American Health Properties, Inc. reports dividend; fourth quarter and annual results; and plan to file targeted stock distribution.

DENVER--(BUSINESS WIRE)--Jan. 31, 1995--American Health Properties, Inc. (NYSE:AHE) Tuesday declared a dividend of $.575 per share of the company's common stock, payable Feb. 24 to shareholders of record Feb. 10, 1995.

The amount of this dividend is the same as for the third quarter of 1994 and represents a payout ratio of approximately 86% of funds from operations. This represents a total dividend for 1994 of $2.30 per share.

The company reported net income of $8,770,000 ($.42 per share) on gross revenues of $22,047,000 for the fourth quarter ended Dec. 31, 1994 as compared to net income of $8,332,000 ($.40 per share) on gross revenues of $20,813,000 for the comparable period in 1993. Funds from operations were $14,012,000 ($.67 per share) for the fourth quarter of 1994 as compared to $13,092,000 ($.63 per share) for the fourth quarter of 1993.

For the year ended Dec. 31, 1994, the company reported net income of $9,693,000 ($.46 per share) on gross revenues of $87,027,000. Funds from operations were $55,905,000 ($2.68 per share). For the year ended Dec. 31, 1993, the company reported net income and funds from operations of $50,987,000 ($2.71 per share) and $49,527,000 ($2.63 per share) respectively on revenues of $81,523,000.

Net income in 1994 reflects a write-down of real estate investments of $30,000,000 as a result of accelerating negative trends in the psychiatric industry. Net income for 1993 reflects the sale of an acute care hospital in Aurora, Colorado for $42 million, resulting in a gain of $19,742,000.

Expenses for 1994 include $1,450,000 related to the distribution of Psychiatric Group Preferred Stock discussed below, and were reduced by $750,000 as a result of the reversal of a corporate relocation accrual recorded in the fourth quarter of 1993 after the company decided to maintain its headquarters in Denver. Expenses for 1993 include settlement costs for a class action lawsuit of $2,234,000.

Funds from operations for 1994 and 1993 of $2.68 and $2.63 per share, respectively, exclude the write-down of real estate investments, asset sale gains and the aforementioned non- recurring expenses.

The company also stated that it believes that investor uncertainty as to the expected cash flows from its investments in psychiatric hospitals has depressed the market value of the company's common stock. In order to address this uncertainty, the company announced that it intends to file an information statement with the Securities and Exchange Commission relating to a new series of preferred stock to be designated "Psychiatric Group Preferred Stock" to be distributed to all common shareholders. The company expects the distribution to be made in the second quarter of 1995, depending on the timing of SEC review. As a result of this distribution, existing shareholders will then hold two separate securities. The company intends to apply to list the new targeted stock on the New York Stock Exchange.

In making the distribution, the company seeks to separate the economic attributes of its psychiatric hospital investments from its existing core investments in acute care and rehabilitation hospitals and medical office buildings. The result will be two distinct portfolios with two distinct classes of publicly-traded shares intended to represent each portfolio. The company anticipates that the distribution will enhance shareholder value by allowing the market to separately value the common stock and the psychiatric group preferred stock and by permitting investors to make separate investment decisions with respect to each group. In the future, in addition to consolidated financial statements, the company will publish separate financial statements for the core group and the psychiatric group, respectively. Dividends and other payouts or distributions with respect to the common stock and psychiatric group preferred stock are expected to be a function of the individual performance of the core group and the psychiatric group, respectively.

Joseph P. Sullivan, president and chief executive officer of the company, stated that, "As a result of this distribution of targeted stock, the company expects that future investments and financings will be made through the core group which currently consists of 17 facilities in 10 states totaling approximately $550 million in portfolio investments. The core group includes 13 acute care hospitals, three physical rehabilitation hospitals and one medical office building and has what we believe to be the strongest cash flow coverage of rent obligations in the health care REIT industry."

AHE is a real estate investment trust (REIT) specializing in quality health care facilities. The company's investments include twenty-four acute care, rehabilitation and psychiatric hospital properties located in thirteen states.

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       AMERICAN HEALTH PROPERTIES, INC. AND SUBSIDIARIES
                     FINANCIAL HIGHLIGHTS
            (In thousands except per share amounts)
                          (Unaudited)

                    Three Months Ended    Twelve Months Ended
                          Dec. 31,             Dec. 31,
                     1994       1993       1994       1993

Revenues
Rental income      $17,293    $16,283    $67,732    $64,555
Mortgage interest
 income              1,453      1,427      5,787      5,687
Additional rental
 and interest
 income              2,341      2,259      9,506      9,334
Other interest
 income                960        844      4,002      1,947
                    ------     ------     ------     ------
                    22,047     20,813     87,027     81,523

Expenses
Depreciation
 and amortization    3,448      3,567     14,103     14,087
Interest
 expense             6,873      6,630     26,101     27,269
General and
 administrative      1,447      2,124      5,376      6,437
Targeted stock
 issuance costs      1,450          -      1,450          -
Litigation costs         -         44          -      2,234
Write-down of
 real estate
 investments             -          -     30,000          -
                     ------     ------    ------     ------
                     13,218     12,365    77,030     50,027

Minority
 Interest                59        116        304        251
Income before
 gain on sale
 of property          8,770      8,332      9,693     31,245
Gain on sale
 of property              -          -          -     19,742

Net Income           $8,770     $8,332     $9,693    $50,987

Funds From
 Operations         $14,012    $13,092    $55,905    $49,527

Per Share Amounts
Net Income            $0.42      $0.40      $0.46      $2.71
Funds From
 Operations           $0.67      $0.63      $2.68      $2.63
Dividends            $0.575      $0.57      $2.30      $2.25

Average Shares
 Outstanding         20,879     20,764     20,856     18,843

                                              As of Dec. 31,
Balance Sheet Information                    1994       1993

Total Assets                             $ 579,503  $ 614,453
Total Debt                               $ 245,663  $ 245,423
Total Shareholders' Equity               $ 307,501  $ 343,303

CONTACT: American Health Properties

Joseph P. Sullivan or Victor C. Streufert, 303/796-9793