ElderTrust Announces Execution of Non-Binding Letter of Intent to Acquire Certain Leasehold and Purchase Option Rights for Seven Property Portfolio.

KENNETT SQUARE, Pa.--(BUSINESS WIRE)--July 22, 1998--ElderTrust (NYSE: ETT) announced Wednesday that it has entered into a non-binding letter of intent to acquire from Genesis Health Ventures Inc. (NYSE: GHV) the leasehold and purchase option rights to seven eldercare centers.

These centers are located in New Jersey and Maryland and are currently leased by Genesis from the current property owners. The purchase price to be paid to Genesis is $44 million, including $39 million in cash and a $5 million note.

Following the acquisition of the leasehold and purchase option rights, ElderTrust would sublease the properties to Genesis for a ten-year period, with an option for Genesis to renew for an additional ten years.

The leases between ElderTrust and the current property owners, which would be assigned to ElderTrust by Genesis, would be for ten years with lease payments of approximately $4.2 million per year.

Rental income due from Genesis under the subleases wouldbe approximately $10 million per year.

The purchase options, which can be exercised in 2008 at the expiration of the leases on the tenth anniversary of the transaction closing, would have an exercise price of approximately $72 million and would permit ElderTrust to acquire all of the partnership interests of the entities which currently own the properties.

The leases and purchase options constitute a capital lease under Financial Accounting Standard (FAS) 13 and total capitalized consideration to be paid or assumed by ElderTrust in the transaction would be approximately $108 million.

As part of the transaction, the current property owners would lend to ElderTrust approximately $16 million on a nonrecourse basis at an interest rate consistent with comparable mortgages on eldercare centers. This note would amortize over a ten-year period and be secured by the lease payments due ElderTrust from Genesis under the subleases.

"This transaction, if consummated, would be a significant acquisition for us," said Edward B. Romanov, Jr., President and CEO. "We believe that these properties are some of the best performing in the Genesis portfolio."

The transaction is expected to close by August 31, 1998. The transaction is subject to various conditions precedent, including, without limitation, approval of the Board of Directors of Genesis Health Ventures, lenders and the current property owners, negotiation and execution of definitive documentation and receipt of all necessary governmental and third party consents. There can be no assurance that the transaction will be consummated.

ElderTrust, with headquarters in Kennett Square owns and leases 28 buildings and has loaned $45 million in construction and term financing on 9 healthcare facilities.

The above statements include forward-looking statements. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance.

Numerous factors exist which, in some cases have affected, and in the future could cause results to differ materially from these expectations. These statements involve risks and uncertainties concerning the receipt of the requisite approvals to consummate the transaction.

Other risk factors affecting the Company are detailed from time to time in the Company's filings with the Securities and Exchange Commission.

   CONTACT:  ElderTrust
              D. Lee McCreary, Jr., senior VP & CFO, 610/925-4200