UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of ~~the~~Report ~~Securities~~(Date ~~Exchange~~of ~~Act~~earliest ofevent ~~1934~~reported): May 6, 2019

Date of Report (Date of earliest event reported): March 13, 2019

CNL HEALTHCARE PROPERTIES II, INC.

(Exact Name of Registrant as Specified in its Charter)

Maryland

000-55777

47-4524619

(State or other jurisdiction

of incorporation)

(Commission File No.)

(I.R.S. Employer

Identification No.)



450 South Orange Avenue, Orlando, FL		32801
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (407) 650-1000

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

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. ☒

~~Item~~Securities ~~1.01~~registered ~~Entry~~pursuant ~~into~~to aSection 12(b) ~~Material~~of ~~Definitive~~the ~~Agreement~~Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

None

N/A

Item 2.01

Completion of Acquisition or Disposition of Assets.

Sale of MOB Property

OnAs previously reported in a Current Report on Form 8-K filed on March 1519, 2019, CHP II Overland Park KS MOB Owner, LLC, an operating subsidiary of CNL Healthcare Properties II, Inc. (referred to herein as “we”, “us”, “our” or the “Company”), (the “Seller”), entered into an Asset Purchase Agreement (the “Sale Agreement”) with HCP Medical Office Buildings, LLC, a Delaware limited liability company (the “Original Purchaser”), for the sale of the Company’s medical office building located in Overland Park, Kansas (the “~~MOB~~ Property”) for approximately $15.4 million in cash (the “Sale”), subject to certain pro-rations and other adjustments as described in the Sale Agreement ~~(the “Purchase Price”)~~. Purchaser will place into escrow a $0.3 million earnest money deposit (the “First Deposit”). If Purchaser does not terminate the Sale Agreement on or before the end of the inspection period on April 5, 2019, the Purchaser will place into escrow an additional $0.3 million earnest money deposit (together with the First Deposit, the “Deposit”) and the Deposit will be nonrefundable, except in the event of the Seller’s breach of the Sale Agreement or failure to satisfy conditions to the consummation of the Sale.

~~The~~On ~~MOB~~May 6, 2019, ~~Property~~the isSeller ~~subject~~and toOverland aPark ~~right~~MOB, ~~of first refusal~~LLC, ~~which provides~~ an ~~unaffiliated~~affiliate ~~third~~of ~~party~~the ~~a right~~Original toPurchaser ~~acquire~~consummated the ~~MOB~~Sale ~~Property under~~ (the ~~same~~“Closing ~~material~~Date”), ~~terms~~which ~~and~~resulted ~~conditions~~in asnet ~~Purchaser.~~cash ~~Seller~~proceeds ~~anticipates~~to ~~that~~ the ~~right~~Company of ~~first~~approximately ~~refusal~~$9.5 million ~~will~~after beclosing ~~exercised~~costs orand repayment ~~expire~~of ~~prior~~indebtedness tosecured by the ~~end~~Property ofsold (the ~~inspection~~“Sale ~~period~~Proceeds”). inThe Company intends to use the ~~Sale~~remainder ~~Agreement.~~of ~~The~~the Sale ~~Agreement~~ ~~contains~~Proceeds ~~customary~~strategically ~~representations,~~to ~~warranties,~~pay ~~covenants~~down ~~and~~the ~~indemnities~~Company’s indebtedness on one of ~~the~~its ~~Seller~~senior housing assets and for ~~the~~other ~~Purchaser~~corporate purposes. The Company ~~currently~~does ~~anticipates~~not ~~that~~plan ~~the~~to ~~consummation~~make ofa ~~the~~special ~~Sale~~distribution ~~will~~at ~~occur~~this time in ~~the~~its ~~first~~strategic ~~half~~alternatives ofprocess ~~2019;~~as ~~provided,~~it ~~however,~~continues ~~that there~~to ~~can~~focus beon nomaximizing ~~assurance~~value ~~that~~for ~~the~~its ~~Sale~~stockholders. ~~will~~The ~~ultimately~~Company’s beremaining ~~completed~~real estate portfolio consists of two senior housing properties.

~~The~~Item ~~Company’s board of directors (the “Board”) unanimously approved the Company entering into the Sale Agreement~~7.01 ~~Net~~Regulation ~~proceeds~~FD from the Sale, after payment of closing costs, will be used to satisfy debt securing the MOB Property and the remaining proceeds may be used to make a special distribution to stockholders and/or for general corporate purposes. Disclosure

The ~~foregoing~~Company ~~description~~will ofe-mail ~~the~~its ~~Sale~~stockholders’ ~~Agreement~~financial ~~does~~advisors ~~not~~a ~~purport~~letter toand send the Company’s bestockholders a ~~complete~~letter ~~description~~notifying them of the ~~rights~~closing of the Sale and ~~obligations~~advising of related matters. A copy of the ~~parties~~letter ~~thereunder~~to ~~and~~financial advisors is ~~qualified~~filed inas ~~its~~Exhibit ~~entirety~~99.1 byand ~~reference~~a tocopy of the ~~full~~letter ~~text~~to ofstockholders ~~the~~is ~~Sale~~filed ~~Agreement~~as ~~that~~Exhibit ~~will~~99.2 beto ~~filed~~this ~~with~~Current Report ~~the~~on ~~Securities~~Form 8-K and ~~Exchange~~is ~~Commission~~incorporated asherein anby ~~exhibit~~reference to solely for the ~~Company’s~~purposes ~~next~~of ~~quarterly~~this ~~report~~Item 7.01 disclosure.

Pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), the information contained in this Item 7.01 disclosure, including Exhibits 99.1 and 99.022 ~~Termination~~and the information set forth therein, is deemed to have been furnished and shall not be deemed to be “filed” under the Securities Exchange Act of a1934, ~~Material~~as ~~Definitive~~amended ~~Agreement~~(the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall any of such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

OnBy ~~March 13,~~furnishing ~~2019,~~ the ~~Board~~information ~~and~~contained ~~the~~in ~~Company’s~~this ~~external~~Item advisor, CHP II Advisors, LLC (the “Advisor”) agreed to terminate the Amended and Restated Expense Support and Restricted Stock Agreement dated May 9, 2016 (as amended, the “Expense Support Agreement”) between the Company and the Advisor, which termination is effective April 1, 20197.01 ~~Any restricted shares granted to the Advisor under the Expense Support Agreement shall continue to be held by the Advisor~~disclosure, ~~subject to the vesting and forfeiture provisions of the Expense Support Agreement which survive termination. The Expense Support~~including ~~Agreement~~Exhibits ~~termination was unanimously approved by the Board and culminates certain Board action taken to modify the Advisor’s overall compensation~~99.1 ~~The Company~~ and ~~the Advisor previously agreed to eliminate future acquisition fees and disposition fees as well as to generally reduce the asset management fee (the “AUM Fee”) to 0~~99.402, ~~percent per annum of average invested assets as described in~~ the Company’s ~~Current~~makes ~~Report~~no onadmission ~~Form 8-K filed March 6, 2019. The AUM Fee is further subject and subordinate to an agreed upon hurdle relating to the total operating expenses of the Company (~~as ~~described in the Amended and Restated Advisory Agreement), though~~ to the ~~extent~~materiality ~~any portion~~ of ~~the~~such AUM Fee is not paid as a result of total operating expenses exceeding the prescribed limits, it may nevertheless be recovered by the Advisor if certain Company performance thresholds are subsequently metinformation.

Item 89.01 ~~Other~~Financial ~~Events~~Statements and Exhibits

~~Engagement~~(b) ofPro ~~SunTrust~~forma ~~Robinson~~financial ~~Humphrey, Inc~~information.~~; Suspension of Cash Distribution~~

AsThe ~~previously~~following ~~disclosed~~unaudited inpro ~~October~~forma ~~2018,~~consolidated ~~the~~financial ~~Company’s~~statements ~~Board~~have ~~formed~~been aprepared ~~special~~to ~~committee~~provide ~~comprised~~pro ~~solely~~forma ofinformation ~~its~~with ~~independent~~regards ~~directors (the “Special Committee”)~~ to ~~consider~~a ~~possible~~real estate ~~strategic~~disposition, ~~alternatives~~described ~~for~~in ~~the~~Item ~~Company~~2.01 ~~Such~~above. ~~strategic alternatives may include, without limitation, an orderly disposition of the Company’s assets or one or~~

~~more~~The ofaccompanying ~~the~~unaudited ~~Company’s~~pro ~~asset~~forma ~~classes~~condensed ~~and~~consolidated ~~the~~balance ~~distribution~~sheet of the ~~net sale proceeds thereof to the stockholders of the~~ Company ~~and~~illustrates ~~a potential business combination or other transaction with an unrelated third party or affiliated party of~~ the ~~company’s~~estimated ~~sponsor.~~effect ~~The sale~~ of the ~~MOB~~Sale, ~~Property~~described isin ~~the~~described ~~first transaction pursuant to this strategic shift by the Company. In furtherance of the Company’s consideration of strategic alternatives,~~ in ~~January~~Item ~~2019, the Special Committee engaged SunTrust Robinson Humphrey, Inc~~2.01 ~~(“STRH”)~~above, anas ~~independent~~if ~~investment~~it ~~banking~~had ~~firm~~occurred ~~to act~~ as ~~financial~~of ~~advisor~~December to31, ~~the Special Committee~~2018.

InThe ~~light~~accompanying ofunaudited ~~the~~pro ~~pending~~forma ~~Sale~~condensed ~~and~~consolidated ~~the~~statements ~~formation~~ of ~~the~~operations ~~Special Committee and the engagement~~ of ~~STRH,~~ the ~~Board~~Company ~~voted~~are topresented ~~suspend~~for the ~~Company’s~~ ~~cash~~years ~~distribution~~ended onDecember 31, ~~its~~2018 ~~common~~and ~~stock~~2017 ~~effective~~(the ~~April 1,~~“Pro ~~2019.~~Forma ~~Accordingly,~~Periods”) ~~the~~and ~~Board~~include ~~does~~certain ~~not~~pro ~~currently~~forma ~~intended~~adjustments to ~~declare~~illustrate ~~any regular distributions on~~ the ~~Company’s~~estimated ~~common~~effect ~~stock after the effective date~~ of the ~~suspension~~Sale, ~~though~~ ~~special~~described ~~distributions~~in ~~may~~Item ~~be made from time to time~~2.01 ~~The~~above, ~~date~~as ofif ~~the~~it ~~suspension~~had ofoccurred ~~the~~on ~~Company’s~~January ~~cash~~1, ~~distribution~~2017, ~~corresponds~~which ~~with~~represents the ~~termination~~first ~~date~~day of the ~~Expense~~first ~~Support~~pro ~~Agreement~~forma period presented.

~~Determination~~This unaudited pro forma condensed consolidated financial information is presented for informational purposes only and does not purport to be indicative of ~~Estimated~~the ~~Net~~Company’s ~~Asset~~financial ~~Value~~position ~~per~~or ~~Share~~financial results as if the transaction reflected herein had occurred as of the date indicated or been in effect during the Pro Forma Periods. In addition, this unaudited pro forma condensed consolidated financial information should not be viewed as indicative of the Company’s expected financial position or financial results for future periods and should be read in conjunction with the Company’s financial statements as filed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

OnCNL ~~March 13,~~HEALTHCARE ~~2019,~~PROPERTIES ~~the Board unanimously approved $9.92 as the estimated net asset value (“NAV”) per share of the Company’s common stock outstanding as of December 31~~II, ~~2018 (the “Valuation Date”), based on the estimated value of our assets less the estimated value of our liabilities, including estimated property transaction costs, divided by approximately 4~~INC.~~90 million~~ ~~shares~~AND ~~issued~~SUBSIDIARIES and outstanding as of December 31, 2018, excluding restricted shares issued to our Advisor. There have been no material changes between December 31, 2018 and the date of this filing that would impact the overall estimated NAV per share.

