Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company,. or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s outstanding ~~Class A, Class T and Class I~~ common stock as of ~~November 1, 2017~~October 31, 2019 was ~~717,435~~ ~~shares, 1,640,300 shares and 106,380 shares, respectively.~~4,899,139 Class A shares.

September 30,

December 31,

ASSETS

2017

2016

Real estate investment properties, net

$
20,407,427

$
―

Cash

15,467,018

5,977,241

Intangibles, net

1,029,205

―

Other assets

217,443

48,928

Restricted cash

119,478

383,000

Total assets

$
37,240,571

$
6,409,169

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Mortgage and notes payable

$
16,176,403

$
312,500

Accounts payable and accrued liabilities

606,502

23,263

Due to related parties

640,447

240,651

Other liabilities

112,965

―

Total liabilities

17,536,317

576,414

Commitments and contingencies (Note 10)

Stockholders' equity:

Preferred stock, $0.01 par value per share, 10,000,000 shares authorized; none issued or outstanding

―

―

Class A Common stock, $0.01 par value per share, 1,200,000,000 shares authorized; 708,626 and 325,119 shares issued and outstanding, respectively

7,087

3,251

Class T Common stock, $0.01 par value per share, 700,000,000 shares authorized; 1,434,980 and 308,587 shares issued and outstanding, respectively

14,349

3,086

Class I Common stock, $0.01 par value per share, 100,000,000 shares authorized; 88,880 and 8,454 shares issued and outstanding, respectively

889

85

Capital in excess of par value

21,509,803

6,226,141

Accumulated loss

(1,293,154
)

(342,447
)
Accumulated distributions

(534,720
)

(57,361
)
Total stockholders' equity

19,704,254

5,832,755

Total liabilities and stockholders' equity

$
37,240,571

$
6,409,169

		September 30,
ASSETS		2019
Real estate investment properties	$		48,000,000
Cash			4,652,043
Restricted cash			321,115
Other assets			249,320
Total assets	$		53,222,478

LIABILITIES
Mortgage loans	$		6,150,000
Liability for estimated costs in excess of estimated receipts during liquidation			2,369,538
Accounts payable and accrued liabilities			908,002
Other liabilities			38,495
Due to related parties			78,079
Total liabilities			9,544,114
Commitments and contingencies (Note 13)
Net assets in liquidation	$		43,678,364

															Two Months		Quarter		Eight Months		Nine Months
	Quarter Ended							Nine Months Ended							Ended		Ended		Ended		Ended
	September 30,							September 30,							August 31,		September 30,		August 31,		September 30,
	2017			2016				2017			2016				2019		2018		2019		2018
Revenues:
Resident fees and services	$	1,095,696		$		―		$	2,178,566		$		―		$	1,490,631	$	1,483,924	$	5,841,081	$	3,748,684
Total revenues		1,095,696		―					2,178,566		―					1,490,631		1,483,924		5,841,081		3,748,684

Operating expenses:
Property operating expenses		626,933		―					1,236,358		―					1,020,058		942,446		3,735,511		2,181,612
General and administrative expenses		178,940			93,439				664,727			93,439				371,795		300,989		1,197,034		905,686
Acquisition fees and expenses																—		—		—		818
Property management fees		64,570		―					136,442		―					74,216		73,996		291,842		228,318
Depreciation and amortization		324,417		―					647,185		―					451,154		438,469		1,795,444		1,087,147
Total operating expenses		1,194,860			93,439				2,684,712			93,439				1,917,223		1,755,900		7,019,831		4,403,581

Operating loss		(99,164	)		(93,439		)		(506,146	)		(93,439		)		(426,592)		(271,976)		(1,178,750)		(654,897)

Other expense:
Other income (expense):
Interest and other income																8,744		9,884		27,004		9,946
Interest expense and loan cost amortization		196,489			17,149				402,683			17,149				(51,505)		(220,314)		(567,415)		(595,497)
Total other expense		196,489			17,149				402,683			17,149				(42,761)		(210,430)		(540,411)		(585,551)
Loss before income taxes		(295,653	)		(110,588		)		(908,829	)		(110,588		)		(469,353)		(482,406)		(1,719,161)		(1,240,448)
Income tax expense		(12,253	)	―					(41,878	)	―
Income tax benefit (expense)																—		9,938		(30,533)		(35,245)
Loss from continuing operations																(469,353)		(472,468)		(1,749,694)		(1,275,693)
Income from discontinued operations																—		13,781		1,666,868		76,575
Net loss	$	(307,906	)	$	(110,588		)	$	(950,707	)	$	(110,588		)	$	(469,353)	$	(458,687)	$	(82,826)	$	(1,199,118)

Class A common stock:
Class A common stock (basic and diluted):
Net loss attributable to Class A stockholders	$	(109,676	)	$	(102,794		)	$	(346,091	)	$	(98,501		)	$	(469,353)	$	(87,907)	$	(82,826)	$	(257,552)
Net loss per share of Class A common stock outstanding (basic and diluted)	$	(0.16	)	$	(0.36		)	$	(0.66	)	$	(0.95		)
Weighted average number of Class A common shares outstanding (basic and diluted)		683,113			284,747				521,781			103,295
Net loss per share of Class A common stock outstanding															$	(0.10)	$	(0.10)	$	(0.02)	$	(0.30)
Weighted average number of Class A common shares outstanding																4,899,139		879,674		4,899,139		857,729
Distributions declared per Class A common share	$	0.1440		$	0.0700			$	0.3930		$	0.0700			$	—	$	0.1440	$	0.1440	$	0.4320

Class T common stock:
Class T common stock (basic and diluted):
Net loss attributable to Class T stockholders	$	(188,994	)	$	(5,411		)	$	(582,723	)	$	(10,002		)	$	—	$	(327,896)	$	—	$	(845,906)
Net loss per share of Class T common stock outstanding (basic and diluted)	$	(0.16	)	$	(0.36		)	$	(0.66	)	$	(0.95		)
Weighted average number of Class T common shares outstanding (basic and diluted)		1,177,167			14,990				878,536			10,489
Net loss per share of Class T common stock outstanding															$	—	$	(0.10)	$	—	$	(0.30)
Weighted average number of Class T common shares outstanding																—		3,281,231		—		2,817,132
Distributions declared per Class T common share	$	0.1169		$	0.0700			$	0.3087		$	0.0700			$	—	$	0.1177	$	—	$	0.3530

Class I common stock:
Class I common stock (basic and diluted):
Net loss attributable to Class I stockholders	$	(9,236	)	$	(2,383		)	$	(21,893	)	$	(2,085		)	$	—	$	(42,884)	$	—	$	(95,660)
Net loss per share of Class I common stock outstanding (basic and diluted)	$	(0.16	)	$	(0.36		)	$	(0.66	)	$	(0.95		)
Weighted average number of Class I common shares outstanding (basic and diluted)		57,534			6,600				33,006			2,187
Net loss per share of Class I common stock outstanding															$	—	$	(0.10)	$	—	$	(0.30)
Weighted average number of Class I common shares outstanding																—		429,142		—		318,577
Distributions declared per Class I common share	$	0.1328		$	0.0700			$	0.3715		$	0.0700			$	—	$	0.1310	$	—	$	0.3936

	Common Stock																																					Common Stock
								Class A					Class T					Class I					Capital in											Total					Class A			Class T			Class I			Capital in						Total
	Number			Par				Number		Par			Number		Par			Number		Par			Excess of			Accumulated				Accumulated				Stockholders'					Number	Par		Number	Par		Number	Par		Excess of		Accumulated		Accumulated		Stockholders'
	of Shares			Value				of Shares		Value			of Shares		Value			of Shares		Value			Par Value			Loss				Distributions				Equity					of Shares	Value		of Shares	Value		of Shares	Value		Par Value		Loss		Distributions		Equity
Balance at December 31, 2016	―			$	―				325,119	$	3,251			308,587	$	3,086			8,454	$	85		$	6,226,141		$	(342,447		)	$	(57,361		)	$	5,832,755
Subscriptions received for common stock, including distribution reinvestments	―			―					378,053		3,781			1,117,844		11,178			80,135		801			16,650,186		―				―					16,665,946
Balance at June 30, 2019																																					Balance at June 30, 2019		4,899,139	$	48,995	―	$	―	―	$	―	$	48,039,220	$	(3,077,633)	$	(3,664,293)	$	41,346,289
Net loss																																					Net loss		―		―	―		―	―		―		―		(469,353)		―		(469,353)
Balance at August 31, 2019																																					Balance at August 31, 2019		4,899,139	$	48,995	―	$	―	―	$	―	$	48,039,220	$	(3,546,986)	$	(3,664,293)	$	40,876,936

Balance at December 31, 2018																																					Balance at December 31, 2018		4,899,139	$	48,995	―	$	―	―	$	―	$	48,039,220	$	(3,464,160)	$	(2,958,820)	$	41,665,235
Net loss																																					Net loss		―		―	―		―	―		―		―		(82,826)		―		(82,826)
Cash distributions declared																																					Cash distributions declared		―		―	―		―	―		―		―		―		(705,473)		(705,473)
Balance at August 31, 2019																																					Balance at August 31, 2019		4,899,139	$	48,995	―	$	―	―	$	―	$	48,039,220	$	(3,546,986)	$	(3,664,293)	$	40,876,936

Balance at June 30, 2018																																					Balance at June 30, 2018		866,325	$	8,663	3,010,868	$	30,109	348,644	$	3,487	$	40,355,933	$	(2,399,408)	$	(1,731,573)	$	36,267,211
Subscriptions received for common stock,																																					Subscriptions received for common stock,
																																					including distribution reinvestments		27,937		280	530,986		5,310	129,978		1,300		7,197,379		―		―		7,204,269
Stock dividends issued	―			―					5,454		55			8,549		85			291		3			(143	)	―				―				―			Stock dividends issued		2,819		28	9,622		96	1,229		12		(136)		―		―		―
Redemptions of common stock																																					Redemptions of common stock		—		―	(3,298)		(33)	―		―		(33,146)		―		―		(33,179)
Stock issuance and offering costs	―			―				―		―			―		―			―		―				(1,366,381	)	―				―					(1,366,381	)	Stock issuance and offering costs		―		―	―		―	―		―		(582,115)		―		―		(582,115)
Net loss	―			―				―		―			―		―			―		―			―				(950,707		)	―					(950,707	)	Net loss		―		―	―		―	―		―		―		(458,687)		―		(458,687)
Cash distributions declared	―			―				―		―			―		―			―		―			―			―					(477,359		)		(477,359	)	Cash distributions declared		―		―	―		―	―		―		―		―		(554,780)		(554,780)
Balance at September 30, 2017	―			$	―				708,626	$	7,087			1,434,980	$	14,349			88,880	$	889		$	21,509,803		$	(1,293,154		)	$	(534,720		)	$	19,704,254
Balance at September 30, 2018																																					Balance at September 30, 2018		897,081	$	8,971	3,548,178	$	35,482	479,851	$	4,799	$	46,937,915	$	(2,858,095)	$	(2,286,353)	$	41,842,719

Balance at December 31, 2017																																					Balance at December 31, 2017		808,011	$	8,080	2,049,223	$	20,492	160,490	$	1,605	$	28,984,932	$	(1,658,977)	$	(846,200)	$	26,509,932
Subscriptions received for common stock,																																					Subscriptions received for common stock,
																																					including distribution reinvestments		93,663		937	1,480,250		14,803	316,665		3,167		19,733,531		―		―		19,752,438
Balance at December 31, 2015		20,000		$	200			―		$		―	―		$		―	―		$		―	$	199,800		$		―		$		―		$	200,000
Conversion of initial common stock shares		(20,000	)		(200		)		20,000		200		―		―			―		―			―			―				―				―
Subscriptions received for common stock, including distribution reinvestments	―			―					260,180		2,602			9,089		91			8,375		84			2,775,972		―				―					2,778,749
Stock dividends issued	―			―					1,047		10			32	―				32	―				(10	)	―				―				―			Stock dividends issued		8,021		80	24,541		245	2,696		27		(352)		―		―		―
Redemptions of common stock																																					Redemptions of common stock		(12,614)		(126)	(5,836)		(58)	―		―		(185,276)		―		―		(185,460)
Stock issuance and offering costs	―			―				―		―			―		―			―		―				(2,681	)	―				―					(2,681	)	Stock issuance and offering costs		―		―	―		―	―		―		(1,594,920)		―		―		(1,594,920)
Net loss	―			―				―		―			―		―			―		―			―				(110,588		)	―					(110,588	)	Net loss		―		―	―		―	―		―		―		(1,199,118)		―		(1,199,118)
Cash distributions declared	―			―				―		―			―		―			―		―			―			―					(20,662		)		(20,662	)	Cash distributions declared		―		―	―		―	―		―		―		―		(1,440,153)		(1,440,153)
Balance at September 30, 2016	―			$		―			281,227	$	2,812			9,121	$	91			8,407	$	84		$	2,973,081		$	(110,588		)	$	(20,662		)	$	2,844,818
Balance at September 30, 2018																																					Balance at September 30, 2018		897,081	$	8,971	3,548,178	$	35,482	479,851	$	4,799	$	46,937,915	$	(2,858,095)	$	(2,286,353)	$	41,842,719

	Nine Months Ended						Eight Months Ended August 31,		Nine Months Ended September 30,
	September 30, 2017			September 30, 2016			2019		2018
Operating activities:
Net cash flows provided by (used in) operating activities	$	82,390		$	(128,324	)
Net cash flows provided by (used in) operating activities – continuing operations							$	679,646	$	(336,905)
Net cash flows provided by operating activities – discontinued operations								188,175		541,630
Net cash flows provided by operating activities								867,821		204,725

Investing activities:
Acquisition of property	(21,854,119		)	―
Payment of direct acquisition costs	(6,187		)	―
Acquisition of properties							―			(24,740,622)
Capital expenditures	(58,781		)	―				(112,713)		(49,179)
Net cash used in investing activities	(21,919,087		)	―
Net cash flows used in investing activities – continuing operations								(112,713)		(24,789,801)

Capital expenditures							―			(23,151)
Proceeds from sale of real estate								15,044,231	―
Net cash flows provided by (used in) investing activities – discontinued operations								15,044,231		(23,151)

Net cash flows provided by (used in) investing activities								14,931,518		(24,812,952)

Financing activities:
Subscriptions received for common stock through primary offering		16,448,354			2,778,749		―			19,009,962
Payment of underwriting compensation	(967,600		)		(2,306	)	―			(984,483)
Payment of cash distributions, net of distribution reinvestments	(259,767		)		(20,662	)
Proceeds from mortgage and notes payable		16,050,000			312,500
Payment of cash distributions, net of distribution reinvestments during 2018								(705,473)		(597,676)
Redemptions of common stock							―			(185,460)
Repayment of mortgage loans								(18,350,000)	―
Proceeds from mortgage loans							―			5,000,000
Payment of loan costs	(208,035		)		―		―			(91,649)
Net cash flows provided by financing activities		31,062,952			3,068,281
Net cash flows (used in) provided by financing activities								(19,055,473)		22,150,694

Net increase in cash and restricted cash		9,226,255			2,939,957
Cash and restricted cash at beginning of period		6,360,241			200,000
Cash and restricted cash at end of period	$	15,586,496		$	3,139,957
Net decrease in cash and restricted cash								(3,256,134)		(2,457,533)
Cash and restricted cash at beginning of period, including held for sale								8,237,547		12,421,919
Cash and restricted cash at end of period, including held for sale							$	4,981,413	$	9,964,386

Supplemental disclosure of non-cash investing and financing activities:
Amounts incurred but not paid (including amounts due to related parties):
Acquisition fees and expenses related to asset acquisition	$	24,900		$	―		$	—	$	91,097
Loan costs							$	—	$	27,807
Selling commissions and Dealer Manager fees	$	16,438		$	―		$	—	$	41,651
Annual distribution and stockholder servicing fee	$	549,449		$	375		$	—	$	1,395,460
REIT Funding escrow	$	―		$	383,000
Assumption of liabilities on acquisition of property							$	—	$	115,779

CNL Healthcare Properties II, Inc. (“Company”) is a Maryland corporation ~~organized~~that incorporated on July 10, 2015 ~~that intends~~and elected to ~~qualify~~be taxed as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes beginning with the year ~~ending~~ended December 31, ~~2017 or the year in which the Company commences material operations.~~2017. The Company is sponsored by CNL Financial Group, LLC (“Sponsor” or “CNL”) and was formed primarily to acquire and manage a diversified portfolio of healthcare real estate and real estate-related assets it believes will generate a steady current return and provide long-term value to its stockholders. It intends to focus on investing, primarily in the United States, within the seniors housing, medical office, acute care and post-acute care sectors, as well as other types of real estate and real estate-related securities and loans.

~~The Company~~ is externally managed and advised by CHP II Advisors, LLC (“Advisor”), an affiliate of CNL. The Advisor provides advisory services to the Company relating to substantially all aspects of its investments and operations, including real estate acquisitions and dispositions, asset management and other operational matters. During the period from July 10, 2015 to December 31, 2015, the Company sold 20,000 shares of common stock to the Advisor for an aggregate purchase price of $0.2 million, and these shares were converted into 20,000 Class A shares upon the filing of the Company’s Articles of Amendment and Restatement in March 2016.

