ATLANTA, July 21, 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 that it has reached an important milestone in its strategic transition to a property holding and leasing company. AdCare has entered into agreements for all 40 of its facilities.
- On July 20, 2015, AdCare signed an agreement to sublease two Georgia facilities to affiliates of Wellington Health Services L.L.C. Affiliates of Wellington currently sublease two of AdCare's facilities. The sublease agreement for the two additional facilities represents initial year cash rent of $2.0 million, which is subject to an annual escalator of approximately 3%. The initial term of the sublease agreement is ten years with two renewal options, subject to renewal of the master lease under which AdCare leases the facilities. The transfer of operations under the sublease agreement is scheduled to be completed in the third quarter of 2015, subject to the receipt of landlord consent, required licenses and other state regulatory approvals. AdCare expects initial year cash rent, net of initial year cash rent expense, to be approximately $0.2 million.
- On July 17, 2015, AdCare signed an agreement to sublease one Arkansas facility to an affiliate of Aria Health Group, LLC. Affiliates of Aria currently sublease eight of AdCare's facilities. The sublease agreement has a seven-year initial term, with a 3% per annum escalator and a five-year renewal option and represents initial year cash rent of $600,000. The transfer of operations under the sublease agreement is scheduled to be completed in the third quarter of 2015, subject to the receipt of required licenses and other state regulatory approvals.
"Today is an important milestone in the Company's strategic transition. By entering into agreements on these three facilities, we have now executed agreements to lease, manage, or sell all 40 of our facilities," commented Bill McBride, AdCare's Chairman and Chief Executive Officer. "Already, 24 facilities have completed the operations transfer to third party operators, with additional facilities scheduled to transition within the next 90 days as other approvals are received."
"I am encouraged with our progress to date, and as we remain focused on diligently transitioning operations to third party operators, we are simultaneously identifying attractive property acquisition opportunities for growth," continued Mr. McBride. "We have a growing pipeline that we are actively evaluating to put capital to work and increase shareholder value. Our progress to date gave the Board of Directors confidence to increase the dividend on our common stock by 10%, as we recently announced, reaffirming our commitment to return cash to our shareholders as we execute our business plan."
Since the Board of Directors approved the strategic plan to transition AdCare's business from an owner and operator of healthcare facilities to a healthcare property holding and leasing company, AdCare has entered into agreements for all 40 of its healthcare facilities. Of these 40 healthcare facilities:
- Twenty-seven facilities have transferred operations to third-party operators or are under a management contract with an indefinite term;
- One facility in Arkansas has been sold;
- Of the remaining 12 facilities pending transfer:
- Of the five facilities in Ohio, AdCare has received HUD approval on four, and one facility does not require HUD approval. AdCare expects to transfer operations to a third-party operator for these five facilities on August 1, 2015;
- The transfer of two facilities in Georgia is expected to occur in the third quarter of 2015, subject to receipt of landlord consent, required licenses and other state regulatory approvals;
- AdCare expects to transition one facility in Arkansas to a third-party operator in the third quarter of 2015, subject to receipt of required licenses and other state regulatory approvals;
- AdCare expects to transition two facilities in Oklahoma to a third-party operator during the third quarter of 2015, subject to receipt of required licenses;
- The transfer of one facility in Georgia is subject to HUD approval and is expected to occur in the third quarter of 2015; and
- AdCare expects to close the sale of one facility in Oklahoma in the third quarter, subject to certain termination provisions and closing conditions.
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 Company's transition to a healthcare facilities holding and leasing company, statements regarding the transfer of operations to third party operators, statements regarding acquisition opportunities, and statements regarding any dividend. 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.