UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): ~~September~~October 2916, 2017

CNL GROWTH PROPERTIES, INC.

(Exact Name of Registrant as Specified in its Charter)

Maryland

000-54686

26-3859644

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

450 South Orange Avenue

Orlando, Florida 32801

(Address of Principal Executive Offices; Zip Code)

Registrant’s telephone number, including area code: (407) 650-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 21.01 ~~Completion~~Entry ofinto ~~Acquisition~~a orMaterial ~~Disposition~~Definitive ~~of Assets~~Agreement.

~~Sale~~On October 17, 2017, CNL Growth Properties, Inc. (“we” or the “Company”) entered into an Assignment and Assumption Agreement (the “Agreement”) with our advisor, Global Growth Advisors, LLC (the “Advisor”), pursuant to which we transferred certain remaining assets and liabilities to the Advisor and the Advisor agreed to perform certain administrative and related matters in connection with the winding-up of ~~Haywood~~the ~~Reserve~~Company in exchange for a net payment from the Advisor of approximately $21,420.

AsAmong ~~previously~~the ~~reported~~assets intransferred ato ~~Current~~the ~~Report~~Advisor onwere ~~Form~~certain ~~8-K~~membership ~~filed~~interests ~~with~~in ~~the~~GGT ~~Securities~~Spring ~~and~~Town ~~Exchange~~TX, ~~Commission~~a onDelaware limited ~~July 7,~~liability ~~2017~~company (“Spring Town”) that was formed to acquire, ~~the~~develop ~~joint~~and ~~venture~~operate ofreal estate and an ~~operating~~apartment ~~subsidiary~~complex ofknown ~~CNL~~as ~~Growth~~Modera ~~Properties,~~Spring ~~Inc.~~Town Center (the “~~Company~~Property”). ~~and~~As ~~Daniel~~previously ~~Haywood~~reported, ~~LLC,~~pursuant anto ~~Alabama~~the ~~limited~~terms ~~liability~~of ~~company~~the Purchase and Sale Agreement (the “~~Joint~~PSA”) ~~Venture~~between Spring Town and Abbey Residential, LLC (the “Buyer”), ~~entered~~Spring ~~into~~Town asold ~~purchase~~the ~~and~~Property ~~sale agreement~~on ~~with~~June 23, ~~MSP~~2017. REThe ~~Holdings~~PSA requires Spring Town to retain $500,000 ~~LLC~~of the purchase proceeds in escrow until the later of December 23, a2017 ~~Delaware~~or ~~limited~~the ~~liability~~date ~~company~~any ~~and~~claims anfiled ~~unaffiliated~~pursuant ~~third~~to ~~party~~the PSA are settled (the “~~Buyer~~Survival Period”), for ~~the~~purposes ~~sale~~of indemnification of the ~~Joint~~Buyer ~~Venture’s~~under ~~292-unit~~the ~~“Class A” garden-style~~PSA. ~~multifamily~~The ~~residential~~Advisor ~~community~~paid ~~located~~the inCompany ~~Greenville~~$237,500 ~~South~~for such ~~Carolina~~membership ~~known~~interests, aswhich ~~“Haywood~~amount ~~Reserve”~~was (netted from the ~~“Property”).~~payments ~~The~~due ~~sale~~to ~~price~~the Advisor for its assumption of the ~~Property~~liabilities ~~was~~of ~~approximately~~the ~~$53~~Company and agreement to perform certain administrative matters as set forth in the Agreement.~~8 million.~~

OnItem ~~September 29, 2017, the Joint Venture completed the sale of the Property to Haywood Reserve Operating Company, LLC, an affiliate of the Buyer~~8.01 ~~The~~Other ~~net cash to the Company from the sale of the Property was approximately $20~~Events.5 million after repayment of approximately $24.6 million of debt, along with closing costs, reserves, and distributions to its joint venture partner in accordance with the provisions of the Joint Venture’s governing documents.