On March 2, 2016, pursuant to a registration statement on Form S-11 under the Securities Act of 1933, the Company commenced its initial public offering of up to $1.75 billion (“Primary Offering”), in any combination, of Class A, Class T and Class I shares of common stock on a “best efforts” basis, which ~~means~~meant that CNL Securities Corp. (“Dealer Manager”), an affiliate of the Sponsor, ~~will use~~used its best efforts but iswas not required to sell any specific amount of shares. The Company also ~~intends to offer~~offered up to $250 million, in any combination, of Class A, Class T and Class I shares ~~to be issued~~ pursuant to its distribution reinvestment plan (“Reinvestment Plan” and, together with the Primary Offering, the “Offering”). The Company ~~reserves the right to reallocate the shares offered between the Primary Offering and the Reinvestment Plan.~~

From the time of the Company’s formation on July 10, 2015 (inception) through July 10, 2016, the Company had not commenced operations because they were in their development stage and had not received the minimum required offering amount of $2.0 million in shares of common stock. T~~he Company broke escrow in its Offering effective July 11, 2016,~~ ~~through the sale of 250,000 Class A shares to~~ ~~its Advisor for $2.5 million~~ ~~and~~ ~~commenced operations.~~

~~The Company contributes~~has contributed the net proceeds from its Offering to CHP II Partners, LP (“Operating Partnership”) in exchange for partnership interests. The Company ~~intends to own~~owns substantially all of its assets either directly or indirectly through the Operating Partnership in which the Company is the sole limited partner and its wholly-owned subsidiary, CHP II GP, LLC, is the sole general partner. The Operating Partnership ~~may own~~owns assets through: (1) a wholly-owned taxable REIT subsidiary (“TRS”), CHP II TRS Holding, Inc. (“TRS Holdings”) and (2) property owner subsidiaries, which are single purpose entities.

On August 31, 2018, the Company’s board of directors approved the termination of its Offering and the suspension of its Reinvestment Plan, effective October 1, 2018. The Company ~~generally expects~~also suspended its share redemption plan (“Redemption Plan”) and discontinued its stock dividends concurrently. In October 2018, the Company deregistered the unsold shares of its common stock under its previous registration statement on Form S-11. Through the close of its Offering, the Company had received aggregate proceeds of approximately $51.2 million (4.9 million shares), including approximately $1.2 million (0.1 million shares) of proceeds pursuant to ~~lease~~the Reinvestment Plan.

In 2018, the Company announced it had formed a special committee consisting solely of its independent directors (“Special Committee”) to consider possible strategic alternatives available to the Company, including, without limitation, (i) an orderly disposition of the Company’s assets or one or more of the Company’s asset classes and the distribution of the net sale proceeds thereof to the stockholders of the Company and (ii) a potential business combination or other transaction with an unrelated third-party or affiliated party of the Company’s Sponsor. In January 2019, the Special Committee engaged SunTrust Robinson Humphrey, Inc., an investment banker, to act as a financial advisor to the aforementioned Special Committee and, subsequently, the Company committed to a plan to sell its medical office building (“MOB”), Mid America Surgery Institute (“Mid America Surgery”).

In March 2019, the Company entered into an asset purchase agreement (“Sale Agreement”) with HCP Medical Office Buildings, LLC related to the sale of Mid America Surgery for a gross sales price of $15.4 million (“MOB Sale”), subject to certain pro-rations and other adjustments as described in the Sale Agreement. In May 2019, the Company completed the MOB Sale.

In March 2019, in connection with the exploration of strategic alternatives, the Company’s board of directors suspended regular cash distributions to stockholders effective April 1, 2019. In addition, in March 2019, the Company’s advisory agreement was amended and restated to eliminate acquisition fees and dispositions fees as well as to reduce the asset management fees (“AUM Fees”) to 0.40% per annum of average invested assets. The Company’s board of directors and its Advisor also agreed to terminate the Expense Support Agreement effective April 1, 2019; refer to Note 11. “Related Party Arrangements” for additional information. Moreover, effective April 1, 2019, the Advisor waived its rights to any AUM Fees going forward, with such waiver to remain in effect through the Company’s dissolution and liquidation.

As of September 30, 2019, the Company owned two seniors housing ~~properties~~communities that are leased to single member limited liability companies wholly-owned by TRS Holdings, ~~and engage~~a subsidiary of the Company. TRS Holdings has engaged independent third-party managers under management agreements to operate the properties as permitted under the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) ~~structures; however,~~structures.

In September 2019, the Company's stockholders approved a plan of dissolution ("Plan of Dissolution") as further described in Note 2. “Plan of Dissolution.” As a result of the adoption of the Plan of Dissolution, all of the Company's real estate properties are considered held for sale and the Company has adopted the liquidation basis of accounting ("Liquidation Basis of Accounting") effective September 1, 2019 as described in Note 4. "Net Assets in Liquidation." There can be no assurance that the Company will have a liquidity event in the near term.

As described in Note 1. “Organization,” the Plan of Dissolution approved by stockholders in September 2019 authorizes the Company to undertake the sale of all its assets, distribute the net proceeds after payment of all of the Company's liabilities to stockholders as liquidating distributions, wind-up the Company’s operations and dissolve the Company in accordance with Maryland law. The Company is permitted to provide for the payment of any unascertained or contingent liabilities and may do so by purchasing insurance, establishing a reserve fund or in other ways deemed necessary.

The Plan of Dissolution enables the Company to sell any and all of its assets without further approval of the stockholders and provides that liquidating distributions be made to the stockholders as determined by the board. Pursuant to applicable REIT rules, in order to be able to deduct liquidating distributions as dividends, the Company must distribute all of the net proceeds from the sale of its assets to stockholders by September 2021, which represents 24 months following the stockholders’ approval of the Plan of Dissolution. However, if the Company cannot sell its assets and pay its debts within 24 months, or if the board of directors and the Special Committee determine that it is otherwise advisable to do so, the Company may ~~also lease~~transfer and assign its ~~properties~~remaining assets to ~~third-party tenants under triple-net~~a liquidating trust. Upon such transfer and assignment, stockholders will receive interests in the liquidating trust. The liquidating trust will pay or ~~similar lease structures, where the tenant bears all or substantially~~provide for all of the ~~costs (including cost increases for real estate taxes, utilities, insurance~~Company’s liabilities and ~~ordinary repairs). Medical office, acute care~~distribute any remaining net proceeds from the sale of its assets to the holders of interests in the liquidating trust.

The dissolution process and ~~post-acute care properties will generally be leased on a triple-net, net or modified gross basis~~the amount and timing of liquidating distributions to ~~third-party tenants. In addition, the Company expects most investments will be wholly-owned, although, it may invest through partnerships with other entities where the Company believes~~stockholders involves risks and uncertainties. Accordingly, it is ~~appropriate~~not possible to predict the timing or aggregate amount which will ultimately be distributed to stockholders and ~~beneficial.~~ no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the accompanying condensed consolidated statement of net assets.

The Company expects to ~~invest in~~continue to qualify as a ~~combination~~REIT throughout the liquidation until such time as any remaining assets, if any, are transferred into a liquidating trust. The board of ~~stabilized assets, new property developments and properties which have not reached full stabilization. Finally,~~directors shall use commercially reasonable efforts to continue to cause the Company to maintain its REIT status, provided however, the board of directors may ~~invest~~elect to terminate the Company's status as a REIT if it determines that such termination would be in the best interest of the stockholders.

Basis of Presentation - As a result of the approval of the Plan of Dissolution by its stockholders in September 2019, the Company’s financial position and ~~originate mortgage, bridge or mezzanine loans or in entities that make investments similar to~~results of operations for the ~~foregoing investment types.~~nine months ended September 30, 2019 will be presented using two different presentations. The Company ~~would generally make loans~~adopted the Liquidation Basis of Accounting as of September 1, 2019 and for the periods subsequent to September 1, 2019. As a result, a new statement of financial position (Statement of Net Assets) is presented, which represents the ~~owners~~estimated amount of ~~properties to enable them to acquire land, buildings, or to develop property. In exchange, the owner generally grants~~cash that the Company expects to collect on disposal of its assets as it carries out its Plan of Dissolution. In addition, a ~~first lien or collateralized interest~~new statement of operations (Statement of Changes in ~~a participating mortgage collateralized by~~Net Assets) reflects any changes in net assets from the ~~property or by interests in~~original estimated values as of September 1, 2019 through the ~~entity that owns the property.~~most recent period presented.

All financial results and disclosures up through August 31, 2019, prior to adopting the Liquidation Basis of ~~Presentation~~Accounting, are presented based on a going concern basis (“Going Concern Basis”), which contemplated the realization of assets and ~~Consolidation —~~ liabilities in the normal course of business. As a result, the balance sheet as of December 31, 2018, and the statements of operations and the statements of cash flows for the eight months ended August 31, 2019 and the comparative nine months ended September 30, 2018 used the Going Concern Basis consistent with the presentation in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, the Operating Partnership and its other subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation Liquidation Basis (Post-Plan of Dissolution) – As a result of the approval of the Plan of Dissolution by its stockholders in September 2019, the Company adopted the Liquidation Basis of Accounting as of September 1, 2019 and for the periods subsequent to September 1, 2019 in accordance with generally accepted accounting principles of the United States (“GAAP”). Accordingly, as of September 1, 2019, the Company’s assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of cash that the Company will collect on disposal of its assets as it carries out the Plan of Dissolution. The liquidation value of the Company's operating properties is presented on an undiscounted basis. Estimated costs to dispose of its assets have been presented separately from the related assets. Liabilities are carried at their contractual amounts due or estimated settlement amounts.

The Company accrues costs and income that it expects to incur and earn through the end of liquidation to the extent it has a reasonable basis for estimation. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation in the accompanying condensed consolidated statement of net assets. Actual costs and income may differ from amounts reflected in the financial statements because of inherent uncertainty in estimating future events. These differences may be material. See Note 4. "Liability for Estimated Costs in Excess of Estimated Receipts During Liquidation" for further discussion. Actual costs incurred but unpaid as of September 30, 2019 are included in accounts payable and accrued liabilities, due to related parties and other liabilities in the accompanying condensed consolidated statement of net assets.

Net assets in liquidation represents the estimated liquidation value available to stockholders upon liquidation. Due to the uncertainty in the timing of the anticipated sale date(s) and the estimated cash flows, actual operating results and sale proceeds may differ materially from the amounts estimated.

Basis of Presentation - Going Concern Basis (Pre-Plan of Dissolution)- The accompanying unaudited condensed consolidated financial statements through August 31, 2019 have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by ~~generally accepted accounting principles in the United States (“GAAP”).~~GAAP. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which, in the opinion of management, are necessary for the fair statement of the Company’s operating results for the interim period presented. Operating results for the ~~quarter~~periods ended August 31, 2019 and ~~nine months ended~~ September 30, ~~2017 may not be indicative~~2018 were prepared on the going concern basis of accounting, which contemplates the ~~results that may be expected for~~realization of assets and liabilities in the ~~year ending December 31, 2017.~~normal course of business. Amounts as of December 31, ~~2016~~2018 included in the unaudited condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date but do not include all disclosures required by GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership and its other subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

~~Allocation of Purchase Price for Real Estate Acquisitions~~ — Upon acquisition of real estate, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets in order to determine whether the acquisition should be accounted for as an asset acquisition. If the substantially all threshold is not met, the Company then determines whether the acquisition meets the definition of a business (i.e. does it include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs).

The Company estimates the fair value of acquired tangible assets (consisting of land and improvements, building and improvements, and furniture, fixtures and equipment), intangible assets (consisting of in-place leases and above- or below-market leases) and liabilities assumed in order to allocate the purchase price. In estimating the fair value of the assets acquired and liabilities assumed, the Company considers information obtained about each property as a result of its due diligence and utilizes various valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, estimates of replacement costs net of depreciation and available market information. The fair value of the tangible assets of an acquired leased property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building.

The purchase price is allocated to in-place lease intangibles based on management’s evaluation of the specific characteristics of the acquired lease(s). Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, including estimates of lost rental income during the expected lease-up periods, and costs to execute similar leases such as leasing commissions, legal and other related expenses. Above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual rents to be paid pursuant to the lease and management’s estimate of the fair market lease rates for each in-place lease and may include assumptions for lease renewals of below-market leases.

~~Mortgages and Notes Payable~~ — Mortgages and notes payable are recorded at the stated principal amount and are generally collateralized by the Company’s property. Mortgages and notes payable assumed in connection with an acquisition are recorded at fair market value as of the date of the acquisition.

~~Loan Costs —~~ Loan costs paid in connection with obtaining indebtedness are deferred and amortized over the estimated life of the indebtedness using the effective interest method. Loan costs are presented as a direct deduction from the carrying amount of the related indebtedness in the balance sheet.

~~Depreciation and Amortization~~ — Real estate costs related to the acquisition and improvement of properties are capitalized. Repair and maintenance costs are charged to expense as incurred and significant costs incurred for replacements and improvements are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Real estate assets are stated at cost less accumulated depreciation, which is computed using the straight-line method of accounting over the estimated useful lives of the related assets. Buildings and improvements are depreciated on the straight-line method over their estimated useful lives, which generally are limited to 39 and 15 years, respectively, or the remaining life of the ground lease. Furniture, fixtures and equipment are depreciated on the straight-line method over their estimated useful lives, which generally range between three and five years.

Amortization of intangible assets is computed using the straight-line method of accounting over the shorter of the respective lease term or estimated useful life. If a lease is terminated or modified prior to its scheduled expiration, the Company recognizes a loss on lease termination related to the unamortized lease-related costs not deemed to be recoverable.

~~Impairment of Real Estate Assets~~ — Real estate assets are reviewed on an ongoing basis to determine whether there are any indicators, including property operating performance and general market conditions, that the value of the real estate properties (including any related amortizable intangible assets or liabilities) may be impaired. To assess if an asset group is potentially impaired, management compares the estimated current and projected undiscounted cash flows, including estimated net sales proceeds, of the asset group over its remaining useful life to the net carrying value of the asset group. Such cash flow projections consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. In the event that the carrying value exceeds the undiscounted operating cash flows, the Company would recognize an impairment provision to adjust the carrying value of the asset group to the estimated fair value of the asset group.

~~Revenue Recognition~~ — Resident fees and services are recorded in the period in which the services are performed and generally consist of (1) monthly rent, which covers occupancy of the residents’ unit as well as basic services, such as utilities, meals and certain housekeeping services, and (2) service level charges, ~~such as assisted living care, memory care and ancillary services. Resident agreements are generally short-term in nature,~~ ~~billed monthly in advance~~ ~~and cancelable by the residents with a 30-day notice. Resident agreements may require the payment of upfront fees prior to moving into the community with any non-refundable portion of such fees~~ ~~being recorded as deferred revenue and amortized over the estimated resident stay.~~

~~Shares Based Payments to Non-Employees~~ — In connection with an expense support arrangement described in Note 6. “Related Party Arrangements,” the Company may issue forfeitable restricted Class A shares of common stock (“Restricted Stock”) to the Advisor on an annual basis in lieu of cash for services rendered, in the event that the Company does not achieve established distribution coverage targets.

The Restricted Stock is forfeited if shareholders do not ultimately receive their original invested capital back with at least a 6% annualized return of investment upon a future liquidity or disposition event of the Company. Upon issuance of Restricted Stock, the Company measures the fair value at its then-current lowest aggregate fair value pursuant to Accounting Standards Codification (“ASC”) 505-50. On the date in which the Advisor satisfies the vesting criteria, the Company remeasures the fair value of the Restricted Stock pursuant to ASC 505-50 and records expense equal to the difference between the original fair value and that of the remeasurement date. In addition, given that performance is outside the control of the Advisor and involves both market conditions and counterparty performance conditions, the shares are treated as unissued for accounting purposes and the Company only includes the Restricted Stock in the calculation of diluted earnings per share to the extent their effect is dilutive and the vesting conditions have been satisfied as of the reporting date.

~~Pursuant~~Assets Held for Sale, net and Discontinued Operations — The Company determines to classify a property as held for sale once management has the authority to approve and commits to a plan to sell the property, the property is available for immediate sale, there is an active program to locate a buyer, the sale of the property is probable and the transfer of the property is expected to occur within one year. Upon the determination to classify a property as held for sale, the Company ceases recording further depreciation and amortization relating to the ~~amended expense support agreement,~~associated assets and those assets are measured at the ~~Advisor shall be~~lower of its carrying amount or fair value less disposition costs and are presented separately in the ~~record owner of the Restricted Stock until the shares of common stock are sold or otherwise disposed of, and shall be entitled to~~consolidated balance sheets for all ~~of the rights of a stockholder of~~periods presented. In addition, the Company ~~including, without limitation,~~classifies assets held for sale as discontinued operations if the ~~right to vote such shares (to the extent permitted by~~disposal represents a strategic shift that has (or will have) a major effect on the Company’s ~~articles~~operations and financial results. For any disposal(s) qualifying as discontinued operations, the Company allocates interest expense and loan cost amortization thatdirectly relates to any mortgage loan(s) collateralized by properties classified as discontinued operations.

Reclassifications – Certain amounts in the prior year’s condensed consolidated balance sheet, statement of ~~incorporation)~~operations and ~~receive all~~statement of cash ~~distributions and stock dividends paid with respect~~flows have been reclassified to ~~such shares. All cash distributions and stock dividends paid~~conform to the ~~Advisor~~current year’s presentation, primarily related to the Restricted Stock shares shall vest immediately and will not be subject to forfeiture. The Company recognizes expense related to the cash distributions and stock dividends related to the Restricted Stock shares.

