UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

AMERICAN REALTY CAPITAL
HEALTHCARE TRUST III, INC.

(Name of Registrant as Specified In Its Charter)

(Name of person(s) filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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To the Stockholders of American Realty Capital Healthcare Trust III, Inc.:

You are cordially invited to attend the 2017 annual meeting of the stockholders of American Realty Capital Healthcare Trust III, Inc., a Maryland corporation (the “Company”), to be held on December 21, 2017 at 4:00 p.m., local time at The Core Club, located at 66 E. 55th Street, New York, New York (the “Annual Meeting”).

As described in further detail in the accompanying proxy statement, the Company has agreed to sell substantially all of its assets to Healthcare Trust, Inc. (“HTI”), pursuant to and on the terms set forth in a Purchase Agreement, dated as of June 16, 2017 (the “Purchase Agreement”), by and among the Company, American Realty Capital Healthcare Trust III Operating Partnership, L.P., a Delaware limited partnership and the Company’s operating partnership (the “OP”), ARHC TRS Holdco III, LLC, a subsidiary of the OP, HTI, HTI’s operating partnership and one of its subsidiaries (together with the other transactions contemplated by the Purchase Agreement, the “Asset Sale”) for a purchase price of $120.0 million (the “Purchase Price”). The Purchase Price is subject to customary prorations and closing adjustments in accordance with the terms of the Purchase Agreement, which are estimated to be $0.8 million payable to HTI assuming the Asset Sale closes on November 30, 2017, and will be payable on the date the Asset Sale is consummated (the “Closing Date”) less $4.9 million, the principal amount as of the date of this proxy statement of the loan secured by the Company’s Philip Center property, which will be assumed by HTI or repaid by the Company, and associated costs. HTI will deposit $6.0 million of the Purchase Price payable on the Closing Date into an escrow account for the benefit of the Company on the Closing Date, and this amount, less any amounts paid or reserved for pending or unsatisfied indemnification claims of HTI made pursuant to the Purchase Agreement, will be released in installments thereafter over a period of 14 months following the Closing Date. HTI is sponsored and advised by an affiliate of the Company’s advisor.

In connection with its approval of the Purchase Agreement, the Company’s board of directors (the “Board”) also approved the Company’s plan of liquidation and dissolution (the “Plan of Liquidation”), which is subject to stockholder approval. The closing of the Asset Sale is conditioned upon stockholder approval of both the Asset Sale and the Plan of Liquidation. Thus, if stockholders do not approve the Plan of Liquidation, the Asset Sale will not be completed even if stockholders approve the Asset Sale. Likewise, the effectiveness of the Plan of Liquidation is conditioned upon stockholder approval of the Plan of Liquidation and the closing of the Asset Sale. If the Asset Sale is not approved and does not close, the Plan of Liquidation will not become effective regardless of whether or not it has been approved.

The Company believes that the net cash proceeds generated by the Asset Sale will be sufficient to pay the Company’s expenses, including the expenses of liquidating, and to satisfy its liabilities and obligations. After paying or providing for these amounts, the Company estimates the net cash proceeds available for distribution pursuant to the Plan of Liquidation to its stockholders will aggregate $17.67 to $17.81 per outstanding share of the Company’s common stock, par value $0.01 per share, including an anticipated initial liquidating distribution of $15.75 per share of common stock expected to be paid within two weeks following the closing of the Asset Sale, subject to Board approval. This estimate is based on certain assumptions and there can be no guarantee as to the exact amount that you will receive. During the course of liquidating and dissolving, the Company may incur unanticipated expenses and liabilities all of which are likely to reduce the cash available for distribution to stockholders.

At the Annual Meeting, you will be asked to consider and vote upon the following matters:

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The record date for determining the stockholders entitled to receive notice of, and to vote at, the Annual Meeting is the close of business on October 23, 2017. The Asset Sale cannot be completed unless the Company’s stockholders approve the Asset Sale and the Plan of Liquidation by the affirmative vote of at least a majority of the outstanding shares of common stock, excluding, for the purposes of the approval of the Asset Sale, shares of common stock beneficially owned by the Company’s advisor, any director of the Company or any of their respective affiliates, including AR Global Investments, LLC.

Based on the unanimous recommendation of a special transaction committee of the Board consisting solely of the two independent directors on the Board (the “Special Committee”), the Board (with Edward M. Weil, Jr., the executive chairman of the Board and a member of the board of directors of HTI, abstaining) has unanimously (1) determined that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approved each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determined that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approved the Plan of Liquidation, and (3) recommended that holders of shares of common stock vote FOR the proposal to approve the Asset Sale and FOR the proposal to approve the Plan of Liquidation. Because the Board is comprised of only Mr. Weil and two independent directors and Mr. Weil abstained, the recommendation and other determinations of the Board with respect to the Asset Sale and the Plan of Liquidation were made by the Company’s independent directors, who are also the only members of the Special Committee. The Board also unanimously recommends that holders of shares of common stock vote FOR the other proposals.

This proxy statement contains important information about the Company and each of the proposals. The Company encourages you to read this proxy statement carefully before voting, including the section entitled “Risk Factors” beginning on page 89.

Please authorize a proxy to vote your shares as promptly as possible, whether or not you plan to attend the Annual Meeting. To authorize a proxy, complete, sign, date and mail your proxy card in the preaddressed postage-paid envelope provided or authorize your proxy by one of the other methods specified in this proxy statement or the accompanying notices. Authorizing a proxy will ensure that your vote is counted at the Annual Meeting if you do not attend in person. You may revoke your proxy at any time before it is voted. Please review this proxy statement for more complete information regarding the Purchase Agreement, the Asset Sale, Plan of Liquidation and the Annual Meeting.

W. Todd Jensen
Interim Chief Executive Officer and President
American Realty Capital Healthcare Trust III, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Asset Sale or the Plan of Liquidation, passed upon the merits or fairness of the Asset Sale or the Plan of Liquidation, or passed upon the adequacy or accuracy of the disclosure in this proxy statement. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated October 23, 2017 and is first being mailed to stockholders on or about October 25, 2017.

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405 Park Avenue, 4^th Floor
New York, New York 10022
(212) 415-6500

NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 21, 2017

To the Stockholders of American Realty Capital Healthcare Trust III, Inc.:

The 2017 annual meeting of stockholders (the “Annual Meeting”) of American Realty Capital Healthcare Trust III, Inc., a Maryland corporation (the “Company,” “we,” “us,” or “our”), will be held at The Core Club, located at 66 E. 55th Street, New York, New York, on December 21, 2017, commencing at 4:00 p.m., local time, for the following purposes:

The Company’s board of directors (the “Board”) has fixed the close of business on October 23, 2017 as the record date for determining the stockholders entitled to receive notice of, and to vote at, the Annual Meeting and any postponements or adjournments of the Annual Meeting. Only holders of record of the Company’s common stock, par value $0.01 per share, at the close of business on the record date are entitled to receive notice of, and to vote at, the Annual Meeting.

Approval of each of the Asset Sale and the Plan of Liquidation requires the affirmative vote of at least a majority of the outstanding shares of common stock, excluding for the purposes of the approval of the Asset Sale, shares of common stock beneficially owned by the Company’s advisor, any director of the Company or any of their respective affiliates, including AR Global Investments, LLC.

Directors will be elected by the affirmative vote of the holders of a majority of the outstanding shares of common stock, present in person or by proxy, to elect each nominee, provided that a quorum is present. Approval of the proposal to ratify the appointment of KPMG requires the affirmative vote of the majority of the votes cast for the proposal at the Annual Meeting, provided that a quorum is present. The proposal to adjourn the Annual Meeting requires the affirmative vote of the majority of the votes cast for the proposal.

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Based on the unanimous recommendation of a special transaction committee of the Board consisting solely of the two independent directors on the Board (the “Special Committee”), the Board (with Edward M. Weil, Jr., the executive chairman of the Board and a member of the board of directors of HTI, abstaining) has unanimously (1) determined that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approved each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determined that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approved the Plan of Liquidation, and (3) recommended that holders of shares of common stock vote FOR the proposal to approve the Asset Sale and FOR the proposal to approve the Plan of Liquidation. Because the Board is comprised of only Mr. Weil and two independent directors and Mr. Weil abstained, the recommendation and other determinations of the Board with respect to the Asset Sale and the Plan of Liquidation were made by the Company’s independent directors, who are also the only members of the Special Committee. The Board also unanimously recommends that holders of shares of common stock vote FOR the other proposals.

YOUR VOTE IS IMPORTANT

Please authorize a proxy to vote your shares as promptly as possible, regardless of whether you plan to attend the Annual Meeting. To authorize a proxy, complete, sign, date and mail your proxy card in the preaddressed postage-paid envelope provided or, if the option is available to you, call the toll free telephone number listed on your proxy card or use the internet as described in the instructions on the proxy card to authorize your proxy. Authorizing a proxy will assure that your vote is counted at the Annual Meeting if you do not attend in person. You may revoke your proxy at any time before it is voted. Please review the proxy statement accompanying this notice for more complete information regarding the Purchase Agreement, the Asset Sale, the Plan of Liquidation and the Annual Meeting.

By Order of the Board of Directors of
American Realty Capital Healthcare Trust III, Inc.

New York, New York October 23, 2017		Katie P. Kurtz Chief Financial Officer, Treasurer and Secretary

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		Page
QUESTIONS AND ANSWERS			1
Questions About the Asset Sale and the Plan of Liquidation			2
Questions About the Other Proposals			10
Questions About the Annual Meeting			10
SUMMARY			14
SPECIAL FACTORS			24
Background of the Asset Sale and the Plan of Liquidation			24
Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation			38
Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders			41
HTI’s Purposes and Reasons for the Asset Sale			44
Position of HTI, HTI OP and HTI Holdco as to Fairness to the Company’s Unaffiliated Stockholders			46
Opinion of the Special Committee’s Financial Advisor			47
Other Presentations by the Special Committee’s Financial Advisor			52
Opinion of the HTI Special Committee's Financial Advisor			53
Other Presentations by the HTI Special Committee's Financial Advisor			58
Certain Unaudited Projections Provided to the Board, the Special Committee, the Special Committee’s Financial Advisor, the HTI Board, the HTI Special Committee and the HTI Special Committee’s Financial Advisor			59
Financing of the Asset Sale			61
Fees and Expenses			63
Plans for the Company After the Asset Sale			64
Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation			65
Regulatory Approvals Required for the Asset Sale and the Plan of Liquidation			68
Accounting Treatment			68
Provisions for Unaffiliated Stockholders			68
THE PURCHASE AGREEMENT			69
Parties to the Purchase Agreement			69
Closing Date			70
Purchase Price			70
Escrow Agreement			70
Representations and Warranties			70
Conditions to Completion			71
Covenants and Agreements			72
Indemnification			77
Termination; Termination Fee and Expenses			78
Miscellaneous Provisions			79
AR GLOBAL ARRANGEMENTS			80
Letter Agreement			80
Executed Amendments to the Advisory Agreement and Property Management Agreement			81
Contemplated Amendments to Advisory Agreement and LPA			81
THE PLAN OF LIQUIDATION			84
Range of Liquidating Distributions			84
Liquidating Procedures			86
Liquidating Trust			87

