The Company Also Announces an Application for up to $30 Million in Additional
Financing
KENNETT SQUARE, Pa., Oct. 27 /PRNewswire/ -- ElderTrust (NYSE: ETT), an
equity healthcare REIT, today announced that it has reached a tentative
agreement with German American Capital Corp., the lender on its Bank Credit
Facility, to extend the Facility from January 1, 2000 through June 30, 2001 on
the terms summarized below. Finalization of the extension is subject to,
among other things, the lender's internal credit review and document
completion.
The Company also announced that it has executed loan applications for up
to $30 million of new mortgage loan financings, which will be secured by four
of the Company's skilled nursing facilities. One of the loans will be
collateralized by two of the properties. If the financing is successful, the
net proceeds from the new mortgage financing will be used to further reduce
the unpaid principal balance of the Company's Bank Credit Facility, which
currently is approximately $68 million. The applied-for mortgage debt,
arranged by J.P. Morgan, has a three-year term and is interest-only with a
variable interest rate that the Company would be obligated to hedge to a fixed
rate at closing. The Company estimates the net proceeds from the refinancing,
if successfully completed, will not be less than $25 million.
"We hope to finalize the Bank Credit Facility extension within the next
several weeks and to close the new mortgage financing by the middle of
December, 1999," said D. Lee McCreary, Jr., President and Chief Executive
Officer. Mr. McCreary added, "If finalized in its present form, the extension
agreement would provide the Company an additional eighteen months to pay-off
the balance under the Bank Credit Facility. Bear in mind that these
arrangements are not yet completed. Our number one priority is to finalize
them."
Additional details on the pending agreements are as follows:
Bank Credit Facility Extension
Proposal:
Interest rate:
Base rate 30-day LIBOR
Spread 275 basis points if loan is less than 80% of
borrowing base, 325 basis points if loan is
80% or more of borrowing base.
Term: Expires June 30, 2001.
Fees: 100 basis points due upon extension.
6.25 basis points per month on outstanding
balance.
Principal amortization: 22 basis points of monthly balance.
Other:
Maximum additional borrowing
capacity:
$5.75 million.
Dividend limitation: 95% of FFO, plus $3 million over the loan
term.
J.P. Morgan Mortgages:
Application amount: $30 million
Estimated net proceeds: not less than $25 million
Interest rate:
Base rate 30-day LIBOR
Spread 300 basis points, variable rate
instrument, hedge contract required.
Term: 3 years, one two-year extension available
at borrower's option.
Fees: 100 basis points, 50 basis points for
extension.
Principal amortization: None
The interest rate, loan extension fee and loan principal amortization
under the terms of the proposed Bank Credit Facility extension, as well as the
higher interest expense under the proposed new mortgage financing, will reduce
the Company's cash flows and could affect its ability to maintain
distributions to its shareholders at current levels depending on the magnitude
thereof. As previously disclosed by the Company, there can be no assurance
that the Company will be able to extend the term of its existing Bank Credit
Facility or obtain replacement financing thereof or that the Company will be
able to continue making distributions to its common shareholders at current
levels.
ElderTrust is a real estate investment trust that invests in real estate
properties used in the healthcare services industry, principally along the
East Coast of the United States. Since commencing operations in January 1998,
the Company has acquired direct and indirect interests in 31 buildings and has
loans outstanding of $49 million in construction and term financing on eight
additional healthcare facilities.
Certain matters discussed within this press release may be deemed to be
forward-looking statements within the meaning of the Private Securities and
Litigation Reform Act of 1995. Although ElderTrust believes the expectations
reflected in such forward-looking statements are reasonable assumptions, it
can give no assurance that its expectations will be attained. Factors that
could cause actual results to differ materially from ElderTrust's expectations
include real estate conditions, the Company's ability to refinance its
existing bank credit facility, changes in the economic conditions and other
risks detailed from time to time in the Company's SEC reports and filings.
The Company assumes no obligation to update or supplement forward-looking
statements that become untrue because of subsequent events.
For more information on ElderTrust via fax at no charge, please dial
1-800-PRO-INFO and enter ticker symbol ETT, or visit ElderTrust's Web site at
http://www.eldertrust.com .
SOURCE ElderTrust
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Related links:
http://www.eldertrust.com
CONTACT:
D. Lee McCreary, Jr., President and Chief
Executive Officer of ElderTrust, 610-925-4200, e-mail,
http://www.eldertrust.com
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