~~Segment Information~~ — ~~Operating segments are components~~classification of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company has determined that it operates in one operating segment, real estate ownership. The Company’s chief operating decision maker evaluates the Company’s MOB property as held for sale and discontinued operations, from a number of different operational perspectives including, but not limited to, a property-by-property basis and by tenant or operator. The Company derives all significant revenues from a single reportable operating segment of business, healthcare real estate, regardless ofwith no effect on the type (seniors housing, medical office, etc.) or ownership structure (leased or managed). Accordingly, the Company does not report segment information; nevertheless, management periodically evaluates whether the Company continues to have one single reportable segment of business.other previously reported consolidated financial statements.

Adopted Accounting Pronouncements— In ~~August~~February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which made eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU further clarified how the predominance principle should be applied to cash receipts and payments relating to more than one class of cash flows. The ASU is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2017. The ASU is to be applied retrospectively for each period presented. Subsequently, in November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which modifies the presentation of the statement of cash flows and requires reconciliation to the overall change in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. As a result, the statement of cash flows will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents. The ASU is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2017. The ASU is to be applied retrospectively for each period presented. The Company early adopted both ASU 2016-15 and ASU 2016-18 on January 1, 2017; the adoption of which impacts the Company’s presentation of its statement of cash flows for all periods presented, but will not have an impact on the Company’s condensed consolidated balance sheets or condensed consolidated statements of operations.

In October 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810): Interests Held Through Related Parties that are under Common Control,” which requires an entity to consider its indirect interests held by related parties that are under common control on a proportionate basis when evaluating whether the entity is a primary beneficiary of a VIE. The ASU is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2016. The Company has adopted ASU 2016-17 on January 1, 2017; the adoption of which did not have a material impact to its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business and provides a framework by which to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2017. The ASU is to be applied prospectively for each period presented. The Company early adopted ASU 2017-01 on January 1, 2017; the adoption of which did have a material impact on the Company’s condensed consolidated financial statements as a result of Summer Vista Assisted Living being considered an asset acquisition.

~~Recent~~ Accounting ~~Pronouncements~~ — In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” as a new ASC topic (Topic 606). The core principle of this ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU further provides guidance for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, lease contracts). The FASB subsequently issued ASU 2015-14 to defer the effective date of ASU 2014-09 until annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with earlier adoption permitted. In addition, in December 2016, the FASB issued ASU 2016-20, which provides technical corrections and improvements to ASC 606 based on questions that stakeholders have raised while working through the implementation. ASC 606 can be adopted using one of two retrospective transition methods: (i) retrospectively to each prior reporting period presented or (ii) as a cumulative-effect adjustment as of the date of adoption. The Company continues to execute on its implementation plan for ASC 606; specifically, as it relates to the allocation of consideration to different revenue streams within a given contract and the impact that the adoption of ASC 606 will have on the Company’s financial statement disclosures. The Company expects to use the modified retrospective approach as its transition method. The Company does not expect the adoption of this ASU to have a material impact (if any) on the amounts and timing of its revenue recognition.

~~In February 2016, the FASB issued ASU~~Standard Update (“ASU”) 2016-02, “Leases (Topic 842): Accounting for Leases,” which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The ASU requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The ASU further modifies lessors’ classification criteria for leases and the accounting for sales-type and direct financing leases. The ASU ~~will~~ also ~~require~~requires qualitative and quantitative disclosures designed to give financial statement users additional information on the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” which includes a practical expedient for lessors that allows them to elect to not separate lease and non-lease components in a contract for the purpose of revenue recognition and disclosure if certain criteria are met. The Company elected the practical expedient and applied the guidance to all of the leases that qualified under the established criteria. In December 2018, the FASB issued ASU is2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors,” which addressed challenges encountered in determining certain lessor costs paid by the lessee directly to third parties by allowing lessors to exclude these costs from its variable lease payments. This amendment did not have a material impact on the Company’s financial statements and related disclosures as it conformed Accounting Standard Codification (“ASC”) 842 to the Company’s historical accounting under ASC 840. In March 2019, the FASB issued ASU 2019-01, “Leases (Topic 842): Codification Improvements,” which clarified the transition guidance related to interim disclosure requirements in the year of adoption. All of the ASC 842 ASUs are effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, ~~2018 with early adoption permitted.~~ 2018.

The ~~ASU is to be applied~~Company adopted these ASUs on January 1, 2019 using a modified retrospective ~~approach. The Company is currently evaluating~~approach, the adoption of these ASUs did not have a material impact ~~this ASU will have~~ on the Company’s ~~condensed~~consolidated results of operations or cash flows. However, the adoption of these ASUs did impact the Company’s consolidated financial ~~statements; specifically,~~position for arrangements such as ~~it relates to arrangements~~ground or other leases in which the Company is the ~~lessee~~lessee. More specifically, the adoption of ASC 842 resulted in the Company recording operating lease assets and liabilities on January 1, 2019. The following table provides additional details by financial statement line item of the ~~required~~adjusted presentation in the Company’s ~~condensed~~ consolidated financial ~~position and related financial statement disclosures.~~position:

In ~~August 2017,~~June 2018, the FASB issued ASU ~~2017-12 “Derivatives and Hedging~~2018-07, “Compensation – Stock Compensation (Topic ~~815)~~718): ~~Targeted~~ Improvements to Nonemployee Share-Based Payment Accounting, ~~for Hedging Activities,~~” which ~~amended~~expands the ~~hedge accounting model~~scope to ~~better reflect an entity’s risk management activities.~~include share-based payment transactions for acquiring goods and services from nonemployees. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payments. The amendments also clarify that this ASU ~~expands an entities ability~~does not apply to ~~hedge nonfinancial and financial risk components~~share-based payments used to provide financing to the issuer or awards granted in conjunction with selling of goods or services to customers as well as reduce the complexity related to fair value hedges of interest rate risk. The ASU further eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair valuea part of a ~~hedging instrument to be presented in the same income statement line as the hedged item.~~contract accounted for under Revenue from Contracts with Customers (Topic 606). The ASU is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2018. The Company ~~does not expect~~adopted this ASU prospectively on January 1, 2019; the adoption of ~~this ASU to~~which did not have a material impact on the Company’s consolidated results of operations or cash ~~flows until such time as~~flows.

The Liquidation Basis of Accounting requires the Company ~~enters into interest protection arrangements.~~to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the Plan of Dissolution. The Company currently estimates that it will have costs in excess of estimated receipts during the liquidation. These amounts can vary significantly due to, among other things, the timing and estimates for occupancy, the timing of any property sale(s), direct costs incurred to complete the sale(s), the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of operations. These costs are estimated and are anticipated to be paid out over the liquidation period.

Upon transition to the Liquidation Basis of Accounting as of September 1, 2019, the Company accrued the following estimated receipts and costs expected to be incurred during liquidation:

The change in the liability for estimated costs in excess of estimated receipts during liquidation as of September 30, 2019 is as follows:

~~During~~The following is a reconciliation of stockholders’ equity under the Going Concern Basis to net assets in liquidation under the Liquidation Basis of Accounting as of September 1, 2019:

Net assets in liquidation decreased by approximately $118,000 during the period from September 1, 2019 through September 30, 2019. The primary reason for the decrease in net assets was due to net outflows for corporate expenditures exceeding net inflows from real estate investments.

Net assets in liquidation include projections of costs and expenses to be incurred during the period required to complete the Plan of Dissolution. There is inherent uncertainty with these projections, and the projections could change materially based on the timing of any property sale(s), the performance of the underlying properties and any changes in the underlying assumptions of the projected cash flows.

Prior to adopting the Liquidation Basis of Accounting, the following table presents disaggregated revenue related to resident fees and services for the eight months ended August 31, 2019 and nine months ended September 30, 2017, the Company acquired Summer Vista Assisted Living (“Summer Vista”), a seniors housing community in Pensacola, Florida, for a purchase price of approximately $21.4 million. In connection therewith, the Company incurred approximately $0.6 million of acquisition fees and expenses, which have been capitalized as a component of the cost of the assets acquired and allocated on a relative fair value basis.2018:

The seniors housing community features 89 residential units and is operated under a RIDEA structure pursuant to a newly negotiated five-year property management agreement with SRI Management, LLC (“Superior Residences”), the property’s existing third-party property manager who has managed the property since it opened in February 2016.

~~The following summarizes the purchase price allocation for Summer Vista, and the related assets acquired and liabilities assumed in connection with the acquisition:~~

~~The~~As a result of adopting Liquidation Basis of Accounting in September 2019, real estate assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of cash that the Company expects to collect on the disposal of its assets as it carries out its Plan of Dissolution. Prior to adopting Liquidation Basis of Accounting, the gross carrying amount and accumulated depreciation of the Company’s real estate ~~investment properties~~assets as of ~~September 30, 2017~~December 31, 2018, excluding assets held for sale, are as follows:

	September 30,
	2017
Land and land improvements	$	2,302,242	$	4,075,733
Building and building improvements		17,611,786	38,700,052
Furniture, fixtures and equipment		883,283	1,872,959
Less: accumulated depreciation		(389,884)	(1,679,564)
Real estate investment properties, net	$	20,407,427	$	42,969,180

Depreciation expense on the Company’s real estate investment ~~properties,~~properties, net was approximately ~~$0.2~~$1.1 million and ~~$0.4~~$0.7 million for the ~~quarter~~eight months ended August 31, 2019 and nine months ended September 30, ~~2017, respectively.~~

~~The gross carrying amount~~2018, respectively, and ~~accumulated amortization~~approximately $0.3 million for each of the ~~Company’s intangibles as of~~two months ended August 31, 2019 and the quarter ended September 30, ~~2017 are as follows:~~2018, respectively.

~~Amortization~~Prior to adopting Liquidation Basis of Accounting, the gross carrying amount and accumulated amortization of the Company’s intangible assets as of December 31, 2018, excluding assets held for sale, are as follows:

For the two months and eight months ended August 31, 2019, amortization on the Company’s intangibles was approximately ~~$0.1~~$0.2 million and ~~$0.3~~$0.7 million, ~~for the quarter and nine months ended September 30, 2017,~~ respectively, all of which was included in depreciation and amortization. For the quarter and nine months ended September 30, 2018, amortization on the Company’s intangibles was approximately $0.2 million and $0.4 million, respectively, all of which was included in depreciation and amortization.

Prior to adopting the Liquidation Basis of Accounting, the Company committed to a plan to sell its MOB, Mid America Surgery, and classified the property as held for sale. The Company believed the sale of Mid America Surgery would cause a strategic shift in the Company’s operations and, therefore, classified the corresponding revenues and expenses for its MOB property as discontinued operations. In March 2019, the Company entered into a Sale Agreement with HCP Medical Office Buildings, LLC related to the MOB Sale. In May 2019, the Company completed the MOB Sale and recognized a gain on the sale of approximately $1.6 million for financial reporting purposes.

As of December 31, 2018, the amounts classified as assets held for sale and the liabilities associated with those assets held for sale consisted of the following:

The following table is a summary of the Company’s income from discontinued operations for the two months and eight months ended August 31, 2019 and the quarter and nine months ended September 30, 2018:

As of September 30, 2019, all of the Company’s real estate assets are considered held for sale due to the adoption of Liquidation Basis of Accounting effective September 1, 2019, as discussed above in Note 3. “Summary of Significant Accounting Policies.”

In May 2019, in connection with the MOB Sale, the Company strategically paid down approximately $12.8 million of debt secured by its Summer Vista Assisted Living (“Summer Vista”) property. In connection therewith, the Company wrote-off approximately $0.1 million in unamortized loan costs as a loss on the early extinguishment of debt, which is included in interest expense and loan cost amortization in the accompanying condensed consolidated statements of ~~operations.~~ operations for the eight months ended August 31, 2019.

The ~~weighted average remaining useful life~~following table provides details of the Company’s ~~intangibles was 2.0 years~~indebtedness as of September 30, ~~2017.~~2019 and December 31, 2018:

The fair market value of the Company’s mortgage loans was approximately $6.1 million and $18.9 million as of September 30, 2019 and December 31, 2018, respectively, which is based on then-current rates and spreads the Company would expect to obtain for similar borrowings. Since this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair values is categorized as Level 3 on the three-level valuation hierarchy.

The ~~estimated~~following is a schedule of future ~~amortization on~~principal payments and maturity for the Company’s ~~intangibles~~mortgage loans for the remainder of ~~2017,~~2019, each of the next four years and thereafter, in the aggregate, as of September 30, ~~2017 is as follows:~~2019:

2017	$	128,651
2018		514,603

2019		385,951	$	—
2020	―			31,849
2021	―			85,947
2022				1,192,460
2023				4,839,744
Thereafter	―			—
	$	1,029,205	$	6,150,000

The Company is externally advised and has no direct employees. All of the Company’s executive officers are executive officers, or on the board of managers, of the Advisor. In ~~addition, certain directors and officers hold similar positions with CNL Securities Corp., the Dealer Manager of the Offering and a wholly owned subsidiary of CNL. In~~ connection with services provided to the Company, affiliates are entitled to the following fees:

Dealer Manager — ~~From~~Through the ~~commencement~~termination of ~~our~~the Offering ~~through March 19, 2017,~~in October 2018, the Dealer Manager received a selling commission of up to 7% of the sale price for each Class A share and 2% of the sale price for each Class T share sold in the Primary Offering, all or a portion of which was reallowed to participating broker dealers. In addition, the Dealer Manager received a dealer manager fee in an amount equal to 2.75% of the price of each Class A share or Class T share sold in the Primary Offering, all or a portion of which was reallowed to participating broker dealers. In March 2017, the Company entered into an amended and restated dealer manager agreement, which reduces the maximum combined sales commissions, dealer manager fees and ongoing annual distribution and stockholder servicing fees payable to the Dealer Manager and participating broker-dealers from 9.75% to 8.5% of the gross proceeds for each share class of common stock sold in the Primary Offering. Effective March 20, 2017 and subsequently, the Dealer Manager will receive a combined selling commission and dealer manager fee of up to 8.5% of the sale price for each Class A share and up to ~~4.5%~~4.75% of the sale price for each Class T share sold in the Primary Offering, all or a portion of which ~~may~~could be reallowed to participating broker dealers. In addition, ~~effective March 20, 2017,~~ for Class T shares sold in the Primary Offering, the Dealer Manager ~~may~~could choose the respective amounts of the commission and dealer manager fee, provided that the selling commission ~~shall~~did not exceed 3.0% of the gross proceeds from the completed sale of such Class T shares. Effective March 20, 2017, the Company and the Dealer Manager also agreed that the Company will cease paying the annual distribution and stockholder servicing fee of 1.00% and 0.50%, respectively (described further below), if the total underwriting compensation, comprised of the dealer manager fees, selling commissions, and annual distribution and stockholder servicing fees, payable to broker-dealers in connection with the sale of Class T and Class I shares in the Primary Offering exceeds 8.5% of the gross offering price of such Class T or Class I shares, respectively. Prior to March 20, 2017, the 8.5% cap was set as 9.75%. Separately, the Company’s stockholders approved an amendment to the Company’s charter to adjust the conversion feature of Class T and Class I shares to match this new 8.5% cap. To the extent stockholders that purchased Class A shares on the terms in effect prior to March 20, 2017 would have paid lower selling commissions and/or dealer manager fees on the terms in effect subsequently, the Advisor, or one of its affiliates, issued them a refund in March 2017. To the extent participating broker-dealers that sold Class T or Class I shares on the terms in effect prior to March 20, 2017 were entitled to greater ongoing annual distribution and stockholder servicing fees with respect to such sales compared to sales made on the terms in effect subsequently, the Advisor paid this liability on behalf of the Company. As a result of the overall reduction in underwriting compensation, the Company recorded an approximate $0.1 million reduction in its liability related to annual distribution and stockholder servicing fees for Class T and Class I shares sold through March 19, 2017.

The Company ~~has and will continue to pay~~paid a distribution and stockholder servicing fee, subject to certain underwriting compensation limits, with respect to the Class T and Class I shares sold in the Primary Offering in an annual amount equal to 1% and 0.50%, respectively, of the ~~current~~then-current gross offering price per Class T or Class I share, respectively, or if the Company is no longer offering shares in a public offering, the estimated per share value per Class T or Class I share, respectively. The annual distribution and stockholder servicing fee will continue to be calculated as a percentage of the current gross offering price per Class T or Class I share until the Company reports an estimated per share value following the termination of the Primary Offering, at which point the distribution fee will be calculated based on the new estimated per share value, until such underwriting compensation limits are met or the shares are converted to Class A shares pursuant to the terms of the securities.share.

