DEFM14A 1 tv477444_defm14a.htm DEFM14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



 

SCHEDULE 14A



 

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant x
Filed by a Party other than the Registrant o
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Section 240.14a-12

AMERICAN REALTY CAPITAL
HEALTHCARE TRUST III, INC.

(Name of Registrant as Specified In Its Charter)

(Name of person(s) filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o No fee required
o Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11.
(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

x Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:


 
 

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[GRAPHIC MISSING]

To the Stockholders of American Realty Capital Healthcare Trust III, Inc.:

You are cordially invited to attend the 2017 annual meeting of the stockholders of American Realty Capital Healthcare Trust III, Inc., a Maryland corporation (the “Company”), to be held on December 21, 2017 at 4:00 p.m., local time at The Core Club, located at 66 E. 55th Street, New York, New York (the “Annual Meeting”).

As described in further detail in the accompanying proxy statement, the Company has agreed to sell substantially all of its assets to Healthcare Trust, Inc. (“HTI”), pursuant to and on the terms set forth in a Purchase Agreement, dated as of June 16, 2017 (the “Purchase Agreement”), by and among the Company, American Realty Capital Healthcare Trust III Operating Partnership, L.P., a Delaware limited partnership and the Company’s operating partnership (the “OP”), ARHC TRS Holdco III, LLC, a subsidiary of the OP, HTI, HTI’s operating partnership and one of its subsidiaries (together with the other transactions contemplated by the Purchase Agreement, the “Asset Sale”) for a purchase price of $120.0 million (the “Purchase Price”). The Purchase Price is subject to customary prorations and closing adjustments in accordance with the terms of the Purchase Agreement, which are estimated to be $0.8 million payable to HTI assuming the Asset Sale closes on November 30, 2017, and will be payable on the date the Asset Sale is consummated (the “Closing Date”) less $4.9 million, the principal amount as of the date of this proxy statement of the loan secured by the Company’s Philip Center property, which will be assumed by HTI or repaid by the Company, and associated costs. HTI will deposit $6.0 million of the Purchase Price payable on the Closing Date into an escrow account for the benefit of the Company on the Closing Date, and this amount, less any amounts paid or reserved for pending or unsatisfied indemnification claims of HTI made pursuant to the Purchase Agreement, will be released in installments thereafter over a period of 14 months following the Closing Date. HTI is sponsored and advised by an affiliate of the Company’s advisor.

In connection with its approval of the Purchase Agreement, the Company’s board of directors (the “Board”) also approved the Company’s plan of liquidation and dissolution (the “Plan of Liquidation”), which is subject to stockholder approval. The closing of the Asset Sale is conditioned upon stockholder approval of both the Asset Sale and the Plan of Liquidation. Thus, if stockholders do not approve the Plan of Liquidation, the Asset Sale will not be completed even if stockholders approve the Asset Sale. Likewise, the effectiveness of the Plan of Liquidation is conditioned upon stockholder approval of the Plan of Liquidation and the closing of the Asset Sale. If the Asset Sale is not approved and does not close, the Plan of Liquidation will not become effective regardless of whether or not it has been approved.

The Company believes that the net cash proceeds generated by the Asset Sale will be sufficient to pay the Company’s expenses, including the expenses of liquidating, and to satisfy its liabilities and obligations. After paying or providing for these amounts, the Company estimates the net cash proceeds available for distribution pursuant to the Plan of Liquidation to its stockholders will aggregate $17.67 to $17.81 per outstanding share of the Company’s common stock, par value $0.01 per share, including an anticipated initial liquidating distribution of $15.75 per share of common stock expected to be paid within two weeks following the closing of the Asset Sale, subject to Board approval. This estimate is based on certain assumptions and there can be no guarantee as to the exact amount that you will receive. During the course of liquidating and dissolving, the Company may incur unanticipated expenses and liabilities all of which are likely to reduce the cash available for distribution to stockholders.

At the Annual Meeting, you will be asked to consider and vote upon the following matters:

1. the approval of the Asset Sale;
2. the approval of the Plan of Liquidation;
3. the election of three directors to serve for one year, until the Company’s 2018 annual meeting of stockholders and their successors are duly elected and qualified;
4. the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017;


 
 

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5. the adjournment of the Annual Meeting to a later date or dates, if necessary or appropriate as determined by the chairperson of the Annual Meeting, to solicit additional proxies in favor of the proposals above; and
6. such other matters as may properly come before the Annual Meeting and any postponement or adjournment thereof.

The record date for determining the stockholders entitled to receive notice of, and to vote at, the Annual Meeting is the close of business on October 23, 2017. The Asset Sale cannot be completed unless the Company’s stockholders approve the Asset Sale and the Plan of Liquidation by the affirmative vote of at least a majority of the outstanding shares of common stock, excluding, for the purposes of the approval of the Asset Sale, shares of common stock beneficially owned by the Company’s advisor, any director of the Company or any of their respective affiliates, including AR Global Investments, LLC.

Based on the unanimous recommendation of a special transaction committee of the Board consisting solely of the two independent directors on the Board (the “Special Committee”), the Board (with Edward M. Weil, Jr., the executive chairman of the Board and a member of the board of directors of HTI, abstaining) has unanimously (1) determined that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approved each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determined that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approved the Plan of Liquidation, and (3) recommended that holders of shares of common stock vote FOR the proposal to approve the Asset Sale and FOR the proposal to approve the Plan of Liquidation. Because the Board is comprised of only Mr. Weil and two independent directors and Mr. Weil abstained, the recommendation and other determinations of the Board with respect to the Asset Sale and the Plan of Liquidation were made by the Company’s independent directors, who are also the only members of the Special Committee. The Board also unanimously recommends that holders of shares of common stock vote FOR the other proposals.

This proxy statement contains important information about the Company and each of the proposals. The Company encourages you to read this proxy statement carefully before voting, including the section entitled “Risk Factors” beginning on page 89.

Please authorize a proxy to vote your shares as promptly as possible, whether or not you plan to attend the Annual Meeting. To authorize a proxy, complete, sign, date and mail your proxy card in the preaddressed postage-paid envelope provided or authorize your proxy by one of the other methods specified in this proxy statement or the accompanying notices. Authorizing a proxy will ensure that your vote is counted at the Annual Meeting if you do not attend in person. You may revoke your proxy at any time before it is voted. Please review this proxy statement for more complete information regarding the Purchase Agreement, the Asset Sale, Plan of Liquidation and the Annual Meeting.

[GRAPHIC MISSING]W. Todd Jensen
Interim Chief Executive Officer and President
American Realty Capital Healthcare Trust III, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Asset Sale or the Plan of Liquidation, passed upon the merits or fairness of the Asset Sale or the Plan of Liquidation, or passed upon the adequacy or accuracy of the disclosure in this proxy statement. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated October 23, 2017 and is first being mailed to stockholders on or about October 25, 2017.


 
 

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[GRAPHIC MISSING]

405 Park Avenue, 4th Floor
New York, New York 10022
(212) 415-6500

NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 21, 2017

To the Stockholders of American Realty Capital Healthcare Trust III, Inc.:

The 2017 annual meeting of stockholders (the “Annual Meeting”) of American Realty Capital Healthcare Trust III, Inc., a Maryland corporation (the “Company,” “we,” “us,” or “our”), will be held at The Core Club, located at 66 E. 55th Street, New York, New York, on December 21, 2017, commencing at 4:00 p.m., local time, for the following purposes:

1. to consider and vote on a proposal to approve the sale of substantially all of the assets of the Company to Healthcare Trust, Inc., a Maryland corporation (“HTI”), pursuant to and on the terms set forth in the Purchase Agreement, dated as of June 16, 2017 (the “Purchase Agreement”), by and among the Company, American Realty Capital Healthcare Trust III Operating Partnership, L.P., a Delaware limited partnership and the Company’s operating partnership (the “OP”), ARHC TRS Holdco III, LLC, a subsidiary of the OP, HTI, HTI’s operating partnership and one of its subsidiaries (together with the other transactions contemplated by the Purchase Agreement, the “Asset Sale”);
2. to consider and vote on a proposal to approve the plan of liquidation and dissolution of the Company (the “Plan of Liquidation”), including the complete liquidation and dissolution of the Company as contemplated thereby;
3. to consider and vote on the election of three directors to serve for one year, until the Company’s 2018 annual meeting of stockholders and their successors are duly elected and qualified;
4. to consider and vote on a proposal to ratify the appointment of KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for the year ending December 31, 2017;
5. to consider and vote on a proposal to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate as determined by the chairperson of the Annual Meeting, to solicit additional proxies in favor of the proposals above; and
6. to consider and act upon such other matters as may properly come before the Annual Meeting and any postponement or adjournment thereof.

The Company’s board of directors (the “Board”) has fixed the close of business on October 23, 2017 as the record date for determining the stockholders entitled to receive notice of, and to vote at, the Annual Meeting and any postponements or adjournments of the Annual Meeting. Only holders of record of the Company’s common stock, par value $0.01 per share, at the close of business on the record date are entitled to receive notice of, and to vote at, the Annual Meeting.

Approval of each of the Asset Sale and the Plan of Liquidation requires the affirmative vote of at least a majority of the outstanding shares of common stock, excluding for the purposes of the approval of the Asset Sale, shares of common stock beneficially owned by the Company’s advisor, any director of the Company or any of their respective affiliates, including AR Global Investments, LLC.

Directors will be elected by the affirmative vote of the holders of a majority of the outstanding shares of common stock, present in person or by proxy, to elect each nominee, provided that a quorum is present. Approval of the proposal to ratify the appointment of KPMG requires the affirmative vote of the majority of the votes cast for the proposal at the Annual Meeting, provided that a quorum is present. The proposal to adjourn the Annual Meeting requires the affirmative vote of the majority of the votes cast for the proposal.


 
 

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Based on the unanimous recommendation of a special transaction committee of the Board consisting solely of the two independent directors on the Board (the “Special Committee”), the Board (with Edward M. Weil, Jr., the executive chairman of the Board and a member of the board of directors of HTI, abstaining) has unanimously (1) determined that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approved each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determined that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approved the Plan of Liquidation, and (3) recommended that holders of shares of common stock vote FOR the proposal to approve the Asset Sale and FOR the proposal to approve the Plan of Liquidation. Because the Board is comprised of only Mr. Weil and two independent directors and Mr. Weil abstained, the recommendation and other determinations of the Board with respect to the Asset Sale and the Plan of Liquidation were made by the Company’s independent directors, who are also the only members of the Special Committee. The Board also unanimously recommends that holders of shares of common stock vote FOR the other proposals.

YOUR VOTE IS IMPORTANT

Please authorize a proxy to vote your shares as promptly as possible, regardless of whether you plan to attend the Annual Meeting. To authorize a proxy, complete, sign, date and mail your proxy card in the preaddressed postage-paid envelope provided or, if the option is available to you, call the toll free telephone number listed on your proxy card or use the internet as described in the instructions on the proxy card to authorize your proxy. Authorizing a proxy will assure that your vote is counted at the Annual Meeting if you do not attend in person. You may revoke your proxy at any time before it is voted. Please review the proxy statement accompanying this notice for more complete information regarding the Purchase Agreement, the Asset Sale, the Plan of Liquidation and the Annual Meeting.

By Order of the Board of Directors of
American Realty Capital Healthcare Trust III, Inc.

 
New York, New York
October 23, 2017
  [GRAPHIC MISSING]
Katie P. Kurtz
Chief Financial Officer, Treasurer and Secretary


 
 

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  Page
QUESTIONS AND ANSWERS     1  
Questions About the Asset Sale and the Plan of Liquidation     2  
Questions About the Other Proposals     10  
Questions About the Annual Meeting     10  
SUMMARY     14  
SPECIAL FACTORS     24  
Background of the Asset Sale and the Plan of Liquidation     24  
Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation     38  
Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders     41  
HTI’s Purposes and Reasons for the Asset Sale     44  
Position of HTI, HTI OP and HTI Holdco as to Fairness to the Company’s Unaffiliated Stockholders     46  
Opinion of the Special Committee’s Financial Advisor     47  
Other Presentations by the Special Committee’s Financial Advisor     52  
Opinion of the HTI Special Committee's Financial Advisor     53  
Other Presentations by the HTI Special Committee's Financial Advisor     58  
Certain Unaudited Projections Provided to the Board, the Special Committee, the Special Committee’s Financial Advisor, the HTI Board, the HTI Special Committee and the HTI Special Committee’s Financial Advisor     59  
Financing of the Asset Sale     61  
Fees and Expenses     63  
Plans for the Company After the Asset Sale     64  
Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation     65  
Regulatory Approvals Required for the Asset Sale and the Plan of Liquidation     68  
Accounting Treatment     68  
Provisions for Unaffiliated Stockholders     68  
THE PURCHASE AGREEMENT     69  
Parties to the Purchase Agreement     69  
Closing Date     70  
Purchase Price     70  
Escrow Agreement     70  
Representations and Warranties     70  
Conditions to Completion     71  
Covenants and Agreements     72  
Indemnification     77  
Termination; Termination Fee and Expenses     78  
Miscellaneous Provisions     79  
AR GLOBAL ARRANGEMENTS     80  
Letter Agreement     80  
Executed Amendments to the Advisory Agreement and Property Management Agreement     81  
Contemplated Amendments to Advisory Agreement and LPA     81  
THE PLAN OF LIQUIDATION     84  
Range of Liquidating Distributions     84  
Liquidating Procedures     86  
Liquidating Trust     87  

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  Page
Reporting Requirements     88  
Common Stock     88  
RISK FACTORS     89  
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS     96  
THE ANNUAL MEETING OF STOCKHOLDERS     97  
Date, Time, Place and Purpose of the Annual Meeting     97  
Record Date; Who Can Vote at the Annual Meeting     97  
Quorum     97  
Vote Required for Approval     97  
Voting by the Company’s Directors and Executive Officers and Certain Current Beneficial Owners     98  
Abstentions and Broker Non-Votes     98  
Manner of Authorizing Proxy     98  
Revocation of Proxies     99  
Tabulation of the Votes     99  
Solicitation of Proxies     99  
Assistance     99  
PROPOSAL NO. 1: THE ASSET SALE PROPOSAL     100  
PROPOSAL NO. 2: THE PLAN OF LIQUIDATION PROPOSAL     101  
PROPOSAL NO. 3: ELECTION OF DIRECTORS     102  
Nominees     102  
Business Experience of Nominees     102  
CORPORATE GOVERNANCE     106  
Information About the Board of Directors and its Committees     106  
Leadership Structure of the Board of Directors     106  
Oversight of Risk Management     106  
Audit Committee     106  
Oversight of Compensation     107  
Oversight of Nominations and Corporate Governance     107  
Conflicts Committee     108  
Director Independence     108  
Family Relationships     109  
Communications with the Board of Directors     109  
Section 16(a) Beneficial Ownership Reporting Compliance     109  
Code of Ethics     109  
Compensation of Executive Officers     110  
Executive Officers     110  
Compensation of Directors     111  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS     113  
THE COMPANY     115  
Business Overview     115  
Properties     116  
Reportable Segments     119  
Property Types     119  
Competition     124  
Healthcare Regulation     124  
Environmental Regulations     128  
Employees     128  

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  Page
OTHER IMPORTANT INFORMATION REGARDING THE COMPANY     129  
Background Information     129  
Ratio of Earnings to Fixed Charges     129  
Book Value Per Share     130  
Distributions     130  
Prior Public Offerings     131  
Prior Stock Purchases and Other Transactions     131  
OTHER IMPORTANT INFORMATION REGARDING HTI     132  
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS     135  
Advisor     135  
Property Manager     138  
Former Arrangements     138  
Indemnification Agreements     139  
Investment Allocation Agreement     139  
Purchase Agreement and AR Global Arrangements     139  
Affiliated Transaction Best Practices Policy     139  
Certain Conflict Resolution Procedures     140  
AUDIT COMMITTEE REPORT     143  
PROPOSAL NO. 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     144  
Fees     144  
Pre-Approval Policies and Procedures     144  
PROPOSAL NO. 5: THE ADJOURNMENT PROPOSAL     145  
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES     146  
Tax Consequences to the Company     147  
Tax Consequences to U.S. Stockholders     148  
Tax Consequences to Tax-Exempt U.S. Stockholders     149  
Tax Consequences to Non-U.S. Stockholders     149  
Tax Consequences of the Liquidating Trust     150  
Other Tax Considerations     151  
APPRAISAL RIGHTS     152  
STOCKHOLDER PROPOSALS     154  
Stockholder Proposals in the Proxy Statement     154  
Stockholder Proposals and Nominations for Directors to Be Presented at Meetings     154  
WHERE YOU CAN FIND MORE INFORMATION     154  
INDEX TO FINANCIAL STATEMENTS AND INFORMATION     F-1  
Annex A — Purchase Agreement     A-1  
Annex B — Plan of Liquidation     B-1  
Annex C — Opinion of Special Committee’s Financial Advisor     C-1  
Annex D — Opinion of HTI’s Financial Advisor     D-1  
Annex E — Certain Provisions of the MGCL     E-1  

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QUESTIONS AND ANSWERS

Unless stated otherwise, all references in this proxy statement to “we,” “us,” “our” and the “Company” are to American Realty Capital Healthcare Trust III, Inc., a Maryland corporation and also include references to the Company’s operating partnership and indirect subsidiaries, unless the context otherwise requires; all references to the “OP” are to American Realty Capital Healthcare Trust III Operating Partnership, L.P., a Delaware limited partnership and the Company’s operating partnership; and all references to “HTI” are to Healthcare Trust, Inc., a Maryland corporation and also include references to HTI’s operating partnership and indirect subsidiaries, unless the context otherwise requires; all references to the “HTI OP” are to Healthcare Trust Operating Partnership, L.P., a Delaware limited partnership and the operating partnership of HTI; all references to the “Purchase Agreement” are to the Purchase Agreement, dated as of June 16, 2017, by and among the Company, the OP, ARHC TRS Holdco III, LLC, a subsidiary of the OP (“HT III Holdco”), HTI, HTI OP and ARHC TRS Holdco II, LLC, a subsidiary of the HTI OP (“HTI Holdco”), a copy of which is attached as Annex A to this proxy statement; all references to the “Plan of Liquidation” are to the Company’s plan of liquidation and dissolution (the “Plan of Liquidation”), a copy of which is attached as Annex B to this proxy statement,

The following are some questions that you, as a stockholder to whom the notice of annual meeting and this proxy statement are addressed, may have regarding the proposals being considered and brief answers to those questions. The Company urges you to read carefully this entire proxy statement, including the Annexes, and the other documents to which this proxy statement refers, because the information in this section does not provide all the information that might be important to you. This proxy statement is dated October 23, 2017 and is first being mailed to stockholders on or about October 25, 2017.

Q: What am I being asked to vote upon?
A: The Company’s Board of Directors (the “Board of Directors” or the “Board”) is using this proxy statement to solicit proxies of the Company’s stockholders in connection with the matters to be considered at the 2017 annual meeting of stockholders (the “Annual Meeting”). At the Annual Meeting, the Company will ask you to consider and vote on the following matters:
the approval of the sale of substantially all of the Company’s assets to HTI, pursuant to and on the terms set forth in the Purchase Agreement, and the other transactions contemplated thereby (together, the “Asset Sale”);
the approval of the Plan of Liquidation, including the complete liquidation and dissolution of the Company contemplated thereby;
the election of three directors to serve for one year, until the Company’s 2018 annual meeting of stockholders and their successors are duly elected and qualified;
the ratification of the appointment of KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for the year ending December 31, 2017; and
the adjournment of the Annual Meeting to a later date or dates, if necessary or appropriate as determined by the chairperson of the Annual Meeting, to solicit additional proxies in favor of the proposals above.

You will also be asked to consider and act on any matters as may properly come before the Annual Meeting or any postponement or adjournment thereof. The Board does not know of any matters that may be considered at the Annual Meeting other than the matters set forth above.

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Questions About the Asset Sale and the Plan of Liquidation

Q: Why are the proposals to approve the Asset Sale and the Plan of Liquidation being submitted to stockholders?
A: On June 16, 2017, the Company entered into the Purchase Agreement with HTI, an entity sponsored and advised by affiliates of the Company’s advisor, American Realty Capital Healthcare III Advisors, LLC (the “Advisor”), pursuant to which the Company agreed to sell substantially all of its assets to HTI in the Asset Sale. The Plan of Liquidation will not become effective until the date the Asset Sale is consummated (the “Closing Date”). The Asset Sale may only be consummated if stockholders approve the Asset Sale and the Plan of Liquidation. Subject to the Asset Sale being completed, the Company intends to wind up its affairs and distribute its assets, which are expected to consist primarily of cash after satisfying the Company’s liabilities, to the holders of its common stock in accordance with the Plan of Liquidation.
Q: Why did the Company enter into the Purchase Agreement?
A: Based on the recommendation of the special transaction committee comprised entirely of the two independent directors on the Board (the “Special Committee”), the Board has determined that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company, and advisable and in the best interests of the Company and its stockholders, and that the Asset Sale and the Plan of Liquidation are substantively and procedurally fair to the Company’s unaffiliated stockholders, after careful consideration of a number of factors including:
the fixed cash consideration to be paid in connection with the Asset Sale by HTI, consisting of $120.0 million, less the $4.9 million principal amount of the Philip Center Loan, which will be assumed by HTI or repaid by the Company, and associated costs;
in light of the Special Committee’s consideration of potential strategic alternatives, the likelihood that the Company would have difficulty achieving access to public equity capital markets and continuing to grow on a stand-alone basis;
in light of the Special Committee’s consideration of potential strategic alternatives, the likelihood that the Company would have difficulty achieving a liquidity event that would provide greater value to the Company’s stockholders in both the near-term and long-term future; and
the fact that the Special Committee conducted a thorough and diligent strategic review process, including communicating with 25 potential buyers regarding a potential transaction.

The Board and the Special Committee also considered a variety of other factors, including risks and other potentially negative factors. For a more complete discussion of the factors and risks considered by the Board and the Special Committee, see “Special Factors — Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation” and “— Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders.”

Q: How does the Board recommend that stockholders vote on the proposals to approve the Asset Sale and the Plan of Liquidation?
A: Based on the unanimous recommendation of the Special Committee, the Board unanimously (with Edward M. Weil, Jr., the executive chairman of the Board and a member of the board of directors of HTI (the “HTI Board”), abstaining) recommends that holders of shares of common stock vote FOR the proposal to approve the Asset Sale and FOR the proposal to approve the Plan of Liquidation.
Q: Who is HTI?
A: HTI, the purchaser in the Asset Sale, is a Maryland corporation formed and sponsored by affiliates of the Advisor. Like the Company, HTI invests in healthcare real estate, focusing on seniors housing and medical office buildings (“MOB”) located in the United States. As of June 30, 2017, HTI owned

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163 properties located in 29 states and comprised of 8.5 million rentable square feet. HTI is externally managed by Healthcare Trust Advisors, LLC (the “HTI Advisor”), an entity controlled by American Realty Capital VII, LLC (the “Sponsor”), which is wholly owned by AR Global Investments, LLC (“AR Global”). The HTI Advisor and the Advisor are under common control with AR Global.
Q: What is the purchase price for the Company’s assets and when will it be paid?
A: Under the Purchase Agreement, HTI has agreed to purchase all of the Company’s properties for a purchase price of $120.0 million (the “Purchase Price”). The Purchase Price is subject to customary prorations and closing adjustments in accordance with the terms of the Purchase Agreement, which are estimated to be $0.8 million payable to HTI assuming the Asset Sale closes on November 30, 2017, and will be payable on the Closing Date less the principal amount of the loan secured by the Company’s Philip Center property (the “Philip Center Loan”), which was $4.9 million as of the date of this proxy statement. Pursuant to the terms of the Purchase Agreement, HTI has agreed to use commercially reasonable efforts (including paying early termination fees not to exceed $200,000) to assume the Philip Center Loan and to cause the Company to be released from the guaranty associated with the Philip Center Loan. If HTI does not assume the Philip Center Loan on the Closing Date or if the Company is not released from the guaranty associated with the Philip Center Loan, the Philip Center Loan will be repaid in full by the Company on the Closing Date and any early termination fee in excess of $200,000 will be subtracted from the Purchase Price.

On the Closing Date, HTI will deposit $6.0 million of the Purchase Price (the “Escrow Amount”) payable into an escrow account for the benefit of the Company on the Closing Date, and the Escrow Amount, less any amounts paid or reserved for pending or unsatisfied indemnification claims of HTI made pursuant to the Purchase Agreement, will be released in installments thereafter over a period of 14 months following the Closing Date.

Q: What assets are being sold by the Company pursuant to the Purchase Agreement?
A: The assets subject to the Asset Sale represent the membership interests in indirect subsidiaries of the Company which collectively own all 19 of the Company’s properties and comprise substantially all of the Company’s assets. These properties are referred to individually as a “Property” and collectively as the “Properties” throughout this proxy statement. See “The Company — Properties” for further details regarding the Properties.
Q: What assets will not be sold by the Company?
A: Following the completion of the Asset Sale, the only distributable assets of the Company are expected to be cash on hand, which the Company expects will ultimately be distributed in one or more liquidating distributions to its stockholders.
Q: What liabilities will and will not be assumed by HTI?
A: As part of the Asset Sale, HTI is required to use commercially reasonable efforts to assume the Philip Center Loan. None of the other Properties are encumbered by indebtedness, and HTI will not assume any of the Company’s other liabilities.
Q: When does the Company expect to complete the Asset Sale?
A: The Company expects to complete the Asset Sale as soon as practicable following stockholder approval of the Asset Sale and the Plan of Liquidation. However, there can be no assurance regarding the timing of completing the Asset Sale because the transaction is subject to a number of customary closing conditions.
Q: What will happen if the Asset Sale or the Plan of Liquidation is not approved?
A: If stockholders do not approve the Asset Sale or the Plan of Liquidation, a condition to the closing of the Asset Sale will have failed and the Company or HTI may terminate the Purchase Agreement. In connection with any termination of the Purchase Agreement on this basis, the Company will be responsible for reimbursing HTI for up to $850,000 of actual third party, non-HTI Advisor expenses,

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including non-HTI Advisor legal fees and any fee paid to the HTI Special Committee’s financial advisor, incurred in connection with the transactions contemplated by the Purchase Agreement.
Q: What will happen if the Asset Sale does not close?
A: If the Asset Sale does not close, the Plan of Liquidation will not become effective and the Company will not be permitted to liquidate and dissolve but will instead continue to operate its business, including potentially pursuing other strategic options.
Q: What will happen under the Plan of Liquidation?
A: Under the Plan of Liquidation, which becomes effective when the Asset Sale closes, the Company will be authorized to sell all of its remaining assets, liquidate and dissolve the Company and its subsidiaries, and distribute the net proceeds of such liquidation in accordance with the provisions of the Company’s charter (the “Charter”), the Company’s bylaws and the laws of the State of Maryland.

See “The Plan of Liquidation” for further details.

Q: What is the range of net liquidation proceeds estimated by the Board to be available for distribution pursuant to the Plan of Liquidation, including any initial distribution immediately following the closing of the Asset Sale, and how were those estimates determined?
A: The Board estimates that the net cash proceeds available for distribution to the Company’s stockholders pursuant to the Plan of Liquidation will be $17.67 to $17.81 per outstanding share of common stock. This range is an increase from the prior estimated range of $17.49 to $17.64 per share included in the Company’s proxy statement dated July 18, 2017. The increase resulted primarily from the additional cash from operations due to a later estimated Closing Date. To assist the Board in estimating the range of total liquidating distributions, the Advisor prepared an estimate of the range of net proceeds from the Asset Sale that may be available to distribute to the Company’s stockholders in one or more liquidating distributions pursuant to the Plan of Liquidation (the “Liquidation Analysis”).

Based on the Liquidation Analysis and subject to review and approval by the Board and the closing of the Asset Sale, we expect to pay an initial liquidating distribution of $15.75 per outstanding share of common stock within two weeks following the closing of the Asset Sale. This estimate of an initial liquidating distribution is based on certain assumptions, including that the Company retains the Escrow Amount and a certain amount of cash on hand for unknown and outstanding liabilities and expenses.

The Liquidation Analysis reflects, among other things, the Advisor’s best estimate of:

the prorations that would be payable to HTI pursuant to the Purchase Agreement;
the costs and expenses of consummating the Asset Sale and implementing the Plan of Liquidation; and
the Company’s assets and liabilities on the Closing Date.

These, and other estimates used in the Liquidation Analysis, are based on a number of assumptions, including that:

the Closing Date occurred on either (A) December 31, 2017 (the high end of the range), or (B) November 30, 2017 (the low end of the range);
the final liquidating distribution will occur before there is any need to transfer the Company’s assets to a liquidating trust on either (A) the 14-month anniversary of the Closing Date, which is the earliest date the Company is permitted to make its final liquidating distribution to stockholders under the Plan of Liquidation (the high end of the range), or (B) the two-year anniversary of the Closing Date, which is the latest date the Company is permitted to make its final liquidating distribution to stockholders under the Plan of Liquidation (the low end of the range);

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all $6.0 million of the Purchase Price payable into an escrow account for the benefit of the Company on the Closing Date reserved for pending or unsatisfied indemnification claims of HTI made pursuant to the Purchase Agreement will be released in installments thereafter over a period of 14 months following the Closing Date; and
2,666 restricted shares of the Company’s common stock (“restricted shares”) issued under the Company’s employee and director incentive restricted share plan (the “RSP”), will be issued to the Company’s independent directors in connection with the Annual Meeting.

The following table, prepared by the Advisor, summarizes the individual components of the range of net cash proceeds available for distribution pursuant to the Plan of Liquidation estimated by the Board based on the Liquidation Analysis.

