8-K

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, 2024

CNL Healthcare Properties, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland	000-54685	27-2876363
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

450 South Orange Ave.

Orlando, Florida 32801

(Address of Principal Executive Offices; Zip Code)

Registrant’s telephone number, including area code: (407) 650-1000

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:

☐ 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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in 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 7.01 Regulation FD Disclosure.

On March 14, 2024, CNL Healthcare Properties, Inc. (the “Company”), through a webinar and related script, discussed the Company’s board of directors’ unanimous determination of the estimated net asset value per share of its common stock as of December 31, 2023 (“2023 NAV”), which was announced in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2024. The webinar presentation and related script are hereby furnished as Exhibits 99.1 and 99.2 under Item 7.01.

By filing this report on Form 8-K, the Company makes no admission as to the materiality of any information in this report. The information in this Form 8-K is being furnished under Item 7.01 and shall not be deemed to be filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

99.1	Webinar presentation related to Company’s 2023 NAV.
99.2	Webinar script related to Company’s 2023 NAV.
104	Cover Page Interactive Data File (embedded within 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.

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 Securities and Exchange Commission, including, but not limited to, the Company’s quarterly reports on Form 10-Q, and the Company’s annual report on Form 10-K, copies of which may be obtained from the Company’s website at http://www.cnlhealthcareproperties.com.

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.

SIGNATURES

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

Dated: March 14, 2024		CNL HEALTHCARE PROPERTIES, INC.
		a Maryland corporation
	By:	/s/ Ixchell C. Duarte
		Ixchell C. Duarte
		Chief Financial Officer and Treasurer

EX-99.1

Estimated Net Asset Value Presentation March 2024 Exhibit 99.1

General Notices This is not an offer to sell nor a solicitation of an offer to buy shares of the company. This presentation 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. Certain statements in this presentation are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. 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 performance, the economy, and other future conditions and forecasts of future events and circumstances. Forward-looking statements are typically identified by words such as “continues,” “could,” “estimates,” “expects,” “maintains,” “may,” “should,” “pursues,” “will,” the negative of such terms 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, amount and timing of anticipated future distributions, estimates of per share NAV of the company’s common stock, and/or 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 ability to control or accurately predict.

General Notices 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. Given these uncertainties, the company cautions you not to place undue reliance on such statements. 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. An investment in the company is subject to significant risks, some of which are summarized below in the “Risk Factors” section of this presentation. See also, “Risk Factors” in the company’s public filings for a more detailed description of the risks associated with an investment in the company.

Risk Factors Investing in a non-traded real estate investment trust (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. Epidemics, pandemics, or other infectious diseases, including COVID-19, and health and safety measures intended to reduce their spread may have an adverse effect on the company’s business, results of operations and financial condition. Non-traded REITs are illiquid. If the company does not successfully implement a liquidity event, investors may have to hold an investment for an indeterminate period of time. 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. There is a risk that a stockholder may not be able to sell shares at a time or price acceptable to the stockholder, or at all. The use of leverage to acquire assets may hinder the company’s ability to pay distributions, may require partial repayment if the value of assets decline and may decrease the value of stockholders’ investment. 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. Events, including macroeconomic trends such as inflation, which adversely affect the ability of seniors to afford the company’s daily resident fees, could cause the occupancy rates, resident fee revenues and results of operations of the company’s seniors housing properties to decline.

Risk Factors The company relies on its advisor and the advisor’s affiliates to conduct operations. The company is obligated to pay substantial fees to its advisor and its affiliates based upon agreements which have not been negotiated at arm’s length. These fees could influence their advice and judgment in performing services. Certain officers and directors of the advisor also serve as the company’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 than to the company. Additionally, the financial condition of our operators and tenants can impact the Company’s operating revenue. The company has paid distributions on a quarterly basis; however, there can be no assurance that the company will be able to achieve expected cash flows necessary to pay or maintain distributions at any particular level or that distributions will continue over time. 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. Failure to qualify as a REIT would adversely affect the company’s operations and the company’s ability to pay distributions to investors. Agreements with the company’s lenders may also restrict the Company’s ability to pay distributions. Aspects of the company’s organizational structure, including the limit on the percentage of shares of the Company’s stock that any person may own, the ability of the company’s board of directors to take certain actions without stockholder approval, and the company’s use of an operating partnership structure could have a material adverse effect on the distributions investors receive from the company and/or could reduce the value of the company’s assets.

