General Notices

CNL Healthcare Properties closed to new investors on Sept. 30, 2015.

This is not an offer to sell nor a solicitation of an offer to buy shares of the REIT. Only the prospectus makes such an offer. This piece must be read in conjunction with the prospectus in order to understand fully all the objectives, risks, charges and expenses associated with an investment and must not be relied upon to make a decision. The information herein does not supplement or revise any information in the REIT's public filings. To the extent information herein conflicts with the prospectus, the information in the prospectus shall govern.

Forward-looking statements are based on current expectations and may be identified by words such as believes, expects, may, could and terms of similar substance and speak only as of the date made. Actual results could differ materially due to risks and uncertainties that are beyond the REIT’s ability to control or accurately predict. Investors should not place undue reliance on forward-looking statements.

Managing dealer of CNL Healthcare Properties is CNL Securities, member FINRA/SIPC. Shares are offered to the public through other broker-dealers or with the assistance of registered investment advisors. Broker-dealers are reminded that CNL Healthcare Properties’ communications must be accompanied or preceded by a prospectus.

An investment in the REIT is subject to significant risks, some of which are summarized in the Risk Factors section of this piece and are fully detailed in the Risk Factors section in the REIT’s prospectus. Investors should read and understand all of the risks and the entire prospectus before making a decision to invest. The prospectus is available on SEC.gov and CNLHealthcareProperties.com.

Risk Factors

Investing in a non-traded REIT is a higher risk, longer term investment than many listed securities and is not suitable for all investors. Shares may lose value, or investors could lose their entire investment.

The REIT and its advisor have limited operating histories on which investors may evaluate operations and prospects for the future.

Non-traded REITs are illiquid. There is no public trading market for the shares. The REIT does not expect to offer a liquidity event in the near future. If investors are able to sell their shares, it would likely be at a substantial discount.

There are significant limitations on the redemption of investors’ shares under the REIT’s redemption plan. The REIT can determine not to redeem any shares or to redeem only a portion of the shares for which redemption is requested. In no event will more than 5 percent of the outstanding shares be redeemed in any 12-month period. The REIT may suspend, terminate or modify the redemption plan at any time. Holding periods may be waived and redemptions paid at the purchase price in the event of death, qualifying disability, confinement to a long-term care facility or bankruptcy. For more specific information, including redemptions for special circumstances, please refer to the prospectus.

The REIT has not identified all investments it will make in the future, and investors will not have the opportunity to evaluate future investments before they are made.

The REIT is obligated to pay substantial fees to its advisor, managing dealer, property manager and their respective affiliates for their services in managing the day-to-day operations of the REIT based upon agreements that have not been negotiated at arm’s length, and some of which are payable based upon factors other than the quality of services. These fees could influence their advice and judgment in performing services. In addition, certain officers and directors of the advisor also serve as the REIT’s officers and directors, as well as officers and directors of competing programs, resulting in conflicts of interest.

The board of directors discontinued the stock distribution on Sept. 30, 2015, and will continue to evaluate the cash distribution policy going forward. There is no guarantee of future distributions or if distributions can be sustained at all. The REIT may continue to pay distributions from other sources without limit, including offering proceeds or borrowings. This will reduce cash available for investment, lower investors’ overall return, and is not sustainable over a long period of time. Stock distributions paid to earlier investors will be dilutive to later investors.

For the nine months ended Sept. 30, 2016, approximately 96 percent of cash distributions were covered by operating cash flow and 4 percent were funded by other sources. For the years ended Dec. 31, 2015, 2014 and 2013, approximately 45, 34 and 13 percent, respectively, of total distributions were covered by operating cash flow and approximately 55, 66 and 87 percent, respectively, were funded by other sources, including offering proceeds. For the years ended Dec. 31, 2012 and 2011, the REIT’s first two years of operations, distributions were not covered by operating cash flow and were 100 percent funded by offering proceeds. Cash flows from operating activities have been impacted by high levels of acquisition costs and fees during the REIT’s growth phase, as well as its strategy to develop new properties and acquire newer existing properties prior to being fully leased and stabilized. The REIT’s long-term strategy is to fully invest its capital, complete its development/value add properties and work toward the goal of being leased up to a stabilized level of occupancy. The REIT believes that this will potentially generate higher levels of cash flows from operating activities to support its distributions.

Commencing in 2013, the REIT’s advisor and its affiliated property manager provided expense support to the REIT, forgoing the payment of fees in cash and the acceptance of restricted stock for services as provided in the Expense Support Agreement and described in the prospectus. The expense support amount will be determined for each calendar quarter on a noncumulative basis and may be terminated at any time by the advisor. Decreases in the support amount from the advisor will reduce cash flow available for distributions.

If the REIT fails to maintain its qualification as a REIT for any taxable year, it will be subject to federal income tax on taxable income at regular corporate rates. In such an event, net earnings available for investment or distributions would be reduced. The use of leverage to acquire assets may hinder the REIT’s ability to pay distributions and/or decrease the value of stockholders’ investment in the event income from or the value of the property securing the debt declines.

There are significant risks associated with the seniors housing and healthcare sectors, including market risks impacting demand, litigation risks and the cost of being responsive to changing government regulations. The REIT’s success in these sectors is dependent, in part, on the ability to evaluate local conditions, identify appropriate opportunities and find qualified tenants or, where properties are acquired through a taxable REIT subsidiary, engage and retain qualified independent managers.