Health Care REIT, Inc. (NYSE:HCN) announced on Feb. 15 that it will use a RIDEA structure to partner with Chartwell Seniors Housing REIT (TSX:CSH.UN) to own and operate a 42-property portfolio of high-quality seniors housing and care communities located in “attractive” Canadian markets.
The portfolio, which has approximately 8,200 units, is primarily made up of independent living residences, many of which offer a continuum of care that includes assisted living and memory care.
“The investment with Chartwell provides Health Care REIT with the opportunity to partner with a premier seniors housing operator in Canada and to invest in high-quality real estate in attractive markets,” said George L. Chapman, chairman, CEO, and president of Health Care REIT in a statement. “This investment takes our successful U.S. investment strategy and applies it to the Canadian market. HCN will gain a meaningful foothold in Canada’s largest and most attractive markets with a portfolio of high-quality private pay facilities, and benefit from a relationship with Canada’s leading seniors housing operator.”
The two REITs are acquiring the portfolio from Maestro Retirement Residences Fund L.P., Maestro Retirement Residences Fund II, L.P., Maestro Retirement Residences Fund III, L.P., Maestro Retirement Residences Fund IV, L.P., and Maestro Retirement Residences Fund V, L.P., for $952.2 million (U.S. dollars).
Thirty-nine of the 42 properties will be owned 50% each by Health Care REIT and Chartwell Seniors Housing, with HCN owning the remaining three properties outright.
Following closing, the Canadian REIT will manage the communities under an incentive-based management contract.
Health Care REIT’s investment has a projected first year net operating income yield of approximately 7.4% after management feeds, and is expected to be immediately accretive to FFO with future NOI growth of 4%-5% in the long-term.
The portfolio’s occupancy is currently at 88%, but has potential to increase through enhanced operational strategies and efficiencies, and newly developed communities that are still in lease up.
Written by Alyssa Gerace