~~Item~~Final ~~9.01~~Liquidating ~~Financial~~Cash ~~Statements~~Distribution and ~~Exhibits.~~Dissolution of the Company

On October 16, 2017, our board of directors declared a final cash distribution of $120.7 million, which equals $5.35 per share (bthe “Final Distribution”) ~~Pro~~to ~~forma~~the ~~financial~~holders ~~information~~of record of our common stock as of the close of business on October 17, 2017, payable on or around October 24, 2017. The Final Distribution will be the last distribution made pursuant to the plan of dissolution that was approved by our stockholders on August 4, 2016 (the “Plan”). The Final Distribution of $5.35 per share is higher than our previously announced estimated net asset value of our common stock as of December 31, 2016 of $5.01 per share. After giving effect to the Final Distribution, stockholders will have received an aggregate of $13.00 per share, which is higher than the estimate of $11.41- $12.39 provided in the proxy statement dated June 17, 2016 seeking stockholder approval of the Plan. With respect to shareholders who received quarterly stock distributions between October 2010 and September 2014, the number of shares held by a shareholder increased by between 3.4% and 40% depending on when the shares were originally purchased. As a result, such shareholders will receive additional total distributions. For example, initial shareholders who invested in the Company in December 2009 have received an additional 0.4 shares in the Company for each share originally purchased and will receive a total of $18.21 in distributions for each $10 invested. Shareholders who invested in April 2014 have received an additional 0.034 shares for each share originally purchased and will receive a total of $13.45 in distributions for each $10 invested. Attached to this Current Report on Form 8-K as Exhibit 99.1 is a performance chart providing additional detail regarding total returns received by stockholders on their investment in the Company’s common stock.

The ~~Company’s~~Final ~~unaudited~~Distribution ~~pro~~will ~~forma~~be ~~condensed~~reflected ~~consolidated~~in ~~statement~~each ofstockholder’s ~~net~~Form ~~assets~~1099 atfor the ~~June~~year ending October 3031, 2017. ~~illustrates~~As discussed in the ~~estimated~~definitive ~~effects~~proxy ofstatement, the ~~sale~~liquidating distributions will be applied to reduce a stockholders’ basis but not below zero. The amount of distributions in excess of basis will be gain ~~the~~which ~~Property~~should ~~referred~~be torecognized in ~~Item~~the 2year such amount is received.01 ~~above~~Stockholders (are advised to consult their tax advisors regarding the ~~“Transaction”)~~tax asconsequences ifof itthe ~~had~~Final ~~occurred~~Distribution onin ~~such~~light ~~date~~of his or her particular investment or tax circumstances.

The ~~unaudited~~Company ~~pro~~anticipates ~~forma~~that ~~condensed consolidated~~promptly ~~statement~~following ofthe ~~operations~~Final ~~for~~Distribution, ~~the~~on ~~seven~~or ~~months~~around ~~ended July~~October 31, ~~2016~~2017, (it will file its Articles of Dissolution with the State ~~“Pro~~Department ~~Forma~~of ~~Period”)~~Assessments ~~includes~~and ~~certain~~Taxation ~~pro~~of ~~forma~~the ~~adjustments~~State toof ~~illustrate~~Maryland, upon which the ~~estimated~~Company ~~effect~~will be legally dissolved and all shares of the ~~Transaction~~Company’s asoutstanding ifcommon itstock ~~had~~will ~~occurred~~be oncancelled ~~the~~and ~~first~~no ~~day~~longer deemed to be outstanding and all rights of the ~~Pro~~holders ~~Forma~~thereof ~~Period~~as stockholders shall cease and terminate. We will also file appropriate notification to terminate our obligations under the U.S. securities laws.

~~The~~On ~~unaudited~~October 18, ~~pro~~2017, ~~forma condensed consolidated statement of net assets and statement of operations are presented for informational purposes only and do not purport to be indicative of~~ the Company’s ~~financial~~sent ~~results~~to asstockholders ifa ~~the~~letter ~~Transaction~~regarding ~~reflected herein had occurred on~~ the ~~first~~Final ~~date~~Distribution ~~of or been in effect during the Pro Forma Period. Further, the unaudited pro forma condensed consolidated statement of net assets~~ and ~~statement~~dissolution of ~~operations should not be viewed as indicative of~~ the Company’s ~~financial results in the future;~~ and ~~they~~a ~~should~~performance bechart showing ~~read~~stockholder indistributions ~~conjunction~~per ~~with~~share ~~the~~paid ~~Company’s~~per ~~financial statements~~year. asA ~~filed~~copy ~~with~~of the ~~Commission~~letter onis ~~Form~~included ~~10-Q~~herewith ~~for~~as ~~the~~Exhibit ~~six~~99.2 ~~months ended June 30, 2017~~ and onincorporated ~~Form~~by ~~10-K~~reference ~~for the year ended December 31, 2016~~herein.

