UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 8.01 Other Events.
Determination of Net Asset Value for Outstanding Shares for the month ended January 31, 2022
On February 17, 2022, the board of directors (the “Board”) of CNL Strategic Capital, LLC (the "Company") has determined the Company’s net asset value per share for each share class in a manner consistent with the Company’s valuation policy. This table provides the Company’s aggregate net asset value and net asset value per share for its Class FA, Class A, Class T, Class D, Class I, and Class S shares as of January 31, 2022:
Month Ended January 31, 2022 | Class FA | Class A |
Class T |
Class D | Class I |
Class S | Total | |||||||||||||||||||||
| Net Asset Value | $ | 150,335,858 | $ | 46,555,178 | $ | 50,412,809 | $ | 31,712,490 | $ | 179,812,384 | $ | 58,640,119 | $ | 517,468,838 | ||||||||||||||
| Number of Outstanding Shares | 4,558,900 | 1,497,269 | 1,629,177 | 1,034,812 | 5,707,546 | 1,766,079 | 16,193,783 | |||||||||||||||||||||
| Net Asset Value, Per Share | $ | 32.98 | $ | 31.09 | $ | 30.94 | $ | 30.65 | $ | 31.50 | $ | 33.20 | ||||||||||||||||
| Net Asset Value, Per Share Prior Month | $ | 32.62 | $ | 30.78 | $ | 30.66 | $ | 30.35 | $ | 31.18 | $ | 32.84 | ||||||||||||||||
| Increase in Net Asset Value, Per Share from Prior Month | $ | 0.36 | $ | 0.31 | $ | 0.28 | $ | 0.30 | $ | 0.32 | $ | 0.36 | ||||||||||||||||
The increase in the Company’s net asset value per share for each applicable share class for the month ended January 31, 2022 was primarily driven by the increases in the fair value of five out of the ten of the Company’s portfolio company investments. The fair value of three of the Company’s portfolio company investments decreased. The fair value of two of the Company’s portfolio company investments did not change.
Public Offering Price Adjustment
On February 17, 2022, the Board approved the new per share public offering price for each share class in the current public offering (the “Offering”). The new public offering prices will be effective as of February 25, 2022 and will be used for the Company’s next monthly closing for subscriptions on February 28, 2022. The purchase price for Class A, Class T, Class D, and Class I shares purchased under our distribution reinvestment plan will be equal to the net asset value per share as of January 31, 2022. The following table provides the new public offering prices and applicable upfront selling commissions and dealer manager fees for each share class available in the Offering:
Class A |
Class T |
Class D |
Class I | |
| Public Offering Price, Per Share | $33.98 | $32.48 | $30.65 | $31.50 |
| Selling Commissions, Per Share | $2.04 | $0.97 | ||
| Dealer Manager Fees, Per Share | $0.85 | $0.57 |
We have also posted this information on our website at www.cnlstrategiccapital.com. A subscriber may also obtain this information by calling us by telephone at (866) 650-0650.
Declaration of Distributions
On February 17, 2022, the Board declared cash distributions on the outstanding shares of all classes of our common shares based on a monthly record date, as set forth below:
| Distribution
Record Date | Distribution Payment Date | Declared Distribution Per Share for Each Share Class | ||||||||||||||||||||||
| Class FA | Class A | Class T | Class D | Class I | Class S | |||||||||||||||||||
| March 30, 2022 | April 11, 2022 | $0.104167 | $ | 0.104167 | $ | 0.083333 | $ | 0.093750 | $ | 0.104167 | $ | 0.104167 | ||||||||||||
Return Information
The following table illustrates year-to-date (“YTD”), trailing 12 months (“1-Year Return”), 3-Year Return, 3-Year Average Annual Return (“AAR”), and cumulative total returns to January 31, 2022, with and without upfront sales load.
| YTD Return(1) | 1-Year Return(2) | 3-Year Return(3) | 3-Year AAR(3) | Cumulative Total Return(4) | Cumulative Return Period | |||||||||||||||||||
| Class FA (no sales load) | 1.4% | 12.0% | 40.4% | 13.5% | 55.8% | February 7, 2018 – January 31, 2022 | ||||||||||||||||||
| Class FA (with sales load) | -5.2% | 4.7% | 31.3% | 10.4% | 45.7% | February 7, 2018 – January 31, 2022 | ||||||||||||||||||
| Class A (no sales load) | 1.3% | 10.6% | 34.9% | 11.6% | 47.8% | April 10, 2018 – January 31, 2022 | ||||||||||||||||||
| Class A (with sales load) | -7.3% | 1.2% | 23.5% | 7.8% | 35.2% | April 10, 2018 – January 31, 2022 | ||||||||||||||||||
| Class I | 1.4% | 10.8% | 36.0% | 12.0% | 49.4% | April 10, 2018 – January 31, 2022 | ||||||||||||||||||
| Class T (no sales load) | 1.2% | 9.6% | 30.3% | 10.1% | 40.5% | May 25, 2018 – January 31, 2022 | ||||||||||||||||||
| Class T (with sales load) | -3.6% | 4.4% | 24.1% | 8.0% | 33.8% | May 25, 2018 – January 31, 2022 | ||||||||||||||||||
| Class D | 1.3% | 10.7% | 32.8% | 10.9% | 40.7% | June 26, 2018 – January 31, 2022 | ||||||||||||||||||
| Class S (no sales load) | 1.4% | 12.6% | N/A | N/A | 29.9% | March 31, 2020 – January 31, 2022 | ||||||||||||||||||
| Class S (with sales load) | -2.1% | 8.6% | N/A | N/A | 25.3% | March 31, 2020 – January 31, 2022 | ||||||||||||||||||
(1) For the period from January 1, 2022 through January 31, 2022.
