The $790 million all-cash purchase of Calgary-based Parkbridge Lifestyle Communities by the British Columbia Investment Management Corporation (BCIMC) is not only one of the biggest acquisitions ever for BCIMC, it also completes a circle within B.C.’s public-sector pensions for which BCIMC invests.
Parkbridge is one of the largest owners and operators of land-lease retirement communities across Canada, primarily in Alberta and Ontario. In B.C., its portfolio includes a 230-unit seniors’ community in Langley.
In theory, a retired B.C. public servant could rent a home in a Parkbridge community while gaining some pension income from the BCIMC investment.
The 2010 purchase of Parkbridge began with an unsolicited bid, said Mary Garden, vice-president, real estate for Victoria-based BCIMC.
“We identified Parkbridge as an attractive investment and began pursuing an opportunity to acquire them,” she said.
According to Parkbridge’s filings for the fourth quarter of 2009, the company posted net income of $2.4 million on total revenues of $22.7 million. The company also reported that its seniors residences had a 99% occupancy rate.
Parkbridge’s retirement communities are composed primarily of detached modular homes, which residents lease.
“We felt this particular property type was very well suited to addressing the need of affordable seniors homes,” Garden said, noting that surveys shows most seniors prefer to live independently as long as possible.
Aggressive bid
BCIMC’s offer was aggressive. The $7.30-per-share bid represented a 30% increase to the Parkbridge share price when it was presented in October of 2010. The bid quickly won the unanimous approval of the Parkbridge board members and executive officers and, a month later, was endorsed by a majority of Parkbridge shareholders.
“We did not require any additional financing,” Garden said. She added that BCIMC will retain both the Parkbridge name and its complete management team.
Canaccord Genuity Corp. acted as Parkbridge’s financial adviser, while BCIMC relied on advice from CIBC World Markets.
BCIMC is an investment management corporation that manages a global investment portfolio valued at over $86 billion. BCIMC invests in all major asset classes, including infrastructure. BCIMC’s clients include public-sector pension plans, public trusts and insurance funds.
Since purchasing Parkbridge, BCIMC has expanded with two new sites for retirement communities, both on Vancouver Island. Noting that B.C. has one of the fastest-growing seniors populations in Canada – it is estimated that 24% of B.C. residents will be over the age of 65 within 20 years – Garden said BCIMC plans to “substantially expand” the Parkbridge model in the province.
“We will be looking to purchase existing properties and to buy land and develop property,” she said.
For Parkbridge, the investment represents a great western opportunity, said Bill Wells, senior vice-president and COO.
“BCIMC is a leading and stable Canadian institutional investor that is well positioned to support Parkbridge’s long-term growth and development plans,” Wells said. “British Columbia is an attractive market and provides opportunities for the expansion and development of land-lease communities.”
Speculation
In addition to the Parkbridge deal, BCIMC, in partnership with the Public Sector Pension Investment Board, bought Vancouver-based TimberWest Forest Corp., in a $1 billion cash deal last year.
The TimberWest purchase included 327,000 hectares of forestland on Vancouver Island, much of which TimberWest had been trying to sell as potential recreational use. Garden, however, quashed any speculation that Parkbridge, which also operates 28 recreation properties, would be soon accessing land acquired in the TimberWest deal.
“That is not currently part of our plan,” she said.
The recreation formula used by Parkbridge is modelled on their retirement communities: low-cost bunglow-style units that are rented out. Twenty of the properties, which include marinas, are located in Ontario and are run on a seasonal basis.
“This provides very affordable recreational opportunities,” Garden said. When asked about long-range plans for Parkbridge’s recreational development in B.C, Garden was coy.
“Keep tuned,” she said.
BCIMC has had trouble with recreational investments in the past, however.
As a secured creditor, it is owed about $20 million from its investment in Victoria-based Aviawest Resorts. Aviawest sought credit protection last November.
BCICM vice-president Dean Atkins, in an affidavit filed to the British Columbia Supreme Court last fall, said Aviawest should be pushed into receivership so creditors can liquidate assets and realize some return on their investments. “I am of the view that the petitioners [Aviawest] have significantly overstated their assets … there is no possibility for any value remaining for the benefit of unsecured creditors,” Atkins said. •
