1. Investment
Make checks payable to NorthStar Healthcare Income, Inc.
3912
A
State of Sale Investment Amount
Initial Investment
min. is 4,000
Volume Discount Purchase
min. is 500,001
Additional Purchase
min. is 100 Check this box if investor is purchasing through an RIA or participating in a wrap account or fee-only account approved by the broker-dealer, RIA or bank acting as a trustee,
fiduciary, or similar entity, or an employee of a broker-dealer including spouse, parent or minor child of employee.
877.940.8777
NorthStarSecurities.comHealthcare
Subscription Agreement
2. Form of Ownership
Corporation
1
Partnership
2
Estate
3
Pension Plan KEOGH Plan
401K PSP
Trust:
4
date__________
Other:
please specify__________________________
Name of TrustCorporationPlanOther SSN or TIN of TrustCorporationPlanOther
Required documentation: 1 Articles of incorporation. 2 Title and signature pages of the partnership agreement. 3 Letters of testamentary or letters of administration or a small estate affidavit. 4 Title and signature pages of the trust or a trust certification form.
Individual Individual TOD
5
Joint Tenant
with rights of survivorship
Joint Tenant TOD
5
with rights of survivorship
Community Property Traditional IRA
SEP IRA Simple IRA
Beneficiary IRA
6
Roth IRA Tenants in Common
Tenants by Entirety UGMA:
state of_______
UTMA:
state of_______ 5 Fill out Transfer on Death form to effect designation. Transfer on Death form available on www.NorthStarSecurities.comHealthcare.
6 Please include deceased person’s name, SSN, date of birth and date of death in Section 3 under Co-InvestorCo-Trustee.
Custodian
7
or Third Party Administrator Information
8
if applicable
Name of CustodianThird Party Administrator Mailing Address
City State Zip Code CustodianThird Party Administrator Telephone Number
Custodian TIN Custodian Account Number
7 The Custodian must sign and provide a Medallion Signature Guarantee in Section 6. 8 The Third Party Administrator will be set up as an Interested Party and will receive copies of Trade Confirmations and Statements.
A-3
3. Investor Registration Information
InvestorTrusteeAuthorized Signer Residential Address
no P.O. Boxes
SSNTIN DOB
mmddyy
City Non U.S. Citizen
Country of Citizenship State Zip Code
Co-InvestorCo-TrusteeCo-Authorized Signer Mailing Address
if different from above
SSNTIN City
DOB
mmddyy
DOD
mmddyy for Beneficiary IRA
State Zip Code Non U.S. Citizen
Country of Citizenship E-mail
Daytime Telephone Evening Telephone
5. Go Paperless
initials
E-mail In lieu of receiving documents, I authorize NorthStar Healthcare Income, Inc. NorthStar Healthcare to make available on its website,
www.NorthStarSecurities.com: quarterly investor statements, quarterly reports, annual reports, proxy statements, prospectus supplements
or other documents required to be delivered to me, as well as any investment or marketing updates
and to notify me via the e-mail address listed here or in Section 3 when such reports are available. I understand that I may receive paper documents by visiting www.NorthStarSecurities.com and clicking on Investor Login to login to my account to change my selections.
E-delivery does not include New Account Statements or Trade Confirmations.
4. Distribution Information
Distribution Reinvestment Plan DRP Fill out information below If you checked Cash: Send check to a
third party
or Cash: Direct Deposit via ACH.
In the event that the DRP is not offered for a distribution, your distribution will be sent by check to the address in Section 3
or your Custodian for deposit in your Custodial account cited in Section 2.
Financial InstitutionThird Party
Cash Distribution Choose One Only
Address Cash: Send check to my Custodian in Section 2.
custodian accounts only
City Cash: Send check to the address in Section 3.
non-custodian accounts only
State Zip Code Cash: Send check to a third party -
fill out information to the right
.
non-custodian accounts only
ABA Routing Number
Direct Deposit via ACH only
Cash: Direct Deposit via ACH -
fill out information to the right
.
non-custodian accounts only
Account Number
Total of DRP and Cash 100
Checking Savings
BrokerageOther
attach a voided, pre-printed check or deposit slip send check to a third party only
A-4
Please initial each of the representations below. In the case of joint investors or fiduciaries, each investor must initial. Except in the case of fiduciary accounts, you may not grant any person a power of attorney POA to make such representations on your behalf. An Attorney-in-Fact signing on
behalf of the investor pursuant to a POA represents by their signature that they are acting as a fiduciary for the investor. In order to induce NorthStar Healthcare to accept this subscription, I hereby warrant that:
INVESTOR INITIALS CO-INVESTOR INITIALS
ALL REPRESENTATIONS A-F MUST BE INITIALED
a. a. I received a final prospectus of NorthStar Healthcare, wherein the terms and conditions of the offering are described, 5 business days
in advance of the date hereof. b.
b. I certify that I have i a net worth total assets minus total liabilities, exclusive of home, home furnishings and automobiles of 250,000 or more; or ii a minimum net worth as previously described of at least 70,000 AND a minimum of 70,000 annual
gross income. c.
c. I have accepted the terms and conditions of NorthStar Healthcare’s charter. d.
d. I am purchasing shares for my own account and acknowledge that the investment is not liquid. e.
e. I declare that the information supplied is true and correct and may be relied upon by NorthStar Healthcare. f.
f. I acknowledge that I will not be admitted as a stockholder until my investment has been accepted. The acceptance process includes, but is not limited to, reviewing the Subscription Agreement for completeness and signatures as well as payment of the full
purchase price of the Shares.