   
(all dollars in thousands, except per share)   Low End   High End
Gross Proceeds from Asset Sale(1)   $ 120,000     $ 120,000  
Philip Center Loan(2)     (4,905 )      (4,897 ) 
Estimated Proration Payable to HTI     (771 )      (771 ) 
Estimated Net Other Assets and Liabilities(3)     13,463       13,823  
Estimated Unpaid Transaction/Liquidation Costs(4)     (4,842 )      (4,208 ) 
Estimated Net Proceeds from Plan of Liquidation   $ 122,945     $ 123,947  
Shares of common stock (fully diluted)(5)     6,959,059       6,959,059  
Estimated Per-Share Liquidating Distributions   $ 17.67     $ 17.81  

(1) Represents the Purchase Price agreed upon by the parties to the Purchase Agreement for the purchase of the Properties.
(2) Represents the outstanding balance (principal and interest) of the Philip Center Loan estimated as of the Closing Date. The amount payable to the Company with respect to the Purchase Price on the Closing Date will be less the principal amount of the Philip Center Loan, which will be assumed by HTI or repaid by the Company.
(3) Primarily represents the Advisor’s estimate of net cash on hand as of the Closing Date. This net amount also gives effect to approximately $0.7 million (the low end of the range) and $0.6 million (the high end of the range) estimated to become payable in cash by the Advisor to the Company following the Closing Date pursuant to the Letter Agreement (as defined herein and described in more detail under “AR Global Arrangements — Letter Agreement”).
(4) Represents the Advisor’s estimate of the remaining unpaid transaction and closing costs payable in connection with the consummation of the Asset Sale and the costs of implementing the Plan of Liquidation. The total estimated transaction and liquidation costs pursuant to the Asset Sale and Plan of Liquidation, representing the aggregate of both amounts that have actually been paid through the date of this proxy statement and amounts estimated to be paid through the expected Closing Date and the implementation of the Plan of Liquidation that remain unpaid, are described in more detail in the table below. These costs include: (i) estimated transaction and closing costs associated with the consummation of the Asset Sale including, among other costs, fees payable to the Company’s financial advisor and legal fees, and (ii) estimated liquidation costs including, among other costs, the costs of services provided by third parties other than the Advisor required in connection with the implementation of the Plan of Liquidation. The variation between the estimates at the high end and the low end of the range primarily relate to the assumptions made regarding the amount of time that transpires between the Closing Date and the final liquidating distribution.
(5) Includes 90 limited partnership units of the OP designated as “OP Units” (“OP Units”) beneficially owned by AR Global and 2,666 restricted shares that will be automatically granted to the Company’s independent directors in connection with the Annual Meeting. In accordance with the LPA, a holder of an OP Unit will receive liquidating distributions under the Plan of Liquidation at the same time and in the same amount per unit as a holder of a share of the Company’s common stock will receive per share.

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The table below, prepared by the Advisor, summarizes the total estimated transaction and liquidation costs pursuant to the Asset Sale and Plan of Liquidation, representing the aggregate of both amounts that have actually been paid through the date of this proxy statement and amounts estimated to be paid through the expected Closing Date and the implementation of the Plan of Liquidation.

   
(all dollars in thousands)
Estimated Transaction/Liquidation Costs:
  Low End   High End
Philip Center Loan Transfer Tax and Closing Costs   $ 390     $ 389  
Legal Costs     1,115       1,055  
Accounting Costs     855       658  
Insurance Costs     314       183  
Financial Advisor     1,250       1,250  
Proxy/Shareholder Solicitation Costs     368       268  
Other Additional Costs     1,465       1,320  
Total Estimated Transaction/Liquidation Costs:   $ 5,757     $ 5,122  

The Liquidation Analysis is based on certain assumptions and there can be no guarantee as to the exact amount that the Company will distribute to its stockholders pursuant to the Plan of Liquidation. Moreover, shares of the Company’s common stock are not listed on a national securities exchange, and the estimated range of liquidating distributions does not represent the amount a stockholder would obtain if a stockholder sold his or her shares. With respect to the estimated prorations and closing adjustments, the Company’s estimated assets and liabilities on the Closing Date and estimated costs and expenses of closing the Asset Sale and liquidating the Company, the methodologies employed were based upon a number of estimates and assumptions that may not be accurate or complete, including estimates and assumptions regarding the actual operating results of the Properties prior to the Closing Date, the actual cost of operating the Company, the actual Closing Date, the actual amount of time it will take to complete the implementation of the Plan of Liquidation and whether the Company will be required to provide for any unknown and outstanding liabilities and expenses, which may include the establishment of a reserve fund or transferring assets to a liquidating trust to pay contingent liabilities and ongoing expenses in an amount to be determined as information concerning such contingencies and expenses becomes available.

These estimates are based on circumstances and conditions existing as of the date of this proxy statement. Changes in these circumstances and conditions during the period under which the Company implements the Plan of Liquidation could have a material effect on the ultimate timing and amount of liquidating distributions paid to stockholders. If the Company underestimates its existing obligations and liabilities or if unanticipated or contingent liabilities arise, the amount ultimately distributed to stockholders would be less than estimated. Funding indemnity claims or other contingent liabilities could delay and reduce distributions to stockholders.

See “The Plan of Liquidation — Range of Liquidating Distributions.”

Q: When will I receive my liquidating distributions?
A: The Board expects to authorize an initial liquidating distribution to be paid to stockholders within two weeks following the closing of the Asset Sale, but the Board has not established a definitive timetable for paying additional liquidating distributions. The Plan of Liquidation requires the Company to use commercially reasonable efforts to cause the liquidation and dissolution of the Company to occur and to make the complete distribution of all assets of the Company to the holders of outstanding shares of common stock no later than the second anniversary of the effective date of the Plan of Liquidation. The Plan of Liquidation also provides, however, that this final distribution will not occur earlier than the end of the 14-month survival period of the representations and warranties under the Purchase Agreement and will not occur prior to final resolution of any unsatisfied indemnification claims that are first made prior to the end of that period.

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connection with the liquidation of the Company) at the time the final distribution is to be paid, the Board may establish a liquidating trust and the Company may transfer its remaining assets and liabilities to that liquidating trust. The Company would then distribute beneficial interests in the liquidating trust to its stockholders. If the Company establishes a reserve fund, the Company may pay a final distribution from any funds remaining in the reserve fund after it determines that all of the Company’s liabilities and obligations have been paid.

The actual amounts and timing of the liquidating distributions will be determined by the Board or, if a liquidating trust is formed, by the trustees of the liquidating trust, in their discretion. We cannot predict the timing or amount of any liquidating distributions, as uncertainties exist regarding the precise value of any remaining assets after the Asset Sale, the final amount of our liabilities and obligations, the operating costs and amounts to be set aside in a reserve fund for claims, obligations and provisions during the liquidation and dissolution process.

Q: What is a liquidating trust?
A: A liquidating trust is a trust organized for the primary purpose of liquidating and distributing the assets transferred to it. Pursuant to applicable rules relating to entities that qualify as a real estate investment trust for U.S. federal income tax purposes (“REIT”), in order to deduct liquidating distributions as dividends, the Company must complete the liquidation within 24 months of the date the Plan of Liquidation is adopted. If the Company is unable to do so, it may satisfy this requirement by transferring and assigning its remaining assets and liabilities to a liquidating trust prior to the end of the 24-month period. This is necessary for the Company to meet the annual distribution requirement and not be subject to U.S. federal income tax on the amount of liquidating distributions. If the Company forms a liquidating trust, the Company would then distribute beneficial interests in the liquidating trust to its stockholders. Your interests in a liquidating trust will be generally non-transferable except by will, intestate succession or operation of law.
Q: Do the Company’s directors and officers (including all of the Company’s executive officers and one of the Company’s directors in their capacities as executives or members of the Advisor, the HTI Advisor and their affiliates) have interests in the Asset Sale or the Plan of Liquidation that may differ from those of the Company’s stockholders?
A: In considering the recommendation of the Board (with Mr. Weil abstaining) to approve the Asset Sale and the Plan of Liquidation, you should note that the Company’s directors and officers (including all of the Company’s executive officers and one of the Company’s directors in their capacities as executives or members of the Advisor, the HTI Advisor and certain of their affiliates) may have interests in the Asset Sale and Plan of Liquidation that are different from, or in addition to, the interests of stockholders. Both the Advisor and the HTI Advisor, as well as their respective property managers, American Realty Capital Healthcare III Properties, LLC (the “Property Manager”) and Healthcare Trust Properties, LLC (the “HTI Property Manager”), are indirectly owned and controlled by AR Global. Edward M. Weil, Jr., the executive chairman of the Board, is also a member of the HTI Board. Mr. Weil owns a non-controlling interest in the parent of AR Global and is also the chief executive officer of AR Global. In addition, the Company, HTI, the Advisor, the HTI Advisor, the Property Manager and the HTI Property Manager have the same executive officers. These interests also include the following:
under a letter agreement (as amended, the “Letter Agreement”) that was entered into in connection with the execution of the Purchase Agreement by and among the Company, the Advisor, the Property Manager and AR Global, as guarantor, subject to completing the Asset Sale, the obligation of the Advisor and its affiliates to pay the Company approximately $3.68 million with respect to certain expense reimbursements or fees previously paid by the Company to the Advisor or its affiliates will be satisfied in exchange for:
º surrender (in accordance with the Letter Agreement as described in “AR Global Arrangements — Letter Agreement”) by the Advisor of 83,018 limited partnership units of the OP designated as Class B Units (“Class B Units”) previously issued to the Advisor and the additional Class B Units to be issued in November 2017 with respect to the

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quarter ended September 30, 2017 in accordance with the terms of the Company’s advisory agreement with the Advisor (the “Advisory Agreement”) and the limited partnership agreement of the OP (the “LPA”);
º an agreement by the Advisor and the Property Manager to waive or assume certain fees and expense reimbursements that are payable or that become payable by the Company to the Advisor for providing transition services required to implement the Plan of Liquidation or other services provided during 2017 in an aggregate amount valued at $1.1 million and to waive an amount equal to cash asset management and oversight fees that would become payable if the Asset Sale closes with respect to services provided by the Advisor for the quarter commencing October 1, 2017 through and including the Closing Date; and
º an agreement by the Advisor to pay the Company any remaining amounts in cash following the Closing Date;
pursuant to the Letter Agreement, prior to the Closing Date and subject to completing the Asset Sale, the Company and the Advisor have agreed to enter into amendments to the Advisory Agreement and the LPA effective as of October 1, 2017 to facilitate the establishment of a value for Class B Units consistent with the applicable provisions of the Letter Agreement and certain of the other payments contemplated by the Letter Agreement, even though, without these amendments, the Advisor would not be entitled to receive liquidating distributions in connection with the Plan of Liquidation;
the acquisition of the Properties by HTI could result in an increase in the fees payable by HTI to the HTI Advisor and the HTI Property Manager and their affiliates under the advisory agreement between HTI and the HTI Advisor (the “HTI Advisory Agreement”) and the property management agreement between HTI and the HTI Property Manager (“HTI Property Management Agreement”);
all outstanding and unvested restricted shares including 4,798 unvested restricted shares held by the Company’s two independent directors in the aggregate as of the record date and the 1,333 restricted shares automatically granted to each of the Company’s independent directors in connection with the Annual Meeting, will vest upon the sale of all or substantially all of the Company’s assets, which would occur if the Asset Sale is consummated;
HTI may be required to reimburse the HTI Advisor for insourced acquisition expenses up to a maximum of $0.6 million, representing 0.5% of the contract purchase price (as defined in HTI’s charter) being paid to acquire the Properties; and
HTI common stock may increase in value as a result of the Asset Sale, which may benefit HTI’s stockholders generally as well as AR Global, which directly or indirectly beneficially owns 8,888 shares of HTI common stock and 359,340 shares of HTI common stock issuable in exchange for certain performance-based restricted, forfeitable interests in the HTI OP.

Other than as contemplated by the Letter Agreement, if the Asset Sale is completed, no fees or other amounts are or will become due or otherwise payable under the Advisory Agreement, the Company’s property management agreement with the Property Manager (the “Property Management Agreement”), the LPA or any other agreement between the Company and the Advisor and its affiliates.

In addition, you should note that inherent conflicts of interest exist where the individuals who comprise the management teams of the Company and HTI are the same individuals and those individuals are assisting the Board and HTI Board in connection with the Asset Sale. In addition, P. Sue Perrotty, an independent director of the Company, has served as an independent director of another AR Global-sponsored REIT, Global Net Lease, Inc. (“GNL”), since March 2015 and two other entities previously sponsored by AR Global that are now managed by unrelated advisors.

See “Special Factors — Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation.”

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Q: Are there any risks related to the Asset Sale or the Plan of Liquidation?
A: Yes. You should carefully review the section entitled “Risk Factors” beginning on page 89 of this proxy statement.
Q: What are the United States federal income tax consequences of the Asset Sale and the Plan of Liquidation?
A: In general, if the Plan of Liquidation is approved and becomes effective and the Company is liquidated, distributions to a stockholder under the Plan of Liquidation, including each stockholder’s pro rata share of the fair market value of any assets that are transferred to a liquidating trust, should not be taxable to the stockholder for U.S. federal income tax purposes until the aggregate amount of liquidating distributions to the stockholder exceeds the adjusted tax basis in the stockholder’s shares of common stock, and then should be taxable to the stockholder as capital gain (assuming the stockholder holds his, her or its shares as a capital asset). To the extent the aggregate amount of liquidating distributions to a stockholder is less than the adjusted tax basis in his, her or its shares of common stock, the stockholder generally will recognize a capital loss (assuming the stockholder holds his, her or its shares as a capital asset) in the year the final distribution is received by the stockholder. The transfer of the Company’s assets to a liquidating trust is a taxable event to the Company’s stockholders notwithstanding that the stockholders may not currently receive a distribution of cash or any other assets with which to satisfy the resulting tax liability. Please see the section entitled “Material U.S. Federal Income Tax Consequences” for a more detailed summary of the possible U.S. federal income tax consequences. Stockholders should consult their own tax advisors as to the tax effect of their particular circumstances.
Q: Am I entitled to appraisal rights or dissenters’ rights in connection with the proposals to approve the Asset Sale or the Plan of Liquidation?
A: No. Under the Maryland General Corporation Law (the “MGCL”) and pursuant to the Charter, the Company’s stockholders are generally not entitled to appraisal rights or to any similar rights of dissenters for their shares of common stock in connection with the proposals to approve the Asset Sale or the Plan of Liquidation. See “Appraisal Rights.”
Q: Will I still be able to sell or transfer my shares of common stock following the closing of the Asset Sale and the effectiveness of the Plan of Liquidation?
A: There is no established public trading market for shares of common stock because common stock is not listed on a stock exchange. However, shares of common stock will be transferable following the closing of the Asset Sale to the same extent as before the closing of the Asset Sale up until the Company files its Articles of Dissolution. If the Plan of Liquidation is approved by the Company’s stockholders, the Board will then decide when to file the Articles of Dissolution with the State Department of Assessments and Taxation of Maryland (the “SDAT”). From and after the date the Company files the Articles of Dissolution with the SDAT, the Company will close its stock transfer books and discontinue recording transfers of shares of common stock. Thereafter, certificates representing shares of common stock will not be assignable or transferable on the Company’s books.

If the Company transfers its remaining assets and liabilities to a liquidating trust and distributes beneficial interests in the liquidating trust to its stockholders, the shares of beneficial interest in the liquidating trust will be generally non-transferable except by will, intestate succession or operation of law.

Q: Will I continue to receive regular distributions on my common stock prior to the completion of the dissolution?
A: No. On July 18, 2017, in light of the pending Asset Sale and Plan of Liquidation, the Board determined that the Company would cease declaring and paying regular distributions to its stockholders following the distributions to stockholders of record with respect to each day during the month of July 2017 which were paid on August 1, 2017. If the Asset Sale and the Plan of Liquidation are approved by the Company’s stockholders at the Annual Meeting and the Plan of Liquidation becomes effective, the Company anticipates paying periodic liquidating distributions, including an initial liquidating distribution of $15.75 expected to be paid within two weeks following the closing of the Asset Sale, as further

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described in this proxy statement, subject to satisfying its liabilities and obligations, in lieu of regular distributions. If, for some reason, the Asset Sale and the Plan of Liquidation are not approved by the Company’s stockholders at the Annual Meeting, the Board will further evaluate the Company’s distribution policy.

Questions About the Other Proposals

Q: Am I being asked to vote on anything else?
A: Yes. At the Annual Meeting, the Board is also asking you to consider and vote on:
the election of three directors to serve for one year, until the Company’s 2018 annual meeting of stockholders and their successors are duly elected and qualified;
a proposal to ratify the appointment of KPMG as the Company’s independent registered public accounting firm for the year ending December 31, 2017; and
a proposal to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate as determined by the chairperson of the Annual Meeting, to solicit additional proxies in favor of the other proposals.

You will also be asked to consider and act on any matters as may properly come before the Annual Meeting or any postponement or adjournment thereof. The Board does not know of any matters that may be considered at the Annual Meeting other than the matters set forth above and the approval of the Asset Sale and the Plan of Liquidation.

Q: How does the Board recommend that stockholders vote on these proposals?
A: The Board unanimously recommends that stockholders vote FOR the election of each of the director nominees named in this proxy statement, FOR the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm, and FOR the adjournment of the Annual Meeting to a later date or dates, if necessary or appropriate as determined by the chairperson of the Annual Meeting, to solicit additional proxies in favor of the other proposals.
Q: What happens if the Company is liquidated and dissolved before the expiration of the term of any of the directors elected at the Annual Meeting?
A: Following the liquidation and dissolution of the Company, the Company will no longer have a Board or directors and all of the Company’s then current directors will cease serving in that capacity, regardless of the timing of the expiration of their respective terms.

Questions About the Annual Meeting

Q: When and where will the Annual Meeting be held?
A: The Annual Meeting will be held at The Core Club, located at 66 E. 55th Street, New York, New York, on December 21, 2017, commencing at 4:00 p.m., local time.
Q: Who can vote at the Annual Meeting?
A: The record date for determining stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on October 23, 2017. As of the record date, there were 6,956,304 shares of common stock outstanding held by approximately 3,837 holders of record. Each share of common stock is entitled to one vote on each proposal presented at the Annual Meeting.
Q: What constitutes a quorum?
A: The Charter and the Company’s bylaws state that the presence in person or by proxy of stockholders entitled to cast at least 50% of all the votes entitled to be cast at the meeting on any matter will constitute a quorum. Shares that are voted and shares abstaining from voting, if any, will be counted for purposes of determining whether a quorum is present at the Annual Meeting.

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Q: What vote is required to approve the proposals at the Annual Meeting?
A: Approval of each of the Asset Sale and the Plan of Liquidation requires the affirmative vote of at least a majority of the outstanding shares of common stock on each of the proposals to approve the Asset Sale and the Plan of Liquidation, excluding for the purposes of the approval of the Asset Sale, shares of common stock beneficially owned by the Advisor, any director of the Company or any of their respective affiliates, including AR Global. As of the record date, there were 16,886 shares of common stock beneficially owned by the Advisor, the Company’s directors and their respective affiliates, including AR Global.

Directors will be elected by the affirmative vote of the holders of a majority of the outstanding shares of common stock, present in person or by proxy, to elect each nominee, provided that a quorum is present. Approval of the proposal to ratify the appointment of KPMG requires the affirmative vote of the majority of the votes cast for the proposal at the Annual Meeting, provided that a quorum is present. The proposal to adjourn the Annual Meeting requires the affirmative vote of the majority of the votes cast for the proposal.

The Company’s bylaws authorize the chairperson of the meeting to adjourn the meeting in the discretion of the chairperson and without any action by the stockholders regardless of whether a quorum is present.

The closing of the Asset Sale is conditioned upon stockholder approval of both the Asset Sale and the Plan of Liquidation. Thus, if stockholders do not approve the Plan of Liquidation, the Asset Sale will not be completed even if stockholders approve the Asset Sale. Likewise, the effectiveness of the Plan of Liquidation is conditioned upon stockholder approval of the Plan of Liquidation and the closing of the Asset Sale. If the Asset Sale is not approved and does not close, the Plan of Liquidation will not become effective regardless of whether or not it has been approved.

Q: What do I need to do now?
A: After you have carefully read this proxy statement, please respond by completing, signing and dating your proxy card and returning it in the enclosed preaddressed postage-paid envelope or, if available, by authorizing your proxy by one of the other methods specified in your proxy card as promptly as possible so that your shares of common stock will be represented and voted at the Annual Meeting.

Please refer to your proxy card to see which voting options are available to you. The method by which you authorize a proxy will in no way limit your right to vote at the Annual Meeting if you later decide to attend the meeting in person.

Q: How will my proxy be voted?
A: All shares of the Company’s common stock entitled to vote and represented by properly completed proxies received prior to the Annual Meeting, and not revoked, will be voted at the Annual Meeting as instructed on the proxies. If you properly sign, date and return a proxy card, but do not indicate how your shares of common stock should be voted on a matter, the shares of common stock represented by your proxy will be voted as the Board recommends and therefore FOR the proposal to approve the Asset Sale, FOR the proposal to approve the Plan of Liquidation, FOR the election of each of the director nominees named in this proxy statement, FOR the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm and FOR the proposal to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate as determined by the chairperson of the Annual Meeting, to solicit additional proxies in favor of the other proposals.

If you abstain from voting, your shares will not be counted as votes cast and will have the same effect as a vote against the proposal to approve the Asset Sale, the proposal to approve the Plan of Liquidation and the election of each of the director nominees named in this proxy statement, but will have no effect on the other proposals.

None of the Company’s common stock is held in “street name” and thus the Company does not anticipate any “broker non-votes” at the Annual Meeting. A “broker non-vote” would only occur if your shares were held in street name by a bank or other nominee and you did not provide that nominee with voting instructions.

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Q: Can I revoke my proxy or change my vote after I have delivered my proxy?
A: Yes. You may revoke your proxy or change your vote at any time before your proxy is exercised at the Annual Meeting. If you are a holder of record, you can do this in any of the three following ways:
by sending a written notice to the Company’s Secretary at 405 Park Avenue, 4th Floor, New York, New York 10022, in time to be received before the Annual Meeting, stating that you would like to revoke your proxy;
by completing, signing and dating another proxy card and returning it by mail in time to be received before the Annual Meeting, or by authorizing a later dated proxy by the internet or telephone in which case your later-authorized proxy will be recorded and your earlier proxy revoked; or
by attending the Annual Meeting and voting in person.

Simply attending the Annual Meeting without voting will not revoke your proxy or change your vote.

Q: Who will incur the expense of soliciting proxies? 
A: The Company is soliciting the proxy on behalf of the Board, and the Company will pay all costs of preparing, assembling and mailing the proxy materials. The Company’s directors and officers, as well as employees of the Advisor or its affiliates, may solicit proxies on the Company’s behalf in person or by telephone, facsimile or other means, for which they will not receive any additional compensation. The Company has retained Broadridge Investor Communication Solutions, Inc. (“Broadridge”) to aid in the solicitation of proxies. Broadridge will receive a fee of approximately $20,000 for proxy solicitation services provided for the Company, plus up to approximately $88,000 in reimbursements of certain costs and out-of-pocket expenses incurred in connection with their services, all of which will be paid by the Company. The Company estimates that the proxy and solicitation costs paid by the Company will be between approximately $0.3 million and $0.4 million. See “The Plan of Liquidation — Range of Liquidating Distributions.” The Company will request banks, brokers, custodians, nominees, fiduciaries and other record holders to forward copies of this proxy statement to people on whose behalf they hold shares of common stock and to request authority for the exercise of proxies by the record holders on behalf of those people, if necessary. In accordance with the regulations of the SEC, the Company will reimburse these brokerage firms, and other custodians, nominees and fiduciaries for their expenses incurred in sending proxies and proxy materials to beneficial owners of shares of common stock.
Q: What should I do if I receive more than one set of voting materials for the Annual Meeting?
A: You may receive more than one set of voting materials for the Annual Meeting, including multiple copies of this proxy statement and multiple proxy cards. If you are a holder of record and your shares of common stock are registered in more than one name, you may receive more than one proxy card. Please complete, sign, date and return each proxy card that you receive or, if available, please authorize your proxy by telephone or over the internet.
Q: What if I receive only one set of proxy materials although there are multiple stockholders at my address?
A: The Securities and Exchange Commission (the “SEC”) has adopted a rule concerning the delivery of documents filed by us with the SEC, including proxy statements. The rule allows us to send a single set of any annual report, proxy statement, proxy statement combined with a prospectus or information statement to any household at which two or more stockholders reside if they share the same last name or the Company reasonably believes they are members of the same family. This procedure is referred to as “Householding.” This rule benefits both you and us by reducing the volume of duplicate information received at your household and helps us reduce expenses. Each stockholder subject to Householding will continue to receive a separate proxy card.

The Company will promptly deliver, upon written or oral request, a separate copy of this proxy statement to a stockholder at a shared address to which a single copy was previously delivered. If you would prefer to receive your own copy, you may direct requests for separate copies by calling the Company’s Investor

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Relations department at (866) 902-0063 or by mailing a request to American Realty Capital Healthcare Trust III, Inc., 405 Park Avenue, 4th Floor, New York, New York 10022, Attention: Investor Relations. Likewise, if your household currently receives multiple copies of disclosure documents and you would like to receive one set, please contact us.

Q: Who can answer my questions?
A: If you have any questions about the Asset Sale, the Plan of Liquidation, any of the proposals to be submitted to stockholders at the Annual Meeting or how to authorize your proxy, or need additional copies of this proxy statement or the enclosed proxy card, you should contact:

American Realty Capital Healthcare Trust III, Inc.
Attention: Investor Relations
405 Park Avenue, 4th Floor
New York, New York 10022
(866) 902-0063
www.thehealthcarereit3.com

You can also contact the proxy solicitor hired by the Company as follows:

Broadridge Investor Communication Solutions, Inc.

For Questions, Stockholders May Call: (855) 973-0094

To Vote Toll Free, Stockholders May Call: (800) 690-6903

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SUMMARY

The following summary highlights some of the information contained in this proxy statement but may not contain all of the information that is important to you. For a more complete description of the Purchase Agreement, the Asset Sale and the Plan of Liquidation, the Company encourages you to read carefully this entire proxy statement, including the attached Annexes. The Company encourages you to read the information about the Company and HTI that has been filed with the SEC. You may obtain the information filed with the SEC without charge by following the instructions in the section entitled “Where You Can Find More Information.”

The Asset Sale and the Plan of Liquidation (page 24)

On June 16, 2017, the Company agreed to sell substantially all of its assets to HTI in the Asset Sale pursuant to and on the terms set forth in the Purchase Agreement for the Purchase Price of $120.0 million. The Purchase Price is subject to customary prorations and closing adjustments in accordance with the terms of the Purchase Agreement, which are estimated to be $0.8 million payable to HTI assuming the Asset Sale closes on November 30, 2017, and will be payable on the Closing Date less $4.9 million, the principal amount as of the date of this proxy statement of the Philip Center Loan, which will be assumed by HTI or repaid by the Company, and associated costs. HTI will deposit $6.0 million of the Purchase Price payable on the Closing Date into an escrow account for the benefit of the Company on the Closing Date, and this amount, less any amounts paid or reserved for pending or unsatisfied indemnification claims of HTI made pursuant to the Purchase Agreement, will be released in installments thereafter over a period of 14 months following the Closing Date.

In connection with its approval of the Purchase Agreement, the Board also approved the Plan of Liquidation, subject to stockholder approval. The closing of the Asset Sale is conditioned upon stockholder approval of both the Asset Sale and the Plan of Liquidation. Thus, if stockholders do not approve the Plan of Liquidation, the Asset Sale will not be completed even if stockholders approve the Asset Sale. Likewise, the effectiveness of the Plan of Liquidation is conditioned upon stockholder approval of the Plan of Liquidation and the closing of the Asset Sale. If the Asset Sale is not approved and does not close, the Plan of Liquidation will not become effective regardless of whether or not it has been approved. Pursuant to the Plan of Liquidation, if it becomes effective, the Company intends to wind up its affairs and distribute its assets, which are expected to consist primarily of cash after satisfying the Company’s liabilities, to the holders of its common stock in one or more liquidating distributions in accordance with the Plan of Liquidation.

Parties to the Purchase Agreement (page 69)

The Company was incorporated on April 24, 2014 as a Maryland corporation and elected and qualified to be taxed as a REIT beginning with the taxable year ended December 31, 2015. Substantially all of the Company’s business is conducted through the OP, a Delaware limited partnership of which the Company is the sole general partner. HT III Holdco, a Delaware limited liability company, is a wholly owned subsidiary of the OP. The Company was formed to primarily acquire a diversified portfolio of healthcare-related assets including MOBs, seniors housing communities and other healthcare-related facilities. The Company’s initial public offering (the “IPO”) raised significantly less capital than expected, realizing only $171.5 million in net proceeds. As of June 30, 2017, the Company owned 19 properties consisting of 0.5 million rentable square feet. The Company’s principal executive offices are located at 405 Park Avenue, 4th Floor, New York, New York 10022. The Company’s Investor Relations telephone number is (866) 902-0063.

The purchaser is HTI, a Maryland corporation that was formed and sponsored by affiliates of the Advisor. Substantially all of HTI’s business is conducted through its operating partnership, the HTI OP, a Delaware limited partnership of which HTI is the sole general partner. HTI Holdco, a Delaware limited liability company, is a wholly owned subsidiary of the HTI OP. Like the Company, HTI invests in healthcare real estate, focusing on seniors housing and MOBs, located in the United States. As of June 30, 2017, HTI owned 163 properties located in 29 states and comprised of 8.5 million rentable square feet.

The Company’s and HTI’s external advisors are both owned and controlled, indirectly, by AR Global.

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Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation; Fairness of the Asset Sale (page 38)

Based on the unanimous recommendation of the Special Committee, which consisted solely of the Company’s two independent directors, the Board (with Mr. Weil abstaining) has unanimously (1) determined that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approved each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determined that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approved the Plan of Liquidation, and (3) recommended that stockholders vote FOR the Asset Sale and FOR the Plan of Liquidation.

Solely to comply with the disclosure requirements of Rule 13e-3 and related rules under the Exchange Act, the Special Committee recommended to the Board and the Board (with Mr. Weil not participating) has determined, for the Company, the OP and HT III Holdco, that the Asset Sale and the Plan of Liquidation are substantively and procedurally fair to and in the best interests of the Company and the Company’s unaffiliated stockholders.

In evaluating the Asset Sale and the Plan of Liquidation, the Board consulted with the Special Committee and its legal and financial advisors, and considered numerous factors and risks, which the Board and the Special Committee viewed as supporting their decisions. For a more complete discussion of the factors and risks considered, see “Special Factors —  Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation” and “— Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders.”