The Company ~~records~~recorded the annual distribution and stockholder servicing fees as a reduction to capital in excess of par value and ~~measures~~measured the related liability in an amount equal to the maximum fees owed in relation to the Class T and Class I shares on the shares’ issuance date. The liability iswas relieved over time, as the fees ~~are~~were paid to the Dealer ~~Manager, or is adjusted if~~Manager. In connection with the ~~fees are no longer owed on any~~close of the Offering effective October 1, 2018, certain underwriting compensation limits were met and, effective October 31, 2018, each Class T orand Class I share ~~that is redeemed or repurchased, as well as upon~~automatically converted into a Class A share pursuant to the earliest occurrence of: (i) a listing on a national securities exchange; (ii) a merger or consolidation of the Company with or into another entity, or the sale or other disposition of all or substantially allterms of the Company’s ~~assets; (iii) after~~charter. The Class T and Class I shares converted into Class A shares on a one-for-one basis because the ~~termination~~then-current estimated net asset value (“NAV”) per share of $10.06 was the same for all share classes. Effective October 31, 2018, Class T and Class I shares were no longer subject to class specific expenses upon conversion into Class A shares. The Company’s obligation to pay the remaining distribution and stockholder servicing fees liability of approximately $1.4 million to the Dealer Manager ceased effective October 31, 2018 upon the conversion of the ~~Primary Offering in which the initial~~Class T and Class I shares in the account were sold, the end of the month in which total underwriting compensation paid in the Primary Offering is not less than 10% of the gross proceeds from all share classes of the Primary Offering; (iv) the end of the month in which the total underwriting compensation paid in a Primary Offering with respect to shares purchased in a Primary Offering is not less than 8.5% of the gross offering price of those shares purchased in such Primary Offering (excluding shares purchased through the Reinvestment Plan and those received as stock dividends); or (v) any other conditions described in the Company’s prospectus.into Class A Shares.

CNL Capital Markets, ~~Corp.~~LLC — The Company will pay CNL Capital Markets, ~~Corp.,~~LLC, an affiliate of CNL, an annual fee payable monthly based on the average number of total investor accounts that ~~will be~~are open during the term of the capital markets service agreement pursuant to which certain administrative services are provided to the Company. These services may include, but are not limited to, the facilitation and coordination of the transfer agent’s activities, client services and administrative call center activities, financial advisor administrative correspondence services, material distribution services and various reporting and troubleshooting activities.

Advisor — ~~The~~Pursuant to the Company’s advisory agreement, dated as of March 2, 2016, the Company ~~will pay~~paid the Advisor ~~a monthly asset management fee~~AUM Fees in an amount equal to ~~0.0667%~~0.80% per annum of ~~the monthly~~ average ~~of the sum of~~invested assets. In March 2019, the Company’s advisory agreement was amended and the Operating Partnership’s respective daily real estate asset value, without duplication, plus the outstanding principal amount of any loans made, plus the amount invested in other permitted investments. For this purpose, “real estate asset value” equals the amount invested in wholly-owned properties, determined on the basis of cost, and in the case of properties owned by any joint venture or partnership in which the Company is a co-venturer or partner the portion of the cost of such properties paid by the Company, exclusive ofrestated to eliminate acquisition fees and ~~acquisition expenses and will not be reduced for any recognized impairment. Any recognized impairment loss will not~~dispositions fees as well as to reduce the ~~real estate asset value for~~AUM Fees to 0.40% per annum of average invested assets. The reduced AUM Fees were further subject and subordinate to an agreed upon hurdle relating to the ~~purposes of calculating the asset management fee. The asset management fee, which will not exceed fees which are competitive for similar services~~total operating expenses (as described in the ~~same geographic area, may or may not be taken, in whole or in part as~~amended and restated advisory agreement) of the Company, though to ~~any year, in~~ the ~~Advisor’s sole discretion. All or~~extent any portion of the ~~asset management fee~~AUM Fees are not ~~taken~~paid as a result of total operating expenses exceeding the prescribed limits, it may be recovered by the Advisor if certain Company performance thresholds are subsequently met. The Company’s board of directors approved renewing the amended and restated advisory agreement through March 2020. Effective as of April 1, 2019, the Advisor waived its rights to any ~~fiscal year shall be deferred without interest and may be taken~~AUM Fees going forward, with such waiver to remain in ~~such other fiscal year as the Advisor shall determine.~~

The Company will pay the Advisor a construction management fee of up to 1% of hard and soft costs associated with the initial construction or renovation of a property, or with the management and oversight of expansion projects and other capital improvements, in those cases in which the value of the construction, renovation, expansion or improvements exceeds (i) 10% of the initial purchase price of the property and (ii) $1 million in which case such fee will be due and payable as draws are funded for such projects.

The Advisor will receive an investment services fee of 2.25% of the purchase price of properties and funds advanced for loans or the amount invested in the case of other assets for services in connection with the selection, evaluation, structure and purchase of assets. No investment services fee will be paid to the Advisor in connection witheffect through the Company’s ~~purchase of securities.~~dissolution and liquidation.

The Advisor, its affiliates and related parties also are entitled to reimbursement of certain operating expenses in connection with their provision of services to the Company, including personnel costs, subject to the limitation that the Company will not reimburse the Advisor for any amount by which operating expenses exceed the greater of 2% of its average invested assets or 25% of its net income in any ~~expense year~~four consecutive fiscal quarters (“Expense Year”) unless approved by the independent directors. ~~The Company commenced its Primary Offering in March 2016 and made its first investment in March 2017.~~ For the ~~expense year~~Expense Year ended September 30, ~~2017,~~2019, the Company’s total operating expenses were in excess of this limitation by approximately ~~$0.6~~$35,000. As of September 30, 2019, the Company had received cumulative approvals from its independent directors for total operating expenses in excess of this limitation of approximately $0.9 million. The Company’s independent directors determined that the higher relationship of operating expenses to average invested assets for the Expense Year ended September 30, 2019, was justified based on the Company being in the early stages of raising and deploying capital and the limited number of investments to date, both of which were impacted by the downtime required to modify the dealer manager agreement to reduce overall underwriting compensation as discussed above, andgiven the cost of operating a public ~~company.~~

~~The Advisor will pay all other organizational~~company and ~~offering expenses incurred~~the MOB Sale undertaken in the second quarter of 2019 in connection with the ~~formation~~exploration of strategic alternatives, which further reduced the Company’s already limited number of investments.

For the nine months ended September 30, 2019, the Company ~~without reimbursement~~paid cash distributions of approximately $38,000 to the Advisor related to the Class A common stock held by the ~~Company. These expenses include, but are not limited~~Advisor. The Company suspended regular cash distributions to ~~Security~~stockholders effective April 1, 2019 and Exchange Commission (“SEC”) registration fees, Financial Industry Regulatory Authority (“FINRA”) filing fees, printing and mailing expenses, blue sky fees and expenses, legal fees and expenses, accounting fees and expenses, advertising and sales literature, transfer agent fees, due diligence expenses, personnel costs associated with processing investor subscriptions, escrow fees and other administrative expenses ofthere were no cash distributions declared subsequent to the ~~Offering.~~

suspension. In addition, the Company discontinued its stock dividends in October 2018 so there were no stock dividends declared subsequent to the suspension. For the quarter and nine months ended September 30, ~~2017,~~2018, the Company paid cash distributions of approximately ~~$40,000~~$38,000 and ~~$108,000,~~$114,000, respectively, and issued stock dividends of approximately ~~800~~1,000 shares and ~~3,200~~2,000 shares, respectively, to the Advisor related to the Class A common stock held by the Advisor.

Pursuant to an expense support arrangement, the Advisor ~~has~~ agreed to accept payment in ~~Restricted Stock~~restricted stock in lieu of cash for services rendered, in the event that the Company ~~does~~did not achieve established distribution coverage targets (“Expense Support Agreement”). Under the terms of the Expense Support Agreement, for each quarter within a calendar expense support year, the Company will record a proportional estimate of the cumulative year-to-date period based on an estimate of the annual expense support expected for the calendar expense support year. In exchange for services rendered and in consideration of the expense support provided under this arrangement, the Company ~~shall issue,~~issued, following each determination date, a number of shares of ~~Restricted Stock~~restricted stock equal to the quotient of the expense support amount provided by the Advisor for the preceding year divided by the board of directors’ most recent determination of ~~net asset value~~NAV per share of the Class A common shares ~~if the board has made such a determination, or otherwise the most recent public offering price per Class A common share,~~ on the terms and conditions and subject to the restrictions set forth in the Expense Support Agreement. The ~~Restricted Stock~~restricted stock is subordinated and forfeited to the extent that shareholders do not receive a Priority Return on their Invested Capital (as such terms are defined in the Company’s ~~prospectus)~~advisory agreement), excluding for the purposes of calculating this threshold any shares of ~~Restricted Stock~~restricted stock owned by the Advisor. In March 2019, the Company’s board of directors and the Advisor agreed to terminate the Expense Support Agreement effective April 1, 2019. Any restricted stock shares granted to the Advisor under the Expense

Support Agreement shall continue to be held by the Advisor, subject to the vesting and forfeiture provisions of the Expense Support Agreement which survive termination.

The following fees for services rendered ~~are expected to be~~were settled in the form of ~~Restricted Stock~~restricted stock pursuant to the Expense Support Agreement for the quarter and nine months ended September 30, ~~2017~~2019 and 2018 and cumulatively ~~as of September 30, 2017:~~through the termination date effective April 1, 2019:

16The fees payable through the termination of the Offering in October 2018 to the Dealer Manager for the quarter and nine months ended September 30, 2019 and 2018, and related amounts unpaid as of September 30, 2019 and December 31, 2018 were as follows:

The ~~fees payable to the Dealer Manager for the quarter and nine months ended September 30, 2017 and 2016, and related amounts unpaid as of September 30, 2017 and December 31, 2016 are as follows:~~

~~The fees and~~ expenses incurred by and reimbursable to the Company’s related parties, including amounts included in income from discontinued operations, for the quarter and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, and related amounts unpaid as of September 30, ~~2017~~2019 and December 31, ~~2016~~2018 are as follows:

	Quarter Ended				Nine Months Ended				Unpaid amounts as of ⁽¹⁾				Quarter Ended				Nine Months Ended				Unpaid amounts as of ⁽¹⁾
	September 30,				September 30,				September 30,		December 31,		September 30,				September 30,				September 30,		December 31,
	2017		2016		2017		2016		2017		2016		2019		2018		2019		2018		2019		2018
Reimbursable expenses:
Operating expenses ⁽³⁾	$	221,415	$	132,098	$	652,824	$	132,098	$	74,560		73,545	$	170,893	$	227,393	$	580,462	$	754,188	$	78,079	$	85,902
Acquisition fees and expenses		5,816	―			27,705	―		―		―		―			8,680	―			10,183	―			—
	$	227,231	$	132,098	$	680,529	$	132,098	$	74,560	$	73,545		170,893		236,073		580,462		764,371		78,079		85,902
Investment Service Fees⁽⁴⁾	―		―			481,500	―		―		―
Asset Management Fees⁽⁵⁾		42,800	―			86,060	―		―		―
Asset management fees ⁽⁴⁾														45,650		87,488		196,136		229,088	―			—
Investment services fee ⁽⁵⁾													―			545,625	―			545,625	―			—
	$	270,031	$	132,098	$	1,248,089	$	132,098	$	74,560	$	73,545	$	216,543	$	869,186	$	776,598	$	1,539,084	$	78,079	$	85,902

In ~~March 2017, in~~ connection with adopting the ~~Summer Vista acquisition,~~Liquidation Basis of Accounting, the Company ~~entered into a secured mortgage loan agreement with Synovus Bank in~~accrues costs it expects to incur through the amount of approximately $16.1 million (“Summer Vista Loan”). The Summer Vista Loan matures on April 1, 2022, subject to two one-year extension options provided certain conditions are met. The Summer Vista Loan accrues interest at a rate equal to the sumend of the London Interbank Offered Rate (“LIBOR”) plus 2.85%, with monthly payments of interest only for the first 18 months of the term of the Summer Vista Loan, and monthly payments of interest and principal for the remaining 42 months of the term of the Summer Vista Loan using a 30-year amortization period with the remaining principal balance payable at maturity. Prior to April 1, 2019, the interest payable on the Summer Vista Loan may be reduced to a rate equal to the sum of LIBOR plus 2.70% if, at such time, no event of default exists, certain debt yield thresholds are met, and at least $2,150,000 of the original outstanding principal balance of the Summer Vista Loan has been paid. The Company may prepay, without a penalty, all or any part of the Summer Vista Loan at any time.

~~The following table provides details of the Company’s indebtedness as~~liquidation. As of September 30, ~~2017 and December 31, 2016:~~

~~The fair market value of the mortgage and notes payable was approximately $16.4 million as of September 30, 2017, which is based on current rates and spreads~~2019, the Company ~~would expect to obtain~~has accrued Advisor personnel expenses of approximately $0.1 million and included in its liability for ~~similar borrowings. Since this methodology includes inputs that are less observable by the public and are not necessarily reflected~~estimated costs in ~~active markets, the measurement~~excess of ~~the~~ estimated ~~fair values is categorized as Level 3 on the three-level valuation hierarchy.~~

The following is a schedule of future principal payments and maturity for the Company’s indebtedness for the remainder of 2017, each of the next four years and thereafter, in the aggregate, as of September 30, 2017:

Subscription Proceeds — In October 2018, in light of the Company’s decision to terminate its Offering, the Company suspended the Reinvestment Plan and the Redemption Plan. As ofsuch, there were no subscriptions proceeds received for either the quarter or nine months ended September 30, ~~2017,~~2019. For the quarter and nine months ended September 30, 2018, the Company ~~had~~ received ~~aggregate~~ subscription proceeds of approximately ~~$23.3~~$7.2 million ~~(2.2~~(0.7 million shares) and $19.8 million (2.0 million shares), ~~which includes $200,000 (20,000 shares) of subscription proceeds received from the Advisor prior to the commencement of the~~respectively, through its Offering ~~approximately $251,250 (25,125 shares) of subscription proceeds received in connection with a private placement made in 2016~~ and ~~approximately $221,000 (22,100 shares) of subscription proceeds pursuant to the~~ Reinvestment Plan.

Distributions — In October 2018, in light of the Company’s decision to terminate its Offering, the Company suspended the Reinvestment Plan and discontinued the issuance of stock dividends concurrently. In March 2019, in connection with the Company’s strategic alternatives discussed in Note 1. “Organization,” the Company’s board of directors suspended regular cash distributions to stockholders effective April 1, 2019. As such, there were no cash distributions declared subsequent to April 1, 2019. For the eight months ended August 31, 2019, the Company declared cash distributions of approximately $0.7 million, all of which were paid in cash to stockholders. None of the cash distributions were reinvested during 2019 due to the suspension of the Reinvestment Plan effective October 2018. For the quarter and nine months ended September 30, ~~2017,~~2018, the Company declared ~~and paid~~ cash distributions of approximately ~~$477,400,~~$0.6 million and $1.4 million, respectively, of which ~~were net~~approximately $0.3 million and $0.8 million, respectively, was reinvested pursuant to the Reinvestment Plan.

Redemptions — In October 2018, in light of ~~class-specific expenses. In addition,~~the Company’s decision to terminate its Offering, the Company ~~declared~~suspended the Reinvestment Plan and ~~issued stock dividends of approximately 14,300 shares~~the Redemption Plan. As such, there were no requests for the redemption of common stock ~~during~~subsequent to the suspension in October 2018. During the quarter and nine months ended September 30, ~~2017.~~

~~For~~2018, the nine months ended September 30, 2017, 100% of the cash distributions paid to stockholders were considered a return of capital to stockholders for federal income tax purposes. The distribution of new common shares to recipients is non-taxable. No amounts distributed to stockholdersCompany received requests for the nine months ended September 30, 2017 were required to be or have been treated by the Company as a return of capital for purposes of calculating the stockholders’ return on their invested capital as described in the Company’s advisory agreement.

In September 2017, the Company’s board of directors declared a monthly cash distribution of $0.0480, less class-specific expenses, and a monthly stock dividend of 0.00100625 shares on each outstanding shareredemption of common stock ~~on October 1, 2017, November 1, 2017~~of approximately $33,000 and ~~December 1, 2017. These distributions~~$0.2 million, respectively, which were approved for redemption at an average price of $10.05 and ~~dividends are to be paid and distributed by December 31, 2017.~~$10.05, respectively.

As of September 30, 2017, the Company recorded current deferred tax assets and net current tax expense related to deferred income at its TRS. The components of the income tax expense as of September 30, 2017 are as follows:

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of September 30, 2017 are as follows:

~~A reconciliation of the income tax expense computed at the statutory federal tax rate on income before income taxes is as follows:~~

~~The Company analyzed its material tax positions and determined that it has not taken any uncertain tax positions. The tax year 2016 remains subject to examination by taxing authorities.~~

From time to time, the Company may be a party to legal proceedings in the ordinary course of, or incidental to the normal course of, its business, including proceedings to enforce its contractual or statutory rights. While the Company cannot predict the outcome of these legal proceedings with certainty, based upon currently available information, the Company does not believe the final outcome of any pending or threatened legal proceeding will have a material adverse effect on its results of operations or financial condition.

~~Refer~~Prior to ~~Note 6. “Related Party Arrangements”~~adopting the Liquidation Basis of Accounting, the accompanying condensed consolidated financial statements include an interim tax provision for ~~information on contingent Restricted Stock shares due to~~ the ~~Company’s Advisor in connection with~~two months and eight months ended August 31, 2019 and the ~~Expense Support Agreement.~~quarter and nine months ended September 30, 2018. The components of income tax expense for each period are as follows:

~~During~~Deferred income taxes reflect the ~~period from October 1, 2017 through November 1, 2017,~~tax effects of temporary differences between the ~~Company received additional subscription proceeds~~carrying amounts of ~~approximately $2.4 million (0.2 million shares).~~assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of December 31, 2018 are as follows:

The recording of a valuation allowance relates primarily to a change in judgment about the Company’s ability to realize deferred tax assets in future years, due to its current and foreseeable operations.