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		Page
Reporting Requirements			88
Common Stock			88
RISK FACTORS			89
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS			96
THE ANNUAL MEETING OF STOCKHOLDERS			97
Date, Time, Place and Purpose of the Annual Meeting			97
Record Date; Who Can Vote at the Annual Meeting			97
Quorum			97
Vote Required for Approval			97
Voting by the Company’s Directors and Executive Officers and Certain Current Beneficial Owners			98
Abstentions and Broker Non-Votes			98
Manner of Authorizing Proxy			98
Revocation of Proxies			99
Tabulation of the Votes			99
Solicitation of Proxies			99
Assistance			99
PROPOSAL NO. 1: THE ASSET SALE PROPOSAL			100
PROPOSAL NO. 2: THE PLAN OF LIQUIDATION PROPOSAL			101
PROPOSAL NO. 3: ELECTION OF DIRECTORS			102
Nominees			102
Business Experience of Nominees			102
CORPORATE GOVERNANCE			106
Information About the Board of Directors and its Committees			106
Leadership Structure of the Board of Directors			106
Oversight of Risk Management			106
Audit Committee			106
Oversight of Compensation			107
Oversight of Nominations and Corporate Governance			107
Conflicts Committee			108
Director Independence			108
Family Relationships			109
Communications with the Board of Directors			109
Section 16(a) Beneficial Ownership Reporting Compliance			109
Code of Ethics			109
Compensation of Executive Officers			110
Executive Officers			110
Compensation of Directors			111
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS			113
THE COMPANY			115
Business Overview			115
Properties			116
Reportable Segments			119
Property Types			119
Competition			124
Healthcare Regulation			124
Environmental Regulations			128
Employees			128

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		Page
OTHER IMPORTANT INFORMATION REGARDING THE COMPANY			129
Background Information			129
Ratio of Earnings to Fixed Charges			129
Book Value Per Share			130
Distributions			130
Prior Public Offerings			131
Prior Stock Purchases and Other Transactions			131
OTHER IMPORTANT INFORMATION REGARDING HTI			132
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			135
Advisor			135
Property Manager			138
Former Arrangements			138
Indemnification Agreements			139
Investment Allocation Agreement			139
Purchase Agreement and AR Global Arrangements			139
Affiliated Transaction Best Practices Policy			139
Certain Conflict Resolution Procedures			140
AUDIT COMMITTEE REPORT			143
PROPOSAL NO. 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			144
Fees			144
Pre-Approval Policies and Procedures			144
PROPOSAL NO. 5: THE ADJOURNMENT PROPOSAL			145
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES			146
Tax Consequences to the Company			147
Tax Consequences to U.S. Stockholders			148
Tax Consequences to Tax-Exempt U.S. Stockholders			149
Tax Consequences to Non-U.S. Stockholders			149
Tax Consequences of the Liquidating Trust			150
Other Tax Considerations			151
APPRAISAL RIGHTS			152
STOCKHOLDER PROPOSALS			154
Stockholder Proposals in the Proxy Statement			154
Stockholder Proposals and Nominations for Directors to Be Presented at Meetings			154
WHERE YOU CAN FIND MORE INFORMATION			154
INDEX TO FINANCIAL STATEMENTS AND INFORMATION			F-1
Annex A — Purchase Agreement			A-1
Annex B — Plan of Liquidation			B-1
Annex C — Opinion of Special Committee’s Financial Advisor			C-1
Annex D — Opinion of HTI’s Financial Advisor			D-1
Annex E — Certain Provisions of the MGCL			E-1

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QUESTIONS AND ANSWERS

Unless stated otherwise, all references in this proxy statement to “we,” “us,” “our” and the “Company” are to American Realty Capital Healthcare Trust III, Inc., a Maryland corporation and also include references to the Company’s operating partnership and indirect subsidiaries, unless the context otherwise requires; all references to the “OP” are to American Realty Capital Healthcare Trust III Operating Partnership, L.P., a Delaware limited partnership and the Company’s operating partnership; and all references to “HTI” are to Healthcare Trust, Inc., a Maryland corporation and also include references to HTI’s operating partnership and indirect subsidiaries, unless the context otherwise requires; all references to the “HTI OP” are to Healthcare Trust Operating Partnership, L.P., a Delaware limited partnership and the operating partnership of HTI; all references to the “Purchase Agreement” are to the Purchase Agreement, dated as of June 16, 2017, by and among the Company, the OP, ARHC TRS Holdco III, LLC, a subsidiary of the OP (“HT III Holdco”), HTI, HTI OP and ARHC TRS Holdco II, LLC, a subsidiary of the HTI OP (“HTI Holdco”), a copy of which is attached as Annex A to this proxy statement; all references to the “Plan of Liquidation” are to the Company’s plan of liquidation and dissolution (the “Plan of Liquidation”), a copy of which is attached as Annex B to this proxy statement,

The following are some questions that you, as a stockholder to whom the notice of annual meeting and this proxy statement are addressed, may have regarding the proposals being considered and brief answers to those questions. The Company urges you to read carefully this entire proxy statement, including the Annexes, and the other documents to which this proxy statement refers, because the information in this section does not provide all the information that might be important to you. This proxy statement is dated October 23, 2017 and is first being mailed to stockholders on or about October 25, 2017.

You will also be asked to consider and act on any matters as may properly come before the Annual Meeting or any postponement or adjournment thereof. The Board does not know of any matters that may be considered at the Annual Meeting other than the matters set forth above.

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Questions About the Asset Sale and the Plan of Liquidation

The Board and the Special Committee also considered a variety of other factors, including risks and other potentially negative factors. For a more complete discussion of the factors and risks considered by the Board and the Special Committee, see “Special Factors — Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation” and “— Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders.”

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On the Closing Date, HTI will deposit $6.0 million of the Purchase Price (the “Escrow Amount”) payable into an escrow account for the benefit of the Company on the Closing Date, and the Escrow Amount, less any amounts paid or reserved for pending or unsatisfied indemnification claims of HTI made pursuant to the Purchase Agreement, will be released in installments thereafter over a period of 14 months following the Closing Date.

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See “The Plan of Liquidation” for further details.

Based on the Liquidation Analysis and subject to review and approval by the Board and the closing of the Asset Sale, we expect to pay an initial liquidating distribution of $15.75 per outstanding share of common stock within two weeks following the closing of the Asset Sale. This estimate of an initial liquidating distribution is based on certain assumptions, including that the Company retains the Escrow Amount and a certain amount of cash on hand for unknown and outstanding liabilities and expenses.

The Liquidation Analysis reflects, among other things, the Advisor’s best estimate of:

These, and other estimates used in the Liquidation Analysis, are based on a number of assumptions, including that:

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The following table, prepared by the Advisor, summarizes the individual components of the range of net cash proceeds available for distribution pursuant to the Plan of Liquidation estimated by the Board based on the Liquidation Analysis.

(all dollars in thousands, except per share)		Low End				High End
Gross Proceeds from Asset Sale(1)		$	120,000			$	120,000
Philip Center Loan(2)			(4,905	)			(4,897	)
Estimated Proration Payable to HTI			(771	)			(771	)
Estimated Net Other Assets and Liabilities(3)			13,463				13,823
Estimated Unpaid Transaction/Liquidation Costs(4)			(4,842	)			(4,208	)
Estimated Net Proceeds from Plan of Liquidation		$	122,945			$	123,947
Shares of common stock (fully diluted)(5)			6,959,059				6,959,059
Estimated Per-Share Liquidating Distributions		$	17.67			$	17.81

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The table below, prepared by the Advisor, summarizes the total estimated transaction and liquidation costs pursuant to the Asset Sale and Plan of Liquidation, representing the aggregate of both amounts that have actually been paid through the date of this proxy statement and amounts estimated to be paid through the expected Closing Date and the implementation of the Plan of Liquidation.

(all dollars in thousands) Estimated Transaction/Liquidation Costs:		Low End				High End
Philip Center Loan Transfer Tax and Closing Costs		$	390			$	389
Legal Costs			1,115				1,055
Accounting Costs			855				658
Insurance Costs			314				183
Financial Advisor			1,250				1,250
Proxy/Shareholder Solicitation Costs			368				268
Other Additional Costs			1,465				1,320
Total Estimated Transaction/Liquidation Costs:		$	5,757			$	5,122

The Liquidation Analysis is based on certain assumptions and there can be no guarantee as to the exact amount that the Company will distribute to its stockholders pursuant to the Plan of Liquidation. Moreover, shares of the Company’s common stock are not listed on a national securities exchange, and the estimated range of liquidating distributions does not represent the amount a stockholder would obtain if a stockholder sold his or her shares. With respect to the estimated prorations and closing adjustments, the Company’s estimated assets and liabilities on the Closing Date and estimated costs and expenses of closing the Asset Sale and liquidating the Company, the methodologies employed were based upon a number of estimates and assumptions that may not be accurate or complete, including estimates and assumptions regarding the actual operating results of the Properties prior to the Closing Date, the actual cost of operating the Company, the actual Closing Date, the actual amount of time it will take to complete the implementation of the Plan of Liquidation and whether the Company will be required to provide for any unknown and outstanding liabilities and expenses, which may include the establishment of a reserve fund or transferring assets to a liquidating trust to pay contingent liabilities and ongoing expenses in an amount to be determined as information concerning such contingencies and expenses becomes available.

These estimates are based on circumstances and conditions existing as of the date of this proxy statement. Changes in these circumstances and conditions during the period under which the Company implements the Plan of Liquidation could have a material effect on the ultimate timing and amount of liquidating distributions paid to stockholders. If the Company underestimates its existing obligations and liabilities or if unanticipated or contingent liabilities arise, the amount ultimately distributed to stockholders would be less than estimated. Funding indemnity claims or other contingent liabilities could delay and reduce distributions to stockholders.

See “The Plan of Liquidation — Range of Liquidating Distributions.”

If the Board decides it would not be feasible for the Company to pay, or adequately provide for, all debts and liabilities of the Company (including costs and expenses incurred and anticipated to be incurred in

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connection with the liquidation of the Company) at the time the final distribution is to be paid, the Board may establish a liquidating trust and the Company may transfer its remaining assets and liabilities to that liquidating trust. The Company would then distribute beneficial interests in the liquidating trust to its stockholders. If the Company establishes a reserve fund, the Company may pay a final distribution from any funds remaining in the reserve fund after it determines that all of the Company’s liabilities and obligations have been paid.

The actual amounts and timing of the liquidating distributions will be determined by the Board or, if a liquidating trust is formed, by the trustees of the liquidating trust, in their discretion. We cannot predict the timing or amount of any liquidating distributions, as uncertainties exist regarding the precise value of any remaining assets after the Asset Sale, the final amount of our liabilities and obligations, the operating costs and amounts to be set aside in a reserve fund for claims, obligations and provisions during the liquidation and dissolution process.

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Other than as contemplated by the Letter Agreement, if the Asset Sale is completed, no fees or other amounts are or will become due or otherwise payable under the Advisory Agreement, the Company’s property management agreement with the Property Manager (the “Property Management Agreement”), the LPA or any other agreement between the Company and the Advisor and its affiliates.

In addition, you should note that inherent conflicts of interest exist where the individuals who comprise the management teams of the Company and HTI are the same individuals and those individuals are assisting the Board and HTI Board in connection with the Asset Sale. In addition, P. Sue Perrotty, an independent director of the Company, has served as an independent director of another AR Global-sponsored REIT, Global Net Lease, Inc. (“GNL”), since March 2015 and two other entities previously sponsored by AR Global that are now managed by unrelated advisors.

See “Special Factors — Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation.”

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If the Company transfers its remaining assets and liabilities to a liquidating trust and distributes beneficial interests in the liquidating trust to its stockholders, the shares of beneficial interest in the liquidating trust will be generally non-transferable except by will, intestate succession or operation of law.

