Listed below are the prospectuses for each CNL Securities distributed product.
This is not an offer to sell nor a solicitation of an offer to buy shares of CNL Strategic Capital. Only the prospectus makes such an offer. This piece must be read in conjunction with the prospectus in order to understand fully all the objectives, risks, charges and expenses associated with an investment and must not be relied upon to make a decision. The information herein does not supplement or revise any information in CNL Strategic Capital’s public filings. To the extent information herein conflicts with the prospectus, the information in the prospectus shall govern.
An investment in CNL Strategic Capital, LLC is considered speculative and involves a high degree of risk, including the loss of all or a substantial amount of investment. Investing in CNL Strategic Capital is not a short-term investment and requires investors to meet the minimum suitability standards. CNL Strategic Capital is offering Class A, Class T, Class D and Class I shares in this offering, and each have different fees and expenses.
CNL Strategic Capital is a recently formed entity that has no operating history. It may be unable to successfully implement its business and acquisition strategies or meet its investment objectives. This will initially be a blind pool offering, and investors will not have the opportunity to evaluate CNL Strategic Capital historical data or assess any investments prior to purchasing shares.
Although the success of CNL Strategic Capital will be dependent on the performance of its managers, investors should not rely on the past performance of these managers and their respective affiliates as an indication of future success. CNL Strategic Capital does not share a comparable business strategy or business objective with any CNL public programs and is a different investment vehicle with different structure, fees and risks from LLCP.
This is a “best efforts” offering, and there is no assurance that CNL Strategic Capital, LLC will raise substantial funds. A substantial portion of CNL Strategic Capital’s assets may be invested in a limited number of businesses, which would lead to less diversification and the potential for greater volatility. If CNL Strategic Capital is unable to raise substantial funds, it will be limited in the number and type of acquisitions it may make.
CNL Strategic Capital does not have any employees and is reliant on its managers to execute its business strategy. CNL Strategic Capital’s manager and sub-manager, and their respective affiliates, face conflicts of interest including conflicts that result from compensation arrangements and allocations of business opportunities with this and with other offerings and its affiliates.
CNL Strategic Capital faces certain risks and costs with respect to the evaluation and management of future business acquisitions.
Co-investing with other investment groups may increase the risk that third parties may make business, financial or management decisions with which CNL Strategic Capital does not fully agree. In certain cases, the sub-manager, subject to the final approval of the manager, will invest alongside the sub-managers’ affiliates or other clients. CNL Strategic Capital will not purchase these businesses unless a majority of the board of directors, including a majority of the independent directors, determines that such transaction is fair and reasonable.
CNL Strategic Capital’s business strategy is to acquire a controlling interest in the businesses it acquires. It may also acquire other debt and minority equity positions to a lesser extent, some of which may be in combination with other funds managed by LLCP or its affiliates.
While CNL Strategic Capital intends to pay distributions on a monthly basis, distributions are not guaranteed in frequency or amount. Initially, distributions will be paid from fee waivers or deferrals, expense support waivers, offering proceeds, borrowings and cash from operations. CNL Strategic Capital typically is obligated to repay expense support to the advisors over several years, reducing future distributions and potentially diluting value for shareholders entering the fund at a later date.
Subject to certain exceptions, CNL Strategic Capital may use leverage in an amount not to exceed 50 percent of its gross assets, subjecting it to inflation and interest rate risk. This may result in refinancing challenges, lower returns on investment, increased financing costs and reduced operating cash flows. Leverage can magnify the potential for loss or gain, which can impact an investment’s volatility and returns. Furthermore, there is no assurance that CNL Strategic Capital, or the borrowers that it may lend to, will be able to perform their obligations under any or all of the loan documents, or that they will have sufficient resources to meet their obligations.
The board of directors will determine the net asset value (NAV) per share of each applicable class on a monthly basis, commencing in April 2018 with our month ended March 31, 2018 NAV. Asset valuations will be estimates of fair value and do not represent the amount an investor would receive now or at any time in the future. While the board of directors has engaged an independent valuation firm to assist with the valuation of CNL Strategic Capital’s businesses, the valuation is inherently subjective, and CNL Strategic Capital’s NAV may not accurately reflect the actual price at which its assets could be liquidated on any given day. The realized value of shares will be dependent upon market conditions that are beyond anyone’s ability to control or predict.
An investment in CNL Strategic Capital is illiquid and no secondary market is expected to develop. The shares sold in this offering will not be listed on an exchange or quoted through a quotation system for the foreseeable future, if ever. Investors will have limited liquidity. If investors are able to sell their shares, they will likely receive less than their purchase price.
Beginning no later than the end of March 2019, and at the discretion of the board of directors, CNL Strategic Capital intends to commence a quarterly share repurchase program. The total amount of aggregate repurchases of outstanding shares of common stock will be limited to 2.5 percent of the aggregate net asset value per calendar quarter and 10 percent of the aggregate net asset value per calendar year, and will include numerous restrictions that limit an investor’s ability to sell their shares. Unless the board of directors approves otherwise, quarterly repurchases will be limited to proceeds received from the distribution reinvestment plan during the prior quarter. The share repurchase program may be suspended, modified or terminated by the board of directors at any time.