A reconciliation of the income tax expense for the two months and eight months ended August 31, 2019 and the quarter and nine months ended September 30, 2018 computed at the statutory federal tax rate on income (loss) before income taxes is as follows:

The Company analyzed its material tax positions and determined that it has not taken any uncertain tax positions. The tax years 2016 and forward remain subject to examination by taxing authorities throughout the United States.

Statements contained under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form ~~10-~~Q10-Q for ~~the fiscal quarter and nine months ended~~ September 30 ~~2017~~, 2019 (“Quarterly Report”) that are not statements of historical or current fact may constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to the safe harbor created by Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements are statements that do not relate strictly to historical or current facts, but reflect management’s current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of the Company’s business and its performance, the economy, and other future conditions and forecasts of future events and circumstances. Forward-looking statements are typically identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “continues,” “pro forma,” “may,” “will,” “seeks,” “should,” “could” and words and terms of similar substance in connection with discussions of future operating or financial performance, business strategy and portfolios, projected growth prospects, cash flows, costs and financing needs, legal proceedings, amount and timing of anticipated future distributions, estimates of per share net asset value of the Company’s common stock, and/or other matters. The Company’s forward-looking statements are not guarantees of future performance. While the Company’s management believes its forward-looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances. As with any projection or forecast, forward-looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise, and may not be realized. The Company’s forward-looking statements are based on management’s current expectations and a variety of risks, uncertainties and other factors, many of which are beyond the Company’s ability to control or accurately predict. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company’s actual results could differ materially from those set forth in the forward-looking statements due to a variety of risks, uncertainties and other factors. Given these uncertainties, the Company cautions you not to place undue reliance on such statements.

For further information regarding risks and uncertainties associated with the Company’s business, and other important factors that could cause the Company’s actual results to vary materially from those expressed or implied in its forward-looking statements, please refer to the risk factors listed and described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as supported by Part II, Item 1A in this Quarterly Report, and in the “Risk Factors” heading in the Company’s prospectus, as supplemented, included in Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (File No. 333-206017), filed with the Commission on April 17, 2017,2018, copies of which may be obtained from the Company’s website at www.cnlhealthcarepropertiesii.com.

All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by this cautionary note. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to, and expressly disclaims any obligation to, publicly release the results of any revisions to its forward-looking statements to reflect new information, changed assumptions, the occurrence of unanticipated subsequent events or circumstances, or changes to future operating results over time, except as otherwise required by law.

The following discussion is based on the condensed consolidated financial statements as of September 30, ~~2017~~2019 (unaudited) and December 31, ~~2016.~~2018. Amounts as of December 31, ~~2016,~~2018, included in the unaudited condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date. This information should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto, as well as the audited consolidated financial statements, notes thereto and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

CNL Healthcare Properties II, Inc. (referred to herein as “we”, “us”, “our” or the “Company”) is a Maryland corporation that incorporated on July 10, ~~2015 and intends~~2015. We elected to ~~qualify~~be taxed as a REIT for U.S. federal income tax purposes beginning with the year ~~ending~~ended December 31, 2017 ~~or the first year~~and our intention is to be organized and operate in ~~which we commence material operations.~~a manner that allows us to remain qualified as a REIT for federal income tax purposes.

We are externally managed and advised by our Advisor, CHP II Advisors, LLC. Our Advisor is responsible for managing substantially all aspects of our ~~day-to-day affairs~~investments and ~~for identifying and making~~operations, including real estate acquisitions and ~~investments on our behalf. We had no operations prior to the commencement of our Primary Offering.~~

Our investment focus is on acquiring a diversified portfolio of healthcare real estate or real estate-related assets, primarily in the United States, within the seniors housing, medical office, post-acute care and acute caredispositions, asset classes. The types of seniors housing that we may acquire include active adult communities (age-restricted and age-targeted housing), independent and assisted living facilities, continuing care retirement communities, and memory care facilities. The types of medical office properties that we may acquire include medical office buildings, specialty medical and diagnostic service facilities, surgery centers, outpatient rehabilitation facilities,management and other ~~facilities designed for clinical services. The types~~operational matters.

On August 31, 2018, our board of post-acute care facilities that we may acquire include skilled nursing facilities, long-term acute care hospitals and inpatient rehabilitative facilities. The types of acute care facilities that we may acquire include general acute care hospitals and specialty surgical hospitals. We view, manage and evaluate our portfolio homogeneously as one collection of healthcare assets with a common goal of maximizing revenues and property income regardless ofdirectors approved the ~~asset class or asset type.~~

~~We are committed to investing the proceeds~~termination of our Offering and the suspension of our Reinvestment Plan, effective October 1, 2018. We also suspended our Redemption Plan and discontinued our stock dividends concurrently. In October 2018, we deregistered the unsold shares of common stock under our previous registration statement on Form S-11. Since inception, we received aggregate proceeds of approximately $51.2 million, which was comprised of the following: (1) approximately $50.8 million of proceeds through the close of our Offering, including approximately $1.2 million of proceeds pursuant to our Reinvestment Plan; $0.2 million of proceeds from our Advisor as our initial capitalization; and (3) approximately $0.3 million of proceeds from a private placement. In 2018, our board of directors appointed a Special Committee comprised solely of our independent board members to oversee the process of exploring strategic ~~investment types aimed~~alternatives to maximize ~~stockholder~~ value ~~by generating sustainable cash flow growth and increasing the value~~for our stockholders, including, without limitation, (i) an orderly disposition of our ~~healthcare assets.~~assets or one or more of our asset classes and the distribution of the net sale proceeds thereof to our stockholders and (ii) a potential business combination or other transaction with an unrelated third-party or affiliated party of our Sponsor. In January 2019, the Special Committee engaged SunTrust Robinson Humphrey, Inc., an investment banker, to act as a financial advisor to the aforementioned Special Committee and, subsequently, we committed to a plan to sell Mid America Surgery. Although we have formed the Special Committee for the exploration of strategic alternatives, we are not obligated to enter into any particular transaction or any transaction at all. In the meantime, we continue to strategically manage and position our portfolio to drive performance and maximize value for our stockholders.

In March 2019, we entered into a Sale Agreement with HCP Medical Office Buildings, LLC related to the MOB Sale for a gross sales price of $15.4 million, subject to certain pro-rations and other adjustments as described in the Sale Agreement. In May 2019, we completed the MOB Sale resulting in net cash proceeds of approximately $15.0 million, a portion of which was used to repay approximately $5.6 million of debt secured by our Mid America Surgery property. We ~~generally~~used the remaining proceeds, along with a portion of our available cash on hand, to strategically pay down approximately $12.8 million of debt secured by our Summer Vista property.

In March 2019, in connection with exploring strategic alternatives, our board of directors suspended our regular cash distributions to stockholders effective April 1, 2019. In addition, in March 2019, our board of directors and our Advisor agreed to terminate the Expense Support Agreement effective April 1, 2019. Any restricted stock shares granted to our Advisor under the Expense Support Agreement shall continue to be held by the Advisor, subject to the vesting and forfeiture provisions of the Expense Support Agreement which survive termination.

In September 2019, our stockholders approved a Plan of Dissolution authorizing us to undertake the sale of all our assets, distribute the net proceeds after payment of all our liabilities to stockholders as liquidating distributions, wind-up our operations and dissolve in accordance with Maryland law. As a result of the adoption of our Plan of Dissolution, all of our real estate properties are considered held for sale and we have adopted the Liquidation Basis of Accounting effective September 1, 2019.

Although our stockholders approved our Plan of Dissolution, there is no assurance we will have a final liquidity event in the near term. Our Plan of Dissolution enables us to sell any and all of our assets without further approval of our stockholders. We expect to ~~lease~~distribute all of the net proceeds from the sale of our assets to our stockholders by September 2021. However, if we cannot sell our assets and pay our debts within this 24-month period, or if our board and the Special Committee determine that it is otherwise advisable to do so, we may transfer and assign our remaining assets to a liquidating trust. Upon such transfer and assignment, our stockholders will receive interests in the liquidating trust. The liquidating trust will pay or provide for all of our liabilities and distribute any remaining net proceeds from the sale of its assets to the holders of interests in the liquidating trust.

The dissolution process and the amount and timing of distributions to stockholders involves risks and uncertainties. Accordingly, it is not possible to predict the timing or aggregate amount which will ultimately be distributed to stockholders and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the consolidated statement of net assets.

We expect to continue to qualify as a REIT throughout the liquidation until such time as any remaining assets, if any, are transferred into a liquidating trust. Our board shall use commercially reasonable efforts to continue to cause us to maintain our REIT status, provided however, our board may elect to terminate our status as a REIT if it determines that such termination would be in the best interest of our stockholders.

As of September 30, 2019, our healthcare investment portfolio consists of two seniors housing properties that are both located in Florida: Summer Vista and The Crossings at Riverview (“Riverview”). We have leased our two seniors housing properties to single member limited liability companies wholly-owned by TRS Holdings and ~~engage~~engaged independent third-party property managers under management agreements to operate the properties as permitted under RIDEA ~~structures; however,~~structures.

While we ~~may also lease~~are not directly impacted by the performance of our ~~properties~~property managers, to the extent that our property managers experience operating difficulties and become unable to generate sufficient cash to make payments to us, there could be a material adverse impact on our consolidated operating results, liquidity and/or financial condition. Our property managers are generally contractually required to provide financial information to us in accordance with their management agreements, which we monitor in order to mitigate the aforementioned risk.

We monitor the performance of our third-party ~~tenants under triple-net or similar lease structures, where~~operators to stay abreast of material changes in the ~~tenant bears all or substantially all~~operations of underlying property by: (1) reviewing the current, historical and prospective operating margins (measured by earnings before interest, taxes, depreciation, amortization and facility rent); (2) monitoring trends in the source of our revenue, including relative mix of payors (including Medicare, Medicaid, etc.) and private payors (including commercial insurance and private pay patients); (3) evaluating the effect of evolving healthcare legislation and other regulations on our profitability and liquidity; and (4) reviewing the competition and demographics of the ~~costs (including cost increases for real estate taxes, utilities, insurance~~local and ~~ordinary repairs). Medical office, post-acute care and acute care properties will be leased on a triple-net, net or modified gross basis to third-party tenants. In addition,~~surrounding areas in which we expect most investments will be wholly owned, although, we may invest through partnerships with other entities where we believe it is appropriate and beneficial. We expect to invest in a combination of stabilized assets, new property developments and properties which have not reached full stabilization. Finally, we also may invest in and originate mortgage, bridge or mezzanine loans or in entities that make investments similar to the foregoing investment types. We generally make loans to the owners of properties to enable them to acquire land, buildings, or to develop property. In exchange, the owner generally grants us a first lien or collateralized interest in a participating mortgage collateralized by the property or by interests in the entity that owns the property.

In September 2017, our board of directors unanimously approved $10.00 as the estimated net asset value (“NAV”) per share of each class of our common stock outstanding as of June 30, 2017, based on the estimated value of our assets less the estimated value of our liabilities, divided by 1,634,493 shares issued and outstanding as of June 30, 2017. Also, in September 2017, our board of directors unanimously approved offering prices for each class of shares of our common stock to be sold in our ongoing Primary Offering based on the estimated NAV per share for each class plus applicable upfront selling commissions and dealer manager fees, effective September 19, 2017. Establishing offering prices based on the estimated NAV per share for each class of shares did not cause any change to the previous Primary Offering prices for each class of shares. Accordingly, the Primary Offering prices remain $10.93, $10.50 and $10.00 per share for the purchase of Class A, Class T and Class I shares of our common stock, respectively, in our ongoing Primary Offering. In addition, effective October 3, 2017, the price for the repurchase of shares under our redemption plan and the price for sales of shares under our Reinvestment Plan became equal to the initial NAV per share for each class, as applicable. For additional information on the determination of our estimated NAV, please refer to our Current Report on Form 8-K, filed with the Commission on September 19, 2017.

We believe recent demographic trends and compelling supply and demand indicators present a strong case for an investment focus on healthcare real estate or real estate-related assets. We believe that the healthcare sector will continue to provide attractive opportunities as compared to other asset sectors over the long-term.

As of November 1, 2017, we owned one seniors housing community in Pensacola, Florida that was acquired in March 2017 for a purchase price of approximately $21.4 million. The property is comprised of 89 residential units (67 assisted living and 22 memory care units) and operated under a RIDEA structure by Superior Residences, a third-party property manager, who operated the property previously for the seller under a similar structure since it opened in February 2016.

~~Management reviews~~also review certain operating and other statistical measures of the underlying property such as occupancy levels and revenue per occupied unit (“RevPOU”), which we define as total revenue before charges for ancillary and care services offered at the community divided by average number of occupied units. As of September 30, ~~2017, 100%~~2019, 96% and 79% of ~~the~~ resident units were occupied at Summer ~~Vista.~~Vista and Riverview, respectively. The average monthly RevPOU ~~for the quarter ended~~as of September 30, ~~2017~~2019 and 2018 was ~~$3,881~~$4,283 and $3,680, respectively, for assisted living units and ~~$4,278~~$5,192 and $4,072, respectively, for memory care units. As of September 30, 2017, there were 42 residents on a waitlist indicating interest for units as they become available. We believe the aforementioned operating and statistical measures assist us in determining the ability of our properties or operators to achieve market rental rates, to assess the overall performance of our healthcare portfolio, and to review compliance with leases, debt, licensure, etc.

We monitor the performance of our third-party operator(s) to stay abreast of material changes in the operations of underlying property by (1) reviewing the current, historical and prospective operating margins (measured by earnings before interest, taxes, depreciation, amortization and facility rent), (2) monitoring trends in the source of our revenue, including relative mix of payors (including Medicare, Medicaid, etc.) and private payors (including commercial insurance and private pay patients), (3) evaluating the effect of evolving healthcare legislation and other regulations on our profitability and liquidity, and (4) reviewing the competition and demographics of the local and surrounding areas in which we operate.

~~Our primary source~~As described above under “Strategic Alternatives,” we began evaluating strategic alternatives to maximize value for our stockholders. In September 2019, our stockholders approved a Plan of ~~capital for items other than acquisitions~~Dissolution pursuant to which our board of directors is authorized to undertake a sale of all of our assets and distribute the net proceeds to our stockholders after payment of all of our liabilities. As of September 30, 2019, our cash totaled $4.7 million. We will use our cash on hand and net sales proceeds received from the sale of real estate to pay all obligations, pay liquidating distributions and any other corporate purposes deemed appropriate. Our total assets and net assets in liquidation were $53.2 million and $43.7 million, respectively, as of September 30, 2019. Our ability to meet our obligations is ~~expected~~contingent upon the disposition of our assets in accordance with our Plan of Dissolution. We estimate that the proceeds from the sale of assets pursuant to our Plan of Dissolution will be adequate to pay our obligations, however, we cannot provide any assurance as to the prices or net proceeds we will receive from the disposition of our ~~Offering.~~ assets.

We believe that cash flows provided by operating activities along with cash on hand will ~~use such amounts for investments in properties~~continue to provide adequate capital to fund our operating, administrative and other ~~permitted investments,~~expenses incurred during liquidation as well as ~~the payment or reimbursement of fees and expenses relating to the selection, acquisition and development of properties and other permitted investments. Generally~~debt service obligations. As a REIT, we expect to meet cash needs for items other than acquisitions from our cash flows from operations, and we expect to meet cash needs for acquisitions from net proceeds from our Offering and borrowings. However, until such time as we are fully invested, we may use proceeds from our Offering and/or borrowings to pay all or a portionmust distribute annually at least 90% of our ~~operating expenses, distributions and debt service.~~

The number of properties and other permitted investments we may acquire or make will depend on the number of shares sold through our Offering and the resulting net proceeds available for investment. If the number of shares sold is substantially less than the maximum amount of the Offering, we would likely make a limited number of investments resulting in our healthcare real estate portfolio being less diversified in terms of the type, number and amount of investments. If our healthcare real estate portfolio is concentrated in a small number of investments, the value of an investment in us will fluctuate with the performance of the specific assets we acquire and, therefore, expose our stockholders to increased risk. In addition, many of our operating expenses as a public company are fixed regardless of the number of investments in our healthcare real estate portfolio. Therefore, an inability to raise substantial funds in our Offering or otherwise would increase our fixed operating expenses as a percentage of gross income and, in turn, reduce the amount of proceeds available for distribution to our stockholders.REIT taxable income.

~~We intend to strategically leverage~~Our cash flows from operating and investing activities through August 31, 2019, as described within “Sources of Liquidity and Capital Resources” and “Uses of Liquidity and Capital Resources” represent cash flows from continuing operations, which includes our ~~real estate assets and use debt as a means of providing additional funds for the acquisition of~~two seniors housing properties and ~~the diversification of~~excludes our ~~portfolio. Our ability to increase our diversification through borrowings could~~MOB property that was classified as discontinued operations and sold in May 2019. The following discussion and analysis should be ~~adversely affected by credit market conditions, which could result~~read in lenders reducing or limiting funds available for loans, including loans collateralized by real estate. We may also be negatively impacted by rising interest rates on any unhedged variable rate debt or the timing of when we seek to refinance existing debt. During times when interest rates on mortgage loans are high or financing is otherwise unavailable on a timely basis, we may purchase certain properties for cashconjunction with the ~~intention of obtaining a mortgage loan for a portion of~~accompanying unaudited condensed consolidated financial statements and the purchase price at a later time. Potential future sources of capital include proceeds from collateralized or uncollateralized financings from banks or other lenders. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. As of September 30, 2017, our debt leverage ratio was approximately 43.4% of the aggregate carrying value of our assets.notes thereto.