Net asset value (NAV) means the fair value of real estate, real estate-related investments and all other assets less the fair value of total liabilities. Our estimated NAV per share is based upon subjective judgments, assumptions and opinions, which may or may not turn out to be correct. You should not rely upon our estimated NAV as representative of the amount that might be paid to you for your shares in a market transaction or in a liquidity event. Forces that influence real property values, including social trends, economic circumstances, including inflation, governmental controls and regulations, and environmental conditions, such as epidemics and pandemics, including COVID-19, can significantly affect the appraised properties value. Our valuation consultant has considered the known impacts of COVID-19 in its analysis as of the valuation date; however, the continuing effects and risks of COVID-19 on the appraised properties’ operations and financial condition remain uncertain. In determining our estimated NAV per share, we relied upon a valuation of our portfolio of properties and the amount of our outstanding debt as of Dec. 31, 2023. 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, the estimated value to the company of our equity in our portfolio may not reflect the amount that would be realized upon a sale of each of our properties. We intend to conduct annual year-end valuations in accordance with our valuation policy. If we do not perform a subsequent calculation of the NAV per share of our shares, you may not be able to determine the net asset value of your shares on an ongoing basis. The estimated NAV per share is only an estimate and 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 company’s 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. Valuation Disclosures

Welcome Business Update Estimated Net Asset Valuation Next Steps

Business Update - 2023 Highlights

Business Update Data as of Dec. 31, 2023, unless otherwise noted. 1 Based on total seniors housing managed portfolio revenue. 2 Since announcing strategic alternatives in mid-2018. Total Investment $1.74B Leverage 31.0% Average Effective Community Age 14.7 years Number of States 26 Dispositions2 73 (10 discreet transactions /$1.52B gross proceeds) Seniors Housing Portfolio Composition By Units 92.1% private-pay1 Current Distribution (Annualized) 1.63% (or $.1024 p/share annually)

Estimated Net Asset Value (NAV) Result Dec. 31, 2023, Estimated NAV $6.28 per share Represents a decline of $0.64 per share or 9.25% Aggregate appraised value of comparable real estate properties declined $92.16 million (-5.22%) compared to 2022

Offering closed to new investors Special distribution $2.00/share Historical Estimated Net Asset Value Recap This valuation has been determined with the assistance of a third party, which is aligned to be in accordance with IPA guidelines. The IPA is a trade industry organization. There is no assurance that the IPA Guidelines are acceptable under ERISA, or to the SEC or to FINRA for compliance with reporting requirements. The estimated figures for per share valuation are not the amount an investor is expected to receive now or at any time in the future. The company’s estimated NAV will vary. Given these uncertainties, do not place undue reliance on such statements that are dependent on assumptions, data and/or methods that may be incorrect, imprecise or unrealized. An investor’s actual return is unknown until a share redemption or a liquidity event occurs. For the years ended Dec. 31, 2023, 2022, 2021, 2020, 2019 and 2018 (excluding the special cash distribution paid during the year ended Dec. 31, 2019), approximately 100%, 100%, 100%, 100%, 100% and 83% respectively of regular cash distributions were covered by operating cash flow and approximately 0%, 0%, 0%, 0%, 0% and 17.0% respectively of regular cash distributions were funded with borrowings under the company’s credit facilities. For the years ended 2017, 2016, 2015, 2014 and 2013, approximately 91%, 94%, 45%, 34% and 13%, respectively, of total distributions were covered by operating cash flow and approximately 9%, 6%, 55%, 66% and 87%, respectively, were funded by offering proceeds. Distributions are not guaranteed in frequency or amount. Net Asset Value Public Offering Price $10.00 $10.14 $10.58 $9.13 $9.52 $9.00 $9.75 $10.32 $10.04 $10.01 $7.99 $7.81 $7.38 $6.92 $6.28 Pandemic onset

Estimated NAV Process 1 There is no assurance that IPA Guidelines are acceptable to FINRA or under ERISA for compliance with valuation or reporting requirements. Please see the Form 8-K for complete details. Consistent with IPA guidelines1 & company valuation policy Included estimated transaction costs Independent valuation firm: Robert A Stanger & Co., Inc. Individual property appraisals Income approach with discounted cash flow analysis and/or direct cap analysis Range provided by adjusting discount rates, direct cap rates and terminal cap rates up and down by 25 bps and stressing up and down by 5% Disclosure of key assumptions & methodology Outside of IPA guidelines but consistent with approach taken since initiation of strategic alternatives process

