Announces Completion of $30 Million Financing and Reinstitutes Share Buyback
Program on a Limited Basis
KENNETT SQUARE, Pa., Nov. 24 /PRNewswire/ -- ElderTrust (NYSE: ETT), an
equity healthcare REIT, today announced its new dividend policy. The policy,
which is subject to completion of the tentative agreement to extend the Bank
Credit Facility, will take effect with the dividend to be declared in January
2000 for the quarter ending December 31, 1999. This new policy reflects the
expected decrease in cash available for distribution resulting from the
increased interest costs and principal amortization on the Company's new debt
obligations. Under the new dividend policy, it is anticipated that the
dividend will be $1.20 per year, or $0.30 per quarter, per common share
outstanding.
The Company also announced that it has successfully completed new mortgage
financing of $30 million secured by four existing properties. One of the
loans is secured by two properties. The new mortgage debt, arranged by J.P.
Morgan, has a three-year term and a variable interest rate based on one-month
LIBOR. Approximately $28 million of the total debt has been used to reduce
the Company's outstanding Bank Credit Facility to a current balance of
approximately $40 million. The remaining funds were used to cover
transaction-related expenses and escrow requirements.
In addition, the Company announced it had reinstituted its share buyback
program on a limited basis. The Company reported that its Board of Trustees
had authorized the repurchase of up to $500,000 of the Company's common shares
from time to time in open market purchases or privately-negotiated
transactions.
D. Lee McCreary, Jr., President & Chief Executive Officer said, "Our
recent refinancing efforts have significantly increased our debt service
costs. As a result, we have adopted a policy that our dividend should not
exceed that amount the Company can distribute from current operating cash flow
after taking into account debt service and other cash obligations. Although
we can provide no assurance as to the permanence of this new dividend level,
this dividend was set by the Board of Trustees at an amount the Company
believes can be sustained over the longer-term without further downward
adjustment."
Mr. McCreary continued, "The successful completion of the $30 million of
additional refinancing is a key component of our plan to resolve the line of
credit issue. Our next step is to finalize the previously announced tentative
agreement with German American Capital Corp., an agreement that would extend
the line term to June 30, 2001. We hope to finalize that agreement within the
next few weeks, although we can give no assurance that the extension of the
Bank Credit Facility will be completed within such time frame or at all.
Implementation of the above-noted dividend policy is dependent upon successful
completion of this extension agreement."
Additional details on the refinancing are as follows:
J.P. Morgan Mortgages:
Loan amount: $30 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
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
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 extend or 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
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