From the commencement of our Offering until September 15, 2017, our net investment value per share for Class A, Class T and Class I shares was $10.00 per share, which was based on the “amount available for investment/net investment amount” percentage shown in the Estimated Use of Proceeds section of our prospectus. In September 2017, our board of directors adopted an estimated NAV of $10.00 per share for each class of our common stock outstanding as of June 30, 2017.

InDuring the eight months ended August 2017, we had received gross offering proceeds in excess of $20 million which was sufficient to satisfy the minimum offering amounts in all states where we are conducting our offering except Pennsylvania.

~~For~~31, 2019 and the nine months ended September 30, 2017, we received aggregate subscription proceeds of approximately $16.4 million (1.6 million shares), and approximately $218,000 (21,800 shares) of subscription proceeds received pursuant to our Reinvestment Plan.

For the period from October 1, 2017 through November 1, 2017, we received additional subscription proceeds of approximately $2.4 million (0.2 million shares). We expect to continue to raise capital under our Offering.

In August 2016, in connection with our private placement, we issued promissory notes to each of 125 separate investors for a total principal amount of $0.3 million (each a “Note” and collectively, “Notes”). We owe interest on the Notes of approximately $70,000 per annum, which is payable semi-annually in arrears. The Notes mature on June 30, 2046. Some or all of the Notes may be prepaid at any time, in whole or in part, provided that (i) such prepayment include all accrued and unpaid interest due on such prepaid principal amount to and including the date of prepayment and (ii) if the prepayment occurs prior to the second anniversary of the issue date of the Note, the operating partnership will pay on the date of such prepayment a one-time premium equal to approximately $31,000. In connection with the issuance of the Notes, the Company placed approximately $0.4 million into a third-party escrow account to be held to repay the principal of the Notes and two semi-annual interest payments until such time as we raised at least $10 million in gross proceeds in our Offering, which occurred during the nine months ended September 30, 2017 and approximately $0.4 million was released from escrow to us.

In March 2017, we entered into the Summer Vista Loan and received approximately $16.1 million of proceeds from this mortgage loan, which were used to fund the acquisition of Summer Vista. The Summer Vista Loan matures on April 1, 2022, subject to two one-year extension options provided certain conditions are met. The Summer Vista Loan accrues interest at a rate equal to the sum of LIBOR plus 2.85%, with monthly payments of interest only for the first 18 months, and monthly payments of interest and principal for the remaining 42 months using a 30-year amortization period with the remaining principal balance payable at maturity. Prior to April 1, 2019, the interest payable on the Summer Vista Loan may be reduced to a rate equal to the sum of LIBOR plus 2.70% if, at such time, no event of default exists, certain debt yield thresholds are met, and at least $2,150,000 of the original outstanding principal balance of the Summer Vista Loan has been paid. We may prepay, without a penalty, all or any part of the Summer Vista Loan at any time.

We experienced positive cash flow from operating activities for the nine months ended September 30, 2017 of approximately $0.1 million as compared to cash used in operating activities of approximately ($0.1) million for the nine months ended September 30, 2016. We generally expect to meet future cash needs for general and administrative expenses, debt service and distributions from the net operating income (“NOI”) from our properties.

~~During the nine months ended September 30, 2017,~~2018, our cash ~~flows~~flow from operating activities was positively impacted by approximately $0.2 million and $0.6 million, respectively, of expense support received pursuant to the Expense Support Agreement with our Advisor ~~pursuant~~that was in effect through its termination date of April 1, 2019. Pursuant to ~~which~~the Expense Support Agreement, our Advisor ~~has~~ agreed to accept payment in ~~Restricted Stock~~restricted stock in lieu of cash for services rendered, in the event that the Company ~~does~~did not achieve established distribution coverage targets (as defined in the Expense Support Agreement). ~~For the nine months ended September 30, 2017, we expect that approximately $0.4 million~~In March 2019, as further described above under “Strategic Alternatives,” our board of ~~asset management fees~~directors and our Advisor ~~personnel expenses will be settled in the form of Restricted Stock pursuant~~agreed to terminate the Expense Support ~~Agreement.~~Agreement effective April 1, 2019. Any restricted stock shares granted to our Advisor under the Expense Support Agreement shall continue to be held by the Advisor, subject to the vesting and forfeiture provisions of the Expense Support Agreement which survive termination. As a result of terminating the Expense Support Agreement effective April 1, 2019, the amount of expense support we receive from our Advisor ceased April 1, 2019. Accordingly, there was no expense support received subsequent to April 1, 2019. Any amounts settled, and for which ~~Restricted Stock~~restricted stock shares ~~will be~~were issued, pursuant to the Expense Support Agreement are permanently settled and we have no further obligation to pay such amounts to our Advisor. Effective April 1, 2019, we have settled Advisor personnel expenses in cash rather than restricted stock, unless such amounts were otherwise subordinated or waived.

~~Refer~~Effective March 2, 2019, our advisory agreement was amended and restated to ~~Note 6. “Related Party Arrangements”~~eliminate acquisition fees and dispositions fees as well as to reduce our AUM Fees to 0.40% per annum of average invested assets. Our AUM Fees were further subject and subordinate to an agreed upon hurdle relating to the total operating expenses (as described in ~~Item 1. “Financial Statements” for additional information.~~the amended and restated advisory agreement) of the Company, though to the extent any portion of the AUM Fees are not paid as a result of total operating expenses exceeding the prescribed limits, it may be recovered by our Advisor if certain Company performance thresholds are subsequently met. Our board of directors approved renewing the amended and restated advisory agreement through March 2020. Effective as of April 1, 2019, our Advisor waived its rights to any AUM Fees going forward, with such waiver to remain in effect through our dissolution and liquidation.

~~During~~In March 2019, we entered into a Sale Agreement with HCP Medical Office Buildings, LLC related to the MOB Sale for a gross sales price of $15.4 million, subject to certain pro-rations and other adjustments as described in the Sale Agreement. In May 2019, we completed the MOB Sale resulting in net cash proceeds of approximately $15.0 million, a portion of which was used to repay approximately $5.6 million of debt secured by our Mid America Surgery property. We used the remaining proceeds, along with a portion of our available cash on hand, to strategically pay down approximately $12.8 million of debt secured by our Summer Vista property.

In October 2018, in light of the decision to terminate our Offering, we suspended our Reinvestment Plan and our Redemption Plan. As such, there were no subscriptions proceeds received for the nine months ended September 30, 2017, we acquired Summer Vista, which represents our first acquisition of property, and paid total purchase price consideration of approximately $21.9 million. We expect to continue to expand our healthcare investment portfolio through additional acquisitions as we raise additional capital from our Offering.

2019. For the nine months ended September 30, ~~2017,~~2018, we received subscription proceeds of approximately $19.0 million (1.9 million shares) and $0.8 million (0.08 million shares) through our Offering and Reinvestment Plan, respectively.

Prior to adopting the Liquidation Basis of Accounting, we experienced positive cash flow from operating activities for the eight months ended August 31, 2019 of approximately $0.7 million as compared to negative cash flow from operating activities for the nine months ended September 30, 2018 of approximately $0.3 million. The fluctuation across periods was primarily the result of our second seniors housing property, Riverview, being acquired on August 31, 2018 and, as such, the prior period consisted entirely of operations for Summer Vista while the current period included operations for both Summer Vista and Riverview. In addition, our cash flow from operating activities during 2019 was positively impacted by our decision to use the remaining proceeds from the MOB Sale, along with a portion of our available cash on hand, to strategically pay down approximately $12.8 million of debt secured by our Summer Vista property, which resulted in lower interest expense.

During the eight months ended August 31, 2019 and nine months ended September 2018, our cash flow from operating activities was also positively impacted by the expense support received from our Advisor of approximately $0.2 million. As a result of terminating the Expense Support Agreement effective April 1, 2019, as described above under “Expense Support Agreement,” the amount of expense support we receive from our Advisor ceased April 1, 2019 and there was no expense support received subsequent to April 1, 2019. Effective April 1, 2019, we have settled Advisor personnel expenses in cash rather than restricted stock, unless such amounts were otherwise subordinated or waived.

We paid approximately $113,000 and $49,000 in capital expenditures during the eight months ended August 31, 2019 and nine months ended September 2018, respectively. The increase across periods primarily relates to additions at our Riverview property during 2019.

As further described above under “Strategic Alternatives,” we terminated and closed our Offering effective October 1, 2018. As such, there was no underwriting compensation for the eight months ended August 31, 2019. For the nine months ended September 30, 2018, we paid approximately $1.0 million in underwriting compensation. Under the terms of the Primary Offering, our Dealer Manager iswas entitled to receive selling commissions, dealer manager fees and/or annual distribution and stockholder servicing fees, which ~~are~~were based on the respective share class of our common stock sold, all or a portion of which ~~may~~could be reallowed to participating broker dealers. Refer to Note 11. “Related Party Arrangements” for additional information related to amounts incurred for the nine months ended September 30, 2018.

During the eight months ended August 31, 2019, we ~~entered into an amended and restated dealer manager agreement, which reduces~~used the maximum combined sales commissions, dealer manager fees and ongoing annual distribution and stockholder servicing fees payable to the Dealer Manager and participating broker-dealers from 9.75% to 8.5% of the gross proceeds for each share class of common stock sold in the Primary Offering. The aforementioned reduction to underwriting compensation will result in a lower amount of commissions and fees being paid to the Dealer Manager in future periods and will further provide for increased net proceeds from our ~~Primary~~MOB Sale, along with a portion of our available cash on hand, to make approximately $18.4 million of total debt repayments, which were comprised of approximately $5.6 million of debt secured by our Mid America Surgery property and approximately $12.8 million of debt secured by our Summer Vista property. As of September 30, 2019, we had approximately $6.2 million of borrowings collateralized by our properties; substantially all of which matures after September 2021 (our required liquidation date as a REIT). Therefore, we do not expect debt repayments to represent a significant use of liquidity until such time as we sell our two remaining real estate properties.

Our Redemption Plan was designed to provide eligible stockholders with limited interim liquidity by enabling them to sell shares back to us prior to any liquidity event. In connection with the termination of our Offering and our board of directors’ decision to beconsider possible strategic alternatives available to us, our Redemption Plan was suspended effective October 1, 2018 and we no longer accept or process any redemption requests received after such date. During the nine months ended September 30, 2018, we received requests for ~~investment.~~the redemption of common stock of approximately $0.2 million, which were approved by our board of directors and paid as of September 30, 2018.

In order to qualify as a REIT, we are required to make distributions, other than capital gain distributions, to our stockholders each year in the amount of at least 90% of our taxable income. We may make distributions in the form of cash or other property, including distributions of our own securities. ~~We expect to~~To the extent we did not have ~~little, if any,~~sufficient cash flows from operations available for ~~distribution until~~cash distributions, we make substantial investments. There may be a delay between the sale of our common stock and the purchase of properties or other investments, which could result in a delay in our ability to generate cash flows to cover distributions to our stockholders. Therefore, we may determine to paypaid some or all of our cash distributions from sources other than cash flows from operations, such as ~~from~~ cash flows provided by financing activities, a component of which ~~may include the~~included proceeds of our Offering and/or borrowings, whether collateralized by our assets or unsecured. As further described above under “Strategic Alternatives,” we terminated and closed our Offering effective October 1, 2018. We ~~have not established any limit on the extent~~suspended our Reinvestment Plan and discontinued stock dividends concurrently. As a consequence of suspending our Reinvestment Plan, effective October 1, 2018, stockholders who were participants in our Reinvestment Plan began to ~~which we may use borrowings or proceeds~~receive cash distributions instead of additional shares of our ~~Offering to pay~~common stock. In March 2019, our board of directors suspended regular cash distributions effective April 1, 2019 and ~~there is no assurance we will be able to sustain~~our board of directors has not declared any regular distributions ~~at any level.~~on our common stock after the effective date of the suspension.

The following table details our cash distributions per share and our ~~total~~ cash distributions paid, including distribution reinvestments as applicable, by quarter for the ~~quarter and~~ nine months ended September 30, ~~2017:~~2019 and 2018 (in thousands, except per share data):

	Cash Distributions per Share ⁽¹⁾						Cash Distributions Paid ⁽²⁾						Cash Flows			Cash Distributions per Share ⁽¹⁾						Cash Distributions Paid ⁽²⁾						Cash Flows Provided by (Used in) Operating Activities ⁽³⁾
Periods	Class A Share		Class T Share		Class I Share		Cash Distributions Declared		Distribution Reinvestments		Cash Distributions net of Distribution Reinvestments		Provided by (Used in) Operating Activities ⁽³⁾			Class A Share		Class T Share		Class I Share		Cash Distributions Declared		Distribution Reinvestments		Cash Distributions net of Distribution Reinvestments		Cash Flows Provided by (Used in) Operating Activities ⁽³⁾
2017 Quarters
2019 Quarters
First	$	0.1050	$	0.0750	$	0.1050	$	73,202	$	28,260	$	44,942	$	(154,202	)	$	0.1440	$	—	$	—	$	705	$	—	$	705	$	426
Second		0.1440		0.1168		0.1337		172,574		75,925		96,649		33,113			—		—		—		—		—		—		232
Third(4)		0.1440		0.1169		0.1328		231,583		113,407		118,176		203,479			—		—		—		—		—		—		210
Year	$	0.3930	$	0.3087	$	0.3715	$	477,359	$	217,592	$	259,767	$	82,390		$	0.1440	$	—	$	—	$	705	$	—	$	705	$	868

2018 Quarters
First																$	0.1440	$	0.1178	$	0.1312	$	402	$	225	$	177	$	157
Second																	0.1440		0.1175		0.1314		483		283		200		(242	)
Third																	0.1440		0.1177		0.1310		555		334		221		290
Year																$	0.4320	$	0.3530	$	0.3936	$	1,440	$	842	$	598	$	205

In September 2017, the Company’s board of directors declared a monthly cash distribution of $0.0480, less class-specific expenses, and a monthly stock dividend of 0.00100625 shares on each outstanding share of common stock on October 1, 2017, November 1, 2017 and December 1, 2017. These distributions and dividends are to be paid and distributed by December 31, 2017.

From the time of our formation on July 10, 2015 (inception) through July 10, 2016, we had not commenced operations because we were in our development stage and had not received the minimum required offering amount of $2.0 million in shares of common stock. Operations commenced on July 11, 2016, when aggregate subscription proceeds in excess of the minimum offering amount were released to us from escrow. We made our first acquisition on March 31, 2017 and as a result, the only operations as of September 30, 2016 were general and administrative expenses of approximately $0.1 million and interest expense of approximately $17,000.

~~The following is a discussion of our operations for the quarter and nine months ended September 30, 2017:~~

We are not aware of any material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues and income to be derived from the ~~acquisition and~~ operation of properties and other permitted investments, other than those referred to in ~~the risk factors identified~~Part II, Item 1A of this report and in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016, as supplemented by~~2018.

As a result of our stockholders' approval of our Plan of Dissolution in September 2019 and our adoption of the ~~risk factors included in Part II, Item 1A~~Liquidation Basis of ~~this Quarterly Report.~~Accounting effective September 1, 2019, the results of operations for our current year periods are not comparable to our prior year periods.

~~We generally expect~~In addition, due to ~~meet future cash needs for general and administrative expenses, debt service and distributions from~~the adoption of our Plan of Dissolution, we are no longer reporting net operating income, ~~NOI. We define NOI, a non-GAAP measure,~~funds from operations or modified fund from operations as ~~resident fees and services less property operating expenses and property management fees. We use NOI as a~~we no longer consider these to be relevant key performance ~~metric for internal monitoring and planning purposes, including~~metrics since we have adopted the ~~preparation~~Liquidation Basis of annual operating budgets and monthly operating reviews, as well as to facilitate analysis of future investment and business decisions. It does not represent cash flows generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income or loss (determined in accordance with GAAP) as an indication of our operating performance or to be an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity. We believe the presentation of this non-GAAP measure is important to the understanding of our operating results for the periods presented because it is an indicator of the return on property investment and provides a method of comparing property performance over time. From the time of our formation on July 10, 2015 (inception) through July 10, 2016, we had not commenced operations because we were in our development stage and had not received the minimum required offering amount of $2.0 million in shares of common stock. Operations commenced on July 11, 2016, when aggregate subscription proceeds in excess of the minimum offering amount were released to us from escrow. The chart below illustrates our net losses, and NOI for the quarter and nine months ended September 30, 2017 and 2016:

Due to certain unique operating characteristics of real estate companies, as discussed below, the North American Real Estate Investment Trust (“NAREIT”) promulgated a measure known as Funds From Operations (“FFO”),

which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards approved by the Board of Governors of NAREIT. NAREIT defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, real estate asset impairment write-downs, plus depreciation and amortization of real estate related assets, and after adjustments for unconsolidated partnerships and joint ventures. Our FFO calculation complies with NAREIT’s policy described above.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or is requested or required by lessees for operational purposes in order to maintain the value of the property. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income or loss. However, FFO and Modified Funds From Operations (“MFFO”), as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or loss in its applicability in evaluating operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.Accounting.