Methodology & Assumptions Discounted cash flow analysis and/or a direct capitalization analysis (except for the land) Adjusted values for excess land, deferred maintenance or capital needs and lease-up costs Adjusted for company and JV interests Appraised Assets Cash, Other Tangible Assets & Liabilities Fair value estimated to approximate the net realizable value as of the valuation date, based on the company’s balance sheet Fair market value estimated using a discounted cash flow analysis and based on pricing for similar instruments, as of the valuation date Debt

Discount and Capitalization Rates 1 The weighted average capitalization rate, discount rates and terminal capitalization rates are weighted on stabilized net operating income. The weighted average YoY change is based on the comparable set of properties from the prior year. Range Min Max Weighted Avg.1 Weighted Avg. YoY Change Direct capitalization rate Not Utilized Discount rate 7.75% 10.75% 9.50% 8.80% 0.32% Terminal capitalization rate 6.75% 8.50% 8.00% 7.60% 0.55% Direct capitalization rate 7.00% 7.50% 7.50% 7.17% -0.16% Discount rate 10.00% 11.00% 11.25% 10.57% -0.17% Terminal capitalization rate 8.75% 9.75% 9.25% 9.32% 0.45% RIDEA LEASED

8-K Sensitivity 5% Decrease NAV midpoint by $0.54 per share 5% Increase NAV midpoint by $0.51 per share Impact of 5% or 5% on capitalization rates, discount rates and land price PSF

Stanger varied the discount rate, terminal cap rates and direct capitalization rates, by 25 bps in either direction Valuation Range and Midpoint The estimated NAV is based upon assumptions and estimates believed to be accurate as of Dec. 31, 2023. Data is subject to change. Please see the Form 8-K for complete details. Impact of low end of range on NAV: $0.30 The resulting NAV per share range was $5.93 to $6.58 Impact of high end of range on NAV: $0.35

Estimated NAV Per Share Build-Up 1 Includes restricted cash and reflects approximately $25.3 million in principal payments and approximately $14.2 million of non-recurring financing costs. 2 Reflects payoff of one secured debt obligation. 3 Reflects a hypothetical orderly sale of the company’s assets. 4 The estimated NAV per share is a snapshot in time and is not necessarily indicative of the value the company or stockholders may receive if the company were to list its shares or liquidate its assets, now or in the future. The estimated NAV per share includes an estimate for transaction costs but excludes debt prepayment penalties, which can materially reduce realized returns. This methodology is consistent with IPA guidelines. 5 Excludes the advisor’s restricted shares for the year ending Dec. 31, 2023. There is no assurance that IPA Guidelines are acceptable to FINRA or under ERISA for compliance with valuation or reporting requirements. Please see the Form 8-K for complete details. Table of Value Estimates for Components of Net Asset Value (as of Dec. 31, 2023)   Value ($ in 000’s) (Per share) Same store real estate assets (net) $1,673,900 $9.62 + Cash, cash equivalents & other assets1 67,976 0.39 – Fair market value of debt2 (584,809) (3.36) – Accounts payables, other liabilities and noncontrolling interests (41,262) (0.24) = Estimated NAV (Per share: NAV/outstanding shares) $1,115,805 $ 6.41 - Estimated transaction costs3 (23,780) (0.14) Estimated NAV (net of estimated transaction costs)4 $1,092,025 $ 6.28 Share count of 173.94 million5 Note: numbers may not foot due to rounding.

Financial Health 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 company’s ability to control or accurately predict. Investors should not place undue reliance on forward-looking statements. $106.1M Liquidity $54.1M Cash $52.0M Undrawn Credit Facility

Seniors Housing Sector All Markets – Seniors Housing | Profit | Quarterly | 4Q20233 Source: 1 Organization for Economic Co-Operation and Development and NIC MAPÒ Data as of 1Q23 2 Welltower Business Update, February 2024– Sourced from NIC MAPÒ Data 3 NIC MAPÒ Data as of 4Q23; All markets; For profit Net Inventory Growth2 Demographic Trends (80+ Population1 2024 80+ Population 15,083,304 Growth 3,767,980 ( 25%) 2029 80+ Population 18,851,284

Continue to maximize property-level cash flows and operating performance1 Maintain financial flexibility and balance sheet strength, and ample liquidity Pursue ultimate shareholder liquidity as the economic environment allows What’s Next?1 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,” “anticipates,” “intends,” “estimates,” “plans,” “continues,” “pro forma,” “may,” “will,” “seeks,” “should” and “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 company’s ability to control or accurately predict. The reader should not place undue reliance on forward-looking statements. 1 For the year ended Dec. 31, 2023, 2022, 100 percent of regular cash distributions were covered by operating cash flow as defined by GAAP. Distributions paid from sources other than operating cash flow, now and in the future, are not sustainable and can reduce stockholders’ overall return.

