Mainstreet Health Investments Inc is looking to spend hundreds of millions of dollars to acquire senior housing and care properties in Canada and the United States after tapping the Canadian equity market, a top executive said.
The company, which owns a portfolio of U.S. seniors housing and care properties, on Thursday raised about US$95 million and listed on the Toronto Stock Exchange.
The move is an attempt to emulate the model deployed at Healthlease Properties, a real estate investment trust that was listed in Toronto in 2012 and sold to Health Care REIT – now called Welltower Inc (HCN.N) – for about $1 billion (US$762.20 million) in 2014.
Healthlease was launched by Carmel, Indiana-based Mainstreet Investments, the biggest U.S. developer of post-acute health care properties and the company behind Mainstreet Health.
Several top executives at Mainstreet Health have held roles at Healthlease and are part of the parent’s executive team.
“It’s the same team. It’s the same strategy. It’s the same opportunity. Here we go again,” said Scott White, president of Mainstreet Health, which is listing under the same ticker symbol that Healthlease held, (HLPu.TO).
Mainstreet Health has also attracted interest from several investors in Healthlease, White said on Thursday in an interview with Reuters.
The company owns a portfolio of 11 properties in the Chicago area. It acquired them with the help of U.S. hedge fund Magnetar Financial, which owns about half of Mainstreet Health.
The company is using proceeds from the offering to buy 13 additional U.S. properties in deals expected to close over the next few weeks.
“Historically… we’ve spent between US$200 million to US$400 million per year. The market, the opportunity is the same, if not better,” said White, adding that he expects to make acquisitions “at least at that pace.
“The market itself is very fragmented. There’s a lot of opportunity for consolidation.” he said.
Zeke Turner, who is well-known in the Canadian real estate industry, will be chairman of Mainstreet Health, while Adlai Chester will be CEO and Scott White president. Mainstreet Health is expected to be structured as a real estate operating company.
The lead underwriters for the offering were BMO Capital Markets, CIBC Capital Markets and National Bank Financial. Goodmans LLP and Blake, Cassels & Graydon are providing legal advice.
The stock was trading at US$10.16, above the offering price of US$10 at mid-morning on Thursday.
(Reporting by John Tilak; Editing by Dan Grebler)
Photo courtesy of Reuters/Gary Cameron