Ventas to Acquire High Quality Canadian Seniors Housing Portfolio in Partnership with Le Groupe Maurice
- Ventas Invests in
C$2.4 BillionPortfolio Through 85/15% Partnership with Le Groupe Maurice (“LGM”); LGM to Continue to Manage Portfolio
- 31 Class A Apartment-Like Seniors Housing Communities in Attractive Quebec Markets
- Well-Occupied, Stable Portfolio and Lease-Up Assets Expected to Deliver 4% NOI CAGR over Next 5 Years
- Additional Growth Expected from Four In-Progress Developments
- Exclusive Rights to Future Development Pipeline
- Establishes High Quality New Platform for Growth with LGM; Builds on Ventas’s Successful Strategy with Leading Operators
- Diversification of Ventas’s Portfolio, Business Model and Operator Base
- Transaction is Expected to be Accretive to Normalized FFO in 2020
Le Groupe Maurice is a market leader in the design, development and
management of apartment like, independent living seniors housing
“We are delighted to announce this accretive investment with
The President and Founder of Le Groupe Maurice,
Highlights of the Transaction
- High Quality Portfolio of 31 Communities and Four In-Progress
DevelopmentsManaged by LGM
Includes 28 stable, Class A, institutional quality apartment-like
communities containing 7,885 units in high density, core urban
markets with occupancy of nearly 97 percent, average units per
community of 282, average age of 8 years and revenue per occupied
unit of over
- Adds lease-up portfolio of three assets opening in 2019 containing 1,032 units. LGM’s ten most recently completed and stabilized developments averaged 25 percent occupancy in month one and leased to over 90 percent occupancy on average in just 12 months.
- These 31 communities are forecast to deliver four percent compound annual growth in net operating income (“NOI”) over the next five years.
The transaction also includes four in-progress developments
expected to contain about 1,400 units in attractive locations in
Montrealthat are projected to open in late 2020 and 2021.
- Includes 28 stable, Class A, institutional quality apartment-like communities containing 7,885 units in high density, core urban markets with occupancy of nearly 97 percent, average units per community of 282, average age of 8 years and revenue per occupied unit of over
- Participation in Attractive Quebec Senior Housing Market
- Canada’s senior housing market has delivered stable and growing cash flows, with limited new supply and attractive demand growth via an aging population.
Quebecoffers a large, thriving senior housing market with a penetration rate approximating 18 percent (two times the Canadian average).
- The Canadian 75 and over senior population is forecast to grow nearly 50 percent between 2018 and 2028.
- Attractive Valuation for Stable Cash Flows with Embedded Growth
C$2.4 billiontotal portfolio valuation (at 100 percent, including assumption of C$1.3 billionof debt) for 31 communities and four in-progress developments:
28 stable assets:
C$2.0 billionpurchase price, estimated 5.5 percent yield, acquired at or below replacement cost with a per unit cost of C$255 thousand.
Three lease-up assets:
C$0.3 billionpurchase price, estimated 5.5 percent stabilized yield with a per unit cost of C$290 thousand.
Four in-progress developments:
C$0.1 billioninvested to date; C$0.4 billionprojected total cost, estimated 6.5 percentstabilized yield with a per unit cost of C$280 thousand.
- Exclusive arrangement to fund and own all LGM development projects provides long-term sustainable growth.
- 28 stable assets:
Ventasinvestment equals 85 percent of C$2.4 billiontotal portfolio valuation and pro-rata share of partnership returns.
- Establishes New Platform for Growth with
Exclusive DevelopmentRights Ventasand LGM will enter into an 85/15 percent partnership agreement that will own the 35 assets and future developments. Ventashas secured exclusive rights to own and fund all LGM future developments under a pipeline agreement, which should provide long-term sustainable growth. New incremental developments are expected to average two to three new starts per year.
- Diversification of Portfolio, Business Model and Operator Base
- Ventas’s pro forma Canadian portfolio increases from 41 properties to 76 properties and the NOI contribution from Canadian assets is expected to grow to seven percent of Ventas’s NOI; NOI from the Company’s Canadian SHOP portfolio is expected to represent 21 percent of its total SHOP NOI.
- These new communities offer an outstanding lifestyle for seniors, with a la carte services, active adult options, and apartment-like units, resulting in longer length of stay. Demand for the top-tier amenities for an active senior lifestyle at the assets is strong.
With the transaction, LGM would become a top ten
Ventasoperator by NOI, and is expected to represent approximately 4 percent of Ventas’s pro forma NOI by year end 2019.
- Positive Financial Impact
NOI from the 31 communities in 2020 is expected to range from
C$123 to C$129 million(at 100 percent). The portfolio of 31 assets is expected to deliver 4 percent compound annual growth rate in NOI over the next five years.
The transaction is expected to be neutral to 2019 normalized Funds
from Operations (“FFO”) per share and accretive to 2020 normalized
FFO by approximately
- NOI from the 31 communities in 2020 is expected to range from
Approvals, Timing and Funding
The LGM transaction is expected to close in two phases. The first phase
- expected to close early in the third quarter of 2019 - includes a
As part of the LGM transaction, TD Securities is serving as exclusive
financial advisor, and
About Le Groupe Maurice
LGM is a market leader in design, development and management of
progressive residences for seniors in
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