November 5, 2015
VIA EDGAR
Eric McPhee
Senior Staff Accountant
Office of Real Estate & Commodities
Division of Corporate Finance
U.S. Securities & Exchange Commission
100 F Street, NE
Mailstop 3233
Washington, D.C. 20549
| Re: | Summit Healthcare REIT, Inc. |
| Form 10-K for the fiscal year ended December 31, 2014 | |
| Filed on March 20, 2015 | |
| File No. 0-52566 |
Dear Mr. McPhee:
This letter responds to the comment in your letter dated October 23, 2015 to Elizabeth A. Pagliarini, Chief Financial Officer of Summit Healthcare REIT, Inc. (the “Company”) regarding our Form 10-K for fiscal year ended December 31, 2014 (our “Form 10-K”). For your convenience, we have set forth below your comment followed by our response.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2014
Notes to Consolidated Statements of Operations
4. Concentration of Risk, page 62
Comment:
1. We note that as of December 31, 2014 you had two tenants which accounted for 46% and 32% of your tenant rental revenue, respectively, and that as of June 30, 2015, you had concentrations of 49% and 29%. Please tell us whether any groups of properties rented to a single tenant represented more than 20% of your total assets as of December 31, 2014. To the extent you do have a significant asset concentration leased to a single tenant, please tell us whether you have considered providing full audited financial statements of that tenant.
2 South Pointe Drive, Suite 100 • Lake Forest, California 92630 • Toll-Free (800) 978-8136 • Local (949) 535-2022 • www.SummitHealthcareReit.com
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Summit Healthcare REIT, Inc.
File No. 0-52566
Response:
We examined whether any groups of properties rented to a single tenant represented more than 20% of our total assets as of December 31, 2014 and determined that none of our single properties or groups of properties rented to a single tenant represented more than 20% of our total assets. We are providing the calculation of all our properties owned at December 31, 2014 in support of this statement as Exhibit A attached to this letter. Additionally, there are no cross-default provisions between tenants and no guarantees by other entities with respect to the Company’s tenants that would create a significant concentration. Therefore, as none of our single properties or groups of properties rented to a single tenant constitute a significant concentration, no full audited financial statements are required to be provided in our Form 10-K.
****
We acknowledge that:
| · | the Company is responsible for the adequacy and accuracy of the disclosure in the filings; |
| · | staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and |
| · | the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
Please let me know if you have any further questions or if we can be helpful in any other way. I can be reached via phone: 949-535-2018; fax: 949-535-2054; or email: epagliarini@summithealthcarereit.com. Additionally, please feel free to contact Sharyn Grant, Controller at 949-535-1917; or email: sgrant@summithealthcarereit.com.
| Very truly yours, | |
| Summit Healthcare REIT, Inc. | |
| By: | /s/ Elizabeth Pagliarini |
| Name: | Elizabeth Pagliarini |
| Title: | Chief Financial Officer |
CC: BDO USA, LLP
David J. Kaufman, Thompson Coburn LLP
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Summit Healthcare REIT, Inc.
File No. 0-52566
Exhibit A
| Property | % of total | Net Book Value (in $) | Tenant |
| CHP Sheridan | 3,690,386 | ||
| CHP Fernhill | 4,131,892 | SNF Management as Tenant | |
| CHP Tigard | 13.0% | 7,584,223 | 15,406,502 |
| CHP Medford | 6.6% | 7,842,083 | RSL Medford, LLC |
| CHP Friendswood | 11.6% | 13,725,033 | Friendswood TRS, LLC |
| CHP Winston-Salem | 7.8% | 9,176,942 | Danby House, LLC |
| HP Aledo | 7.0% | 8,267,294 | MW Aledo Operating, LLC |
| HP Shelby | 4,135,704 | ||
| HP Hamlet | 6,123,301 | WPH Salem, LLC as tenant | |
| HP Carteret | 12.0% | 3,951,145 | 14,210,149 |
| HP Redding | 3,482,127 | CSL Redding, LLC | |
| Lamar | 3.8% | 4,518,515 | Lamar Estates, LLC |
| Monte Vista | 2.9% | 3,418,093 | Monte Vista Estates, LLC |
| Myrtle Point | 3.5% | 4,176,121 | Myrtle Point Care Center |
| Gateway | 9.6% | 11,315,327 | Sapphire at Applewood, LLC |
| Applewood | 2.5% | 2,949,070 | Sapphire at Gateway, LLC |
| Other | 235,000 | ||
| Total Real Estate per 2014 10-K | 98,722,256 | ||
| Total Assets per 2014 10-K | 118,081,000 | ||
| 20% of assets | 23,616,200 | ||
No group of properties rented to a single tenant exceeds 20% of our total assets as of December 31, 2014.