Sienna Senior Living has announced a strategic joint venture with Sabra Health Care REIT to purchase a $243 million (C$307.5 million) portfolio of eleven private-pay retirement residences in Ontario and Saskatchewan. This will be Sienna’s first venture into the Saskatchewan retirement market, with four of the 11 properties located in the province. The other seven properties are in various cities in the Greater Toronto Area of Ontario, where Sienna already maintains properties. Extendicare Inc. is the seller, and the portfolio represents all of its currently owned private-pay retirement properties in Canada.
Both Sienna and Sabra will have 50% ownership of the high-quality, entirely private-pay portfolio consisting of 1,048 units, with 840 independent living units, 51 assisted living and 157 memory care. With an average age of six years, all properties were constructed or expanded in 2010 or later, and they had an average occupancy rate of 90% at time of sale. In fact, the average occupancy was 90% for the first nine months of 2021, excluding one new community that was still in lease up. Not too shabby during the pandemic. Additionally, excess land at four of the properties in Ontario represents future incremental development potential of 233 suites. In comparison, Welltower’s owned Canadian portfolio has a 78% occupancy rate and Ventas stands at 93.5%
The joint venture plans to allocate C$5 million for future capital improvements to be completed in the near term, split between the two partners. The unlevered return is expected to be about 6% in the first 12 months. Sienna will finance its portion of the price with a new term loan, draws from existing credit facilities and proceeds from the sale of two properties. Prior to this new JV, Sienna owned and operated 70 seniors housing communities in Canada, and 13 others that are managed for others, including eight that are owned by Sabra. So, this new JV will more than double their relationship.
TD Securities was the exclusive financial advisor to Sienna and Torys LLP was their legal advisor.
