Chartwell Seniors Housing REIT

Chartwell Seniors Housing REIT

February 15, 2012 15:16 ET

Chartwell Announces $931 MM Acquisition, Public Offerings of $190 MM of Subscription Receipts and $100 MM of Convertible Debentures, and Redemption of its Series 2007-1 Convertible Debentures

- $931 Million Acquisition of a 8,187 Suite Canadian Seniors Housing Portfolio in a 50/50 Co-Ownership With Health Care REIT

- A Public Offering of $190 Million of Subscription Receipts and $100 Million of Convertible Debentures

- Redemption of Series 2007-1 Convertible Debentures

MISSISSAUGA, ONTARIO--(Marketwire - Feb. 15, 2012) -


Chartwell Seniors Housing Real Estate Investment Trust (TSX:CSH.UN) ("Chartwell") announced today that a subsidiary of Chartwell has entered into an agreement with a subsidiary of Health Care REIT, Inc. (NYSE:HCN) ("HCN") to purchase a portfolio of 8,187 suites in 42 retirement communities (the "Properties") in key Canadian growth markets for a net purchase price of approximately $931 million (see Acquisition Funding section). The Properties are located in Québec (45%), Ontario (45%), British Columbia (7%) and Alberta (3%), with virtually all of the Properties being in the independent supportive living or assisted living segments. Occupancy for the Properties as at December 31, 2011 was 88%.

The acquisition is being made pursuant to the terms of an agreement of purchase and sale (the "APS") entered into among Chartwell Master Care LP ("Chartwell LP"), HCN Canadian Properties, Inc. ("HCN Canada"), HCN and each of Maestro Retirement Residences Fund, L.P., Maestro Retirement Residences Fund II, L.P., Maestro Retirement Residences Fund III, L.P., Maestro Retirement Residences Fund IV, L.P. and Maestro Retirement Residences Fund V, L.P (collectively, the "Vendors"). Chartwell LP and HCN have completed their formal due diligence, and closing of the acquisition is anticipated on or about May 1, 2012 (the "Acquisition Closing"), subject to receipt of regulatory approvals.

Chartwell LP and HCN have agreed to form a co-ownership for the purpose of acquiring the Properties (the "Co-Ownership") and have agreed to enter into an agreement that will govern the Co-Ownership (the "Co-Ownership Agreement"). As co-owners, subsidiaries of Chartwell and HCN will each acquire a 50% undivided interest in 39 of the Properties with 7,662 suites (the "Co-Owned Properties"), which have a purchase price of approximately $850 million, and HCN will acquire a 100% interest in three of the Properties with 525 suites (the "HCN Properties"), which have a purchase price of approximately $81 million. Chartwell LP has agreed to manage all of the Properties, as well as any other retirement communities acquired in the future by the Co-Ownership pursuant to the terms of a management agreement or management agreements (the "Management Agreement").

The average purchase price per suite of the Co-Owned Properties is estimated to be approximately $111,000. Chartwell and HCN have received independent third party appraisals indicating that the appraised value of the Properties exceeds the purchase price of the Properties.

"With the completion of this important transaction, we are increasing our focus on the strong, stable and growing Canadian market," commented Brent Binions, Chartwell's President and CEO. "Most importantly, the acquisition is expected to be immediately accretive to our AFFO per unit, on a debt-neutral basis, and make a strong and growing contribution going forward."

Mr. Binions continued: "This acquisition is consistent with our previously stated strategies to: (a) focus on our core business by expanding our presence and leveraging our management infrastructure in existing Canadian markets and thereby increase the percentage of total AFFO derived from our Canadian property operations; and (b) enhance profitability by growing our presence in the higher-margin independent/assisted living segments. We have completed extensive due diligence on this acquisition and are confident that the quality of the Properties will enhance our already strong reputation for delivering the highest levels of care and service."

