AdCare Signs Agreement to Purchase Florida Facility for $4.8 million
Company Begins its Acquisition Program with an Agreement on a 55 bed Nursing Facility in the Tampa Bay Area
ATLANTA, Ga., Sept. 22, 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 it has signed a letter of intent to purchase a skilled nursing facility with 55 operational beds in Florida for approximately $4.8 million, net of reserves. The proposed transaction signals AdCare's entrance into the Florida market, and represents the first acquisition since the Company's transition to a healthcare property holding and leasing company.
The Company also has also executed a letter of intent with one of its existing operators to lease the facility upon purchase. The terms of the long-term lease agreement are expected to include a 15-year term with initial annual cash rent of $420,000 in the first year, and a 3% annual escalator.
"This agreement to purchase a Tampa Bay area facility represents the first of what we expect will be several transactions that expand and further diversify our portfolio of properties," commented Bill McBride, AdCare's Chairman and Chief Executive Officer. "With this transaction we will be expanding our geographic presence to the attractive Florida market and deploying our capital in an accretive fashion which we believe will increase shareholder value. It has always been our long-term plan to expand our portfolio of properties. Entry into this new market with the purchase and simultaneous leasing of the property to one of our existing, high-quality operators does just that."
Terms of the Transaction
Under the terms of the letter of intent, AdCare is expected to purchase the facility for approximately $4.8 million, net of reserves. As part of the transaction, the Company will assume the existing HUD debt associated with the property.
"One of the key considerations with this acquisition was the attractive HUD financing already in place," added Allan Rimland, AdCare's President and Chief Financial Officer. "In addition, we are acquiring this facility at an attractive per-bed price. The fact that one of our existing operators has agreed to operate the facility pursuant to a long-term lease, as well as the existing, assumable financing are both significant positives for AdCare, and we are excited to enter the Florida market."
The purchase is expected to close in the first quarter of 2016. The purchase of the facility and its lease to one of our existing operators is subject to, among other things, satisfactory due diligence, HUD approval and the negotiation and execution of a definitive purchase agreement and lease agreement, each of which will contain customary representations, warranties, covenants and closing conditions. There is no assurance that these transactions will be completed on the terms described in this press release or that they will be completed at all.
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 anticipated purchase and lease of the Tampa Bay area facility and the timing and terms thereof. 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.
SOURCE AdCare Health Systems, Inc.
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