INVESTOR INITIALS CO-INVESTOR INITIALS
STATE WHERE YOU RESIDE REPRESENTATION MUST BE INITIALED
g.
g. If I am an Alabama investor, I meet NorthStar Healthcare’s suitability standards listed above, and I have a liquid net worth of at least
10 times my investment in NorthStar Healthcare and its affiliates. h.
h. If I am a California investor, I have a net worth of at least 350,000 or, in the alternative, an annual gross income of at least
70,000 and a net worth of at least 150,000 and my total investment in this offering may not exceed 10 of my net worth. i.
i. If I am an Iowa investor, I have a net worth of at least 350,000 or, in the alternative, a minimum annual gross income of at least
70,000 and a minimum net worth of at least 100,000, and my total investment in this offering cannot exceed 10 of my liquid net worth.
j.
j. If I am a Kansas investor, I understand that it is recommended by the Office of the Kansas Securities Commissioner that Kansas investors
not invest, in the aggregate, more than 10 of their liquid net worth in this and other public, non-traded real estate investment trusts. k.
k. If I am a Kentucky investor, I may not invest more than 10 of my liquid net worth in the shares of NorthStar Healthcare or the
shares of NorthStar Healthcare’s affiliates’ other non-traded REIT offerings. l.
l. If I am a Maine investor, I understand that it is recommended by the Maine Office of Securities that Maine investors not invest, in
the aggregate, more than 10 of their liquid net worth in this offering and similar direct participation investments. m.
m. If I am a Massachusetts investor, I may not invest more that 10 of my liquid net worth in NorthStar Healthcare and other
non-traded REITs or other non-traded direct participation programs. n.
n. If I am a Nebraska investor, I must limit my investment in this offering and in the securities of other public, non-traded real estate
investment trusts to 10 of my net worth. Investors who are accredited investors within the meaning of the federal securities laws are not subject to the foregoing limitation.
o.
o. If I am a New Jersey investor, I must have either a a minimum liquid net worth of 100,000 and a minimum annual gross income of
85,000 or b a minimum liquid net worth of 350,000. For these purposes, “liquid net worth” is defined as that portion of net worth total assets exclusive of home, home furnishings and automobiles, minus total liabilities that consists of cash, cash equivalents and readily
marketable securities. In addition, my investment in NorthStar Healthcare, its affiliates and other non-publicly traded direct investment programs including real estate investment trusts, business development companies, oil and gas programs, equipment leasing programs
and commodity pools, but excluding unregistered, federally and state exempt private offerings may not exceed 10 of my liquid net worth. p.
p. If I am a New Mexico investor, in addition to the suitability requirements listed above, I may not invest, in the aggregate, more than
10 of my liquid net worth in this offering, the offerings of our affiliates or other non-traded REITs. q.
q. If I am a North Dakota investor, I meet NorthStar Healthcare’s suitability standards listed above and represent that I have a net
worth of at least 10 times my investment in this offering. r.
r. If I am an Ohio investor, I may not invest, in the aggregate, more than 10 of my liquid net worth in NorthStar Healthcare, its
affiliates or other non-traded REITs. s.
s. If I am an Oregon investor, I may not invest, in the aggregate, more than 10 of my net worth in NorthStar Healthcare.
t. t. If I am a Pennsylvania investor, I may not invest more than 10 of my net worth in this offering.
u. u. If I am a Tennessee investor, I must not invest more than 10 of my liquid net worth in this offering.
Net worth should be calculated exclusive of homes, home furnishings and automobiles. Liquid net worth is defined as that portion of net worth which consists of cash, cash equivalents and readily marketable securities.
Taxpayer Identification Number Certification
required :
Each investor signing below, under penalties of perjury, certifies that: 1 The number shown in the Investor Social Security NumbersTaxpayer Identification Number field in Section 3 of this form is my correct taxpayer identification number or I am waiting for a number to be issued to me,
and 2 I am not subject to backup withholding because: a I am exempt from backup withholding, or b I have not been notified by the Internal Revenue Service IRS that I am subject to backup withholding as a result of a failure to report all interest or dividends, or c the IRS has notified
me that I am no longer subject to backup withholding, and 3 I am a U.S. person including a resident alien. NOTE: You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report
all interest and dividends on your tax return.
The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.
Signature of InvestorTrusteeAuthorized Signer Date Signature of Co-InvestorCo-Trustee Date Co-Authorized SignerCustodian
When signing as a custodian, a Medallion Signature Guarantee is required.
Medallion Signature Guarantee
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HC-SUBDOC_06.2015
7. Broker-DealerRegistered RepresentativeRegistered Investment Advisor Information
All fields must be complete
The Registered Representative RR or Registered Investment Advisor RIA must sign below to complete the order. An authorized principal of the broker-dealer or RIA firm must sign below if required by such broker-dealer or RIA firm. The RR or RIA and BD hereby warrants that it is duly licensed
and may lawfully sell Shares in the state designated as the investor’s legal residence, or the state in which the sale was made, if different.
Broker-DealerRIA Firm Registered RepresentativeRIA
Registered Representative Branch Mailing Address
City State Zip Code
E-mail Telephone
Facsimile
The undersigned confirm that they i have reasonable grounds to believe that the information and representations concerning the investors identified herein are true, correct and complete in all respects; ii have discussed such investor’s prospective purchase of Shares with such investor; iii have advised such investor of all pertinent facts with regard to the lack of liquidity and
marketability of the Shares; iv have delivered a current Prospectus and related supplements, if any, to such investor; v have reasonable grounds to believe that the investor is purchasing these Shares for its own account; and vi have reasonable grounds to believe that the purchase of Shares is a suitable investment for such investor, that such investor meets the suitability
standards applicable to such investor set forth in the Prospectus and related supplements, if any, and that such investor is in a financial position to enable such investor to realize the benefits of such an investment and to suffer any loss that may occur with respect thereto. The undersigned attest that the RRRIA and the Broker-DealerRIA Firm are subject to the USA PATRIOT
Act. In accordance with Section 326 of the Act, the RRRIA and the Broker-DealerRIA Firm have performed a Know Your Customer review of each investor who has signed this Subscription Agreement in accordance with the requirements of the Customer Identification Program. The undersigned registered representative further represents and certifies in connection with this
subscription for shares, that he or she has complied with and has followed all of his or her firm’s current policies and procedures for obtaining principal approval. I understand this subscription agreement is for NorthStar Healthcare Income, Inc.
