Welltower To Buy Amica Retirement Home Chain From Ontario Teachers' For $4.6 Billion
Welltower To Buy Amica Retirement Home Chain From Ontario Teachers’ For $4.6 Billion
Welltower, a publicly traded real estate investment trust based in the United States, agreed to buy the Amica Senior Lifestyles chain from the Ontario Teachers’ Pension Plan as demand rises across Canada for retirement homes.
The Toledo, Ohio-based seniors living company, said it will pay the pension fund $4.6 billion, or approximately 3.2 billion United States dollars, for the chain’s 31 ultra-luxury Amica-branded retirement complexes in Toronto, Vancouver and Victoria, British Columbia. Welltower said the negotiated price represents “a substantial discount to estimated replacement cost” for the properties.
Welltower also said the deal includes seven properties under construction that are valued $1.25 billion as well as nine projects in the permit process valued at $150 million. As part of the pending deal, Welltower said it will also acquire a minority interest in Amica’s management team.
The transaction is just the latest of its kind for Welltower and occurs at a time when occupancy rates have risen in Canadian retirement home operations after dipping significantly during the recent pandemic. Demand for retirement homes in Canada is expected to further rise as the seniors population grows and new retirement home construction projects has slowed.
CBRE said in its latest report on valuations in that sector that institutional investors are starting to return while private buyers are expanding their portfolios.
The deal requires regulatory approvals and is expected to close in the fourth quarter. Welltower said that as part of the deal it will take over $560 million of Canada Mortgage and Housing Corp.-insured debt with an average interest rate of 3.6%.
“Construction starts remain at historic lows as a share existing inventory. While conditions appear ripe for new development in the sector, persistent high construction costs make the case for investment in existing projects that much stronger at this time,” said the real estate company in a report last month.
Bank of Montreal analysts initiated coverage on publicly-traded seniors housing companies this year in a report about baby boomers lifting the sector.
“With pandemic disruptions firmly in the rearview mirror and an aging population now upon us, we believe an attractive supply/demand picture will help drive a multi-year period of above-average organic growth,” said the analysts in a report. “The boomers are here—demographic tailwinds will support demand for year. As baby boomers age, growth in Canada’s seniors population is materially accelerating. Individuals aged 75+ are expected to reach circa 5.3 million people over the next 10 years.”
Shankh Mitra, Welltower’s CEO since 2020, said the Amica properties offer upside potential.
“Against a backdrop of rapidly growing demand and limited new supply, we expect the portfolio to drive outsized revenue and cash flow growth in the coming years,” he said in a statement.
“For the last 15 years, Ontario Teachers’ has acted as an extension of our internal team,” Amica’s Ezer said in a statement.
Welltower has been involved in other Canadian retirement home properties.
In October 2023, Welltower purchased 12 retirement homes in Quebec from Cogir for $885 million and soon after announced an agreement to divide a portfolio of seniors properties it held in partnership with Canadian retirement home firm Chartwell that left Welltower with 23 operations and Chartwell 16, along with a payment of $97.2 million to Chartwell.
The OTTP listed assets of $255.8 billion in its most recent tally made midway through 2024. Its real estate holdings, managed through its Cadillac Fairview subsidiary, were valued at just over 10% of the pension fund’s holdings, with 68 properties across Canada assessed at $28 billion. The OTTP’s largest recent transaction prior to the Amica sale took place last October when the pension fund purchased its partner TD’s 50% stake in the CF Carrefour Laval shopping centre in Laval, Quebec for $553 million.
Source CoStar. Click here for the full story.
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