Trends in Long-Term Care - U.S. Senate Special Committee on Aging

2972
In July, 1965 the Company's wholly owned subsidiary, Liberty House of New
York, Inc. ("Liberty") purchased from Anne Weiss the lease of the Towers
Nurs<strong>in</strong>g Home at 2 West 106th Street, New York, New York and sundry receivables
for $1,025,000. Anne Weiss, who at that time did bus<strong>in</strong>ess as an <strong>in</strong>dividual
under the name of Towers Nurs<strong>in</strong>g Home, is the wife of Bernard Bergman.
The lease expires <strong>in</strong> 1979, but the Company holds an option to extend
the lease to 1989. The rental payable under the lease is $10,833 per month,
plus real estate and water taxes. Liberty made payment of the purchase price
by pay<strong>in</strong>g $133,000 <strong>in</strong> cash, assum<strong>in</strong>g various liabilities of Towers Nurs<strong>in</strong>g Home
<strong>in</strong> the aggregate amount of $163,000 and by deliver<strong>in</strong>g its 4% promissory note
<strong>in</strong> the pr<strong>in</strong>cipal amount of $730,000. The pr<strong>in</strong>cipal and <strong>in</strong>terest of this note was
made payable <strong>in</strong> equal monthly <strong>in</strong>stallments of $5,000 from January 1, 1966
until January 1, 1967, thereafter, of $3,333 per month until July 1, 1972 and,
thereafter, of $5,000 per month until paid <strong>in</strong> full.
Liberty subleased the property back to Anne Weiss, who undertook to ma<strong>in</strong>ta<strong>in</strong>
the license required to operate the nurs<strong>in</strong>g home and to comply with all municipal
and governmental regulations required to conduct such home and agreed
to pay Liberty rental of $25,000 per month, subject to certa<strong>in</strong> conditions. Effective
July 1, 1967 this rental was <strong>in</strong>creased to $30,000 a month <strong>in</strong> consideration
of the addition of 50 beds to the nurs<strong>in</strong>g home. The cost of this addition was
approximately $122,000, of which approximately $91,000 was paid by Liberty
and $31,000 was paid by Anne Weiss.
Effective January 1, 1968, the above-described sublease was superseded by
a new sublease to a new partnership consist<strong>in</strong>g of Alex Forro (the manager of
the nurs<strong>in</strong>g home), Sissel P. Klurman (the wife of Samuel A. Klurman) and
Anne Weiss, do<strong>in</strong>g bus<strong>in</strong>ess under the name of Towers Nurs<strong>in</strong>g Home, at a rental
of $30,000 per month, subject to certa<strong>in</strong> conditions. As additional consideration
for Liberty's grant<strong>in</strong>g this sublease, the sublessee paid Liberty $100,000. This
sublease will expire <strong>in</strong> 21 years.
The lease price and the sublease rental were determ<strong>in</strong>ed by negotiation. In
the op<strong>in</strong>ion of management such price and the sublease arrangements are as
favorable to the Company as they would have been if the lease had been with
a non-affiliated person.