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CNL Preps $2 Billion Healthcare REIT Offering

An S-11 for CNL Healthcare Properties II Inc., the planned follow-up to CNL Healthcare Properties I, has been registered with the Securities & Exchange Commission. CNL Healthcare Properties II is a non-traded real estate investment trust that will invest primarily in seniors housing, medical office buildings, and acute care and post-acute care facilities. The company is seeking to raise up to $2 billion from the sale of Class A, Class T and Class I shares of common stock and distribution reinvestment plan shares.

The Class A shares will be offered to the public for $11.08 per share, with a 7 percent ($0.78) selling commission and a 2.75 percent ($0.30) dealer manager fee.

The Class T shares will be offered for $10.50 per share, with a 2 percent selling commission ($0.21) and a 2.75 percent ($0.29) dealer manager fee. In addition, the company will pay a trailing commission, called an “annual distribution and stockholder servicing fee” in an amount equal to 1 percent of the then-current primary offering price, payable on a quarterly basis. The trail commission is emerging as a popular structure in the face of FINRA Rule 15-02, which will require investor statements to reflect the impact of sales load beginning in April 2016.

The Class I shares will be offered for $10.00 per share and have no front end fees, therefore, there will be no selling commissions or dealer manager fees. The annual distribution and stockholder servicing fee is 0.50 percent per Class I share, payable on a quarterly basis.

The original CNL Healthcare Properties I, which was declared effective in June 2011, is externally managed and advised by CNL Healthcare Corp. The company closed its follow-on offering in September 2015 after raising a total of $1.67 billion over the course of its two offerings.

To date, the REIT’s healthcare investment portfolio consists of 135 properties, including 71 seniors housing communities, 49 medical offices, 10 post-acute care facilities and five acute care hospitals. Six of the 71 seniors housing communities currently have real estate under development and five were owned through an unconsolidated joint venture. One of the 10 post-acute care facilities currently have real estate under development.