KENNETT SQUARE, Pa., Nov. 6 /PRNewswire/ -- ElderTrust (NYSE: ETT), a
health care REIT, today addressed Monday's announcement by Genesis Health
Ventures, Inc. (NYSE: GHV).
"We believe that it is important to address this announcement as Genesis
is our most significant tenant and borrower," said Edward B. Romanov, Jr.,
President and Chief Executive Officer of ElderTrust.
In the announcement Genesis reported, among other things, that it expects
fourth quarter 1998 earnings to be significantly below that of its prior
quarter ended June 30, 1998, and that the negative impact of the Medicare
Prospective Payment System ("PPS") will be greater than previously
anticipated. Genesis also announced that it expects its fiscal 1999 cash flow
from operations (or EBITDA), excluding the impact of the recent Vitalink
acquisition, to decline 3 to 5% due to PPS, but may increase up to 30%
including the impact of the Vitalink acquisition. Romanov also noted:
-- "Of 27 properties owned, directly or indirectly, by ElderTrust, 15 are
skilled nursing facilities impacted by PPS, all of which are subject to
fixed rent leases. No facilities impacted by PPS are subject to
percentage rent leases.
-- Review of the skilled nursing facility budgets prepared by Genesis has
shown no significant impact on our properties' lease coverage ratios.
The Company will continue to monitor these properties' performance as
PPS is fully implemented.
-- Our lease base has more than nine years before it comes up for renewal.
As a result, no leases subject to PPS are contractually due for
renegotiation in the near term.
-- In addition to skilled nursing facilities, the Company also leases
assisted living facilities and medical office buildings. These
properties are not impacted by PPS or other items in the Genesis
announcement."
"It appears that PPS may have a negative impact on the skilled nursing
industry," noted Mr. Romanov. "However, we do not believe it will have a
material impact on ElderTrust."
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 a portfolio of 27 buildings and has loaned
approximately $50 million in construction and term financing on 10 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 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, information determined in the course of due diligence review,
changes in the economic conditions and other risks detailed from time to time
in the Company's SEC reports and filings, including its registration
statement as well as quarterly reports on Form 10-Q and reports on Form 8-K.
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
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., ElderTrust Senior Vice
President & Chief Financial Officer, 610-925-4200
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