Net assets in liquidation decreased by approximately $118,000 during the ~~accounting and reporting promulgations under GAAP (for acquisition fees and expenses~~period from September 1, 2019 through September 30, 2019. The primary reason for ~~business combinations~~the decrease in net assets was due to net outflows for corporate expenditures exceeding net inflows from ~~a capitalization/depreciation model) to an expensed-as-incurred model that were put into effect in 2009, and other changes to GAAP accounting for~~ real estate subsequent to the establishment of NAREIT’s definition of FFO, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP and accounted for as operating expenses. Our management believes these fees and expenses do not affect our overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start up entities may also experience significant acquisition activity during their initial years, we believe that non-listed REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after acquisition activity ceases. Due to the above factors and other unique features of publicly registered, non-listed REITs, the Investment Program Association (“IPA”), an industry trade group, has standardized a measure known as MFFO which the IPA has recommended as a supplemental measure for publicly registered non-listed REITs and which we believe to be another appropriate supplemental measure to reflect the operating performance of a non-listed REIT. MFFO is not equivalent to our net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended. We believe that because MFFO excludes costs that we consider more reflective of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that affect our operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we acquired our properties and once our portfolio is in place. By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance after our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry.investments.

We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: MFFO, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income or loss: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to remove the impact of GAAP straight-line adjustments from rental revenues); accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income; gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, and unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income or loss. These expenses are paid in cash by us. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property.

Our management uses MFFO and the adjustments used to calculate it in order to evaluate our performance against other non-listed REITs which have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence that the use of such measures is useful to investors. For example, acquisition costs are funded from our subscription proceeds and other financing sources and not from operations. By excluding expensed acquisition costs, the use of MFFO provides information consistent with management’s analysis of the operating performance of the properties.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different non-listed REITs, although it should be noted that not all REITs calculate FFO and MFFO the same way and as such comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flows available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations, as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. MFFO is useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and NAV is disclosed. FFO and MFFO are not useful measures in evaluating NAV because impairments are taken into account in determining NAV but not in determining FFO and MFFO.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments we use to calculate FFO or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO.

~~The following table presents a reconciliation of net loss to FFO and MFFO for the quarter and nine months ended September 30, 2017 and 2016:~~

Quarter Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Net loss

$
(307,906
)

$
(110,558
)

$
(950,707
)

$
(110,558
)
Adjustments to reconcile net loss to FFO:

Depreciation and amortization

324,417

―

647,185

―

Total FFO

16,511

(110,558
)

(303,522
)

(110,558
)
Adjustments to reconcile FFO to MFFO

―

―

―

―

Total MFFO

$
16,511

$
(110,558
)

$
(303,522
)

$
(110,558
)

Class A common stock:

Weighted average number of Class A common shares outstanding ⁽¹⁾

683,113

284,747

521,781

103,295

Net loss per share of Class A common stock outstanding (basic and diluted)

$
(0.16
)

$
(0.36
)

$
(0.66
)

$
(0.95
)
FFO per share of Class A common stock outstanding (basic and diluted)

$
0.01

$
(0.36
)

$
(0.21
)

$
(0.95
)
MFFO per share of Class A common stock outstanding (basic and diluted)

$
0.01

$
(0.36
)

$
(0.21
)

$
(0.95
)

Class T common stock:

Weighted average number of Class T common shares outstanding ⁽¹⁾

1,177,167

14,990

878,536

10,489

Net loss per share of Class T common stock outstanding (basic and diluted)

$
(0.16
)

$
(0.36
)

$
(0.66
)

$
(0.95
)
FFO per share of Class T common stock outstanding (basic and diluted)

$
0.01

$
(0.36
)

$
(0.21
)

$
(0.95
)
MFFO per share of Class T common stock outstanding (basic and diluted)

$
0.01

$
(0.36
)

$
(0.21
)

$
(0.95
)

Class I common stock:

Weighted average number of Class I common shares outstanding ⁽¹⁾

57,534

6,600

33,006

2,187

Net loss per share of Class I common stock outstanding (basic and diluted)

$
(0.16
)

$
(0.36
)

$
(0.66
)

$
(0.95
)
FFO per share of Class I common stock outstanding (basic and diluted)

$
0.01

$
(0.36
)

$
(0.21
)

$
(0.95
)
MFFO per share of Class I common stock outstanding (basic and diluted)

$
0.01

$
(0.36
)

$
(0.21
)

$
(0.95
)

We have entered into agreements with our Advisor and its affiliates, whereby we agree to pay certain fees to, or reimburse certain expenses of, our Advisor or its affiliates for ~~acquisition and~~ advisory services, selling commissions, dealer manager fees, asset management fees and reimbursement of operating costs.

Our Advisor and its affiliates and related parties also are entitled to reimbursement of certain operating expenses in connection with their provision of services to us, including personnel costs, subject to the limitation that, beginning on the earlier of the Expense Year after (i) we make our first investment or (ii) six months after the commencement of the Offering, we will not reimburse the Advisor for any amount by which operating expenses exceed the greater of 2% of our average invested assets or 25% of our net income in any Expense Year unless approved by the independent directors. For the Expense Year ended September 30, 2019, our total operating expenses were in excess of this limitation by approximately $35,000. As of September 30, 2019, we had received cumulative approvals by our independent directors for total operating expenses in excess of this limitation of approximately $0.9 million. Our independent directors determined that the higher relationship of operating expenses to average invested assets for the Expense Year ended September 30, 2019, was justified given the cost of operating a public company and the MOB Sale undertaken in the second quarter of 2019 in connection with our exploration of strategic alternatives, which further reduced our already limited number of investments.

~~“Financial Statements” –~~ Note 611. “Related Party Arrangements” in the accompanying condensed consolidated financial statements for additional information.

As of September 30, 2017, our Advisor has incurred aggregate other organizational and offering expenses of approximately $6.1 million in connection with our formation, without reimbursement by us. These expenses include, but are not limited to, SEC registration fees, FINRA filing fees, printing and mailing expenses, blue sky fees and expenses, legal fees and expenses, accounting fees and expenses, advertising and sales literature, transfer agent fees, due diligence expenses, personnel costs associated with processing investor subscriptions, escrow fees and other administrative expenses of the Offering.

The following table presents our contractual obligations by payment period as of September 30, ~~2017:~~2019 (in thousands):

See Item 1. “Condensed Consolidated Financial Information (unaudited)” and our Annual Report on Form 10-K for the year ended December 31, 2018 for a summary of our ~~significant~~critical accounting ~~policies.~~policies and estimates.

See Item 1. “Condensed Consolidated Financial Information (unaudited)” for a summary of the impact of recent accounting pronouncements.

We ~~are~~may be exposed to financial market risks, specifically changes in interest rates ~~to the extent~~as we ~~borrow~~have borrowed money to acquire ~~properties or to make loans and other permitted investments.~~properties. As of September 30, 2019, all of our debt is unhedged variable rate debt. Our management objectives related to interest rate risk ~~will be~~is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we expect to borrow primarily at fixed rates or variable rates with the lowest margins available, and in some cases, with the ability to convert variable rates to fixed rates. With regard to variable rate financing, we will assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating interest rate protection opportunities through swaps or caps.

We expect to hold our fixed-rate note obligations to maturity (or prepayment) and the amounts due under such instruments would be limited to the outstanding principal balance, any accrued and unpaid interest and any prepayment premiums. Accordingly, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed-rate note obligations, would have a significant impact on our operations. The fair market value of the Notes was approximately $0.3 million as of September 30, 2017, which was determined using discounted cash flows based on current rates and spreads we would expect to obtain for similar borrowings.

The following is a schedule as of September 30, ~~2017~~2019 of our variable rate debt maturities for the remainder of ~~2017~~2019, and each of the next four years and thereafter (principal maturities only) (in thousands):

	Expected Maturities																Expected Maturities														Fair
	2017		2018		2019		2020		2021		Thereafter		Total		Fair Value ⁽¹⁾		2019		2020		2021		2022		2023		Thereafter		Total		Value ⁽¹⁾
Variable rate debt	$	—	$	32	$	199	$	211	$	224	$	15,384	$	16,050	$	16,044	$	—	$	32	$	86	$	1,192	$	4,840	$	—	$	6,150	$	6,117
Average interest rate on variable rate debt	LIBOR + 2.85%		LIBOR + 2.85%		LIBOR + 2.85%		LIBOR + 2.85%		LIBOR + 2.85%		LIBOR + 2.85%		LIBOR + 2.85%					—	LIBOR + 2.45%		LIBOR + 2.33%		LIBOR + 2.67%		LIBOR + 2.25%				LIBOR + 2.33%

Management estimates that a one-percentage point increase or decrease in LIBOR in ~~2017,~~2019, compared to LIBOR rates as of September 30, ~~2017,~~2019, would result in annualized fluctuation of interest expense on our current variable rate debt of approximately ~~$0.2~~$0.1 million for the year ~~ended~~ending December 31, ~~2017.~~2019. This sensitivity analysis contains certain simplifying assumptions, and although it gives an indication of our exposure to changes in interest rates, it is not intended to predict future results and actual results will likely vary given that our sensitivity analysis on effects of changes in LIBOR does not factor in a potential change in variable rate debt levels, ~~any offsetting gains on interest swap contracts,~~ or the impact of any LIBOR floors or ~~caps.~~caps that may exist under our debt arrangements.

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based

upon that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by us in the reports we filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the relevant SEC rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

~~We have not evaluated any change in our internal control over financial reporting that occurred during our last~~During the most recent fiscal quarter, due to a transition period established by the rules of the SEC for newly public companies. We expect to issue management’s first assessment regarding internal control over financial reporting for the year ending December 31, 2017 and to evaluate anythere were no changes in our internal controls over financial reporting ~~in each quarterly and annual report thereafter.~~(as defined under Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

From time to time, we may be a party to legal proceedings in the ordinary course of, or incidental to the normal course of, our business, including proceedings to enforce our contractual or statutory rights. While we cannot predict the outcome of these legal proceedings with certainty, based upon currently available information, we do not believe the final outcome of any pending or threatened legal proceeding will have a material adverse effect on our results of operations or financial condition.

There have been no material changes in our assessment of our risk factors ~~replace and/or supplement the similar risk factors identified in Item 1A. “Risk Factors”~~from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~

Our offering prices per share for each class of our shares are primarily based on the estimated NAV per share of each class of our shares plus applicable upfront selling commissions and dealer manager fees, but also based upon subjective judgments, assumptions and opinions2018 as supplemented by management, which may or may not turn out to be correct. Therefore, our offering prices may not reflect the amount that might be paid to our stockholders for their shares in a market transaction and may not be indicative of the price at which our shares would trade if they were actively traded.

On September 15, 2017, our board of directors approved an estimated NAV per share of $10.00 for each class of shares of our common stock as of June 30, 2017. To assist FINRA members and their associated persons that participatethose set forth in our offering of common stock in meeting their customer account statement reporting obligations pursuant to applicable FINRA and NASD Conduct Rules, we will disclose in our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and/or in our Current Reports on Form 8-K, our estimated NAV per share of each class of our shares. This estimated value per share will be accompanied by any disclosures required under the FINRA and NASD Conduct Rules.

The estimated NAV per share for each class of our shares will be based on valuations of our assets and liabilities performed at least annually, by, or with the material assistance or confirmation of, a third-party valuation expert or

service and will generally be consistent with the recommendations in the Investment Program Association Practice Guideline 2013-01- Valuations of Publicly Registered, Non-Listed REITs. The three share classes in our offering are meant to provide broker-dealers with more flexibility to facilitate investment in us and are offered partially in response to recent changes to the applicable FINRA and NASD Conduct Rules regarding the reporting of our estimated NAV per share of each class of our shares.

Our board of directors determined the offering price of each class of our shares based upon a number of factors but primarily based on the estimated NAV per share of our shares determined by our board of directors. Although we established the estimated NAV per share generally in accordance with our valuation policy and certain recommendations and methodologies of the Investment Program Association, the valuation methodologies used by the independent valuation firm retained by our board of directors to estimate the value of our property and the estimated NAV of each class of our shares as of June 30, 2017 involved subjective judgments, assumptions and opinions, which may or may not turn out to be correct. Our board of directors also took into consideration applicable upfront selling commissions and dealer manager fees of our offering in establishing the current offering prices for each class of our shares. As a result of these, as well as other factors, our offering prices for each class of our shares may not reflect the amount that might be paid to our stockholders for their shares in a market transaction or of the proceeds that our stockholders would receive if we were liquidated or dissolved and the proceeds were distributed to our stockholders. See “Description of Capital Stock—Valuation Policy” for a description of our policy with respect to valuations of our common stock.

The estimated NAV per share of each class of our shares is based upon a valuation of our property as of June 30, 2017 and does not take into account how developments subsequent to the valuation date related to individual assets, the financial or real estate markets or other events may have increased or decreased the value of our portfolio. The valuation and appraisal of our property are estimates of fair value and may not necessarily correspond to realizable value upon the sale of the property. Therefore, our estimated NAV per share for each class of our shares may not reflect the amount that would be realized upon a sale of our property.

On September 15, 2017, our board of directors approved a NAV per share of $10.00 for each class of shares of our common stock as of June 30, 2017. We intend to use this NAV as the estimated per share value of each class of our shares until the next net asset valuation approved by our board of directors. We expect to perform a net asset valuation at least annually. We will disclose future estimates of our NAV to stockholders in our filings with the Commission.

Further, our estimated NAV per share is based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding, all as of June 30, 2017. We did not make any adjustments to our estimated NAV subsequent to June 30, 2017, including adjustments relating to, among others, the issuance of common stock, the payment of related offering costs, net operating income earned or distributions declared. The NAV of our shares will fluctuate over time in response to a number of factors, including but not limited to the proceeds raised from our offering, future investments, the performance of individual assets in our portfolio, the management of those assets, and the real estate and finance markets.

For the purposes of calculating our estimated NAV per share of each class of our shares, we retained an investment banking firm as valuation expert to provide a range of per share values for our and a valuation of our property as of June 30, 2017. The valuation methodologies used to estimate the NAV of each class of our shares, as well as the value of our property, involved certain subjective judgments, including but not limited to, discounted cash flow analysis. Ultimate realization of the value of an asset depends to a great extent on economic and other conditions beyond our control and the control of our advisor and our valuation expert. Further, valuations do not necessarily represent the price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller. Therefore, the valuation of our property may not correspond to the realizable value upon a sale of the asset. Because the price investors will pay for shares in our offering is primarily based on our estimated NAV per share for each class of shares plus applicable upfront selling commissions and dealer manager fees, investors may pay more than realizable value for their investment when they purchase their shares or receive less than realizable value when they sell their shares.

Because the current offering prices for our shares in our public offering exceed the net tangible book value per share, investors in our offering will experience immediate dilution in the net tangible book value of their shares.

We are currently offering our Class A, Class T and Class I shares in our primary public offering at $10.93, $10.50 and $10.00 per share, respectively, with discounts available as described in the “Plan of Distribution” section of our prospectus. In addition, under our distribution reinvestment plan distributions will be reinvested in additional shares at prices per share equal to the current NAV per share for each class, as applicable. Our current public offering prices for our shares exceed our net tangible book value per share, which amount is the same for all three classes. Our net tangible book value per share is a rough approximation of value calculated as total book value of assets minus total book value of liabilities, divided by the total number of shares of common stock outstanding. Net tangible book value is used generally as a conservative measure of net worth that we do not believe reflects our estimated value per share. It is not intended to reflect the value of our assets upon an orderly liquidation of the company in accordance with our investment objectives. However, net tangible book value does reflect certain dilution in value of our common stock from the issue price in our offering primarily as a result of (i) the substantial fees paid in connection with our offering, including selling commissions, dealer manager fees and annual distribution and stockholder servicing fees, (ii) the fees and expenses paid to our advisor and its affiliates in connection with the selection, acquisition, management and sale of our investments, (iii) general and administrative expenses, (iv) accumulated depreciation and amortization of real estate investments, and (v) the issuance of stock dividends. As of December 31, 2016, our net tangible book value per share of shares of our shares was $9.08. To the extent we are able to raise substantial proceeds in our offering, some of the expenses that cause dilution of the net tangible book value per share are expected to decrease on a per share basis, resulting in increases in the net tangible book value per share. This increase would be partially offset by increases in depreciation and amortization expenses related to our real estate investments.

~~The actual value of shares that we repurchase under our redemption plan may be substantially less than what we pay.~~

~~Under our redemption plan, the price for the repurchase of shares shall be equal to the then-current NAV per share, as published from time to time in an Annual Report on Form 10-K, a~~ Quarterly Report on Form 10-Q ~~and/or a Current Report on Form 8-K publicly filed with~~for the Commission. These prices may not accurately represent the current value of our assets per share of our common stock at any particular time and may be higher or lower than the actual value of our assets per share at such time. Accordingly, when we repurchase shares of our common stock, the actual value of the shares that we repurchase may be less than the price that we pay, and the repurchase may be dilutive to our remaining stockholders.period ended June 30, 2019.

We only own one property, which increases the risk that adverse changes in the performance or value of that property could materially affect our results of operations, our NAV and returns to our investors.

As of the date of this report, we only own one real estate investment consisting of a seniors housing community. As a result, we are subject to greater risks associated with geographic and property-type concentration in a single asset. A decline in in the performance or value of that asset will adversely affect our performance and the value of our stockholders’ investments.

