CNL Healthcare Properties, Inc.

Item 1A. Risk Factors

TheExcept as set forth below, there have been no material changes in our assessment of our risk factors from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Risks Relating to the Acquisition Transaction

The exchange ratio for the shares of Company common stock in exchange for shares of Sonida Senior Living Common Stock is subject to a collar. If the applicable price of Sonida Senior Living common stock falls outside of the applicable collar, the number of shares to be issued will be fixed. As a result, the Companys stockholders cannot be certain of the value of the stock consideration that they may receive following the Transactions.

On November 4, 2025, the Company entered into the Merger Agreement with Sonida Senior Living, CHP Merger Corp., a Maryland corporation and a wholly-owned subsidiary of the Company (CNL Merger Sub), SSL Sparti LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Sonida Senior Living (HoldCo), and Sparti Merger Sub, Inc., a Maryland corporation, and a wholly-owned subsidiary of HoldCo and an indirect wholly-owned subsidiary of Sonida Senior Living (SNDA Merger Sub). The Merger Agreement provides, among other things, and subject to the terms and conditions set forth therein and in accordance with applicable law, for the acquisition of the Company by Sonida Senior Living for a combination of Sonida Senior Livings common stock and cash (the acquisition and the other transactions contemplated by the Merger Agreement, the Transactions). The Transactions will be accomplished through the following steps: (i) the Company will sell to SNDA Merger Sub equity interests in certain subsidiaries of the Company (the Equity Purchase) in exchange for shares of common stock, $0.01 par value per share, of Sonida Senior Living (Parent Common Stock), (ii) CNL Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity (the First Merger), (iii) the Company will adopt a plan of liquidation, in a form reasonably satisfactory to Sonida Senior Living (the Plan of Liquidation), substantially concurrently with the effective time of the First Merger, and (iv) on the next business day, the Company will merge with and into SNDA Merger Sub, with SNDA Merger Sub surviving as a wholly-owned subsidiary of Sonida Senior Living after the Second Merger.

Pursuant to the terms and conditions of the Merger Agreement, as a result of the Transactions, each share of common stock, $0.01 par value per share, of the Company (Company Common Stock), issued and outstanding immediately prior to the effective time of the First Merger (other than shares held by Sonida Senior Living or any of its subsidiaries or any wholly owned subsidiary of the Company) will be converted into the right to receive a number of shares of Parent Common Stock equal to the Exchange Ratio (such shares of Parent Common Stock, the Per Share Stock Consideration) and $2.32 in cash (the Per Share Cash Consideration). The Exchange Ratio will be determined based on the quotient obtained by dividing $4.58 by the volume-weighted average trading price of the Parent Common Stock on the New York Stock Exchange for the ten trading days ending on the second business day before the date on which the closing of the First Merger occurs (the Closing VWAP), subject to an asymmetrical collar mechanism, applied as follows: (x) if the Closing VWAP is less than $22.73, which is 85% of the volume-weighted average trading price of the Parent Common Stock on the New York Stock Exchange for the 30 trading days ending on the second business day before the date of signing the Merger Agreement (the Signing VWAP), the Exchange Ratio will be set at 0.2015, which is the quotient obtained by dividing $4.58 by $22.73, and (y) if the Closing VWAP is greater than $34.76, which is 130% of the Signing VWAP, the Exchange Ratio shall be set at 0.1318, which is the quotient obtained by dividing $4.58 by $34.76. Because these exchange ratios are fixed, if the value of Parent Common Stock falls outside of the collar, the value of the stock portion of the total consideration will fluctuate. The market price of the Parent Common Stock has fluctuated since the date of the announcement of the Merger and may continue to fluctuate until the date the First Merger is completed. Parent Common Stock price changes may result from a variety of factors, many of which are beyond the Companys control.

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The Transactions are subject to the satisfaction or waiver of conditions which may not be satisfied or completed on a timely basis, if at all. Failure to complete the Merger could have material and adverse effects on the Company and could result in the Company being required to pay Sonida Senior Living a termination fee.

The consummation of the Transactions is subject to the satisfaction or waiver of conditions, including, among others, (i) the receipt of the approval by the Companys stockholders of the Transactions, (ii) the receipt of the approval by Sonida Senior Livings shareholders of the Transactions and the issuance by Sonida Senior Living of the Per Share Stock Consideration, (3) the receipt of consents and approvals of the requisite governmental authorities, (4) absence of injunctions, orders or laws that prohibit or restrain the consummation of the Transactions, (5) the authorization for listing of the shares of Parent Common Stock issuable pursuant to the Transactions on the New York Stock Exchange, (6) the effectiveness of a registration statement on Form S-4 registering the shares of Parent Common Stock issuable pursuant to the Transactions, (7) the accuracy of each partys representations and warranties to the other party, (8) material compliance with the covenants under the Merger Agreement, and (9) the absence of events that would be reasonably expected to result in a Material Adverse Effect (as defined in the Merger Agreement) with respect to each party. The Companys obligation to consummate the Transactions is also subject to certain additional conditions, including (1) the placement of director and officer insurance, (2) the appointment of two individuals selected by the Company to the board of directors of Parent, including Stephen H. Mauldin, and (3) Parent securing equity financing on terms set forth in the Merger Agreement or otherwise approved by the Company. Sonida Senior Livings obligation to consummate the Transactions is separately subject to additional conditions, including (1) CNL Financial Group, LLC, having not terminated a Transition Services Agreement between it and Sonida Senior Living, (2) the delivery by the Company of an executed Plan of Liquidation, and (3) confirmation the Company will receive an opinion related to the Companys status as a REIT. These conditions make the completion and the timing of the completion of the Merger uncertain. Also, either the Company or Sonida Senior Living may terminate the Merger Agreement for a number of reasons, including if the Transactions are not completed by May 29, 2026, except that this right to terminate the Merger Agreement will not be available to a party if that party failed to fulfill its obligations under the Merger Agreement and that failure was a principal cause of, or resulted in, the failure of the Transactions to be completed on or before such date.