RIAs must complete the following: Registered Representatives must complete the following:
Check only if investment is made through the RIA in its capacity as an RIA and
not in its capacity as a Registered Representative, if applicable, whose agreement with the investor includes a fixed or “wrap” fee feature for advisory and related brokerage
services. If an owner or any member of the RIA firm is a FINRA-licensed Registered Representative affiliated with a broker-dealer, the transaction should be conducted
through that broker-dealer, not through the RIA. I hereby certify that I hold a Series 7
or Series 62 FINRA license and I am registered in the following state in
which this sale was completed.
State
Signature of Registered RepresentativeRIA Signature of Broker-Dealer or RIA FirmAuthorized Principal
if required by Broker-Dealer
Date Date
8. Payment Instructions
By mail - Checks should be made payable to
NorthStar Healthcare Income, Inc. Forward the Subscription Agreement and payment to:
Regular mail
NorthStar Healthcare co DST Systems, Inc.
P.O. Box 219923 Kansas City, MO 64121-9923
ExpressOvernight delivery
NorthStar Healthcare co DST Systems, Inc.
430 West 7th Street Kansas City, MO 64105-1407
Wire transfers - Please reference subscriber’s name.
UMB Bank, N.A. ABA Routing Number - 101000695
Account Number - 9871879666 Reference - NorthStar Healthcare Income, Inc.
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1
NORTHSTAR HEALTHCARE INCOME, INC. SUPPLEMENT NO. 12 DATED SEPTEMBER 14, 2015
TO THE PROSPECTUS DATED FEBRUARY 6, 2015
This Supplement No. 12 supplements, and should be read in conjunction with, our prospectus dated February 6, 2015, as supplemented by Supplement No. 11 dated August 19, 2015. Defined terms used in this Supplement No. 12 shall have the
meaning given to them in the prospectus unless the context otherwise requires. The purpose of this Supplement No. 12 is to disclose:
• the status of our current public offering; and • the entry into a purchase agreement.
Status of Our Current Public Offering
Following the completion of our 1.1 billion initial public offering of common stock, we commenced our follow-on public offering of 700.0 million in shares of common stock on February 6, 2015, of which up to 500.0 million in shares are
being offered pursuant to our primary offering and up to 200.0 million in shares are being offered pursuant to our distribution reinvestment plan, or DRP. We refer to our primary offering and our DRP collectively as our offering.
As of September 11, 2015, we received and accepted subscriptions in our offering for 30.4 million shares, or 307.3 million, including 0.28 million shares, or 2.6 million, sold to NorthStar Realty Finance Corp. As of September 11, 2015, 39.3
million shares remain available for sale pursuant to our offering, including shares offered pursuant to our DRP that may be reallocated to our primary offering. Our primary offering is expected to terminate during the fourth quarter of 2015.
However, our board of directors may determine to terminate our primary offering at any time.
Entry into a Purchase Agreement
On September 11, 2015, we, through Trilogy Real Estate Investment Trust, or the purchaser, a wholly-owned subsidiary of a joint venture in which we indirectly hold a 30 ownership interest, or the joint venture, entered into an equity
purchase agreement, or the purchase agreement, with Trilogy Investors, LLC, or Trilogy, Trilogy Holdings, LP, Trilogy Holdings LLC, Trilogy Holdings Corporation, and the other sellers party thereto, or collectively, the sellers, all of which are
unaffiliated with us, pursuant to which the purchaser proposes to acquire approximately 96
of the outstanding equity
interests of Trilogy, or the acquisition, for a purchase price of 1.125 billion, subject to certain adjustments set forth therein. Pursuant to the purchase agreement, a
t the closing of the acquisition, certain members of Trilogy’s management will retain a portion of the outstanding equity interests of Trilogy currently held by such persons, representing in the aggregate
approximately 4
of the outstanding equity interests of Trilogy after the closing of the acquisition. Trilogy currently owns
andor operates 96 facilities, predominantly structured as integrated senior healthcare campuses offering a range of care, with over 10,000 beds across Indiana, Ohio, Kentucky and Michigan, as well as certain ancillary services businesses.
The purchase agreement contemplates that Trilogy will be restructured such that, at the closing of the acquisition, it will be in a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly
referred to as a “RIDEA” structure. At the closing of the acquisition, Trilogys facilities and ancillary services businesses will be managed by an eligible independent contractor owned by certain members of Trilogys current management, or the EIK,
pursuant to management agreements with 20-year terms, subject to certain potential extension options in favor of Trilogy. Pursuant to the purchase agreement, the closing of the acquisition is subject to customary conditions, including but
not limited to i the absence of any change, effect, event, occurrence, circumstance, state of facts or development from the
2 date of the purchase agreement until the closing of the acquisition that has had or would reasonably be expected to have a
material adverse effect, ii the receipt of certain governmental approvals, lender and other third party consents, iii through the closing of the acquisition, the continued and full-time employment by Trilogy of the individual designated to serve as the
chief executive officer of the EIK and iv no event of default under any loans insured by the U.S. Department of Housing and Urban Development secured by certain Trilogy facilities. Pursuant to the terms of the purchase agreement, the acquisition must
be completed prior to June 30, 2016, or the outside date, although there can be no assurance that the acquisition will be completed by the outside date, or at all.
