AdCare Health Systems, Inc., a self-managed healthcare real estate investment company that invests primarily in real estate purposed for senior living and long-term healthcare, today announced continued progress in its strategic transition to a property holding and leasing company. 

Transition Update

The Company received approval from HUD with respect to four facilities in Ohio and one facility in Georgia and expects to complete the operations transfers of these facilities in the third quarter of 2015. The four Ohio facilities are subject to lease agreements previously executed with affiliates of Beacon Management and the Georgia facility is subject to a lease agreement previously executed with an affiliate of C-Ross Management. In the aggregate, the four Ohio facilities, plus an additional facility in Ohio which did not require HUD approval, and the Georgia facility, represent $4.1 million in initial year cash rent. 

As expected, the Company completed the operations transfer of one skilled nursing facility in North Carolina, effective June 1, 2015, pursuant to a lease agreement previously signed with a wholly-owned subsidiary of Symmetry Healthcare Management, representing approximately $650,000 in initial year cash rent. 

"Our commitment to completing the strategic transition of our company, along with timely communication of our progress, continues with the announcement of HUD approval on five facilities and the transfer of operations of one facility," stated Bill McBride, AdCare's Chairman and Chief Executive Officer. "We expect to transfer operations on substantially all of the remaining facilities in the third quarter."

Since the Board approved the strategic plan to transition the Company's business from an owner and operator of healthcare facilities to a healthcare property holding and leasing company, the Company has entered into agreements for 37 of its 40 healthcare facilities. Of these 37 healthcare facilities:

• Twenty-six facilities have transferred operations to third-party operators or are under a management contract with an indefinite term; 
• Of the remaining 11 facilities pending transfer:
  - Of the five facilities in Ohio, the Company has received HUD approval on four, and one facility does not require HUD approval. The Company expects to transfer operations to a third-party operator for these five facilities on August 1.
  - Of the two facilities in Georgia, the Company has received HUD approval on one, and expects to transfer operations for this facility to a third-party operator, on July 1. Transfer of the second Georgia facility is subject to HUD approval. 
  - The Company 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 Company expects to close the sale of one facility in Oklahoma in the third quarter, subject to certain termination provisions and closing conditions; and
  - The Company expects the sale of one Arkansas facility to close on July 1.

The remaining two facilities in Georgia and one facility in Arkansas are pending final disposition.