ATLANTA — AdCare Health Systems, Inc. (NYSE MKT: ADK), (NYSE MKT: ADK.PRA), a long-term care provider, has leased two Georgia skilled nursing facilities as part of its ongoing strategic plan to transition from an owner and operator of healthcare facilities to a healthcare property holding and leasing company. The agreement is with affiliates of C-Ross Management, an operator of long-term care facilities.
AdCare has now leased 28 of its 37 facilities.
The lease, contingent on all licenses and other approvals required by the state of Georgia, is expected to become effective for one of the two properties by April 1, and the other by June 1, pending approval by the U.S. Department of Housing and Urban Development ("HUD").
Under the terms of the triple net lease agreements, the lessees of the facilities will be responsible for day-to-day management, ongoing maintenance and facility improvements for the duration of the leases. The initial term of the leases is five years with a five-year renewal option. The annual rent in the first year will total $1.4 million and will escalate at $24,000 each year through the initial term and 2 percent upon renewal.
"We are continuing to make steady and consistent progress in our plans to transition to a healthcare property holding and leasing company," says Bill McBride, AdCare's president and CEO. "With this announcement, we now have signed agreements to transition nearly three fourths of our owned properties to the new leasing model."
C-Ross Management currently operates eight facilities in two southeastern states and focuses on all aspects of long-term care.