InPRO ~~establishing~~FORMA ~~the~~CONDENSED ~~estimated~~CONSOLIDATED ~~NAV,~~BALANCE ~~the~~SHEET ~~Board engaged Robert A. Stanger & Co., Inc., an independent third-party valuation firm~~ (~~“Stanger”~~UNAUDITED), to provide a net asset valuation analysis of the Company. Stanger developed a valuation analysis of the Company and provided the analysis to the valuation committee of the Board, comprised solely of the independent directors (the “Valuation Committee”) in a report dated March 13, 2019 that contained, among other information, a range of per share net asset values for the Company’s common stock as of the Valuation Date (the “Valuation Report”).

~~Background~~AS OF DECEMBER 31, 2018

In January 2019, the Company announced that it initiated a process to update the Company’s estimated NAV per share to provide existing investors and broker-dealers with increased transparency and an estimated value of the Company’s shares based on the value of the Company’s current portfolio as of December 31, 2018. The Company announced two previous NAVs per share of $10.06 and $10.00 as of December 31, 2017 and June 30, 2017, respectively.


ASSETS	CHP II Historical			MOB Sale Pro Forma Adjustments				CHP II Pro Forma
Real estate investment properties, net	$	53,573,013		$	(10,603,833	)	(a)	$	42,969,180
Cash		8,003,576			15,359,500		(a)		17,753,578
					(5,609,498	)	(b)
Intangibles, net		4,983,627			(3,485,818	)	(a)		1,497,809
Other assets		495,188			(112,551	)	(a)		382,637
Restricted cash		233,971			—				233,971

Total assets	$	67,289,375		$	(4,452,200	)		$	62,837,175


LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgages and notes payable, net	$	24,197,359		$	(5,600,000	)	(b)	$	18,665,013
					67,654		(a)
Accounts payable and accrued liabilities		888,816			(382,237	)	(a)		497,081
					(9,498	)	(b)
Others liabilities		452,063			(323,106	)	(a)		128,957
Due to related parties		85,902			—				85,902

Total liabilities		25,624,140			(6,247,187	)			19,376,953

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; 4,899,139 shares issued and outstanding as of December 31, 2018		48,995			—				48,995
Capital in excess of par value		48,039,220			—				48,039,220
Accumulated loss		(3,464,160	)		1,794,987		(a)		(1,669,173	)
Accumulated distributions		(2,958,820	)		—				(2,958,820	)

Total stockholders’ equity		41,665,235			1,794,987				43,460,222

Total liabilities and stockholders’ equity	$	67,289,375		$	(4,452,200	)		$	62,837,175

~~From~~See ~~Stanger’s~~accompanying ~~engagement~~notes through the issuance of its Valuation Report, Stanger held discussions with our Advisor and conducted appraisals, investigations, research, review and analyses as it deemed necessary. The Valuation Committee, upon its receipt and review of the Valuation Report, concluded that the range of $9.40 and $10.49 for the Company’s estimated NAV per share of the Company’s common stock proposed in Stanger’s Valuation Report was reasonable, and recommended to ~~the~~pro ~~Board~~forma ~~that~~condensed itconsolidated ~~adopt~~financial $9statements.92 as the estimated NAV per share of the Company’s common stock, which is the midpoint of the range in Stanger’s Valuation Report. At a special meeting of the Board also held on March 13, 2019, the Board accepted the recommendation of the Valuation Committee and approved $9.92 as the estimated NAV per share of the Company’s common stock as of December 31, 2018.

~~Other~~CNL ~~than~~HEALTHCARE ~~the~~PROPERTIES ~~adjustment for estimated transaction costs~~II, ~~which reduced the NAV by $0~~INC.26 ~~per~~AND ~~share,~~SUBSIDIARIES ~~the Board’s determination of the December 31, 2018 NAV (the “2018 NAV”) was undertaken in accordance with the~~

~~Company’s~~PRO ~~valuation~~FORMA ~~policy~~CONDENSED ~~and~~CONSOLIDATED ~~the~~STATEMENT ~~recommendations~~OF ~~and~~OPERATIONS ~~methodologies of the Investment Program Association, a trade association for non-listed direct investment vehicles~~ (~~“IPA”~~UNAUDITED)~~, as~~ ~~set forth in IPA Practice Guideline 2013-01 “Valuations of Publicly Registered Non-Listed REITs” (“IPA Practice Guideline”).~~

~~The~~FOR ~~estimated~~THE ~~2018~~YEAR ~~NAV~~ENDED ~~represents a snapshot in time~~DECEMBER 31, ~~will likely change, and does not necessarily represent the amount a stockholder would receive now or in the future for his or her shares of the Company’s common stock. The~~ 2018 NAV is based on a number of assumptions, estimates and data that are inherently imprecise and susceptible to uncertainty and changes in circumstances. Please see “Valuation Methodologies and Major Assumptions,” “Valuation Summary,” and “Additional Information Regarding the Valuation, Limitations of Estimated Share Value and the Engagement of Stanger” in this Current Report, below.