Investors Please consult your financial professional or visit cnlhealthcareproperties.com. Financial Professionals Please contact our managing dealer, CNL Securities, member FINRA/SIPC at 866-650-0650 or visit cnlsecurities.com

EX-99.2

Exhibit 99.2

CHP 2023 Valuation Webinar Script

March 14, 2024, 2:30 p.m. ET

Althia:

Ladies and gentlemen, welcome to the CNL Healthcare Properties valuation conference call. Before we begin, please note that statements made during this call will include forward-looking statements within the Private Securities Litigation Reform Act of 1995, including statements about financial guidance, business strategies, future financial performance, and potential strategic alternatives.

Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks, which could cause actual results to differ materially from the expectations and assumptions discussed here today. Descriptions of these risks can be found in the company’s SEC filings, including its recently filed annual report on Form 10-K. Listeners are cautioned that these forward-looking statements are neither promises nor guarantees and are only made as of the date of this call. The company undertakes no obligation to update or revise the information provided on this call due to new information or future results or developments, except as required by law.

The valuation information discussed today is a point-in-time estimate based on numerous inputs and data that vary over time and may be subjective. Valuations and appraisals of real estate properties are only estimates of fair market value and may not necessarily correspond to realizable value upon the sale of such properties or the amount that shareholders will receive upon liquidity of their investment.

Additional information is available in our filings with the SEC, which also may be accessed through the company’s website at cnlhealthcareproperties.com. Each listener is encouraged to review those filings together with all other information provided.

As a reminder, this call is being recorded on March 14, 2024, at 2:30 p.m. I will now turn the call over to CNL Healthcare Properties’ President and CEO — Mr. Steve Mauldin.

Welcome/Agenda - Slide 7 Steve:

Thank you, Althia. Good afternoon and thank you for joining us today as we review information related to our updated annual net asset valuation process. Joining me on today’s call is Ixchell Duarte, the company’s chief financial officer and treasurer, and Mike Tetrick, senior vice president at the company’s advisor, CNL Healthcare Corp. Two days ago, we publicly announced $6.28 per share as the estimated net asset valuation (or “N-A-V” or “NAV”) as of year-end 12/31/2023, which is 0.64 cents or 9.25% less than our previous year-end 2022 NAV of $6.92 per share. Mike will review details of the NAV process in a few minutes, but first let me take a moment to summarize the company’s state of play and achievements looking back on 2023.

Business Update – Slide 8 Steve:

In 2023, we maintained a sharp focus on improving the operational and financial performance of our national portfolio of private-pay seniors housing communities, which number 69 operating assets in 26 states. Throughout the year we had a relentless focus on increasing occupancy rates and improving operating margins. As a result of our efforts, I am pleased to report that we made real and tangible operational progress and grew portfolio-wide occupancy steadily and by more than 100 basis points in our 54 properties managed under third-party operating agreements (or under the RIDEA format) and significantly expanded Net Operating Income (or NOI) from pandemic-driven lows. By way of example, our RIDEA properties have now posted an impressive nine consecutive quarters of year-over-year revenue growth and six consecutive quarters of year-over-year NOI growth. I am also pleased to share that our 15 triple-net leased properties have maintained strong occupancy and have been able to organically support lease payments received, further contributing to our operational success in 2023.

Finally, and very importantly, in early December we completed the successful refinancing of our $600 million corporate unsecured credit facilities six months ahead of its May 2024 maturity date. Our refinanced corporate credit facilities now have a maturity of May 2026. These debt facilities make up the overwhelming majority of our company’s debt, or just under 94% of our debt outstanding as of year-end 2023. Refinancing our unsecured credit facilities was a vital corporate initiative to support the ongoing health of our company and is a significant achievement given the very challenging credit and debt capital environment, which is leaving many real estate owners without supportive or economically viable financing options. Our total debt-to-asset ratio continues to be very low and conservative at 31.0%, based on the in-place carrying value of our assets at year end.