Each party to the purchase agreement has made customary representations and warranties in the purchase agreement. Each party has also made and entered into certain customary covenants and agreements in the purchase agreement, including,
without limitation, covenants regarding the conduct of the business of Trilogy prior to the closing of the acquisition. Each party to the purchase agreement has also agreed to customary indemnification obligations in respect of such party’s
representations, warranties and covenants contained in the purchase agreement, subject to specified limitations on the amount
of indemnifiable damages and the survival period. The purchase agreement may be terminated, among other reasons, upon mutual written consent of the parties thereto,
or by either party i if a law, rule, regulation or other restriction or requirement of any governmental entity shall have been enacted, entered into or promulgated, or any governmental entity shall have issued a final and non-appealable order, decree or
ruling, in each case, permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the purchase agreement, ii in the event of an uncured breach by the other party that results in a failure to satisfy any of the closing
conditions described above, subject to customary cure provisions or iii if the acquisition is not consummated by the outside date. If Trilogy terminates the purchase agreement due to certain uncured and material breaches by the purchaser or because
the purchaser fails to consummate the acquisition when required under the purchase agreement, the purchaser will be required to pay Trilogy a termination fee of 45.0 million.
In connection with the acquisition, we, through NorthStar Healthcare Income Operating Partnership, LP, our operating partnership, entered into i an equity commitment letter, dated September 11, 2015, or the ECL, with the purchaser,
pursuant to which we agreed to invest, directly or indirectly, up to 194.1 million, in exchange for equity in the purchaser, solely for the purpose of funding 30 of the amount payable by the purchaser to the sellers pursuant to the purchase
agreement and related costs and expenses, and ii a limited guarantee, dated as of September 11, 2015, or the limited guarantee, in favor of Trilogy pursuant to which we agreed to guarantee 30 of the
purchaser’s obligations, the guaranteed obligations, under the purchase agreement with respect to, among other items, the termination fee and certain indemnification
and expense reimbursement obligations relating to the purchaser’s obtaining sufficient debt financing to complete the acquisition; provided that our maximum liability under the limited guarantee is limited to 13.5 million and provided further
that we will not be liable for amounts in excess of 30 of the guaranteed obligations. The joint ven
ture through which we will hold our interest in Trilogy was created concurrently with the purchaser’s entry into the purchase agreement when we, through a wholly-owned subsidiary of our operating partnership, and Griffin-
American Healthcare REIT III, Inc. through a wholly-owned
subsidiary of Griffin-American Healthcare REIT III Holdings,
LP, its operating partnership, or collectively, GAHR, entered into a limited liability company agreement of the joint venture entity, Trilogy REIT Holdings, LLC, or the JV agreement. We are the indirect owner of a 30 interest in the joint venture.
GAHR will serve as the manager of the joint venture and is the indirect owner of a 70 interest in the joint venture. The joint venture is the holder of all of the common shares
of the purchaser and serves as the purchaser’s sole trustee. The JV agreement contemplates that the purchaser intends to qualify and remain qualified as a real estate investment trust as defined in
Section 856 of the Internal Revenue Code of 1986, as amended. The JV agreement governs the relationship among the parties thereto with respect to the purchase agreement and
matters relating thereto, and with respect to the oversight and operation of Trilogy’s business following the closing of the acquisition. The JV agreement provides that GAHR, as the manager of the joint venture, is generally responsible for the day-
to-day affairs of the joint venture, subject to certain limitations or exceptions therein, including our right to consent to certain significant d
ecisions. The JV agreement also contains provisions relating to GAHR’s and our obligations and rights with
3 respect to funding the joint venture, and customary forced sale and other liquidity rights. Distributions of capital or other
proceeds generally will be made pro rata in proportion to each member’s respective ownership interest in the joint venture.
GAHR is sponsored by American Healthcare Investors, LLC, an entity in which our sponsor and vice chairman own an approximate 43 interest and 12 interest, respectively.
We and GAHR also entered into a senior secured revolving credit facility financing commitment letter, or the senior facility letter, pursuant to which KeyBank National Association, or KeyBank, has agreed to provide, subject to the terms and
conditions of the senior facility letter, a 345.0 million revolving credit facility to certain subsidiaries of the purchaser. KeyBank’s obligation to make the initial funding under the senior facility letter is subject to a number of conditions precedent,
some of which must be completed by December 31, 2015 and others of which must be completed by the outside date. In
addition, as of July 31, 2015, Trilogy had approximately 520.4 million of debt outstanding, excluding capital leases, of which approximately 205.1 million is expected to be assumed by the purchaser in connection with the acquisition and the balance of
315.3 million is to be repaid. Trilogy is expected to incur additional debt in conjunction with certain on-going development projects which will either be assumed or repaid by the purchaser at the closing of the acquisition.
NORTHSTAR HEALTHCARE INCOME, INC. SUPPLEMENT NO. 13 DATED NOVEMBER 12, 2015
TO THE PROSPECTUS DATED FEBRUARY 6, 2015
This Supplement No. 13 supplements, and should be read in conjunction with, our prospectus dated February 6, 2015, as supplemented by Supplement No. 11 dated August 19, 2015 and Supplement No. 12 dated September 14, 2015. Defined
terms used in this Supplement shall have the meaning given to them in the prospectus unless the context otherwise requires. The purpose of this Supplement No. 13 is to disclose:
• the status of our current public offering; and
• our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.
Status of Our Current Public Offering
Following the completion of our 1.1 billion initial public offering of common stock, we commenced our follow-on public offering of 700.0 million in shares of common stock on February 6, 2015, of which up to 500.0 million in shares are
being offered pursuant to our primary offering and up to 200.0 million in shares are being offered pursuant to our distribution reinvestment plan, or DRP. We refer to our primary offering and our DRP collectively as our offering. In November 2015, our
board of directors authorized the reallocation of shares available to be offered pursuant to our DRP to our primary offering.
