MONTREAL — Ventas (NYSE: VTR) has agreed to acquire an 85 percent stake in Le Groupe Maurice (LGM), a Montreal-based developer, owner and operator. Although the price was not disclosed, Ventas valued the company’s 31-property portfolio at $1.8 billion (CA$2.4 billion).
The seniors housing properties, including those currently under construction, are all Class A and located throughout Quebec. LGM will continue to manage the communities following the acquisition. Ventas will also have exclusive rights to fund and own all additional developments under a pipeline agreement with LGM.
The 28 properties currently open total 7,885 units (282 per community) with an average occupancy of 97 percent. The average community age is eight years, with revenue per occupied unit of more than CA$2,600 per month. Three more communities totaling 1,032 units are scheduled to open this year, with an additional four communities totaling 1,400 units due for completion by 2021.
Although Canada does not have quite so clear delineations along the continuum of care, LGM markets their properties as either apartments with services, condominiums with services or care units (which covers both memory care and skilled nursing services).
Founded in 1998, LGM has over 2,000 employees. LGM has a 9 percent market share in Quebec, according to Ventas. The investment will diversify and expand Ventas’ seniors housing operating portfolio. Ventas also noted that Quebec’s penetration rate of 18 percent is double the Canadian average, and the senior population in the country is forecast to grow nearly 50 percent between 2018 and 2028.
Including the projects currently in development, the acquisition will nearly double Ventas’ Canadian seniors housing portfolio from 41 properties to 76. The REIT expects its Canadian seniors housing portfolio to increase to 7 percent of its total NOI and 21 percent of its seniors housing NOI.
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 CA$987 million bridge loan from Ventas to LGM to enable it to buy out its current private equity partner. The second phase is the full investment and partnership closing, which is subject to customary closing conditions, including regulatory approvals, and is also expected to occur in the third quarter of 2019.
TD Securities is serving as exclusive financial advisor and Osler, Hoskin & Harcourt LLP is serving as legal advisor to Ventas. National Bank Financial Inc. is serving as exclusive financial advisor, and McCarthy Tetrault LLP is serving as strategic and legal advisor to Le Groupe Maurice.