Valuation Methodologies


	CHP II Historical			MOB Sale Pro Forma Adjustments				CHP II Pro Forma
Revenues:
Resident fees and services	$	5,905,098		$	—			$	5,905,098
Rental income and tenant reimbursements		1,532,218			(1,532,218	)	(a)		—

Total revenues		7,437,316			(1,532,218	)			5,905,098

Operating expenses:
Property operating expenses		4,230,905			(599,694	)	(a)		3,631,211
General and administrative		1,211,915			—				1,211,915
Property management fees		381,465			(44,989	)	(a)		336,476
Depreciation and amortization		2,304,728			(524,943	)	(a)		1,779,785
Acquisition fees and expenses		818			—				818

Total operating expenses		8,129,831			(1,169,626	)			6,960,205
Operating loss		(692,515	)		(362,592	)			(1,055,107	)

Other income (expense):
Interest and other income		15,819			—				15,819
Interest expense and loan cost amortization		(1,127,693	)		274,164		(a)		(853,529	)

Total other expense		(1,111,874	)		274,164				(837,710	)

Loss before income taxes		(1,804,389	)		(88,428	)			(1,892,817	)
Income tax expense		794			—				794

Net loss	$	(1,805,183	)	$	(88,428	)		$	(1,893,611	)

Class A Common Stock (basic and diluted):
Net loss attributable to Class A stockholders	$	(661,345	)					$	(693,742	)

Net loss per share of Class A common stock outstanding	$	(0.43	)					$	(0.45	)

Weighted average number of Class A common shares outstanding ^(b)		1,547,449							1,547,449

Class T Common Stock (basic and diluted):
Net loss attributable to Class T stockholders	$	(1,025,147	)					$	(1,075,365	)

Net loss per share of Class T common stock outstanding	$	(0.43	)					$	(0.45	)

Weighted average number of Class T common shares outstanding ^(b)		2,398,691							2,398,691

Class I Common Stock (basic and diluted):
Net loss attributable to Class I stockholders	$	(118,691	)					$	(124,504	)

Net loss per share of Class I common stock outstanding	$	(0.43	)					$	(0.45	)

Weighted average number of Class I common shares outstanding ^(b)		277,718							277,718

AsSee ofaccompanying ~~the~~notes ~~Valuation~~to ~~Date,~~pro ~~the~~forma ~~Company’s~~condensed ~~real~~consolidated ~~estate~~financial ~~portfolio consisted of two seniors housing communities, one in Riverview, Florida and one in Pensacola, Florida and the MOB Property in Overland Park, Kansas (the “Appraised Properties”)~~statements. ~~The Appraised Properties were valued using valuation and appraisal methodologies with real estate industry standards and practices further described below.~~

ToCNL ~~estimate~~HEALTHCARE ~~the~~PROPERTIES ~~value of the Appraised Properties~~II, ~~Stanger has performed a site visit and conducted an appraisal of each asset~~INC. InAND ~~determining~~SUBSIDIARIES its value opinion of each Appraised Property, Stanger utilized all information that it deemed relevant, including information from the Advisor and its own data sources, which data sources included information on capitalization rates, leasing rates and other economic factors. In conducting its appraisals of the Appraised Properties, and pursuant to its engagement, Stanger utilized the income approach to valuation. Specifically, a direct capitalization analysis was used for seniors housing properties and both a direct capitalization and discounted cash flow analysis was used for the MOB Property.

~~For~~PRO ~~the~~FORMA ~~seniors~~CONDENSED ~~housing~~CONSOLIDATED ~~assets,~~STATEMENT aOF ~~direct~~OPERATIONS ~~capitalization~~(UNAUDITED) analysis was performed by applying a market capitalization rate for each applicable Appraised Property to the estimated stabilized forward-year annual net operating income at each such property. In selecting each capitalization rate, Stanger took into account, among other factors, prevailing capitalization rates in the applicable property sector, the property’s location, age and condition, and the property’s operating trends.

~~For~~FOR ~~the~~THE ~~MOB~~YEAR ~~Property,~~ENDED ~~the above-described direct capitalization analysis was performed and a market discount rate and terminal capitalization rate was applied to multi-year property projections which factored in~~DECEMBER 31, ~~among~~2017 ~~other things, the leases encumbering the property, market conditions with respect to lease-up or releasing and property historical and projected operating trends.~~

As applicable, Stanger adjusted the capitalized value of each Appraised Property for any deferred maintenance or capital needs and lease-up costs to estimate the “as-is” value of each Appraised Property. Stanger’s appraisal report was certified by an appraiser licensed in the state in which the Appraised Properties were located. As of the Valuation Date, the aggregate estimated value of the Appraised Properties was approximately $66.64 million.


	CHP II Historical			MOB Sale Pro Forma Adjustments					CHP II Pro Forma
Revenues:
Resident fees and services	$	3,290,191		$	—				$	3,290,191
Rental income and tenant reimbursements		18,624			(18,624	)	(a	)		—

Total revenues		3,308,815			(18,624	)				3,290,191

Operating expenses:
Property operating expenses		1,852,057			(4,400	)	(a	)		1,847,657
General and administrative		917,700			—					917,700
Property management fees		196,632			—					196,632
Depreciation and amortization		971,389			—					971,389

Total operating expenses		3,937,778			(4,400	)				3,933,378
Operating loss		(628,963	)		(14,224	)				(643,187	)

Other income (expense):
Interest and other income		66			(44	)	(a	)		22
Interest expense and loan cost amortization		(589,540	)		—					(589,540	)

Total other expense		(589,474	)		(44	)				(589,518	)

Loss before income taxes		(1,218,437	)		(14,268	)				(1,232,705	)
Income tax expense		98,093			—					98,093

Net loss	$	(1,316,530	)	$	(14,268	)			$	(1,330,798	)

Class A Common Stock (basic and diluted):
Net loss attributable to Class A stockholders	$	(438,710	)						$	(443,465	)

Net loss per share of Class A common stock outstanding	$	(0.74	)						$	(0.75	)

Weighted average number of Class A common shares outstanding ^(b)		590,225								590,225

Class T Common Stock (basic and diluted):
Net loss attributable to Class T stockholders	$	(833,933	)						$	(842,970	)

Net loss per share of Class T common stock outstanding	$	(0.74	)						$	(0.75	)

Weighted average number of Class T common shares outstanding ^(b)		1,121,944								1,121,944

