Item 2.01. Completion of Acquisition or Disposition of Assets. On January 22, 2014 , NorthStar Healthcare Income, Inc. (" NorthStar Healthcare "), through a subsidiary of its joint venture (the "Joint Venture") with The Freshwater Group, Inc. ("Freshwater"), completed the acquisition of a 183-unit independent and assisted living facility located in Denver, Colorado (the "Harvard Square Facility") for a purchase price of $31.5 million , plus closing costs. The Joint Venture acquired the Harvard Square Facility from Harvard Square, LLC and LDEV, LLC , each an unaffiliated third-party. The Joint Venture funded the investment through a combination of proceeds from NorthStar Healthcare's ongoing initial public offering, a $21.5 million senior mortgage note payable (the "Harvard Square Borrowing") provided by an unaffiliated third-party lender and an equity contribution from Freshwater. The transaction was approved by NorthStar Healthcare's board of directors in accordance with NorthStar Healthcare's investment guidelines. NorthStar Healthcare owns a 97% interest in the Joint Venture. The Harvard Square Facility was constructed in 1981 and consists of a three-story, 131,000 square foot building. As of January 16, 2014 , resident occupancy was 91%. An affiliate of Watermark Retirement Communities, Inc. ("Watermark"), a national operator of senior living facilities and an affiliate of Freshwater, was hired to operate the Harvard Square Facility pursuant to a seven-year management agreement with automatic one-year renewals (the "Management Agreement") under which Watermark will receive a base management fee equal to 5.0% of the monthly gross revenues collected. The Management Agreement may be terminated without penalty in the event of various defaults. The Harvard Square Borrowing bears interest at a floating rate of 2.92% over the one-month London Interbank Offered Rate. The term of the Harvard Square Borrowing is 84 months. The initial 36 monthly payments on the Harvard Square Borrowing are interest-only, with payments based on a 30-year amortization schedule thereafter. The Harvard Square Borrowing may be prepaid at any time, subject to a declining prepayment premium ranging from 5.0-1.0% of the outstanding loan balance, depending on the year of prepayment. The loan agreement contains standard representations, warranties and covenants contained in transactions of this type. In connection with the Harvard Square Borrowing, affiliates of Freshwater agreed to guaranty certain recourse carve-out and environmental obligations of the Joint Venture under the loan agreement and related documentation (the "Guaranteed Obligations"). NorthStar Healthcare, through its operating partnership, entered into a contribution agreement, dated January 22, 2014 (the "Contribution Agreement"), whereby NorthStar Healthcare and Freshwater agreed to fund their pro rata share of certain losses arising out of the Guaranteed Obligations; provided, however, NorthStar Healthcare or Freshwater, as the case may be, will be individually responsible for 100% of certain losses caused by the respective party. The Harvard Square Facility is the second asset to close into the Joint Venture, which previously acquired a 125-unit independent living facility located in Milford, Ohio for $15.6 million , plus closing costs. The Joint Venture has also entered into a purchase and sale agreement to acquire a 202-unit independent living facility located in Frisco, Texas (the "Parkview Facility") for $39.5 million , plus closing costs and credits for certain capital expenditures. The acquisition of the Parkview Facility remains subject to, among other things, the satisfaction of customary closing conditions. Although there can be no assurance that the transaction will be completed, the Joint Venture expects to complete the acquisition of the Parkview Facility in February 2014 . Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off Balance Sheet Arrangement of a Registrant. The information set forth under Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03. Item 9.01. Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired. If applicable, the required financial statements for the transaction described in Item 2.01 above will be filed under cover of a Form 8-K/A as soon as practicable and no later than 71 days after the date on which this initial Current Report on Form 8-K is required to be filed. (b) Pro Forma Financial Information. If applicable, the required pro forma financial information for the transaction described in Item 2.01 above will be filed under cover of a Form 8-K/A as soon as practicable and no later than 71 days after the date on which this initial Current Report on Form 8-K is required to be filed. Safe Harbor Statement 2 -------------------------------------------------------------------------------- This Current Report on Form 8-K 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, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "will" "expects," "intends," or other similar words or expressions. These statements are based on NorthStar Healthcare's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements; NorthStar Healthcare can give no assurance that its expectations will be attained. Forward-looking statements are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying any forward-looking statements will not materialize or will vary significantly from actual results. Variations of assumptions and results may be material. Factors that could cause actual results to differ materially from NorthStar Healthcare's expectations include, but are not limited to, NorthStar Healthcare's ability to realize the anticipated benefits of the Joint Venture with Freshwater, the ability of Watermark to successfully manage the Harvard Square Facility, NorthStar Healthcare's liability under the Contribution Agreement, if any, the Joint Venture's ability to complete the acquisition of the Parkview Facility in February 2014 , if ever, the impact of any losses from our properties on cash flows and returns, market rental rates and property level cash flows, changes in economic conditions generally and the real estate and debt markets specifically, the ability to maintain a qualified diversified portfolio, the impact of local economics, the ability to successfully implement an exit strategy, availability of investment opportunities, availability of capital, the ability to achieve its targeted returns, generally accepted accounting principles, policies and rules applicable to REITs and the factors described in Part I, Item 1A of NorthStar Healthcare's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and in Part II, Item 1A of NorthStar Healthcare's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 , as well as in NorthStar Healthcare's other filings with the Securities and Exchange Commission . The foregoing list of factors is not exhaustive. All forward-looking statements included in this Current Report on Form 8-K are based upon information available to NorthStar Healthcare on the date of this report and NorthStar Healthcare is under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results. 3 --------------------------------------------------------------------------------
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