~~CNL~~Fee ~~GROWTH~~Paid ~~PROPERTIES,~~to ~~INC.~~Advisor ~~AND~~for ~~SUBSIDIARIES~~Subordinated Share of Net Sales

~~UNAUDITED~~Pursuant ~~PRO~~to ~~FORMA~~our ~~CONDENSED~~Third ~~CONSOLIDATED~~Articles ~~STATEMENT~~of OFAmendment ~~NET~~and ~~ASSETS~~Restatement and our Advisory Agreement, our Advisor is entitled to a subordinated share of net sales proceeds equal to (i) 15% of the amount by which (A) the sum of net sales proceeds from the sale of our assets, and distributions paid to our stockholders from inception through the measurement date, and total incentive fees, if any, previously paid to the Advisor exceeds (B) the sum of the amount paid for our common stock in our public offerings which is outstanding (without deduction for organizational and offering expenses and less amounts paid to redeem shares under our share redemption plan) (“invested capital”) and amounts required to pay our stockholders a 6% cumulative, non-compounded annual return on invested capital, less (ii) total incentive fees, if any, previously paid to the Advisor. We will pay the Advisor approximately $5.2 million as its subordinated share of net sales in satisfaction of our obligations under the Advisory Agreement.

~~JUNE 30,~~Item ~~2017~~9.01 Financial Statements and Exhibits

(Liquidation Basis)


Exhibit No.		Description

99.1		Performance Chart

99.2		Letter to Stockholders dated October 18, 2017 announcing Final Distribution

			Haywood Reserve
	Historical		Property Sold				Pro Forma
	June 30,		Pro Forma				June 30,
	2017		Adjustments				2017 (e)
ASSETS
Real estate assets, net	$	141,425,000	$	(53,775,000	)	(a)	$	87,650,000
Cash and cash equivalents		87,162,734		53,247,443		(a)
				(24,669,968	)	(b)		115,740,209
Restricted cash		1,154,210		—				1,154,210
Other assets		222,437		—				222,437
Total Assets	$	229,964,381	$	(25,197,525	)		$	204,766,856
LIABILITIES
Mortgage and construction notes payable	$	71,799,475	$	(24,580,317	)	(b)	$	47,219,158
Liability for non-controlling interests		23,063,074		85,087		(c)		23,148,161
Liability for estimated costs in excess of estimated receipts during liquidation		8,321,459		(317,723	)	(d)		8,003,736
Accounts payable and other accrued expenses		1,981,076		(89,651	)	(b)		1,891,425
Due to related parties		1,830,573		—				1,830,573
Other liabilities		1,259,084		—				1,259,084
Total Liabilities		108,254,741		(24,902,604	)			83,352,137
Commitments and contingencies
Net assets in liquidation	$	121,709,640	$	(294,921	)		$	121,414,719

Cautionary Note Regarding Forward-Looking Statements

~~See~~Statements ~~accompanying~~in ~~notes~~this Current Report on Form 8-K that are not statements of historical fact constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to ~~unaudited~~the safe harbors created by Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that do not relate strictly to historical or current facts, but reflect management’s current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of the Company’s business and its performance, statements of future economic performance, and other future conditions and forecasts of future events and circumstances. Forward-looking statements are typically identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “continues,” “pro forma,” ~~condensed~~“may,” “will,” ~~consolidated~~“seeks,” “should” and “could,” and words and terms of similar substance in connection with discussions of future operating or financial performance, business strategy and portfolios, cash flows, costs and financing needs, legal proceedings, amount and timing of anticipated future distributions, estimated per share value of the Company’s common stock, and other matters. The Company’s forward-looking statements are not guarantees of future performance. While the Company’s management believes its forward-looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances. As with any projection or forecast, forward-looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise, and may not be realized. The Company’s forward-looking statements are based on management’s current expectations and a variety of risks, uncertainties and other factors, many of which are beyond the Company’s inability to control or accurately predict. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company’s actual results could differ materially from those set forth in the forward-looking statements due to a variety of risks, uncertainties and other factors.

3For further information regarding risks and uncertainties associated with the Company’s business, and important factors that could cause the Company’s actual results to vary materially from those expressed or implied in its forward-looking statements, please refer to the factors listed and described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Risk Factors” sections of the Company’s documents filed from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, the Company’s quarterly reports on Form 10-Q, and the Company’s annual report on Form 10-K, copies of which may be obtained from the Company’s website at http://www.cnlgrowthproperties.com.