As of November 10, 2015, we received and accepted subscriptions in our offering for 46.5 million shares, or 471.4 million, including 0.28 million shares, or 2.6 million, sold to NorthStar Realty Finance Corp. As of November 10, 2015, 23.1
million shares remain available for sale pursuant to our offering, including shares offered pursuant to our DRP. Our primary offering is expected to terminate on the date on which the maximum offering has been issued, which we currently expect to
occur on or around December 31, 2015. However, our board of directors may determine to terminate our primary offering at any time.
Quarterly Report for the Quarter Ended September 30, 2015
On November 12, 2015, we filed with the Securities and Exchange Commission our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, a copy of which is attached to this Supplement as Appendix A without exhibits.
APPENDIX A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15d OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015 Commission File Number: 000-55190
NORTHSTAR HEALTHCARE INCOME, INC.
Exact Name of Registrant as Specified in its Charter
Maryland 27-3663988
State or Other Jurisdiction of IRS Employer
Incorporation or Organization Identification No.
399 Park Avenue, 18th Floor, New York, NY 10022
Address of Principal Executive Offices, Including Zip Code
212 547-2600
Registrant’s Telephone Number, Including Area Code
Indicate by check mark whether the registrant 1 has filed all reports required to be filed by Section 13 or 15d of the Securities Exchange Act of 1934 during the preceding 12 months or for such shorter period that the registrant was required to file such
reports, and 2 has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T §232.405 of this chapter during
the preceding 12 months or for such shorter period that the registrant was required to submit and post such files. Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. Check one: Large accelerated filer
o Accelerated filer
o Non-accelerated filer
o
Do not check if a smaller reporting company
Smaller reporting company ý
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes o No ý
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: The Company has one class of common stock, 0.01 par value per share, 156,699,755 shares outstanding as of November 10,
2015.
NORTHSTAR HEALTHCARE INCOME, INC. FORM 10-Q
TABLE OF CONTENTS
Index Page
Part I. Financial Information
5 Item 1.
Financial Statements 5
Consolidated Balance Sheets as of September 30, 2015 unaudited and December 31, 2014 5
Consolidated Statements of Operations unaudited for the three and nine months ended September 30, 2015 and 2014
6 Consolidated Statements of Comprehensive Income Loss unaudited for the three and nine months
ended September 30, 2015 and 2014 7
Consolidated Statements of Equity for the nine months ended September 30, 2015 unaudited and year ended December 31, 2014
8 Consolidated Statements of Cash Flows unaudited for the nine months ended September 30, 2015 and
2014 9
Notes to Consolidated Financial Statements unaudited 11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
35 Item 3.
Quantitative and Qualitative Disclosures About Market Risk 61
Item 4. Controls and Procedures
62
Part II. Other Information
63 Item 1.
Legal Proceedings 63
Item 1A. Risk Factors
63 Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds 63
Item 6. Exhibits
66
Signatures 67
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section
21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,”
“anticipate,” “estimate,” “believe,” “could,” “project,” “predict,” “continue,” “future” or other similar words or expressions. Forward-looking statements are not guarantees of performance and are based on certain assumptions, discuss future
expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Such statements include, but are not limited to, those relating to our ability to successfully
complete our follow-on continuous, public offering, our ability to pay distributions to our stockholders, our reliance on our advisor and our sponsor, the operating performance of our investments, our financing needs, the effects of our current strategies
and investment activities and our ability to effectively deploy capital. Our ability to predict results or the actual effect of plans or strategies is inherently uncertain, particularly given the economic environment. Although we believe that the expectations
reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements and you should not unduly rely on these statements.
These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from those forward-looking statements. These factors include, but are not limited to:
• adverse economic conditions and the impact on the real estate industry, including healthcare real estate;
• our ability to successfully raise capital in our follow-on continuous, public offering;
• our ability to deploy capital quickly and successfully and achieve a diversified portfolio consistent with our target asset
classes; •
our dependence on the resources and personnel of our advisor, our sponsor and their affiliates, including our advisor’s ability to source and close on attractive investment opportunities on our behalf;
• the performance of our advisor, our sponsor and their affiliates;
• our liquidity and access to capital;
• our use of leverage;
• our ability to close on the recent commitments to acquire healthcare real estate investments on the terms contemplated
or at all, and any related termination fees incurred to the extent such investments are not closed; •
our ability to make distributions to our stockholders; •
the lack of a public trading market for our shares; •
the effect of economic conditions on the valuation of our investments; •
the effect of paying distributions to our stockholders from sources other than cash flow provided by operations; •
the impact of NorthStar Realty Finance Corp.’s spin-off of its asset management business, which included our advisor; •
our advisor’s and its affiliates’ ability to attract and retain sufficient personnel to support our growth and operations; •
the impact of market and other conditions influencing the availability of equity versus debt investments and performance of our investments relative to our expectations and the impact on our actual return on invested equity, as
well as the cash provided by these investments;
• changes in our business or investment strategy;
• the impact of economic conditions on the operatorstenants of the real property that we own as well as on borrowers of
the debt we originate and acquire and the mortgage loans underlying the healthcare-related commercial mortgage backed securities in which we invest;
• the ability and willingness of our tenants, operators, managers and other third parties to satisfy their respective
obligations to us, including in some cases their obligation to indemnify us from and against various claims and liabilities;
• changes in the value of our portfolio;
3
• our ability to realize current and expected returns over the life of our investments;
• any failure in our advisor’s and its affiliates’ due diligence to identify relevant facts during our underwriting process or
otherwise; •
illiquidity of properties or debt investments in our portfolio; •
our ability to finance our assets on terms that are acceptable to us, if at all, including our ability to complete securitization financing transactions;
• environmental compliance costs and liabilities;
• whether we will realize the benefits of the long-term partnership between our sponsor and James F. Flaherty III, our
Vice Chairman and potential conflicts that may arise in connection with his interest in American Healthcare Investors, LLC;
• risks associated with our joint ventures and unconsolidated entities, including our lack of sole decision making
authority and the financial condition of our joint venture partners; •
increased rates of loss or default and decreased recovery on our investments; •
the degree and nature of our competition; •
the effectiveness of our risk and portfolio management systems; •
failure to maintain effective internal controls and disclosure controls and procedures; •
regulatory requirements with respect to our business and the healthcare industry generally, as well as the related cost of compliance;
• the extent and timing of future healthcare reform and regulation, including changes in reimbursement policies,
procedures and rates; •
legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts, or REITs, and changes to laws affecting non-traded REITs and alternative investments generally;
• our ability to maintain our qualification as a REIT for federal income tax purposes and limitations imposed on our
business by our status as a REIT; •
the loss of our exemption from registration under the Investment Company Act of 1940, as amended; •
availability of opportunities to acquire equity, debt and securities investments in the healthcare real estate sector; •
general volatility in capital markets; •
the adequacy of our cash reserves and working capital; •
our ability to raise capital in light of certain regulatory changes, including amendments to Rules 2340 and 2310 of the Financial Industry Regulatory Authority, Inc. and the U.S. Department of Labor’s recent proposal on a fiduciary
standard for retirement accounts; and
• other risks associated with investing in our targeted investments, including changes in our industry, interest rates, the
securities markets, the general economy or the capital markets and real estate markets specifically. The foregoing list of factors is not exhaustive. All forward-looking statements included in this Quarterly Report on Form 10-Q
are based on information available to us on the date hereof and we are under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.
