$578 million Amica deal highlights seniors-home sector consolidation

Transaction comes on heels of Regal Lifestyle Communities’ $374m sale in June

Amica Mature Lifestyles CEO Samir Manji is urging shareholders to approve the transaction that he believes offers “significant value”

Amica Mature Lifestyles’ pending $578 million sale  to BayBridge Seniors Housing Inc. highlights demand for seniors residential care homes and a trend toward industry consolidation.

The Ontario Teachers’ Pension Plan Board subsidiary’s friendly takeover bid was announced September 2 and values Vancouver-based Amica’s (TSX:ACC) shares at $18.75, or a 113% premium to its $8.79 close on September 1.

Amica chairman and CEO Samir Manji called the offer a “significant value” and urged shareholders to approve it. The transaction requires a two-thirds vote of Amica shareholders, and industry insiders expect it to be approved.

“It’s not often that you see a buyout that’s more than 110% of the previous day’s closing price,” said Azim Jamal, CEO of the privately held Vancouver-based Retirement Concepts, which operates 23 seniors homes, including assisted-living and independent-living facilities.

Other transactions earlier this year for seniors housing facilities underscore investor interest in the sector.

Toronto’s Regal Lifestyle Communities (TSX:RLC) agreed to sell 23 seniors residences, including some in B.C., for $374 million to both Ohio-based Health Care REIT (NYSE:HCN) and Ontario’s Revera on June 18. The deal valued Regal’s stock price at a 25.5% premium to its previous day’s closing price.

Other B.C. seniors residences were also in play in June when Sabra Health Care REIT Inc. (Nasdaq:SBRA) agreed to buy nine Canadian seniors housing facilities from an unnamed seller who was advised by Greystone Real Estate Advisors.

“The Amica deal reflects the appetite that investors have for income-producing real estate of every asset class, whether you look at apartment buildings, office buildings, industrial properties or hotels,” said Jamal, who, in 1997, took the reins of the family business that his father, Abdul Jamal, founded in 1988.

Amica’s 24 residences tend to be urban, private-pay, luxury seniors living facilities.

Retirement Concepts’ residences are a mix of government-subsidized seniors care facilities and private-pay.

Jamal added that BayBridge’s bid for Amica was likely as high as it was because seven of Amica’s properties are on B.C.’s West Coast.

“Real estate on the West Coast trades at a premium because it’s more rare. Finding a site to build on in Vancouver is harder than anywhere else in the country.”

Amica operates Amica at Arbutus Manor in Vancouver and has homes in West Vancouver, Burnaby and Port Coquitlam.

Retirement Concepts operates two Vancouver facilities: the Terraces on 7th and Renfrew Care Centre. •