Chartwell will fund the acquisition of its 50% interest in the Co-Owned Properties as follows: (a) the assumption of its 50% share of approximately $471 million in existing and newly arranged mortgage debt that will be in-place on Acquisition Closing ("Mortgage Debt"); (b) cash derived in part from a portion of the proceeds of the public offering described below; and (c) a debt bridge facility (the "Bridge Facility").

Chartwell believes the transaction will bring a number of benefits to its unitholders, including:

(i) Focus on Core Markets: After the acquisition of the Co-Owned Properties, Chartwell will increase its percentage of total suites in Canada to 77%. Chartwell's Canadian percentage of total suites will further increase to approximately 86% should Chartwell's previously stated, and currently underway, U.S. disposition program for approximately 3,200 suites in 11 states (the "US Disposition Program") be completed. Management believes Chartwell's increased focus on Canadian markets will enhance the stability of its earnings, provide further economies of scale and operating synergies and reduce the operating and foreign exchange risks associated with its U.S. portfolio.
(ii) Immediate Accretion: The acquisition of Chartwell's interests in the Co-Owned Properties is estimated to be approximately 5%(1) accretive to Chartwell's Adjusted Funds From Operations ("AFFO") per unit. Such accretion assumes completion of the acquisition of the Co-Owned properties, the public offerings, the Bridge Facility financing and Mortgage Debt financings (all of which are described in this news release), and excludes potential management fee profits.
(iii) Upside Potential: The Properties' average occupancy as at December 31, 2011 was 88%. Chartwell believes there is an opportunity to leverage its management expertise and local market knowledge to increase occupancies at the Properties to a more typical stabilized occupancy rate of at least 90% over time.
(iv) Scale Benefits: Chartwell will enhance its economies of scale and branding value as a result of becoming the largest owner and operator of seniors housing facilities in Canada. While Chartwell will own/manage over 20%(2) more seniors housing suites in Canada than its next largest competitor, management believes that significant growth opportunities remain in Canada as the top three Canadian seniors housing owner/operators still comprise only approximately 15%(2) of the total Canadian seniors housing market, and only 8.6%(3) of the seniors' population aged 75 years and over in Canada reside in seniors' housing.
(v) Higher Margins: After the Acquisition Closing, Chartwell will increase the weighting of independent living and assisted living suites within its portfolio from approximately 82% of its total suites to approximately 87%, with these types of suites typically providing higher profit margins and valuations.
(vi) Experienced and Well Capitalized Co-owner: Having HCN as Chartwell's co-owner not only assists with the initial acquisition funding requirements, but also provides Chartwell, on an ongoing basis, with a highly experienced, well capitalized partner, that is fully committed to participating in the seniors housing industry. The Co-Ownership is expected to provide Chartwell with an opportunity to leverage its existing operating expertise, earn management fees and gain access to new growth opportunities in the future.
Note 1: Based on a full year of ownership of the Co-Owned Properties, a purchase price of $850 million, occupancy of approximately 89% (which is equal to the December 31, 2011 occupancy for the Co-Owned Properties of approximately 89%), and budgeted year one net operating income ("NOI") for the Co-Owned Properties of approximately $70 million, including use of an estimated $4.3 million of the NOI guarantee reserve as described in Acquisition Funding. The AFFO accretion is based upon the contractual terms for the Mortgage Debt (which is consistent with Chartwell's definition of AFFO), the terms for the public securities being offered as described in this news release (the Subscription Receipts and the Debentures) and the intended use of proceeds, the contractual terms of the Bridge Facility, and an annual maintenance capital expenditure deduction equal to 2% of revenue, but does not include the effect of the US Disposition Program
Note 2: Source: Chartwell's annual information form for the year ended December 31, 2010
Note 3: Source: CMHC Seniors Housing Report - Canada Highlights, 2011