~~CNL~~All ~~GROWTH~~written ~~PROPERTIES,~~and ~~INC~~oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statements. ~~AND~~Forward-looking ~~SUBSIDIARIES~~statements speak only as of the date on which they are made; the Company undertakes no obligation to, and expressly disclaims any obligation to, update or revise its forward-looking statements to reflect new information, changed assumptions, the occurrence of subsequent events, or changes to future operating results over time unless otherwise required by law.

~~UNAUDITED~~3 ~~PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS~~

~~FOR~~EXHIBIT ~~THE~~INDEX ~~SEVEN MONTHS ENDED JULY 31, 2016~~

(Going Concern Basis)


Exhibit No.		Description

99.1		Performance Chart

99.2		Letter to Stockholders dated October 18, 2017 announcing Final Distribution

				Haywood Reserve
	Historical			Property Sold				Pro Forma
	July 31,			Pro Forma				July 31,
	2016			Adjustments (a)				2016 (d)
Revenues:
Rental income from operating leases	$	19,199,105		$	(101,686	)		$	19,097,419
Other property revenue		2,003,701			(20,559	)			1,983,142
Total revenues		21,202,806			(122,245	)			21,080,561
Expenses:
Property operating expenses		11,653,617			(394,518	)			11,259,099
General and administrative		2,775,540			(12,138	)			2,763,402
Asset management fees, net of amounts capitalized		1,604,305			(20,467	)	(b)		1,583,838
Property management fees		965,979			(45,500	)			920,479
Depreciation		5,355,949			(140,742	)			5,215,207
Total expenses		22,355,390			(613,365	)			21,742,025
Operating loss		(1,152,584	)		491,120				(661,464	)
Other income (expense):
Fair value adjustments and other income		73,120			—				73,120
Interest expense and loan cost amortization, net of amounts capitalized		(4,197,031	)		21,827		(c)		(4,175,204	)
Loss on extinguishment of debt		(27,454	)		—				(27,454	)
Total other income (expense)		(4,151,365	)		21,827				(4,129,538	)
Income tax expense		(151,217	)		—				(151,217	)
Net loss before gain on sale of real estate		(5,455,166	)		512,947				(4,942,219	)
Gain on sale of real estate, net of tax		40,917,543			—				40,917,543
Net income including noncontrolling interests		35,462,377			512,947				35,975,324
Net income from continuing operations attributable to noncontrolling interests		(21,931,862	)		(48,319	)			(21,980,181	)
Net income from continuing operations attributable to common stockholders	$	13,530,515		$	464,628			$	13,995,143
Net income per share of common stock (basic and diluted) from continuing operations	$	0.60						$	0.62
Weighted average number of shares of common stock outstanding (basic and diluted)		22,526,171							22,526,171

SIGNATURES

~~See~~Pursuant ~~accompanying~~to ~~notes~~the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to ~~unaudited~~be ~~pro~~signed ~~forma~~on ~~condensed~~its ~~consolidated~~behalf ~~financial~~by ~~statements~~the undersigned hereunto duly authorized.

~~CNL~~5 ~~GROWTH PROPERTIES, INC. AND SUBSIDIARIES~~

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying unaudited pro forma condensed consolidated statement of net assets of the Company is presented as if the disposition of the Haywood Reserve Property described in Note 2. “Pro Forma Transaction” had occurred as of June 30, 2017. The accompanying unaudited pro forma condensed consolidated statement of operations of the Company presented for the seven months ended July 31, 2016 (the “Pro Forma Period”) includes certain pro forma adjustments to illustrate the estimated effect of the Company’s disposition, described in Note 2. “Pro Forma Transaction”, as if it had occurred as of the first day of the Pro Forma Period. The amounts included in the historical columns represent the Company’s historical statement of net assets and operating results for the respective Pro Forma Period presented.

The accompanying unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and do not include all of the information and note disclosures required by generally accepted accounting principles of the United States (“GAAP”). Pro forma financial information is intended to provide information about the continuing impact of a transaction by showing how a specific transaction or group of transactions might have affected historical financial statements. Pro forma financial information illustrates only the isolated and objectively measurable (based on historically determined amounts) effects of a particular transaction, and excludes effects based on judgmental estimates of how historical management practices and operating decisions may or may not have changed as a result of the transaction. Therefore, pro forma financial information does not include information about the possible or expected impact of current actions taken by management in response to the pro forma transaction, as if management’s actions were carried out in previous reporting periods.