Factors that could have a material adverse effect on our operations and future prospects are set forth in our filings with the United States Securities and Exchange Commission, or the SEC, including Part I, Item 1A of our Annual Report on Form 10-K
for the fiscal year ended December 31, 2014 and in Part II, Item 1A of this Quarterly Report on Form 10-Q under the heading “Risk Factors.” The risk factors set forth in our filings with the SEC could cause our actual results to differ significantly from
those contained in any forward-looking statement contained in this report.
4
PART I. Financial Information Item 1. Financial Statements
NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
Dollars in Thousands
September 30, 2015
Unaudited December 31,
2014 Assets
Cash 257,416
267,672 Restricted cash
19,202 8,706
Operating real estate, net 838,206
259,409 Investments in unconsolidated ventures refer to Note 4
352,567 215,175
Real estate debt investments, net 202,549
146,267 Receivables, net
10,974 10,161
Deferred costs and intangible assets, net 50,994
2,974 Other assets
24,751 8,385
Total assets
1,756,659 918,749
Liabilities
Mortgage notes payable 579,750
76,000 Due to related party
748 755
Escrow deposits payable 4,225
2,385 Distribution payable
7,839 4,794
Accounts payable and accrued expenses 14,605
2,830 Other liabilities
3,010 —
Total liabilities
610,177 86,764
Commitments and contingencies
Equity NorthStar Healthcare Income, Inc. Stockholders’ Equity
Preferred stock, 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2015 and December 31, 2014
— —
Common stock, 0.01 par value, 400,000,000 shares authorized, 144,980,664 and 97,971,587 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively
1,450 980
Additional paid-in capital 1,301,527
875,205 Retained earnings accumulated deficit
161,968 45,458
Total NorthStar Healthcare Income, Inc. stockholders’ equity 1,141,009
830,727
Non-controlling interests
5,473 1,258
Total equity 1,146,482
831,985
Total liabilities and equity 1,756,659
918,749
Refer to accompanying notes to consolidated financial statements.
5
NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Dollars in Thousands, Except Per Share Data Unaudited
Three Months Ended September 30,
Nine Months Ended September 30,
2015 2014
2015 2014
Revenues
Resident fee income 23,111
3,862 39,091
10,591 Rental income
9,404 1,882
19,051 4,149
Interest income 5,466
2,579 12,675
3,847 Other revenue
1,131 —
1,131 —
Total revenues 39,112
8,323 71,948
18,587
Expenses
Real estate properties - operating expenses 16,378
2,988 27,864
7,946 Interest expense
6,377 776
11,455 2,186
Transaction costs 1,290
1,641 5,832
3,354 Asset management and other fees - related party
6,358 3,719
26,901 6,471
General and administrative expenses 6,267
1,043 13,368
2,570 Depreciation and amortization
10,332 1,052
16,714 2,644
Total expenses 47,002
11,219 102,134
25,171
Other income loss
Realized gain loss, net 786
— 786
—
Income loss before equity in earnings losses of unconsolidated ventures and income tax benefit expense
8,676 2,896
30,972 6,584
Equity in earnings losses of unconsolidated ventures 20,594
204 29,534
93 Income tax benefit expense
4,125 —
4,678 —
Net income loss
25,145 2,692
55,828 6,677
Net income loss attributable to non-controlling interests 104
4 257
35
Net income loss attributable to NorthStar Healthcare Income, Inc. common stockholders
25,041 2,688
55,571 6,642
Net income loss per share of common stock, basicdiluted 0.19
0.06 0.46
0.23 Weighted average number of shares of common stock outstanding,
basicdiluted 135,065,223
44,764,285 120,937,863
29,341,711 Distributions declared per share of common stock
0.17 0.17
0.50 0.50
Refer to accompanying notes to consolidated financial statements.
6
NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME LOSS
Dollars in Thousands Unaudited
Three Months Ended September 30,
Nine Months Ended September 30,
2015 2014
2015 2014
Net income loss
25,145 2,692
55,828 6,677
Comprehensive income loss
25,145 2,692
55,828 6,677
Comprehensive income loss attributable to non-controlling interests
104 4
257 35
Comprehensive income loss attributable to NorthStar Healthcare Income, Inc.