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Questions About the Other Proposals

You will also be asked to consider and act on any matters as may properly come before the Annual Meeting or any postponement or adjournment thereof. The Board does not know of any matters that may be considered at the Annual Meeting other than the matters set forth above and the approval of the Asset Sale and the Plan of Liquidation.

Questions About the Annual Meeting

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Directors will be elected by the affirmative vote of the holders of a majority of the outstanding shares of common stock, present in person or by proxy, to elect each nominee, provided that a quorum is present. Approval of the proposal to ratify the appointment of KPMG requires the affirmative vote of the majority of the votes cast for the proposal at the Annual Meeting, provided that a quorum is present. The proposal to adjourn the Annual Meeting requires the affirmative vote of the majority of the votes cast for the proposal.

The Company’s bylaws authorize the chairperson of the meeting to adjourn the meeting in the discretion of the chairperson and without any action by the stockholders regardless of whether a quorum is present.

The closing of the Asset Sale is conditioned upon stockholder approval of both the Asset Sale and the Plan of Liquidation. Thus, if stockholders do not approve the Plan of Liquidation, the Asset Sale will not be completed even if stockholders approve the Asset Sale. Likewise, the effectiveness of the Plan of Liquidation is conditioned upon stockholder approval of the Plan of Liquidation and the closing of the Asset Sale. If the Asset Sale is not approved and does not close, the Plan of Liquidation will not become effective regardless of whether or not it has been approved.

Please refer to your proxy card to see which voting options are available to you. The method by which you authorize a proxy will in no way limit your right to vote at the Annual Meeting if you later decide to attend the meeting in person.

If you abstain from voting, your shares will not be counted as votes cast and will have the same effect as a vote against the proposal to approve the Asset Sale, the proposal to approve the Plan of Liquidation and the election of each of the director nominees named in this proxy statement, but will have no effect on the other proposals.

None of the Company’s common stock is held in “street name” and thus the Company does not anticipate any “broker non-votes” at the Annual Meeting. A “broker non-vote” would only occur if your shares were held in street name by a bank or other nominee and you did not provide that nominee with voting instructions.

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Simply attending the Annual Meeting without voting will not revoke your proxy or change your vote.

The Company will promptly deliver, upon written or oral request, a separate copy of this proxy statement to a stockholder at a shared address to which a single copy was previously delivered. If you would prefer to receive your own copy, you may direct requests for separate copies by calling the Company’s Investor

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Relations department at (866) 902-0063 or by mailing a request to American Realty Capital Healthcare Trust III, Inc., 405 Park Avenue, 4^th Floor, New York, New York 10022, Attention: Investor Relations. Likewise, if your household currently receives multiple copies of disclosure documents and you would like to receive one set, please contact us.

American Realty Capital Healthcare Trust III, Inc.
Attention: Investor Relations
405 Park Avenue, 4^th Floor
New York, New York 10022
(866) 902-0063
www.thehealthcarereit3.com

You can also contact the proxy solicitor hired by the Company as follows:

Broadridge Investor Communication Solutions, Inc.

For Questions, Stockholders May Call: (855) 973-0094

To Vote Toll Free, Stockholders May Call: (800) 690-6903

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SPECIAL FACTORS

Background of the Asset Sale and the Plan of Liquidation

The Company was incorporated on April 24, 2014 as a Maryland corporation and elected and qualified to be taxed as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2015. The Company is a non-traded, externally-advised REIT with a focus on acquiring a diversified portfolio of healthcare-related assets including MOBs, senior housing communities and other healthcare-related facilities in the United States. On August 20, 2014, the Company commenced the IPO on a “reasonable best efforts” basis of up to 125.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $3.1 billion, plus up to 26.3 million shares of common stock available pursuant to the Company’s distribution reinvestment plan (“DRIP”). On November 15, 2015, the Company announced the suspension of the IPO, effective December 31, 2015, and in August 2016, the Company’s IPO lapsed in accordance with its terms. As of June 30, 2017, the Company had received total proceeds from the IPO and the DRIP, net of share repurchases, of $171.1 million.

On January 29, 2016, the Board received an unsolicited letter of interest (the “January 29^th HTI Letter”) from the chairman of the HTI Board, inquiring as to whether the Board would be interested in discussing a possible strategic transaction with HTI, and, if so, entering into a mutual non-disclosure agreement to facilitate the pursuit of discussions in greater depth. HTI is a non-traded REIT externally advised by the HTI Advisor. Like the Company, HTI invests in healthcare real estate, focusing on seniors housing and MOBs, located in the United States. As of June 30, 2017, HTI owned 163 properties located in 29 states and comprised of 8.5 million rentable square feet. The HTI Advisor and the Advisor are under common control with AR Global. See “Certain Relationships and Related Transactions.”

On February 4, 2016, the Company and HTI entered into a nondisclosure agreement.

On February 8, 2016, the HTI Board entered into an engagement letter with KeyBanc, pursuant to which KeyBanc agreed to serve as financial advisor to the HTI Board.

On February 16, 2016, the independent directors of the Board received an unsolicited letter (the “February 16^th Strategic Party A Letter”) from the lead independent director of a strategic party referred to as “Strategic Party A,” requesting that the Company enter into a nondisclosure agreement with Strategic Party A, so that Strategic Party A could gather information with the intention of submitting a proposal to enter into a potential strategic transaction with the Company. Strategic Party A is also a non-traded REIT which is sponsored and advised by affiliates of AR Global. Strategic Party A advised in the February 16^th Strategic Party A Letter that Strategic Party A had engaged a financial advisor (“Strategic Party A Financial Advisor”) to assist Strategic Party A in compiling financial information and structuring a potential strategic transaction.

On February 19, 2016, Ms. Perrotty, one of the Company’s independent directors, received a follow-up letter from a representative of KeyBanc, advising the Company that HTI was aware that Strategic Party A was also interested in potentially acquiring the Company and requesting that any information regarding HTI or any potential transaction between HTI and the Company not be shared with the Advisor or any other personnel related to or affiliated with Strategic Party A. KeyBanc also requested that the Company and HTI begin to exchange information pursuant to their nondisclosure agreement.

On February 22, 2016, the Board held a special telephonic meeting to discuss the receipt of the January 29^th HTI Letter and the February 16^th Strategic Party A Letter and to establish the Special Committee, a special committee comprised solely of the independent and disinterested directors of the Board to evaluate and review the letters. The Board also authorized the engagement of Shapiro Sher Guinot & Sandler, P.A. (“Shapiro Sher”) as counsel to the Special Committee to assist it as it considered any transaction and authorized the Special Committee to proceed with the engagement of a financial advisor to the Special Committee. Representatives of the Company’s management, AR Global, Proskauer Rose LLP, the Company’s outside counsel (“Proskauer”), and Shapiro Sher were present at the meeting.

On February 22, 2016, immediately following the Board meeting, the Special Committee held a special telephonic meeting with representatives of Shapiro Sher and Proskauer present. Ms. Perrotty, as the chair of

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the Special Committee, advised that she had requested proposals to act as financial advisor to the Special Committee from SunTrust Robinson Humphrey and two other investment banks.

On February 26, 2016, during telephonic meetings of the Board, with representatives of management, Proskauer and Shapiro Sher present, SunTrust Robinson Humphrey and one of the investment banks each presented their respective qualifications with respect to acting as the financial advisor to the Special Committee and material investment banking and lending relationships with AR Global and certain entities sponsored and advised by affiliates of AR Global. The other investment bank contacted by Ms. Perrotty ultimately declined to be considered.

On February 26, 2016, at a special telephonic meeting of the Special Committee, with representatives of Shapiro Sher and Proskauer present, the Special Committee discussed the information provided by SunTrust Robinson Humphrey and the other investment bank at the earlier meetings, but deferred a decision so that the Special Committee could interview additional potential financial advisors.

On February 27, 2016, Ms. Perrotty responded to the lead independent director of Strategic Party A regarding the February 16^th Strategic Party A Letter on behalf of the Special Committee, expressing the Special Committee’s interest in entering into discussions about a possible transaction with Strategic Party A and in entering into a nondisclosure agreement with Strategic Party A.

On March 15, 2016, a third investment bank discussed with the Special Committee its qualifications with respect to acting as the financial advisor to the Special Committee and material investment banking and lending relationships with AR Global and certain entities sponsored and advised by affiliates of AR Global.

On March 16, 2016, at a telephonic meeting of the Special Committee, the Special Committee selected SunTrust Robinson Humphrey as its financial advisor.

On March 24, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, Ms. Perrotty reported that she had been advised that HTI had decided not to pursue additional discussions with the Company at that time. The Special Committee, after discussions with the assistance of SunTrust Robinson Humphrey, determined to focus on negotiations with Strategic Party A, including entering into a nondisclosure agreement with Strategic Party A and setting up a data room.

On March 30, 2016, the Special Committee entered into an engagement letter with SunTrust Robinson Humphrey as its exclusive financial advisor for the purpose of assisting the Special Committee in its analysis and consideration of any potential transaction.

On March 31, 2016, the Company and Strategic Party A entered into a nondisclosure agreement.

On April 4, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee about recent discussions with Strategic Party A Financial Advisor regarding Strategic Party A’s business plan and strategy.

On April 7, 2016, Strategic Party A sent a letter to SunTrust Robinson Humphrey in which it proposed to acquire 100% of the issued and outstanding shares of the Company’s common stock as part of a four-party merger transaction in exchange for common stock in Strategic Party A, valuing the Company’s common stock at $22.60 per share based on Strategic Party A’s most recent published estimated per-share net asset value (the “April 7^th 2016 Proposal”). The April 7^th 2016 Proposal also contemplated a 30-day exclusivity period, a 30-day go-shop period, and a break-up fee of 1.0% during the go-shop period and 2.0% following the go-shop period.

At telephonic meetings of the Special Committee held on April 11 and April 18, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey discussed its preliminary financial analyses with respect to the Company and reviewed the April 7^th 2016 Proposal. The Special Committee directed SunTrust Robinson Humphrey to move forward with negotiations with Strategic Party A Financial Advisor and Strategic Party A. The Special Committee instructed SunTrust

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Robinson Humphrey to negotiate for a mix of cash and stock as consideration, a higher exchange ratio, a longer go-shop period with potential matching rights, a lower break-up fee, and the timing of the proposed exclusivity period.

On April 25, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that Strategic Party A desired to focus on an all-stock transaction with the Company that would be expected to close concurrently with other potential transactions Strategic Party A was pursuing but would not be contingent on the closing of those other potential transactions. Based on direction from the Special Committee, SunTrust Robinson Humphrey responded to the April 7^th 2016 Proposal by email to Strategic Party A Financial Advisor on April 26, 2016 proposing an increase in the value to $24.50 per share, an increase in the go-shop period to fifty days, and modifications to the break-up fee that correlated with the increase in the go-shop period, as well as an expense reimbursement provision.

On April 29, 2016, the Company issued a press release announcing that the Board had established the Special Committee to conduct a review of strategic alternatives and was addressing potential conflicts of interest relating to a potential strategic transaction. The Company further advised in the press release that the Special Committee had engaged SunTrust Robinson Humphrey as its financial advisor and Shapiro Sher as its special legal counsel in connection with such strategic review process.

At telephonic meetings of the Special Committee held on May 2 and May 9, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported on the status of ongoing negotiations with Strategic Party A Financial Advisor. The Special Committee, with the assistance of SunTrust Robinson Humphrey and Shapiro Sher, discussed whether the Special Committee should consider reaching out to other parties, including HTI, to gauge their interest in the Company’s portfolio.