HTI’s Purposes and Reasons for the Asset Sale; Fairness of the Asset Sale (page 44)

To reach a decision to authorize and approve the Asset Sale, the HTI Special Committee held a number of meetings, consulted with its legal and financial advisors, and considered a number of factors, some of which weighed positively in favor of the Asset Sale, as well as a variety of risks and other potentially negative factors concerning the Asset Sale.

Solely to comply with the disclosure requirements of Rule 13e-3 and related rules under the Exchange Act. HTI, HTI OP and HTI Holdco have determined that the Asset Sale and Plan of Liquidation are fair to the Company’s unaffiliated stockholders.

For a more complete discussion of the factors and risks considered, “Special Factors — HTI’s Purposes and Reasons for the Asset Sale” and “— Position of HTI, HTI OP and HTI Holdco as to Fairness to the Company’s Unaffiliated Stockholders.”

Opinion of the Special Committee’s Financial Advisor (page 47)

On June 16, 2017, SunTrust Robinson Humphrey, Inc. (“SunTrust Robinson Humphrey”) rendered its oral opinion to the Special Committee and the Board (which was subsequently confirmed in writing by delivery of SunTrust Robinson Humphrey’s written opinion dated June 16, 2017) as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the membership interests of the Company’s subsidiaries that directly own the Properties (the “Membership Interests”) and one subsidiary that holds the license for operating the Company’s assisted living facility (the “Holdco Interest”) in the Asset Sale pursuant to the Purchase Agreement.

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SunTrust Robinson Humphrey’s opinion was directed to the Special Committee (in its capacity as such) and the Board (in its capacity as such) and only addressed the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interest in the Asset Sale pursuant to the Purchase Agreement and did not address any other terms, conditions, aspects or implications of the Asset Sale or the Plan of Liquidation. The summary of SunTrust Robinson Humphrey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex C to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by SunTrust Robinson Humphrey in preparing its opinion. However, neither SunTrust Robinson Humphrey’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement is intended to be, and they do not constitute, advice or a recommendation as to, or otherwise address, how the Special Committee, the Board or any security holder of the Company should act or vote with respect to any matter relating to the Asset Sale or otherwise.

Opinion of the HTI Special Committee’s Financial Advisor (page 47)

On June 16, 2017, KeyBanc Capital Markets Inc. (“KeyBanc”) rendered its oral opinion to the special committee comprised solely of HTI’s independent directors (the “HTI Special Committee”), as of June 16, 2017, that the Purchase Price to be paid to the Company in connection with the Asset Sale was fair, from a financial point of view, to HTI.

The full text of KeyBanc’s written opinion, dated June 16, 2017, is attached hereto as Annex D. The written opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by KeyBanc in rendering its opinion. The opinion was provided to the HTI Special Committee and addresses only, as of the date of the written opinion, the fairness, from a financial point of view, to HTI of the Purchase Price to be paid to the Company in connection with the Asset Sale pursuant to the Purchase Agreement, and it does not address HTI’s underlying business decision to effect the Asset Sale or any other terms of the Asset Sale. The opinion does not constitute a recommendation as to how any stockholder should vote with respect to the Asset Sale or any other matter, and does not in any manner address the price at which HTI common stock or the Company’s common stock will trade at any time.

Properties (page 116)

The following table summarizes certain information regarding each of the Properties to be sold in the Asset Sale as of June 30, 2017.

           
Property/Portfolio   Acquisition
Date
  Number of
Properties
  Rentable
Square
Feet
  Occupancy   Weighted
Average
Remaining
Lease
Term
  Base
Purchase
Price(1)
                         (In years)   (In thousands)
Medical Office Buildings:
                                                     
DaVita Bay Breeze – Largo, FL     Mar. 2015       1       7,247       100.0 %      10.0     $ 1,650  
RAI Clearwater – Clearwater, FL     Apr. 2015       1       14,936       100.0 %      7.4       4,750  
DaVita Hudson – Hudson, FL     May 2015       1       8,984       100.0 %      7.2       2,725  
Rockwall Medical Plaza – 
Rockwall, TX
    Jun. 2015       1       18,176       100.0 %      2.7       6,639  
Decatur Medical Office Building – 
Decatur, GA
    Jul. 2015       1       20,800       100.0 %      5.4       5,100  
Buckeye Health Center – 
Cleveland, OH
    Aug. 2015       1       25,070       100.0 %      2.8       5,550  
Philip Professional Center – 
Lawrenceville, GA
    Aug. 2015       2       31,483       93.9 %      11.1       9,000  
Illinois CancerCare Clinic – 
Galesburg, IL
    Aug. 2015       1       9,211       100.0 %      7.2       3,400  
Galesburg VA Outpatient Clinic – 
Galesburg, IL
    Aug. 2015       1       9,979       100.0 %      6.1       2,630  

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Property/Portfolio   Acquisition
Date
  Number of
Properties
  Rentable
Square
Feet
  Occupancy   Weighted
Average
Remaining
Lease
Term
  Base
Purchase
Price(1)
                         (In years)   (In thousands)
Woodlake Office Center – 
Woodbury, MN
    Sep. 2015       1       36,375       100.0 %      5.3       14,900  
Greenfield Medical Center – 
Gilbert, AZ
    Oct. 2015       1       28,489       100.0 %      3.1       7,000  
Lee Memorial Health System Outpatient Center – Ft.
Meyers, FL
    Oct. 2015       1       24,174       100.0 %      1.2       5,275  
Beaumont Medical Center – 
Warren, MI
    Dec. 2015       1       35,219       95.2 %      4.5       13,650  
Madison Medical Plaza – 
Joliet, IL
    Dec. 2015       1       70,023       89.4 %      4.1       19,500  
UnityPoint Clinic – Muscatine, IA     Dec. 2015       1       21,767       100.0 %      7.8       5,887  
UnityPoint Clinic – Moline, IL     Dec. 2015       1       14,640       100.0 %      6.5       3,767  
Total Medical Office Buildings:           17       376,573       97.1 %      5.4       111,423  
Triple-Net Leased Healthcare Facility:
                                                     
Arcadian Cove Assisted Living – Richmond, KY     Aug. 2015       1       34,659       100.0 %      13.2       4,775  
Seniors Housing – Operating Property:
                                                     
Cedarhurst of Collinsville – Collinsville, IL     Aug. 2015       1       56,700       75.0 %      N/A       11,600  
Portfolio, June 30, 2017           19       467,932                 $ 127,798  

(1) Contract purchase price, excluding acquisition related costs.

N/A Not applicable

The Purchase Agreement (page 69)

The Purchase Agreement, which governs the terms of the Asset Sale, is attached as Annex A to this proxy statement. You are encouraged to read carefully the Purchase Agreement in its entirety.

Conditions to Completion (page 71)

A number of conditions must be satisfied or waived, where legally permissible, before the Asset Sale can be completed. These include, among others:

approval of the Asset Sale by the Company’s stockholders;
approval of the Plan of Liquidation by the Company’s stockholders;
confirmation of the accuracy of representations and warranties of each of the parties to the Purchase Agreement;
delivery of all documents, certificates and instruments required to be delivered at the closing under the Purchase Agreement;
the absence of any temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction, or other legal restraint or prohibition preventing the consummation of the Asset Sale or the Plan of Liquidation;
the absence of any action by a governmental agency that makes the consummation of the Asset Sale or the Plan of Liquidation illegal; and
performance in all material respects by each of the parties to the Purchase Agreement of all of their obligations thereunder.

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We cannot give any assurance as to when or if all of the conditions to completing the Asset Sale will be satisfied or waived or that the Asset Sale will occur.

Exclusivity (page 73)

The Company has agreed to not initiate, solicit, knowingly encourage or facilitate any inquiries or the making of any proposal, offer or other action that constitutes, or may reasonably be expected to lead to any acquisition proposal. If, prior to stockholder approval of the Asset Sale and the Plan of Liquidation, the Company receives a bona fide written acquisition proposal that did not result from a breach of these obligations and the Special Committee determines in good faith after consulting with its legal and financial advisors that such acquisition proposal is or is reasonably expected to lead to a superior proposal, the Company may furnish, make available or provide access to non-public information with respect to the Company to the person who made such acquisition proposal, participate in negotiations regarding such proposal and disclose to the Company’s stockholders any information required to be disclosed under applicable law.

If, prior to stockholder approval of the Asset Sale and the Plan of Liquidation, the Board determines in good faith after consulting with its legal advisor (and based on the recommendation of the Special Committee) that the failure of the Board to take certain actions related to changing its recommendation to the Company’s stockholders with respect to its approval of the Asset Sale or the Plan of Liquidation or entering into an agreement related to an acquisition proposal (any such action, a “Change in Recommendation”) would be reasonably likely to be inconsistent with the standard of conduct applicable to the Company’s directors under applicable law, subject to certain conditions, (a) upon receipt by the Company of an acquisition proposal that constitutes a superior proposal, the Board may make a Change in Recommendation and may terminate the Purchase Agreement in accordance with its terms and enter into an agreement relating to, or for the implementation of, such superior proposal, or (b) otherwise make a Change in Recommendation, subject to certain conditions, in response to a material event, circumstance, change or development that was not known to the Board prior to signing the Purchase Agreement (or if known, the consequences of which were not known or reasonably foreseeable), which event or circumstance, or any material consequence thereof, becomes known to the Board prior to the effective time of the Asset Sale (which shall in no event include the receipt, existence or terms of an acquisition proposal or any matter relating thereof or consequence thereof).

Indemnification (page 77)

If the Asset Sale and the Plan of Liquidation are both approved by the Company’s stockholders, following the closing of the Asset Sale, the Company will continue to have certain obligations under the Purchase Agreement, including obligations with respect to proration of certain revenue and expense items relating to the Properties which will result in adjustments to the Purchase Price, assisting HTI in obtaining any necessary licenses to operate the Company’s seniors housing — operating property (“SHOP”) and indemnifying HTI against any “losses” as defined in the Purchase Agreement that HTI may incur in connection with, among other things, any stockholder litigation brought by stockholders of the Company in connection with the Asset Sale, any breach or inaccuracy of any representations and warranties made by the Company or its affiliates or the failure of the Company or its affiliates to perform their obligations under the Purchase Agreement. The representations and warranties were made by the parties as of the date of the Purchase Agreement and generally survive (along with related indemnification obligations) for a period of 14 months following the Closing Date. Any losses payable to HTI in connection with the Company’s indemnification of HTI as described above are recoverable first from the Escrow Amount and then, to the extent the indemnifiable losses exceed the Escrow Amount, from the Company and the OP jointly and severally. The Board may establish a reserve fund to set aside the funds necessary to satisfy these obligations and liabilities not assumed under the Purchase Agreement, all of which will impact the timing of liquidating distributions to stockholders and may impact the amount ultimately available for distribution.

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Termination; Termination Fee and Expenses (page 78)

The Purchase Agreement contains termination rights for both the Company and HTI. The Company or HTI may terminate the Purchase Agreement at any time before the Closing Date without a termination fee payable or reimbursement of expenses by either party:

by mutual written agreement of the Company and HTI;
if the Asset Sale has not closed on or before the March 16, 2018 outside date; or
if a final, non-appealable order has been issued prohibiting the transactions contemplated by the Purchase Agreement.

In addition, either party may terminate the Purchase Agreement prior to the Closing Date and the Company will reimburse up to $850,000 of HTI’s non-HTI Advisor expenses if the Company’s stockholders do not approve the Asset Sale and the Plan of Liquidation.

The Company may terminate the Purchase Agreement if:

HTI has not fulfilled certain necessary conditions (including payment of the Purchase Price) to close the Asset Sale prior to the Closing Date, in which case HTI will reimburse the Company up to $750,000 in actual third party expenses incurred in connection with the Asset Sale; or
at any time prior to approval of the Asset Sale and the Plan of Liquidation by the Company’s stockholders if the Board (based on the recommendation of the Special Committee) approves and authorizes the Company to enter into a definitive agreement providing for the implementation of a superior proposal, as long as concurrently with terminating the Purchase Agreement, the Company pays HTI a termination fee of $3.6 million (the “Termination Fee”).

HTI may terminate the Purchase Agreement:

if the Company has not fulfilled certain necessary conditions to close the Asset Sale prior to the Closing Date, in which case the Company will reimburse HTI up to $750,000 in actual third party expenses incurred in connection with the Asset Sale;
following a Change in Recommendation prior to the Closing Date, in which case the Company must pay the Termination Fee to HTI;
at any time prior to approval of the Asset Sale and the Plan of Liquidation by the Company’s stockholders, if the Company’s Board approves, adopts or recommends an acquisition proposal, the Company enters into an agreement relating to an acquisition proposal, or if a tender offer or exchange offer constituting an acquisition proposal is commenced and the Company fails to recommend against acceptance of the offer within ten business days, in which case the Company must pay the Termination Fee to HTI; or
if the Company materially violates its exclusivity obligations under the Purchase Agreement, in which case the Company must pay the Termination Fee to HTI.

Regulatory Approvals (page 68)

The Company and HTI are not aware of any regulatory approvals of any municipal, state and federal governmental agencies or authorities required for the consummation of the Asset Sale. If any approvals are required, the Company does not anticipate that they will hinder, delay, or restrict completion of the Asset Sale. Under the Purchase Agreement, the Company and HTI have each agreed to use commercially reasonable efforts to take all actions necessary, proper, or advisable to complete the Asset Sale.

In the event that one or more regulatory approvals are required to complete the Asset Sale, the approvals may not be obtained on a timely basis or at all. There is no assurance that any required regulatory approvals will be obtained or that any required approvals will not contain terms, conditions or restrictions.

No regulatory approvals are required for the Plan of Liquidation to become effective.

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Escrow Agreement (page 70)

On the Closing Date, HTI will deposit $6.0 million of the Purchase Price, representing the Escrow Amount, into an escrow account for the benefit of the Company pursuant to an escrow agreement with Wells Fargo Bank, N.A. executed as of the Closing Date in the form attached as an exhibit to the Purchase Agreement (the “Escrow Agreement”). According to the terms of the Escrow Agreement, the Escrow Amount will be held in the escrow account for 14 months following the Closing Date. One third of the Escrow Amount not paid or reserved for pending or unsatisfied claims of HTI will be released to the Company in three installments: six, 12 and 14 months following the Closing Date.

Financing of the Asset Sale (page 61)

At the closing of the Asset Sale, HTI plans to simultaneously add qualifying Properties it is acquiring to the borrowing base of its existing revolving credit facility, thereby increasing the borrowing capacity thereunder, and draw down approximately $50.0 million to pay a portion of the Purchase Price and other costs associated with the closing of the Asset Sale. HTI intends to fund the remaining amounts payable through a combination of additional borrowings made possible by adding additional unencumbered assets it currently owns to the borrowing base of the HTI Revolving Credit Facility as well as cash on hand. Although the Asset Sale is not subject to any financing condition, adding any property to the borrowing base of the HTI Revolving Credit Facility requires satisfying certain conditions, including approval of the agent thereunder. There can be no assurance these conditions will be satisfied or waived when all the other conditions to the closing of the Asset Sale have been satisfied or waived and that HTI will be able pay the Purchase Price when it is required to do so under the Purchase Agreement. HTI has not made alternative financing arrangements and, if sufficient financing is not available through the HTI Revolving Credit Facility on the Closing Date, HTI may not have sufficient cash on hand available to fund the entire Purchase Price and any other costs payable in connection with the closing of the Asset Sale.

AR Global Arrangements (page 80)

In connection with executing the Purchase Agreement, the Company, the Advisor, the Property Manager and AR Global, as guarantor, entered into the Letter Agreement, pursuant to which, as amended, subject to completing the Asset Sale, the parties agreed to resolve matters related to expense reimbursements or fees previously paid by the Company to the Advisor and its affiliates. Pursuant to the Letter Agreement, the Company and the Advisor also agreed to enter into an amendment to the Advisory Agreement and an amendment to the LPA required to reflect certain agreements in the Letter Agreement (the “Contemplated Amendments”). Notwithstanding the date the Contemplated Amendments are executed, they will be effective as of October 1, 2017 and only if the Asset Sale and the Plan of Liquidation are approved and the Asset Sale closes. They will be of no force or effect in the event the Purchase Agreement is terminated prior to the Closing Date.

Since the Company’s inception, in lieu of paying the Advisor in cash for its asset management services, the Company has compensated the Advisor by causing the OP to issue to the Advisor (subject to periodic approval by the Board) performance-based restricted, forfeitable Class B Units. The cash that would have been used to pay the Advisor for these services was available to fund other items including to pay distributions. Under the Contemplated Amendments, the OP would no longer issue Class B Units to the Advisor for periods commencing on or after October 1, 2017. Instead, the Advisor would be entitled to receive cash fees from the Company payable quarterly in arrears. In addition, the Contemplated Amendments provide that the rights, privileges and characteristics of Class B Units would be amended in order to facilitate the establishment of a value for Class B Units consistent with the applicable provisions of the Letter Agreement.

Without the Contemplated Amendments, the Advisor would not be entitled to receive liquidating distributions in connection with the Plan of Liquidation although the Class B Units would be entitled to regular operating distributions if the Company continued to operate and pay regular distributions. See “Special Factors — Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation — Potential Payments to the Advisor in Connection with the Asset Sale” for further details.

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Under the Letter Agreement, if the Asset Sale is completed, the obligation of the Advisor and its affiliates to pay the Company approximately $3.68 million with respect to certain expense reimbursements or fees previously paid by the Company to the Advisor or its affiliates will be satisfied, either on the Closing Date or through payments made by the Advisor to the Company thereafter, in exchange for: (i) surrender (in accordance with the Letter Agreement as described in “AR Global Arrangements”) by the Advisor of 83,018 Class B Units previously issued to the Advisor and the additional Class B Units to be issued to the Advisor during November 2017 with respect to the quarter ended September 30, 2017 in accordance with the terms of the Advisory Agreement and the LPA; (ii) an agreement to waive or assume certain fees and expenses payable or to be payable by the Company to the Advisor for providing transition services required to implement the Plan of Liquidation or other services provided during 2017 in an aggregate amount valued at $1.1 million, to waive an amount equal to cash asset management and oversight fees that would become payable if the Assets Sale closes with respect to services provided by the Advisor for the quarter commencing October 1, 2017 through and including the Closing Date and in respect of the assumption by the Advisor of the responsibility for payment of certain disputed fees potentially owed by the Company, the waiver of an amount equal to the disputed amount; and (iii) an agreement by the Advisor to pay the Company any remaining amounts in cash following the Closing Date.

Other than as contemplated by the Letter Agreement, if the Asset Sale is completed, no fees or other amounts are or will become due or otherwise payable under the Advisory Agreement, the LPA or any other agreement between the Company and the Advisor and its affiliates.

Concurrently with the execution of the Letter Agreement, the Advisory Agreement was amended to reflect the Advisor’s agreement to provide the Company services required to implement the Plan of Liquidation following the Closing Date.

The Plan of Liquidation (page 84)

Pursuant to the Plan of Liquidation, the Company will, among other things:

pay or provide for the Company’s liabilities, obligations and expenses, which may include establishing a reserve fund to provide for payment of contingent or unknown liabilities;
liquidate and dissolve the OP and the indirect subsidiaries of the Company and the OP, and distribute the net proceeds of the liquidation in accordance with the provisions of the organizational documents of those entities and the laws of the States of Maryland and Delaware, as applicable;
distribute cash and the remaining proceeds of the Asset Sale and the Company’s liquidation to stockholders in one or more distributions after paying or providing for liabilities, obligations and expenses and taking all necessary or advisable actions to wind up the Company’s affairs; and
wind up the Company’s operations and dissolve the Company, all in accordance with the Plan of Liquidation attached hereto as Annex B.

The Plan of Liquidation requires the Company to use commercially reasonable efforts to liquidate and dissolve the Company and to distribute all of the Company’s assets to the holders of outstanding shares of common stock no later than the second anniversary of the effective date of the Plan of Liquidation. The Plan of Liquidation also provides, however, that this final distribution will not occur earlier than the end of the 14-month survival period of the representations and warranties under the Purchase Agreement and will not occur prior to final resolution of any unsatisfied indemnification claims or other claims that are first made prior to the end of that period.

Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation (page 65)

In considering the recommendation of the Board to approve the Asset Sale and the Plan of Liquidation, although Mr. Weil abstained, you should note that the Company’s directors and officers (including all of the Company’s executive officers and one of the Company’s directors in their capacities as executives or members of the Advisor, the HTI Advisor and certain of their affiliates) may have interests in the Asset Sale and Plan of Liquidation that are different from, or in addition to, the interests of stockholders. Both the Advisor and the HTI Advisor, as well as their respective property managers, the Property Manager and the HTI Property

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Manager, are indirectly owned and controlled by AR Global. Edward M. Weil, Jr., the executive chairman of the Board, is also a member of the HTI Board. Mr. Weil owns a non-controlling interest in the parent of AR Global and is also the chief executive officer of AR Global. In addition, the Company, HTI, the Advisor, the Property Manager and the HTI Property Manager have the same executive officers, W. Todd Jensen and Katie P. Kurtz. These interests are described in further detail herein.

Accounting Treatment of the Asset Sale and the Plan of Liquidation (page 68)

The Company prepares its financial statements in accordance with U.S. generally accepted accounting principles, (“GAAP”). The Asset Sale will be treated as an asset disposition for accounting purposes. The Company expects that effectiveness of the Plan of Liquidation will cause the Company’s basis of accounting to change from the going-concern basis to the liquidation basis of accounting.

The Annual Meeting of Stockholders (page 97)

The Annual Meeting of the Company’s stockholders will be held on December 21, 2017 at 4:00 p.m., local time, at The Core Club, located at 66 E. 55th Street, New York, New York. At the Annual Meeting, stockholders will be asked to approve the Asset Sale, to approve the Plan of Liquidation, to elect three directors to serve for one year, until the Company’s 2018 annual meeting of stockholders and their successors are duly elected and qualified, to ratify the appointment of KPMG as the Company’s independent registered public accounting firm for the year ending December 31, 2017 and to approve the proposal to adjourn the Annual Meeting to a later date or dates.

Only holders of record of common stock at the close of business on October 23, 2017, the record date, are entitled to notice of and to vote at the Annual Meeting. As of the record date, there were approximately 3,837 holders of record of the Company’s common stock.

At the Annual Meeting, the presence in person or by proxy of stockholders entitled to cast at least 50% of all the votes entitled to be cast at the meeting will constitute a quorum. Abstentions, if any, will be counted in determining whether a quorum is present at the Annual Meeting. Abstentions are not counted as votes cast and will have the same effect as a vote against the Asset Sale, the Plan of Liquidation and the election of each of the director nominees named in this proxy statement, but will have no effect on the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm or the proposal to adjourn the Annual Meeting to a later date or dates.

Approval of the Asset Sale and the Plan of Liquidation requires the affirmative vote of the holders of at least a majority of the outstanding shares of common stock on those proposals excluding for the purposes of the Asset Sale, shares of common stock beneficially owned by the Advisor, any director of the Company or any of their respective affiliates, including AR Global. As of the record date, there were 16,886 shares of common stock beneficially owned by the Advisor, the Company’s directors and their respective affiliates, including AR Global.

Directors will be elected by the affirmative vote of the holders of a majority of the outstanding shares of common stock, present in person or by proxy, to elect each nominee, provided that a quorum is present.

Approval of the proposal to ratify the appointment of KPMG as the Company’s independent registered public accounting firm requires the affirmative vote of the majority of the votes cast for the proposal at the Annual Meeting, provided that a quorum is present.

Approval of the proposal to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate as determined by the chairperson of the Annual Meeting, requires the affirmative vote of a majority of the votes cast for the proposal. The Company’s bylaws authorize the chairperson of the meeting to adjourn the meeting in the discretion of the chairperson and without any action by the stockholders regardless of whether a quorum is present.

The closing of the Asset Sale is conditioned upon stockholder approval of both the Asset Sale and the Plan of Liquidation. Thus, if stockholders do not approve the Plan of Liquidation, the Asset Sale will not be completed even if stockholders approve the Asset Sale. Likewise, the effectiveness of the Plan of Liquidation is conditioned upon stockholder approval of the Plan of Liquidation and the closing of

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the Asset Sale. If the Asset Sale is not approved and does not close, the Plan of Liquidation will not become effective regardless of whether or not it has been approved.

Your vote is very important. You are encouraged to authorize your proxy as promptly as possible. If you do not indicate how your shares of common stock should be voted on a matter, the shares of common stock represented by your properly executed proxy will be voted as the Board recommends and therefore FOR the Asset Sale, FOR the Plan of Liquidation, FOR the election of each of the director nominees named in this proxy statement, FOR the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm and FOR the adjournment of the Annual Meeting to a later date or dates.

Voting by the Company’s Directors and Executive Officers and Certain Current Beneficial Owners and Management (page 113)

Currently, there are no formal arrangements between the Company and any of its executive officers, directors or affiliates relating to the manner in which those individuals in their capacity as holders of common stock will vote for any of the proposals at the Annual Meeting. Neither HTI, HTI OP, HTI Holdco, any executive officer of the Company nor any director or executive officer of HTI currently owns shares of common stock. As of the record date, the Company’s directors have the power to vote 7,998 shares of common stock, representing less than 1.0% of the outstanding shares entitled to vote.

At the close of business on the record date, the Advisor, the Company’s directors and their respective affiliates, including AR Global, held and were entitled to vote 16,886 shares of common stock (including unvested restricted shares owned by the Company’s independent directors), collectively representing less than 1.0% of the shares of the Company’s common stock issued and outstanding and entitled to vote on that date. The holders of these shares intend to vote FOR each of the proposals presented at the Annual Meeting in accordance with the recommendations of the Board except that shares of common stock beneficially owned by the Advisor, any director of the Company or any of their respective affiliates, including AR Global, are excluded from the vote with respect to the approval of the Asset Sale.

Material U.S. Federal Income Tax Consequences (page 146)

Generally, distributions to the Company’s stockholders (including distributions to a liquidating trust) will be taxable to the stockholders. A stockholder will recognize gain or loss equal to the difference between the adjusted tax basis in the stockholder’s shares of the Company’s common stock and the amount of cash and the fair market value, net of any accompanying liabilities, of property distributed to the stockholder (including the stockholder’s share of the fair market value of any property, net of any accompanying liabilities, distributed to a liquidating trust). The taxation of any gain or loss will depend on the circumstances of each stockholder, among other things.

Stockholders should consult their own tax advisors to determine the tax consequences to them (including the application and effect of any other federal, state, local or non-U.S. income and other tax laws) of the Asset Sale and the Plan of Liquidation.

Risk Factors (page 89)

In evaluating the Asset Sale and Plan of Liquidation, you should carefully read this proxy statement and especially consider the factors discussed in the section entitled “Risk Factors” beginning on page 89 of this proxy statement.

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SPECIAL FACTORS

Background of the Asset Sale and the Plan of Liquidation

The Company was incorporated on April 24, 2014 as a Maryland corporation and elected and qualified to be taxed as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2015. The Company is a non-traded, externally-advised REIT with a focus on acquiring a diversified portfolio of healthcare-related assets including MOBs, senior housing communities and other healthcare-related facilities in the United States. On August 20, 2014, the Company commenced the IPO on a “reasonable best efforts” basis of up to 125.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $3.1 billion, plus up to 26.3 million shares of common stock available pursuant to the Company’s distribution reinvestment plan (“DRIP”). On November 15, 2015, the Company announced the suspension of the IPO, effective December 31, 2015, and in August 2016, the Company’s IPO lapsed in accordance with its terms. As of June 30, 2017, the Company had received total proceeds from the IPO and the DRIP, net of share repurchases, of $171.1 million.

On January 29, 2016, the Board received an unsolicited letter of interest (the “January 29th HTI Letter”) from the chairman of the HTI Board, inquiring as to whether the Board would be interested in discussing a possible strategic transaction with HTI, and, if so, entering into a mutual non-disclosure agreement to facilitate the pursuit of discussions in greater depth. HTI is a non-traded REIT externally advised by the HTI Advisor. Like the Company, HTI invests in healthcare real estate, focusing on seniors housing and MOBs, located in the United States. As of June 30, 2017, HTI owned 163 properties located in 29 states and comprised of 8.5 million rentable square feet. The HTI Advisor and the Advisor are under common control with AR Global. See “Certain Relationships and Related Transactions.”

On February 4, 2016, the Company and HTI entered into a nondisclosure agreement.

On February 8, 2016, the HTI Board entered into an engagement letter with KeyBanc, pursuant to which KeyBanc agreed to serve as financial advisor to the HTI Board.

On February 16, 2016, the independent directors of the Board received an unsolicited letter (the “February 16th Strategic Party A Letter”) from the lead independent director of a strategic party referred to as “Strategic Party A,” requesting that the Company enter into a nondisclosure agreement with Strategic Party A, so that Strategic Party A could gather information with the intention of submitting a proposal to enter into a potential strategic transaction with the Company. Strategic Party A is also a non-traded REIT which is sponsored and advised by affiliates of AR Global. Strategic Party A advised in the February 16th Strategic Party A Letter that Strategic Party A had engaged a financial advisor (“Strategic Party A Financial Advisor”) to assist Strategic Party A in compiling financial information and structuring a potential strategic transaction.

On February 19, 2016, Ms. Perrotty, one of the Company’s independent directors, received a follow-up letter from a representative of KeyBanc, advising the Company that HTI was aware that Strategic Party A was also interested in potentially acquiring the Company and requesting that any information regarding HTI or any potential transaction between HTI and the Company not be shared with the Advisor or any other personnel related to or affiliated with Strategic Party A. KeyBanc also requested that the Company and HTI begin to exchange information pursuant to their nondisclosure agreement.

On February 22, 2016, the Board held a special telephonic meeting to discuss the receipt of the January 29th HTI Letter and the February 16th Strategic Party A Letter and to establish the Special Committee, a special committee comprised solely of the independent and disinterested directors of the Board to evaluate and review the letters. The Board also authorized the engagement of Shapiro Sher Guinot & Sandler, P.A. (“Shapiro Sher”) as counsel to the Special Committee to assist it as it considered any transaction and authorized the Special Committee to proceed with the engagement of a financial advisor to the Special Committee. Representatives of the Company’s management, AR Global, Proskauer Rose LLP, the Company’s outside counsel (“Proskauer”), and Shapiro Sher were present at the meeting.