If CNL Strategic Capital were to become taxable as a corporation for U.S. federal income tax purposes, it would be required to pay income tax at corporate rates on its net income. Distributions by CNL Strategic Capital to shareholders would then constitute dividend income taxable to such shareholders.
Please read the prospectus, including the Risk Factors section, for full details.
No offering is made to residents of New York, Maryland or any other state, except by a prospectus filed with the Department of Law of the state of New York, the Maryland Division of Securities or the respective state securities administrator. Neither the U.S. Securities and Exchange Commission, the attorney general of the state of New York, the Maryland Division of Securities nor any other state securities administrator has passed on or endorsed the merits of the REIT's offering or the adequacy or accuracy of this piece or the REIT's prospectus. Any representation to the contrary is unlawful.
This is not an offer to sell nor a solicitation of an offer to buy shares of the REIT. Only the prospectus makes such an offer. This piece must be read in conjunction with the prospectus in order to understand fully all the objectives, risks, charges and expenses associated with an investment and must not be relied upon to make a decision. The information herein does not supplement or revise any information in the REIT's public filings. To the extent information herein conflicts with the prospectus, the information in the prospectus shall govern. The prospectus is available on sec.gov and cnlhealthcarepropertiesii.com.
Forward-looking statements are based on current expectations and may be identified by words such as believes, expects, may, could and terms of similar substance and speak only as of the date made. Actual results could differ materially due to risks and uncertainties that are beyond the REIT's ability to control or accurately predict. Investors should not place undue reliance on forward-looking statements.
Managing dealer of CNL Healthcare Properties II is CNL Securities, member FINRA/SIPC. Shares are offered to the public through selling firms. Selling firms are reminded that the REIT's communications must be accompanied or preceded by a prospectus.
Investing in a non-traded REIT is a higher-risk, longer term investment than many listed securities and is not suitable for all investors. Shares may lose value, or investors could lose their entire investment.
The REIT was recently organized and has a limited operating history on which investors may evaluate operations and prospects for the future. The REIT is a blind pool offering that is in the initial stages of property acquisitions and has made limited investments.
This is a best-efforts offering and if the REIT raises substantially less than the maximum offering amount, it may not be able to invest in a large variety of portfolio assets, which will subject investors to greater risk.
Non-traded REITs are illiquid. There is no public trading market for the shares. The REIT does not expect to offer a liquidity event in the near future and investors should be prepared to hold shares for an indefinite period of time. If investors are able to sell their shares, it would likely be at a substantial discount.
There are significant limitations on the redemption of investors' shares under the REIT's redemption plan. The REIT can determine not to redeem any shares or to redeem only a portion of the shares for which redemption is requested. In no event will more than 5 percent of the weighted average of all share classes of the outstanding shares be redeemed in any 12-month period. The REIT may modify, suspend or terminate the redemption plan at any time. Holding periods may be waived for qualifying events
The REIT is obligated to pay substantial fees to its advisor, managing dealer, property manager and their respective affiliates for their services in managing the day-to-day operations of the REIT based upon agreements that have not been negotiated at arm's length, and some of which are payable based upon factors other than the quality of services. These fees could influence their advice and judgment in performing services. In addition, certain officers and directors of the advisor also serve as the REIT's officers and directors, as well as officers and directors of competing programs, resulting in conflicts of interest.
There is no guarantee of future distributions or that distributions will be paid at all. Due to the high levels of investment costs and fees incurred during the REIT's initial phase, distributions will not be fully covered by cash flows from operating activities and will be paid from expense waivers, borrowings and offering proceeds. For the nine months ended Sept. 30, 2017, approximately 49 percent of cash distributions were covered by operating cash flow and 51 percent were funded by offering proceeds. For the year ended Dec. 31, 2016, distributions were not covered by operating cash flow and were 100 percent funded by offering proceeds. Distributions paid from sources other than operating cash flow, now and in the future, are not sustainable, can reduce investors' overall return and may be dilutive
The per-share amount of distributions on Class A, Class T and Class I shares will differ because of the timing of certain class-specific expenses. Specifically, distributions on Class T shares and Class I shares will be lower than distributions on Class A shares because the REIT is required to pay ongoing distribution and servicing fees with respect to the Class T shares and Class I shares. These fees are not applicable to Class A shares.
If the REIT fails to maintain its qualification as a REIT for any taxable year, it will be subject to federal income tax and net earnings available for investment or distributions will be reduced.
The use of leverage to acquire assets may hinder the REIT's ability to pay distributions and/or decrease the value of shareholders' investments.
There are significant risks associated with the seniors housing and healthcare sectors, including market risks impacting demand, competition from other entities, litigation risks and the cost of being responsive to changing government regulations. The REIT's success in these sectors is dependent, in part, on the ability to evaluate local conditions, identify appropriate opportunities and find qualified tenants or, where properties are acquired through a taxable REIT subsidiary, engage and retain qualified independent managers.
Read the prospectus, including the Risk Factors section, for full details.
Relating to Forward-Looking Statements
The information on this website includes forward-looking statements based on current expectations and may be identified by words such as believes, anticipates, expects, may, will, continues, could, targeted and terms of similar substance, and speak only as of the date made. Actual results could differ materially due to risks and uncertainties that are beyond the offering’s ability to control or accurately predict. Investors and financial advisors should not place undue reliance on any forward-looking statements.
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