At telephonic meetings of the Special Committee held on May 16, May 23, and May 31, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee initially authorized SunTrust Robinson Humphrey to contact 12 parties identified by the Special Committee with the assistance of SunTrust Robinson Humphrey to gauge interest in the Company’s portfolio. SunTrust Robinson Humphrey subsequently reported that eight parties from the 12 parties initially contacted as well as from additional parties that the Special Committee subsequently authorized SunTrust Robinson Humphrey to contact had entered into nondisclosure agreements with the Company and had begun to review the Company’s portfolio in the data room. SunTrust Robinson Humphrey also reported to the Special Committee updates on the negotiations with Strategic Party A Financial Advisor and that HTI had expressed interest in renewing discussions.

On June 10, 2016, Strategic Party A Financial Advisor presented a revised proposal letter (the “June 10^th Proposal”) to SunTrust Robinson Humphrey that was delivered to the Special Committee on the same day. In the June 10^th Proposal, Strategic Party A proposed to acquire 100% of the issued and outstanding shares of the Company’s common stock in exchange for common stock in Strategic Party A valuing the Company’s common stock at $22.00 per share (a decrease from the $22.60 per share valuation in the April 7^th 2016 Proposal) based on Strategic Party A’s most recent published estimated per-share net asset value. The June 10^th Proposal contemplated a 30-day exclusivity period, 45-day go-shop period, and a break-up fee of 0.5% during the go-shop period and 2.5% following the go-shop period. The June 10^th Proposal was not contingent on any additional transactions that Strategic Party A was concurrently pursuing. SunTrust Robinson Humphrey advised the Special Committee that with the other transactions being considered, there would be uncertainty regarding the value of Strategic Party A’s stock and, therefore, in the implied valuation of the Company’s common stock of $22.00 represented by Strategic Party A’s proposal. The Special Committee also expressed concern about eventual liquidity following a transaction with Strategic Party A involving stock consideration, given the negative view of some publicly-traded REIT investors about REITs with diversified assets.

On June 13, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reviewed Strategic Party A’s June 10^th Proposal and updated the Special Committee on its conversations with Strategic Party A Financial

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Advisor. SunTrust Robinson Humphrey reported that Strategic Party A had refused to propose an all-cash transaction because of the small size of the Company’s portfolio. SunTrust Robinson Humphrey also advised that it had spoken with KeyBanc regarding HTI’s renewed interest in the Company’s portfolio and reported that the Special Committee might receive a revised proposal from HTI shortly. The Special Committee decided not to respond to the June 10^th Proposal pending review of other proposals that might be submitted.

At telephonic meetings of the Special Committee held on June 20 and June 27, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee on the status of the potentially interested bidders and also advised that HTI had not made a new proposal. SunTrust Robinson Humphrey and the Special Committee further discussed the June 10^th Proposal, the decline in value from the April 7^th 2016 Proposal and Strategic Party A’s refusal to propose an all-cash transaction. The Special Committee, with the assistance of SunTrust Robinson Humphrey, also began discussing the possibility of liquidating the Company’s portfolio on a property-by-property basis. The Special Committee decided not to respond to Strategic Party A’s June 10^th Proposal pending further clarity on the interest level of other interested parties.

On July 5, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey advised the Special Committee that 11 potentially interested bidders had signed nondisclosure agreements and been granted access to the Company’s data room but each of these bidders had either declined to make a proposal, had indicated that it was unlikely to do so or had indicated that any proposal would be at a low valuation based on the potentially interested bidder’s view. SunTrust Robinson Humphrey also reviewed with the Special Committee the potential sale of the properties comprising the Company’s portfolio as an alternative to a sale of the Company. Based on this review, as well as additional discussions among the members of the Special Committee with the assistance of SunTrust Robinson Humphrey, the Special Committee decided to respond to Strategic Party A’s June 10^th Proposal and directed SunTrust Robinson Humphrey to negotiate for the inclusion of a cash component in the consideration instead of only stock, either as a mix of cash and stock or by allowing the Company to distribute the cash on its balance sheet to its stockholders prior to closing any transaction with Strategic Party A.

On July 11, 2016, at a telephonic meeting of the Special Committee with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, Ms. Perrotty reported regarding her conversation with the chairman of the HTI Board, who advised her that HTI would not be making a bid for the Company’s portfolio. SunTrust Robinson Humphrey reported on discussions with Strategic Party A Financial Advisor and noted that Strategic Party A was amenable to the Company paying a special cash distribution to its stockholders in connection with a transaction. Strategic Party A Financial Advisor also advised SunTrust Robinson Humphrey that Strategic Party A was nearing an agreement to enter into a transaction with another entity and was still interested in entering into a transaction with the Company.

On August 1, 2016, at a telephonic meeting of the Special Committee, SunTrust Robinson Humphrey reported that there had been limited progress in discussions with Strategic Party A Financial Advisor about a potential transaction involving the Company and Strategic Party A. SunTrust Robinson Humphrey also reported on its contacts with certain of the other potential bidders that had signed nondisclosure agreements and had been granted access to the Company’s data room.

On August 15, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported that Strategic Party A was no longer interested in a concurrent transaction, but, rather, Strategic Party A wanted to complete other transactions before focusing on a potential transaction with the Company. SunTrust Robinson Humphrey further reported on preliminary discussions with four new potential bidders contacted at the request of the Special Committee, including a strategic party referred to as “Strategic Party B.” The Special Committee instructed SunTrust Robinson Humphrey to continue to contact other potential bidders. Strategic Party B is a non-traded REIT not sponsored or advised by affiliates of AR Global.

Also on August 15, 2016, the Company and Strategic Party B entered into a nondisclosure agreement.

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On August 29, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey updated the Special Committee with respect to the status of discussions with potential bidders.

On September 2, 2016, SunTrust Robinson Humphrey received a letter from Strategic Party B (the “September 2^nd Proposal”) proposing to purchase all the assets in the Company’s portfolio for $129 million in cash, inclusive of the assumption of approximately $5 million in mortgage debt outstanding under the Philip Center Loan.

On September 6, 2016, at a telephonic meeting of the Special Committee with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reviewed with the Special Committee the September 2^nd Proposal, which, without taking into account fees or allocations payable to the Advisor or fees and expenses (other than SunTrust Robinson Humphrey’s advisory fee) associated with a transaction involving the Company or a liquidation of the Company, equated to $20.03 per share of the Company’s common stock. SunTrust Robinson Humphrey also reviewed other terms of the proposal, including a $1.3 million deposit due from Strategic Party B upon the signing of a purchase agreement, a 45-day exclusivity and due diligence period, and the absence of a go-shop period (which Strategic Party B had indicated to SunTrust Robinson Humphrey was very important to it). SunTrust Robinson Humphrey also reported that it had not had any further contact with Strategic Party A Financial Advisor.

On September 7, 2016, SunTrust Robinson Humphrey notified the Special Committee that Strategic Party A had announced entry into a merger agreement to acquire another entity.

On September 12, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey advised the Special Committee of receipt of a revised proposal from Strategic Party B (the “September 12^th Proposal”) increasing the all-cash consideration from $129 million to $132 million, inclusive of the assumption of approximately $5 million in debt outstanding under the Philip Center Loan but otherwise on the same terms as the September 2^nd Proposal. SunTrust Robinson Humphrey noted that Strategic Party B had characterized this proposal as “final.” SunTrust Robinson Humphrey reviewed a comparison of the September 12^th Proposal and the June 10^th Proposal from Strategic Party A. The Special Committee, with the assistance of SunTrust Robinson Humphrey and Shapiro Sher, discussed the attractiveness of the September 12^th Proposal because of the all-cash consideration as compared to the all-stock consideration of the June 10^th Proposal. The Special Committee also discussed Strategic Party A’s portfolio after its recent acquisition and the terms of the advisory agreement of Strategic Party A, as well as the estimated per-share net asset value that Strategic Party A used in its June 10^th Proposal. The Special Committee directed SunTrust Robinson Humphrey to contact Strategic Party A and propose either including a cash component as part of the consideration or increasing the total amount of consideration based on an increase in Strategic Party A’s valuation of the Company.

On September 19, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey advised the Special Committee that Strategic Party A Financial Advisor had not responded to the Special Committee’s proposed modifications to the June 10^th Proposal. The Special Committee, with the assistance of SunTrust Robinson Humphrey and Shapiro Sher, discussed contacting HTI before moving forward with Strategic Party B based on the September 12^th Proposal. The Special Committee also discussed the option to end the Company’s strategic process and to not pursue any transactions at this time and continue to operate. SunTrust Robinson Humphrey reviewed with the Special Committee the strategic process to date and the September 12^th Proposal. The Special Committee, with the assistance of SunTrust Robinson Humphrey, discussed the Company’s portfolio and future prospects, including, in particular, that under the Company’s current plan to pay out its available cash in regular distributions to its stockholders, there would be less cash available for operations and acquisitions, limiting the Company’s ability to grow its portfolio. After further discussions, the Special Committee determined that it did not believe ending the strategic process was in the Company’s best interest and directed SunTrust Robinson Humphrey to continue discussions with Strategic Party B unless improved proposals were received from HTI or Strategic Party A. After the meeting, the chairman of the HTI Board advised Ms. Perrotty that HTI was not interested in making an offer for the Company’s portfolio.

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On September 21, 2016, the Special Committee confirmed by email that SunTrust Robinson Humphrey should continue discussions with Strategic Party B.

On September 26, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee on a telephonic meeting with representatives of Strategic Party B on September 24, 2016 to discuss the September 12^th Proposal, as well as certain related matters including taxes, the purchase and sale agreement, a timeline to a potential closing, due diligence, the proxy statement related to stockholder approval of the sale of the Company’s assets, and certain Company related party fees in the event of a transaction. Following this discussion, the Special Committee authorized SunTrust Robinson Humphrey to deliver a revised proposal letter reflecting the need for stockholder approval, lender consent for the assumption of the mortgage, a “fiduciary out” right and a break-up fee.

On September 29, 2016, SunTrust Robinson Humphrey delivered the revised proposal letter to Strategic Party B authorized at the September 26^th meeting of the Special Committee.

On October 3, 2016, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey advised the Special Committee that it expected to hear from Strategic Party B in the next day or two. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed other details relating to a potential strategic transaction with Strategic Party B, including certain related party and transaction fees that may be owed under the Advisory Agreement, the LPA, and the Property Management Agreement, and with respect to restricted shares issued to independent directors.

On October 7, 2016, SunTrust Robinson Humphrey reported to the Special Committee that Strategic Party B was no longer interested in acquiring the assets of the Company’s portfolio. The Special Committee subsequently learned from Strategic Party B that it was not raising capital at a pace that would enable it to fund its September 12^th Proposal.

At telephonic meetings of the Special Committee held on October 10, October 17, and November 7, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the Special Committee’s options. Ms. Perrotty reported upon her discussions with Strategic Party B’s chair and that Strategic Party B might be interested in proceeding with negotiations if it were able to raise sufficient capital. The Special Committee directed SunTrust Robinson Humphrey to continue contacting entities that had expressed interest over the course of the Company’s strategic process, including HTI, and to contact parties that had not yet been contacted. The Special Committee also discussed a potential liquidation and several “break-up” scenarios whereby the assets could be sold in groups to several buyers.

On October 28, 2016, the Company and a strategic party referred to as “Strategic Party C” entered into a nondisclosure agreement. Strategic Party C is an exchange-listed REIT not sponsored or advised by affiliates of AR Global.