This unaudited pro forma condensed consolidated financial information is presented for informational purposes only and does not purport to be indicative of the Company’s financial results or financial position as if the transaction reflected herein had occurred, or been in effect during the Pro Forma Period. In addition, this unaudited pro forma condensed consolidated financial information should not be viewed as indicative of the Company’s expected financial results for future periods.

2. Pro Forma Transaction

On June 30, 2017, Daniel Haywood, LLC (the “Joint Venture”) entered into a purchase and sale agreement with MSP RE Holdings, LLC, an unaffiliated third party, for the sale of the Haywood Reserve Property. The purchase price for the Haywood Reserve Property was approximately $53.8 million excluding transaction costs.

On September 29, 2017, the Joint Venture completed the sale of the Haywood Reserve Property to Haywood Reserve Operating Company, LLC, an affiliate of MSP RE Holding, LLC.

3. Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Net Assets

The adjustments to the unaudited pro forma condensed consolidated statement of net assets represent adjustments needed to the Company’s historical statement of net assets as if the completed disposition of the Haywood Reserve Property occurred as of June 30, 2017.

CNL GROWTH PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Net Assets (continued):

(a) These adjustments reflect the net sales proceeds received from the completed disposition of the Haywood Reserve Property and the elimination of the related account balances as if the sale was consummated as of June 30, 2017.

	Haywood ReserveProperty Sold
Sale Price	$	53,775,000
Closing and transaction costs		(527,557	)
Net sales proceeds	$	53,247,443

(b) These adjustments reflect the use of a portion of the net cash proceeds received from the completed sale of the Haywood Reserve Property to pay down existing indebtedness, including accrued interest.

(c) These adjustments reflect the increase in the liability for noncontrolling interests for the joint venture partner’s share of net sales proceeds and estimated costs in excess of estimated receipts during liquidation.

(d) These adjustments reflect the reduction of estimated costs in excess of estimated receipts during liquidation.

(e) The adjusted unaudited pro forma condensed consolidated statement of net assets does not include pro forma adjustments related to the sale of the Aura at the Rim and Fairfield Ranch properties previously reported on Form 8-K on July 18, 2017 and August 1, 2017.

4. Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Operations

The adjustments to the unaudited pro forma condensed consolidated statement of operations represent adjustments needed to the Company’s historical results to remove the historical operating results of the completed sale of the Haywood Reserve Property as if it had occurred on the first day of the first Pro Forma Period presented.

(a) Except as described in (b) and (c) below, these amounts represent the elimination of the operations on the completed sale of the Haywood Reserve Property from the historical amounts for the seven months ended July 31, 2016, to give effect to the completed sale of the Haywood Reserve Property as if the sale occurred on the first day of the first Pro Forma Period presented. The Haywood Reserve Property was classified in continuing operations because the proposed disposition of the property would neither cause a strategic shift in the Company, nor was it considered to have a major impact on the Company’s business. Therefore, the property did not qualify as discontinued operations under ASU 2014-08.

(b) Amount includes the elimination of asset management fee expenses, calculated at 0.08334% monthly on the invested assets value of the Haywood Reserve Property for the seven months ended July 31, 2016. These fees were historically paid by the Company to its advisor and would not have been incurred subsequent to the disposition of this asset.

(c) Amount represents the elimination of interest expense and loan cost amortization to reflect the use of net cash proceeds from the completed sale of the Haywood Reserve Property to retire indebtedness that was collateralized by the Haywood Reserve Property as if the sale occurred on the first day of the first Pro Forma Period presented.

(d) The adjusted unaudited pro forma condensed consolidated statement of operations does not include pro forma adjustments related to the sales of the Aura Grand property, the Crescent Gateway and City Walk properties, the Oxford Square property, the Broadway property, the Spring Property, the Aura at the Rim property, the Fairfield Ranch property or the Membership Interest sale in the Bainbridge Joint Venture previously reported on Form 8-K on November 1, 2016, December 6, 2016, March 6, 2017, June 23, 2017, June 29, 2017, July 18, 2017, August 1, 2017 and July 7, 2017, respectively.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 5, 2017		CNL GROWTH PROPERTIES, INC. a Maryland corporation
	By:	/s/ Tammy J. Tipton
		Tammy J. Tipton Chief Financial Officer

Date: October 18, 2017

CNL GROWTH PROPERTIES, INC.

a Maryland corporation

/s/ Tammy J. Tipton

Tammy J. Tipton

Chief Financial Officer

Filing Compare · CNL Growth Properties, Inc.