25,041 2,688
55,571 6,642
Refer to accompanying notes to consolidated financial statements.
7
NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY
Dollars and Shares in Thousands
Common Stock Additional
Paid-in Capital
Retained Earnings
Accumulated Deficit
Total Company’s
Stockholders’ Equity
Non- controlling
Interests Total Equity
Shares Amount
Balance as of December 31, 2013
10,985 110
97,055 3,872
93,293 202
93,495 Net proceeds from issuance of
common stock 85,691
857 765,872
— 766,729
— 766,729
Issuance and amortization of equity- based compensation
8 —
60 —
60 —
60 Non-controlling interests -
contributions —
— —
— —
1,090 1,090
Shares redeemed for cash 14
— 142
— 142
— 142
Distributions declared —
— —
26,641 26,641
— 26,641
Proceeds from distribution reinvestment plan
1,302 13
12,360 —
12,373 —
12,373 Net income loss
— —
— 14,945
14,945 34
14,979
Balance as of December 31, 2014
97,972 980
875,205 45,458
830,727 1,258
831,985 Net proceeds from issuance of
common stock 43,857
439 395,986
— 396,425
— 396,425
Issuance and amortization of equity- based compensation
12 —
81 —
81 —
81 Non-controlling interests -
contributions —
— —
— —
4,472 4,472
Shares redeemed for cash 206
2 2,011
— 2,013
— 2,013
Distributions declared —
— —
60,939 60,939
— 60,939
Proceeds from distribution reinvestment plan
3,346 33
32,266 —
32,299 —
32,299 Net income loss
— —
— 55,571
55,571 257
55,828
Balance as of September 30, 2015 unaudited
144,981 1,450
1,301,527 161,968
1,141,009 5,473
1,146,482
Refer to accompanying notes to consolidated financial statements.
8
CONSOLIDATED STATEMENTS OF CASH FLOWS Dollars in Thousands
Unaudited
Nine Months Ended September 30,
2015 2014
Cash flows from operating activities:
Net income loss 55,828
6,677 Adjustments to reconcile net income loss to net cash provided by used in operating
activities: Equity in earnings losses of unconsolidated ventures
29,534 93
Depreciation and amortization 16,714
2,644 Straight-line rental income
2,488 504
Amortization of premiumaccretion of discount on investments 99
80 Amortization of deferred financing costs
1,135 425
Amortization of equity-based compensation 81
43 Deferred income tax benefit
6,140 —
Realized gain loss, net 786
— Distributions from unconsolidated ventures refer to Note 4
249 —
Changes in assets and liabilities: Restricted cash
2,735 2,391
Receivables, net 2,813
1,245 Other assets
213 143
Due to related party 748
3,508 Escrow deposits payable
2,108 1,070
Accounts payable and accrued expenses 8,256
1,476 Other liabilities
479 —
Net cash provided by used in operating activities 11,524
1,621
Cash flows from investing activities:
Acquisition of operating real estate investments 587,413
208,055 Improvement of operating real estate investments
4,479 889
Origination of real estate debt investments 74,438
20,023 Acquisition of real estate debt investments
188 120,596
Repayment on real estate debt investments 17,868
— Investment in unconsolidated ventures refer to Note 4
184,730 24,808
Distributions from unconsolidated ventures refer to Note 4 17,875
666 Deferred costs and intangible assets
43,798 —
Change in restricted cash 7,833
1,952 Other assets
5,396 940
Net cash provided by used in investing activities 872,156
374,717
Cash flows from financing activities:
Borrowing from mortgage notes 503,750
41,500 Repayment of mortgage notes
— 143
Payment of deferred financing costs 8,328
1,665 Change in restricted cash
196 281
Net proceeds from issuance of common stock 398,740
387,126 Net proceeds from issuance of common stock, related party
2,594 620
Shares redeemed for cash 2,013
128 Distributions paid on common stock
57,894 12,397
Proceeds from distribution reinvestment plan 32,299
6,805 Contributions from non-controlling interests
4,472 1,013
Distributions to non-controlling interests —
15 Net cash provided by used in financing activities
873,424 422,435
Net increase decrease in cash 10,256
46,097 Cash - beginning of period
267,672 45,537
Cash - end of period 257,416
91,634
Refer to accompanying notes to consolidated financial statements. 9
CONSOLIDATED STATEMENTS OF CASH FLOWS Continued Dollars in Thousands
Unaudited
Nine Months Ended September 30,
2015 2014
Supplemental disclosure of non-cash investing and financing activities:
Accrued cost of capital refer to Note 7 809
1,300 Subscriptions receivable, gross
3,818 3,710
Escrow deposits related to investments 208
71 Distribution payable
7,839 2,857
Conversion of real estate debt investment to investment in unconsolidated venture —
5,386 Accrued capital expenditures
1,592 —
Other liabilities 2,532
— Accrued acquisition fees - unconsolidated ventures
3,304 —
Refer to accompanying notes to consolidated financial statements.
10
NORTHSTAR HEALTHCARE INCOME, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited 1.
Business and Organization
NorthStar Healthcare Income, Inc. the “Company” was formed to acquire, originate and asset manage a diversified portfolio of equity, debt and securities investments in healthcare real estate, directly or through joint ventures, with a focus on the mid-
acuity senior housing sector, which the Company defines as assisted living “ALF”, memory care “MCF”, skilled nursing “SNF”, independent living “ILF” facilities and continuing care retirement communities which may have independent living,
assisted living, skilled nursing and memory care available on one campus “CCRC”. The Company also invests in other healthcare property types, including medical office buildings “MOB”, hospitals and rehabilitation facilities. The Company’s
investments are predominantly in the United States, but it may also make international investments. The Company was formed in October 2010 as a Maryland corporation and commenced operations in February 2013. The Company elected to be taxed as
a real estate investment trust “REIT” under the Internal Revenue Code of 1986, as amended the “Internal Revenue Code”, commencing with the taxable year ended December 31, 2013. The Company conducts its operations so as to continue to
qualify as a REIT for U.S. federal income tax purposes.
