Chartwell Seniors Housing REIT
TSX : CSH.UN

Chartwell Seniors Housing REIT

December 07, 2009 16:21 ET

Chartwell Seniors Housing REIT Announces Acquisition of Remaining 50% Interests in Canadian LTC and US Retirement Home Portfolios for Approx. C$196MM Together With $70MM Equity Raise

MISSISSAUGA, ONTARIO--(Marketwire - Dec. 7, 2009) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

Chartwell Seniors Housing Real Estate Investment Trust (TSX:CSH.UN) announced today that it agreed to acquire from ING Real Estate Investment Management Australia PTY Limited and its affiliates ("ING") the remaining 50% ownership interests in eight long term care properties situated in Ontario ("Regency Care portfolio") and six retirement home properties located in the United States ("Meridian portfolio") that it does not already own. Chartwell has managed these portfolios and owned the other 50% interests in these portfolios in joint venture relationships with ING since their original acquisition.

The Regency Care portfolio is comprised of eight long-term care facilities consisting of 1,385 Class A beds situated in southern Ontario originally acquired in a joint venture with ING in July 2007. Four of the properties have excess land available for future development. Chartwell has been managing the Regency Care portfolio since its acquisition. Occupancies have remained consistently above 97% with significant waiting lists. The purchase price for ING's 50% partnership interest in the Regency Care Portfolio is C$79.5 million (before closing costs), less outstanding mortgages in respect of the properties of approximately C$68.9 million in outstanding mortgages on the properties bearing interest at 7.41% and a weighted average term to maturity of 17.9 years, resulting in a cash payment by Chartwell to ING of approximately C$10.6 million.

The Meridian portfolio consists of six independent living and assisted living communities totalling 1,057 suites: five properties in the Denver, Colorado area and one in Temple, Texas. The Meridian portfolio was acquired in a joint venture with ING in August 2005. Chartwell's US joint venture property management company, Horizon Bay Chartwell, will continue managing these properties. Occupancies in the portfolio have remained strong, currently at approximately 92%. The purchase price for ING's 50% partnership interest in the Meridian Portfolio is US$110.5 million (before closing costs), less outstanding mortgages in respect of the properties of approximately US$75.2 million at an interest rate of 5.41% maturing in September 2015, resulting in a cash payment by Chartwell to ING of approximately US$35.3 million.

The closings of these transactions are subject to limited due diligence, regulatory and lender approvals and are expected to occur in the first quarter of 2010. The purchase will be effected through the transfer of ING's interests in the joint venture vehicles ultimately owning the properties. The closing costs related to these transactions are estimated at approximately $4.0 million.

"Having managed these properties for years, we are very familiar with them, and are delighted to be acquiring the full ownership in these high quality assets. Not only are we enhancing value through the combining of partial interests, but we also expect these acquisitions to be approximately 2% accretive to Chartwell's AFFO. This transaction, which stems from our existing strategic relationships, represents the types of opportunity that Chartwell seeks to pursue as it focuses on its core operating business, but remains open to very selective and accretive acquisition opportunities primarily from its strategic partners. This acquisition of the remaining 50% interest in 2,442 suites adds to the approximately 700 suites acquired from two other strategic partners in the fourth quarter of 2009," stated Brent Binions, President and Chief Executive Officer.

Chartwell has also entered into an agreement with a syndicate of underwriters led by RBC Capital Markets, under which the underwriters have agreed to buy on a bought deal basis by way of a short form prospectus, 11,300,000 Trust Units (the "Trust Units") at a price of $6.20 per Trust Unit for gross proceeds of $70,060,000 (the "Offering"). Chartwell has granted the underwriters an option, for a period of 30 days following the closing of the offering, to purchase up to an additional 1,695,000 Trust Units to cover over-allotments, if any. The net proceeds of the Offering will be used for the acquisition of partnership interests in the Regency Care and the Meridian portfolios from ING and for general corporate purposes. The Offering is expected to close on or about December 24, 2009 and is subject to Chartwell receiving all necessary regulatory approvals.

Chartwell will, within the next few days, file with the securities commissions and other similar regulatory authorities in each of the provinces of Canada, a preliminary short form prospectus relating to the issuance of the Units.

Chartwell intends to make monthly cash distributions to Unitholders of record on each record date, on or about the 15th day of the month following the record date. Chartwell's current monthly cash distribution is $0.045 per Unit. Provided that the closing takes place prior to December 31, 2009, the first cash distribution to which purchasers of the Units under this offering will be entitled to participate will be for the month of December, with a record date of December 31, 2009 and a payment date of January 15, 2010.

On a pro forma basis assuming completion of the Regency and Meridian transactions, the bought deal offering completed in October 2009, this bought deal offering and the previously announced realization on the three Melior properties in Quebec, and adjusting for the previously announced and completed Horizon Bay reorganization and acquisition of the Thunder Bay facility, as at September 30, 2009 Chartwell's pro forma debt to gross book value ratio before convertible debentures will be 56.3% and including convertible debentures will be 62.4%. Chartwell reported in its management, discussion and analysis for the period ending September 30, 2009 (in the chart entitled debt leverage on page 40 thereof) that as at September 30, 2009 its debt to gross book value before convertible debentures was 54.7% and including convertible debentures was 61.4%. This number was published in error and should have been stated as 55.7% (62.4% including convertible debentures), owing to accumulated depreciation and amortization being stated as $532,867 rather than $469,324.

This press release is not an offer to sell, or a solicitation of an offer to buy, any securities. The securities referred to in this press have not been and will not be registered under the U.S. Securities Act of 1933, as amended and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933.

Chartwell is a real estate investment trust focused on generating sustainable, stable and growing cash distributions from owning and managing a complete range of seniors housing communities. It is one of the largest participants in the North American seniors housing business. Chartwell's aim is to capitalize on the strong demographic trends present in its markets to maximize the value of its existing portfolio of seniors housing facilities, and prudently avail itself of opportunities to grow internally and through accretive acquisitions.

Chartwell's Distribution Reinvestment Plan (DRIP) allows Unitholders to have their monthly cash distributions used to purchase units without incurring commission or brokerage fees, and receive bonus units equal to 3% of their monthly cash distributions. More information can be obtained at www.chartwellreit.ca.

This press release contains forward-looking information that reflect the current expectations of management about the future results, performance, achievements, prospects or opportunities for Chartwell and the seniors housing industry. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "believe", "project", "should" or "continue" or the negative thereof or similar variations. Forward-looking statements are based upon a number of assumptions and are subject to a number of known and unknown risks and uncertainties, many of which are beyond Chartwell's control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements.

While we anticipate that subsequent events and developments may cause our views to change, we do not have an intention to update this forward-looking information, except as required by applicable securities laws. This forward-looking information represents our views as of the date of this press release and such information should not be relied upon as representing our views as of any date subsequent to the date of this document. We have attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimated expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These factors are not intended to represent a complete list of the factors that could affect us. See "Risks and Uncertainties" in our MD&A and risk factors highlighted in materials filed with the securities regulatory authorities in Canada from time to time, including but not limited to our most recent annual information form.

Contact Information

  • Chartwell Seniors Housing Real Estate Investment Trust
    Vlad Volodarski, Chief Financial Officer
    (905) 501-4709
    (905) 501-4710 (FAX)
    vvolodarski@chartwellreit.ca