AdCare Signs New Master Sublease Agreement for Three Existing Georgia Facilities
ATLANTA, June 22, 2016 /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 the execution of a new master sublease for three of its Georgia facilities with affiliates of Peach Health Group LLC.
"We welcome Peach Health as the new operator of three of our healthcare facilities located in Georgia previously operated by affiliates of New Beginnings Care, LLC," commented Bill McBride, AdCare's Chairman and Chief Executive Officer. "Peach Health Group and its affiliates are well-respected operators in Georgia that currently operate 11 other facilities in the state and have established a solid reputation for strong clinical and operational expertise. In addition, Peach Health Group affiliates have experience in reopening closed facilities in Georgia."
"The new long-term master sublease with affiliates of Peach Health is yet another example of the efforts we are undertaking to strengthen our tenant roster and increase the value of our real estate portfolio," added Mr. McBride. "In the case of the Jeffersonville facility, we are taking the opportunity, while recertifying the building and changing our tenant, to make significant improvements to the physical plant which should enable the facility to be more competitive and generate a higher rental rate once stabilized. We anticipate making similar improvements to the other two facilities in the near future."
The master sublease is subject to landlord consent and certain and other conditions. The master sublease is structured as a triple net lease and includes an initial term of just over 11 years, monthly initial cash rent of $110,000 and a 3.0% annual rent escalator. For two of the properties, the master sublease provides for no or reduced rent for eight months after the earlier of the recertification of such property to receive Medicare and Medicaid reimbursements or April 1, 2017. In addition, the Company is providing a working capital line of credit to the tenants of up to $1 million for a period of one year at an interest rate of 13.5% per annum. The line of credit is secured by a first priority security interest in the assets and accounts receivable of the tenants.
On January 22, 2016, New Beginnings Care, LLC and its affiliates filed petitions to reorganize their finances under the Bankruptcy Code. New Beginnings operated the Company's Oceanside, Savannah Beach and Jeffersonville facilities. Both the Oceanside and Jeffersonville facilities have been decertified by the Center for Medicare Services and are currently closed.
For additional information regarding the master sublease, please refer to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 22, 2016.
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 38 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. 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, 2015, and AdCare's subsequently filed Quarterly Reports on Form 10-Q. 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.
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SOURCE AdCare Health Systems, Inc.