"We are very pleased to be entering into the arrangement with Health Care REIT, a highly experienced and well capitalized participant fully committed to the North American seniors housing business" said Mr. Binions. "We are also pleased that all of the approximately 2,400 people employed at the Properties, and a number of Maestro head office professionals, will continue to be employed in connection with the Properties. Chartwell is already active in all of Maestro's major markets in Canada, which will ensure that this transition will be a smooth one. In particular, Chartwell's current Québec operations include approximately 5,000 seniors housing suites, nearly 1,700 employees and a significant regional corporate office, which will now expand its headcount. We are progressing well with our plans to integrate the operational, sales, marketing and other disciplines supporting the Properties into the Chartwell organization," Mr. Binions continued.

"Health Care REIT is pleased to make this investment in Canadian seniors housing. The Canadian economy is strong and this investment with Chartwell provides our company with the opportunity to work with the premier seniors housing operator in Canada," said George L. Chapman, Chairman, Chief Executive Officer and President of Health Care REIT. "Chartwell has a reputation for delivering excellent quality care and service to their residents and strong financial results to their investors. We have great confidence in their ability to successfully manage the communities. We look forward to a long-term investment in Canadian seniors housing and a lasting relationship with Chartwell."

"We are satisfied with this transaction, which further solidifies our residence network and guarantees its future. As experienced investors in the North American industry, Chartwell and Health Care REIT were quick to recognize the quality of our portfolio of residences and the expertise of our employees, who will continue to serve our residents to the highest standards of excellence," said Pierre Ferland, President of Maestro.


Chartwell has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets to issue to the public in Canada subject to regulatory approval, on a bought deal basis, 23,175,000 of subscription receipts (the "Subscription Receipts"), representing approximately $190 million of gross proceeds, with each subscription receipt representing the right to receive one trust unit of Chartwell (each, a "Unit"), at no additional cost and without further action, at a price of $8.20 per Subscription Receipt, and $100 million aggregate principal amount of 5.7% convertible unsecured subordinated debentures (the "Debentures"). The maturity date of the Debentures will be on March 31, 2018. The Debentures will be convertible at the option of the holder in certain circumstances into Units at a price of $11.00 per Unit.

Chartwell has granted an over-allotment option exercisable at any time up to 30 days after closing of the offering, to acquire up to 1,738,125 additional Subscription Receipts, representing 7.5% of the Subscription Receipts offering (or, in certain circumstances, Units) and up to $15 million of Debentures at the same offering price and the same offering terms, respectively.

Chartwell intends to use the entire proceeds of the Subscription Receipt offering (following the release of the escrowed funds by the Subscription Receipt agent), net of the underwriters' fee and expenses attributable thereto, to finance, in part, the purchase price for the Co-Owned Properties. The remainder of Chartwell's share of the purchase price for the Co-Owned Properties will be funded by the assumption by Chartwell of its equal share of the Assumed Mortgages and with the Bridge Facility.

Chartwell intends to use the proceeds of the Debenture offering, net of the underwriters' fee and offering expenses attributable thereto, as follows: (a) approximately $78 million to redeem all of Chartwell's issued and outstanding convertible unsecured subordinated debentures, which mature on May 1, 2012 (the "Series 2007-1 Debentures"), including any accrued and unpaid interest; (b) approximately $18 million to repay a portion of the outstanding balance under Chartwell's operating facility; and (c) the remainder, if any, for general trust purposes.

On the Acquisition Closing, (a) one Unit will be automatically issued in exchange for each Subscription Receipt (subject to customary anti-dilution protections), without payment of additional consideration or further action; (b) holders of Subscription Receipts shall be entitled to receive an amount per Subscription Receipt equal to the amount that would have been declared as distributions on the Units issuable on the exchange of such Subscription Receipts, if such Units had been issued on the closing of the Subscription Receipt offering in lieu of the Subscription Receipts (subject to certain restrictions); and (c) the net proceeds from the sale of the Subscription Receipts will be released from escrow to Chartwell.

