ATLANTA, Sept. 18, 2015 /PRNewswire/ -- AdCare Health
Systems, Inc. (NYSE MKT: ADK), (NYSE MKT: ADK.PRA), a
self-managed healthcare real estate investment company that invests
primarily in real estate purposed for senior living and long-term
healthcare, today announced continued progress in its efforts to
increase the value of its portfolio of healthcare properties.
AdCare has negotiated extensions to leases for a total of 12
facilities, including eight in the last month, providing tenants
with longer leases typically in return for increased annual rent
escalators. As a result, nearly all of AdCare's leases have initial
terms of 10 years or longer with an average, annual escalator of
approximately 2.5%.
"We continue to work closely with the operators of our recently
transitioned facilities, identifying opportunities to further
stabilize and increase our cash flow by lengthening the terms of
leases, and increasing rent escalations whenever possible,"
commented Bill McBride, AdCare's
Chairman and Chief Executive Officer. "The willingness of our
operators to accept lease term changes is a reflection of the
improvements the operators are making to the underlying operating
performance of the facilities."
Lease Extensions and Refinancing Activity
- AdCare extended the initial term on five of the eight
facilities with existing operators leased from a single landlord to
12 years from five years, providing AdCare with increased rental
revenue visibility and matching the underlying lease.
- AdCare extended the initial term on a facility in Ohio from 4 to 10 years. As previously
announced, AdCare extended the initial term on four facilities in
Ohio from five to 10 years.
- AdCare extended the initial term on two facilities in
Alabama from 5 to 15 years.
AdCare also submitted a HUD financing application to refinance
debt on a facility the company owns in South Carolina. The proposed loan would
refinance $6.5 million of existing
debt and result in an approximate 100 basis point reduction in
interest as well as free up additional cash for AdCare to reinvest
in additional properties. Management expects the financing to be
completed in the first quarter of 2016. Furthermore, the
Company expects to refinance existing debt on selected properties
with HUD debt in the future.
"We are taking actions to increase the value of our existing
portfolio by locking in predictable rental payments and freeing up
cash that can be redeployed for the acquisition of additional
properties," added Mr. McBride. "Submission of a HUD financing
application on our South Carolina
property, the first submission following our transition,
demonstrates our ability to work in concert with the new
facilities' operators to complete the required documentation and
create favorable financial benefits for each of us."
Transition Update
As expected, AdCare successfully transferred operations on two
facilities in Georgia on
September 1, 2015. In addition, the
Company has received preliminary HUD approval on its remaining
facility in Georgia.
As a result, 34 facilities have transferred operations to
third-party operators or are under management contracts with an
indefinite term. Of the remaining facilities:
- One facility in Georgia has
received preliminary HUD approval and is expected to transfer on
October 1
- One facility in Arkansas is
also expected to transfer on October
1
- Two facilities in Oklahoma are
expected to transfer during the fourth quarter
- One facility in Oklahoma is
expected to be sold during the fourth quarter
About AdCare Health Systems
AdCare Health Systems, Inc. (NYSE MKT: ADK) (NYSE MKT: ADK.PRA) is
a self-managed healthcare real estate investment company that
invests primarily in real estate purposed for senior living and
long-term healthcare through facility lease and sub-lease
transactions. The Company currently owns, leases or manages for
third parties 39 facilities. For more information about AdCare,
visit www.adcarehealth.com.
Important Cautions Regarding Forward-Looking
Statements
Statements contained in this press release that are not historical
facts may be forward-looking statements within the meaning of
federal law. Such statements can be identified by the use of
forward-looking terminology, such as "believes," "expects,"
"plans," "intends," "anticipates" and variations of such words or
similar expressions, but their absence does not mean that the
statement is not forward-looking. Statements in this press release
that are forward-looking include, among other things, statements
regarding the favorable economic impact of the modifications to the
master lease and statements regarding the modification of the
subleases. Such forward-looking statements reflect management's
beliefs and assumptions and are based upon information currently
available to management and involve known and unknown risks,
results, performance or achievements of AdCare, which may differ
materially from those expressed or implied in such statements. Such
factors are identified in the public filings made by AdCare with
the Securities and Exchange Commission, including AdCare's Annual
Report on Form 10-K for the year ended December 31, 2014. There is no assurance that
such factors or other factors will not affect the accuracy of such
forward-looking statements. Except where required by law, AdCare
undertakes no obligation to revise or update any forward-looking
statements to reflect events or circumstances after the date of
this press release.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/adcare-completes-operations-transfer-on-two-facilities-and-extends-leases-on-eight-additional-facilities-300145086.html
SOURCE AdCare Health Systems, Inc.