TORONTO -- Retirement Residences Real Estate Investment Trust says it will acquire seniors' retirement properties in British Columbia, Manitoba and Ontario in a joint venture with the Canada Pension Plan Investment Board.
The investment trust bought Lifestyle Residences Real Estate Investment Trust from London Life Insurance Co., a unit of Great-West Lifeco Inc. of Winnipeg.
The trust also bought two Vancouver retirement homes, Crofton Manor and Hollyburn House, from Great-West. The two properties are operated by Lifestyle.
The price tag of the acquisitions, including the assumption of existing debt of about $159-million and working capital, is $410-million.
The acquisitions add 17 retirement homes, in British Columbia, Winnipeg and the Toronto area, with capacity for 2,207 suites, to Retirement Residences' operations. The deal is expected to close by the end of August.
The investment trust and the CPP Investment Board will each have a 50-per-cent interest in the Lifestyle acquisition, and Retirement Residences will manage the joint venture.
"Not only are these acquisitions immediately accretive for Retirement REIT, but the formation of a joint venture with an entity of the calibre of CPP Investment Board is indicative of our continued growth and maturity," Barry Reichmann, president of Retirement Residences, said in a release.
The deal marks Retirement Residences' entry into the retirement home market in British Columbia.
The move by the CPP Investment Board is in line with its plans to invest 5 per cent of its holdings in real estate. "These are quality properties that allow us to diversify and grow our real estate investment portfolio," said Mark Weisdorf, CPP Investment Board's spokesman. "As well, this joint venture initiative is consistent with our strategy to partner with experienced managers whose interests are aligned with ours."
Retirement Residences also announced yesterday that it has entered into a financing agreement with a group of investment banks, led by CIBC World Markets Inc. and Scotia Capital Inc., to issue $150-million of convertible debentures. It said money raised from the offering will be used to finance the Lifestyle purchases, make other acquisitions and reduce debt. The debentures will bear annual interest at 8.25 per cent and can be converted into Retirement Residences units at a conversion price of $12.35 each.
Retirement Residences investment fund is Canada's largest provider of housing for seniors, with 200 retirement and long-term care homes in the United States and Canada.
The Canada Pension Plan Investment Board is a federal Crown corporation that makes long-term investments with money not needed to pay current CPP pensions to retired Canadians.
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