CNL

The Company's Advisor, Directors, and affiliates are expressly prohibited from voting on or consenting to stockholder matters regarding removal of the Advisor, Directors, or any affiliate, or any transaction between the Company and any of them, and such shares will not count toward quorum or majority in such votes.

“The Company's Advisor (as such term is defined in the Articles of Incorporation), the Directors and any affiliates are prohibited from voting on or consenting to matters submitted to the stockholders regarding the removal of the Advisor, Directors or any affiliate or any transaction between the Company and any of them, nor will such shares be counted in determining a quorum or a majority in such circumstances.”

CHP II Advisors, LLC (the Advisor) is designated as an Excepted Holder with a 100% Excepted Holder Limit through June 30, 2017, exempting it from the standard 9.8% ownership cap that applies to all other stockholders. This creates a material conflict of interest: the Advisor could hold a controlling equity stake with no ownership-limit constraint during the initial period.

“Notwithstanding the foregoing, until June 30, 2017, 'Excepted Holder' shall include CHP II Advisors, LLC (and/or any Person who is a Beneficial Owner of shares as a result of the Beneficial Ownership of shares of Capital Stock by CHP II Advisors, LLC and/or any Person if any of the shares of Capital Stock owned by such Person would be aggregated with the shares of Capital Stock owned by CHP II Advisors, LLC for purposes of determining the Beneficial Ownership of CHP II Advisors, LLC), with an Excepted Holder Limit of 100%.”

Advisor and its affiliates may manage other REITs and investment programs with similar investment objectives simultaneously, creating potential conflicts of interest in allocation of investment opportunities. Formal conflict resolution procedures are required.

“If the Sponsor, Advisor, a Director or Affiliates thereof have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as the Company, it shall be the duty of the Directors (including the Independent Directors) to adopt the method set forth in the Registration Statement or another reasonable method by which properties are to be allocated to the competing investment entities and to use their best efforts to apply such method fairly to the Company.”

The Managing Dealer responsible for selling Equity Shares in all Offerings is CNL Securities Corp., which is explicitly identified as an Affiliate of the Advisor. This creates a structural related-party conflict where the dealer collecting selling commissions and marketing support fees is under common control with the investment advisor receiving advisory fees.

“Managing Dealer means CNL Securities Corp., an Affiliate of the Advisor, or such other Person or entity selected by the Board of Directors to act as the managing dealer for a securities offering by the Company. CNL Securities Corp. is a member of FINRA.”

The charter includes extensive Roll-Up Transaction provisions acknowledging the risk that the Company could be merged, consolidated, or converted into a Roll-Up Entity. Stockholders voting against a Roll-Up must be offered the choice to remain as stockholders or receive cash at appraised value. The Company is prohibited from participating in Roll-Ups that reduce stockholder voting rights or impose transfer impediments.

“In connection with any proposed Roll-Up Transaction, which, in general terms, is any transaction involving the acquisition, merger, conversion, or consolidation, directly or indirectly, of the Company and the issuance of securities of a Roll-Up Entity that would be created or would survive after the successful completion of the Roll-Up Transaction, an appraisal of all Properties shall be obtained from an Independent Appraiser.”