~~During the period covered by this quarterly report, we did not sell any equity securities that were not registered under the Securities Act of 1933,~~ and ~~we did not repurchase any of our securities.~~

On March 2, 2016, our Registration Statement on Form S-11 (File No. 333-206017), covering a public offering of up to $2.0 billion shares of common stock, was initially declared effective under the Securities Act of 1933, as amended. Our Primary Offering commenced on a “best efforts” basis wherein we are offering, in any combination, three classes of our common stock: Class A shares, Class T shares and Class I shares. There are differing selling fees and commissions for each class of common stock. We will also pay annual distribution and stockholder servicing fees, subject to certain underwriting compensation limits, on the Class T and Class I shares sold in the Primary Offering. This is a continuous offering that will end no later than two years from March 2, 2016, unless extended in accordance with applicable securities laws.

~~The use of proceeds from our Primary Offering was as follows as of September 30, 2017:~~

The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this report.

The following exhibits are included, or incorporated by reference in this Quarterly Report on Form 10-Q for ~~the quarter and nine months ended~~ September 30, ~~2017~~2019 (and are numbered in accordance with Item 601 of Regulation S-K).

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the ~~8th~~14th day of November ~~2017.~~2019.

Maryland		47-4524619
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

CNL Center at City Commons
450 South Orange Avenue
Orlando, Florida		32801
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	~~(Do not check if a smaller reporting company)~~☒	Smaller reporting company	☒
			Emerging growth company	☒


		~~Page~~
PART I. FINANCIAL INFORMATION			PAGE

		Item 1.		~~Condensed~~1.Condensed Consolidated Financial Information (unaudited):
	Condensed Consolidated Statement of Net Assets (Liquidation Basis)		1
	Condensed Consolidated Balance ~~Sheets~~Sheet (Going Concern Basis)		2
	Condensed Consolidated Statement of Changes in Net Assets (Liquidation Basis)		3
			Condensed Consolidated Statements of Operations (Going Concern Basis)		4
			Condensed Consolidated Statements of ~~Stockholders’~~ Equity (Going Concern Basis)		5
			Condensed Consolidated ~~Statement~~Statements of Cash Flows (Going Concern Basis)		6
			Notes to Condensed Consolidated Financial Statements		7
		Item 2.		~~Management’s~~2.Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
		Item 3.		~~Quantitative~~3.Quantitative and Qualitative Disclosures about Market Risk		3128
		Item 4.		~~Controls~~4.Controls and Procedures		3328

PART II. OTHER INFORMATION

	~~Item 1.~~
~~Legal~~Item 1.Legal Proceedings			3329
		Item ~~1A.~~		~~Risk~~1A.Risk Factors		3329
		Item 2.		~~Unregistered~~2.Unregistered Sales of Equity Securities and Use of Proceeds		3529
		Item 3.		~~Defaults~~3.Defaults Upon Senior Securities		3629
		Item 4.		~~Mine~~4.Mine Safety Disclosures		3629
		Item 5.		~~Other~~5.Other Information		3629
		Item 6.		~~Exhibits~~6.Exhibits		3629

~~Exhibits~~Exhibit Index			3730
Signatures			3831

	Period from September 1, 2019 through
	September 30, 2019
Net assets in liquidation, beginning of period (Note 5)	$	43,796,825
Changes in net assets in liquidation:
Cash payments net of cash receipts		(118,461)
Net assets in liquidation, end of period	$	43,678,364

	As Presented		Effect of		As Adjusted
	December 31,		ASC 842		January 1,
	2018		Adoption		2019
Other assets	$	382,637	$	32,500	$	415,137
Total assets	$	67,289,375	$	32,500	$	67,321,875

Other liabilities	$	(128,957)	$	(32,500)	$	(161,457)
Total liabilities	$	(25,624,140)	$	(32,500)	$	(25,656,640)


Resident fees and services	$	4,549,487
Property operating expenses	(3,125,538)
Property management fees	(245,763)
General and administrative	(713,957)
Interest expense	(131,554)
Liquidation transaction costs	(2,605,872)
Liability for estimated costs in excess of estimated receipts during liquidation	$	(2,273,197)

	September 1, 2019		Cash Payments (Receipts)		Remeasurement of Assets and Liabilities		September 30, 2019
Assets:
Net inflows from real estate investments	$	1,178,186	$	(207,906)	$	—	$	970,280

Liabilities:
Corporate expenditures	(713,957)		87,636		—		(626,321)
Interest expense on mortgage loans	(131,554)		23,929		—		(107,625)
Liquidation transaction costs	(2,605,872)		—		—		(2,605,872)
	(3,451,383)		111,565		—		(3,339,818)
Total liability for estimated costs in excess of estimated receipts during liquidation	$	(2,273,197)	$	(96,341)	$	—	$	(2,369,538)

Stockholders’ equity as of August 31, 2019	$	40,876,936
Increase due to estimated net realizable value of investments in real estate		5,215,743
Decrease due to adjustment of assets and liabilities to net realizable value		(22,657)
Liability for estimated costs in excess of estimated receipts during liquidation		(2,273,197)
Adjustment to reflect the change to the liquidation basis of accounting		2,919,889
Estimated value of net assets in liquidation as of September 1, 2019	$	43,796,825

Land and land improvements	$	2,269,406
Buildings and building improvements		17,611,786
Furniture, fixtures and equipment		857,338
In-place lease intangibles ⁽¹⁾		1,286,507
Liabilities assumed		(170,918	)
Total purchase price consideration	$	21,854,119

Eight Months Ended August 31, 2019 and Nine Months Ended September 30, 2018
Type of Investment	Number of Units				Revenues				Percentage of Revenues
Resident fees and services:	2019		2018		2019		2018		2019			2018
Assisted living		129		129	$	4,006,041	$	2,706,757		68.6	%		72.2	%
Memory care		52		52		1,758,522		998,661		30.1	%		26.6	%
Other revenues	―		―			76,518		43,266		1.3	%		1.2	%
		181		181	$	5,841,081	$	3,748,684		100.0	%		100.0	%

	September 30,
	2017
In-place lease intangibles	$	1,286,507
Less: accumulated amortization		(257,302	)
Intangibles, net	$	1,029,205


	December 31,
	2018
In-place resident agreement intangibles	$	2,569,419
Less: accumulated amortization		(1,071,610)
Intangible assets, net	$	1,497,809

	Two Months Ended		Quarter Ended		Eight Months Ended		Nine Months Ended
	August 31,		September 30,		August 31,		September 30,
	2019		2018		2019		2018
Revenues:
Rental income and related revenues	$	—	$	422,967	$	486,294	$	1,253,209
Operating expenses:
Property operating expenses	—			196,932		165,782		547,152
General and administrative expenses	—			(110)		791		1,275
Property management fees	—			11,538		13,869		32,931
Depreciation and amortization	—			131,636		43,793		393,565
Total operating expenses	—			339,996		224,235		974,923
Gain on sale of real estate	—		—			1,566,321	—
Operating income	—			82,971		1,828,380		278,286
Other expense:
Interest expense and loan cost amortization	—			(69,190)	(161,512)			(201,711)
Total other expense	—			(69,190)	(161,512)			(201,711)
Income before income taxes						1,666,868		76,575
Income tax expense	—		—		—		—
Income from discontinued operations	$	—	$	13,781	$	1,666,868	$	76,575

	Quarter Ended		Nine Months Ended		As of
	September 30,		September 30,		September 30,
	2017		2017		2017
Fees for services rendered:
Asset management fees	$	42,800	$	86,060	$	86,060
Advisor personnel expenses ⁽¹⁾		95,805		320,204		320,204
Total fees for services rendered	$	138,605	$	406,264	$	406,264

Then-current public offering price	$	10.93	$	10.93	$	10.93
Restricted Stock shares ⁽²⁾		12,681		37,170		37,170

		Quarter Ended				Nine Months Ended				Cumulative
		September 30,				September 30,				Fees
		2019		2018		2019		2018		Settled
Fees for services rendered:
	Asset management fees	$	―	$	87,488	$	99,417	$	229,088	$	578,171
	Advisor personnel expenses ⁽¹⁾		―		112,784		127,950		362,555		1,058,676
Total fees for services rendered		$	―	$	200,272	$	227,367	$	591,643	$	1,636,847
Then-current NAV		$	9.92	$	10.06	$	9.92	$	10.06	$	9.92
Restricted stock shares ⁽²⁾			―		19,908		22,920		58,811		164,210
Cash distributions on restricted stock ⁽³⁾		$	―	$	8,113	$	8,113	$	16,226	$	16,226
Stock dividends on restricted stock⁽⁴⁾			―		170		―		340		340

2017	$	—
2018		32,036
2019		199,072
2020		211,350
2021		224,386
Thereafter		15,695,656
	$	16,362,500

	September 30,
	2017
Current:
Federal	$	(63,333	)
State		(9,133	)
Total current expense	$	(72,466	)
Deferred:
Federal	$	26,446
State		4,142
Total deferred benefit		30,588
Income tax expense	$	(41,878	)

Carryforwards of net operating loss	$	—
Prepaid rent		21,043
Valuation allowance		9,545
Net deferred tax assets	$	30,588

	Quarter Ended					Nine Months Ended
	September 30, 2017					September 30, 2017
Tax benefit computed at federal statutory rate	$	103,479		35.0	%	$	318,090		35.0	%
Impact of REIT election		(114,441	)	(38.7	)%		(354,977	)	(39.1	)%
State income tax expense		(1,291	)	(0.4	)%		(4,991	)	(0.5	)%
Income tax expense	$	(12,253	)	(4.1	)%	$	(41,878	)	(4.6	)%


		Two Months Ended		Quarter Ended		Eight Months Ended		Nine Months Ended
		August 31,		September 30,		August 31,		September 30,
		2019		2018		2019		2018
Current:
	Federal	$	―	$	8,150	$	―	$	(26,350)
	State		―		3,040		―		(5,560)
Total current expense			―		11,190		―		(31,910)

Deferred:
	Federal		―		(838)		(25,300)		(2,164)
	State		―		(414)		(5,233)		(1,171)
Total deferred expense			―		(1,252)		(30,533)		(3,335)
	Income tax expense	$	―	$	9,938	$	(30,533)	$	(35,245)

	Two Months Ended August 31,				Quarter Ended September 30,
	2019				2018
Tax benefit computed at federal statutory rate	$	98,564	21.0	%	$	101,305	21.0	%
Impact of REIT election		(98,564)	(21.0)	%		(93,991)	(19.5)	%
State income tax expense		―	―	%		2,624	0.5	%
Impact of change in deferred tax asset		11,297	3.6	%		―	―	%
Impact of change in valuation allowance		(11,297)	(3.6)	%		―	―	%
Income tax expense	$	―	―	%	$	9,938	2.0	%

	Eight Months Ended August 31,				Nine Months Ended September 30,
	2019				2018
Tax benefit computed at federal statutory rate	$	361,024	21.0	%	$	260,494	21.0	%
Impact of REIT election		(355,791)	(20.7)	%		(289,008)	(23.3)	%
State income tax expense		(5,233)	(0.3)	%		(6,731)	(0.5)	%
Impact of change in deferred tax asset		86,558	5.0	%		―	―	%
Impact of change in valuation allowance		(117,091)	(6.8)	%		―	―	%
Income tax expense	$	(30,533)	(1.8)	%	$	(35,245)	(2.8)	%

	Quarter Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net loss	$	(307,906	)	$	(110,558	)	$	(950,707	)	$	(110,558	)
Adjustments to reconcile net loss to FFO:
Depreciation and amortization		324,417		―				647,185		―
Total FFO		16,511			(110,558	)		(303,522	)		(110,558	)
Adjustments to reconcile FFO to MFFO	―			―			―			―
Total MFFO	$	16,511		$	(110,558	)	$	(303,522	)	$	(110,558	)

Class A common stock:
Weighted average number of Class A common shares outstanding ⁽¹⁾		683,113			284,747			521,781			103,295
Net loss per share of Class A common stock outstanding (basic and diluted)	$	(0.16	)	$	(0.36	)	$	(0.66	)	$	(0.95	)
FFO per share of Class A common stock outstanding (basic and diluted)	$	0.01		$	(0.36	)	$	(0.21	)	$	(0.95	)
MFFO per share of Class A common stock outstanding (basic and diluted)	$	0.01		$	(0.36	)	$	(0.21	)	$	(0.95	)

Class T common stock:
Weighted average number of Class T common shares outstanding ⁽¹⁾		1,177,167			14,990			878,536			10,489
Net loss per share of Class T common stock outstanding (basic and diluted)	$	(0.16	)	$	(0.36	)	$	(0.66	)	$	(0.95	)
FFO per share of Class T common stock outstanding (basic and diluted)	$	0.01		$	(0.36	)	$	(0.21	)	$	(0.95	)
MFFO per share of Class T common stock outstanding (basic and diluted)	$	0.01		$	(0.36	)	$	(0.21	)	$	(0.95	)

Class I common stock:
Weighted average number of Class I common shares outstanding ⁽¹⁾		57,534			6,600			33,006			2,187
Net loss per share of Class I common stock outstanding (basic and diluted)	$	(0.16	)	$	(0.36	)	$	(0.66	)	$	(0.95	)
FFO per share of Class I common stock outstanding (basic and diluted)	$	0.01		$	(0.36	)	$	(0.21	)	$	(0.95	)
MFFO per share of Class I common stock outstanding (basic and diluted)	$	0.01		$	(0.36	)	$	(0.21	)	$	(0.95	)

	Payments Due by Period
	2017		2018-2019		2020-2021		Thereafter		Total
Mortgage and notes payable (principal and interest)	$	183,943	$	1,699,997	$	1,875,610	$	17,658,076	$	21,417,626
	$	183,943	$	1,699,997	$	1,875,610	$	17,658,076	$	21,417,626

	Total			Payments to Affiliates ⁽¹⁾			Payments to Others
Aggregate price of offering amount registered ⁽²⁾	$	1,750,000,000
Shares sold ⁽³⁾		2,147,756
Aggregate amount sold ⁽³⁾	$	22,580,454
Payment of underwriting compensation ⁽⁴⁾		(1,086,984	)	$	(1,086,984	)	$	—
Net offering proceeds to the issuer		21,493,470
Purchases of real estate and development costs		(5,379,888	)	―				(5,379,888	)
Payment of investment services fees and acquisition expenses		(625,037	)		(503,389	)		(121,648	)
Payment of capital expenditures		(17,000	)	―				(17,000	)
Distributions to stockholders ⁽⁵⁾		(162,496	)		(115,442	)		(47,054	)
Remaining proceeds from the Offering	$	15,309,049

Exhibit No.		Description

3.1		Second Articles of Amendment and Restatement (Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 15, 2017 and incorporated herein by reference.)

3.2		Articles of Amendment (Previously filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed September 11, 2019.)

3.3		Amended and Restated Bylaws ~~(Previously~~(Previously filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed May 6, 2016 and incorporated herein by reference.)

4.1		Form of Subscription Agreement (Previously ~~filed~~included as Appendix AB to the ~~Company’s~~ Prospectus filed with the Company’s Post-Effective Amendment No. 8 to the Registration Statement on Form S-11 (File No. 333-206017), filed April ~~26, 2017~~13, 2018 and incorporated herein by reference.)

4.2		Distribution Reinvestment Plan (Previously filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q filed May 6, 2016 and incorporated herein by reference.)

4.3		Amended and Restated Redemption Plan (Previously filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed April 17, 2017 and incorporated herein by reference.)

4.4		Statement regarding transfer restrictions, preferences, limitations and rights of holders of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates) (Previously filed as Exhibit 4.4 to the Company’s Pre-Effective Amendment No. 2 to Registration Statement on Form S-11 (File No. 333-206017), filed January 15, 2016 and incorporated herein by reference.)

10.1		~~Asset Purchase~~Amended and Restated Advisory Agreement ~~between MidAmerica Surgery Institute Properties, LLC, and CHP II Partners, LP, dated October 2, 2017~~( ~~(Previously~~Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed ~~October 3, 2017~~on March 6, 2019 and incorporated herein by reference.)

10.2		Asset Purchase Agreement for Overland Park (Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10).) (Previously filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed May 9, 2019 and incorporated herein by reference.)

31.1		Certification of Chief Executive Officer of CNL Healthcare Properties II, Inc., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)

31.2		Certification of Chief Financial Officer of CNL Healthcare Properties II, Inc., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)

32.1		Certification of Chief Executive Officer and Chief Financial Officer of CNL Healthcare Properties II, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)

101		The following materials from CNL Healthcare Properties II, Inc. Quarterly Report on Form 10-Q for the ~~quarter and~~ nine months ended September 30, ~~2017,~~2019, formatted in XBRL (Extensible Business Reporting Language); (i) Condensed Consolidated Statement of Net Assets, (ii) Condensed Consolidated Balance Sheets, ~~(ii)~~(iii) Condensed Consolidated Statement of Changes in Net Assets, (iv) Condensed Consolidated Statements of Operations, ~~(iii)~~(v) Condensed Consolidated Statements of Stockholders’ Equity, ~~(iv)~~(vi) Condensed Consolidated ~~Statement~~Statements of Cash Flows, and ~~(v)~~(vii) Notes to the Condensed Consolidated Financial Statements.


CNL HEALTHCARE PROPERTIES II, INC.

By:	/s/ Stephen H. Mauldin
	STEPHEN H. MAULDIN
	Chief Executive Officer and President
	(Principal Executive Officer)


By:	/s/ ~~Kevin R. Maddron~~Ixchell C. Duarte
	~~KEVIN R. MADDRON~~IXCHELL C. DUARTE
	Chief Financial Officer, ~~Chief Operating Officer~~Senior Vice President and Treasurer
	(Principal Financial Officer)