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, announced it has signed a letter of intent to purchase a skilled nursing facility with 169 licensed beds in Tennessee for approximately $9.0 million.

The Company also announced it has executed a letter of intent with Skyline Healthcare LLC, a former tenant, to lease the facility upon purchase. Skyline Healthcare LLC is a well-capitalized firm that operates facilities throughout the United States, including Tennessee. The terms of the long-term lease agreement are expected to include a 15-year term with initial annual cash rent of $900,000 in the first year, and a 2% annual rent escalator.

Bill McBride, AdCare's Chairman and Chief Executive Officer, commented, "This transaction follows on the mutually successful relationship we had with Skyline as tenant operator and then purchaser of nine facilities in Arkansas.  We hope to work more closely with Skyline in the future as we have been particularly impressed with their exceptional operational and clinical focus. In addition, with the purchase and simultaneous leasing of this property, we will be effectively deploying cash in an accretive fashion and expanding our geographic footprint to a new, attractive market."

The company intends to finance the acquisition with conventional mortgage debt and cash on hand. The purchase is expected to close in the first quarter of 2017. The purchase of the facility and the lease to Skyline is subject to, among other things, satisfactory due diligence, debt financing 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 this transaction will be completed on the terms described in this press release or that they will be completed at all.