At telephonic meetings of the Special Committee held on December 5 and December 19, 2016, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that five parties were interested in at least a portion of the Company’s portfolio, including Strategic Party C. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed selling the Company’s portfolio in pieces and the potential ramifications to the total amount of net proceeds the Company’s stockholders would ultimately receive with respect to the Company’s assets. At the December 19, 2016 meeting, after discussions with the assistance of SunTrust Robinson Humphrey regarding the upcoming holidays and the holidays’ potential impact on responsiveness by certain interested or potentially interested parties, the level of interest that had been received to date, possible ways to increase the interest in certain of the properties that were not receiving any interest (including engaging a broker to assist with marketing such properties), and the fact that Strategic Party B might be in a better position to submit a proposal if it had more time to raise capital, the Special Committee decided to defer action until after January 1, 2017 and then reach out to all parties that may be interested, including Strategic Party B. 

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On January 9, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey updated the Special Committee on the status of its outreach to potential bidders. Given that no strong interest for the Company’s entire portfolio had been received, the Special Committee authorized SunTrust Robinson Humphrey to contact any interested parties to confirm their interest in pieces of the Company’s portfolio and refine their bids. Among the preliminary bids at this time were (i) Strategic Party C’s bid for the two SHOP Properties at a range of $13.2 to $14 million, and (ii) a combined bid for 11 of the Properties (including both SHOP Properties) for $75 million. Neither of the preliminary bids had been formalized at this time and remained speculative, and no further progress was made with respect to either of these bids subsequently.

On February 21, 2017, the HTI Board held a telephonic meeting to discuss its potential transaction with the Company and to establish the HTI Special Committee. Also on February 21, 2017, the HTI Special Committee retained Arnold & Porter Kaye Scholer LLP (“A&PKS”) as counsel to the HTI Special Committee.

On February 27, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported that KeyBanc had recently informed them that HTI was interested in restarting discussions with the Special Committee. SunTrust Robinson Humphrey further reported that it expected to receive a proposal letter from HTI shortly. Following discussions about the potential for a cash offer from HTI, SunTrust Robinson Humphrey advised the Special Committee that, since the January 9^th meeting, SunTrust Robinson Humphrey had continued discussions with seven prospective bidders that had entered into nondisclosure agreements and had received preliminary bids for all but three of the Company’s 19 assets and continued to pursue a bid for the entire portfolio. The preliminary bids included the two bids discussed at the January 9^th meeting and a preliminary bid for five of the single-tenant MOB assets for $19.3 million. The Special Committee directed that SunTrust Robinson Humphrey continue its discussions with the potential bidders and notify KeyBanc that HTI had one week to formalize its interest.

On March 2, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the Company’s real estate portfolio and valuation. The HTI Special Committee authorized KeyBanc to present a bid for $98.5 million in cash for all of the real estate assets in the Company’s portfolio.

On March 6, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that it had verbally received a preliminary bid from HTI for all the assets in the Company’s portfolio for $98.5 million in cash on March 3, 2017 (the “March 3^rd Bid”). SunTrust Robinson Humphrey further reported that it had received a combined bid from three entities (each of which had been part of the preliminary bids), including Strategic Party C, for all but three of the Properties (the RAI Clearwater, DaVita Dialysis and Philip Professional Center) for $93.3 million in cash and that, if the three remaining Properties could be sold individually by a broker at approximately the price the Company had paid for them, then the total gross proceeds generated (prior to any incremental transaction fee due the broker) could be more than those generated by the March 3^rd Bid. After discussions about the execution risks of a combined proposal and the uncertainty regarding the Company’s ability to sell the three remaining Properties individually on the terms discussed, the Special Committee directed SunTrust Robinson Humphrey to negotiate with KeyBanc and contact the other additional parties for their “best and final” offers.

On March 7, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the Company’s response to HTI’s initial bid, including the Special Committee’s proposed valuation. After discussion regarding the Company’s portfolio and valuation, the HTI Special Committee authorized KeyBanc to present a new bid for $104.5 million in cash for all of the real estate assets in the Company’s portfolio. Subsequently, SunTrust Robinson Humphrey, as directed by the Special Committee, informed KeyBanc that the $104.5 million bid was less than the Company would accept.

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On March 10, 2017, the Company and a strategic party referred to as “Strategic Party D” entered into a nondisclosure agreement. Strategic Party D is an exchange-listed REIT not sponsored or advised by affiliates of AR Global.

Also on March 10, 2017, KeyBanc and the Chairman of the HTI Special Committee participated in a due diligence call with the members of the Company’s management (including certain of its asset managers) and discussed the historic and projected performance of the Company’s portfolio. On March 14, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the due diligence call and the rejection by the Special Committee of the increased bids. After discussion regarding the portfolio and valuation, the HTI Special Committee authorized KeyBanc to present a new offer for $110 million in cash for all of the real estate assets in the Company’s portfolio.

On March 20, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that it had received two proposals on March 17, 2017. The first proposal was from HTI and contemplated an asset transaction to acquire the entire portfolio for $110 million (the “March 17^th HTI Proposal”) (which reflected an increase from the $98.5 million in cash proposed in the March 3^rd Bid). The second proposal also contemplated an asset transaction in the form of a combined bid from Strategic Party C and Strategic Party D for the entire portfolio in the amount of $110.0 million in cash (the “March 17^th Combined Proposal”). SunTrust Robinson Humphrey reported that KeyBanc had stated that no further increase should be expected from HTI. SunTrust Robinson Humphrey further advised that Strategic Party C, which proposed to purchase two assisted living facility assets, had conditioned its proposal on the assets being delivered free and clear of all leases and operating agreements, which SunTrust Robinson Humphrey noted would result in buy-out costs that would lower the net proceeds to the Company of the March 17^th Combined Proposal by an amount not yet determined. SunTrust Robinson Humphrey advised that both proposals may represent approximately $17.20-$17.25 on a per share basis, without taking into account fees or allocations payable to the Advisor or fees and expenses (other than SunTrust Robinson Humphrey’s advisory fee) associated with a transaction involving the Company or a liquidation of the Company (including buy-out costs for leases and operating agreements contemplated by the March 17^th Combined Proposal). The Special Committee discussed the two proposals and again discussed the Company’s option to suspend the Company’s strategic process if the Special Committee believed that it could lead to more value for the Company’s stockholders in the long run and considered, based on discussions with SunTrust Robinson Humphrey, that a near-term increase in value was not likely. The Special Committee directed SunTrust Robinson Humphrey to request a “best and final” offer from each of HTI, Strategic Party C, and Strategic Party D and to gauge each party’s interest in adding a stock component to their respective bids to create additional value for the Company’s stockholders.

On March 23, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the prior conversations between KeyBanc and SunTrust Robinson Humphrey and the due diligence calls with members of the Company’s management. After discussion, the HTI Special Committee authorized KeyBanc to present a new bid for $111 million in cash for all of the real estate assets in the Company’s portfolio.

On March 27, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reported to the Special Committee that it had received a revised proposal letter from HTI on March 23, contemplating the purchase by HTI of all the assets in the Company’s portfolio for $111 million in cash (the “March 23^rd Proposal”). SunTrust Robinson Humphrey further reported that it had received a proposal letter from Strategic Party D on March 24^th, contemplating the sale of all the assets in the Company’s portfolio for approximately $114 million (subject to a dollar-for-dollar reduction based on the amount outstanding under the Philip Center Loan at closing) in stock based on the trading price of Strategic Party D’s stock at closing in a “stock-for-assets” asset purchase (the “March 24^th Proposal”). Strategic Party C did not participate in the March 24^th Proposal. SunTrust Robinson Humphrey reported to the Special Committee that the March 24^th Proposal, if completed, would result in the Company’s stockholders owning roughly 29% of Strategic Party D. After discussing HTI’s March 23^rd Proposal and Strategic Party D’s March 24^th Proposal, the Special

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Committee requested that SunTrust Robinson Humphrey provide it with additional information regarding Strategic Party D to assist the Special Committee in making a final decision given that the Company’s stockholders would become stockholders of Strategic Party D if the contemplated transaction was completed.

On March 28, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reviewed with the Special Committee additional information regarding Strategic Party D. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed Strategic Party D’s strategic plan moving forward, the fit of the Company’s portfolio within Strategic Party D’s portfolio of properties and the challenges of engaging in a “stock-for-asset” transaction as an asset purchase (instead of as a merger). The Special Committee authorized SunTrust Robinson Humphrey to continue negotiations with Strategic Party D with a view towards improving the March 24^th Proposal. The Special Committee directed SunTrust Robinson Humphrey to propose adding an independent director of the Company’s choice to Strategic Party D’s board of directors and adding a go-shop period. Strategic Party D advised that it would not be increasing its bid prior to responding to these additional requests.

On March 30, 2017, the Chairman of the HTI Special Committee emailed the other members of the HTI Special Committee to report on his conversation with representatives from KeyBanc and the Company’s management team regarding the Company’s portfolio and to request authorization for an increased bid of $120 million in cash for all of the real estate assets in the Company’s portfolio. Citing his beliefs that the return on the bid would be justified, that the assets were of the type HTI was looking to bring into its portfolio, and that it would be advantageous to HTI’s shareholders to seek to do so more rapidly by making this acquisition, the Chairman of the HTI Special Committee reported that he and several other members of the HTI Special Committee were comfortable with the increased bid. The HTI Special Committee approved the increased bid and directed KeyBanc to deliver a revised written indication of interest to the Company.

On March 31, 2017, Ms. Perrotty received a phone call from the Chairman of the HTI Special Committee advising Ms. Perrotty that HTI would be increasing the cash consideration in its proposal to $120.0 million. Also on March 31, 2017, SunTrust Robinson Humphrey advised the Special Committee that it had received a revised proposal letter from HTI with these terms (the “March 31^st Proposal”) and a statement from KeyBanc that the proposal represented HTI’s final offer.

On April 2, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the March 31^st Proposal. The March 31^st Proposal contemplated an acquisition of all the assets in the Company’s portfolio for $120.0 million in cash, reduced dollar for dollar by the $4.9 million outstanding Philip Center Loan. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the terms of the March 31 ^st Proposal, including the absence of any financing contingency or other contingencies except due diligence, the negotiation of a purchase and sale agreement, required approval by the Company’s stockholders and HTI’s request for a 30-day exclusivity period. SunTrust Robinson Humphrey reported that Strategic Party D had declined to improve its March 24^th Proposal. The Special Committee ultimately rejected Strategic Party D because it believed the all-cash bid from HTI that provided $6 million more of incremental value was a better transaction for the Company’s stockholders. After discussing the improved bid from HTI and Strategic Party D’s statement that it would not increase its bid, the Special Committee directed SunTrust Robinson Humphrey to negotiate the March 31^st Proposal from HTI. The Special Committee also considered the need for a go-shop period, but ultimately determined that, in light of its extensive marketing efforts since the strategic process began in April of 2016, having a go-shop period was not essential and the final Purchase Agreement agreed to by the Company did not include a go-shop provision.

On April 5, 2017, SunTrust Robinson Humphrey received a letter from HTI with a revised proposal (the “April 5^th Proposal”). The April 5^th Proposal contained a “fiduciary out” provision with a 5% break-up fee and certain property-by-property expense allocations. With the assistance of Shapiro Sher and SunTrust Robinson Humphrey, the Special Committee subsequently negotiated a reduction in the break-up fee from 5% to 3%, that any property-level transfer tax and title costs would be allocated as is the custom in the state in which each of the Properties was located, and clarified language to account for the Properties that were held

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by long-term ground leases and not in fee simple. On April 7, 2017, SunTrust Robinson Humphrey received a letter from HTI with a revised proposal reflecting these revisions (the “April 7^th Proposal”).