(2) For the period from February 1, 2021 through January 31, 2022.
(3) For the period from February 1, 2019 through January 31, 2022. The AAR adds the annual return for each of the last three years together and divides the sum by three.
(4) For the period from the date the first share was issued for each respective share class through January 31, 2022.
Total return is calculated for each share class as the change in the net asset value for such share class during the period and assuming all distributions are reinvested. Amounts are not annualized. The Company’s performance changes over time and currently may be different than that shown above. Past performance is no guarantee of future results. For details regarding applicable sales load, please see the “Plan of Distribution" section in the Company’s Prospectus. Class I and D have no upfront sales load.
For the month to date period ended January 31, 2022, sources of declared distributions on a GAAP basis were as follows:
| Month Ended January 31, 2022 | ||||||
| Amount | % of Total Distributions Declared | |||||
| Net investment income1 | $ | 843,229 | 52.6 | % | ||
| Distributions in excess of net investment income2 | 761,391 | 47.4 | % | |||
| Total distributions declared | $ | 1,604,620 | 100.0 | % | ||
Cash distributions net of distributions reinvested during the periods presented were funded from the following sources:
| Month Ended January 31, 2022 | ||||||||
| Amount | % of Cash Distributions Net of Distributions Reinvested | |||||||
| Net investment loss before expense support | (360,097 | ) | (33.3 | )% | ||||
| Expense support | 1,203,326 | 111.3 | % | |||||
| Net investment income | 843,229 | 78.0 | % | |||||
| Cash distributions net of distributions reinvested in excess of net investment income2 | 238,261 | 22.0 | % | |||||
| Cash distributions net of distributions reinvested3 | 1,081,490 | 100.0 | % | |||||
1 Net investment income includes expense support due from the Manager and Sub-Manager of $1,203,326 for the month ended January 31, 2022.
2 Consists of distributions made from offering proceeds for the periods presented.
3 For the month ended January 31, 2022, excludes $523,130 of distributions reinvested pursuant to our distribution reinvestment plan.
For the years ended December 31, 2021, 2020, 2019, and 2018 distributions were paid from multiple sources and these sources included net investment income before expense support of 65.2%, 42.3%, 61.7% and 85.2%, reimbursable expense support of 0.0%, 33.2%, 23.5% and 11.1%, and offering proceeds of 34.8%, 24.5%, 14.8% and 3.7%, respectively. For additional information regarding sources of distributions, please see the annual and quarterly reports the Company files with the Securities and Exchange Commission. The Company may be required to repay expense support to the Manager and Sub-Manager in future periods which may reduce future income available for distributions. As of the date of this current report, management believes that reimbursement of expense support is not probable under the terms of the Expense Support and Conditional Reimbursement Agreement. For additional information regarding sources of distributions, please see the annual and quarterly reports the Company files with the Securities and Exchange Commission. The Company may be required to repay expense support to the Manager and Sub-Manager in future periods which may reduce future income available for distributions. As of the date of this current report, management believes that reimbursement of expense support is not probable under the terms of the Expense Support and Conditional Reimbursement Agreement.
We have also posted this information on our website at www.cnlstrategiccapital.com. A subscriber may also obtain this information by calling us by telephone at (866) 650-0650. The calculation of the Company’s net asset value is a calculation of fair value of the Company’s assets less the Company’s outstanding liabilities. For a discussion of how the fair values of the Company's investments have been impacted by the COVID-19 pandemic, please see Note 4. “Fair Value of Financial Instruments” in Item 1. “Financial Statements” in Part I of the Company’s quarterly report on Form 10-Q for the three months ended September 30, 2021. Please also see “Risk Factors—Risks Related to Our Business—The outbreak of highly infectious or contagious diseases, including the current outbreak of the novel coronavirus (“COVID-19”), could materially and adversely impact our business, our operating businesses, our financial condition, results of operations and cash flows. Further, the spread of COVID-19 pandemic has caused severe disruptions in the U.S. and global economy and financial markets and could potentially create widespread business continuity issues of an as yet unknown magnitude and duration.”
Cautionary Note Regarding Forward-Looking Statements
Statements in this Current Report on Form 8-K, including intentions, beliefs, expectations or projections relating to the items described herein, are forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on the beliefs and assumptions of the Company’s management and on the information currently available to management at the time of such statements. Forward-looking statements generally can be identified by the words “believes,” “expects,” “intends,” “plans,” “estimates” or similar expressions that indicate future events. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control. Any forward-looking statement made by us in this Current Report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. Important risks, uncertainties and factors that could cause actual results to differ materially from those in the forward-looking statements include the risks associated with the Company’s ability to pay distributions and the sources of such distribution payments, the Company’s ability to locate and make suitable investments, the ongoing and potential impact of the ongoing COVID-19 pandemic on the economy and the broader financial markets, which may have a significant negative impact on the Company's (and its businesses) financial condition, results of operations, cash flows and net asset value per share and other risks described in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and the other documents filed by the Company with the Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: February 18, 2022 | CNL Strategic Capital, LLC a Delaware limited liability company | ||
| By: | /s/ Chirag J. Bhavsar | ||
Chirag J. Bhavsar Chief Executive Officer |