Class I Common Stock (basic and diluted):
Net loss attributable to Class I stockholders	$	(43,887	)						$	(44,363	)

Net loss per share of Class I common stock outstanding	$	(0.74	)						$	(0.75	)

Weighted average number of Class I common shares outstanding ^(b)		59,044								59,044

~~Debt.~~See ~~The~~accompanying ~~Company~~notes determined the fair market value of the Company’s debt by applying a discounted cash flow analysis over the projected remaining term of the debt and reflecting the debt’s contractual agreement and corresponding interest and principal payments. The expected debt payments were then discounted to ~~present~~pro ~~value~~forma atcondensed anconsolidated ~~interest~~financial ~~rate the Company deemed appropriate and reflective of market interest rates as of the Valuation Date for debt instruments with similar collateral, anticipated duration and prepayment terms~~statements. As of the Valuation Date, the estimated market value of the Company’s debt was $24.5 million, which equaled its aggregate outstanding principal balance as of the Valuation Date. While Stanger did not determine the value of the Company’s debt liabilities, Stanger did review the market interest rates used by the Company in determining the debt fair market value and, based upon a summary of the loan terms as provided by the Company, determined that in the aggregate, the market interest rates utilized by the Company were reasonable.

~~Valuation~~CNL ~~Summary;~~HEALTHCARE ~~Material~~PROPERTIES ~~Assumptions~~II, INC. AND SUBSIDIARIES

~~The~~NOTES ~~following~~TO isPRO aFORMA ~~summary~~CONDENSED ofCONSOLIDATED ~~the~~FINANCIAL ~~direct~~STATEMENTS ~~capitalization~~(UNAUDITED) rates used to arrive at the value of the seniors housing properties: direct capitalization rate range of 6.25% to 7.00% with a weighted average of approximately 6.63%. The following is a summary of the rates used to arrive at the value of the medical office property: direct capitalization rate of 5.25%; discount rate of 6.50%, and a terminal capitalization rate of 6.00%.

In its Valuation Report, Stanger utilized the Company’s estimate of the December 31, 2018 value of the Company’s other assets, including cash and other tangible assets net of payables, accruals and other tangible liabilities, which approximated the net realizable values of such amounts on the Company’s adjusted balance sheet as of December 31, 20181. ~~Furthermore,~~Basis ~~the Valuation Report includes Stanger’s estimate~~ of ~~the Advisor’s subordinated participation in net sales proceeds or incentive fee due upon liquidation of the Company’s portfolio.~~ Presentation

The ~~Valuation~~accompanying ~~Report~~unaudited ~~contained~~pro aforma ~~range~~condensed ~~for~~consolidated balance sheet of the Company’s ~~estimated~~illustrates ~~2018~~the ~~NAV~~estimated effect of ~~$9.40~~the todisposition, described ~~$10~~in Note 2.49 ~~per~~“Pro ~~share~~Forma Transaction, ~~including~~” ~~deductions~~as ~~for~~if ~~estimated~~it ~~property~~had ~~transaction~~occurred ~~costs~~as inof aDecember 31, ~~hypothetical~~2018. ~~orderly~~The ~~sale~~accompanying ofunaudited ~~the~~pro ~~assets~~forma consolidated statements of operations of the Company. ~~The~~are ~~per~~presented ~~share~~for ~~range~~the isyears ~~based~~ended onDecember 31, 2018 aand ~~share~~2017, ~~count~~and include certain pro forma adjustments to illustrate the estimated effect of ~~approximately~~the ~~4.90 million~~Company’s ~~shares~~disposition, ~~issued~~described ~~and~~in ~~outstanding~~Note 2. “Pro Forma Transaction,” as ~~of December~~if it had occurred on January 311, ~~2018~~2017, ~~excluding~~which ~~restricted~~represents the ~~shares~~first ~~issued~~day toof the first pro forma period presented. The amounts included in the historical columns represent the Company’s ~~Advisor~~historical balance sheet and operating results for the respective Pro Forma Periods presented as filed with the Securities and Exchange Commission.

The ~~valuation~~accompanying ~~range~~unaudited ~~was~~pro ~~calculated~~forma bycondensed ~~Stanger~~consolidated financial statements have been prepared byin ~~varying~~accordance ~~the~~with ~~direct~~Article ~~capitalization~~11 ~~rates~~of Regulation S-X and ~~discount~~do ~~rates~~not include all of the information and ~~terminal~~note ~~capitalization~~disclosures ~~rates~~required by 25generally ~~basis~~accepted ~~points~~accounting inprinciples ~~either~~of ~~direction~~the United States (“GAAP”). ~~The~~Pro forma ~~lower~~financial ~~end~~information ofis intended to provide information about the ~~range~~continuing ~~has~~impact of a ~~positive~~transaction ~~$0.57~~by ~~impact~~showing onhow ~~NAV~~a ~~per~~specific ~~share~~transaction or group of transactions might have affected historical financial statements. ~~The~~Pro ~~high~~forma ~~end~~financial information ofillustrates only the ~~range~~isolated ~~has~~and objectively measurable (based on historically determined amounts) effects of a ~~negative~~particular transaction, and excludes effects based on judgmental estimates of how historical management practices and $0operating decisions may or may not have changed as a result of the transaction.52 Therefore, pro forma financial information does not include information about the possible or expected impact onof ~~NAV~~current ~~per~~actions ~~share~~taken by management in response to the pro forma transaction, as if management’s actions were carried out in previous reporting periods.