On April 7, 2017, SunTrust Robinson Humphrey reviewed with the Special Committee a proposed timeline to closing a transaction contemplated by the April 7^th Proposal as well as information provided by the Advisor regarding related party fees that could be payable to the Advisor, Property Manager, limited partners of the OP, directors, and other vendors in connection with the transaction as contemplated by the April 7^th Proposal.

On April 10, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, SunTrust Robinson Humphrey reviewed the April 7^th Proposal and the status of negotiations with HTI. In response to a question by the Special Committee, SunTrust Robinson Humphrey noted that, under the terms of the April 7^th Proposal, the assets to be acquired by HTI did not include the cash on the Company’s balance sheet. Shapiro Sher added that the proposed transaction did not include approximately $3.8 million owed to the Company from the Advisor, which SunTrust Robinson Humphrey noted represented approximately $0.50 per share of the Company’s common stock. The Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the process for authorizing and approving the April 7^th Proposal and explored structuring the transaction as an all-cash merger (with a pre-closing “all cash” distribution to the Company’s stockholders), instead of an asset purchase transaction followed by a plan of liquidation as proposed by HTI under the terms of the April 7^th Proposal. Ultimately, HTI declined to structure the transaction as a “cash” merger due to its desire to receive post-closing indemnification rights typical of a purchase of real estate assets. The Special Committee, recognizing that all of the other potential bidders had proposed asset sales for cash (except for Strategic Party A, which proposed a stock-for-stock merger, and Strategic Party D, which proposed an asset-for-stock transaction) that would ultimately require a liquidation by the Company, accepted that structure (even though liquidating distributions to stockholders would not be completed until 2018). After additional discussions with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, the Special Committee recommended that the Board authorize continued negotiations on the basis of the April 7^th Proposal. The Special Committee also determined to address with the Advisor the $3.8 million owed to the Company from the Advisor.

On April 11, 2017, in an executive session of a telephonic meeting of the Board, with only the independent directors of the Board (representing all the members of the Special Committee), Shapiro Sher, and a representative of Proskauer present, the independent directors of the Board discussed the terms of the April 7^th Proposal and steps required to implement the transactions contemplated thereby. The independent directors of the Board, based upon the recommendation of the Special Committee and upon such other matters as were deemed relevant by the independent directors, authorized continued negotiations based on the April 7^th Proposal.

On April 14, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed the terms of the draft purchase agreement to be presented to the Company.

On April 18, 2017, A&PKS delivered the first draft of the purchase agreement (the “April 18^th Purchase Agreement”) to Shapiro Sher, Proskauer, and AR Global. Shapiro Sher sent the April 18^th Purchase Agreement to the Special Committee and to SunTrust Robinson Humphrey on the same date. The April 18^th Purchase Agreement was structured as a sale of the membership interests in each of the special purpose entities that own the Properties to the HTI OP to facilitate the assignment of minor contracts and to avoid a right of first refusal requirement for one of the properties.

Shapiro Sher and A&PKS held several due diligence and planning calls over the next several weeks, including some with representatives of the Company, HTI, and Proskauer present. During these calls, discussion covered the structure of the transaction, tax implications, and various aspects of the Company that needed to be addressed in the purchase agreement.

On April 28, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher present, Shapiro Sher reported to the Special Committee on the status of the development of a revised

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draft of the April 18^th Purchase Agreement. Shapiro Sher reported on the outstanding issues consisting, primarily, of issues surrounding the assumption of the Philip Center Loan (and whether it was assignable) and the right of HTI to terminate the entire transaction if any property were destroyed by fire or condemned. Shapiro Sher also advised the Special Committee that Shapiro Sher was making extensive revisions to the April 18^th Purchase Agreement, not because the parties were in disagreement about issues, but rather to structure the agreement to fit the Company and the Properties. The parties also discussed certain amounts that may be payable to the Advisor and its affiliates in connection with consummating a transaction. Prior to the Special Committee meeting, Shapiro Sher circulated an AR Global in-house counsel prepared Advisor Receivables and Payables proposal that Shapiro Sher had received on April 25. The Special Committee discussed the proposed real estate commissions and administrative expense reimbursements that the Advisor was proposing would become payable concurrent with or prior to the consummation of the transaction.

On May 4, 2017, Shapiro Sher delivered a revised draft of the purchase agreement, which included input from Proskauer and AR Global, to A&PKS, the Special Committee, and SunTrust Robinson Humphrey (the “May 4^th Purchase Agreement”). The May 4^th Purchase Agreement addressed the assumption of the Philip Center Loan, rejected the right to terminate the transaction for a single fire or condemnation, clarified matters relating to the assisted living facilities, and tailored certain terms to be applicable to the Company, its entities, and the Properties.

On May 11, 2017, at a telephonic meeting of the HTI Special Committee, with representatives of A&PKS and KeyBanc present, the HTI Special Committee discussed its comments to the May 4^th Purchase Agreement and the status of due diligence relating to the Asset Sale.

Also on May 11, 2017, A&PKS delivered its comments to the May 4^th Purchase Agreement to Shapiro Sher and Shapiro Sher forwarded the comments to the Special Committee and to SunTrust Robinson Humphrey on May 12, 2017. A&PKS comments included, among other things, (1) the addition of a $6 million escrow amount to cover indemnification of representations and warranties, (2) capping HTI’s expense reimbursement to the Company at $250,000 if HTI were to terminate the purchase agreement due to a breach thereof, (3) extending the facility-level representations and warranties that the Company was willing to make regarding the Cedarhurst Facility to include facility-level representations and warranties for Arcadian Cove Assisted Living Facility (in respect to which the Company is only a landlord and does not have direct knowledge of many relevant matters), (4) the Company indemnifying HTI if HTI suffered any losses in connection with any stockholder litigation that may be filed in connection with the transactions contemplated by the purchase agreement, and (5) granting HTI the right to terminate the purchase agreement if there is either (a) a condemnation proceeding against any building that constitutes more than 5% of the Company’s portfolio or (b) damage or destruction (i) exceeding $5 million or (ii) that requires a legally nonconforming property to be rebuilt in accordance with current zoning requirements.

On May 12, 2017, representatives of Shapiro Sher, SunTrust Robinson Humphrey and AR Global held a call to discuss certain matters regarding the Properties and the Company’s operations.

On May 17, 2017, A&PKS and Shapiro Sher participated in a conference call to discuss A&PKS’s comments to the May 4^th Purchase Agreement. The parties were able to resolve certain issues including (1) various closing conditions, (2) the expense reimbursement cap, and (3) the expansion of the facility-related representations and warranties to the Arcadian Cove Assisted Living Facility. The remaining issues that Shapiro Sher relayed to the Special Committee on the same day were (1) HTI’s request for indemnity to cover not only HTI but also its directors, (2) the terms of the escrow arrangement, and (3) the right to terminate the purchase agreement if either (a) there is a condemnation proceeding against any building or (b) damage or destruction to any Property prior to the Closing Date (with such threshold amounts to be further discussed).

On May 18, 2017, Shapiro Sher delivered a memorandum to the Special Committee, advising the Special Committee of the directors’ duties as independent directors under Maryland law (such advice had been delivered orally on multiple occasions throughout the strategic process) as the Special Committee considered the purchase agreement, a plan of liquidation for the Company’s complete liquidation and dissolution following the consummation of the transactions contemplated by the purchase agreement, certain amounts payable to the Advisor and its affiliates, and other matters related to the potential transaction. Discussions between Shapiro Sher and A&PKS continued.

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On May 19, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, Shapiro Sher reported to the Special Committee on the status of the remaining substantive issues from its negotiations with A&PKS. The three outstanding substantive issues were (1) the HTI indemnity request, (2) HTI’s request for a $6 million escrow that would be released over a period of eighteen months to cover indemnification expenses for any such litigation or any breaches of the representations and warranties of the purchase agreement (with $2 million being released every six months), and (3) HTI’s ability to terminate the purchase agreement in the event of damage or destruction or condemnation proceedings (subject to a “5% of the properties” threshold). After Shapiro Sher updated the Special Committee on the status of the purchase agreement, SunTrust Robinson Humphrey reviewed with the Special Committee a summary of the Special Committee’s strategic process to date, an overview of the financial terms of the proposed transaction with HTI and SunTrust Robinson Humphrey’s preliminary financial analyses with respect to the Properties. After this review was completed, the representatives of SunTrust Robinson Humphrey left the meeting and, in an executive session of the Special Committee with only Shapiro Sher and the members of the Special Committee present, the Special Committee determined that Ms. Perrotty would reach out to the lead independent director of HTI to discuss the outstanding substantive issues.

On May 25, 2017, after consulting with Ms. Perrotty regarding her recent conversation with HTI’s lead independent director, Shapiro Sher delivered a revised draft of the purchase agreement to A&PKS (the “May 25^th Purchase Agreement”). The May 25^th Purchase Agreement included the following terms related to the outstanding substantive issues: (1) a $1 million escrow that would be released over a period of six months to cover indemnification expenses for any litigation or any breaches of the representations and warranties of the May 25^th Purchase Agreement (as opposed to the $6 million/18-month provision requested by HTI), (2) the ability of HTI to terminate the purchase agreement if the Company’s representations in the May 25^th Purchase Agreement were materially inaccurate (but implying knowledge to any officers who served both the Company and HTI and limiting the “inaccurate representation” indemnification to certain basic representations), (3) removing the provision that gave HTI the ability to terminate the purchase agreement in the event of damage or destruction or condemnation proceeding, and (4) limiting the Company’s indemnification of HTI and its directors if the Company’s stockholders sue not only the Company, but also HTI, to exclude any shared directors and key management personnel of both the Company and HTI.

On June 5, 2017, representatives of A&PKS and Shapiro Sher participated in a conference call to discuss the May 25^th Purchase Agreement and the outstanding substantive issues. Among the substantive issues discussed were (1) HTI’s continued desire to have the right to terminate the purchase agreement if (a) there is a condemnation proceeding or (b) a fire or other loss (subject to an increased threshold amount), (2) the terms of the escrow arrangements, (3) the assumption of the Company’s obligations under its engagement letter with SunTrust Robinson Humphrey, (4) expense reimbursements, and (5) indemnification obligations in the event of stockholder litigation.

On June 6, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the outstanding issues from the prior day’s conference call between A&PKS and Shapiro Sher. The Special Committee, after determining that Ms. Perrotty would contact the lead independent director of HTI to discuss the Company’s proposed compromises, directed Shapiro Sher to further negotiate with A&PKS. The Special Committee, in an executive session with only representatives of Shapiro Sher present, directed the following (1) to accept HTI’s request for indemnification by the Company of the non-independent directors and officers of HTI, but requested that HTI also indemnify the Company’s non-independent director and the Company’s officers, (2) to lower the expense reimbursement cap from $750,000 to $500,000, with a condition whereby the expense reimbursement would not become payable if the Company did not enter into an agreement related to a superior proposal within 12 months, and to eliminate the expense reimbursement for a material adverse change or temporary restraining order, (3) to negotiate a $3 million escrow that would be released over a period of six or nine months, and (4) to negotiate the proposed condemnation or risk-of-loss provisions to exclude any amounts that were insured. Shapiro Sher contacted A&PKS later that day to discuss the Special Committee’s directions.

