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AMERICAN HEALTH PROPERTIES INC. COMMENTS ON FOUR WINDS KATONAH AND SAN DIEGO HOSPITAL

 AMERICAN HEALTH PROPERTIES INC. COMMENTS ON
 FOUR WINDS KATONAH AND SAN DIEGO HOSPITAL
 DENVER, Feb. 19 /PRNewswire/ -- American Health Properties Inc. (NYSE: AHE) stated that it is engaged in preliminary discussions with the owners of Four Winds Hospital in Katonah (Westchester County) New York ("Four Winds") regarding a potential deferral of a portion of the interest payments due in 1992 under its first mortgage loan agreement (the "loan") with Four Winds. The deferral would be in exchange for an increased participation in revenue growth at the hospital. The current outstanding balance on the loan is $61.2 million. AHE stated that Four Winds is current on all debt service and that the loan is not in default. The potential restructuring is related only to the Four Winds hospital in Katonah and will not affect AHE's investments in the Four Winds Hospitals in Saratoga Springs, New York, and Chicago.
 At the same time, AHE announced that Continental Medical Systems Inc. (NYSE: CNM) had exercised an option to purchase AHE's interest in a rehabilitation hospital in San Diego scheduled for completion in March 1992. AHE had previously agreed to purchase the hospital upon completion for $25.2 million. Pursuant to the exercise of the option, CNM will pay AHE $2.8 million as consideration for AHE's transfer of its rights under the purchase agreement to CNM. AHE expects that this transaction will close prior to March 31, 1992 and that it will result in extraordinary income to AHE of approximately $2.8 million or $.16 per share.
 The psychiatric hospital industry has been under pressure is recent times to restructure the delivery of care by reducing lengths of inpatient stays and encouraging outpatient and partial hospitalization programs. While Four Winds remains one of the preeminent psychiatric hospitals in the country, inpatient census levels have dropped substantially below levels of prior years. Four Winds has advised AHE that, in response to the changing environment, it has undertaken several initiatives which it believes will preserve its competitive position in the marketplace and maintain its economic viability. The hospital has also undertaken significant measures to reduce operating expenses and overhead, including substantial reductions in staff and the termination of its hospital advisory services agreement with Preferred Health Ltd. Four Winds now believes that it is well positioned for the future.
 "Following discussions with Four Winds last week, it became increasingly clear that the hospital needed certain financial relief in order to execute its strategic plan. While we remain confident about the long-term viability of the hospital, we must equally recognize that it will take time for that strategy to be fully implemented. It is important that Four Winds have the financial flexibility to achieve these goals," said Robert L.B. Diener, president of AHE.
 AHE expects a definitive agreement relating to the deferral to be completed in early March and will report the specific details of the agreement at that time.
 "The sale of our interest in the San Diego Rehabilitation Hospital will provide us extraordinary income that will enable AHE to defer interest due under the Four Winds loan in 1992 without an interruption of the earnings or dividend growth of the company," Diener said.
 AHE is a real estate investment trust (REIT) specializing in quality healthcare facilities. The company's investments include 24 acute care, rehabilitation and psychiatric hospital properties located in 14 states.
 -0- 2/19/92
 /CONTACT: Robert L.B. Diener, president and CEO of American Health Properties, 303-796-9793/
 (AHE CNM) CO: American Health Properties, Inc.; Continental Medical Systems, Inc. ST: Colorado, California IN: HEA SU:


JL-EH -- LA042 -- 0731 02/19/92 22:47 EST
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Publication:PR Newswire
Date:Feb 19, 1992
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