Welltower Inc. (NYSE:WELL) entered into a definitive agreement to acquire 55 medical office building and related properties in United States from CNL Healthcare Properties, Inc., CHP Partners, LP (“Sellers”) for approximately $1.3 billion on December 27, 2018. CNL Healthcare Properties, Inc. owns directly or indirectly 100% interest in 54 properties and owns, directly or indirectly 90% interest in one property. In connection with the sale agreement, Welltower Inc. deposited $26 million in cash into escrow as an earnest money deposit. The sale agreement provides that the Welltower shall have until January 17, 2019 to undertake an inspection of the properties. In the event that the Welltower determines no later than the end of the inspection period that it does not wish to proceed with the purchase of the properties, it may notify the sellers, and upon such notification the parties shall no longer have any obligations under the sale agreement and the Welltower shall be entitled to a return of $25 million of the initial deposit. In the event that the Welltower wishes to proceed with the purchase of the properties at the end of the inspection period, then the Welltower shall deposit an additional $50 million in cash or provide a letter of credit in the same amount to be held in escrow until the consummation of the transactions contemplated by the sale agreement or until the termination thereof and to be applied against the purchase price or delivered to the parties, respectively, upon termination as provided in the sale agreement. In the event that the sale agreement is terminated due to a breach by the Welltower, the sellers shall be entitled to retain the earnest money. In the event that the sale agreement is terminated due to a breach by the sellers, the Welltower shall be entitled to a return of the earnest money.

Transaction is subject to customary closing conditions, including governmental and third-party consents. The Board of Directors and special committee unanimously approved the sale of 55 of the healthcare assets to Welltower Inc. In 2018, a special committee was established by Board of CNL Healthcare Properties, Inc. Transaction is expected to close in first half of 2019. The transaction is expected to close in June 2019. CNL Healthcare Properties, Inc. will use approximately $430 million in sales proceeds to pay costs related to closing and repay indebtedness currently secured by the properties being sold to Welltower pursuant to the sale agreement. Subject to approval of the Board, CNL Healthcare Properties, Inc. anticipates using the remainder of the proceeds to rebalance corporate borrowings, make a special distribution to stockholders and for other liquidity needs of the company. Steve Hentschel, Ted Flagg, Evan Kovac, Ben Appel, Andrew Milne, Zach Drozda and Anthony Frogameni of HFF Securities L.P. and KeyBanc Capital Markets Inc. served as financial advisors to the Special Committee of CNL Healthcare Properties, Inc. Steven Klein of Gibson, Dunn & Crutcher LLP acted as legal advisor to Welltower Inc.