Business Update - Slide 9 Steve:

Our seniors housing portfolio of 69 communities is predominantly needs-based, private-pay assisted living communities, including assisted living with memory care services and independent living units, with an effective average asset age of under 15 years. As the portfolio continued its rebound in 2023, we were able to maintain a financially responsible and consistent annualized distribution rate throughout the year.

Across the seniors housing sector and overall commercial real estate space more broadly, the past two years of economic uncertainty, rising costs of capital (both debt and equity) and inflation pressures, coupled with an especially tight credit environment, have put material downward pressure on property values by way of increased capitalization (or cap) rates and discount rates as well as restricted quick expansion of cash flow margins.

As everybody on this call is no doubt aware, since March 2022, the Federal Reserve has increased its Federal Funds rate 11 times from 0.25% to 5.50%, and higher personnel costs and wages are here to stay as they make up about 70% of our controllable operating expenses at the property level. Add to that, the cost of essentially everything else is inflated compared to prior years – be that food, gas, insurance, the list goes on.

Specifically, higher costs of capital (again, both debt and equity) has driven higher expected rates of return and increases to both discount rates and cap rates, both of which are fundamental determinants in valuing income-producing properties. Since current and expected future property cash flows are divided by discount and cap rates to calculate values, the higher these rates are, the lower the cash flows are valued.

While our portfolio’s balance sheet produced previously unseen positive net operating income or (NOI) growth in 2023, macroeconomic factors previously I just mentioned played a key role in tempering the year-end estimated valuation of our assets. Our clear expectation is that any future (and expected) interest rate cuts will positively impact our specific portfolio and valuations of income-producing real estate assets in general.

	You can take comfort in the fact that we are confident that our company remains financially well-positioned, especially considering the recent successful refinancing of our corporate credit facilities, low debt level and ample liquidity.
NAV Result -Slide 10 Steve:	The $0.64 per share or 9.25% decline in the company’s 2023 estimated NAV year-over-year, is naturally driven by a decline in the aggregate appraised value of the company’s properties and a reduction in value driven by $14.2 million in non-recurring costs connected with our successful early refinancing of the company’s $600 million unsecured credit facilities in December. Additionally, we used incremental cash to pay $25.3 million of principal payments, which had a net neutral impact on NAV. The aggregate appraised value of the company’s comparable properties declined by approximately $92.2 million to $1.67 billion as of Dec. 31, 2023. The primary factor is the uncontrollable expansion in discount rates and cap rates, which Mike will explain in detail.
NAV history slide -Slide 11 Steve:	Our estimated NAV per share includes an ongoing deduction for our current projection of estimated property-level transaction costs. The projected transaction costs are estimated based on a hypothetical orderly sale of the company’s assets. We began proactively deducting these costs from our estimated 2017 NAV calculations, after we publicly announced the initiation of our strategic alternatives process to begin to provide liquidity to shareholders.

Finally, and consistent with past years, we continue to closely follow the Investment Program Association (or “IPA”) industry guidelines for our annual net asset valuation exercise. The IPA is the leading national industry trade association for our direct investment industry. As a reminder, our estimated NAV is very much a snapshot in time – like any appraisal process – and is not necessarily meant to be indicative of value the company or our shareholders should expect to receive now, or in the future. While we will not be hosting a question-and-answer session at the end of today’s call due to the fact we remain squarely in our strategic alternatives process, CNL’s shareholder services and capital markets team members stand ready to assist you further with any questions. I would now like to invite Mike Tetrick to describe our valuation process in greater detail. Mike is a senior vice president with our company’s advisor and has extensive involvement in the company’s annual valuation process.

Estimated NAV Process – Slide 12 Mike:

For a sixth year, the company engaged Robert A. Stanger & Co., an independent third-party valuation firm, to provide a valuation analysis of our real estate and balance sheet and to assist the board of directors and the company’s valuation committee, which is comprised solely of independent directors, to establish the new estimated NAV per share as of calendar year-end 2023.

