ATLANTA, Aug. 18, 2015 /PRNewswire/ -- AdCare Health Systems, Inc. (NYSE MKT: ADK)(NYSE MKT: ADK.PRA), announced today that the company has signed an agreement to modify the master lease under which it leases eight skilled nursing facilities located in Georgia. As a result of the agreement, AdCare extended the current term of the master lease by seven years, through 2027, locking in a $1.9 million annual lease spread as a result of existing sublease agreements with third-party operators. The agreement also resolves all outstanding issues related to the subleasing of the properties by the company.
As previously disclosed, the company leases these eight skilled nursing facilities under a master lease with a single landlord which was originally set to expire after a 10-year term in 2020. All of these facilities have been subleased to third-party operators with transfers of operations complete. The company expects annual cash rent under the subleases, net of annual cash rent expense, to be approximately $1.9 million in the aggregate, excluding the effects of annual escalators. In connection with the lease modification and extension, the company will make an upfront cash payment to the landlord of $575,000, release to the landlord the company's previously paid security deposit of $500,000 and one month of advance rent of $398,000.
"This agreement locks in a predictable lease spread and extends the maturity of our master lease, providing predictable cash flow for AdCare," stated Bill McBride, AdCare's Chairman and Chief Executive Officer. "It represents a 'win-win' for each of us from which we can both move forward. We will now begin the process of negotiating with the existing subtenants of the facilities to extend their subleases to mirror the modified master lease agreement."
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, primarily in the Southeast. 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.
References to the consolidated company and its assets and activities, as well as the use of terms such as "we," "us," "our," and similar verbiage, is not meant to imply that AdCare Health Systems, Inc. has direct operating assets, employees or revenue or that any of the facilities, the home health business or other related businesses are operated by the same entity.
SOURCE AdCare Health Systems, Inc.