Boston, MA 09/25/2014 (wallstreetpr) – AdCare Health Systems, Inc. (NYSEMKT:ADK) has signed a leasing agreement with a nursing home in Alabama for two skilled nursing and rehabilitation facilities. The leasing agreement will come to full use as of November 1, 2014, according to a press release on the company’s website.
Change of Business Model
The leading long-term care provider is leasing the facilities as part of it’s restructuring strategy. The care provider is trying to transition from an owner and a giant operator of healthcare facility to a leasing company. AdCare Health Systems, Inc. (NYSEMKT:ADK) is also believed to have cast eye on the lucrative healthcare property holding business.
The leasing agreement comes at a time when the company is in much need of cash to foresee restructuring plans. The leasing will thus be of great benefit to the company’s cash balance that is set to be pampered with up to $800, 000 as part of the agreement, during the life of the leasing agreement.
Other Leasing Agreements to Follow Suit
Terms of the lease agreement require the lessee to manage the day to day operations in terms of management of the facilities as well as carrying out any required maintenance and facility upgrades. AdCare Health Systems, Inc. (NYSEMKT:ADK) plans to carry out similar leasing agreements with its other asset portfolios. The move is intended to have a positive impact on the company’s cash balance while at the same time guaranteeing shareholders long-term value through their investments in the company.
Interim CEO and President, David Tenwick, is quoted as saying that the latest agreement highlights the future of the remaining facilities as the AdCare Health Systems, Inc. (NYSEMKT:ADK) makes the transition to a health care property holding company. Future leasing agreements are expected to reduce the company’s operating expenses while providing predictable returns on investments. The management team remains confident that the company is on course to register predictable profitability and also improve on the dividend yield.