~~Taking~~This ~~into~~pro ~~consideration~~forma ~~the~~condensed consolidated ~~reasonableness~~financial ofinformation ~~the~~is ~~valuation~~presented ~~methodologies,~~for ~~assumptions~~informational ~~and~~purposes ~~estimated range~~only ofand ~~values~~does ~~contained~~not inpurport ~~Stanger’s~~to ~~Valuation~~be ~~Report,~~indicative of the ~~Valuation~~Company’s ~~Committee~~financial ~~recommended~~position ~~that~~or ~~the~~financial ~~Board~~results ~~approve $9.92~~ as ~~the~~if ~~estimated NAV per share and~~ the ~~Board~~transaction ~~ultimately~~reflected ~~approved~~herein ~~$9.92~~had asoccurred, ~~the~~or ~~estimated~~been ~~NAV~~in effect ~~per~~during ~~share of~~ the ~~Company’s~~ ~~common~~Pro ~~stock~~Forma Periods. AsIn ~~with any valuation methodology~~addition, ~~the~~this ~~methodologies~~pro ~~considered~~forma bycondensed ~~the~~consolidated ~~Valuation~~financial ~~Committee~~information ~~and~~should ~~the~~not ~~Board,~~be inviewed ~~reaching~~as anindicative ~~estimate~~ of the ~~value of the~~ Company’s ~~shares,~~expected ~~are~~financial ~~based~~position ~~upon~~or ~~all~~financial ofresults ~~the~~for ~~foregoing~~future ~~estimates, assumptions,~~periods ~~judgments~~ and ~~opinions~~should ~~that may, or may not, prove to~~ be read ~~correct.~~in ~~The~~conjunction ~~use~~with ofthe ~~different~~Company’s ~~estimates,~~financial ~~assumptions,~~statements ~~judgments~~as orfiled ~~opinions~~in ~~may~~the ~~have~~Company’s ~~resulted~~Annual inReport ~~significantly~~on ~~different~~Form ~~estimates~~10-K offor the ~~value~~year ofended ~~the~~December 31, ~~Company’s shares~~2018.

~~The~~2. ~~following~~Pro ~~table~~Forma ~~summarizes the material components of the Company’s estimated NAV as of December 31, 2018 compared to those as of December 31, 2017:~~ Transaction

~~Table~~In March 2019, the Company entered into an asset purchase agreement (“Sale Agreement”) with HCP Medical Office Buildings, LLC related to the sale of ~~Value~~Mid ~~Estimates~~America Surgery Institute for ~~Components~~a ofgross ~~Net~~sales ~~Asset~~price ~~Value~~ of $15.4 million (1“MOB Sale”), subject to certain pro-rations and other adjustments as described in the Sale Agreement.

	Value as of12/31/18($ in 000’s)			Value as of12/31/18 (6)Per Share			Value as of12/31/17 (7)($ in 000’s)			Value as of12/31/17Per Share
Present value of wholly owned assets(2)		66,640		$	13.60		$	38,880		$	12.65
Cash and cash equivalents(3)		8,238			1.68			12,422			4.04
Other assets(4)		357			0.07			189			0.06
Debt outstanding(5)		(24,500	)		(5.00	)		(19,813	)		(6.44	)
Accounts payable and other accrued expenses		(705	)		(0.14	)		(478	)		(0.16	)
Other liabilities		(144	)		(0.03	)		(287	)		(0.09	)
Net asset value		49,886			10.18		$	30,914		$	10.06
Estimated Transaction Costs		(1,292	)		(0.26	)		0			0
Net Asset Value (Net of Trans. Costs)		48,594			9.92

On May 6, 2019, the Company completed the MOB Sale to an affiliate of HCP Medical Office Buildings, LLC.

~~(1) Balance sheet items reflect management’s unaudited balance sheet as of Dec~~3. ~~31,~~Adjustments ~~2018~~to ~~and~~Unaudited ~~preliminary~~Pro ~~balance~~Forma ~~sheet~~Condensed asConsolidated ofBalance ~~Dec. 31, 2017. These are the composite mid-point figures as derived.~~Sheet

~~(2)~~Adjustments ~~Includes~~to ~~three~~the ~~properties~~Unaudited inPro ~~2018~~Forma ~~and~~Condensed ~~two~~Consolidated ~~properties~~Balance Sheet were needed in ~~2017~~order to present the Company’s historical balance sheet as if the MOB Sale had occurred as of December 31, 2018.

(3a) ~~Includes~~These ~~restricted~~adjustments ~~cash~~reflect the net sales proceeds received from the MOB Sale and the elimination of certain account balances relating to Mid America Surgery Institute as if the MOB Sale had occurred as of December 31, 2018. Accumulated loss has been adjusted to reflect the pro forma gain recognized on the MOB Sale, which is calculated as follows:

(4) Includes accounts receivable and prepaid expenses.


Gross sales price	$	15,400,000
Closing and transaction costs		(40,500	)

Net sales proceeds		15,359,500
Less: carrying value of assets		(14,202,202	)
Less: carrying value of unamortized loan costs		(67,654	)
Plus: carrying value of liabilities		705,343

Pro forma gain on sale of real estate	$	1,794,987

(5b) ~~Debt~~These ~~outstanding~~adjustments inreflect ~~2018 is equal to~~ the ~~fair~~portion ~~market value~~ of ~~debt.~~net Incash ~~2017,~~proceeds nofrom ~~fair~~the ~~market~~MOB ~~valuation~~Sale ofused ~~debt~~to ~~was~~pay ~~conducted~~down ~~and~~ the ~~amount~~related ~~above~~mortgage ~~represents~~loan, ~~debt~~including ~~outstanding.~~accrued ~~Increase represents debt incurred in connection with higher borrowings.~~interest:

(6) Based on approximately 4.90 million shares outstanding, excluding 0.06 million restricted shares issued to the Company’s Advisor.


Mortgage loan	$	(5,600,000	)
Accrued interest		(9,498	)

	$	(5,609,498	)

~~(7) Based on approximately 3~~4.07 ~~million~~Adjustments ~~shares outstanding, including approximately 0.06 million restricted shares expected~~ to beUnaudited ~~issued~~Pro toForma ~~the~~Condensed ~~Advisor~~Consolidated ~~during~~Statement ~~March 2018, as~~ of ~~the 2017 valuation date.~~Operations

~~The~~Adjustments ~~main factors~~to ~~that impacted~~ the ~~Company’s~~Unaudited ~~estimated~~Pro ~~NAV~~Forma ~~per~~Condensed ~~share~~Consolidated asStatements of ~~December 31,~~Operations ~~2018~~were asneeded ~~compared~~in order to present the Company’s historical ~~prior~~financial ~~estimated~~results ~~NAV per share~~ as ofif ~~December 31, 2017 (~~the ~~“2017~~MOB ~~NAV”)~~Sale ~~are~~had ~~(i) an~~occurred ~~increase~~on ~~in real estate value due to the acquisition of our third property and improved values at our same store properties, (ii)~~January ~~a decrease in cash~~1, ~~reflective of the placement of capital in the aforementioned acquisition as well as the close of our offering~~2017, ~~(iii) an~~ ~~increase~~which inrepresents ~~debt of approximately $4.7 million, (iv)~~ the ~~exclusion~~first ofday ~~restricted stock issued to our Advisor and the exclusion~~ of ~~liabilities otherwise expected to be settled by~~ the ~~issuance~~first ofpro ~~restricted~~forma ~~stock~~period to our Advisor, further described below, and (v) the inclusion of estimated property transaction costs in the event of one or more transactions involving the Company’s portfolio of assets to provide liquidity to the Company’s stockholderspresented.

~~The appraised value of the Company’s two real estate assets in the 2017 NAV was $38.9 million. On~~ (a) ~~same~~These ~~store~~adjustments ~~basis,~~reflect the ~~two~~elimination ~~assets appraised~~of ~~in both~~ the ~~2018~~operations ~~and~~relating ~~2017~~to ~~NAV increased in collective value by approximately $2.5 million. The increase in same store real estate value is supported by the operating performance of Summer Vista Assisted Living and~~ Mid- America Surgery Institute. Asfrom ~~noted above,~~ the ~~2018~~historical ~~NAV~~financial ~~per~~results ~~share~~for ~~estimate~~the ~~excludes~~years ~~restricted~~ended ~~shares~~December ~~currently outstanding of approximately 0.06 million as well as approximately $843~~31,~~000~~ of2018 ~~liabilities~~and ~~otherwise~~2017 ~~expected~~ to bereflect ~~settled by~~ the ~~issuance~~MOB ~~of restricted~~Sale ~~stock~~as toif ~~our Advisor. If~~ the ~~restricted~~disposition ~~shares~~had ~~and~~occurred ~~to-be-settled~~on ~~restricted shares were factored into~~ the ~~2018~~first ~~NAV~~day ~~per share, they would result in a cumulative reduction to the NAV~~ of ~~approximately $0.28 per share. The determination was made to exclude these shares because they are subject to return thresholds that are not currently expected to be met and, due to~~ the ~~lack~~Pro ofForma ~~scale~~Periods ~~of the Company, we anticipate the Advisor’s restricted shares would not participate in any special distributions as may be declared by the Board~~presented. ~~The 2017 NAV per share estimate included restricted shares.~~

~~Sensitivity~~(b) ~~Analysis~~For the purposes of determining the weighted average number of shares of common stock outstanding, stock dividends are treated as if such shares were outstanding as of July 11, 2016 (the date when the Company commenced operations).

Changes to the key assumptions used to arrive at the estimated NAV per share could have a significant impact on the underlying value of the Company’s real estate assets. The following table presents the impact on the estimated NAV per share of the Company’s common stock resulting from a 5.0% increase and decrease to parameters utilized in developing the appraised value of the Appraised Portfolio.

	Value Sensitivity
	Low			Concluded			High
Estimated Net Asset Value Per Share	$	9.25		$	9.92		$	10.61
Weighted Average Capitalization Rate Appraised Properties		6.69	%		6.29	%		6.02	%
Terminal Capitalization Rate Appraised Properties(a)(b)		6.30	%		6.00	%		5.70	%
Discount Rate Appraised Properties(a)(b)		6.83	%		6.50	%		6.18	%

(a) Relates to the MOB Property.

(b) As changes in these specific valuation parameters are not material by themselves, we have shown the aggregate value change from moving all parameters up or down by 5%.

Additional Information Regarding the Valuation, Limitations of Estimated Share Value and the Engagement of Stanger

Throughout the valuation process, the Valuation Committee, the Company’s Advisor and senior members of management reviewed, confirmed and approved the processes and methodologies and their consistency with real estate industry standards and best practices.

Stanger’s Valuation Report was based upon market, economic, financial and other information, circumstances and conditions existing at or prior to December 31, 2018, and any material change in such information, circumstances and/or conditions may have a material effect on the Company’s estimated NAV. Stanger’s valuation materials were solely to assist the Company in establishing an estimated value of the Company’s common stock. Stanger’s valuation materials were not addressed to the public and should not be relied upon by any other person to establish an estimated value of the Company’s common stock. Stanger’s Valuation Report does not constitute a recommendation by Stanger to purchase or sell any shares of the Company’s common stock. Although Stanger considered comments received from the Company or the Advisor during the valuation process, the final appraised values of the Company’s appraised properties and debt liabilities in the Valuation Report were determined by Stanger.

In connection with its review, while Stanger reviewed for reasonableness the information supplied or otherwise made available to it by the Company or its Advisor, Stanger assumed and relied upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to it by any other party, and did not undertake any duty or responsibility to verify independently any of such information.

