UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 16, 2005
(December 12, 2005)
AMERICAN RETIREMENT CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Tennessee 01-13031 62-1674303
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
111 Westwood Place, Suite 200
Brentwood, Tennessee 37027
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(Address of Principal Executive Offices) (Zip Code)
(615) 221-2250
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
On December 12, 2005, we entered into a transaction with ASF of Green
Hills, LLC, an affiliate of American Seniors Foundation, Inc., a non-profit
entity ("ASF"), pursuant to which we sold land to, and entered into an agreement
with, ASF to develop a rental assisted living residence in Nashville, Tennessee.
The community, The Cumberland at Green Hills, will have 93 assisted living
units, and 17 Alzheimer's units.
The total development cost of the project is estimated to be approximately
$32.3 million. We will develop the project pursuant to a development agreement
and will manage the project pursuant to a long-term management agreement.
In order to finance the development of the project, on December 12, 2005,
we obtained a $26.25 million construction loan from Bank of America, N.A. The
loan matures on December 12, 2010 and bears interest at a variable rate equal to
one month LIBOR plus 225 basis points. The loan is evidenced by a construction
loan agreement and promissory note. Under this loan, we are required to make
monthly payments of interest only through the scheduled maturity date.
As part of the transaction, we conveyed our interest in the land and our
architectural, engineering and development plans, approvals and entitlements to
ASF.
On December 12, 2005, we, in turn, provided a $32.3 million construction
loan to ASF which will include the land purchase and construction costs. The
loan is evidenced by a construction loan agreement and two promissory notes and
is secured by a first mortgage lien. The $26.25 million promissory note matures
on December 12, 2010 and bears interest at a variable rate equal to one month
LIBOR plus 250 basis points. The $6.05 million promissory note matures on
December 12, 2015 and bears interest at 10.5%. Under the promissory notes, ASF
is required to make monthly payments of interest only through the scheduled
maturity dates. The loan from Bank of America, N.A. is secured by a collateral
assignment of the ASF loan documents.
We expect that ASF will be able to put in place permanent tax-exempt
financing once the community is stabilized.
Risks Associated with Forward-Looking Statements
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This Current Report on Form 8-K contains certain forward-looking statements
within the meaning of the federal securities laws, which are intended to be
covered by the safe harbors created thereby. Those forward-looking statements
include all statements that are not historical statements of fact and those
regarding the intent, belief or expectations of us or our management, including,
but not limited to, all statements regarding our expectations concerning the
development of the project and the project's effect on our financial performance
and all statements regarding ASF's anticipated tax-exempt refinancing of our
loans. All forward-looking statements may be affected by certain risks and
uncertainties, including without limitation the following: (i) our ability to
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successfully complete the development and lease up of the project, (ii) the
ability of ASF to repay any amounts due under the loans and/or to obtain
replacement financing on satisfactory terms, (iii) the risk that we may
experience adverse changes in operating results and cash flow, (iv) the risks
associated with adverse market conditions of the senior housing industry and the
United States economy in general, (v) the risk associated with our debt and
lease obligations, and (vi) the risk factors described in our Annual Report on
Form 10-K/A for the year ended December 31, 2004 under the caption "Risk
Factors" and in our other filings with the SEC.
Should one or more of those risks materialize, actual results could differ
materially from those forecasted or expected. Although we believe that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of these assumptions could prove to be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included in this Form 8-K will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that our forecasts, expectations, objectives or plans will
be achieved. We undertake no obligation to publicly release any revisions to any
forward-looking statements contained herein to reflect events and circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.
Item 7.01. Regulation FD Disclosure
On December 16, 2005, we issued a press release describing the foregoing
transaction. A copy of the press release is furnished herewith as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
99.1 Press Release dated December 16, 2005
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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, hereunto duly authorized.
AMERICAN RETIREMENT CORPORATION
By: /s/ Bryan D. Richardson
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Bryan D. Richardson
Executive Vice President - Finance
and Chief Financial Officer
Date: December 16, 2005
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EXHIBIT INDEX
Exhibit
Number Description
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99.1 Press Release dated December 16, 2005
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