On February 22, 2016, immediately following the Board meeting, the Special Committee held a special telephonic meeting with representatives of Shapiro Sher and Proskauer present. Ms. Perrotty, as the chair of

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the Special Committee, advised that she had requested proposals to act as financial advisor to the Special Committee from SunTrust Robinson Humphrey and two other investment banks.

On February 26, 2016, during telephonic meetings of the Board, with representatives of management, Proskauer and Shapiro Sher present, SunTrust Robinson Humphrey and one of the investment banks each presented their respective qualifications with respect to acting as the financial advisor to the Special Committee and material investment banking and lending relationships with AR Global and certain entities sponsored and advised by affiliates of AR Global. The other investment bank contacted by Ms. Perrotty ultimately declined to be considered.

On February 26, 2016, at a special telephonic meeting of the Special Committee, with representatives of Shapiro Sher and Proskauer present, the Special Committee discussed the information provided by SunTrust Robinson Humphrey and the other investment bank at the earlier meetings, but deferred a decision so that the Special Committee could interview additional potential financial advisors.

On February 27, 2016, Ms. Perrotty responded to the lead independent director of Strategic Party A regarding the February 16th Strategic Party A Letter on behalf of the Special Committee, expressing the Special Committee’s interest in entering into discussions about a possible transaction with Strategic Party A and in entering into a nondisclosure agreement with Strategic Party A.

On March 15, 2016, a third investment bank discussed with the Special Committee its qualifications with respect to acting as the financial advisor to the Special Committee and material investment banking and lending relationships with AR Global and certain entities sponsored and advised by affiliates of AR Global.

On March 16, 2016, at a telephonic meeting of the Special Committee, the Special Committee selected SunTrust Robinson Humphrey as its financial advisor.

On March 24, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, Ms. Perrotty reported that she had been advised that HTI had decided not to pursue additional discussions with the Company at that time. The Special Committee, after discussions with the assistance of SunTrust Robinson Humphrey, determined to focus on negotiations with Strategic Party A, including entering into a nondisclosure agreement with Strategic Party A and setting up a data room.

On March 30, 2016, the Special Committee entered into an engagement letter with SunTrust Robinson Humphrey as its exclusive financial advisor for the purpose of assisting the Special Committee in its analysis and consideration of any potential transaction.

On March 31, 2016, the Company and Strategic Party A entered into a nondisclosure agreement.

On April 4, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee about recent discussions with Strategic Party A Financial Advisor regarding Strategic Party A’s business plan and strategy.

On April 7, 2016, Strategic Party A sent a letter to SunTrust Robinson Humphrey in which it proposed to acquire 100% of the issued and outstanding shares of the Company’s common stock as part of a four-party merger transaction in exchange for common stock in Strategic Party A, valuing the Company’s common stock at $22.60 per share based on Strategic Party A’s most recent published estimated per-share net asset value (the “April 7th 2016 Proposal”). The April 7th 2016 Proposal also contemplated a 30-day exclusivity period, a 30-day go-shop period, and a break-up fee of 1.0% during the go-shop period and 2.0% following the go-shop period.

At telephonic meetings of the Special Committee held on April 11 and April 18, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey discussed its preliminary financial analyses with respect to the Company and reviewed the April 7th 2016 Proposal. The Special Committee directed SunTrust Robinson Humphrey to move forward with negotiations with Strategic Party A Financial Advisor and Strategic Party A. The Special Committee instructed SunTrust

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Robinson Humphrey to negotiate for a mix of cash and stock as consideration, a higher exchange ratio, a longer go-shop period with potential matching rights, a lower break-up fee, and the timing of the proposed exclusivity period.

On April 25, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that Strategic Party A desired to focus on an all-stock transaction with the Company that would be expected to close concurrently with other potential transactions Strategic Party A was pursuing but would not be contingent on the closing of those other potential transactions. Based on direction from the Special Committee, SunTrust Robinson Humphrey responded to the April 7th 2016 Proposal by email to Strategic Party A Financial Advisor on April 26, 2016 proposing an increase in the value to $24.50 per share, an increase in the go-shop period to fifty days, and modifications to the break-up fee that correlated with the increase in the go-shop period, as well as an expense reimbursement provision.

On April 29, 2016, the Company issued a press release announcing that the Board had established the Special Committee to conduct a review of strategic alternatives and was addressing potential conflicts of interest relating to a potential strategic transaction. The Company further advised in the press release that the Special Committee had engaged SunTrust Robinson Humphrey as its financial advisor and Shapiro Sher as its special legal counsel in connection with such strategic review process.

At telephonic meetings of the Special Committee held on May 2 and May 9, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported on the status of ongoing negotiations with Strategic Party A Financial Advisor. The Special Committee, with the assistance of SunTrust Robinson Humphrey and Shapiro Sher, discussed whether the Special Committee should consider reaching out to other parties, including HTI, to gauge their interest in the Company’s portfolio.

At telephonic meetings of the Special Committee held on May 16, May 23, and May 31, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee initially authorized SunTrust Robinson Humphrey to contact 12 parties identified by the Special Committee with the assistance of SunTrust Robinson Humphrey to gauge interest in the Company’s portfolio. SunTrust Robinson Humphrey subsequently reported that eight parties from the 12 parties initially contacted as well as from additional parties that the Special Committee subsequently authorized SunTrust Robinson Humphrey to contact had entered into nondisclosure agreements with the Company and had begun to review the Company’s portfolio in the data room. SunTrust Robinson Humphrey also reported to the Special Committee updates on the negotiations with Strategic Party A Financial Advisor and that HTI had expressed interest in renewing discussions.

On June 10, 2016, Strategic Party A Financial Advisor presented a revised proposal letter (the “June 10th Proposal”) to SunTrust Robinson Humphrey that was delivered to the Special Committee on the same day. In the June 10th Proposal, Strategic Party A proposed to acquire 100% of the issued and outstanding shares of the Company’s common stock in exchange for common stock in Strategic Party A valuing the Company’s common stock at $22.00 per share (a decrease from the $22.60 per share valuation in the April 7th 2016 Proposal) based on Strategic Party A’s most recent published estimated per-share net asset value. The June 10th Proposal contemplated a 30-day exclusivity period, 45-day go-shop period, and a break-up fee of 0.5% during the go-shop period and 2.5% following the go-shop period. The June 10th Proposal was not contingent on any additional transactions that Strategic Party A was concurrently pursuing. SunTrust Robinson Humphrey advised the Special Committee that with the other transactions being considered, there would be uncertainty regarding the value of Strategic Party A’s stock and, therefore, in the implied valuation of the Company’s common stock of $22.00 represented by Strategic Party A’s proposal. The Special Committee also expressed concern about eventual liquidity following a transaction with Strategic Party A involving stock consideration, given the negative view of some publicly-traded REIT investors about REITs with diversified assets.

On June 13, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reviewed Strategic Party A’s June 10th Proposal and updated the Special Committee on its conversations with Strategic Party A Financial

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Advisor. SunTrust Robinson Humphrey reported that Strategic Party A had refused to propose an all-cash transaction because of the small size of the Company’s portfolio. SunTrust Robinson Humphrey also advised that it had spoken with KeyBanc regarding HTI’s renewed interest in the Company’s portfolio and reported that the Special Committee might receive a revised proposal from HTI shortly. The Special Committee decided not to respond to the June 10th Proposal pending review of other proposals that might be submitted.

At telephonic meetings of the Special Committee held on June 20 and June 27, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee on the status of the potentially interested bidders and also advised that HTI had not made a new proposal. SunTrust Robinson Humphrey and the Special Committee further discussed the June 10th Proposal, the decline in value from the April 7th 2016 Proposal and Strategic Party A’s refusal to propose an all-cash transaction. The Special Committee, with the assistance of SunTrust Robinson Humphrey, also began discussing the possibility of liquidating the Company’s portfolio on a property-by-property basis. The Special Committee decided not to respond to Strategic Party A’s June 10th Proposal pending further clarity on the interest level of other interested parties.

On July 5, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey advised the Special Committee that 11 potentially interested bidders had signed nondisclosure agreements and been granted access to the Company’s data room but each of these bidders had either declined to make a proposal, had indicated that it was unlikely to do so or had indicated that any proposal would be at a low valuation based on the potentially interested bidder’s view. SunTrust Robinson Humphrey also reviewed with the Special Committee the potential sale of the properties comprising the Company’s portfolio as an alternative to a sale of the Company. Based on this review, as well as additional discussions among the members of the Special Committee with the assistance of SunTrust Robinson Humphrey, the Special Committee decided to respond to Strategic Party A’s June 10th Proposal and directed SunTrust Robinson Humphrey to negotiate for the inclusion of a cash component in the consideration instead of only stock, either as a mix of cash and stock or by allowing the Company to distribute the cash on its balance sheet to its stockholders prior to closing any transaction with Strategic Party A.

On July 11, 2016, at a telephonic meeting of the Special Committee with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, Ms. Perrotty reported regarding her conversation with the chairman of the HTI Board, who advised her that HTI would not be making a bid for the Company’s portfolio. SunTrust Robinson Humphrey reported on discussions with Strategic Party A Financial Advisor and noted that Strategic Party A was amenable to the Company paying a special cash distribution to its stockholders in connection with a transaction. Strategic Party A Financial Advisor also advised SunTrust Robinson Humphrey that Strategic Party A was nearing an agreement to enter into a transaction with another entity and was still interested in entering into a transaction with the Company.

On August 1, 2016, at a telephonic meeting of the Special Committee, SunTrust Robinson Humphrey reported that there had been limited progress in discussions with Strategic Party A Financial Advisor about a potential transaction involving the Company and Strategic Party A. SunTrust Robinson Humphrey also reported on its contacts with certain of the other potential bidders that had signed nondisclosure agreements and had been granted access to the Company’s data room.

On August 15, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported that Strategic Party A was no longer interested in a concurrent transaction, but, rather, Strategic Party A wanted to complete other transactions before focusing on a potential transaction with the Company. SunTrust Robinson Humphrey further reported on preliminary discussions with four new potential bidders contacted at the request of the Special Committee, including a strategic party referred to as “Strategic Party B.” The Special Committee instructed SunTrust Robinson Humphrey to continue to contact other potential bidders. Strategic Party B is a non-traded REIT not sponsored or advised by affiliates of AR Global.

Also on August 15, 2016, the Company and Strategic Party B entered into a nondisclosure agreement.

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On August 29, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey updated the Special Committee with respect to the status of discussions with potential bidders.

On September 2, 2016, SunTrust Robinson Humphrey received a letter from Strategic Party B (the “September 2nd Proposal”) proposing to purchase all the assets in the Company’s portfolio for $129 million in cash, inclusive of the assumption of approximately $5 million in mortgage debt outstanding under the Philip Center Loan.

On September 6, 2016, at a telephonic meeting of the Special Committee with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reviewed with the Special Committee the September 2nd Proposal, which, without taking into account fees or allocations payable to the Advisor or fees and expenses (other than SunTrust Robinson Humphrey’s advisory fee) associated with a transaction involving the Company or a liquidation of the Company, equated to $20.03 per share of the Company’s common stock. SunTrust Robinson Humphrey also reviewed other terms of the proposal, including a $1.3 million deposit due from Strategic Party B upon the signing of a purchase agreement, a 45-day exclusivity and due diligence period, and the absence of a go-shop period (which Strategic Party B had indicated to SunTrust Robinson Humphrey was very important to it). SunTrust Robinson Humphrey also reported that it had not had any further contact with Strategic Party A Financial Advisor.

On September 7, 2016, SunTrust Robinson Humphrey notified the Special Committee that Strategic Party A had announced entry into a merger agreement to acquire another entity.

On September 12, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey advised the Special Committee of receipt of a revised proposal from Strategic Party B (the “September 12th Proposal”) increasing the all-cash consideration from $129 million to $132 million, inclusive of the assumption of approximately $5 million in debt outstanding under the Philip Center Loan but otherwise on the same terms as the September 2nd Proposal. SunTrust Robinson Humphrey noted that Strategic Party B had characterized this proposal as “final.” SunTrust Robinson Humphrey reviewed a comparison of the September 12th Proposal and the June 10th Proposal from Strategic Party A. The Special Committee, with the assistance of SunTrust Robinson Humphrey and Shapiro Sher, discussed the attractiveness of the September 12th Proposal because of the all-cash consideration as compared to the all-stock consideration of the June 10th Proposal. The Special Committee also discussed Strategic Party A’s portfolio after its recent acquisition and the terms of the advisory agreement of Strategic Party A, as well as the estimated per-share net asset value that Strategic Party A used in its June 10th Proposal. The Special Committee directed SunTrust Robinson Humphrey to contact Strategic Party A and propose either including a cash component as part of the consideration or increasing the total amount of consideration based on an increase in Strategic Party A’s valuation of the Company.

On September 19, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey advised the Special Committee that Strategic Party A Financial Advisor had not responded to the Special Committee’s proposed modifications to the June 10th Proposal. The Special Committee, with the assistance of SunTrust Robinson Humphrey and Shapiro Sher, discussed contacting HTI before moving forward with Strategic Party B based on the September 12th Proposal. The Special Committee also discussed the option to end the Company’s strategic process and to not pursue any transactions at this time and continue to operate. SunTrust Robinson Humphrey reviewed with the Special Committee the strategic process to date and the September 12th Proposal. The Special Committee, with the assistance of SunTrust Robinson Humphrey, discussed the Company’s portfolio and future prospects, including, in particular, that under the Company’s current plan to pay out its available cash in regular distributions to its stockholders, there would be less cash available for operations and acquisitions, limiting the Company’s ability to grow its portfolio. After further discussions, the Special Committee determined that it did not believe ending the strategic process was in the Company’s best interest and directed SunTrust Robinson Humphrey to continue discussions with Strategic Party B unless improved proposals were received from HTI or Strategic Party A. After the meeting, the chairman of the HTI Board advised Ms. Perrotty that HTI was not interested in making an offer for the Company’s portfolio.

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On September 21, 2016, the Special Committee confirmed by email that SunTrust Robinson Humphrey should continue discussions with Strategic Party B.

On September 26, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee on a telephonic meeting with representatives of Strategic Party B on September 24, 2016 to discuss the September 12th Proposal, as well as certain related matters including taxes, the purchase and sale agreement, a timeline to a potential closing, due diligence, the proxy statement related to stockholder approval of the sale of the Company’s assets, and certain Company related party fees in the event of a transaction. Following this discussion, the Special Committee authorized SunTrust Robinson Humphrey to deliver a revised proposal letter reflecting the need for stockholder approval, lender consent for the assumption of the mortgage, a “fiduciary out” right and a break-up fee.

On September 29, 2016, SunTrust Robinson Humphrey delivered the revised proposal letter to Strategic Party B authorized at the September 26th meeting of the Special Committee.

On October 3, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey advised the Special Committee that it expected to hear from Strategic Party B in the next day or two. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed other details relating to a potential strategic transaction with Strategic Party B, including certain related party and transaction fees that may be owed under the Advisory Agreement, the LPA, and the Property Management Agreement, and with respect to restricted shares issued to independent directors.

On October 7, 2016, SunTrust Robinson Humphrey reported to the Special Committee that Strategic Party B was no longer interested in acquiring the assets of the Company’s portfolio. The Special Committee subsequently learned from Strategic Party B that it was not raising capital at a pace that would enable it to fund its September 12th Proposal.

At telephonic meetings of the Special Committee held on October 10, October 17, and November 7, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the Special Committee’s options. Ms. Perrotty reported upon her discussions with Strategic Party B’s chair and that Strategic Party B might be interested in proceeding with negotiations if it were able to raise sufficient capital. The Special Committee directed SunTrust Robinson Humphrey to continue contacting entities that had expressed interest over the course of the Company’s strategic process, including HTI, and to contact parties that had not yet been contacted. The Special Committee also discussed a potential liquidation and several “break-up” scenarios whereby the assets could be sold in groups to several buyers.

On October 28, 2016, the Company and a strategic party referred to as “Strategic Party C” entered into a nondisclosure agreement. Strategic Party C is an exchange-listed REIT not sponsored or advised by affiliates of AR Global.

At telephonic meetings of the Special Committee held on December 5 and December 19, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that five parties were interested in at least a portion of the Company’s portfolio, including Strategic Party C. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed selling the Company’s portfolio in pieces and the potential ramifications to the total amount of net proceeds the Company’s stockholders would ultimately receive with respect to the Company’s assets. At the December 19, 2016 meeting, after discussions with the assistance of SunTrust Robinson Humphrey regarding the upcoming holidays and the holidays’ potential impact on responsiveness by certain interested or potentially interested parties, the level of interest that had been received to date, possible ways to increase the interest in certain of the properties that were not receiving any interest (including engaging a broker to assist with marketing such properties), and the fact that Strategic Party B might be in a better position to submit a proposal if it had more time to raise capital, the Special Committee decided to defer action until after January 1, 2017 and then reach out to all parties that may be interested, including Strategic Party B. 

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On January 9, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey updated the Special Committee on the status of its outreach to potential bidders. Given that no strong interest for the Company’s entire portfolio had been received, the Special Committee authorized SunTrust Robinson Humphrey to contact any interested parties to confirm their interest in pieces of the Company’s portfolio and refine their bids. Among the preliminary bids at this time were (i) Strategic Party C’s bid for the two SHOP Properties at a range of $13.2 to $14 million, and (ii) a combined bid for 11 of the Properties (including both SHOP Properties) for $75 million. Neither of the preliminary bids had been formalized at this time and remained speculative, and no further progress was made with respect to either of these bids subsequently.

On February 21, 2017, the HTI Board held a telephonic meeting to discuss its potential transaction with the Company and to establish the HTI Special Committee. Also on February 21, 2017, the HTI Special Committee retained Arnold & Porter Kaye Scholer LLP (“A&PKS”) as counsel to the HTI Special Committee.

On February 27, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported that KeyBanc had recently informed them that HTI was interested in restarting discussions with the Special Committee. SunTrust Robinson Humphrey further reported that it expected to receive a proposal letter from HTI shortly. Following discussions about the potential for a cash offer from HTI, SunTrust Robinson Humphrey advised the Special Committee that, since the January 9th meeting, SunTrust Robinson Humphrey had continued discussions with seven prospective bidders that had entered into nondisclosure agreements and had received preliminary bids for all but three of the Company’s 19 assets and continued to pursue a bid for the entire portfolio. The preliminary bids included the two bids discussed at the January 9th meeting and a preliminary bid for five of the single-tenant MOB assets for $19.3 million. The Special Committee directed that SunTrust Robinson Humphrey continue its discussions with the potential bidders and notify KeyBanc that HTI had one week to formalize its interest.

On March 2, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the Company’s real estate portfolio and valuation. The HTI Special Committee authorized KeyBanc to present a bid for $98.5 million in cash for all of the real estate assets in the Company’s portfolio.

On March 6, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that it had verbally received a preliminary bid from HTI for all the assets in the Company’s portfolio for $98.5 million in cash on March 3, 2017 (the “March 3rd Bid”). SunTrust Robinson Humphrey further reported that it had received a combined bid from three entities (each of which had been part of the preliminary bids), including Strategic Party C, for all but three of the Properties (the RAI Clearwater, DaVita Dialysis and Philip Professional Center) for $93.3 million in cash and that, if the three remaining Properties could be sold individually by a broker at approximately the price the Company had paid for them, then the total gross proceeds generated (prior to any incremental transaction fee due the broker) could be more than those generated by the March 3rd Bid. After discussions about the execution risks of a combined proposal and the uncertainty regarding the Company’s ability to sell the three remaining Properties individually on the terms discussed, the Special Committee directed SunTrust Robinson Humphrey to negotiate with KeyBanc and contact the other additional parties for their “best and final” offers.

On March 7, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the Company’s response to HTI’s initial bid, including the Special Committee’s proposed valuation. After discussion regarding the Company’s portfolio and valuation, the HTI Special Committee authorized KeyBanc to present a new bid for $104.5 million in cash for all of the real estate assets in the Company’s portfolio. Subsequently, SunTrust Robinson Humphrey, as directed by the Special Committee, informed KeyBanc that the $104.5 million bid was less than the Company would accept.

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On March 10, 2017, the Company and a strategic party referred to as “Strategic Party D” entered into a nondisclosure agreement. Strategic Party D is an exchange-listed REIT not sponsored or advised by affiliates of AR Global.

Also on March 10, 2017, KeyBanc and the Chairman of the HTI Special Committee participated in a due diligence call with the members of the Company’s management (including certain of its asset managers) and discussed the historic and projected performance of the Company’s portfolio. On March 14, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the due diligence call and the rejection by the Special Committee of the increased bids. After discussion regarding the portfolio and valuation, the HTI Special Committee authorized KeyBanc to present a new offer for $110 million in cash for all of the real estate assets in the Company’s portfolio.

On March 20, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that it had received two proposals on March 17, 2017. The first proposal was from HTI and contemplated an asset transaction to acquire the entire portfolio for $110 million (the “March 17th HTI Proposal”) (which reflected an increase from the $98.5 million in cash proposed in the March 3rd Bid). The second proposal also contemplated an asset transaction in the form of a combined bid from Strategic Party C and Strategic Party D for the entire portfolio in the amount of $110.0 million in cash (the “March 17th Combined Proposal”). SunTrust Robinson Humphrey reported that KeyBanc had stated that no further increase should be expected from HTI. SunTrust Robinson Humphrey further advised that Strategic Party C, which proposed to purchase two assisted living facility assets, had conditioned its proposal on the assets being delivered free and clear of all leases and operating agreements, which SunTrust Robinson Humphrey noted would result in buy-out costs that would lower the net proceeds to the Company of the March 17th Combined Proposal by an amount not yet determined. SunTrust Robinson Humphrey advised that both proposals may represent approximately $17.20-$17.25 on a per share basis, without taking into account fees or allocations payable to the Advisor or fees and expenses (other than SunTrust Robinson Humphrey’s advisory fee) associated with a transaction involving the Company or a liquidation of the Company (including buy-out costs for leases and operating agreements contemplated by the March 17th Combined Proposal). The Special Committee discussed the two proposals and again discussed the Company’s option to suspend the Company’s strategic process if the Special Committee believed that it could lead to more value for the Company’s stockholders in the long run and considered, based on discussions with SunTrust Robinson Humphrey, that a near-term increase in value was not likely. The Special Committee directed SunTrust Robinson Humphrey to request a “best and final” offer from each of HTI, Strategic Party C, and Strategic Party D and to gauge each party’s interest in adding a stock component to their respective bids to create additional value for the Company’s stockholders.

On March 23, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the prior conversations between KeyBanc and SunTrust Robinson Humphrey and the due diligence calls with members of the Company’s management. After discussion, the HTI Special Committee authorized KeyBanc to present a new bid for $111 million in cash for all of the real estate assets in the Company’s portfolio.

On March 27, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that it had received a revised proposal letter from HTI on March 23, contemplating the purchase by HTI of all the assets in the Company’s portfolio for $111 million in cash (the “March 23rd Proposal”). SunTrust Robinson Humphrey further reported that it had received a proposal letter from Strategic Party D on March 24th, contemplating the sale of all the assets in the Company’s portfolio for approximately $114 million (subject to a dollar-for-dollar reduction based on the amount outstanding under the Philip Center Loan at closing) in stock based on the trading price of Strategic Party D’s stock at closing in a “stock-for-assets” asset purchase (the “March 24th Proposal”). Strategic Party C did not participate in the March 24th Proposal. SunTrust Robinson Humphrey reported to the Special Committee that the March 24th Proposal, if completed, would result in the Company’s stockholders owning roughly 29% of Strategic Party D. After discussing HTI’s March 23rd Proposal and Strategic Party D’s March 24th Proposal, the Special

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Committee requested that SunTrust Robinson Humphrey provide it with additional information regarding Strategic Party D to assist the Special Committee in making a final decision given that the Company’s stockholders would become stockholders of Strategic Party D if the contemplated transaction was completed.

On March 28, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reviewed with the Special Committee additional information regarding Strategic Party D. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed Strategic Party D’s strategic plan moving forward, the fit of the Company’s portfolio within Strategic Party D’s portfolio of properties and the challenges of engaging in a “stock-for-asset” transaction as an asset purchase (instead of as a merger). The Special Committee authorized SunTrust Robinson Humphrey to continue negotiations with Strategic Party D with a view towards improving the March 24th Proposal. The Special Committee directed SunTrust Robinson Humphrey to propose adding an independent director of the Company’s choice to Strategic Party D’s board of directors and adding a go-shop period. Strategic Party D advised that it would not be increasing its bid prior to responding to these additional requests.

On March 30, 2017, the Chairman of the HTI Special Committee emailed the other members of the HTI Special Committee to report on his conversation with representatives from KeyBanc and the Company’s management team regarding the Company’s portfolio and to request authorization for an increased bid of $120 million in cash for all of the real estate assets in the Company’s portfolio. Citing his beliefs that the return on the bid would be justified, that the assets were of the type HTI was looking to bring into its portfolio, and that it would be advantageous to HTI’s shareholders to seek to do so more rapidly by making this acquisition, the Chairman of the HTI Special Committee reported that he and several other members of the HTI Special Committee were comfortable with the increased bid. The HTI Special Committee approved the increased bid and directed KeyBanc to deliver a revised written indication of interest to the Company.

On March 31, 2017, Ms. Perrotty received a phone call from the Chairman of the HTI Special Committee advising Ms. Perrotty that HTI would be increasing the cash consideration in its proposal to $120.0 million. Also on March 31, 2017, SunTrust Robinson Humphrey advised the Special Committee that it had received a revised proposal letter from HTI with these terms (the “March 31st Proposal”) and a statement from KeyBanc that the proposal represented HTI’s final offer.

On April 2, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the March 31st Proposal. The March 31st Proposal contemplated an acquisition of all the assets in the Company’s portfolio for $120.0 million in cash, reduced dollar for dollar by the $4.9 million outstanding Philip Center Loan. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the terms of the March 31 st Proposal, including the absence of any financing contingency or other contingencies except due diligence, the negotiation of a purchase and sale agreement, required approval by the Company’s stockholders and HTI’s request for a 30-day exclusivity period. SunTrust Robinson Humphrey reported that Strategic Party D had declined to improve its March 24th Proposal. The Special Committee ultimately rejected Strategic Party D because it believed the all-cash bid from HTI that provided $6 million more of incremental value was a better transaction for the Company’s stockholders. After discussing the improved bid from HTI and Strategic Party D’s statement that it would not increase its bid, the Special Committee directed SunTrust Robinson Humphrey to negotiate the March 31st Proposal from HTI. The Special Committee also considered the need for a go-shop period, but ultimately determined that, in light of its extensive marketing efforts since the strategic process began in April of 2016, having a go-shop period was not essential and the final Purchase Agreement agreed to by the Company did not include a go-shop provision.

On April 5, 2017, SunTrust Robinson Humphrey received a letter from HTI with a revised proposal (the “April 5th Proposal”). The April 5th Proposal contained a “fiduciary out” provision with a 5% break-up fee and certain property-by-property expense allocations. With the assistance of Shapiro Sher and SunTrust Robinson Humphrey, the Special Committee subsequently negotiated a reduction in the break-up fee from 5% to 3%, that any property-level transfer tax and title costs would be allocated as is the custom in the state in which each of the Properties was located, and clarified language to account for the Properties that were held

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by long-term ground leases and not in fee simple. On April 7, 2017, SunTrust Robinson Humphrey received a letter from HTI with a revised proposal reflecting these revisions (the “April 7th Proposal”).

On April 7, 2017, SunTrust Robinson Humphrey reviewed with the Special Committee a proposed timeline to closing a transaction contemplated by the April 7th Proposal as well as information provided by the Advisor regarding related party fees that could be payable to the Advisor, Property Manager, limited partners of the OP, directors, and other vendors in connection with the transaction as contemplated by the April 7th Proposal.

On April 10, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reviewed the April 7th Proposal and the status of negotiations with HTI. In response to a question by the Special Committee, SunTrust Robinson Humphrey noted that, under the terms of the April 7th Proposal, the assets to be acquired by HTI did not include the cash on the Company’s balance sheet. Shapiro Sher added that the proposed transaction did not include approximately $3.8 million owed to the Company from the Advisor, which SunTrust Robinson Humphrey noted represented approximately $0.50 per share of the Company’s common stock. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the process for authorizing and approving the April 7th Proposal and explored structuring the transaction as an all-cash merger (with a pre-closing “all cash” distribution to the Company’s stockholders), instead of an asset purchase transaction followed by a plan of liquidation as proposed by HTI under the terms of the April 7th Proposal. Ultimately, HTI declined to structure the transaction as a “cash” merger due to its desire to receive post-closing indemnification rights typical of a purchase of real estate assets. The Special Committee, recognizing that all of the other potential bidders had proposed asset sales for cash (except for Strategic Party A, which proposed a stock-for-stock merger, and Strategic Party D, which proposed an asset-for-stock transaction) that would ultimately require a liquidation by the Company, accepted that structure (even though liquidating distributions to stockholders would not be completed until 2018). After additional discussions with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, the Special Committee recommended that the Board authorize continued negotiations on the basis of the April 7th Proposal. The Special Committee also determined to address with the Advisor the $3.8 million owed to the Company from the Advisor.

On April 11, 2017, in an executive session of a telephonic meeting of the Board, with only the independent directors of the Board (representing all the members of the Special Committee), Shapiro Sher, and a representative of Proskauer present, the independent directors of the Board discussed the terms of the April 7th Proposal and steps required to implement the transactions contemplated thereby. The independent directors of the Board, based upon the recommendation of the Special Committee and upon such other matters as were deemed relevant by the independent directors, authorized continued negotiations based on the April 7th Proposal.

On April 14, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the terms of the draft purchase agreement to be presented to the Company.

