniors housing communities, one acute
care facility and one vacant land parcel. For purposes of the valuation
analysis, the Company's assets were classified into two categories: the
appraised properties which consist of 71 seniors housing properties and one
undeveloped land parcel (the "
For those properties for which a DCF analysis was utilized, pro forma statements of operations for such properties including revenues, expenses and capital expenditures, were analyzed and projected over a multi-year period (typically ten years). Projected operating expenses in the DCF analysis included estimated COVID-19 related expenses. A reversion value is estimated after the holding period and then capitalized at an appropriate terminal capitalization rate reflecting the age, anticipated functional and economic obsolescence and competitive position of such properties to determine their reversion value. Net proceeds to owners are determined by deducting appropriate costs of sale in the reversion year. The discount rate selected for the DCF analysis is based upon estimated target rates of return for buyers of similar properties with consideration given to unique property-related factors, lease-up projections, location and age.
The direct capitalization analysis was performed by applying a market capitalization rate for each applicable triple net leased Appraised Property to the forward-year annual net operating income at each such property. In selecting each capitalization rate, Stanger took into account, among other factors, prevailing capitalization rates in the applicable property sector, the property's location, age and condition, the property's operating trends, the anticipated year of stabilization and the lease coverage ratios and other unique property factors.
As applicable, Stanger adjusted the capitalized value of each Appraised Property
for any excess land, deferred maintenance or capital needs and lease-up costs to
estimate the "as-is" value of each Appraised Property as of the Valuation Date.
Stanger then adjusted the "as-is" property values, as appropriate, for the
Company's allocable ownership interest in the
In providing a valuation for the land parcels owned by the Company (which
includes the one vacant land parcel and excess or surplus land parcels deemed
contributory in value within five seniors communities that are part of the
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extraordinary, special or non-market financing or credits provided by the seller or others which may have influenced the sale price; (iii) adjustments for non-arms-length sale transactions; (iv) improvements or deterioration of market conditions from the reported land sale date through the Valuation Date; (v) listing status versus a consummated sale; (vi) location factors such as area demographics, traffic exposure and access; (vii) land deemed surplus; (viii) zoning factors; and (ix) land size. An index of value (price per square foot) for each land parcel from the land sale comparables was derived and the appropriate index was applied to the Company's land and excess or surplus land parcels.
Sale Property: The value assigned to the Sale Property was based on the purchase
price set forth in the Sale Agreement. As of the Valuation Date, the aggregate
estimated value of the Sale Property was approximately
Debt: The Company determined the fair market value of its debt liabilities by applying a discounted cash flow analysis over the projected remaining term of each debt liability and reflecting the debt's contractual agreement and corresponding interest and principal payments. The expected debt payments were then discounted to present value at an interest rate the Company deemed appropriate and reflective of market interest rates as of the Valuation Date for debt instruments with similar collateral, anticipated duration and prepayment terms. While Stanger did not determine the value of the Company's debt liabilities, Stanger did review the market interest rates used by the Company in determining the debt fair market value and, based upon a summary of the loan terms as provided by the Company, determined that in the aggregate, the market interest rates utilized by the Company were reasonable.
Cash, Other Tangible Assets and Other Liabilities: The fair value of the Company's cash, other tangible assets and liabilities was estimated by the Company to approximate net realizable value as of the Valuation Date based upon the values of these assets and liabilities on the Company's balance sheet, and Stanger reviewed and relied upon and utilized such amounts in its Valuation Report.
Stanger prepared an appraisal report (the "Appraisal Report") summarizing key
information and assumptions and provided an appraised value on the
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
10.1 First Amendment to Term Loan Agreement datedMarch 21, 2022 . 10.2 First Amendment to Credit Agreement datedMarch 21, 2022 . 99.1 Text of correspondence from the Company to Stockholders regarding the 2021 NAV. 99.2 Text of correspondence from the Company to Financial Professionals regarding the 2021 NAV. 104 Cover page Interactive data file (embedded with in the inline XBRL document)
Caution Concerning Forward-Looking Statements
Statements in this Current Report on Form 8-K that are not statements of historical fact, including statements about the purported value of the Company's common stock, constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to the safe harbors 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 management's current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of the Company's business and its performance, statements of future economic performance, and other future conditions and forecasts of future events and circumstances. Forward-looking statements are typically identified by words such as "believes," "expects," "anticipates," "intends," "estimates," "plans," "continues," "pro forma," "may," "will," "seeks," "should" and "could," and words and terms of similar substance in connection with discussions of future operating or financial performance, business strategy and portfolios, projected growth prospects, cash flows, costs and financing needs, legal proceedings, amount and timing of anticipated future distributions, estimated per share value of the Company's common stock, and other matters. The Company's forward-looking statements are not guarantees of future performance. While the Company's management believes its forward-looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances. As with any projection or forecast, forward-looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise and may not be realized. The Company's forward-looking statements are based on management's current expectations and a variety of risks, uncertainties and other factors, many of which are beyond the Company's inability to control or accurately predict. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company's actual results could differ materially from those set forth in the forward-looking statements due to a variety of risks, uncertainties and other factors.
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For further information regarding risks and uncertainties associated with the
Company's business, and important factors that could cause the Company's actual
results to vary materially from those expressed or implied in its
forward-looking statements, please refer to the factors listed and described
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the "Risk Factors" sections of the Company's documents filed
from time to time with the
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. Forward-looking statements speak only as of the date on which they are made; the Company undertakes no obligation to, and expressly disclaims any obligation to, update or revise its forward-looking statements to reflect new information, changed assumptions, the occurrence of subsequent events, or changes to future operating results over time unless otherwise required by law.
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