UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 8-K
-------------------
Current Report
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 1, 1998
Commission File Number: 001-13807
ElderTrust
(Exact name of registrant as specified in its declaration of trust)
Maryland 23-2932973
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
101 East State Street, Suite 100, Kennett Square, Pennsylvania 19348
(Address of principal executive offices)
(zip code)
(610) 925-4200
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
On December 1, 1998, ElderTrust (the "Company"), through its 94% owned
subsidiary, ElderTrust Operating Limited Partnership (the "Operating
Partnership"), acquired the sole interest in one newly-formed limited liability
company (ET Sub-Heritage Andover, LLC) and 99% member interests in three
newly-formed limited liability companies (ET Sub-Vernon Court, LLC, ET Sub-Cabot
Park, LLC, and ET Sub-Cleveland Circle, LLC; the three properties hereafter
referred to as the "MHFA LLC's" and all four entities collectively the "LLC's").
The 1% managing member interests in the MHFA LLC's are owned by limited
liability companies of which Edward B. Romanov, Jr., the Company's President and
Chief Executive Officer, is the sole member. Each LLC except ET Sub-Cabot Park,
LLC was formed to acquire one assisted living facility. ET Sub-Cabot Park, LLC
was formed to acquire one independent living facility. All four facilities were
acquired from National Development of New England and are located in the Boston
MA, metropolitan area.
Consideration paid by the Operating Partnership and the LLC's totaled
approximately $64 million and consisted of $23 million in cash, $38 million in
assumed existing mortgage financing and $3 million borrowed from the sellers in
the form of a seven-month promissory note for these assets. All of the
properties are leased to Genesis Eldercare Partnership of New England, L.P., an
entity whose majority owner is Genesis Health Ventures, Inc.
Of the total consideration paid, the Operating Partnership paid approximately
$41 million consisting of $23 million in cash, $15 million in assumed existing
mortgage financing and the aforementioned $3 million borrowed from the sellers.
In addition, the Operating Partnership acquired for nominal consideration an
option to acquire Mr. Romanov's interest in ET Sub Vernon exercisable at any
time within the period ending November 30, 1999 for an exercise price of $4,000.
ET Sub-Cabot Park, LLC, and ET Sub-Cleveland Circle, LLC are unconsolidated
subsidiaries of the Operating Partnership. Accordingly, the Operating
Partnership's combined $9.8 million cash investment through the Operating
Partnership in these entities are accounted for using the equity method of
accounting. The Operating Partnership's remaining investment totaling $31
million, representing its investment in ET Sub-Heritage Andover, LLC and ET
Vernon Court, LLC, will be consolidated with the Company's other operations.
In connection with the transaction the Operating Partnership and Mr.
Romanov made capital contributions to the LLC's totaling $1.7 million and
$20,000, respectively, in exchange for their LLC interests. The Operating
Partnership also made $15.4 million of subordinated demand loans, bearing
interest at 12% per annum, to the LLC's. The contributions and loans are
summarized as follows.
Total
Entity Contribution Loan Investment
------ ------------ ---- ----------
ET Sub-Heritage
Andover, LLC $ 853,081 $ 7,677,729 $ 8,530,810
ET Sub-Vernon
Court, LLC 321,169 2,919,717 3,240,886
ET Sub-Cabot
Park, LLC 285,509 2,595,534 2,881,043
ET Sub-Cleveland
Circle, LLC 244,698 2,224,530 2,469,228
------------ ------------ ------------
Total $ 1,704,457 $ 15,417,510 $ 17,121,967
============ ============ ============
In addition, the Operating Partnership and Mr. Romanov contributed
capital of $900,000 and $47,000, respectively, and the Operating Partnership
made an additional loan of $3.8 million to, ET Capital Corporation. The
Operating Partnership and Mr. Romanov own 95% nonvoting and 5% voting interests,
respectively, in ET Capital Corp. ET Capital Corp. used these amounts to make
additional subordinated loans to the MHFA LLC's.
The funds used by the Operating Partnership to fund the purchase of its LLC
interests were borrowed by the Operating Partnership under its Bank Credit
Facility.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements.
Supplemental financial information for Genesis is included in
the Company's Form 10-Q for the quarter ended June 30, 1998,
in accordance with Staff Accounting Bulletin No. 71.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit No. Description of Exhibit
----------- ----------------------
2.1 Purchase and Sale Agreement dated as of June
12, 1998 by and among ElderTrust Operating
Limited Partnership, Genesis Health
Ventures, Inc., collectively "Purchasers"
and Cabot Park Limited Partnership,
Cleveland Circle Assisted Living Limited
Partnership, Heritage at the Falls Assisted
Living Limited Partnership, Vernon Court
Associated Limited Partnership, and North
Andover Assisted Living Limited Partnership,
collectively "Seller".
The Company agrees to furnish supplementally
to the Commission a copy of any omitted
schedule to the Purchase and Sale Agreement
upon request.
2.2 Amendment to the Purchase and Sale Agreement
dated July 22, 1998 by and among ElderTrust
Operating Limited Partnership, Genesis
Health Ventures, Inc. and Robert A. Fishman,
counsel for the Seller and the NDNE/ADS
Entities.
2.3 Second amendment to the Purchase and Sale
Agreement dated July 31, 1998 by and among
ElderTrust Operating Limited Partnership,
Genesis Health Ventures, Inc. and Robert A.
Fishman, counsel for the Seller and for the
NDNE/ADS Entities.
2.4 Amendment to the Purchase and Sale Agreement
dated November 30, 1998 by and among
ElderTrust Operating Limited Partnership,
Genesis Health Ventures, Inc. and Robert A.
Fishman, counsel for the Seller and for the
NDNE/ADS Entities.
2.5 Assignment and Assumption of the Purchase
and Sale Agreement by and between ElderTrust
Operating Limited Partnership and Genesis
Health Ventures, Inc. dated November 23,
1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELDERTRUST
(Registrant)
/s/ D. Lee McCreary, Jr.
- ---------------------------------------------------
D. Lee McCreary, Jr.
Senior Vice President and Chief Financial Officer
Date: December 16, 1998
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit Page No.
2.1 Purchase and Sale Agreement dated as of June 12,
1998 by and among ElderTrust Operating Limited
Partnership, Genesis Health Ventures, Inc.,
collectively "Purchasers" and Cabot Park Limited
Partnership, Cleveland Circle Assisted Living
Limited Partnership, Heritage at the Falls
Assisted Living Limited Partnership, Vernon
Court Associated Limited Partnership, and North
Andover Assisted Living Limited Partnership,
collectively "Seller".
2.2 Amendment to the Purchase and Sale Agreement
dated July 22, 1998 by and among ElderTrust
Operating Limited Partnership, Genesis Health
Ventures, Inc. and Robert A. Fishman, counsel
for the Seller and the NDNE/ADS Entities.
2.3 Second amendment to the Purchase and Sale
Agreement dated July 31, 1998 by and among
ElderTrust Operating Limited Partnership,
Genesis Health Ventures, Inc. and Robert A.
Fishman, counsel for the Seller and for the
NDNE/ADS Entities.
2.4 Amendment to the Purchase and Sale Agreement
dated November 30, 1998 by and among ElderTrust
Operating Limited Partnership, Genesis Health
Ventures, Inc. and Robert A. Fishman, counsel
for the Seller and for the NDNE/ADS Entities.
2.5 Assignment and Assumption of the Purchase and
Sale Agreement by and between ElderTrust
Operating Limited Partnership and Genesis Health
Ventures, Inc. dated November 23, 1998.