The Company’s equity investments are generally healthcare properties, which are either structured as net leases to healthcare operators or operated through management agreements with independent third-party operators, predominantly through the
REIT Investment Diversification and Empowerment Act of 2007 “RIDEA” structures that permit the Company, through taxable REIT subsidiaries “TRS”, to have direct exposure to resident fee income and incur related operating expenses. The
Company’s debt investments generally consist of first mortgage loans and mezzanine loans.
The Company is externally managed and has no employees. Prior to June 30, 2014, the Company was managed by an affiliate of NorthStar Realty Finance Corp. NYSE: NRF “NorthStar Realty”. Effective June 30, 2014, NorthStar Realty spun-off its
asset management business into a separate publicly traded company, NorthStar Asset Management Group Inc. NYSE: NSAM the “Sponsor”. The Sponsor and its affiliates provide asset management and other services to the Company, NorthStar Realty,
other sponsored public non-traded companies and any other companies the Sponsor and its affiliates may manage in the future collectively, the “NSAM Managed Companies”, both in the United States and internationally. Concurrent with the spin-off,
affiliates of the Sponsor entered into a new advisory agreement with the Company and each of the other NSAM Managed Companies. Pursuant to the Company’s advisory agreement, NSAM J-NSHC Ltd, an affiliate of the Sponsor the “Advisor”,
agreed to manage the day-to-day operations of the Company on terms substantially similar to those set forth in the Company’s prior advisory agreement with NorthStar Healthcare Income Advisor, LLC the “Prior Advisor”. References to the “Prior
Advisor” herein refer to the services performed by and fees paid and accrued to the Prior Advisor during the period prior to June 30, 2014. The spin-off of NorthStar Realty’s asset management business had no impact on the Company’s operations.
Substantially all the Company’s business is conducted through NorthStar Healthcare Income Operating Partnership, LP the “Operating Partnership”. The Company is the sole general partner of the Operating Partnership. The limited partners of the
Operating Partnership are the Prior Advisor and NorthStar Healthcare Income OP Holdings, LLC the “Special Unit Holder”, each an affiliate of the Sponsor. The Prior Advisor invested 1,000 in the Operating Partnership in exchange for common units
and the Special Unit Holder invested 1,000 in the Operating Partnership and was issued a separate class of limited partnership units the “Special Units”, which are collectively recorded as non-controlling interests on the consolidated balance sheets as of
September 30, 2015 and December 31, 2014. As the Company accepts subscriptions for shares, it contributes substantially all of the net proceeds from its continuous, public offering to the Operating Partnership as a capital contribution. As of
September 30, 2015, the Company’s limited partnership interest in the Operating Partnership was 99.98.
The Company’s charter authorizes the issuance of up to 400.0 million shares of common stock with a par value of 0.01 per share and up to 50.0 million shares of preferred stock with a par value of 0.01 per share. The board of directors of the
Company is authorized to amend its charter, without the approval of the stockholders, to increase the aggregate number of authorized shares of capital stock or the number of shares of any class or series that the Company has authority to issue.
The Company initially registered to offer up to 100.0 million shares pursuant to its primary offering to the public the “Initial Primary Offering” and up to 10.5 million shares pursuant to its distribution reinvestment plan the “Initial DRP”, which are
herein collectively referred to as the Initial Offering. In December 2014, the board of directors of the Company authorized the reallocation of 8.6 million shares available under the Initial DRP to the Initial Primary Offering. On February 2, 2015, the
Company successfully completed its Initial Offering by raising 1.1 billion.
On February 6, 2015, the Company’s registration statement on Form S-11 was declared effective by the Securities and Exchange Commission the “SEC” for a follow-on public offering the “Follow-on Offering” of up to 700.0 million which
includes up to 500.0 million in shares pursuant to its follow-on primary offering the “Follow-on Primary Offering” and up to
11
200.0 million in shares pursuant to its follow-on distribution reinvestment plan the “Follow-on DRP”. In November 2015, the Company’s board of directors authorized the reallocation of shares available to be offered pursuant to the Follow-on DRP to
the Follow-on Primary Offering. The Company began raising capital from the Follow-on Offering at the end of February 2015. As of November 10, 2015, 23.1 million shares remain available for sale pursuant to the Follow-on Offering, including shares
offered pursuant to the Follow-on DRP that may be reallocated to the Follow-on Primary Offering. The Follow-on Primary Offering is expected to terminate on the date the maximum offering has been issued, which the Company currently expects to
occur on or around December 31, 2015. However, the board of directors may determine to terminate the Follow-on Offering at any time.
The Initial Primary Offering and the Follow-on Primary Offering are collectively referred to as the Primary Offering and the Initial DRP and the Follow-on DRP are collectively referred to as the DRP. Additionally, the Primary Offering and the DRP are
collectively referred to as the Offering.
The Company retained NorthStar Securities, LLC the “Dealer Manager”, formerly a subsidiary of NorthStar Realty that became a subsidiary of the Sponsor upon completion of the spin-off, to serve as the dealer manager for the Primary Offering.
On February 11, 2013, the Company commenced operations by satisfying the minimum offering requirement in its Initial Primary Offering as a result of NorthStar Realty purchasing 222,223 shares of common stock for 2.0 million. From inception
through November 10, 2015, the Company raised total gross proceeds of 1.6 billion.
2. Summary of Significant Accounting Policies
Kategori