Also on June 6, 2017, A&PKS delivered a revised draft of the purchase agreement to Shapiro Sher (the “June 6^th Purchase Agreement”). The June 6^th Purchase Agreement made changes in line with A&PKS views

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as had been expressed during the June 5^th conference call. Later in the day on June 6, 2017, A&PKS delivered an email to Shapiro Sher about the following open issues: (1) expense reimbursement, (2) indemnification, and (3) condemnation and risk of loss. With respect to the expense reimbursement issue, A&PKS proposed (1) no expense reimbursement if the transaction did not close because of a temporary restraining order, (2) an expense reimbursement capped at $1 million for termination in the event that the Company’s stockholders vote against the transaction or the Company fails to get a quorum at the special meeting to vote on the transaction, and (3) an expense reimbursement capped at $750,000 for termination due to a material adverse change. With respect to the indemnification issue, A&PKS reaffirmed its stance of a $6 million escrow that would be released over a period of 18 months (with one third being released every six months). In support of its stance on the escrow size and length, A&PKS sent market surveys and studies to Shapiro Sher. With respect to the condemnation, eminent domain, and risk of loss issue, A&PKS expressed an openness to change the structures such that a property that is subject to eminent domain, condemnation or suffers a significant loss is dropped from the transaction with the purchase price adjusted downward based on the agreed purchase price allocation for the property, and that HTI would not have a right to terminate the purchase agreement. Shapiro Sher relayed A&PKS’s stance to the Special Committee.

On June 7, 2017, a representative of SunTrust Robinson Humphrey, on behalf of the Special Committee, and a representative of KeyBanc, on behalf of HTI, negotiated certain unresolved issues and Ms. Perrotty and the lead independent director of HTI followed up with a phone call. The Special Committee and HTI ultimately agreed to the following: (1) with respect to the indemnification issue, a $6 million escrow that would be released over a period of 14 months from the closing of the transaction (with $2 million to be released after six months, another $2 million to be released after 12 months, and the remaining $2 million to be released after 14 months); (2) with respect to the expense reimbursement issue, an expense reimbursement capped at $850,000 for termination in the event that the Company failed to obtain stockholder approval of the transaction; and (3) with respect to the condemnation and risk of loss issue, that in the event of a major condemnation or risk of loss, HTI would not have the option to terminate the purchase agreement, but HTI would have the option to close the transaction without purchasing the property or properties that would be subject to the condemnation or risk or loss provision.

On June 9, 2017, Shapiro Sher delivered a revised draft of the Purchase Agreement to A&PKS (the “Shapiro Sher June 9^th Purchase Agreement”). The Shapiro Sher June 9^th Purchase Agreement incorporated the negotiated transaction terms from the recent negotiations. Later on June 9, 2017, A&PKS delivered a revised draft of the purchase agreement to Shapiro Sher (the “A&PKS June 9^th Purchase Agreement”). The A&PKS June 9^th Purchase Agreement did not contain any revisions related to the resolution of open issues.

On June 12, 2017, at a telephonic meeting of the Special Committee, with representatives of Shapiro Sher and SunTrust Robinson Humphrey present, the Special Committee, with the assistance of Shapiro Sher and SunTrust Robinson Humphrey, discussed the final negotiated transaction terms from the purchase agreement. At the request of the Special Committee, SunTrust Robinson Humphrey reviewed Company management’s methodology behind the purchase price allocation schedule that had been prepared by the Company’s management. The Special Committee also discussed a draft letter agreement with the Advisor to account for certain amounts due to/from the Advisor, including approximately $3.8 million in reimbursements owed from the Advisor to the Company for overpaid offering and related expenses, as well as provide for post-closing transition services. The Special Committee directed Shapiro Sher to further negotiate the letter agreement and to finalize the purchase agreement to A&PKS. After the meeting, Shapiro Sher delivered a revised draft of the Purchase Agreement to A&PKS and Shapiro Sher and A&PKS agreed to the final form of the purchase agreement on June 13, 2017.

On June 14, 2017, Shapiro Sher provided an update to the Special Committee on the status of the letter agreement with the Advisor and provided the finalized Purchase Agreement, together with all exhibits and schedules, to the Special Committee for review. Shapiro Sher also re-delivered the memorandum that had been delivered to the Special Committee on May 18, 2017 regarding a director’s standard of conduct under Maryland law for the Special Committee to consider as it considered both the Purchase Agreement and the Plan of Liquidation.

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On June 15 and June 16, 2017, Shapiro Sher, the Special Committee and the Advisor finalized the negotiation of the Letter Agreement, the Advisory Agreement Amendment, and an amendment to the Property Management Agreement, with terms being agreed upon on June 15, 2017 and final drafts being agreed upon on June 16, 2017. Pursuant to the Letter Agreement, subject to completing the Asset Sale, the parties resolved matters related to approximately $3.7 million in expense reimbursements or fees previously paid by the Company to the Advisor and its affiliates and made certain agreements with respect to all fees and other amounts that would be payable to the Advisor and its affiliates pursuant to the Advisory Agreement, the Property Management Agreement and the LPA if the Asset Sale is completed.

On June 16, 2017, the Special Committee held a telephonic meeting with representatives of Shapiro Sher and SunTrust Robinson Humphrey in attendance. A representative of Shapiro Sher reviewed the principal terms of the Purchase Agreement and the Plan of Liquidation, including the Letter Agreement and amendments to the Advisory Agreement and Property Management Agreement. Representatives of SunTrust Robinson Humphrey then reviewed and discussed with the Special Committee SunTrust Robinson Humphrey’s financial analyses with respect to the Properties owned by the OP and HT III Holdco through the ownership of the Membership Interests and Holdco Interests and the proposed Asset Sale. The financial analyses reviewed and discussed with the Special Committee at the meeting were not materially different from the financial analyses dated May 17, 2017, which were previously reviewed and discussed with the Special Committee on May 19, 2017, as revised to reflect updated data and other information. Thereafter, at the request of the Special Committee, SunTrust Robinson Humphrey rendered its oral opinion to the Special Committee as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Purchase Agreement. The opinion is more fully described in the section entitled “— Opinion of the Special Committee’s Financial Advisor.” A representative of Shapiro Sher reviewed the standard of conduct expected of directors and the standards by which related party agreements should be considered under Maryland law. Following discussions by the Special Committee concerning, among other things, the matters described below under “— Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation,” the Special Committee determined to recommend to the Board that the Board (1) determine that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approve each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determine that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approve the Plan of Liquidation, and (3) recommend that the Asset Sale and the Plan of Liquidation be approved by the Company’s stockholders at the Annual Meeting.

Following the telephonic meeting of the Special Committee on June 16, 2017, the Board (with Mr. Weil recusing himself and not participating and with only the two independent directors on the Board participating) met to consider the proposed transactions with representatives of Shapiro Sher, SunTrust Robinson Humphrey, and Proskauer present. Prior to the meeting, Mr. Weil advised the other members of the Board that he would not be attending the meeting and would be abstaining from any vote on the proposed transactions, including the Plan of Liquidation. At the request of the Special Committee, representatives of SunTrust Robinson Humphrey then reviewed and discussed with the Board SunTrust Robinson Humphrey’s financial analyses with respect to the Properties owned by the OP and HT III Holdco through the ownership of the Membership Interests and Holdco Interests and the proposed Asset Sale. Thereafter, at the request of the Special Committee, SunTrust Robinson Humphrey provided to the Board its oral opinion (which was previously rendered to the Special Committee) as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Purchase Agreement. SunTrust Robinson Humphrey’s oral opinion was subsequently confirmed in writing by delivery of its written opinion to the Special Committee and the Board as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale

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pursuant to the Purchase Agreement. The chair of the Special Committee presented its report to the Board, including its recommendation that the Board approve the proposed transactions. Following discussions by the Board concerning, among other things, the matters described below under “— Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation,” the Board, based on the recommendation of the Special Committee, by unanimous vote of both independent directors (with Mr. Weil having abstained from attending the meeting) the Board (1) determined that each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and approved each of the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale, (2) determined that the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company and approved the Plan of Liquidation, and (3) recommended that the Asset Sale and the Plan of Liquidation be approved by the Company’s stockholders at the Annual Meeting.

Also on June 16, 2017, the HTI Special Committee held a telephonic meeting with representatives of A&PKS and KeyBanc in attendance. A representative of A&PKS discussed the scope of the real estate due diligence that had been requested by the HTI Special Committee and reported on the firm’s findings. Another representative of A&PKS reviewed the principal terms of the Purchase Agreement along with the schedules and exhibits related thereto. Representatives of KeyBanc then reviewed and discussed with the HTI Special Committee KeyBanc’s financial analyses with respect to the Properties. Thereafter, at the request of the HTI Special Committee, KeyBanc rendered its oral opinion to the HTI Special Committee, as of June 16, 2017, that the Purchase Price to be paid to the Company in connection with the Asset Sale was fair, from a financial point of view, to HTI. The opinion is more fully described in the section entitled “— Opinion of the HTI Special Committee’s Financial Advisor.” Following discussions by the HTI Special Committee concerning, among other things, the matters described below under “— HTI’s Purposes and Reasons for the Asset Sale,” the HTI Special Committee determined to recommend to the HTI Board that the HTI Board (1) determine that each of the Purchase Agreement and the other documents and agreements contemplated thereby are fair and reasonable, both financially and otherwise, to HTI and advisable and in the best interests of HTI and (2) approve each of the Purchase Agreement and the other documents and agreements contemplated thereby. Following the telephonic meeting of the HTI Special Committee on June 16, 2017, the HTI Board (with Mr. Weil recusing himself and not participating and with only the independent directors on the HTI Board participating) met to consider the proposed transactions with representatives of A&PKS and KeyBanc present. Prior to the meeting, Mr. Weil advised the other members of the HTI Board that he would not be attending the meeting and would be abstaining from any vote on the proposed transaction. At the request of the HTI Special Committee, representatives of KeyBanc then reviewed and discussed with the HTI Board KeyBanc’s financial analyses with respect to the Properties. The Chairman of the HTI Special Committee presented its report to the HTI Board, including its recommendation that the HTI Board approve the proposed transactions. Following discussions by the HTI Board concerning, among other things, the matters described below under “— HTI’s Purposes and Reasons for the Asset Sale,” the HTI Board, based on the recommendation of the HTI Special Committee, by unanimous vote of the independent directors (with Mr. Weil having abstained from attending the meeting) the HTI Board (1) determined that each of the Purchase Agreement and the other documents and agreements contemplated thereby are fair and reasonable, both financially and otherwise, to HTI and advisable and in the best interests of HTI and (2) approved each of the Purchase Agreement and the other documents and agreements contemplated thereby.

On June 16, 2017, each of the Company and HTI executed and delivered the Purchase Agreement.

On June 19, 2017, the Company issued a press release announcing the Board’s approval of the Asset Sale and the Company’s plan to liquidate.