If the Acquisition Closing does not occur prior to May 30, 2012, each Subscription Receipt will entitle the holder thereof to receive an amount equal to the full offering price per Subscription Receipt and the pro rata share of interest earned thereon, and the underwriters will not receive the remainder of their fee attributable to the issuance of the Subscription Receipts.

Chartwell will, by February 22, 2012, file with the securities regulatory authorities in each of the provinces of Canada a preliminary short form prospectus relating to the issuance of the Subscription Receipts, the Debentures and the Units issuable on exchange of the Subscription Receipts. The closing of the offering is expected to occur on or before March 9, 2012. The closing of the offering of Subscription Receipts and the offering of Debentures are not mutually conditional.

As of February 14, 2012, Chartwell had 145,020,915 units issued and outstanding.


Chartwell intends to immediately deliver a notice to Computershare Trust Company of Canada, as trustee for the Series 2007-1 Debentures, with respect to the redemption of all of the issued and outstanding Series 2007-1 Debentures, such notice to be delivered in accordance with the terms of the trust indenture dated November 26, 2006 between Chartwell and Computershare Trust Company of Canada governing the terms of the Series 2007-1 Debentures (the "2007 Indenture"). Chartwell intends to redeem in full the Series 2007-1 Debentures on or about March 19, 2012 with cash in accordance with the 2007 Indenture. Any accrued and unpaid interest will be paid in cash on the redemption date.


The following table provides a summary description of the Properties. Upon the Acquisition Closing, Chartwell will own and/or manage interests in 237 properties comprising approximately 33,000 suites located in Canada and the U.S.

To view the table associated with this press release, please visit the following link:


Health Care REIT, Inc. is an S&P 500, NYSE listed company, and is the third largest healthcare real estate investment trust in the United States. As of September 30, 2011, HCN's investments across the full spectrum of seniors housing and healthcare facilities included 898 properties in 45 states, totalling approximately U.S.$14 billion in assets. HCN has a U.S.$2 billion credit facility and intends to make this acquisition with cash and assumed debt. 75% of HCN's existing properties are located in the largest 31 metropolitan statistical areas or on the east and west coasts of the United States. HCN does not currently have any seniors housing facilities in Canada. HCN employs a business model rooted in long-term, high quality partnerships with over 100 seniors housing operator and health system relationships currently in place.

Under the terms of the Co-Ownership Agreement, Chartwell LP and HCN will share equally in the risks and rewards of the investment in the Co-Owned Properties, with Chartwell LP being the property manager of all of the Properties. The co-ownership structure is intended to allow HCN's investment to comply with the United States REIT Investment Diversification and Empowerment Act. The Co-Ownership Agreement provides for major decisions to be made by a board comprising equal members from Chartwell LP and HCN. Dispute resolution and liquidity mechanisms are included. The parties intend, depending on the circumstances, to target a debt/cost ratio of 50% to 55% on the Co-Owned Properties. The Co-Ownership has no fixed term and the parties intend to use the structure as a vehicle to invest jointly in additional Canadian properties.

Under the terms of the Co-Ownership Agreement, the parties are subject, with limited exceptions, to certain non-competition restrictions within specified geographic zones surrounding the Properties. Chartwell LP and HCN have agreed to offer to each other the opportunity to co-invest in additional Canadian seniors housing properties within these geographic zones. The restriction will not apply to facilities that were owned or managed by either party prior to the Acquisition Closing and there will be carve-outs for portfolio investments in which a small portion of a large portfolio would otherwise violate the non-compete. In addition, HCN has granted Chartwell LP the option to purchase a 50% interest in the three HCN Properties at the higher of fair market value and HCN's investment in the HCN Properties during the term of the Co-Ownership Agreement, provided that Chartwell LP continues to manage the Properties.


The Properties will be managed by Chartwell LP pursuant to the Management Agreement, which provides for: (a) a base fee equal to 5% of revenues from each Property to be paid to Chartwell LP; and (b) an incentive fee equal to 10% of outperformance, or a reduction of 10% for underperformance, relative to approved annual operating targets, to be paid to Chartwell LP provided that the total management fee paid to Chartwell LP does not exceed 6% of revenues from the Properties and is not less than 4% of revenues from the Properties. Subject to limited cure provisions, Chartwell LP may be terminated as the manager of the Properties if the aggregate annual earnings from the Properties are less than 85% of the pre-approved annual budget.

In respect of the three HCN Properties, the Management Agreement will have an initial term of three years, with one year renewal options at HCN's election. Both Chartwell LP and HCN have the right to terminate the Management Agreement on 180 days notice in respect of the three HCN Properties. In respect of the Co-Owned Properties, the Management Agreement will have an initial term of three years, and will automatically renew for three-year terms provided that the Co-Ownership Agreement remains in effect.


The purchase price for the Properties and Chartwell's expected sources and uses of funding are as follows:

Portfolio Purchase Price Allocation (in $ millions) 100% Chartwell's
50% Interest
Co-Owned Properties
Acquisition of Co-Owned Properties (1) $ 809 $ 405
NOI Guarantee Reserve (2) $ 6 $ 3
Escrow and/or Holdback Amounts (3) $ 35 $ 17
Total Co-Owned Properties (Pre-Transaction Costs) $ 850 $ 425
HCN Properties $ 81 -
Total (Pre-Transaction Costs) $ 931 $ 425
Estimated Capital Expenditures for the Properties over 5 years(4) $ 20 $ 9
Total Investment in Properties $ 951 $ 434
Chartwell's Economic Interest in the Acquisition (in $ millions)
Net Public Equity (Subscription Receipts) $ 182
Bridge Facility(5) $ 28
Sub-total: Equity Required $ 210
Mortgage Debt $ 235
Total Sources $ 445
Acquisition of Co-Owned Properties $ 405
NOI Guarantee Reserve $ 3
Escrow and/or Holdback Amounts $ 17
Estimated Capital Expenditures for the Properties over 5 years $ 9
Property Related Acquisition Costs(6) $ 11
Total Uses $ 445
(1) The closing date of the Leamington property may be later than the Acquisition Closing pending regulatory approval of the transfer of the long-term care license for this facility. $9.0 million of the purchase price will be placed in escrow in respect of this facility until consent to the change in ownership is obtained.
(2) Scarlett Heights and Royalcliffe London, two Co-Owned Properties that are currently in lease-up, are subject to a $6 million NOI Guarantee Reserve based on a stabilized occupancy of 95%. The NOI Guarantee Reserve has a term of one year from Acquisition Closing. $4.3 million of this reserve is assumed to be used in this year. Any unused amount of this reserve will be returned to the Co-Ownership.
(3) $35 million escrow supports representations and warranties under the APS, of which up to $3 million can be applied to pay for certain environmental remediation work.
(4) Chartwell and HCN have received independent third party building condition reports indicating that engineers have identified $25 million of recommended capital expenditures on the Properties over the next 5 years, the present value of which is approximately $20 million. Approximately $1MM of these estimated capital expenditures relate to the HCN Properties, with the remaining $18.9 million being attributable to the Co-Owned Properties. These amounts do not include elective and/or maintenance capital expenditures that may be spent on the Properties post-Acquisition Closing.
(5) Chartwell has arranged the Bridge Facility with RBC Capital Markets, which is a $210.4 million unsecured, floating rate credit facility maturing on December 13, 2012, prepayable at any time, and which may be drawn by Chartwell at the time of the Acquisition Closing, subject to customary conditions, up to June 29, 2012.
(6) Including land transfer tax, legal and third party consultants fees, mortgage assumption costs and mortgage prepayment penalties, Bridge Financing fees, and accounting and financial advisory costs.


Each of Chartwell and HCN intends to assume or to arrange, at the Acquisition Closing, its equal share of the approximately $471 million of Mortgage Debt on the Co-Owned Properties. The weighted average term to maturity of the Mortgage Debt is 3.4 years and the weighted average interest rate is 4.62%. Approximately $71 million of the Mortgage Debt, of which 79% is floating rate, does not contain a prepayment penalty. Chartwell and HCN intend to replace this floating rate debt, and other debt with near-term maturities, with long-term, fixed rate debt after the Acquisition Closing, without material impact on the weighted average interest rate. Assumption of existing/in-place Mortgage Debt is subject to obtaining any required lender consents.

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Chartwell's pro forma debt to gross book value ratio, including the acquisition of its interest in the Co-Owned Properties, is estimated to be approximately 56.5%, excluding the Debentures, and approximately 59.0% including the Debentures. Chartwell's debt level will thus be approximately equal to its reported leverage as at September 30, 2011 of 58.9% (after taking into consideration the acquisition by Chartwell from ING of its 50% interest in 15 properties in the United States on November 1, 2011, which were previously jointly owned with Chartwell). This does not reflect the impact of completing the U.S. Disposition Program which, if successfully completed, is expected to lower Chartwell's overall debt ratio to be within the range of its target debt ratio of 55%.

In addition to the $210.4 million Bridge Facility, Chartwell also currently has approximately $7 million of cash on hand and will have approximately $50 million of availability on its $85 million operating line, as management expects that approximately $18 million of the proceeds from the Debentures will be initially used to reduce the balance outstanding on Chartwell's credit facility. Management believes that this liquidity position and the amount of incurred debt are at levels that allow Chartwell to continue to comfortably meet current obligations and will continue to allow Chartwell to pursue future growth opportunities as they become available.


The APS provides that the assets are generally being sold on an as is, where is basis, at the purchaser's risk and with only the representations and warranties provided for in the agreement. The APS contains limited representations and warranties typical of those contained in acquisition agreements negotiated between sophisticated arm's length parties, certain of which are subject to customary knowledge and materiality qualifications including, with respect to the Vendors and the Properties, organization and status, power and authorization, absence of undisclosed liabilities, material agreements, environmental matters and employment matters. Such representations and warranties survive for a period of 12 months from the Acquisition Closing.

Under the terms of the APS, each Vendor will indemnify each of Chartwell and HCN Canada for certain environmental remediation costs and any breach of any representation or warranty made by such Vendor subject to specific limits. Other than for certain environmental remediation matters, no claim under such indemnity may be made until aggregate losses exceed $1 million, and the maximum aggregate claim is $35 million.

The Acquisition Closing is also subject to typical conditions of a transaction of this nature, including: (a) payment by each of Chartwell and HCN Canada of the purchase price for the Acquisition on the Acquisition Closing; (b) the representations and warranties of the Vendors being materially true and accurate as of the Acquisition Closing; (c) the representations and warranties of Chartwell and HCN Canada being true and correct in all respects as if made as of the Acquisition Closing; (d) Competition Act (Canada) clearance for the acquisition; (e) approval, if required, under the Investment Canada (Act) for the acquisition; (f) that no material adverse changes have occurred since February 15, 2012; and (vii) there being no order, claim or proceeding preventing the consummation of the acquisition. The parties have submitted an advance ruling certificate request and will submit a notification under the pre-merger notification provisions of the Competition Act (Canada) and an application for review under the Investment Canada (Act).


The APS, Management Agreement and Co-Ownership Agreement are material contracts of Chartwell and will be available on Chartwell's profile at, provided that the Co-Ownership Agreement and the Management Agreement will become available upon execution in connection with the Acquisition Closing. A purchaser of Subscription Receipts or Debentures should refer to the terms of these agreements for a complete description of their terms.


RBC Capital Markets is acting as exclusive financial advisor to Chartwell, sole bookrunner for the Subscription Receipt offering and the Debenture offering, and has committed to provide the Bridge Facility to Chartwell.