On April 18, 2017, A&PKS delivered the first draft of the purchase agreement (the “April 18th Purchase Agreement”) to Shapiro Sher, Proskauer, and AR Global. Shapiro Sher sent the April 18th Purchase Agreement to the Special Committee and to SunTrust Robinson Humphrey on the same date. The April 18th Purchase Agreement was structured as a sale of the membership interests in each of the special purpose entities that own the Properties to the HTI OP to facilitate the assignment of minor contracts and to avoid a right of first refusal requirement for one of the properties.

Shapiro Sher and A&PKS held several due diligence and planning calls over the next several weeks, including some with representatives of the Company, HTI, and Proskauer present. During these calls, discussion covered the structure of the transaction, tax implications, and various aspects of the Company that needed to be addressed in the purchase agreement.

On April 28, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher present, Shapiro Sher reported to the Special Committee on the status of the development of a revised

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draft of the April 18th Purchase Agreement. Shapiro Sher reported on the outstanding issues consisting, primarily, of issues surrounding the assumption of the Philip Center Loan (and whether it was assignable) and the right of HTI to terminate the entire transaction if any property were destroyed by fire or condemned. Shapiro Sher also advised the Special Committee that Shapiro Sher was making extensive revisions to the April 18th Purchase Agreement, not because the parties were in disagreement about issues, but rather to structure the agreement to fit the Company and the Properties. The parties also discussed certain amounts that may be payable to the Advisor and its affiliates in connection with consummating a transaction. Prior to the Special Committee meeting, Shapiro Sher circulated an AR Global in-house counsel prepared Advisor Receivables and Payables proposal that Shapiro Sher had received on April 25. The Special Committee discussed the proposed real estate commissions and administrative expense reimbursements that the Advisor was proposing would become payable concurrent with or prior to the consummation of the transaction.

On May 4, 2017, Shapiro Sher delivered a revised draft of the purchase agreement, which included input from Proskauer and AR Global, to A&PKS, the Special Committee, and SunTrust Robinson Humphrey (the “May 4th Purchase Agreement”). The May 4th Purchase Agreement addressed the assumption of the Philip Center Loan, rejected the right to terminate the transaction for a single fire or condemnation, clarified matters relating to the assisted living facilities, and tailored certain terms to be applicable to the Company, its entities, and the Properties.

On May 11, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed its comments to the May 4th Purchase Agreement and the status of due diligence relating to the Asset Sale.

Also on May 11, 2017, A&PKS delivered its comments to the May 4th Purchase Agreement to Shapiro Sher and Shapiro Sher forwarded the comments to the Special Committee and to SunTrust Robinson Humphrey on May 12, 2017. A&PKS comments included, among other things, (1) the addition of a $6 million escrow amount to cover indemnification of representations and warranties, (2) capping HTI’s expense reimbursement to the Company at $250,000 if HTI were to terminate the purchase agreement due to a breach thereof, (3) extending the facility-level representations and warranties that the Company was willing to make regarding the Cedarhurst Facility to include facility-level representations and warranties for Arcadian Cove Assisted Living Facility (in respect to which the Company is only a landlord and does not have direct knowledge of many relevant matters), (4) the Company indemnifying HTI if HTI suffered any losses in connection with any stockholder litigation that may be filed in connection with the transactions contemplated by the purchase agreement, and (5) granting HTI the right to terminate the purchase agreement if there is either (a) a condemnation proceeding against any building that constitutes more than 5% of the Company’s portfolio or (b) damage or destruction (i) exceeding $5 million or (ii) that requires a legally nonconforming property to be rebuilt in accordance with current zoning requirements.

On May 12, 2017, representatives of Shapiro Sher, SunTrust Robinson Humphrey and AR Global held a call to discuss certain matters regarding the Properties and the Company’s operations.

On May 17, 2017, A&PKS and Shapiro Sher participated in a conference call to discuss A&PKS’s comments to the May 4th Purchase Agreement. The parties were able to resolve certain issues including (1) various closing conditions, (2) the expense reimbursement cap, and (3) the expansion of the facility-related representations and warranties to the Arcadian Cove Assisted Living Facility. The remaining issues that Shapiro Sher relayed to the Special Committee on the same day were (1) HTI’s request for indemnity to cover not only HTI but also its directors, (2) the terms of the escrow arrangement, and (3) the right to terminate the purchase agreement if either (a) there is a condemnation proceeding against any building or (b) damage or destruction to any Property prior to the Closing Date (with such threshold amounts to be further discussed).

On May 18, 2017, Shapiro Sher delivered a memorandum to the Special Committee, advising the Special Committee of the directors’ duties as independent directors under Maryland law (such advice had been delivered orally on multiple occasions throughout the strategic process) as the Special Committee considered the purchase agreement, a plan of liquidation for the Company’s complete liquidation and dissolution following the consummation of the transactions contemplated by the purchase agreement, certain amounts payable to the Advisor and its affiliates, and other matters related to the potential transaction. Discussions between Shapiro Sher and A&PKS continued.

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On May 19, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, Shapiro Sher reported to the Special Committee on the status of the remaining substantive issues from its negotiations with A&PKS. The three outstanding substantive issues were (1) the HTI indemnity request, (2) HTI’s request for a $6 million escrow that would be released over a period of eighteen months to cover indemnification expenses for any such litigation or any breaches of the representations and warranties of the purchase agreement (with $2 million being released every six months), and (3) HTI’s ability to terminate the purchase agreement in the event of damage or destruction or condemnation proceedings (subject to a “5% of the properties” threshold). After Shapiro Sher updated the Special Committee on the status of the purchase agreement, SunTrust Robinson Humphrey reviewed with the Special Committee a summary of the Special Committee’s strategic process to date, an overview of the financial terms of the proposed transaction with HTI and SunTrust Robinson Humphrey’s preliminary financial analyses with respect to the Properties. After this review was completed, the representatives of SunTrust Robinson Humphrey left the meeting and, in an executive session of the Special Committee with only Shapiro Sher and the members of the Special Committee present, the Special Committee determined that Ms. Perrotty would reach out to the lead independent director of HTI to discuss the outstanding substantive issues.

On May 25, 2017, after consulting with Ms. Perrotty regarding her recent conversation with HTI’s lead independent director, Shapiro Sher delivered a revised draft of the purchase agreement to A&PKS (the “May 25th Purchase Agreement”). The May 25th Purchase Agreement included the following terms related to the outstanding substantive issues: (1) a $1 million escrow that would be released over a period of six months to cover indemnification expenses for any litigation or any breaches of the representations and warranties of the May 25th Purchase Agreement (as opposed to the $6 million/18-month provision requested by HTI), (2) the ability of HTI to terminate the purchase agreement if the Company’s representations in the May 25th Purchase Agreement were materially inaccurate (but implying knowledge to any officers who served both the Company and HTI and limiting the “inaccurate representation” indemnification to certain basic representations), (3) removing the provision that gave HTI the ability to terminate the purchase agreement in the event of damage or destruction or condemnation proceeding, and (4) limiting the Company’s indemnification of HTI and its directors if the Company’s stockholders sue not only the Company, but also HTI, to exclude any shared directors and key management personnel of both the Company and HTI.

On June 5, 2017, representatives of A&PKS and Shapiro Sher participated in a conference call to discuss the May 25th Purchase Agreement and the outstanding substantive issues. Among the substantive issues discussed were (1) HTI’s continued desire to have the right to terminate the purchase agreement if (a) there is a condemnation proceeding or (b) a fire or other loss (subject to an increased threshold amount), (2) the terms of the escrow arrangements, (3) the assumption of the Company’s obligations under its engagement letter with SunTrust Robinson Humphrey, (4) expense reimbursements, and (5) indemnification obligations in the event of stockholder litigation.

On June 6, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the outstanding issues from the prior day’s conference call between A&PKS and Shapiro Sher. The Special Committee, after determining that Ms. Perrotty would contact the lead independent director of HTI to discuss the Company’s proposed compromises, directed Shapiro Sher to further negotiate with A&PKS. The Special Committee, in an executive session with only representatives of Shapiro Sher present, directed the following (1) to accept HTI’s request for indemnification by the Company of the non-independent directors and officers of HTI, but requested that HTI also indemnify the Company’s non-independent director and the Company’s officers, (2) to lower the expense reimbursement cap from $750,000 to $500,000, with a condition whereby the expense reimbursement would not become payable if the Company did not enter into an agreement related to a superior proposal within 12 months, and to eliminate the expense reimbursement for a material adverse change or temporary restraining order, (3) to negotiate a $3 million escrow that would be released over a period of six or nine months, and (4) to negotiate the proposed condemnation or risk-of-loss provisions to exclude any amounts that were insured. Shapiro Sher contacted A&PKS later that day to discuss the Special Committee’s directions.

Also on June 6, 2017, A&PKS delivered a revised draft of the purchase agreement to Shapiro Sher (the “June 6th Purchase Agreement”). The June 6th Purchase Agreement made changes in line with A&PKS views

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as had been expressed during the June 5th conference call. Later in the day on June 6, 2017, A&PKS delivered an email to Shapiro Sher about the following open issues: (1) expense reimbursement, (2) indemnification, and (3) condemnation and risk of loss. With respect to the expense reimbursement issue, A&PKS proposed (1) no expense reimbursement if the transaction did not close because of a temporary restraining order, (2) an expense reimbursement capped at $1 million for termination in the event that the Company’s stockholders vote against the transaction or the Company fails to get a quorum at the special meeting to vote on the transaction, and (3) an expense reimbursement capped at $750,000 for termination due to a material adverse change. With respect to the indemnification issue, A&PKS reaffirmed its stance of a $6 million escrow that would be released over a period of 18 months (with one third being released every six months). In support of its stance on the escrow size and length, A&PKS sent market surveys and studies to Shapiro Sher. With respect to the condemnation, eminent domain, and risk of loss issue, A&PKS expressed an openness to change the structures such that a property that is subject to eminent domain, condemnation or suffers a significant loss is dropped from the transaction with the purchase price adjusted downward based on the agreed purchase price allocation for the property, and that HTI would not have a right to terminate the purchase agreement. Shapiro Sher relayed A&PKS’s stance to the Special Committee.

On June 7, 2017, a representative of SunTrust Robinson Humphrey, on behalf of the Special Committee, and a representative of KeyBanc, on behalf of HTI, negotiated certain unresolved issues and Ms. Perrotty and the lead independent director of HTI followed up with a phone call. The Special Committee and HTI ultimately agreed to the following: (1) with respect to the indemnification issue, a $6 million escrow that would be released over a period of 14 months from the closing of the transaction (with $2 million to be released after six months, another $2 million to be released after 12 months, and the remaining $2 million to be released after 14 months); (2) with respect to the expense reimbursement issue, an expense reimbursement capped at $850,000 for termination in the event that the Company failed to obtain stockholder approval of the transaction; and (3) with respect to the condemnation and risk of loss issue, that in the event of a major condemnation or risk of loss, HTI would not have the option to terminate the purchase agreement, but HTI would have the option to close the transaction without purchasing the property or properties that would be subject to the condemnation or risk or loss provision.

On June 9, 2017, Shapiro Sher delivered a revised draft of the Purchase Agreement to A&PKS (the “Shapiro Sher June 9th Purchase Agreement”). The Shapiro Sher June 9th Purchase Agreement incorporated the negotiated transaction terms from the recent negotiations. Later on June 9, 2017, A&PKS delivered a revised draft of the purchase agreement to Shapiro Sher (the “A&PKS June 9th Purchase Agreement”). The A&PKS June 9th Purchase Agreement did not contain any revisions related to the resolution of open issues.

On June 12, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the final negotiated transaction terms from the purchase agreement. At the request of the Special Committee, SunTrust Robinson Humphrey reviewed Company management’s methodology behind the purchase price allocation schedule that had been prepared by the Company’s management. The Special Committee also discussed a draft letter agreement with the Advisor to account for certain amounts due to/from the Advisor, including approximately $3.8 million in reimbursements owed from the Advisor to the Company for overpaid offering and related expenses, as well as provide for post-closing transition services. The Special Committee directed Shapiro Sher to further negotiate the letter agreement and to finalize the purchase agreement to A&PKS. After the meeting, Shapiro Sher delivered a revised draft of the Purchase Agreement to A&PKS and Shapiro Sher and A&PKS agreed to the final form of the purchase agreement on June 13, 2017.

On June 14, 2017, Shapiro Sher provided an update to the Special Committee on the status of the letter agreement with the Advisor and provided the finalized Purchase Agreement, together with all exhibits and schedules, to the Special Committee for review. Shapiro Sher also re-delivered the memorandum that had been delivered to the Special Committee on May 18, 2017 regarding a director’s standard of conduct under Maryland law for the Special Committee to consider as it considered both the Purchase Agreement and the Plan of Liquidation.

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On June 15 and June 16, 2017, Shapiro Sher, the Special Committee and the Advisor finalized the negotiation of the Letter Agreement, the Advisory Agreement Amendment, and an amendment to the Property Management Agreement, with terms being agreed upon on June 15, 2017 and final drafts being agreed upon on June 16, 2017. Pursuant to the Letter Agreement, subject to completing the Asset Sale, the parties resolved matters related to approximately $3.7 million in expense reimbursements or fees previously paid by the Company to the Advisor and its affiliates and made certain agreements with respect to all fees and other amounts that would be payable to the Advisor and its affiliates pursuant to the Advisory Agreement, the Property Management Agreement and the LPA if the Asset Sale is completed.

On June 16, 2017, the Special Committee held a telephonic meeting with representatives of Shapiro Sher and SunTrust Robinson Humphrey in attendance. A representative of Shapiro Sher reviewed the principal terms of the Purchase Agreement and the Plan of Liquidation, including the Letter Agreement and amendments to the Advisory Agreement and Property Management Agreement. Representatives of SunTrust Robinson Humphrey then reviewed and discussed with the Special Committee SunTrust Robinson Humphrey’s financial analyses with respect to the Properties owned by the OP and HT III Holdco through the ownership of the Membership Interests and Holdco Interests and the proposed Asset Sale. The financial analyses reviewed and discussed with the Special Committee at the meeting were not materially different from the financial analyses dated May 17, 2017, which were previously reviewed and discussed with the Special Committee on May 19, 2017, as revised to reflect updated data and other information. Thereafter, at the request of the Special Committee, SunTrust Robinson Humphrey rendered its oral opinion to the Special Committee as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Purchase Agreement. The opinion is more fully described in the section entitled “— Opinion of the Special Committee’s Financial Advisor.” A representative of Shapiro Sher reviewed the standard of conduct expected of directors and the standards by which related party agreements should be considered under Maryland law. Following discussions by the Special Committee concerning, among other things, the matters described below under “— Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation,” the Special Committee determined to recommend to the Board that the Board (1) determine that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approve each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determine that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approve the Plan of Liquidation, and (3) recommend that the Asset Sale and the Plan of Liquidation be approved by the Company’s stockholders at the Annual Meeting.

Following the telephonic meeting of the Special Committee on June 16, 2017, the Board (with Mr. Weil recusing himself and not participating and with only the two independent directors on the Board participating) met to consider the proposed transactions with representatives of Shapiro Sher, SunTrust Robinson Humphrey, and Proskauer present. Prior to the meeting, Mr. Weil advised the other members of the Board that he would not be attending the meeting and would be abstaining from any vote on the proposed transactions, including the Plan of Liquidation. At the request of the Special Committee, representatives of SunTrust Robinson Humphrey then reviewed and discussed with the Board SunTrust Robinson Humphrey’s financial analyses with respect to the Properties owned by the OP and HT III Holdco through the ownership of the Membership Interests and Holdco Interests and the proposed Asset Sale. Thereafter, at the request of the Special Committee, SunTrust Robinson Humphrey provided to the Board its oral opinion (which was previously rendered to the Special Committee) as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Purchase Agreement. SunTrust Robinson Humphrey’s oral opinion was subsequently confirmed in writing by delivery of its written opinion to the Special Committee and the Board as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale

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pursuant to the Purchase Agreement. The chair of the Special Committee presented its report to the Board, including its recommendation that the Board approve the proposed transactions. Following discussions by the Board concerning, among other things, the matters described below under “— Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation,” the Board, based on the recommendation of the Special Committee, by unanimous vote of both independent directors (with Mr. Weil having abstained from attending the meeting) the Board (1) determined that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approved each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determined that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approved the Plan of Liquidation, and (3) recommended that the Asset Sale and the Plan of Liquidation be approved by the Company’s stockholders at the Annual Meeting.

Also on June 16, 2017, the HTI Special Committee held a telephonic meeting with representatives of A&PKS and KeyBanc in attendance. A representative of A&PKS discussed the scope of the real estate due diligence that had been requested by the HTI Special Committee and reported on the firm’s findings. Another representative of A&PKS reviewed the principal terms of the Purchase Agreement along with the schedules and exhibits related thereto. Representatives of KeyBanc then reviewed and discussed with the HTI Special Committee KeyBanc’s financial analyses with respect to the Properties. Thereafter, at the request of the HTI Special Committee, KeyBanc rendered its oral opinion to the HTI Special Committee, as of June 16, 2017, that the Purchase Price to be paid to the Company in connection with the Asset Sale was fair, from a financial point of view, to HTI. The opinion is more fully described in the section entitled “— Opinion of the HTI Special Committee’s Financial Advisor.” Following discussions by the HTI Special Committee concerning, among other things, the matters described below under “— HTI’s Purposes and Reasons for the Asset Sale,” the HTI Special Committee determined to recommend to the HTI Board that the HTI Board (1) determine that each of the Purchase Agreement and the other documents and agreements contemplated thereby are fair and reasonable, both financially and otherwise, to HTI and advisable and in the best interests of HTI and (2) approve each of the Purchase Agreement and the other documents and agreements contemplated thereby. Following the telephonic meeting of the HTI Special Committee on June 16, 2017, the HTI Board (with Mr. Weil recusing himself and not participating and with only the independent directors on the HTI Board participating) met to consider the proposed transactions with representatives of A&PKS and KeyBanc present. Prior to the meeting, Mr. Weil advised the other members of the HTI Board that he would not be attending the meeting and would be abstaining from any vote on the proposed transaction. At the request of the HTI Special Committee, representatives of KeyBanc then reviewed and discussed with the HTI Board KeyBanc’s financial analyses with respect to the Properties. The Chairman of the HTI Special Committee presented its report to the HTI Board, including its recommendation that the HTI Board approve the proposed transactions. Following discussions by the HTI Board concerning, among other things, the matters described below under “— HTI’s Purposes and Reasons for the Asset Sale,” the HTI Board, based on the recommendation of the HTI Special Committee, by unanimous vote of the independent directors (with Mr. Weil having abstained from attending the meeting) the HTI Board (1) determined that each of the Purchase Agreement and the other documents and agreements contemplated thereby are fair and reasonable, both financially and otherwise, to HTI and advisable and in the best interests of HTI and (2) approved each of the Purchase Agreement and the other documents and agreements contemplated thereby.

On June 16, 2017, each of the Company and HTI executed and delivered the Purchase Agreement.

On June 19, 2017, the Company issued a press release announcing the Board’s approval of the Asset Sale and the Company’s plan to liquidate.

Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation

In evaluating the Asset Sale and the Plan of Liquidation, the Board consulted with the Special Committee and its legal and financial advisors, and in determining that (1) the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and

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otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and (2) the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company, the Board considered numerous factors, including the following material factors, which the Board and the Special Committee viewed as supporting its decision to approve the Purchase Agreement, the other documents and agreements contemplated thereby, the Asset Sale and the Plan of Liquidation, and to recommend approval of the Asset Sale and the Plan of Liquidation to our stockholders:

the fixed cash consideration to be paid in connection with the Asset Sale by HTI, consisting of $120.0 million, less the $4.9 million principal amount of the Philip Center Loan, which will be assumed by HTI or repaid by the Company, and associated costs;
the indication given by the Company, when conducting its public offering of common stock beginning in 2014, that it would begin the process of achieving a liquidity event not later than three to six years after the termination of the IPO (the Company suspended its IPO effective December 31, 2015, which was earlier than anticipated, and the IPO lapsed in August 2016 in accordance with its terms);
in light of the Special Committee’s consideration of potential strategic alternatives, the likelihood that the Company would have difficulty achieving access to public equity capital markets and continuing to grow on a stand-alone basis;
in light of the Special Committee’s consideration of potential strategic alternatives, the likelihood that the Company would have difficulty achieving a liquidity event that would provide greater value to the Company’s stockholders in both the near-term and long-term future;
the fact that the Special Committee conducted a thorough and diligent strategic review process, including communicating with 25 potential buyers regarding a potential transaction and executing nondisclosure agreements with 22 of these potential buyers;
the expectation that all liquidating distributions will be paid in cash thereby eliminating the uncertainty associated with the receipt of non-cash consideration by the Company;
the costs of continuing to operate the Company based on its asset size;
the Asset Sale does not include the cash on the Company’s balance sheet as of the Closing Date that will be distributed to the Company’s stockholders along with the other net cash proceeds available for distribution, after the Company pays or provides for its liabilities and expenses pursuant to the Plan of Liquidation, which the Board has estimated will be between $17.67 to $17.81 per share of common stock, including an anticipated initial liquidating distribution of $15.75 per share of common stock expected to be paid within two weeks following the closing of the Asset Sale subject to Board approval;
the financial analyses reviewed and discussed with the Special Committee and the Board by representatives of SunTrust as well as the oral opinion of SunTrust Robinson Humphrey rendered to the Special Committee and the Board on June 16, 2017 (which was subsequently confirmed in writing by delivery of SunTrust Robinson Humphrey’s written opinion dated the same date) as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Agreement;
the Company’s ability to complete the Asset Sale in a timely manner (including the likelihood of receiving the stockholder approval of the Asset Sale and the Plan of Liquidation necessary to complete the transaction in a timely manner) given the commitment of both parties to complete the Asset Sale pursuant to their respective obligations under the Purchase Agreement and the absence of any significant closing conditions under the Purchase Agreement, other than stockholder approval of the Asset Sale and the Plan of Liquidation;

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the Asset Sale will not be subject to a financing contingency, as HTI advised the Company that HTI would have sufficient capital to fund the entire Purchase Price and plans to finance the Asset Sale through a combination of cash on its balance sheet and, relying upon its existing assets and the assets being purchased, borrowings under its revolving credit facility;
the terms and conditions of the Purchase Agreement, including:
º the fixed Purchase Price;
º the limited number and nature of the conditions to the Company’s obligation to close the Asset Sale; and
º the “fiduciary out” provision, that allows the Company to terminate the Purchase Agreement in connection with a third party delivering a Superior Proposal (as defined in the Purchase Agreement) to the Company, subject to the payment by the Company to HTI of a 3.0% Termination Fee in the amount of $3.6 million; and
the facts that the Asset Sale and the Plan of Liquidation are subject to the approval of the Company’s stockholders, and that the Plan of Liquidation will not become effective unless the Asset Sale is consummated.

The Board also identified and considered the following potentially negative factors in its deliberations:

the fact that, from March 15, 2015 through the time the Purchase Agreement was approved, each Company stockholder received distributions on a monthly basis at a rate equal to $0.0042808219 per day per share of common stock, or 6.25% per annum, based on a price of $25.00 per share (although the Special Committee believed that this distribution amount would have been reset in the third quarter), and, on July 18, 2017, in light of the pending Asset Sale and Plan of Liquidation, the Board determined that the Company would cease declaring and paying regular distributions to its stockholders;
the terms of the Purchase Agreement regarding the restrictions on the operation of the Company’s business during the period between the signing of the Purchase Agreement and the completion of the Asset Sale;
the Termination Fee to be paid to HTI if the Purchase Agreement is terminated under circumstances specified in the Purchase Agreement, which may discourage other parties that may otherwise have an interest in a business combination with the Company (see the section entitled “The Purchase Agreement — Termination; Termination Fee and Expenses”);
the possibility that the Asset Sale may not be completed, or may be unduly delayed, because the Company’s stockholders may not approve the Asset Sale or the Plan of Liquidation or due to other factors outside of the Company’s control;
the risk that the Asset Sale might not be completed and the effect of the resulting public announcement of termination of the Purchase Agreement on:
º the Company’s operating results, particularly in light of the costs incurred in connection with the transaction, and
º the Company’s ability to attract and retain tenants;
the substantial costs to be incurred in connection with the transaction, including transaction expenses arising from the Asset Sale;
the potential risk of diverting management focus and resources from operational matters and other strategic opportunities while working to implement the Asset Sale;
the absence of appraisal rights or rights of an objecting stockholder for Company stockholders under the MGCL and the Charter;

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the risk that the $6 million subject to the Escrow Agreement and additional Company funds may be required to satisfy indemnification obligations under the Purchase Agreement, which could delay or reduce liquidating distributions; and
the risks described in the section “Risk Factors” beginning on page 89 of this proxy statement.

The Board also considered the interests that certain executive officers and directors of the Company may have with respect to the Asset Sale in addition to their interests as stockholders of the Company generally (see the section entitled “— Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation”), which the Board considered as being neutral in its evaluation of the proposed transaction.

Although the foregoing discussion sets forth the material factors considered by the Board in reaching its recommendation, it may not include all of the factors considered by the Board, and each director may have considered different factors or given different weight to different factors. In view of the variety of factors and the amount of information considered, the Board did not find it practicable to, and did not, make specific assessment of, quantify or otherwise assign relative weights to the specific factors considered in reaching its recommendation. The Board realized that there can be no assurance about future results, including results expected or considered in the factors above. However, the Board concluded that the potential positive factors described above significantly outweighed the neutral and negative factors described above. The recommendation was made after consideration of all of the factors as a whole. This explanation of the Company’s reasons for the Asset Sale and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Cautionary Statement Concerning Forward-Looking Statements.”

THE BOARD (WITH MR. WEIL ABSTAINING) HAS UNANIMOUSLY (1) DETERMINED THAT EACH OF THE PURCHASE AGREEMENT, THE OTHER DOCUMENTS AND AGREEMENTS CONTEMPLATED THEREBY AND THE ASSET SALE ARE FAIR AND REASONABLE, BOTH FINANCIALLY AND OTHERWISE, TO THE COMPANY AND ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND APPROVED EACH OF THE PURCHASE AGREEMENT, THE OTHER DOCUMENTS AND AGREEMENTS CONTEMPLATED THEREBY AND THE ASSET SALE, (2) DETERMINED THAT THE PLAN OF LIQUIDATION, INCLUDING THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, THE COMPANY’S LIQUIDATION AND THE COMPANY’S DISSOLUTION PURSUANT TO THE PLAN OF LIQUIDATION, IS ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND APPROVED THE PLAN OF LIQUIDATION, AND (3) RECOMMENDED THAT HOLDERS OF SHARES OF COMMON STOCK VOTE FOR THE PROPOSAL TO APPROVE THE ASSET SALE AND FOR THE PROPOSAL TO APPROVE THE PLAN OF LIQUIDATION.

In considering the recommendation of the Board, you should be aware that certain of the Company’s directors and officers have arrangements that cause them to have interests in the Asset Sale and the Plan of Liquidation that are different from, or are in addition to, the interests of the Company stockholders generally. See the section entitled “— Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation.”

Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders

The Company, the OP and HT III Holdco are making the statements included in this section solely to comply with the disclosure requirements of Rule 13e-3 and related rules under the Exchange Act.

The Special Committee recommended to the Board and the Board (with Mr. Weil not participating) has determined, for the Company, the OP and HT III Holdco, that the Asset Sale and the Plan of Liquidation are substantively and procedurally fair to and in the best interests of the Company and the Company’s unaffiliated stockholders. Mr. Weil did not participate in the Board’s deliberations or voting on the transaction because he is a member of the HTI Board, as well as the chief executive officer, and a member, of AR Global. Mr. Weil deferred to the independent directors of the Board, who also comprise all the members of the Special

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Committee, to make the determination as to whether the Asset Sale and the Plan of Liquidation were fair to and in the best interests of the Company and its unaffiliated stockholders.

In their consideration of the fairness of the Asset Sale and the Plan of Liquidation to the Company’s unaffiliated stockholders, the Special Committee and the Board (with Mr. Weil not participating) considered the liquidation value of the Company, after giving effect to the receipt by the Company of the proceeds from the Asset Sale, to be a relevant methodology.

The Board, beginning in early 2016 as described in the section entitled “— Background of the Asset Sale and the Plan of Liquidation,” initiated a strategic review process led by the Special Committee consisting of solely the independent directors of the Board. The Special Committee, through its advisors SunTrust Robinson Humphrey and Shapiro Sher, communicated with 25 potential buyers regarding a potential transaction and conducted a thorough and diligent strategic review process which led to the Board approving the Purchase Agreement (subject to stockholder approval and other conditions). Subsequent to the execution of the Purchase Agreement, the Company was required to publish an estimated net asset value per share of its common stock (“Estimated Per-Share NAV”) and provide this information to its stockholders and to members of the Financial Industry Regulatory Authority and their associated persons who participated in the Company’s public offerings to assist them in meeting their customer account statement reporting obligations under the National Association of Securities Dealers Conduct Rule 2340. Instead of seeking third-party appraisals of the Company’s real estate assets performed by an independent valuation firm to establish an Estimated Per-Share NAV, the Board decided to determine an Estimated Per-Share NAV based on the negotiated value ascribed to the Company’s real estate assets under the Purchase Agreement. To assist the Board in establishing both an Estimated Per-Share NAV and an estimated range of total liquidating distributions that may be payable to the Company’s stockholders pursuant to the Plan of Liquidation, the Advisor prepared an estimate of the range of net proceeds from the Asset Sale that may be available to distribute to the Company’s stockholders in one or more liquidating distributions pursuant to the Plan of Liquidation. On July 18, 2017, the independent directors of the Board, who comprise a majority of the Board, with Mr. Weil not participating, unanimously approved an Estimated Per-Share NAV as of July 18, 2017 equal to $17.64. In preparing the liquidation analysis used in connection with this determination of the Estimated Per-Share NAV, which was also included in the Company’s proxy statement dated July 18, 2017, the Advisor estimated a range of net liquidation proceeds to be available for distribution to the Company’s stockholders pursuant to the Plan of Liquidation equal to $17.49 to $17.64 per share. The Advisor subsequently updated the range of net liquidation proceeds to be available for distribution to $17.67 to $17.81 per share for the Liquidation Analysis prepared in connection with this proxy statement. The Special Committee and the Board considered both of these ranges to be material in their consideration of the fairness of the Asset Sale and the Plan of Liquidation to the unaffiliated stockholders of the Company. For more information on the liquidation analyses, including a discussion of the reasons for the increase in the range of net liquidation proceeds to be available for distribution to the Company’s stockholders pursuant to the Plan of Liquidation, see “The Plan of Liquidation.”

The liquidation analyses of the Advisor were based, in part, on the proceeds to be received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Purchase Agreement. As part of their determination, the Special Committee and the Board considered the going concern value of the Membership Interests and the Holdco Interests based on the aggregate implied valuation reference ranges of the Properties held by the OP and HT III Holdco through the Membership Interests and the Holdco Interest indicated by the financial analyses reviewed and discussed with the Special Committee and the Board by representatives of SunTrust Robinson Humphrey on June 16, 2017.

The Special Committee and the Board did not consider current or historical market prices of the Company’s common stock to be relevant as a factor in determining the fairness of the transaction because there is no public market for the Company’s common stock. The Company’s common stock is not and has not been, since the Company’s inception, listed on a national securities exchange.

Further, the Special Committee and the Board did not consider net book value, which is an accounting concept, as a factor because they believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and because net book value does not

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take into account the prospects of the Company, market conditions, trends in the industry in which the Company operates, or the business risks inherent in that industry.

The Special Committee and the Board do not believe that the purchase prices paid in previous purchases of the Company’s common stock during the past two years pursuant to the Company’s share repurchase program (the “SRP”) are relevant in determining the fairness of the transaction to the Company’s unaffiliated stockholders because the purchase prices were based on a fixed percentage of the purchase price paid by the Company’s stockholders upon their purchases of common stock in the IPO. The Company has not purchased any of its common stock outside of the SRP.

In addition, the Special Committee and the Board were aware of, and considered, the interests that the Company’s directors and executive officers may have in the transactions contemplated by the Purchase Agreement that are different from, or in addition to, their interests as Company stockholders generally, as described in the section entitled “— Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation.”

As described under the section entitled “— Background of the Asset Sale and the Plan of Liquidation,” the Special Committee and the Board considered offers made by unaffiliated persons during the past two years for a merger, sale of all or a substantial part of the assets of the Company, or a purchase of a controlling amount of the Company’s securities, however, the Special Committee and the Board ultimately determined that the offer received from HTI was the most favorable offer received during the strategic review process. For a more detailed description of each of the offers received and considered during the past two years, see “— Background of the Asset Sale and the Plan of Liquidation.”

The Special Committee and the Board also considered the following:

the fact that the Purchase Agreement was negotiated extensively and at arm’s-length, by special committees comprised entirely of independent directors of each of the Company and HTI, and that each special committee engaged and was assisted by outside counsel and financial advisors;
the fact that the structure of the Asset Sale permits the Company’s stockholders to immediately realize value for a portion of their investment, in addition to the fact that all of the potential bidders, except for two, had proposed asset sales for cash that would ultimately require a liquidation by the Company instead of a “cash” or other merger;
the fact that all stockholders, including unaffiliated stockholders, will receive the same amounts per share at the same time pursuant to the Asset Sale and the Plan of Liquidation;
the fact that the unaffiliated stockholders represent over 99% of the shares entitled to vote as of the record date; and
the facts that the Asset Sale and the Plan of Liquidation are subject to the approval of the Company’s stockholders (of which the unaffiliated stockholders are a vast majority), and that the Plan of Liquidation will not become effective unless the Asset Sale is consummated.

The Special Committee and the Board also considered the financial analyses reviewed and discussed with the Special Committee and the Board by representatives of SunTrust Robinson Humphrey as well as the opinion of SunTrust Robinson Humphrey rendered to the Special Committee and the Board on June 16, 2017 as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Agreement. Even though such analyses and opinion did not address the fairness of the proceeds to be received by the stockholders of the Company, the Special Committee and the Board nevertheless determined that such opinion and analyses were relevant to their determination as to the fairness of the Asset Sale and Plan of Liquidation to the Company’s unaffiliated stockholders because the Purchase Price to be received by the OP and HT III Holdco will be the primary source of the proceeds to be received by the Company’s stockholders pursuant to the Plan of Liquidation and the stockholders and the unaffiliated stockholders will receive the same amounts per share in the liquidation of the Company.

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Given the fact that the unaffiliated stockholders represent over 99% of the shares entitled to vote as of the record date and that shares of common stock beneficially owned by the Advisor, any director of the Company or any of their respective affiliates including AR Global, are excluded for the purposes of the approval of the Asset Sale, no special provision was made that a majority of the Company’s unaffiliated stockholders is required to approve the Asset Sale and Plan of Liquidation.

The Asset Sale and Plan of Liquidation was approved by a majority of the directors of the Company who are not employees of the Company.

The foregoing discussion of the factors considered by the Special Committee and the Board is not intended to be exhaustive but is believed to include all material factors considered by the Special Committee and the Board in making a determination regarding the fairness of the Asset Sale and the Plan of Liquidation to comply with the requirements of Rule 13e-3 and the related rules under the Exchange Act. The Special Committee and the Board have not retained an unaffiliated representative to act solely on behalf of unaffiliated stockholders for purposes of negotiating the terms of the Asset Sale and the Plan of Liquidation and/or preparing a report concerning the fairness of the Asset Sale and the Plan of Liquidation. The Special Committee and the Board did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their position as to the fairness of the Asset Sale and the Plan of Liquidation. Rather, the Special Committee and the Board made their fairness determination after considering all of the factors as a whole.

HTI’s Purposes and Reasons for the Asset Sale

In reaching its decision to authorize and approve the Asset Sale, the HTI Special Committee, as described above in the section entitled “— Background of the Asset Sale and Plan of Liquidation,” held a number of meetings, consulted with its legal and financial advisors, and considered a number of factors. The various factors the HTI Special Committee considered to be potential benefits of the Asset Sale included the following, which are not necessarily listed in order of relative importance:

its belief that the Asset Sale would further HTI’s previously reported goals of acquiring and managing quality healthcare assets, including growing its portfolio within the medical office and seniors housing sectors, and the fact that its current low leverage would provide ample opportunity to expand its balance sheet;
its belief that the Asset Sale would provide an opportunity to acquire an aggregated portfolio of known assets with good quality that could be integrated into its broader portfolio at a fair price;
its belief that the Asset Sale would broaden its tenant/operator base with additional investment grade tenants;
the HTI management team’s deep understanding of HTI’s and the Company’s portfolio through its existing management responsibilities with respect to the Company and its portfolio;
its belief that the Company had broadly marketed the portfolio, which would help remove any potential issues created by the acquisition of a company with the same executive officers;
the procedural safeguards that it believes were and are present to ensure the fairness of the transaction and to permit the HTI Special Committee to represent effectively the interests of HTI and its stockholders, including the fact that the HTI Special Committee consists solely of independent directors and its independent legal and financial advisors were involved throughout the process and updated the HTI Special Committee directly and regularly;
the Purchase Agreement’s provisions requiring the Seller Parties to indemnify HTI against any “losses” as defined in the Purchase Agreement that HTI may incur in connection with, among other things, any stockholder litigation brought by stockholders of the Company in connection with the Asset Sale, any breach or inaccuracy of any representations and warranties made by the Company or its affiliates or the failure of the Company or its affiliates to perform their obligations under the Purchase Agreement;

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the Purchase Agreement’s provisions requiring the Company to pay HTI the Termination Fee if the Board approves and authorizes the Company to enter into a definitive agreement providing for the implementation of a superior proposal;
the Purchase Agreement’s provisions requiring the Company to reimburse HTI for up to $750,000 in actual third party expenses incurred in connection with the Asset Sale if HTI fails to fulfill certain necessary conditions to close the Asset Sale, and for up to $850,000 in actual third party expenses if the Company’s stockholders do not approve the Asset Sale; and
the other terms of the Purchase Agreement, including representations, warranties and covenants of the parties thereto, as well as the conditions to their respective obligations under the Purchase Agreement.

In addition, the HTI Special Committee considered a variety of risks and other potentially negative factors concerning the Asset Sale. These factors included the following, which are not necessarily listed in order of relative importance:

the fact that the remaining lease terms on four of the medical office building assets are relatively short and re-tenanting may be required over the next three years;
the risk of limited net operating income growth, as many of the tenants have triple net leases with minimal annual rent increases;
the fact that a number of the assets are located in smaller, rural markets that have below average growth profiles;
the possibility that the Asset Sale may not be completed on the terms or timeline currently contemplated or at all, including for reasons beyond the control of HTI or the Company;
the risk that failure to complete the Asset Sale could negatively affect the future business and financial results of HTI;
the potential risk of diverting management focus and resources from operational matters and other strategic opportunities in order to integrate the assets acquired in the Asset Sale into HTI’s existing portfolio;
the substantial costs to be incurred in connection with the Asset Sale, including an estimated $2.4 million in transaction costs associated with the consummation of the Asset Sale, including fees payable to KeyBanc and legal counsel, but not including costs associated with the additional borrowings to be made under the HTI Revolving Credit Facility as described under “— Financing of the Asset Sale”;
the risk of not capturing all of the anticipated estimated operational cost savings and expected tax savings, and the risk that other anticipated benefits of the Asset Sale might not be realized on the expected timeframe or at all;
the challenges of adding the Company’s assets to HTI’s portfolio, including technical, operational, accounting and other challenges;
the fact that projections of future results of operations of HTI following the completion of the Asset Sale are necessarily estimates based on assumptions;
the Purchase Agreement’s provisions requiring HTI to reimburse the Company for up to $750,000 in actual third party expenses incurred in connection with the Asset Sale if HTI fails to fulfill certain necessary conditions to close the Asset Sale;
the Purchase Agreement’s provisions permitting the Company, subject to certain terms and conditions, to terminate the Purchase Agreement in order to enter into a superior proposal (see the section entitled “— The Purchase Agreement — Termination; Termination Fee and Expenses”);

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the risk that if the Purchase Agreement is terminated under certain circumstances, payment by the Company to HTI of a termination fee of  $3.6 million, as contemplated by the Purchase Agreement, may not be sufficient to fully compensate HTI for its losses in such circumstances; and
the risk that the incurrence of additional indebtedness in connection with the Asset Sale could have adverse consequences on HTI’s business following the Asset Sale.

The HTI Special Committee concluded that the potential negative factors associated with the Asset Sale were outweighed by the potential benefits that it expected HTI would achieve as a result of entering into the Purchase Agreement and consummating the transactions contemplated thereby. Accordingly, the HTI Board unanimously (with Mr. Weil recusing himself from the vote) determined that the Asset Sale was fair and reasonable, both financially and otherwise, advisable and in the best interests of HTI.

In addition to the factors described above, the transaction was structured as an asset sale because HTI believed that the acquisition of the Company’s assets would achieve its goal of growing its portfolio while avoiding exposure to the liabilities of the Company. The Purchase Agreement provided for a sale of membership interests in each of the special purpose entities that own the Properties to the HTI OP to facilitate the assignment of minor contracts and to avoid a right of first refusal requirement associated with one of the Properties. HTI considered a merger with the Company but determined that the Asset Sale was preferable due to HTI’s ability to receive post-closing indemnification rights typical of a purchase of real estate assets. HTI is undertaking the transaction at this time in order to achieve the benefits it expects from the Asset Sale and because of uncertainty as to whether the transaction could be achieved at a later time.

The foregoing discussion of the factors considered by the HTI Special Committee is not intended to be exhaustive, but, rather, includes the material factors considered by the HTI Special Committee. In reaching its decision to approve the Asset Sale, the HTI Special Committee did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The HTI Special Committee considered all these factors as a whole, including discussions with, and questioning of, HTI’s financial and legal advisors, and overall considered the factors to be favorable to, and supportive of, its determination. The HTI Special Committee also relied on the experience of KeyBanc, its financial advisor, for its opinion that, as of the date of the Purchase Agreement, and based on and subject to the various assumptions made, procedures followed, factors considered, and qualifications and limitations described in the opinion, the purchase price to be paid by HTI was fair, from a financial point of view, to HTI.

Position of HTI, HTI OP and HTI Holdco as to Fairness to the Company’s Unaffiliated Stockholders

HTI, HTI OP and HTI Holdco are making the statements included in this section solely to comply with the disclosure requirements of Rule 13e-3 and related rules under the Exchange Act.

As described below, HTI, HTI OP and HTI Holdco believe that the Asset Sale and Plan of Liquidation are fair to the Company’s unaffiliated stockholders on the basis of (i) the factors described in “— Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders,” which factors HTI, HTI OP and HTI Holdco agree with and adopt, and (ii) the additional factors described below.

HTI, HTI OP and HTI Holdco attempted to negotiate a transaction that would be most favorable to them and did not undertake any independent evaluation of the fairness of the Asset Sale and the Plan of Liquidation to the unaffiliated stockholders of the Company or engage a financial advisor for such purpose.

In its consideration of the fairness of the Asset Sale and the Plan of Liquidation to the Company’s unaffiliated stockholders, HTI, HTI OP and HTI Holdco reviewed the methodology used by and other considerations of the Company, the OP and HT III Holdco in determining the fairness of the Asset Sale and the Plan of Liquidation to the Company’s unaffiliated stockholders, as described below under “— Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders” and believes that it is reasonable for HTI, HTI OP and HTI Holdco to agree with and adopt such methodology and considerations.

Based on conversations between KeyBanc and SunTrust Robinson Humphrey, HTI, HTI OP and HTI Holdco were aware of some offers made by unaffiliated persons during the past two years for a merger, sale of all or a substantial part of the assets of the Company, or a purchase of a controlling amount of the Company’s

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securities. Additionally, HTI, HTI OP and HTI Holdco became aware of the other offers described under the section entitled “— Background of the Asset Sale and the Plan of Liquidation,” and learned that the Special Committee and the Board ultimately determined that the offer received from HTI was the most favorable offer received during the strategic review process. For a more detailed description of each of the offers received and considered during the past two years, see “— Background of the Asset Sale and the Plan of Liquidation.”

Notwithstanding that the opinion of SunTrust Robinson Humphrey was provided for the confidential use of the Special Committee and the Board, and HTI, HTI OP and HTI Holdco are not entitled to, and did not, rely on such opinion, HTI, HTI OP and HTI Holdco considered the opinion and analysis of SunTrust Robinson Humphrey, as more fully described below under the heading “— Opinion of the Special Committee’s Financial Advisor.” Even though such analyses and opinion did not address the fairness of the proceeds to be received by the stockholders of the Company, HTI, HTI OP and HTI Holdco nevertheless determined that such opinion and analyses were relevant to their determination as to the fairness of the Asset Sale and Plan of Liquidation to the Company’s unaffiliated stockholders because the Purchase Price to be received by the OP and HT III Holdco will be the primary source of the proceeds to be received by the Company’s stockholders pursuant to the Plan of Liquidation and the stockholders and the unaffiliated stockholders will receive the same amounts per share in the liquidation of the Company.

Given the fact that the unaffiliated stockholders represent over 99% of the shares entitled to vote as of the record date and that shares of common stock beneficially owned by the Advisor, any director of the Company or any of their respective affiliates including AR Global, are excluded for the purposes of the approval of the Asset Sale, no special provision was made that a majority of the Company’s unaffiliated stockholders is required to approve the Asset Sale and Plan of Liquidation.

The Asset Sale and Plan of Liquidation were approved by a majority of the directors of the Company who are not employees of the Company.

The foregoing discussion of the factors considered by HTI, HTI OP and HTI Holdco is not intended to be exhaustive but is believed to include all material factors considered by HTI, HTI OP and HTI Holdco in making a determination regarding the fairness of the Asset Sale to comply with the requirements of Rule 13e-3 and the related rules under the Exchange Act. HTI, HTI OP and HTI Holdco did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their position as to the fairness of the Asset Sale and the Plan of Liquidation. Rather, HTI, HTI OP and HTI Holdco made their fairness determination after considering all of the factors as a whole.

Opinion of the Special Committee’s Financial Advisor

On June 16, 2017, SunTrust Robinson Humphrey rendered its oral opinion to the Special Committee and the Board (which was subsequently confirmed in writing by delivery of SunTrust Robinson Humphrey’s written opinion dated June 16, 2017) as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interest in the Asset Sale pursuant to the Purchase Agreement.

SunTrust Robinson Humphrey’s opinion was directed to the Special Committee (in its capacity as such) and the Board (in its capacity as such) and only addressed the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interest in the Asset Sale pursuant to the Purchase Agreement and did not address any other terms, conditions, aspects or implications of the Asset Sale or the Plan of Liquidation. The summary of SunTrust Robinson Humphrey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex C to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by SunTrust Robinson Humphrey in preparing its opinion. However, neither SunTrust Robinson Humphrey’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement is intended to be, and they do not constitute, advice or a recommendation as to, or otherwise address, how the Special Committee, the Board or any security holder of the Company should act or vote with respect to any matter relating to the Asset Sale or otherwise.

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In connection with its opinion, SunTrust Robinson Humphrey conducted such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. In arriving at its opinion, SunTrust Robinson Humphrey reviewed:

a draft, dated June 12, 2017, of the Purchase Agreement;
certain publicly available business, financial and other information concerning the Company, the OP and HT III Holdco, the Membership Interests and the Holdco Interest;
certain financial and operating information with respect to the historical, current and future operations and prospects of the businesses conducted and properties held by the OP and HT III Holdco through the ownership of the Membership Interests and the Holdco Interest, including financial forecasts with respect to the future financial performance of such businesses and properties prepared and provided to SunTrust Robinson Humphrey by the management of the Company (the “Projections”); and
the publicly available financial terms of certain transactions that SunTrust Robinson Humphrey deemed relevant.

In addition, SunTrust Robinson Humphrey had discussions with the management of the Company concerning the businesses, operations, assets, liabilities, present condition and future prospects of the Company and undertook such other studies, analyses and investigations as SunTrust Robinson Humphrey deemed appropriate.

SunTrust Robinson Humphrey assumed and relied upon, without independent verification, the accuracy and completeness of all data, materials and other information furnished, or otherwise made available to it, or publicly available, discussed with or reviewed by it in arriving at its opinion. SunTrust Robinson Humphrey’s role in reviewing such information was limited solely to performing such review as SunTrust Robinson Humphrey deemed necessary and appropriate to support its opinion and such review was not conducted on behalf of the Special Committee, the Board, the Company or any other person. With respect to the Projections, with the Special Committee’s consent, SunTrust Robinson Humphrey assumed that they were reasonably prepared on bases reflecting the best currently available information, estimates and judgments of the management of the Company as to the future financial performance of the businesses conducted and properties held by the OP and HT III Holdco through the ownership of the Membership Interests and the Holdco Interest and were a reasonable basis upon which to evaluate the Membership Interests and the Holdco Interest for purposes of its analyses and opinion. At the Special Committee’s direction, SunTrust Robinson Humphrey used and relied upon the Projections for purposes of its analyses and opinion. SunTrust Robinson Humphrey expressed no view or opinion with respect to the Projections or the assumptions on which they were based.

SunTrust Robinson Humphrey further relied upon and assumed, without independent verification, that there had been no change in any respect material to its analyses or opinion in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company, the OP, HT III Holdco, the Membership Interests or the Holdco Interest since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to it, and that there was no information or any facts that would make any of the information discussed with or reviewed by SunTrust Robinson Humphrey incomplete or misleading in any respect material to its analyses or opinion. SunTrust Robinson Humphrey also assumed that (a) the representations and warranties of all parties to the Purchase Agreement were true and correct, (b) each party to the Purchase Agreement would fully and timely perform all of the covenants and agreements required to be performed by such party under the Purchase Agreement, and (c) the Asset Sale would be consummated in accordance with the terms of the Purchase Agreement, without waiver, modification or amendment of any term, condition or agreement thereof. SunTrust Robinson Humphrey also assumed that, in the course of obtaining any regulatory or third party consents, approvals or agreements in connection with the Asset Sale, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on the Company, the OP, HT III Holdco or the expected benefits of the Asset Sale to such parties. In addition, SunTrust Robinson Humphrey assumed that the Purchase Agreement, when executed by the parties thereto, would conform to the draft reviewed by it in all respects material to its analysis and opinion.

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In arriving at its opinion, one of SunTrust Robinson Humphrey’s representatives visited a number of the Properties, but SunTrust Robinson Humphrey did not otherwise conduct a physical inspection of the properties, assets or facilities of the Company, the OP or HT III Holdco and was not requested to make, and did not make, an independent appraisal of the assets or liabilities (fixed, contingent, derivative, off balance sheet or otherwise) of the Company, the OP or HT III Holdco, nor was SunTrust Robinson Humphrey furnished with any such appraisals. SunTrust Robinson Humphrey did not undertake any independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities to which the Company, the OP or HT III Holdco was or may have been a party or was or may have been subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company, the OP or HT III Holdco was or may have been a party or was or may have been subject. SunTrust Robinson Humphrey did not express any opinion as to the price or range of prices at which the Membership Interests, the Holdco Interest or shares of capital stock of the Company could be purchased or sold at any time.

SunTrust Robinson Humphrey’s opinion only addressed the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interest in the Asset Sale pursuant to the Purchase Agreement and did not address any other terms, conditions, aspects or implications of the Asset Sale or the Plan of Liquidation, including, without limitation, (i) the allocation of the Purchase Price as between the OP and HT III Holdco, (ii) the distribution of the Purchase Price to the equity holders of the OP and HT III Holdco, including, without limitation, the allocation of the proceeds of any such distribution among such equity holders, (iii) the dissolution or liquidation of the Company, (iv) the solvency, creditworthiness or fair value of the Company, the OP, HT III Holdco, HTI, the HTI OP, HTI Holdco or any other person, under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, or (v) the fairness, financial or otherwise, of the amount or nature of any compensation or consideration payable to, or received by, any advisors, managers, officers, directors or employees of any party to the Asset Sale, any class of such persons or any other party, relative to the Purchase Price or otherwise. In addition, with the Special Committee’s agreement, SunTrust Robinson Humphrey assumed that any adjustment to the Purchase Price pursuant to the Purchase Agreement or otherwise would not be material to its analyses or opinion. No opinion, counsel or interpretation was intended regarding matters that require legal, regulatory, accounting, insurance, tax, executive compensation, environmental or other similar professional advice. Furthermore, SunTrust Robinson Humphrey relied, with the Special Committee’s consent, on the assessments of the Special Committee, the Board, the Company and their respective advisors as to all legal, regulatory, accounting, insurance, tax, executive compensation or environmental matters with respect to the Company, the OP, HT III Holdco, the Membership Interests, the Holdco Interest and the Asset Sale.

SunTrust Robinson Humphrey’s opinion was necessarily based upon financial, economic, market and other conditions as they existed on, and could be evaluated as of, the date of its opinion. SunTrust Robinson Humphrey’s opinion did not address the relative merits of the Asset Sale as compared to other business strategies or transactions that may be available to the Company, nor did it address the underlying business decision of the Special Committee, the Board or the Company to proceed with the Asset Sale. It should be understood that, although subsequent developments or circumstances may affect its opinion, SunTrust Robinson Humphrey does not have any obligation to update or revise its opinion.

In performing its analyses, SunTrust Robinson Humphrey considered business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No property or transaction used in SunTrust Robinson Humphrey’s analyses for comparative purposes is identical to the Company or the Properties. The implied valuation reference ranges indicated by SunTrust Robinson Humphrey’s analyses are illustrative and not necessarily indicative of actual values nor predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the Company’s control and the control of SunTrust Robinson Humphrey. Much of the information used in, and accordingly the results of, SunTrust Robinson Humphrey’s analyses are inherently subject to substantial uncertainty.

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SunTrust Robinson Humphrey’s opinion and analyses were provided to the Special Committee and the Board in connection with their evaluation of the proposed Asset Sale and were among many factors considered by the Special Committee and the Board in evaluating the proposed Asset Sale. Neither SunTrust Robinson Humphrey’s opinion nor its analyses were determinative of the Purchase Price or of the views of the Special Committee or the Board with respect to the proposed Asset Sale. SunTrust Robinson Humphrey was retained by the Company on behalf of the Special Committee as an independent contractor, and did not act as an agent or fiduciary of the Special Committee, the Board, the Company, the Company’s stockholders or creditors of the Company or any other person or entity.

The following is a summary of the material financial analyses performed by SunTrust Robinson Humphrey in connection with its opinion rendered to the Special Committee and the Board on June 16, 2017. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of SunTrust Robinson Humphrey’s analyses.

Discounted Cash Flow Analysis

SunTrust Robinson Humphrey performed a discounted cash flow analysis of the businesses conducted and Properties held by the OP and HT III Holdco through the ownership of the Membership Interests and the Holdco Interest by calculating the estimated net present value of the projected unlevered cash flows of such businesses and Properties based on the Projections. SunTrust Robinson Humphrey applied exit capitalization rates ranging from 7.5% to 8.0% to the year 2022 estimated net operating income of the businesses conducted and Properties held by the OP and HT III Holdco through the ownership of the Membership Interests and the Holdco Interest. The net present values of the projected future cash flows and terminal values of such businesses and Properties were then calculated using discount rates ranging from 9.5% to 10.1%. The discounted cash flow analysis indicated an implied value reference range of the businesses conducted and Properties held by the OP and HT III Holdco through the ownership of the Membership Interests and the Holdco Interest of $108,500,000 to $116,000,000, as compared to the Purchase Price of $120,000,000 in the Asset Sale pursuant to the Purchase Agreement.

Selected Transactions Analysis

SunTrust Robinson Humphrey calculated implied valuation reference ranges of the Properties owned by the OP and HT III Holdco through the ownership of the Membership Interests and Holdco Interest by reviewing for each such Property the publicly available financial terms of transactions SunTrust Robinson Humphrey deemed relevant.

The financial terms reviewed included:

Capitalization rate based on the publicly available acquisition price for the Property acquired in the selected transaction.
Acquisition price (based on the publicly available acquisition price for the property acquired in the selected transaction) per bed of the Property acquired, in the case of senior housing or assisted living properties.
Acquisition price (based on the publicly available acquisition price for the property acquired in the selected transaction) per square foot of the Property acquired, in the case of MOBs.

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Taking into account the results of the selected transactions analysis and its experience and professional judgment, SunTrust Robinson Humphrey applied selected ranges of capitalization rates and price per square foot or price per bed to corresponding financial data for each property. The selected ranges and implied valuation reference ranges for each Property are as follows:

       
  Capitalization Rate   Price Per Square Foot (or per Bed, as noted)
Property   Selected Range   Implied Valuation
Reference Range
  Selected Range   Implied Valuation
Reference Range
Cedarhurst of Collinsville     7.25% – 7.75 %    $ 12,583,066 – $13,450,864     $ 150,000 – $175,000*     $ 10,650,000 – $12,425,000  
Arcadian Cove Assisted Living     9.50% – 10.00 %    $ 3,617,393 – $3,807,782     $ 60,000 – $80,000*     $ 2,940,000 – $3,920,000  
Dialysis Centers
                                   
 – DaVita Breeze     7.15% – 7.40 %    $ 1,603,081 – $1,659,133     $ 300.00 – $325.00     $ 2,174,100 – $2,355,275  
 – RAI Clearwater     7.00% – 7.25 %    $ 4,905,214 – $5,080,400     $ 325.00 – $350.00     $ 4,847,700 – $5,220,600  
 – DaVita Hudson     7.25% – 7.50 %    $ 2,653,627 – $2,745,131     $ 275.00 – $300.00     $ 2,470,600 – $2,695,200  
Rockwall Medical Plaza     6.75% – 7.25 %    $ 5,835,255 – $6,267,496     $ 325.00 – $350.00     $ 5,907,200 – $6,361,600  
Decatur Medical Office     10.00% – 11.00 %    $ 4,613,555 – $5,074,910     $ 200.00 – $225.00     $ 4,160,000 – $4,680,000  
MetroHealth Buckeye Center     8.00% – 8.50 %    $ 4,956,659 – $5,266,450     $ 200.00 – $225.00     $ 5,014,000 – $5,640,750  
Philip Professional Center     6.75% – 7.25 %    $ 7,584,000 – $8,145,778     $ 250.00 – $275.00     $ 7,870,750 – $8,657,825  
Galesburg Medical Office Portfolio
                                   
 – VA Clinic     7.75% – 8.00 %    $ 1,971,613 – $2,035,213     $ 240.00 – $265.00     $ 2,394,960 – $2,644,435  
 – Illinois Cancer     7.25% – 7.75 %    $ 3,270,852 – $3,496,428     $ 325.00  –  $350.00     $ 2,993,575 – $3,223,850  
Woodlake Office Center     6.65% – 6.95 %    $ 14,903,813 – $15,576,165     $ 400.00 – $415.00     $ 14,550,000 – $15,095,625  
Greenfield Medical Plaza     7.75% – 8.50 %    $ 6,505,706 – $7,135,290     $ 220.00 – $240.00     $ 6,267,580 – $6,837,360  
Lee Memorial Health Outpatient     8.25% – 8.75 %    $ 4,293,874 – $4,554,109     $ 190.00  –  $210.00     $ 4,593,060 – $5,076,540  
Beaumont Medical Center     8.15% – 8.65 %    $ 12,842,220 – $13,630,086     $ 350.00 – $375.00     $ 12,326,650 – $13,207,125  
Madison Medical Plaza     6.30% – 6.90 %    $ 18,098,826 – $19,882,524     $ 265.00 – $285.00     $ 18,556,095 – $19,956,555  
Unity Point Clinic     7.35% – 7.75 %    $ 8,281,119 – $8,731,793     $ 225.00 – $275.00     $ 8,191,575 – $10,011,925  

* Indicates price per bed.

The selected transactions analysis indicated aggregate implied valuation reference ranges of the Properties held by the OP and HT III Holdco through the Membership Interests and the Holdco Interest of $118,500,000 to $126,500,000 based on capitalization rates and $117,000,000 to $127,000,000 based on price per square foot (or price per bed, as applicable), in each case as compared to the Purchase Price of $120,000,000 in the Asset Sale pursuant to the Purchase Agreement.

Other Matters

SunTrust Robinson Humphrey was retained by the Special Committee as its financial advisor based on SunTrust Robinson Humphrey’s experience and reputation and SunTrust Robinson Humphrey’s knowledge of the Company and its industry. For its services as financial advisor to the Special Committee, SunTrust Robinson Humphrey will receive a transaction fee of $1,250,000 and may in addition receive a discretionary fee in an amount as determined by the Special Committee, each of which is contingent upon the completion of the Asset Sale. Upon the rendering of its opinion, SunTrust Robinson Humphrey became entitled to a fee of $400,000, credited, to the extent previously paid, against the transaction fee. In addition, the Company has

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agreed to reimburse certain expenses incurred by SunTrust Robinson Humphrey in connection with its engagement and to indemnify SunTrust Robinson Humphrey and certain related parties for certain liabilities arising out of its engagement.

SunTrust Robinson Humphrey and its affiliates (including SunTrust Bank) have in the past provided investment banking or other financial advice and services to the Company, HTI and their respective affiliates and other entities sponsored and advised by affiliates of the Advisor for which advice and services SunTrust Robinson Humphrey and its affiliates have received and would expect to receive compensation. SunTrust Robinson Humphrey and its affiliates may in the future provide investment banking and other financial advice and services to the Company, HTI and their respective affiliates and other entities sponsored and advised by affiliates of the Advisor for which advice and services SunTrust Robinson Humphrey and its affiliates would expect to receive compensation. SunTrust Robinson Humphrey is a full service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, SunTrust Robinson Humphrey and its affiliates may acquire, hold or sell, for its and its affiliates’ own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of the Company, HTI, their respective affiliates and other entities sponsored and advised by affiliates of the Advisor and any other company that may be involved in the Asset Sale, as well as provide investment banking and other financial services to such companies. In addition, SunTrust Robinson Humphrey and its affiliates (including SunTrust Bank) may have other financing and business relationships with the Company, HTI and their respective affiliates and other entities sponsored and advised by affiliates of the Advisor, including, without limitation, participating as a lender in a credit facility of an entity sponsored and advised by an affiliate of the Advisor and leasing a significant number of bank branch properties from an entity sponsored and advised by affiliates of the Advisor. The issuance of SunTrust Robinson Humphrey’s opinion was approved by an internal committee of SunTrust Robinson Humphrey, Inc. authorized to approve opinions of such nature.

Other Presentations by the Special Committee’s Financial Advisor

In addition to the financial analyses reviewed with the Special Committee and the Board on June 16, 2017 described above and with the Special Committee on May 19, 2017 (which were dated May 17, 2017 and, as noted in the section entitled “— Background of the Asset Sale and the Plan of Liquidation,” were not materially different from the financial analyses reviewed and discussed with the Special Committee and the Board on June 16, 2017, as revised to reflect updated data and other information), SunTrust Robinson Humphrey also reviewed with the Special Committee discussion materials dated March 6, 2017 and March 27, 2017.

Neither the March 6, 2017 materials nor the March 27, 2017 materials included material financial analyses underlying the opinion of SunTrust Robinson Humphrey rendered to the Special Committee and the Board on June 16, 2017 as to, as of such date, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interest in the Asset Sale pursuant to the Purchase Agreement, and neither the March 6, 2017 materials nor the March 27, 2017 materials constituted an opinion of SunTrust Robinson Humphrey as to the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interest in the Asset Sale or as to any other matter.

The materials included a review of the historical prices at which the Properties were acquired by the Company or its affiliates and a review of indications of interest received from potential acquirors of all or a portion of the Properties. These indications of interest were necessarily based upon financial, economic, market and other conditions as they existed on, and could be evaluated by the potential acquirors as of, the respective dates thereof and were subject to additional review by, and negotiations with, the potential acquirors. Neither the historical acquisition prices nor the indications of interest were necessarily indicative of the price or range of prices at which the Properties or any portion thereof could be sold. Rather, they were included in the materials solely for informational purposes.

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SunTrust Robinson Humphrey has consented to the use of these materials in this proxy statement and their incorporation by reference in the Transaction Statement on Schedule 13E-3 with respect to the Asset Sale.

Historical Acquisition Summary

The materials included information regarding the respective prices at which the Properties were acquired by the Company, the respective dates the Properties were acquired and the respective implied capitalization rates, all based on information provided by Company management. The historical acquisition prices for all 19 Properties in the aggregate was approximately $127.8 million.

Review of Indications of Interest

As discussed above in the “— Background of the Asset Sale and the Plan of Liquidation,” the March 6, 2017 materials reviewed a preliminary bid from HTI for all the assets in the Company’s portfolio for $98.5 million in cash, as well as a combined bid from three entities, including Strategic Party C, for all but three of the Properties (the RAI Clearwater, DaVita Dialysis and Philip Center) for $93.3 million in cash.

As discussed above in the section entitled “— Background of the Asset Sale and the Plan of Liquidation,” the March 27, 2017 materials reviewed a revised proposal from HTI for all the assets in the Company’s portfolio for $111 million in cash and a proposal from Strategic Party D for all the assets in the Company’s portfolio for approximately $114 million (subject to a dollar-for-dollar reduction based on the amount outstanding under the Philip Center Loan at closing) in stock based on the trading price of Strategic Party D’s stock at closing in a “stock-for-assets” asset purchase.

Opinion of the HTI Special Committee’s Financial Advisor

HTI retained KeyBanc to act as financial advisor to the HTI Special Committee in connection with a potential transaction involving the Company or its assets, such as the Asset Sale, and to evaluate whether the purchase price to be paid to the Company in connection with a potential transaction involving the Company or its assets, such as the Asset Sale, was fair, from a financial point of view, to HTI. HTI selected KeyBanc to act as its financial advisor based on KeyBanc’s qualifications, expertise, reputation and knowledge of the business and affairs of HTI and the industry in which HTI operates. At the meeting of the HTI Special Committee on June 16, 2017, KeyBanc rendered its oral opinion, that, as of such date and based upon and subject to the considerations, limitations and other matters set forth therein, the Purchase Price to be paid to the Company in connection with the Asset Sale was fair, from a financial point of view, to HTI.

The full text of KeyBanc’s written opinion, dated June 16, 2017, is attached hereto as Annex D and is incorporated by reference herein. The written opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by KeyBanc in rendering its opinion. You should read the written opinion carefully in its entirety. The opinion was provided to the HTI Special Committee and addresses only, as of the date of the written opinion, the fairness, from a financial point of view, to HTI of the Purchase Price to be paid to the Company in connection with the Asset Sale pursuant to the Purchase Agreement, and it does not address HTI’s underlying business decision to effect the Asset Sale or any other terms of the Asset Sale. It does not constitute a recommendation as to how any stockholder should vote with respect to the Asset Sale or any other matter, and does not in any manner address the price at which HTI common stock or the Company’s common stock will trade at any time. The summary of the written opinion set forth herein is qualified in its entirety by reference to the full text of the written opinion. KeyBanc has consented to the inclusion of a copy of its opinion as Annex D to this proxy statement and its incorporation by reference in the Transaction Statement on Schedule 13E-3 with respect to the Asset Sale.

In connection with rendering its opinion, KeyBanc reviewed and analyzed, among other things, the following:

a draft of the Purchase Agreement, made and entered into as of June 16, 2017, which KeyBanc understood to be in final form;
certain publicly available information concerning HTI and the Company, including, but not limited to, their respective Annual Reports on Form 10-K for the year ended December 31, 2016;

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certain other internal information, primarily financial in nature, including historical and financial projections for HTI and the Company, provided to KeyBanc or otherwise discussed with KeyBanc by members of their respective management teams;
certain cost saving measures and operating synergies projected by members of management of HTI to result from the Asset Sale;
certain publicly available information with respect to other publicly traded companies that KeyBanc believed to be comparable to the Company and that KeyBanc believed to have assets comparable to the assets reflected by the Holdco Interest and the Membership Interests as well as the trading markets for such other publicly traded companies’ securities; and
certain publicly available information concerning the nature and terms of certain other transactions that KeyBanc considered relevant to its analysis of the Asset Sale.

KeyBanc also met with members of management of HTI and the Company to discuss the business and prospects of HTI and the assets reflected by the Holdco Interest and the Membership Interests, as well as other matters it believed relevant to its analysis. KeyBanc also considered such other data and information as KeyBanc judged necessary to render its opinion.

In its review and analysis and in arriving at its opinion, KeyBanc assumed and relied upon the accuracy and completeness of all of the financial and other information provided to or otherwise shared with it by members of management of HTI and by management of the Company or that is publicly available, and KeyBanc assumed and relied upon the representations and warranties contained in the Purchase Agreement. KeyBanc was not engaged to, and did not independently attempt to, verify any of such information. KeyBanc also relied upon information provided by members of management of HTI (including estimated corporate-level cost savings and synergies) and by management of the Company as to the reasonableness and achievability of the financial and operating projections (and the assumptions and bases therefor) provided to KeyBanc, which are described below in the section entitled “— Certain Unaudited Projections Provided to the Board, the Special Committee, the Special Committee’s Financial Advisor, the HTI Board, the HTI Special Committee and the HTI Special Committee’s Financial Advisor” (the “Projections Provided to KeyBanc”), and, with the consent of the HTI Special Committee, KeyBanc assumed that the Projections Provided to KeyBanc were reasonably prepared and reflect the best currently available estimates and judgments of the Company. KeyBanc was not engaged to assess the reasonableness or achievability of the Projections Provided to KeyBanc or the assumptions on which they were based, and KeyBanc expresses no view as to such Projections Provided to KeyBanc or assumptions. In addition, KeyBanc did not conduct a physical inspection or appraisal of any of the Company’s assets. KeyBanc also assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Asset Sale would be obtained without any material adverse effect on HTI or the Company or their respective expectations of the benefits of the Asset Sale.

KeyBanc was not asked to, nor did KeyBanc, offer any opinion as to the terms of the Purchase Agreement or the structure of the Asset Sale. In rendering its opinion, KeyBanc assumed, with the HTI Special Committee’s consent, that the final executed form of the Purchase Agreement would not differ in any material respect from the draft that KeyBanc examined, and that the conditions to the Asset Sale as set forth in the Purchase Agreement will be satisfied and that the Asset Sale will be consummated on a timely basis in the manner contemplated by the Purchase Agreement.

KeyBanc’s opinion was based on economic and market conditions and other circumstances existing on, and information made available to KeyBanc as of, June 16, 2017 and does not address any matters subsequent to such date. In addition, KeyBanc’s opinion was limited to the fairness, as of June 16, 2017, from a financial point of view, to HTI of the Purchase Price to be paid to the Company in connection with the Asset Sale and does not address HTI’s underlying business decision to effect the Asset Sale or any other terms of the Asset Sale. Although subsequent developments may affect KeyBanc’s opinion, KeyBanc does not have any obligation to update, revise or reaffirm its opinion. KeyBanc’s opinion was approved by a fairness committee of KeyBanc.

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The following is a brief summary of the material analyses performed by KeyBanc in connection with its opinion dated June 16, 2017 and presentation to the HTI Special Committee dated June 12, 2017 and delivered on June 16, 2017. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying KeyBanc’s opinion. For purposes of its analyses, KeyBanc utilized the Projections Provided to KeyBanc. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of KeyBanc’s financial analyses.

Comparable Public Companies Analysis

KeyBanc independently identified, reviewed and compared certain financial data and stock trading prices for five publicly traded companies focused on medical office assets that KeyBanc considered, based on its professional judgment and experience, to be comparable to the MOB assets included in the Company’s portfolio, and five publicly traded companies focused on SHOPs that KeyBanc considered, based on its professional judgment and experience, to be comparable to the SHOPs included in the Company’s portfolio. The comparable companies chosen by KeyBanc included:

Medical office-focused companies:
º Healthcare Trust of America
º Healthcare Realty Trust
º Physicians Realty Trust
º Universal Health Realty Income Trust
º Community Healthcare Trust Incorporated
Seniors housing-focused companies:
º Senior Housing Properties Trust
º National Health Investors
º LTC Properties
º Sabra Healthcare
º New Senior Healthcare Group

For each of these comparable companies, KeyBanc determined the applicable company’s implied capitalization rate (“Company Cap Rate”) for 2017 based on third party data and its professional judgment and experience and calculated the mean Company Cap Rate for the MOB-focused comparable publicly-traded companies and for the seniors housing-focused comparable publicly-traded companies. KeyBanc then applied an illiquidity and lack of comparability discount to reflect the lack of a publicly traded stock for the Company’s portfolio relative to the comparable public companies as well as the overall size of the Company’s portfolio relative to the portfolios of the comparable publicly-traded companies. This calculation resulted in a mean 2017 Company Cap Rate for the MOB-focused comparable publicly-traded companies of 6.2% and a mean 2017 Company Cap Rate for the seniors housing-focused comparable publicly-traded companies of 7.6%. KeyBanc applied the discounted mean 2017 Company Cap Rates of the comparable MOB-focused and seniors housing-focused publicly-traded companies’ to the projected 2017 net operating income of the Company’s MOB portfolio and seniors housing portfolio, respectively, and applied a 25 basis point increase and decrease to the discounted mean 2017 Company Cap Rates of the comparable publicly traded companies to determine an implied enterprise value range of the Company’s portfolio of $139.7 million to $151.1 million.

No company or business utilized in the comparable public company analysis is identical to the Company or the Company’s portfolio. Based on its professional judgment and experience, KeyBanc made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions

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and other matters, many of which are beyond the control of the parties to the Purchase Agreement. Mathematical analysis of comparable public companies (such as determining means and medians) in isolation from other analyses is not an effective method of evaluating transactions.

Net Asset Value Analysis

KeyBanc reviewed certain financial data and the purchase prices paid in 354 real estate transactions involving MOBs and seniors housing facilities, for which relevant information was publicly available or available from third-party sources common in the real estate industry, to determine a net asset value for the Company’s portfolio. KeyBanc selected the 354 asset sale transactions based on the following criteria:

MOBs, seniors housing, and dialysis center transactions;
transactions completed since the first quarter of 2015;
transactions from regional geographies similar to that of the Company’s portfolio, except that geography was not a limiting criteria for dialysis center transactions where Fresenius Medical Care or DaVita Dialysis was the tenant;
MOB transactions included only properties built after 2000 and involved only properties between 10,000 and 50,000 square feet in size; and
dialysis center transactions included only transactions where Fresenius Medical Care or DaVita Dialysis was the tenant.

KeyBanc obtained the capitalization rate, which is generally the net operating income of a subject property divided by the purchase price (the “Property Cap Rate”), for each of the selected transactions from third-party data sources commonly used in the real estate industry. KeyBanc calculated the average Property Cap Rates of the selected transactions for MOBs, seniors housing and dialysis centers, respectively, and applied a 25 basis point increase and decrease to the average to determine ranges of Property Cap Rates for transactions involving the different asset types. KeyBanc then applied the ranges of Property Cap Rates of the selected transactions for seniors housing and dialysis centers to the seniors housing and dialysis centers assets in the Company’s portfolio to determine an implied gross asset value range for each facility. KeyBanc also applied the ranges of Property Cap Rates of the selected transactions for MOBs in the midwest, southeast and southwest regions to the MOB assets in the Company’s portfolio in those respective regions to determine an implied gross asset value range for each facility. The implied aggregate gross asset value range for the Company’s MOB portfolio was $106.4 million to $114.0 million and the implied aggregate gross asset value range for the Company’s seniors housing portfolio was $16.7 million to $17.8 million, resulting in an implied aggregate gross asset value range of the Company’s portfolio of $123.0 million to $131.9 million.

No asset utilized in the net asset value analysis is identical to any of the assets in the Company’s portfolio. For example, the transactions used in this analysis occurred in different economic climates than the current one, involved companies with different property profiles and were completed using different consideration. KeyBanc made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of the parties to the Purchase Agreement. Net asset value analysis in isolation from other analyses is not an effective method of evaluating transactions.

Discounted Cash Flow Analysis

KeyBanc performed an illustrative discounted cash flow analysis of the Company’s portfolio, which is designed to determine an implied valuation of the Company’s portfolio by discounting to the present the future expected cash flows from the Company’s portfolio.

KeyBanc analyzed the projections of unlevered free cash flows of the Company’s portfolio for fiscal years 2017 through 2021 that were included in the Projections Provided to KeyBanc. Unlevered free cash flows were determined by taking projected net operating income of the Company’s portfolio for the fiscal years 2017 through 2021 that were included in the Projections Provided to KeyBanc and subtracting general and administrative expenses, increased operating fees, tenant improvement and leasing commission expenses and capital expenditures, in each case as provided by management of the Company in the Projections

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Provided to KeyBanc. KeyBanc discounted the projected unlevered free cash flows for those periods to present value using the mid-year convention, based on an estimate of the Company’s weighted average cost of capital (“WACC”). The WACC was calculated by KeyBanc based on its professional judgment and experience and using various assumptions, including the current risk free rate of return, adjustments for market risk and size of the Company based on third-party data, measures of the equity risk premium for the comparable publicly traded companies (adjusted for the leverage of the Company’s portfolio and target leverage for a publicly traded healthcare REIT) and an assumed marginal tax rate of zero. KeyBanc applied a sensitivity analysis to illustrate the effect of different assumptions for changes in WACC, which resulted in a WACC range for the Company of 7.5% to 8.5%. KeyBanc calculated the Company’s portfolio’s terminal value in fiscal year 2022 by applying the range of Property Cap Rates of 7.0% to 7.5% from KeyBanc’s net asset value analysis to the Company’s projected 2022 net operating income of $9.8 million from the Projections Provided to KeyBanc, and discounting the result by the WACC range.

KeyBanc then calculated the enterprise value of the Company’s portfolio by adding the implied present value of unlevered free cash flows and the implied present value of the terminal value, in each case using the ranges described above, and determined an implied enterprise value of the Company’s portfolio of $120.2 million to $131.5 million.

While discounted cash flow analysis is a widely accepted and practiced valuation methodology, it relies on a number of assumptions, including growth rates, terminal multiples and discount rates. The valuation derived from the discounted cash flow analysis is not necessarily indicative of the Company’s present or future value or results. Discounted cash flow analysis in isolation from other analyses is not an effective method of evaluating transactions.

Miscellaneous

In connection with the review of the Asset Sale for the HTI Special Committee, KeyBanc performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving at its opinion, KeyBanc considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. KeyBanc believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, KeyBanc may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the valuations resulting from any particular analysis described above should not be taken to be KeyBanc’s view of the actual value of the Company’s portfolio. In performing its analyses, KeyBanc made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond HTI’s or the Company’s control. Any estimates contained in KeyBanc’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

KeyBanc conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the Purchase Price to be paid to the Company in connection with the Asset Sale, and in connection with the delivery of its opinion to the HTI Special Committee.

KeyBanc’s opinion and presentation to the HTI Special Committee was one of many factors considered by the HTI Special Committee in deciding to approve the Purchase Agreement and the Asset Sale. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the HTI Special Committee with respect to the Purchase Price to be paid to the Company in connection with the Asset Sale or of whether the HTI Special Committee would have been willing to agree to different consideration. The Purchase Price was determined through arm’s length negotiations between HTI and the Company and was approved by the HTI Special Committee. KeyBanc provided advice to the HTI Special Committee during these negotiations. KeyBanc did not, however, recommend any specific consideration to the HTI Special Committee or that any specific consideration constituted the only appropriate consideration in connection with the Asset Sale.

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Pursuant to a letter agreement dated February 8, 2016 and amended February 20, 2017, KeyBanc provided the HTI Board and the HTI Special Committee with financial advisory services in connection with the Asset Sale for which it will be paid approximately $1,250,000, $500,000 of which was payable upon delivery of its opinion, and the remaining portion of which will be paid upon, and subject to, the Closing. HTI has also agreed to reimburse KeyBanc for its expenses incurred in performing its services. HTI has also agreed to indemnify KeyBanc and its officers, directors, employees, agents, affiliates, partners and controlling persons against certain liabilities and expenses related to, arising out of or in connection with KeyBanc’s engagement.

KeyBanc and its affiliates, including KeyBank National Association, which is lead bank and administrative agent (in such capacity, the “Agent”) under HTI’s existing senior secured revolving credit facility (the “HTI Revolving Credit Facility”), have previously provided cash management services and mortgage banking services to HTI and have also received compensation from HTI during the past two years preceding the date of KeyBanc’s opinion described herein in the aggregate amount of approximately $6.8 million. KeyBanc and its affiliates have also performed banking and related services for affiliates of the Advisor and entities sponsored or advised by the Advisor and its affiliates and received fees during the past two years preceding the date of KeyBanc’s opinion described herein in the aggregate amount of approximately $1.4 million. KeyBanc and its affiliates may also seek to provide such services to HTI and affiliates of the Advisor and entities sponsored or advised by the Advisor and its affiliates in the future and may receive compensation for rendering those services.

Other Presentations by the HTI Special Committee’s Financial Advisor

In addition to its opinion dated June 16, 2017 and presentation delivered on June 16, 2017 to the HTI Special Committee and the underlying financial analyses performed in relation thereto, KeyBanc also delivered preliminary presentation materials to the HTI Board on July 8, 2016 and March 2, 2017 and to the HTI Special Committee on March 7, 2017, March 13, 2017, March 23, 2017 and March 30, 2017. The preliminary financial considerations and other information in such preliminary presentation materials were based on information and data that was available as of the dates of the respective presentations and in certain instances provide implied valuation metrics at certain valuations in order to provide a benchmark in informing the HTI Special Committee’s and the HTI Board’s decision to make offers. KeyBanc also continued to refine various aspects of its financial analyses. Accordingly, the results and other information presented in such preliminary presentation materials may differ from the financial analyses presented on June 16, 2017.

The preliminary presentation materials referenced below were for discussion purposes only and did not present any findings or make any recommendations or constitute an opinion of KeyBanc with respect to the fairness of the Purchase Price or otherwise. The financial analyses performed by KeyBanc in relation to its opinion dated June 16, 2017 supersede all analyses and information presented in the preliminary presentation materials.

July 8, 2016 Preliminary Presentation Materials

The July 8, 2016 preliminary presentation materials contained a preliminary analysis of the 19 properties in the Company’s portfolio, including an overview of the portfolio and detail regarding each individual property.

The July 8, 2016 preliminary presentation materials featured a preliminary analysis of the implied price per share of the Company’s common stock based on its cost basis in the assets, discounted based on KeyBanc’s professional judgment and experience. This analysis presented price per share values rather than enterprise values or net asset values, because at the time the potential transaction with the Company was anticipated to be structured as an acquisition of the entire Company. The presentation also included preliminary net asset value, comparable portfolio transactions, discounted cash flow and comparable publicly traded company analyses. The net asset value analysis used the same methodology as described above under “— Opinion of the HTI Special Committee’s Financial Advisor — Net Asset Value Analysis,” but applied different criteria and assumptions. The comparable portfolio transactions analysis involved KeyBanc’s selection of comparable transactions for MOBs and seniors housing. On the basis of the respective transaction purchase prices, KeyBanc calculated ranges of Property Cap Rates and implied valuations. The discounted cash flow analysis used the same methodology as described above under “— Opinion of the HTI Special

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Committee’s Financial Advisor — Discounted Cash Flow Analysis,” but applied different criteria and assumptions. This analysis used projections of the Company’s revenue and net operating income provided by the Company through SunTrust Robinson Humphrey. The comparable publicly traded company analysis used a similar methodology to the methodology described above under “— Comparable Public Companies Analysis,” except that it included certain additional companies in the analysis and included analyses for 2016 and 2017 of multiples of enterprise value to earnings before interest, depreciation and amortization and price to funds from operations and adjusted funds from operations.

March 2, 2017 Preliminary Presentation Materials

The March 2, 2017 preliminary presentation materials contained an update of the July 8, 2016 preliminary presentation materials and followed a similar format to those materials. Like the July 8, 2016 materials, the March 2, 2017 materials included preliminary net asset value, comparable portfolio transactions, discounted cash flow and comparable publicly traded company analyses that were each based on the same methodology as used in the July 8, 2016 materials, but applied different data and assumptions.

March 7, 2017 Preliminary Presentation Materials

The March 7, 2017 preliminary presentation materials contained a situation update based on KeyBanc’s discussion with the Special Committee’s financial advisor, SunTrust Robinson Humphrey, on March 6, 2017, and included a valuation analysis based on information provided by SunTrust Robinson Humphrey on behalf of the Special Committee. This analysis was similar to the net asset value analysis described above under “— Opinion of the HTI Special Committee’s Financial Advisor — Net Asset Value Analysis” except that, with respect to three MOB assets deemed to be high-quality, the analysis used lower Property Cap Rates that deemed the Property Cap Rate implied by the Company’s original purchase price for those properties to be the market Property Cap Rate.

March 13, 2017 Preliminary Presentation Materials

The March 13, 2017 preliminary presentation materials contained an update for the HTI Special Committee based on a conference call between KeyBanc and members of management of the Company and HTI. These materials included the valuation methodology contained in the March 7, 2017 preliminary presentation materials, but adjusted the projected net operating income downward for two properties based on a diligence update.

March 23, 2017 Preliminary Presentation Materials

The March 23, 2017 preliminary presentation materials contained an update for the HTI Special Committee regarding dialysis centers and reflected the net asset value analysis included in the March 13, 2017 preliminary presentation materials.

March 30, 2017 Preliminary Presentation Materials

The March 30, 2017 preliminary presentation materials contained an updated valuation approach for the Company’s portfolio. These materials included the valuation methodology contained in the March 23, 2017 preliminary presentation materials, with various adjustments to reflect lower Property Cap Rates with respect to three additional MOB assets also deemed to be high-quality, three dialysis treatment centers and one SHOP with a strong operator.

Certain Unaudited Projections Provided to the Board, the Special Committee, the Special Committee’s Financial Advisor, the HTI Board, the HTI Special Committee and the HTI Special Committee’s Financial Advisor

The Company does not, as a matter of course, make public forecasts as to future performance, revenues, net income, net operating income, unlevered cash flows at a property level, funds from operations, adjusted funds from operations or other results or metrics in light of, among other reasons, the uncertainty, unpredictability and subjectivity of any assumptions and estimates underlying any forecast. In connection with evaluating a possible transaction, however, the management of the Company prepared certain non-public unaudited Projections of the Company covering multiple years, which were provided to the Special Committee, the Board and SunTrust Robinson Humphrey. The management of the Company also provided

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KeyBanc with the non-public unaudited Projections Provided to KeyBanc covering multiple years, which were provided to the HTI Special Committee and the HTI Board. The Projections and the Projections Provided to KeyBanc differ in certain respects, including with respect to the inclusion of estimated corporate-level cost savings and synergies as part of the Projections Provided to KeyBanc. This information was not prepared with a view toward public disclosure. 

The Company is including the Projections, because they were made available to the Special Committee, the Board and SunTrust Robinson Humphrey and were utilized by the Special Committee and the Board in reaching their decision to recommend and approve the Asset Sale and the Plan of Liquidation. The Company is including the Projections Provided to KeyBanc, because they were made available to the HTI Special Committee, the HTI Board and KeyBanc. Including this information does not indicate that the Special Committee, the Board, the HTI Special Committee, the HTI Board or their respective advisors or any other person considered, or now considers, the Projections and the Projections Provided to KeyBanc, to be material or to be necessarily predictive of actual future results and the Projections and the Projections Provided to KeyBanc should not be relied upon as such. The internal prospective financial information used to prepare the Projections and the Projections Provided to KeyBanc is subjective in many respects. There can be no assurance that the Projections and the Projections Provided to KeyBanc will be realized or that actual results will not be significantly higher or lower than forecasted. The Projections and the Projections Provided to KeyBanc cover multiple years and thus, by their very nature, are subject to greater uncertainty with each succeeding year. As a result, the inclusion of the Projections and the Projections Provided to KeyBanc in this proxy statement should not be relied on as necessarily predictive of actual future events.

In addition, the Projections and the Projections Provided to KeyBanc were not prepared with a view toward complying with GAAP, the published guidelines of the SEC regarding projections and the use of non-GAAP measures or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither the Company’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the Projections and the Projections Provided to KeyBanc contained in this proxy statement, nor have they expressed any opinion or any other form of assurance on the information or the potential for the Company achieving the Projections and the Projections Provided to KeyBanc. The Projections and the Projections Provided to KeyBanc include certain non-GAAP financial measures. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. These non-GAAP financial measures, as presented in the tables below, may not be comparable to similarly titled amounts used by HTI or other companies. The footnotes to the tables below provide certain supplemental information with respect to the calculation of these non-GAAP financial measures. 

Additionally, although the Projections and the Projections Provided to KeyBanc presented below are presented with numerical specificity, these projections, together with certain information derived therefrom, were based on numerous variables and assumptions as to future events that were deemed to be reasonable as of the respective dates when they were finalized. These assumptions are inherently uncertain and may be beyond the Company’s control. Important factors that may affect actual results and cause the Company to fail to meet the Projections and the Projections Provided to KeyBanc include, but are not limited to, risks and uncertainties relating to the Company’s business (including its ability to achieve strategic goals, objectives and targets), industry performance, the legal and regulatory environment, general business and economic conditions and other factors described or referenced under the sections entitled “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors” beginning on page 74 of this proxy statement. The Projections and the Projections Provided to KeyBanc reflect assumptions that are subject to change and do not reflect revised prospects for the Company’s business, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the Projection and the Projections Provided to KeyBancs were prepared. The Company has not prepared revised standalone projections to take into account other variables that have changed since the dates on which the Projections and the Projections Provided to KeyBanc were finalized. There can be no assurance that the Projections and the Projections Provided to KeyBanc will be realized or that the Company’s future financial results will not materially vary from the Projections and the Projections Provided to KeyBanc. By

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including the Projections and the Projections Provided to KeyBanc in this proxy statement, neither the Company, the Advisor, SunTrust Robinson Humphrey, HTI, the HTI Advisor, KeyBanc nor any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of the Company compared to the information contained in the Projections and the Projections Provided to KeyBanc or that projected results will be achieved. The Company has not made representations in the Purchase Agreement or otherwise concerning the Projections and the Projections Provided to KeyBanc.

The Company does not intend to update or otherwise revise the Projections and the Projections Provided to KeyBanc to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such prospective financial information are no longer appropriate.

In developing the Projections and the Projections Provided to KeyBanc, management made numerous material assumptions with respect to the periods covered by the Projections and the Projections Provided to KeyBanc, including that (1) the Company does not make any acquisitions or dispositions; (2) the Company refinances all debt upon maturity for proceeds equal to the maturing principal balance; and (3) the operating performance of the Properties is consistent with the Company’s expectations.