Recommendation of the Board of Directors and the Company’s Purposes and Reasons for the Asset Sale and the Plan of Liquidation

In evaluating the Asset Sale and the Plan of Liquidation, the Board consulted with the Special Committee and its legal and financial advisors, and in determining that (1) the Purchase Agreement, the other documents and agreements contemplated thereby and the Asset Sale are fair and reasonable, both financially and

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otherwise, to the Company and advisable and in the best interests of the Company and its stockholders and (2) the Plan of Liquidation, including the sale of substantially all of the assets of the Company, the Company’s liquidation and the Company’s dissolution pursuant to the Plan of Liquidation, is advisable and in the best interests of the Company, the Board considered numerous factors, including the following material factors, which the Board and the Special Committee viewed as supporting its decision to approve the Purchase Agreement, the other documents and agreements contemplated thereby, the Asset Sale and the Plan of Liquidation, and to recommend approval of the Asset Sale and the Plan of Liquidation to our stockholders:

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The Board also identified and considered the following potentially negative factors in its deliberations:

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The Board also considered the interests that certain executive officers and directors of the Company may have with respect to the Asset Sale in addition to their interests as stockholders of the Company generally (see the section entitled “— Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation”), which the Board considered as being neutral in its evaluation of the proposed transaction.

Although the foregoing discussion sets forth the material factors considered by the Board in reaching its recommendation, it may not include all of the factors considered by the Board, and each director may have considered different factors or given different weight to different factors. In view of the variety of factors and the amount of information considered, the Board did not find it practicable to, and did not, make specific assessment of, quantify or otherwise assign relative weights to the specific factors considered in reaching its recommendation. The Board realized that there can be no assurance about future results, including results expected or considered in the factors above. However, the Board concluded that the potential positive factors described above significantly outweighed the neutral and negative factors described above. The recommendation was made after consideration of all of the factors as a whole. This explanation of the Company’s reasons for the Asset Sale and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Cautionary Statement Concerning Forward-Looking Statements.”

THE BOARD (WITH MR. WEIL ABSTAINING) HAS UNANIMOUSLY (1) DETERMINED THAT EACH OF THE PURCHASE AGREEMENT, THE OTHER DOCUMENTS AND AGREEMENTS CONTEMPLATED THEREBY AND THE ASSET SALE ARE FAIR AND REASONABLE, BOTH FINANCIALLY AND OTHERWISE, TO THE COMPANY AND ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND APPROVED EACH OF THE PURCHASE AGREEMENT, THE OTHER DOCUMENTS AND AGREEMENTS CONTEMPLATED THEREBY AND THE ASSET SALE, (2) DETERMINED THAT THE PLAN OF LIQUIDATION, INCLUDING THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, THE COMPANY’S LIQUIDATION AND THE COMPANY’S DISSOLUTION PURSUANT TO THE PLAN OF LIQUIDATION, IS ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND APPROVED THE PLAN OF LIQUIDATION, AND (3) RECOMMENDED THAT HOLDERS OF SHARES OF COMMON STOCK VOTE FOR THE PROPOSAL TO APPROVE THE ASSET SALE AND FOR THE PROPOSAL TO APPROVE THE PLAN OF LIQUIDATION.

In considering the recommendation of the Board, you should be aware that certain of the Company’s directors and officers have arrangements that cause them to have interests in the Asset Sale and the Plan of Liquidation that are different from, or are in addition to, the interests of the Company stockholders generally. See the section entitled “— Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation.”

Position of the Company, the OP and HT III Holdco as to Fairness to the Company’s Unaffiliated Stockholders

The Company, the OP and HT III Holdco are making the statements included in this section solely to comply with the disclosure requirements of Rule 13e-3 and related rules under the Exchange Act.

The Special Committee recommended to the Board and the Board (with Mr. Weil not participating) has determined, for the Company, the OP and HT III Holdco, that the Asset Sale and the Plan of Liquidation are substantively and procedurally fair to and in the best interests of the Company and the Company’s unaffiliated stockholders. Mr. Weil did not participate in the Board’s deliberations or voting on the transaction because he is a member of the HTI Board, as well as the chief executive officer, and a member, of AR Global. Mr. Weil deferred to the independent directors of the Board, who also comprise all the members of the Special

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Committee, to make the determination as to whether the Asset Sale and the Plan of Liquidation were fair to and in the best interests of the Company and its unaffiliated stockholders.

In their consideration of the fairness of the Asset Sale and the Plan of Liquidation to the Company’s unaffiliated stockholders, the Special Committee and the Board (with Mr. Weil not participating) considered the liquidation value of the Company, after giving effect to the receipt by the Company of the proceeds from the Asset Sale, to be a relevant methodology.

The Board, beginning in early 2016 as described in the section entitled “— Background of the Asset Sale and the Plan of Liquidation,” initiated a strategic review process led by the Special Committee consisting of solely the independent directors of the Board. The Special Committee, through its advisors SunTrust Robinson Humphrey and Shapiro Sher, communicated with 25 potential buyers regarding a potential transaction and conducted a thorough and diligent strategic review process which led to the Board approving the Purchase Agreement (subject to stockholder approval and other conditions). Subsequent to the execution of the Purchase Agreement, the Company was required to publish an estimated net asset value per share of its common stock (“Estimated Per-Share NAV”) and provide this information to its stockholders and to members of the Financial Industry Regulatory Authority and their associated persons who participated in the Company’s public offerings to assist them in meeting their customer account statement reporting obligations under the National Association of Securities Dealers Conduct Rule 2340. Instead of seeking third-party appraisals of the Company’s real estate assets performed by an independent valuation firm to establish an Estimated Per-Share NAV, the Board decided to determine an Estimated Per-Share NAV based on the negotiated value ascribed to the Company’s real estate assets under the Purchase Agreement. To assist the Board in establishing both an Estimated Per-Share NAV and an estimated range of total liquidating distributions that may be payable to the Company’s stockholders pursuant to the Plan of Liquidation, the Advisor prepared an estimate of the range of net proceeds from the Asset Sale that may be available to distribute to the Company’s stockholders in one or more liquidating distributions pursuant to the Plan of Liquidation. On July 18, 2017, the independent directors of the Board, who comprise a majority of the Board, with Mr. Weil not participating, unanimously approved an Estimated Per-Share NAV as of July 18, 2017 equal to $17.64. In preparing the liquidation analysis used in connection with this determination of the Estimated Per-Share NAV, which was also included in the Company’s proxy statement dated July 18, 2017, the Advisor estimated a range of net liquidation proceeds to be available for distribution to the Company’s stockholders pursuant to the Plan of Liquidation equal to $17.49 to $17.64 per share. The Advisor subsequently updated the range of net liquidation proceeds to be available for distribution to $17.67 to $17.81 per share for the Liquidation Analysis prepared in connection with this proxy statement. The Special Committee and the Board considered both of these ranges to be material in their consideration of the fairness of the Asset Sale and the Plan of Liquidation to the unaffiliated stockholders of the Company. For more information on the liquidation analyses, including a discussion of the reasons for the increase in the range of net liquidation proceeds to be available for distribution to the Company’s stockholders pursuant to the Plan of Liquidation, see “The Plan of Liquidation.”

The liquidation analyses of the Advisor were based, in part, on the proceeds to be received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Purchase Agreement. As part of their determination, the Special Committee and the Board considered the going concern value of the Membership Interests and the Holdco Interests based on the aggregate implied valuation reference ranges of the Properties held by the OP and HT III Holdco through the Membership Interests and the Holdco Interest indicated by the financial analyses reviewed and discussed with the Special Committee and the Board by representatives of SunTrust Robinson Humphrey on June 16, 2017.

The Special Committee and the Board did not consider current or historical market prices of the Company’s common stock to be relevant as a factor in determining the fairness of the transaction because there is no public market for the Company’s common stock. The Company’s common stock is not and has not been, since the Company’s inception, listed on a national securities exchange.

Further, the Special Committee and the Board did not consider net book value, which is an accounting concept, as a factor because they believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and because net book value does not

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take into account the prospects of the Company, market conditions, trends in the industry in which the Company operates, or the business risks inherent in that industry.

The Special Committee and the Board do not believe that the purchase prices paid in previous purchases of the Company’s common stock during the past two years pursuant to the Company’s share repurchase program (the “SRP”) are relevant in determining the fairness of the transaction to the Company’s unaffiliated stockholders because the purchase prices were based on a fixed percentage of the purchase price paid by the Company’s stockholders upon their purchases of common stock in the IPO. The Company has not purchased any of its common stock outside of the SRP.

In addition, the Special Committee and the Board were aware of, and considered, the interests that the Company’s directors and executive officers may have in the transactions contemplated by the Purchase Agreement that are different from, or in addition to, their interests as Company stockholders generally, as described in the section entitled “— Interests of the Advisor and the Company’s Directors and Executive Officers in the Asset Sale and the Plan of Liquidation.”

As described under the section entitled “— Background of the Asset Sale and the Plan of Liquidation,” the Special Committee and the Board considered offers made by unaffiliated persons during the past two years for a merger, sale of all or a substantial part of the assets of the Company, or a purchase of a controlling amount of the Company’s securities, however, the Special Committee and the Board ultimately determined that the offer received from HTI was the most favorable offer received during the strategic review process. For a more detailed description of each of the offers received and considered during the past two years, see “— Background of the Asset Sale and the Plan of Liquidation.”

The Special Committee and the Board also considered the following:

The Special Committee and the Board also considered the financial analyses reviewed and discussed with the Special Committee and the Board by representatives of SunTrust Robinson Humphrey as well as the opinion of SunTrust Robinson Humphrey rendered to the Special Committee and the Board on June 16, 2017 as to, as of June 16, 2017, the fairness, from a financial point of view, to the OP and HT III Holdco of the Purchase Price to be collectively received by the OP and HT III Holdco in exchange for the Membership Interests and the Holdco Interests in the Asset Sale pursuant to the Agreement. Even though such analyses and opinion did not address the fairness of the proceeds to be received by the stockholders of the Company, the Special Committee and the Board nevertheless determined that such opinion and analyses were relevant to their determination as to the fairness of the Asset Sale and Plan of Liquidation to the Company’s unaffiliated stockholders because the Purchase Price to be received by the OP and HT III Holdco will be the primary source of the proceeds to be received by the Company’s stockholders pursuant to the Plan of Liquidation and the stockholders and the unaffiliated stockholders will receive the same amounts per share in the liquidation of the Company.

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Given the fact that the unaffiliated stockholders represent over 99% of the shares entitled to vote as of the record date and that shares of common stock beneficially owned by the Advisor, any director of the Company or any of their respective affiliates including AR Global, are excluded for the purposes of the approval of the Asset Sale, no special provision was made that a majority of the Company’s unaffiliated stockholders is required to approve the Asset Sale and Plan of Liquidation.

The Asset Sale and Plan of Liquidation was approved by a majority of the directors of the Company who are not employees of the Company.

The foregoing discussion of the factors considered by the Special Committee and the Board is not intended to be exhaustive but is believed to include all material factors considered by the Special Committee and the Board in making a determination regarding the fairness of the Asset Sale and the Plan of Liquidation to comply with the requirements of Rule 13e-3 and the related rules under the Exchange Act. The Special Committee and the Board have not retained an unaffiliated representative to act solely on behalf of unaffiliated stockholders for purposes of negotiating the terms of the Asset Sale and the Plan of Liquidation and/or preparing a report concerning the fairness of the Asset Sale and the Plan of Liquidation. The Special Committee and the Board did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their position as to the fairness of the Asset Sale and the Plan of Liquidation. Rather, the Special Committee and the Board made their fairness determination after considering all of the factors as a whole.

HTI’s Purposes and Reasons for the Asset Sale

In reaching its decision to authorize and approve the Asset Sale, the HTI Special Committee, as described above in the section entitled “— Background of the Asset Sale and Plan of Liquidation,” held a number of meetings, consulted with its legal and financial advisors, and considered a number of factors. The various factors the HTI Special Committee considered to be potential benefits of the Asset Sale included the following, which are not necessarily listed in order of relative importance: