Chartwell Seniors Housing REIT
TSX : CSH.UN

Chartwell Seniors Housing REIT

July 19, 2005 02:30 ET

Chartwell REIT to Acquire US$232 Million United States Retirement Home Portfolio-Establishes Joint Venture Relationships with ING Real Estate Australia and Horizon Bay Management LLC

MISSISSAUGA, ONTARIO--(CCNMatthews - July 19, 2005) - NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Conference call to be held on Tuesday, July 19, 2005 at 11:30 am (ET)

Chartwell Seniors Housing Real Estate Investment Trust (TSX:CSH.UN) ("Chartwell") announced today that, through a US subsidiary, it has formed a joint venture with ING Real Estate Australia Pty Limited ("ING Real Estate"), a subsidiary of ING Groep N.V. of the Netherlands, to acquire a portfolio of high quality retirement residences in Colorado and Texas, totaling 1,043 suites. The total purchase price of approximately US$232 million, exclusive of closing costs, will provide an estimated unleveraged capitalization rate of approximately 7.7%. Non-recourse mortgage financing of approximately US$160 million with an interest rate of approximately 5.25% will be placed on the portfolio's properties at closing, which is expected to occur in August, 2005. Chartwell and ING will each acquire a 50% interest in the portfolio.

Chartwell is also forming a joint venture seniors housing management entity with Horizon Bay Management LLC ("HBM"), a large and respected owner and operator of seniors residential facilities across the United States. A 50% interest in a new entity, Horizon Bay Chartwell LLC, will be purchased by Chartwell on closing for a consideration of US$ 3.1 million with the other 50% to be owned by HBM. This new entity will act as the property manager for the new US portfolio and other seniors' residences in the US that Chartwell may acquire in the future. Income from this entity will further augment the REIT's yield from this acquisition.

"With this transaction, we are extending our reach into the strong and growing US seniors housing market, aligning ourselves with one of that country's most respected and proven seniors housing management teams, and establishing a relationship with an equity partner with global access to deep and competitive sources of capital. Just as important, by acquiring established retirement homes, we continue to increase the portion of our income that is derived from stable and recurring rental income," commented Stephen Suske, Chartwell's Vice Chair and President. "In addition, our new US portfolio is 100% private pay with no reliance on state or federal funding, protecting Unitholders from the complicated reimbursement issues inherent in the government-funded sector of the US seniors housing business."

"We are very excited about the many benefits this transaction brings to our Unitholders and the significant opportunities we have with our new partners to generate further growth in the North American seniors housing business and drive returns on Unitholders equity," Mr. Suske added.

The Colorado portfolio is a leading participant in the State's seniors housing business and a popular choice for seniors seeking high quality facilities in this fast-growing region. The properties provide residents with a wide choice of room types, amenities and services. The facilities are modern and well-maintained with almost all suites having a one or two bedroom layout. Amenity areas are spacious, and the surrounding land is beautifully landscaped with walking paths, ponds, streams and putting greens. Occupancies have remained over 95% for the last five years, and 82% of the portfolio is comprised of higher margin independent living units, Chartwell's and Horizon Bay's core focus in the Canadian and US markets respectively. The acquisition also offers Chartwell the immediate opportunity to add approximately 270 new suites to the Colorado portfolio through future development and expansion initiatives.

The Texas campus of care consists of independent living units which are in the form of stand-alone townhouses and seniors apartments, as well as a separate care centre, located on 20 acres of land. It is well located close to all amenities and Texas' largest state hospital. Occupancy is currently 97%. There is also an immediate opportunity to add approximately 125 new suites on seven acres of zoned land to meet strong market demand for the residences and services offered by the campus.

"This portfolio, including vacant land and intellectual property, represents all the seniors housing assets of a well-respected owner/operator who is retiring from the business. The well located portfolio has grown its revenues by an average of 4.7% for each of the last five years, and we anticipate this solid track record to continue going forward under the Horizon Bay Chartwell LLC management," stated Robert Ezer, Chartwell's Chief Executive Officer.

ING Real Estate is part of the ING Groep, the largest real estate asset manager in the world and an international financial institution operating in 50 countries with more than 110,000 employees. Based on market capitalization, ING is one of the 20 largest financial institutions in the world. ING Real Estate has extensive worldwide activities in the management, development and financing of real estate and is one of the largest property investors in the world with total real estate assets under management of over US$50 billion. In Australia, ING Real Estate manages six property funds on behalf of over 54,000 investors with a book value exceeding $5 billion in industrial, office, retail and entertainment properties.