In their analysis, Stanger conducted individual property appraisals for all properties and provided a range of values by decreasing and increasing cap rates and discount rates by 25 basis points. This resulted in a valuation range of $5.93 to $6.58 for the estimated NAV per share. In addition, and in accordance with IPA guidelines, Stanger provided a sensitivity analysis by stressing discount rates and capitalization rates up and down by 5%. The estimated NAV per share was established consistent with our valuation policy and the recommended methodology set forth by the IPA, except for deducting estimated property-level transaction costs., which presume a hypothetical orderly liquidation of the company’s assets.

Methodology & Assumptions – Slide 13 Mike:

Stanger used the income approach to valuation that included a discounted cash flow (or DCF) analysis and a direct capitalization analysis. For the one parcel of land and excess or surplus land, the sales comparison approach was used. The DCF analysis was applied to property revenues and expenses over a projected 10-year holding period. Stanger relied solely on DCF analyses to determine the appraised value of the 54 RIDEA properties as well as two of our fifteen triple net leased properties. The value of these properties decreased primarily due to higher terminal cap rate and discount rate assumptions. Each appraised property’s value was adjusted, as applicable, for lease-up costs, deferred maintenance or capital needs, and surplus land. The resulting value was adjusted for any third-party promoted interests and for our ownership interest in one joint venture asset.

The remaining thirteen triple net leased properties were valued using direct capitalization and had an increase in value due to improved lease coverage and a reduction in the cap rate applied to the forward-year NOI.

The appraised properties excluded any portfolio premium in accordance with our valuation policy and IPA guidelines. Stanger prepared an appraisal report summarizing the key information, assumptions and value for each asset as of year-end.

Stanger appraised the 69 properties and one parcel of land, which had an aggregate estimated value of approximately $1.67 billion, a decrease of 5.2% compared to the appraised value of the same properties for the prior year.

The fair market value of our debt obligations was estimated based on pricing for similar debt instruments that we believe could be obtained as of Dec. 31, 2023. The company utilized a discounted cash flow analysis whereby contractual debt payments were discounted to present value at an interest rate deemed appropriate and reflective of market interest rates as of the valuation date. The collateral type, origination date, anticipated duration and pre-payment terms were also considered. Stanger confirmed the reasonableness of our fair market value of debt.

The values of cash and other assets and liabilities were estimated to approximate net realizable value and based on the values derived from our audited balance sheet for year-end December 31, 2023.

Discount and Capitalization Rates Summary – Slide 14 Mike:

As Steve mentioned earlier, Stanger used both direct capitalization and discounted cash flow analyses in the valuation. Generally, terminal cap rates and discount rates used in the DCF were higher than the prior year. In selecting the discount rate, Stanger considered estimated target rates of return for buyers of similar properties with consideration given to unique property-related features such as location and age. In comparison to last year’s valuation, the RIDEA properties had an increase in the weighted average discount rate of 32 basis points, to 8.80%, and an increase in the terminal capitalization rate of 55 basis points, to 7.60% The two triple-net leased properties that also utilized DCF had a decrease in the weighted average discount rate of 17 basis points, to 10.57%, and an increase in the terminal capitalization rate of 45 basis points, to 9.32%. The thirteen triple-net leased properties utilizing direct cap analyses had a decrease in the weighted average direct capitalization rate of 16 basis points, to 7.17%. Stanger reviewed published seniors housing and healthcare property investor surveys and considered, among other factors, prevailing cap rates for the property’s location, age and condition, the property’s operating trends and, lease coverage ratios to determine the direct capitalization rates utilized in our triple net leased portfolio.

8-K Sensitivity – Slide 15 Mike:

As changes to the key assumptions to arrive at the estimated NAV per share could have a significant impact on the value of our real estate assets, a sensitivity analysis was conducted on the appraised properties in accordance with IPA guidelines to illustrate the effect of a 5% increase or decrease to the discount rates, terminal cap rates and direct capitalization rates. The land price per square foot was also adjusted by 5% in either direction. This sensitivity analysis shows that 5% lower assumed rates would increase the midpoint NAV by $0.51 per share, while 5% higher assumed rates would decrease the midpoint NAV by $0.54 per share.

