Chartwell Seniors Housing Real Estate Investment Trust (TSX: CSH.UN) announced that it has agreed to acquire from Le Groupe Melior and its joint venture partners three properties in lease-up and two parcels of vacant land in the Province of Quebec. Chartwell will acquire the properties for $87.6 million and the purchase price price will be satisfied by the assumption of existing mortgages of approximately $67.1 million and other liabilities of approximately $5.9 million. Subject to adjustments for working capital and closing costs, the remaining amounts will be applied to settle mezzanine loans of $13.8 million and other amounts due to Chartwell. The transactions are expected to close in the first portion of 2010 but will assume control immediately. Details on the properties and parcels are:
- Chartwell will acquire 100% of Les Appartements du Chateau de Bordeaux, a 149-suite independent living community well-located in an older section of Quebec City between two large community parks. Opened in 2006, this modern seniors apartment residence is situated next to the REIT’s Chateau Bordeaux facility and is currently 85% occupied. The lender has agreed to extend the term of the current $21.8 million loan to May 31, 2011. The loan will bear interest at prime plus 1.75%
- Chartwell will also acquire 100% of Les Seigneuries du Carrefour, a 275-suite independent living seniors apartment complex located in the heart of Sherbrooke in Quebec’s Eastern Townships. A brand-new facility, it is located close to shopping, medical clinics and other services, is surrounded by extensive grounds and walking trails, and is currently 59% occupied. Chartwell expects to convert the existing loan into a $26.4 million CMHC insured long term mortgage and a $1.9 million bridge loan with an interest rate of prime + 2.50% due July 2011.
- In addition, Chartwell will be acquiring 100% of Cite Jardin Phase IV, a 173-suite independent living community located in the Cite-Jardin seniors living complex in the City of Gatineau, Quebec close to Ottawa. The property is currently 62% occupied. Chartwell currently owns Phases I, II and IIIA in this complex. The lender has agreed to extend the term of the existing $17.0 million construction loan to October 31, 2012 at an interest rate of prime + 1.75%.
- Chartwell will also acquire a 1.73 acre parcel of land adjacent to its existing Residence Duplessis property in Cap de la Madeleine for future internal growth development as well as a parcel of land adjacent to its Residence Principale property for future use.
"This agreement is consistent with our strategy to make selective acquisitions in markets where we already own properties, thereby generating economies of scale and operating synergies," stated Brent Binions, President and CEO. "We are also pleased to be converting outstanding mezzanine loans into accretive operating properties with solid upside potential as our management teams enhance occupancies and bring rents up to market levels."