In performing its analyses, Stanger made numerous assumptions as of various points in time with respect to industry performance, general business, economic and regulatory conditions, current and future rental market for the Company’s operating properties and other matters, many of which are necessarily subject to change and beyond the control of Stanger and the Company. The analyses performed by Stanger are not necessarily indicative of actual values, trading values or actual future results of the Company’s common stock that might be achieved, all of which may be significantly more or less favorable than suggested by the Valuation Report. The actual value of the Company’s common stock may vary significantly depending on numerous factors that generally impact the price of securities, the financial condition of the Company and the state of the real estate industry more generally. Accordingly, with respect to the estimated NAV of the Company’s common stock, neither we nor Stanger can give any assurance that:

• a stockholder would be able to resell his or her shares at this estimated value for the respective class of shares;

• a stockholder would ultimately realize distributions per share equal to our estimated NAV for the respective class of shares of common stock upon liquidation of our assets and settlement of our liabilities or a sale of the Company;

• our shares would trade at a price equal to or greater than the estimated NAV for the respective class of shares if we listed them on a national securities exchange; or

• the methodology used to estimate our NAV would be acceptable to FINRA or under ERISA for compliance with its reporting requirements.

The December 31, 2018, estimated NAV was determined by our Board at a special meeting held on March 13, 2019. The value of the Company’s shares will fluctuate over time as a result of, among other things, developments related to individual assets and responses to the real estate and capital markets. We currently expect to continue to determine our estimated NAV at least annually.

Stanger possesses substantial experience in the valuation of assets similar to those owned by the Company and regularly undertake the valuation of securities in connection with business combinations and similar transactions. For the preparation of the Valuation Report, we paid Stanger a customary fee for services of this nature, no part of which was contingent relating to the provision of services or specific findings. The Company has not engaged Stanger for any other services.

Certain of the Company’s affiliates engaged Stanger for various real estate-related services and/or to serve as a third-party valuation advisor. The Company anticipates that Stanger will continue to provide similar services to the

Company and its affiliates in the future. In addition, the Company may in its discretion engage Stanger to assist the Board in future determinations of the Company’s estimated NAV. The Company is not affiliated with Stanger or any of its affiliates. While the Company and affiliates of the Company have engaged and/or may engage in the future Stanger for commercial real estate services of various kinds, the Company believes that there are no material conflicts of interest with respect to the Company’s engagement of Stanger.

The Company is furnishing (i) as Exhibit 99.1 to this Current Report on Form 8-K a copy of the letter to the Company’s stockholders regarding the NAV determination as of December 31, 2018, Text of correspondence from the Company to Stockholders regarding the 2018 NAV, and (ii) as Exhibit 99.2 to this Current Report on Form 8-K a copy of the notice mailed to our stockholders’ registered representatives or investment advisers regarding, among other things, the recent determination of the estimated NAV of the Company’s common stock. Such shareholder letter and notice shall not be deemed to be “filed” with the U.S. Securities and Exchange Commission (the “SEC”) or incorporated by reference into any other filing with the SEC.

Item 9.01 Financial Statements and Exhibits.

(d)

Exhibits

99.1		Correspondence ~~from~~with ~~the~~financial ~~Company~~advisors toof stockholders ~~regarding~~of ~~the~~CNL ~~NAV~~Healthcare asProperties ~~of December 31~~II, ~~2018~~Inc.
99.2		Correspondence with ~~financial advisors of~~ stockholders of CNL Healthcare Properties II, Inc. dated May 6, 2019.

Caution Concerning Forward-Looking Statements

Certain statements in this document may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends that all such forward-looking statements be covered by the safe-harbor provisions for forward-looking statements of Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable.

All statements, other than statements that relate solely to historical facts, including, among others, statements regarding the Company’s future financial position, business strategy, projected levels of growth, projected costs and projected financing needs, are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should,” “continues,” “pro forma” or similar expressions. Forward-looking statements are not guarantees of future performance and actual results may differ materially from those contemplated by such forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to, the factors detailed in our annual report for the year ended December 31, 2018, and other documents filed from time to time with the Securities and Exchange Commission.

Many of these factors are beyond the Company’s ability to control or predict. Such factors include, but are not limited to: changes in general economic conditions in the U.S. or globally (including financial market fluctuations); risks associated with our investment strategy; risks associated with the real estate markets in which the Company invests; risks associated with the use of debt to finance the Company’s business activities, including refinancing and interest rate risk and the Company’s failure to comply with its debt covenants; the Company’s failure to obtain, renew or extend necessary financing or to access the debt or equity markets; competition for properties and/or tenants in the markets in which the Company engages in business; the impact of current and future environmental, zoning and other governmental regulations affecting the Company’s properties; the Company’s ability to make necessary improvements to properties on a timely or cost-efficient basis; risks related to development projects or acquired property value-add conversions, if applicable (including construction delays, cost overruns, the Company’s inability to obtain necessary permits and/or public opposition to these activities); defaults on or non-renewal of leases by tenants; failure to lease properties at all or on favorable rents and terms; unknown liabilities in connection with acquired properties or liabilities caused by property managers or operators; the Company’s failure to successfully manage growth or integrate acquired properties and operations; increases in operating costs and other expense items and costs, uninsured losses or losses in excess of the Company’s insurance coverage; the impact of outstanding or potential litigation; risks associated with the Company’s tax structuring; the Company’s failure to qualify and maintain its status as a real estate investment trust; and the Company’s ability to protect its intellectual property and the value of its brands.

Management believes these forward-looking statements are reasonable; however, such statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and the Company may not be able to realize them. Investors are cautioned not to place undue reliance on any forward-looking statements which are based on current expectations. All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made and the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.

For further information regarding risks and uncertainties associated with our business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our documents filed from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained from our website at http://www.cnlhealthcarepropertiesII.com.

We undertake no obligation to publicly release the results of any revisions to these forward looking-statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~CNL Healthcare Properties II, Inc.~~	CNL Healthcare Properties II, Inc.
March 19, 2019
May 7, 2019		By:	/s/ Stephen H. Mauldin
	By:	/s/ Stephen H. Mauldin
			Stephen H. Mauldin Chief Executive Officer, President and Chairman
		Stephen H. Mauldin
		Chief Executive Officer, President and Chairman

Filing Compare · CNL Healthcare Properties II, Inc.