Valuation Range & Midpoint – Slide 16 Mike:

Stanger also provided a valuation range for the appraised properties’ real estate values by varying the discount rate, terminal cap rate and direct capitalization rates by 25 basis points in either direction. The lower end of the discount and capitalization rates, along with the upper end of price per square foot for the land parcel, has a positive $0.30 impact on NAV per share. Conversely, the reverse has a negative $0.35 impact on NAV per share. The result is a NAV per share valuation range of $5.93 to $6.58 with a midpoint value of $6.28. I would now like to turn the call over to Ixchell Duarte, our chief financial officer and treasurer to summarize the results of our valuation work and describe other company matters. Ixchell

Estimated NAV Per Share Build-Up – Slide 17 Ixchell:

Thank you, Mike. The resulting valuation range for the company’s estimated NAV on a per share basis was $ 5.93 to $6.58 per share, which included a deduction of $0.14 per share for estimated transaction costs assuming a hypothetical orderly sale of the company’s assets. Our board of directors approved $6.28 as the estimated NAV per share based on a total net asset value of approximately $1.10 billion which consisted of $1.67 billion in net consolidated real estate value plus $68 million in cash and other assets, offset by approximately $584.8 million in debt, $41.3 million in accounts payable, other liabilities and non-controlling interests, as well as approximately $23.78 million in estimated transaction costs.

We divided our total estimated net asset value by approximately 173.94 million outstanding shares, which excluded the advisor’s restricted shares, and arrived at an estimated NAV per share of $6.28. While we have conducted our valuation as previously described, it is important to note that the estimated NAV per share is a snapshot in time and it is not necessarily indicative of the value of the company or the amount that stockholders may receive if the company were to list its shares or liquidate its assets now or in the future.

Financial Health – Slide 18 Ixchell:

As of December 31, 2023, we had liquidity of $106.1 million consisting of $54.1 million cash on hand and $52.0 million in undrawn availability under our revolving credit facility. As Steve mentioned, we refinanced our $600 million corporate credit facilities and moved the maturity date to May 2026. We remain focused on maintaining strong liquidity and financial flexibility and on managing our portfolio of 70 assets.

Seniors Housing Sector - Slide 19 Ixchell:

The aging demographic trends, particularly driven by baby boomers, all of whom will be older than 65 by 2030 are anticipated to grow the 80+ population by 25% through 2029, and more importantly the first baby boomers turn 80 in 2026. This trend, coupled with the occupancy rebound and declining inventory growth, which remains well below pre-pandemic historical averages, continues to give us confidence in the seniors housing sector. Specifically, majority assisted living inventory growth is near its lowest level since 2010 according to last quarter’s data from the National Investment Center for Seniors Housing Care. We believe we are well-positioned given the quality of our assets, operational progress, and financial stability. As a reminder, we intend to post this presentation on our website at cnlhealthcareproperties.com. We also invite you to review our Form 8-K filed on March 12, 2024, which has additional details about our estimated net asset value and our valuation process. Now, I’d like to turn it back to Steve for closing remarks. Steve

What’s Next - Slide 20 Steve:

Thank you, Ixchell. As I mentioned at the start of today’s call, our clear priority is to remain specifically focused on operational and financial performance, which can be summarized by our unrelenting emphasis to further grow occupancy and operating or cash flow margins. And while a reduced NAV might not immediately indicate a productive year due to market forces none of us can control, we and you should be encouraged by our very strong 2023 operational performance and prospects as we look ahead through 2024.

While market headwinds last year did not support a concluding liquidity transaction, we remain fully committed to our ultimate objective of providing optimal and ultimate liquidity and value to shareholders. To that end, we have remained especially active (even more so in 2023) in studying market and transaction opportunities that we might judge to be in our shareholders’ best interests. We remain ready and activated to pursue additional strategic opportunities as economic and transactional environments permit. In the meantime, and as Ixchell stated, our corporate focus will be to continue proactively drive and maintain our current and forward-looking operating, liquidity and financial health and flexibility.

Contacts - Slide 21

On behalf of everyone here at CNL and our very engaged board of directors, I’d like to thank you for your continued confidence in CNL Healthcare Properties and for joining us for today’s valuation webinar. This concludes today’s call. Thank you very much.

END

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Document and Entity Information	Mar. 14, 2024
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001496454
Document Type	8-K
Document Period End Date	Mar. 14, 2024
Entity Registrant Name	CNL Healthcare Properties, Inc.
Entity Incorporation State Country Code	MD
Entity File Number	000-54685
Entity Tax Identification Number	27-2876363
Entity Address, Address Line One	450 South Orange Ave.
Entity Address, City or Town	Orlando
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32801
City Area Code	(407)
Local Phone Number	650-1000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false