Certain terms used in this press release, such as AFFO and NOI, are not measures defined under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. AFFO and NOI should not be construed as an alternative to net earnings or cash flow from operating activities as determined by IFRS. AFFO and NOI, as presented, may not be comparable to similar measures presented by other issuers. Chartwell believes that NOI and AFFO are useful in the assessment of its operating performance and that this measure is also useful for valuation purposes and is a relevant and meaningful measure of its ability to earn and distribute cash to unitholders. Examples of reconciliations of AFFO to the most directly comparable measure calculated in accordance with IFRS are provided in the MD&A of Chartwell for the three and nine months ended September 30, 2011 and year ending December 31, 2010.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered 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 absent registration or pursuant to applicable exemption from registration.


Chartwell is a real estate investment trust that owns and operates a complete range of seniors housing communities from independent supportive living through assisted living to long term care. It is one of the largest participants in the seniors housing business in North America. 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 communities, and prudently grow both 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


This press release contains forward-looking information that reflects the current expectations of management and in certain instances, Health Care REIT, 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 the parties' control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements.

Chartwell's estimates and assumptions, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein as well as the following: (a) the expected completion of the Acquisition; (b) the expected return and rate of accretion to be realized by Chartwell as a result of the Acquisition; (c) the effect of the Acquisition on the financial performance of Chartwell including the degree to which the acquisition of the Co-Owned Properties will be accretive; (d) the expected cost and scope of certain capital expenditures and environmental remediation for the Co-Owned Properties; (e) the expected market share of seniors housing as a choice for seniors living accommodations will continue in accordance with current trends, taking into account factors like affordability and the relative attractiveness of other living arrangements; (f) Chartwell will continue to receive financing on more favourable terms than many small operators, giving it a competitive advantage with respect to access to capital and financing; (g) there will be no shift in demand for seniors housing, due to changes in demographics or other reasons, that might have a material impact on the sustained demand in all sectors of the seniors industry in Canada and the United States;
(h) Chartwell will be able to invest approximately 2% of gross revenues in capital expenditures and upgrades each year, because its operating performance will not be materially affected by occupancy levels dropping, labour and operating costs increasing, or other economic conditions resulting in increased costs of goods and services and management expenses; (i) Chartwell will maintain good relationships with its unionized employees because of its ability to meet salary requirements and employees' expectations; (j) the impact of North America's financial conditions on Chartwell's operations, including its financing capacity will remain consistent with Chartwell's current expectations; (k) there will be no material changes to government and environmental regulations affecting Chartwell's operations; (l) there will be no significant disruptions affecting Chartwell's operations, whether due to labour disruptions, health or disease-related disruptions, competition or changes in neighbourhood or location conditions; (m) the exchange rate between the Canadian dollar and the U.S. dollar will be approximately consistent with current levels; (n) Chartwell will be able to successfully complete planned and announced acquisitions and divestitures; (o) the performance of Chartwell's investments in the United States will proceed on a basis consistent with Chartwell's current expectations; (p) certain assumptions relating to the Debentures, including, credit risk in respect of the Debentures, prior ranking indebtedness and absence of covenant protection, structural subordination of Debentures, conversion of Debentures following certain transactions, value of conversion privilege of the Debentures, Debentures redemption prior to maturity, inability of Chartwell to purchase Debentures on a change of control and dilution; and (q) the expected benefits associated with the Co-Ownership.

While Chartwell anticipates that subsequent events and developments may cause its views to change Chartwell does not have an intention to update this forward-looking information, except as required by applicable securities laws. This forward-looking information represents Chartwell's views as of the date of this press release and such information should not be relied upon as representing its views as of any date subsequent to the date of this document. Chartwell has 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 Chartwell. See "Risks and Uncertainties" in Chartwell's 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 Chartwell's most recent annual information form.

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