Regal Lifestyle Communities Inc.

Regal Lifestyle Communities Inc.

September 12, 2013 15:27 ET

Regal Lifestyle Communities Inc. Agrees to Acquire $61.8 MM Portfolio and Announces Public Offering of $25 MM of Convertible Debentures and $12.5 MM Private Placement of Common Shares

TORONTO, ONTARIO--(Marketwired - Sept. 12, 2013) -


Regal Lifestyle Communities Inc. ("Regal" or the "Company") (TSX:RLC) announced today that it has agreed to acquire four retirement homes located in Southern Ontario (the "Portfolio") from Community Lifecare Inc. and certain of its affiliates for a purchase price of approximately $61.8 million.

"We are pleased to be able to announce a sizable acquisition less than a year after completing our initial public offering," said Mr. Simon Nyilassy, Regal's President and CEO. He added, "These four quality retirement homes are well established in strong markets in Port Perry, Ottawa, London and Chatham, Ontario, and will be immediately accretive to Regal's AFFO per share and will lower the Company's payout ratio."

The Portfolio comprises the following:

Property Location Number of Suites Year Completed / Last Renovated Occupancy as at August 31, 2013
Port Perry Villa, Port Perry ON 100 2009 100%
Lynwood Park Lodge, Ottawa ON 142 2003 97%
Grand Wood Park, London ON 131 2000 93%
Chatham Retirement Resort, Chatham ON 173 1988 97%
Portfolio Total 546 97%

The retirement homes in the Portfolio offer a range of standard and a la carte services designed to meet the needs of the residents they serve. This, together with competitive pricing in their markets, has resulted in consistently high levels of occupancy. Over 2012 and the six months ended June 30, 2013, the Portfolio achieved weighted average occupancy levels of 97% and 95%, respectively.

Regal intends to invest capital in the Portfolio to ensure that all four retirement homes continue to be well positioned with "current generation" buildings and amenities. These plans include annual maintenance capital of approximately $345,000 or 1.77% of estimated annual revenues for the Portfolio, as well as an additional capital investment of approximately $3.2 million in the first 15 months following closing of the acquisition. Mr. Nyilassy said, "We believe that these investments will enhance the reputation and appeal of the retirement homes in their respective markets and will pay off in terms of continued high occupancy and attractive rental rates."

Regal's initial investment, after taking into account acquisition costs and the additional capital investment of approximately $3.2 million, represents a capitalization rate on estimated 2013 net operating income of approximately 8.25%.

Related Financings and Assumption of Debt

Regal also announced today that it has reached an agreement with a syndicate of underwriters co-led by CIBC and TD Securities Inc., to issue to the public on a bought deal basis, subject to regulatory approval (the "Debenture Offering"), $25 million aggregate principal amount of 6.00% convertible unsecured subordinated debentures due December 31, 2018 (the "Debentures"). The Debentures will be convertible at the option of the holder, into common shares of the Company at a price of $9.75 per common share.

Concurrently with the closing of the Debenture Offering, Regal will issue approximately 1.76 million common shares on a private placement basis to a corporation controlled by Moray Tawse, a director and shareholder of Regal, at a price of $7.10 per common share for total proceeds of approximately $12.5 million (the "Concurrent Private Placement"). No commissions will be payable on the Concurrent Private Placement. Following closing of the Debenture Offering and the Concurrent Private Placement, Mr. Tawse will hold, directly or indirectly, approximately 12% of the issued and outstanding common shares of the Company.

The aggregate net proceeds from the Debenture Offering and the Concurrent Private Placement will be used by Regal to partially fund the acquisition of the Portfolio and for general corporate purposes. In addition, in connection with the acquisition of the Portfolio, Regal will arrange or assume approximately $34.5 million of first and second mortgages secured against the Portfolio having a weighted average annual interest rate of 3.97% and a weighted average term to maturity of 5.4 years.

The Debenture Offering and the Concurrent Private Placement are expected to close on or about October 2, 2013 and are subject to customary conditions, including regulatory approval. The Debenture Offering is conditional on the closing of the Concurrent Private Placement. The Debenture Offering and the Concurrent Private Placement are not conditional upon closing of the acquisition of the Portfolio. If the acquisition of the Portfolio does not close, the net proceeds of the Debenture Offering and the Concurrent Private Placement will be used to fund future acquisitions and for general corporate purposes.

The Company will, on September 18, 2013, file with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada, a preliminary short form prospectus relating to the issuance of the Debentures.

The Debentures have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered, sold or delivered, directly or indirectly, in the United States or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the United States Securities Act of 1933, as amended), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Debentures in the United States or to, or for the account or benefit of, U.S. Persons.

About Regal Lifestyle Communities Inc.

Regal Lifestyle Communities Inc. is a corporation incorporated under the laws of the Province of Ontario which currently owns a portfolio of ten income-producing retirement communities offering a continuum of care, from independent serviced living to a full range of assisted living programs. The ten "current generation" retirement communities comprise over 1,400 suites, primarily located in the Province of Ontario and including a property located in each of the Provinces of Saskatchewan and Newfoundland and Labrador.

Forward-Looking Information

Certain information in this press release may constitute forward-looking statements that involve a number of risks and uncertainties, including statements with respect to the Company and its operations, strategy, financial performance and financial condition, as well as with respect to the acquisition of the Portfolio and the effects of the acquisition of the Portfolio on the financial performance of the Company including that the acquisition of the Portfolio is anticipated to be accretive to the Company's AFFO and lower the Company's payout ratio. Forward-looking statements use the words "believe", "expect", "anticipate", "may", "should", "intend", "estimate" and other similar terms, which do not relate to historical matters. Such forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause the actual results to differ materially from those indicated. Such factors include, but are not limited to, general economic conditions, the failure to receive any required approvals or consents in connection with the acquisition of the Portfolio or the failure to satisfy or waive any other condition to the acquisition of the Portfolio, the failure of the Company to realize expected benefits from the acquisition of the Portfolio, the failure of the Company to satisfy the conditions of the Debenture Offering and the Concurrent Private Placement or otherwise close the Debenture Offering and the Concurrent Private Placement. Also see the risk factors identified in the public filings of the Company available on The Company believes that the expectations reflected in its forward-looking statements are based on reasonable assumptions; however, the Company can give no assurance that actual results will be consistent with these forward-looking statements. Except as required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Readers should be cautioned not to place undue reliance on the forward-looking statements.

"AFFO" and net operating income ("NOI") are not measures recognized under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and do not have any standardized meaning prescribed by IFRS. AFFO and NOI are supplemental measures of a company's performance and management believes that AFFO and NOI are useful in the assessment of the Company's operating performance for valuation purposes, and is also a relevant measure of the ability of the Company to earn and declare dividends to shareholders. AFFO and NOI, as computed by the Company, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to AFFO and NOI reported by such organizations. AFFO and NOI should not be construed as alternatives to comprehensive income or cash flow from operating activities determined in accordance with IFRS as indicators of Regal's performance. For additional information regarding these non-IFRS measures, including the definitions thereof, refer to the Company's most recent management's discussion and analysis of results of operations and financial condition, a copy of which is available at

For more information, visit the Company's issuer profile at

Contact Information

  • Regal Lifestyle Communities Inc.
    Simon Nyilassy
    President and Chief Executive Officer
    (416) 777-9677

    Regal Lifestyle Communities Inc.
    Harold Atterton
    Chief Financial Officer
    (416) 777-9677