Extendicare REIT

Extendicare REIT

June 19, 2008 09:10 ET

Extendicare REIT Completes $126.6 Million Offering of Trust Units and Convertible Unsecured Subordinated Debentures

MARKHAM, ONTARIO--(Marketwire - June 19, 2008) -


Extendicare Real Estate Investment Trust ("Extendicare REIT" or the "REIT") (TSX:EXE.UN) announces that it has closed its previously announced offering of $92.0 million principal amount of 7.25% convertible unsecured subordinated debentures (the "Debentures") and 3,565,000 trust units of the REIT (the "Trust Units") at a price of $9.70 per Trust Unit for aggregate gross proceeds of $34.6 million to a syndicate of underwriters led by CIBC World Markets Inc. and including TD Securities Inc., RBC Capital Markets, National Bank Financial Inc., BMO Capital Markets and Versant Partners Inc. The offering included $12.0 million of Debentures and 465,000 Trust Units issued pursuant to the exercise by the underwriters of their over-allotment option.

The REIT will use the net proceeds of the offering to fund internal growth projects under development and to repay amounts outstanding on Extendicare Health Services, Inc.'s revolving line of credit, which arose principally from acquisitions completed last fall. The REIT has a number of internal growth projects in various stages of development which are expected to add a total of 13 senior care facilities, representing 1,812 beds at a cost of approximately $250 million, anticipated to be completed during 2009 and 2010. Projects in the U.S. include four skilled nursing facilities and one assisted living facility with an anticipated cost of approximately $63 million. Projects in Canada include eight senior care facilities with an anticipated cost of approximately $187 million.

The Debentures and Trust Units offered have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons. This release does not constitute an offer for sale of Debentures or Trust Units in Canada or the United States.

Other Developments

In addition, the REIT announces that its U.S. subsidiary, Tendercare (Michigan) Inc., obtained mortgage financing in the amount of US$51 million from Sovereign Bank and a syndicate of other lenders on June 3, 2008. Proceeds from the financing were used to repay US$49.9 million of mortgage loans owing to LaSalle Bank. The financing is secured by first mortgages on 21 skilled nursing facilities and has a term of three years, with an initial variable interest rate based on the U.S. prime rate plus 0.50% or LIBOR plus 3.25%, and monthly payments based on a 25-year amortization period.

About Us

Extendicare REIT, through its wholly owned subsidiaries, is a major provider of long-term care and related services in North America. We operate 269 nursing and assisted living facilities in North America, with capacity for approximately 30,300 residents. As well, we offer medical specialty services such as subacute care and rehabilitative therapy services in the United States, and home health care services in Canada, and employ approximately 37,800 people in North America.

Forward-looking Statements

Information provided by Extendicare REIT from time to time, including this release, contains or may contain forward-looking statements concerning anticipated financial events, results, circumstances, economic performance or expectations with respect to the REIT and its subsidiaries, including its business operations, business strategy, and financial condition. Forward-looking statements can be identified because they generally contain the words "expect", "intend", "anticipate", "believe", "estimate", "plan" or "objective" or other similar expressions. Forward-looking statements reflect management's beliefs and assumptions and are based on information currently available, and the REIT assumes no obligation to update any forward-looking statement. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the REIT to differ materially from those expressed or implied in the statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on the REIT's forward-looking statements. Further information can be found in the disclosure documents filed by Extendicare REIT with the securities regulatory authorities, available at www.sedar.com and on the REIT's website at www.extendicare.com.

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