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Chartwell selling Ontario long-term care portfolio for $446.5M

Chartwell Retirement Residences (CSH-UN-T) will divest 17 of its Ontario long-term care residence...

IMAGE: IMAAGE: Chartwell Retirement Residences Logo (Courtesy Chartwell Retirement Residences)Chartwell Retirement Residences (CSH-UN-T) will divest 17 of its Ontario long-term care residences, comprising 2,418 beds, to AgeCare Health Services Inc. and Axium Infrastructure Inc. for $446.5 million, the seniors housing and care provider announced Thursday morning.

Chartwell’s OLTC management platform, which serves these homes as well as six other homes comprising an additional 866 beds, will also be divested to AgeCare.

The two purchasers will acquire 16 operating residences and will also acquire, under a forward purchase agreement, a 17th OLTC home with 224 beds which is under development and slated for completion in 2023. AgeCare will assume management of 100 existing beds which are currently operating at that site.

Chartwell expects its net proceeds after expenses, debt repayments and other costs to be approximately $277 million.

“Substantial growth in our retirement portfolio over the years resulted in our Ontario long-term care operations comprising less than 10 per cent of our business,” said Chartwell chief executive officer Vlad Volodarski in the announcement.

“As we made the strategic decision to focus on our growing retirement business, it was critical for us to partner with strong and reputable organizations which hold similar values to ensure a smooth transition for our residents and employees.

“I am confident that AgeCare and Axium are exactly the right partners to continue the legacy of Chartwell’s Ontario long-term care operations.”

Axium and AgeCare

Axium Infrastructure is comprised of Axium Infrastructure Inc. and affiliated entities. The Montreal-based firm is an independent portfolio manager which invests in core infrastructure assets.

Axium had approximately $7.9 billion in assets under management as of Sept. 30, 2021, as well as approximately $1.7 billion in co-investments. Since 2010, the firm has invested in a diversified portfolio of over 200 North American infrastructure assets.

Founded by two physicians, AgeCare currently operates 22 seniors long-term care and supported-living communities in Alberta and British Columbia, offering care and services including long-term care, supportive living, mental health, hospice and adult day programs.

“I am glad that our long-term care team will be joining AgeCare, an organization dedicated to the senior care sector since 1998. We are committed to working closely with AgeCare, Axium, and all our stakeholders to ensure a smooth and successful transition,” Volodarski said in the release.

About the transaction

The transactions are subject to various government approvals which are expected to take up to 12 months.

The portfolio is concentrated in and around the Greater Toronto Area but also includes facilities such as: the 95-bed London Long Term Care; Aylmer Long Term Care with 64 beds; the 112-bed Elmira Long Term Care; 160-bed Royal Oak Long Term Care in Kingsville; and Brant Centre Long Term Care in Brantford.

The portfolio to be managed includes two residences in Hamilton (Regina Gardens and Queens Gardens) as well as four Toronto-area residences (Gibson, White Eagle, Cawthra Gardens and Villa Forum).

The purchase agreement is comprised of several elements.

AgeCare will assume management of the portfolio as well as an additional six homes with 866 beds currently managed by Chartwell, including two homes with 258 beds which Chartwell will continue to own.

The purchase price for the acquired business before costs and adjustments is $382 million. AgeCare and Axium will assume or repay the existing debt of $149.1 million, at an average interest rate of 5.63 per cent.

The forward purchase agreement involves the 224-bed Ballycliffe LTC in Ajax, Ont., east of Toronto. The purchasers will acquire this home upon completion of development, expected in Q3 2023, for $64.5 million.

Chartwell expects to continue to grow its retirement business through acquisitions and development activities.

About Chartwell

Chartwell is an unincorporated, open-ended real estate trust which indirectly owns and operates a complete range of seniors housing communities, from independent supportive living through assisted living to long-term care.

It is the largest operator in the Canadian seniors living sector with over 200 retirement communities in four provinces including properties under development.

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