Chartwell and Health Care REIT acquire Maestro Portfolio

Date Closed: 5/01/2012

Value: C$931 million

Chartwell Seniors Housing REIT (Chartwell) and Health Care REIT, Inc. (HCN) completed the acquisition from the five Maestro Retirement Residences Funds of a portfolio of 8,187 suites in 42 retirement communities in key Canadian growth markets for a net purchase price of approximately $931 million. The retirement communities are located in Québec, Ontario, Alberta and British Columbia. The transaction, which closed on May 1, 2012, received the approvals of both the Competition Bureau and Investment Canada.

Chartwell and HCN formed a co-ownership, each acquiring a 50 per cent undivided interest in 39 of the retirement communities with 7,662 suites, for a net purchase price of approximately $850 million. HCN also acquired a 100 per cent interest in three of the retirement communities with 525 suites, for a net purchase price of approximately $81 million.

In connection with the acquisition, on March 9, 2012, Chartwell completed public offerings of 24,913,125 subscription receipts at a price of $8.20 per subscription receipt for gross proceeds of $204,287,625 and $135 million aggregate principal amount of 5.7 per cent convertible unsecured subordinated debentures, including the exercise, in full, of the over-allotment options in respect of the subscription receipts and the debentures. The offerings were completed on a bought deal basis through a syndicate of investment dealers led by RBC Capital Markets and including CIBC World Markets Inc., BMO Nesbit Burns Inc., Scotia Capital Inc., National Bank Financial Inc., TD Securities Inc., Canaccord Genuity Corp. and GMP Securities L.P.

The net proceeds from the debenture offering were used to redeem the previous series of outstanding convertible debentures and reduce the amounts outstanding on Chartwell’s credit facility. The net proceeds from the subscription receipt offering were used to pay a portion of the purchase price for the acquisition of Chartwell’s interest in the retirement communities, as well as Chartwell’s expenses with respect to the acquisition.

The underwriters were led by BLG with a team that included Paul Mingay, Dyana McLellan, Habeeb Syed and Jeffrey Spiegel (corporate) and Craig Webster (tax).