The following is a summary of the Projections provided to the Board and the Special Committee:

           
  Years Ending December 31,
(In thousands)   2017E   2018E   2019E   2020E   2021E   2022E
Net Operating Income(1)   $ 9,289     $ 9,428     $ 9,729     $ 9,947     $ 9,937     $ 9,877  
Unlevered Cash Flows – Property Level(2)   $ 8,795     $ 8,628     $ 9,151     $ 8,968     $ 7,956     $ 8,117  

(1) Net operating income is defined as total revenue from the MOBs and senior housing assets, net of property operating expenses and property management fees.
(2) Unlevered cash flows — property level is defined as net operating income, as defined in footnote (1) above, net of tenant improvements, leasing commissions and a reserve for capital improvements on the MOBs; and an oversight fee, property operating reserves and a reserve for capital improvements on the senior housing assets.

The following is a summary of certain information related to the Projections Provided to KeyBanc provided to the HTI Special Committee:

           
  Years Ending December 31,
(In thousands)   2017E   2018E   2019E   2020E   2021E   2022E
Net Operating Income(1)   $ 9,238     $ 9,376     $ 9,678     $ 9,896     $ 9,886     $ 9,825  
Unlevered Cash Flows(2)   $ 8,194     $ 7,955     $ 8,463     $ 8,265     $ 7,236     $ 7,378  

(1) Net operating income is defined as total revenue from the MOBs and senior housing assets, net of property operating expenses and property management fees. Differences in net operating income reflected in the two tables set forth above are the result of estimates and rounding.
(2) Represents net operating income, as described in footnote (1) above, net of general and administrative expenses, increased operating fees, tenant improvement and leasing commission expenses and capital expenditures.

Financing of the Asset Sale

At the closing of the Asset Sale, HTI plans to simultaneously add qualifying Properties it is acquiring to the borrowing base of the HTI Revolving Credit Facility, thereby increasing the borrowing capacity thereunder, and draw down approximately $50.0 million to pay a portion of the Purchase Price and other costs associated with the closing of the Asset Sale. HTI intends to fund the remaining amounts payable through a combination of additional borrowings made possible by adding additional unencumbered assets it currently owns to the borrowing base of the HTI Revolving Credit Facility as well as cash on hand. Although the Asset Sale is not subject to any financing condition, adding any property to the borrowing base of the HTI Revolving Credit Facility requires satisfying certain conditions, as described in more detail below, including approval of the Agent. There can be no assurance these conditions will be satisfied or waived when all the

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other conditions to the closing of the Asset Sale have been satisfied or waived and that HTI will be able pay the Purchase Price when it is required to do so under the Purchase Agreement.

HTI has not made alternative financing arrangements and, if sufficient financing is not available through the HTI Revolving Credit Facility on the Closing Date, HTI may not have sufficient cash on hand available to fund the entire Purchase Price and any other costs payable in connection with the closing of the Asset Sale. As of June 30, 2017, HTI had approximately $158.1 million in cash and cash equivalents. As of September 1, 2017, HTI’s cash and cash equivalents was approximately $81.5 million. Cash and cash equivalents may decline further between the date of this proxy statement and the Closing Date. If the Company terminates the Purchase Agreement due to HTI’s failure to pay the Purchase Price at closing, Following an amendment in October 2017 to the credit agreement governing the HTI Revolving Credit Facility (the “Revolving Credit Agreemen”), HTI is subject to a covenant requiring the aggregate amount of all HTI’s unrestricted cash and cash equivalents to be equal to at least $30.0 million at all times.

HTI is required to reimburse the Company for up to $750,000 in actual third party expenses incurred in connection with the Asset Sale (without excluding Advisor expenses). However, after those reimbursements have been paid, HTI will have no further liability to the Company (including for any punitive, speculative or consequential damages) except with respect to surviving indemnification obligations. Moreover, the Company has waived any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against HTI. See “Risk Factors — Failure to complete the Asset Sale, which is subject to conditions and also may not close due to uncertainties regarding HTI’s ability to finance the payment of the Purchase Price at closing, would prevent the Plan of Liquidation from becoming effective and could have adverse consequences for the Company.”

The Revolving Credit Agreement is between HTI OP, as borrower, and an affiliate of KeyBanc, as Agent, and KeyBanc. as lead arranger and sole book runner, along with the other lenders party thereto. See “— Opinion of the HTI Special Committee’s Financial Advisor — Miscellaneous.” The Revolving Credit Agreement provides for a $565.0 million revolving credit facility and also contains a sub-facility for letters of credit up to $25.0 million and an “accordion” feature to allow HTI OP, under certain circumstances and with consent of the lenders, to increase the aggregate borrowings under the HTI Revolving Credit Facility to a maximum of $750.0 million. HTI OP’s ability to borrow under the HTI Revolving Credit Facility is subject to the representations and warranties required under the Revolving Credit Agreement being true in all material respects, there being at that time no continuing default or event of default and the delivery of a customary borrowing notice. Further, in connection with any borrowings made under the HTI Revolving Credit Facility, including in connection with the addition of an additional real estate asset to the borrowing base, the amount outstanding thereunder cannot exceed the maximum amount of borrowing capacity thereunder, which is based on either the capitalized value or the debt service coverage ratio applicable to the pool of eligible unencumbered real estate assets comprising the borrowing base.

As of June 30, 2017, the balance outstanding under the HTI Revolving Credit Facility was $280.5 million and HTI’s unused borrowing capacity under the HTI Revolving Credit Facility was $14.6 million, based on the pool of eligible unencumbered real estate assets comprising the borrowing base thereunder as of that date. The HTI Revolving Credit Facility requires HTI to meet certain financial covenants. As of June 30, 2017, HTI was in compliance with the financial covenants under the HTI Revolving Credit Facility. Other than potential repayment of amounts in connection with removing real estate assets from the borrowing base of the HTI Revolving Credit Facility that will then be pledged in connection with borrowings under HTI’s other credit facility, HTI does not have any current plans or arrangements to repay amounts that are, or may become, outstanding under the HTI Revolving Credit Facility, including amounts that may be incurred in connection with the Asset Sale.

The equity interests and related rights in HTI OP’s wholly owned subsidiaries that directly own the eligible unencumbered real estate assets comprising the borrowing base of the HTI Revolving Credit Facility have been pledged for the benefit of the lenders thereunder, and similar pledges will be made with respect to the equity interests and related rights of any wholly owned subsidiary of HTI OP owning any eligible unencumbered real estate assets, whether acquired in the Asset Sale or already owned by HTI, and added to

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the borrowing base. Adding additional unencumbered real estate assets to the borrowing base is also subject to other conditions under the Revolving Credit Agreement, which include:

the subsidiaries of HTI OP that own such eligible unencumbered real estate assets must have become guarantors under the HTI Revolving Credit Facility, and the equity interests of such subsidiaries must have been pledged as collateral securing the HTI Revolving Credit Facility;
the Agent must have received various instruments, documents and certificates related to the asset, including an appraisal no more than one year old (or otherwise satisfactory to the Agent);
after giving effect to the addition of the asset, no default or event of default may have occurred and all representations and warranties required under the Revolving Credit Agreement must be true in all material respects; and
consent of the Agent and, if there are fewer than ten assets in the borrowing base that are not contributing a minimum amount of capitalized value, at least two-thirds of the lenders under the HTI Revolving Credit Facility, based on commitments.

The HTI Revolving Credit Facility matures on March 21, 2019 and had a weighted average interest rate of 2.85% as of June 30, 2017. HTI OP has the option, based upon the ratio of its consolidated total indebtedness to consolidated total asset value, to have draws under the HTI Revolving Credit Facility priced at either: (a) LIBOR, plus an applicable margin that ranges from 1.60% to 2.20%; or (b) the Base Rate, plus an applicable margin that ranges from 0.35% to 0.95%. The “Base Rate” is defined in the HTI Revolving Credit Facility as the greater of (i) the fluctuating annual rate of interest announced from time to time by the lender as its “prime rate,” (ii) 0.5% above the federal funds effective rate or (iii) the applicable one-month LIBOR plus 1.0%.

The HTI Revolving Credit Facility requires monthly interest payments for each Base Rate loan and periodic payments for each LIBOR loan, based upon the applicable LIBOR loan period. The HTI Revolving Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty (subject to standard breakage costs). Upon the occurrence of an event of default, the lenders have the right to terminate their obligations under the HTI Revolving Credit Facility and to accelerate the payment on any unpaid principal amount of all outstanding loans.

The Revolving Credit Agreement contains various covenants and restrictive provisions that limit HTI’s ability to, among other things:

incur additional debt;
incur or permit certain liens to exist;
make certain investments or acquisitions;
merge or consolidate with another company;
make distributions;
transfer or otherwise dispose of assets; and
enter into certain types of transactions with affiliates.

Fees and Expenses 

The table below, prepared by the Advisor in connection with the Liquidation Analysis under “The Plan of Liquidation — Range of Liquidating Distributions,” summarizes the total estimated transaction and liquidation costs pursuant to the Asset Sale and Plan of Liquidation, representing the aggregate of both

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amounts that have actually been paid through the date of this proxy statement and amounts estimated to be paid through the expected Closing Date and the implementation of the Plan of Liquidation.

   
(all dollars in thousands)
Estimated Transaction/Liquidation Costs: 
  Low End   High End
Philip Center Loan Transfer Tax and Closing Costs   $ 389     $ 390  
Legal Costs     1,055       1,115  
Accounting Costs     658       855  
Insurance Costs     183       314  
Financial Advisor     1,250       1,250  
Proxy/Shareholder Solicitation Costs     268       368  
Other Additional Costs     1,320       1,465  
Total Estimated Transaction/Liquidation Costs:   $ 5,122     $ 5,757  

In addition, HTI expects to incur costs in connection with the consummation of the Asset Sale of approximately $2.4 million as shown in the table below.

 
(all dollars in thousands)
Estimated Costs in connection with the consummation of the Asset Sale:
   
Financial Advisory   $ 1,264  
Legal Costs     1,048  
Other Additional Costs     69  
Total Estimated Transaction/Liquidation Costs:   $ 2,381  

These costs do not include the costs of additional borrowings to be made under the HTI Revolving Credit Facility as described under “— Financing of the Asset Sale.” The foregoing description of HTI fees and expenses is an estimate only. There can be no assurance as to the actual amount of fees and expenses that will be incurred by HTI in connection with the Asset Sale.

Generally, except as otherwise provided in the Purchase Agreement, all expenses incurred in connection with the Asset Sale will be paid by the party incurring those expenses. If the Company or HTI has not fulfilled certain necessary conditions to close the Asset Sale prior to the Closing Date, the other party may terminate the Purchase Agreement and collect an expense reimbursement of up to $750,000 in actual third party expenses incurred in connection with the Asset Sale from the party unable to fulfill the conditions to close the Asset Sale. In addition, either party may terminate the Purchase Agreement prior to the Closing Date and the Company will reimburse up to $850,000 of HTI’s non-HTI Advisor expenses if the Company’s stockholders do not approve the Asset Sale and the Plan of Liquidation.

Plans for the Company After the Asset Sale

The assets subject to the Asset Sale represent substantially all of the Company’s assets. Under the Plan of Liquidation, which becomes effective when the Asset Sale closes, the Company will be authorized to sell all of its remaining assets, liquidate and dissolve the Company and its subsidiaries, and distribute the net proceeds of such liquidation in accordance with the provisions of the Charter, the Company’s bylaws and the laws of the State of Maryland. Following the completion of the Asset Sale, the only distributable assets of the Company are expected to be cash on hand, which the Company expects will ultimately be distributed in one or more liquidating distributions to its stockholders.

See “The Plan of Liquidation” for further details.

As of the date of this proxy statement and other than with respect to the Asset Sale and the Plan of Liquidation, the Company has no other current plans, proposals or negotiations which would relate to or result in an extraordinary transaction involving the Company’s business or management or incurring any indebtedness.

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Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation

In considering the recommendation of the Board to approve the Asset Sale and the Plan of Liquidation, although Mr. Weil abstained, you should note that the Company’s directors and officers (including all of the Company’s executive officers and one of the Company’s directors in their capacities as executives or members of the Advisor, the HTI Advisor and certain of their affiliates) may have interests in the Asset Sale and Plan of Liquidation that are different from, or in addition to, the interests of stockholders. Consequently, these individuals may be more likely to support the Asset Sale and the Plan of Liquidation than might otherwise be the case if they did not have these interests.

These interests are generally related to the fact that the Advisor and the HTI Advisor are each indirectly owned and controlled by AR Global. Mr. Weil, the executive chairman of the Board, is also a member of the HTI Board. Mr. Weil owns a non-controlling interest in the parent of AR Global and is also the chief executive officer of AR Global. In addition, the executive officers of the Company, W. Todd Jenson and Katie P. Kurtz, are also the executive officers of HTI. Mr. Jensen and Ms. Kurtz are also officers and employees of the Advisor and the HTI Advisor, as well as the Property Manager and the HTI Property Manager.

Inherent conflicts of interest exist where the individuals who comprise the management teams of the Company and HTI are the same individuals and those individuals are assisting the Board and HTI Board in connection with the Asset Sale. In addition, Ms. Perrotty, an independent director of the Company, has served as an independent director of another AR Global-sponsored REIT, GNL, since March 2015 and two other entities previously sponsored by AR Global that are now managed by unrelated advisors.

The Board was aware of these interests and conflicts of interest and considered them, among other matters, in reaching its decision to approve the Purchase Agreement, the Asset Sale and the Plan of Liquidation, including the Company’s complete liquidation and dissolution.

Potential Payments to the Advisor in Connection with the Asset Sale

In connection with the execution of the Purchase Agreement, the Company, the Advisor, the Property Manager and AR Global, as guarantor, entered into the Letter Agreement, pursuant to which, as amended, subject to completing the Asset Sale, the parties resolved matters related to expense obligations and fee amounts previously paid by the Company to the Advisor and its affiliates and made certain agreements with respect to all fees and other amounts that would be payable to the Advisor and its affiliates pursuant to the Advisory Agreement, the Property Management Agreement and the LPA if the Asset Sale is completed.

Under the Letter Agreement, if the Asset Sale is completed, the obligation of the Advisor and its affiliates to pay the Company the Excess Amount of approximately $3.68 million with respect to certain expense reimbursements or fees previously paid by the Company to the Advisor or its affiliates will be satisfied in exchange for: (i) surrender (in accordance with the Letter Agreement) of 83,018 Class B Units previously issued to the Advisor and the additional Class B Units to be issued to the Advisor during November 2017 with respect to the quarter ended September 30, 2017 in accordance with the terms of the Advisory Agreement and the LPA; (ii) an agreement to waive or assume certain fees and expenses payable or to be payable by the Company to the Advisor for providing transition services required to implement the Plan of Liquidation or other services provided during 2017 in an aggregate amount valued at $1.1 million and to waive an amount equal to cash asset management and oversight fees that would become payable if the Asset Sale closes with respect to services provided by the Advisor for the quarter commencing October 1, 2017 through and including the Closing Date; and (iii) an agreement by the Advisor to pay the Company any remaining amounts in cash following the Closing Date.

Following the completion of the Asset Sale, these remaining amounts will be payable by the Advisor to the Company, subject to any reduction for overpaid oversight fees subsequently earned by the Property Manager, in two equal installments, the first of which will be due within three days following the Closing Date and the second of which will be due within six months following the Closing Date. Pursuant to the Letter Agreement, these payments following the Closing Date are guaranteed by AR Global along with the payment approximately $228,000 in disputed excess expense reimbursements that will be the responsibility of the Advisor, and not the Company.

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Other than as contemplated by the Letter Agreement, if the Asset Sale is completed, no fees or other amounts are or will become due or otherwise payable under the Advisory Agreement, the LPA or any other agreement between the Company and the Advisor and its affiliates. If the Asset Sale is not completed, the obligation of the Advisor and its affiliates to pay the Company the Excess Amount of approximately $3.68 million would not be satisfied at this time, the Advisor would continue to receive Class B Units on a quarterly basis and not cash asset management and oversight fees, and no changes would be made to the fees or other amounts that are or will become due or otherwise payable under the Advisory Agreement, the LPA or any other agreement between the Company and the Advisor and its affiliates.

Although the Advisor provided services in consideration for receiving the Class B Units, it did not receive capital account credit and the Class B Units would not have been entitled to liquidating distributions which under the LPA are required to be made in accordance with positive capital account balances, not percentage interests. Further, although the LPA permits the special allocation of income or gain to the Advisor as the holder of the Class B Units, the Company has not generated income or gain to be so allocated. Thus, the Advisor would not be entitled to receive liquidating distributions although the Class B Units would be entitled to regular distributions if the Company continued to operate. In the case of a merger, under the LPA, the Class B Units would vest, and the Advisor would have been entitled to continue receiving regular distributions thereon as well as merger consideration equivalent to that of OP Units.

Pursuant to the Letter Agreement, prior to the Closing Date and subject to completing the Asset Sale, the Company and the Advisor have agreed to enter into the Contemplated Amendments effective as of October 1, 2017 to facilitate the establishment of a value for Class B Units consistent with the applicable provisions of the Letter Agreement and certain of the other payments contemplated by the Letter Agreement. Without the Contemplated LPA Amendment, the Advisor would not be entitled to receive liquidating distributions in connection with the Plan of Liquidation.

Pursuant to the Letter Agreement, the aggregate value of the Class B Units is required to be calculated, at the fair market value thereof as reasonably determined by the Board as of the Closing Date, which per-unit amount will be based on the per-share value as implied from the Purchase Agreement. Assuming, as the Advisor did in connection with its preparation of the Liquidation Analysis, that a total of 93,683 Class B Units will be surrendered on the Closing Date based on a fair market value of $17.64 (equivalent to the Company’s current Estimated Per-Share NAV) as of the Closing Date, the total value of the Class B Units surrendered pursuant to the Letter Agreement would be $1,652,568. The number of Class B Units and their fair market value are subject in all respects to approval by the Board at a later date, and the actual number of Class B Units issued and the valuation ascribed thereto cannot be determined at this time.

See “AR Global Arrangements” for a more detailed description of the Letter Agreement, as well as certain amendments to the Advisory Agreement, the Property Management Agreement and the LPA contemplated thereby.

Potential Benefits to HTI and the HTI Advisor in Connection with the Asset Sale

If the Asset Sale is completed, HTI may be required to reimburse the HTI Advisor for insourced acquisition expenses up to a maximum of $0.6 million, representing 0.5% of the contract purchase price (as defined in HTI’s charter) being paid to acquire the Properties.

HTI common stock may increase in value as a result of the Asset Sale, which may benefit HTI’s stockholders generally as well as AR Global, which directly or indirectly beneficially owns 8,888 shares of HTI common stock and 359,340 shares of HTI common stock issuable in exchange for certain performance-based restricted, forfeitable interests in the HTI OP.

Neither HTI, HTI OP nor HTI Holdco owns any interest in the Company, and, accordingly, there will be no effect from the Asset Sale or the Plan of Liquidation on the interest of HTI, HTI OP nor HTI Holdco in the net book value and net earnings of the Company. 

Benefits to the HTI Advisor and the HTI Property Manager from the Asset Sale

Pursuant to the HTI Advisory Agreement, HTI pays the HTI Advisor a quarterly variable management/incentive fee based primarily on the previous quarter’s earnings per share. Acquiring the Properties may result in higher earnings for HTI, and, therefore a higher management fee for the HTI Advisor.

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The quarterly variable management/incentive fee is equal to (x) 15.0% of the applicable prior quarter’s Core Earnings (as defined in the HTI Advisory Agreement) per share of HTI common stock in excess of $0.375 per share plus (y) 10.0% of the applicable prior quarter’s Core Earnings per share in excess of $0.47 per share.

Under the HTI Property Management Agreement, HTI pays the HTI Property Manager a property management fee of 1.5% of gross revenues from HTI’s stand-alone single-tenant net leased properties and 2.5% of gross revenues from all other types of properties, respectively. HTI also reimburses the HTI Property Manager for property level expenses. If the Company contracts directly with third parties for such services, the Company will pay the third party customary market fees and will pay the Property Manager an oversight fee of up to 1.0% of the gross revenues of the property managed. In no event will the Company pay the Property Manager or any affiliate of the Property Manager both a property management fee and an oversight fee with respect to any particular property. Acquiring the Properties may result in higher fees payable to the HTI Property Manager.

The term of the HTI Property Management Agreement extends to February 2019 and is automatically renewable for successive one-year terms unless any party provides written notice of its intention to terminate the agreement at least ninety days prior to the end of the term. Although the Property Manager would be entitled to identical fees with respect to the management of the Properties, that entitlement is subject to the Property Manager’s liability for overpayment of property management and oversight fees, as addressed by the Letter Agreement, and the Property Manager has agreed, in connection with the execution of the Purchase Agreement and subject to completing the Asset Sale, to continue to provide any property management or wind-down services under the Property Management Agreement for no cost or charge.

Restricted Shares

All outstanding and unvested restricted shares, including unvested shares held by our directors and executive officers, will vest upon the sale of all or substantially all of our assets (or any transaction or series of transactions within a period of 12 months ending on the date of the last sale or disposition having a similar effect). Prior to an unvested restricted share vesting, the holder of the unvested restricted shares receives liquidating distributions at the same time and in the same amount as the holders of any other shares of our common stock.

The following table sets forth the number of unvested restricted shares held by our directors and named executive officers as of the record date, as well as the approximate value of those awards. The dollar amounts set forth below were determined based on the high end of the range of the net cash proceeds available for distribution to the Company’s stockholders pursuant to the Plan of Liquidation. The amounts shown are prior to reduction for tax withholding.

   
Beneficial Owner   Unvested
Restricted
Shares
(#)
  Value
($)
W. Todd Jensen            
Katie P. Kurtz            
Edward M. Weil, Jr.            
P. Sue Perrotty     2,399 (1)      42,726  
B.J. Penn     2,399 (1)      42,726  

(1) Includes (i) 533 unvested restricted shares granted on August 20, 2014; (ii) 800 unvested restricted shares granted on July 13, 2015; and (iii) 1,066 unvested restricted shares granted on July 28, 2016. Does not include 1,333 unvested restricted shares that will be automatically granted to each of the Company’s independent directors in connection with the Annual Meeting. Restricted shares vest annually over a five-year period in equal installments, provided that restricted shares vest immediately upon the occurrence of certain events, including the consummation of the sale or disposition of substantially all of the Company’s assets, which would occur if the Asset Sale is consummated.

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Regulatory Approvals Required for the Asset Sale and the Plan of Liquidation

The Company and HTI are not aware of any regulatory approvals of any municipal, state and federal governmental agencies or authorities required for the consummation of the Asset Sale. If any approvals are required, the Company does not anticipate that they will hinder, delay, or restrict completion of the Asset Sale. Under the Purchase Agreement, the Company and HTI have each agreed to use commercially reasonable efforts to take all actions necessary, proper or advisable to complete the Asset Sale.

Although the Company and HTI do not expect any regulatory authorities to raise any significant objections to the Asset Sale that would result in the failure to satisfy the conditions to closing the Asset Sale by the March 16, 2018 outside date, there is no assurance that all required regulatory approvals will be obtained or that these approvals will not contain terms, conditions or restrictions.

No regulatory approvals are required for the Plan of Liquidation to become effective.

Accounting Treatment

The Asset Sale will be treated as an asset disposition for accounting purposes. The Company expects that effectiveness of the Plan of Liquidation will cause the Company’s basis of accounting to change. Once the Plan of Liquidation is effective, the Company must change its basis of accounting from the going-concern basis to the liquidation basis of accounting. In order for the Company’s financial statements to be in accordance with GAAP under the liquidation basis of accounting, all of the Company’s assets must be stated at the amount of consideration the entity expects to collect, and all of the Company’s liabilities must be recorded at the estimated amounts at which the liabilities are expected to be settled.

Provisions for Unaffiliated Stockholders

No provision has been made in connection with the Asset Sale and the Plan of Liquidation (1) to grant unaffiliated stockholders access to the corporate files of the Company, any other party to the Purchase Agreement or any of their respective affiliates or (2) to obtain counsel or appraisal services at the expense of the Company or any other party or affiliate.

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THE PURCHASE AGREEMENT

This section of this proxy statement describes the material provisions of the Purchase Agreement, which is attached as Annex A to this proxy statement and is incorporated herein by reference. As a stockholder, you are not a third party beneficiary of the Purchase Agreement and therefore you may not directly enforce any of its terms and conditions.

This summary may not contain all of the information about the Purchase Agreement that is important to you. The Company urges you to carefully read the full text of the Purchase Agreement because it is the legal document that governs the Asset Sale. The Purchase Agreement is not intended to provide you with any factual information about the Company. In particular, the assertions embodied in the representations and warranties contained in the Purchase Agreement (and summarized below) are qualified by information the Company filed with the SEC prior to the effective date of the Purchase Agreement. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may apply contractual standards of materiality in a way that is different from what may be viewed as material by investors or that is different from standards of materiality generally applicable under the U.S. federal securities laws or may not be intended as statements of fact, but rather as a way of allocating risk among the parties to the Purchase Agreement. The representations and warranties and other provisions of the Purchase Agreement and the description of such provisions in this document should not be read alone but instead should be read in conjunction with the other information contained in the reports, statements and filings that the Company files with the SEC and the other information in this proxy statement. See “Where You Can Find More Information.”

Pursuant to the terms of the Purchase Agreement, and subject to the satisfaction or waiver of certain conditions set forth in the Purchase Agreement, HTI, through the HTI OP and HTI Holdco, has agreed to purchase substantially all of the Company’s assets. The Company’s assets consist of the membership interests of the Company’s subsidiaries that directly own the Properties and one subsidiary that holds the license for operating one of the Company’s assisted living facilities. To the extent the Company owns or controls any of the assets of the subsidiaries or HT III Holdco, the Company will transfer those assets to HTI in the Asset Sale. The Asset Sale constitutes the sale of substantially all of the Company’s assets. Following the Asset Sale, the Company’s only distributable asset will be cash on hand.

On the Closing Date, the Company will, or will cause its subsidiaries to, pay all liens and security interests on the Properties so that HTI purchases the Properties free and clear of all liens and liabilities, except for the Philip Center Loan.

Parties to the Purchase Agreement

The Company was incorporated on April 24, 2014 as a Maryland corporation and elected and qualified to be taxed as a REIT beginning with the taxable year ended December 31, 2015. Substantially all of the Company’s business is conducted through the OP, a Delaware limited partnership of which the Company is the sole general partner. HT III Holdco, a Delaware limited liability company, is a wholly owned subsidiary of the OP. The Company was formed to primarily acquire a diversified portfolio of healthcare-related assets including MOBs, seniors housing communities and other healthcare-related facilities. The IPO raised significantly less capital than expected, realizing only $171.5 million in net proceeds. As of June 30, 2017, the Company owned 19 properties consisting of 0.5 million rentable square feet. The Company’s principal executive offices are located at 405 Park Avenue, 4th Floor, New York, New York 10022. The Company’s Investor Relations telephone number is (866) 902-0063.

The purchaser is HTI, a Maryland corporation that was formed and sponsored by affiliates of the Advisor. Substantially all of HTI’s business is conducted through its operating partnership, the HTI OP, a Delaware limited partnership of which HTI is the sole general partner. HTI Holdco, a Delaware limited liability company, is a wholly owned subsidiary of the HTI OP. Like the Company, HTI invests in healthcare real estate, focusing on seniors housing and MOBs, located in the United States. As of June 30, 2017, HTI owned 163 properties located in 29 states and comprised of 8.5 million rentable square feet.

The Company’s and HTI’s external advisors are both owned and controlled, indirectly, by AR Global.

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Closing Date

The Purchase Agreement provides that the Closing Date, on which the closing of the Asset Sale will take place, will be the fifth business day following the date on which the last of the conditions to closing the Asset Sale (described under “— Conditions to Completion”) have been satisfied or waived (other than the conditions that by their terms are to be satisfied at the closing of the Asset Sale, but subject to the satisfaction or waiver of those conditions) or at another date and time agreed to by HTI and the Company.

Purchase Price

The Purchase Price under the Purchase Agreement is $120.0 million, subject to customary prorations and closing adjustments in accordance with the terms of the Purchase Agreement, which are estimated to be $0.8 million payable to HTI assuming the Asset Sale closes on November 30, 2017. The Purchase Price will be payable on the Closing Date less the principal amount of the Philip Center Loan, which was $4.9 million as of the date of this proxy statement. Pursuant to the terms of the Purchase Agreement, HTI has agreed to use commercially reasonable efforts (including paying early termination fees not to exceed $200,000) to assume the Philip Center Loan and to cause the Company to be released from the guaranty associated with the Philip Center Loan. If HTI does not assume the Philip Center Loan on the Closing Date or if the Company is not released from the guaranty associated with the Philip Center Loan, the Philip Center Loan will be repaid in full by the Company on the Closing Date and any early termination fee in excess of $200,000 will be subtracted from the Purchase Price.

Escrow Agreement

On the Closing Date, HTI will deposit $6.0 million of the Purchase Price, representing the Escrow Amount, into an escrow account for the benefit of the Company pursuant to the Escrow Agreement with Wells Fargo Bank, N.A. executed as of the Closing Date in the form attached as an exhibit to the Purchase Agreement. According to the terms of the Escrow Agreement, the Escrow Amount will be held in the escrow account for 14 months following the Closing Date. One third of the Escrow Amount not paid or reserved for pending or unsatisfied claims of HTI will be released to the Company in three installments: six, 12 and 14 months following the Closing Date.

Representations and Warranties

The Purchase Agreement contains a number of representations and warranties made by the Company, the OP and HT III Holdco (the “Seller Parties”), on the one hand, and HTI, the HTI OP and HTI Holdco (the “Purchaser Parties”), on the other hand. The representations and warranties were made by the parties as of the date of the Purchase Agreement and survive for a period of 14 months following the Closing Date. Certain of these representations and warranties are subject to specified exceptions and qualifications contained in the Purchase Agreement and qualified by the disclosure letters delivered in connection therewith.

Representations and Warranties of the Seller Parties