Chartwell Retirement Residences announced the acquisition of three relatively new retirement communities in Ontario, Canada. Two were built in 2017 and one in 2019, and there are a total of 467 units. Occupancies have ranged from 80.4% to 89.5% as of March 1, 2022. They are located in Collingwood (181 units), Barrie (143 units) and Bowmanville (143 units). The seller was MTCO Holdings, and this is Chartwell’s second transaction with them, having purchased three communities from them in 2015.
The purchase price was C$228 million, or C$488,000 per unit (US$390,000 per unit). Inclusive in that price is C$3 million to be paid at the earlier of the completion of a 132-unit condominium development on the Balmoral Place community in Collingwood, or June 30, 2024. The owners of these units will have access to the amenities at the Balmoral retirement community. Currently, there are 95 condo residences on site who pay a monthly fee to have the same access. In addition, C$3 million of the purchase price has been allocated to 1.8 acres of excess land at the Bowmanville Creek community where 112 units can be built.
As part of the price Chartwell is assuming C$85.6 million of debt with a weighted average interest rate of 3.7% maturing in November 2023. Chartwell is expecting the first-year unlevered return to be 5.3%, increasing to 6.4% upon achieving 95% stabilized occupancy. Good to hear that “stabilized” for Chartwell is 95% and not something lower after the pandemic.