ING Real Estate Australia is seeking to deploy capital in the growing North American seniors' residential market and align itself with a proven operator/owner in the business. After significant due diligence, ING Real Estate has chosen Chartwell to be its joint venture partner in the U.S. and Canada.

"Our exclusive alliance with ING Real Estate provides Chartwell with a unique competitive advantage in future acquisitions due to our partner's deep and competitive source of capital. ING Real Estate will also provide Chartwell with a stream of asset management fee income to augment our REIT's yield," Mr. Suske commented.

Horizon Bay Management LLC, Chartwell's joint venture property management partner, is headquartered in Tampa, Florida, and currently has 6,627 seniors housing suites under management in 30 properties located in Florida, Georgia, Texas, Arizona, California, Illinois, Michigan and Rhode Island. Owned by senior management and various Whitehall Real Estate funds which are managed by Goldman, Sachs & Co., the joint venture also provides Chartwell with the opportunity to acquire additional facilities owned by Whitehall and managed by Horizon Bay.

Following the completion of the transaction, Chartwell's total portfolio, including managed properties and those under development, will increase to 16,166 suites in 143 facilities. Chartwell's new US properties will account for approximately 6% of the total portfolio, enhancing the REIT's geographic diversification. Approximately 69% of the total portfolio will be in the independent living/light care sector of the business.

"This acquisition will be immediately accretive to Chartwell's distributable income per unit. We expect Chartwell's full year 2005 distributable income per unit to rise approximately 15% over last year as this US acquisition, recently completed acquisitions and mezzanine financings, and future acquisitions and mezzanine financings, contribute to distributable income per unit growth through the balance of the year. In the short term, our second quarter results are likely to be in the same range as those of the first quarter of 2005 due to the timing difference between the completion of our March 30, 2005 equity offering and the use of the proceeds in the related acquisitions and mezzanine financings, as well as a lower contribution from fee income in the period," Mr. Suske concluded.

CONFERENCE CALL

Chartwell will hold a conference call at 11:30 am ET on Tuesday, July 19, 2005 to discuss the transaction. To participate in the conference call, please dial (416) 340-2216 or toll free at (866) 898-9626 at least ten minutes before the start of the call. The conference call can also be heard over the Internet at www.chartwellreit.ca. Click on "Investor Relations" and follow the link at the top of the page.

The telephone numbers to listen to the call after it is completed (Instant Replay) are (416) 695-5800 or (800) 408-3053. The Passcode for the Instant Replay is 3159258#. The Instant Replay will be available until midnight, July 25, 2005. The call will also be archived on the Chartwell REIT web site at www.chartwellreit.ca.

Additional information on Chartwell's US strategy, partners and markets can be obtained in the Corporate Information section of Chartwell's web site at www.chartwellreit.ca, under the title: US Acquisition.

Chartwell REIT is a growth-oriented investment trust owning and managing a complete spectrum of seniors housing properties, and is currently the second largest participant in the Canadian seniors housing business. Chartwell REIT will capitalize on the strong demographic trends present in its markets to grow internally and through accretive acquisitions. Chartwell REIT also has an exclusive option to purchase stabilized facilities from Spectrum Seniors Housing Development LP, a seniors housing development company.

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.

Actual direct or indirect ownership of seniors housing facilities is held, and the operation thereof, is conducted by Chartwell Master Care LP, an indirect subsidiary of the REIT. Reference herein to "Chartwell REIT" or the "REIT" means the REIT and its subsidiaries.

Certain statements contained in this news release may include forward-looking information with respect to Chartwell Seniors Housing Real Estate Investment Trust's operations and future financial results. Such statements are based on current expectations, are subject to a number of uncertainties and risks, and actual results may differ materially from those contained in such statements. These uncertainties and risks include, but are not limited to, availability of resources, competitive pressures, changes in market activity and regulatory requirements. Further information can be found in the disclosure documents filed by Chartwell Seniors Housing Real Estate Investment Trust with the securities regulatory authorities, available at www.sedar.com.


Contact Information

  • Chartwell Seniors Housing Real Estate Investment Trust
    Mr. Stephen Suske
    Vice Chair and President
    (905) 501-4701
    (905) 501-9107 (FAX)
    ssuske@chartwellreit.ca