There can be no assurance that the Transactions will be consummated on the terms or timeline currently contemplated, or at all. If the Transactions are not completed on a timely basis, or at all, the Company may be adversely affected and subject to a number of risks, including the following:

the Company will be required to pay its costs relating to the Transactions, such as financial advisory, legal, accounting and printing fees, whether or not the Transactions are completed;

if the Merger Agreement is terminated under certain circumstances specified therein, the Company may be required to pay to Sonida Senior Living a termination fee of $30 million (the Termination Fee);

if the Merger Agreement is terminated as a result of the Companys stockholders not approving the Transactions, the Company will be required to reimburse Sonida Senior Livings out-of-pocket expenses incurred in connection with the Merger Agreement or the Transactions, in an amount not to exceed $10 million;

the Company may experience negative reactions from the financial markets or its tenants or operators; and

the time and resources committed by Company management to matters relating to the Transactions could otherwise have been devoted to pursuing other opportunities.

The Merger Agreement contains provisions that could discourage or make it difficult for a third party to acquire the Company prior to the completion of the Merger.

The Merger Agreement contains certain customary provisions that restrict the Companys ability to solicit, or engage in discussions or negotiations regarding, alternative acquisition proposals from third parties prior to the completion of the Transactions. Upon termination of the Merger Agreement under specified circumstances, including if the Company terminates the Merger Agreement to enter into an alternative acquisition agreement with respect to a Company Superior Proposal or Sonida Senior Living terminates the Merger Agreement as a result of the Companys Board of Directors changing its recommendation, the Company will be required to pay to Sonida Senior Living the Termination Fee. These provisions might discourage an otherwise interested third party from considering or proposing an acquisition of the Company, even one that may be of greater value to the Companys shareholders than the Transactions. Furthermore, even if a third party elects to propose an acquisition, the Companys financial liability to Sonida Senior Living may result in that third party offering a lower value to the Companys shareholders than the third party might otherwise have offered.

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The pendency of the Merger could adversely affect the Companys and Sonida Senior Livings business and operations.

During the pendency of the Transactions, due to operating covenants in the Merger Agreement, the Company and Sonida Senior Living may each be unable to undertake or pursue certain strategic transactions or significant capital projects, financing transactions or other actions that are not in the ordinary course of business, even if such actions may be beneficial to the Company or Sonida Senior Living. In addition, some tenants or operators may delay or defer decisions related to their business dealings with the Company during the pendency of the Merger, which could negatively impact the Companys sources and uses of capital, financial condition, results of operations and cash flows, regardless of whether the transactions contemplated by the Merger Agreement are consummated.

Members of the Companys and Sonida Senior Livings boards of directors and executive officers may have interests in the Transactions that are different from, or in addition to, the interests of the Companys and Sonida Senior Livings stockholders, generally. This may create a potential divergence of interest or the appearance thereof, which may lead to increased dissident stockholder activity, including litigation.

The interests of the Companys and Sonida Senior Livings respective directors and executive officers include, among other things, the continued service as a director or executive officer following the consummation of the Transactions, as applicable, certain rights to continuing indemnification and directors and officers liability insurance for the Companys directors and executive officers and continuation of the Companys and Sonida Senior Livings business and agreements following the Transactions. There is a risk that these interests may influence the Companys and Sonida Senior Livings respective directors and executive officers to support the Transactions.

These interests of the Companys and Sonida Senior Livings respective directors and executive officers in the Transactions may increase the risk of litigation intended to enjoin or prevent the Transactions and the risk of other dissident stockholder activity related thereto. In the past, and in particular following the announcement of a significant transaction, periods of volatility in the overall market or declines in the market price of a companys securities, stockholder litigation and dissident stockholder proposals have often been instituted against companies alleging conflicts of interest in business dealings with affiliated or related persons and entities. The relationships described above may precipitate such activities by dissident shareholders and, if instituted against the Company or Sonida Senior Living or the Companys or Sonida Senior Livings respective directors or executive officers, such activities could result in substantial costs, a material delay or prevention of the consummation of the Transactions and a diversion of managements attention, even if the stockholder action is without merit or unsuccessful.

An adverse outcome in any litigation or other legal proceedings relating to the Merger Agreement, or the transactions contemplated thereby, could have a material adverse impact on the Companys business and its ability to consummate the transactions contemplated by the Merger Agreement.

Transactions like the Transactions are frequently the subject of litigation or other legal proceedings, including actions alleging that either the Companys or Sonida Senior Livings Board of Directors, as applicable, breached its respective duties to its stockholders or other equity holders by entering into the Merger Agreement; by failing to obtain a greater value in the Transactions for the Companys or Sonida Senior Livings stockholders; by failing to make adequate disclosures regarding the Transactions; or by otherwise failing to fulfill their fiduciary duties or statutory obligations. If any litigation or other legal proceedings are brought against the Company or against its Board of Directors in connection with the Merger Agreement, or the Transactions, the Company will defend against it, but the Company might not be successful in doing so. An adverse outcome in such matters, as well as the costs, time, and effort of a defense, even if successful, could have a material adverse effect on the Companys ability to consummate the Transactions or on the Companys business, results of operations, or financial position, including through the delay of the Transactions with consequent direct and indirect costs, the possible diversion of either companys resources, or the distraction of key personnel.