NOT FOR DISTRIBUTION TO THE U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
MARKHAM, Ontario, Feb. 28, 2022 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. ("Sienna" or the "Company") (TSX:SIA) provided an update on the Company's acquisition activity and announced today the launch of a $75 million equity offering, on a bought deal basis.
"Today's announcement further underscores our ability to execute on our growth strategy, as we continue to expand our portfolio in Ontario and Saskatchewan," said Nitin Jain, President and CEO of Sienna. "Supported by strong investor confidence, we aim to build a platform known for industry-leading resident and team member experience amid strengthening market fundamentals in Canadian seniors' living."
As previously announced on February 3, 2022, Sienna entered into an agreement to acquire a 50% ownership interest in eleven seniors' living assets comprised of 1,048 private-pay suites in Ontario and Saskatchewan (the "Retirement Portfolio") in partnership with Sabra Health Care REIT, Inc., who is acquiring the other 50% interest, with Sienna as the manager of the Retirement Portfolio.
Sienna announced today that it has entered into an agreement with a related party to purchase the Woods Park Care Centre ("Woods Park"), which is managed by the Company, for a purchase price of $26 million. Woods Park is located in Barrie, Ontario and offers a continuum of care, comprised of 55 private-pay independent living ("IL") suites and 123 government-funded Class A long-term care beds. The addition of Woods Park to Sienna's portfolio further expands the Company's footprint in Ontario and in markets within close proximity to the Greater Toronto Area.
In addition, Sienna is currently in advanced negotiations to acquire a 50% interest in a newly built, private-pay retirement residence in Saskatchewan (the "Saskatchewan Residence") that consists of 159 private-pay IL suites and 27 private-pay assisted living suites. If completed, the acquisition of the Saskatchewan Residence would be complementary to the Retirement Portfolio and further enhance the Company's scale and leadership in Saskatchewan. Sienna intends to act as manager of the property and earn a management fee.
The aggregate purchase price for the acquisition of the Retirement Portfolio, Woods Park, and, if a purchase agreement is executed with respect thereto, the Saskatchewan Residence (collectively, the "Acquisitions") is expected to be approximately $216 million at Sienna's proportionate ownership interest. The Company expects the Acquisitions to be accretive to Sienna's Operating Funds From Operations ("OFFO") and Adjusted Funds From Operations ("AFFO") per common share on a leverage neutral basis.
Completion of the Acquisitions is subject to customary closing conditions for transactions of this nature, including the receipt of all necessary regulatory approvals, including approvals from the Ontario Retirement Homes Regulatory Authority, Saskatchewan Health Authority and Ontario Ministry of Long-Term Care, and pursuant to the Competition Act (Canada). Sienna expects the completion of the acquisition of the Retirement Portfolio and, if a purchase agreement is executed with respect thereto, the Saskatchewan Residence to occur in late Q2 2022, and completion of the acquisition of Woods Park to occur in Q4 2022.
The Acquisitions and related transaction costs are being financed through a combination of: (i) net proceeds of the Offering (as defined below); (ii) an acquisition term loan for up to $150 million (the "Acquisition Term Loan") that the Company expects to refinance post-closing; (iii) the assumption of the approximately $11 million existing mortgage on Woods Park; (iv) proceeds from the sale of Rideau Retirement Residence and Camilla Care Community; and (v) draws on the Company's existing credit facilities.
Following closing of the Offering and the Acquisitions, and taking into account expected proceeds from the previously announced dispositions of Rideau Retirement Residence and Camilla Care Community, the Company's Debt to Gross Book Value ratio on a pro forma basis is expected to increase from 45% as at December 31, 2021 to approximately 46%.
DESCRIPTION OF THE PUBLIC OFFERING
Sienna has entered into an agreement with a syndicate of underwriters (the "Underwriters") led by TD Securities Inc., as sole bookrunner, under which the Underwriters have agreed to buy, on a bought deal basis, 5,000,000 common shares of the Company (the "Common Shares") at a price of $15.00 per Common Share (the "Offering Price") for gross proceeds of $75 million (the "Offering"). The Company has also granted the Underwriters an option (the "Over-Allotment Option") to purchase up to an additional 750,000 Common Shares at the Offering Price to cover the Underwriters' over-allocation position, if any, exercisable, in whole or in part, no later than 30 days after the closing of the Offering. If the Over-Allotment Option is exercised in full, the gross proceeds to the Company will be approximately $86 million.
The Company intends to use the net proceeds of the Offering and any Over-Allotment Option to partially fund the Acquisitions and pay the Company's expenses of the Acquisitions.
On or before March 4, 2022 the Company will file with the securities commissions or other similar regulatory authorities in each of the provinces and territories of Canada, a preliminary short form prospectus relating to the issuance of the Common Shares. The Offering is expected to close on or about March 23, 2022, subject to normal regulatory approvals, including approval of the Toronto Stock Exchange.
The securities offered pursuant to the Offering have not and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction.
ABOUT SIENNA SENIOR LIVING
Sienna Senior Living Inc. (TSX:SIA) offers a full range of seniors' living options, including independent living, assisted living, long-term care, and specialized programs and services. Sienna's approximately 12,000 employees are passionate about helping residents live fully every day. For more information, please visit www.siennaliving.ca.
This news release contains forward-looking information based on management's current expectations, estimates and projections about the future results, performance, achievements, prospects or opportunities for Sienna. Forward-looking statements include: the Company's intention to complete the Offering and the timing thereof; the Company's intention to execute a definitive agreement with respect to the Saskatchewan Residence and the terms, including the purchase price, and the expectation that Sienna will act as manager and earn fees with respect thereto; the successful closing of the Acquisitions and the timing thereof; the expected benefits of the Acquisitions to Sienna shareholders, including that the Acquisitions are anticipated to be accretive to the Company's OFFO and AFFO per common share; the Acquisition Term Loan; the expected assumption of the existing mortgage on Woods Park; the financing of the Acquisitions through draws on the Company's existing credit facilities; the closing of the sales of Rideau Retirement Residence and Camilla Care Community and the timing thereof; the expected Debt to Gross Book Value ratio following the closing of the Acquisitions and the anticipated closing date of the Offering. Forward-looking statements are based upon a number of assumptions and are subject to a number of known and unknown risks and uncertainties, many of which are beyond our control, and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements.
The forward-looking statements in this news release are based on information currently available and what management currently believes are reasonable assumptions, including the funding of long-term care residences by government entities. Material factors or assumptions that were applied to drawing a conclusion or making an estimate set out in forward-looking statements include: Sienna's expectation of entering into a definitive agreement for the Saskatchewan Residence; the views of management of Sienna regarding current and anticipated market conditions; expected government priorities and spending; absence of material changes to government and environmental regulations affecting Sienna's operations; management's views as to demographic trends; Sienna's ability to maintain good relationships with unionized employees; the ongoing impact and development of the COVID-19 pandemic and related vaccines on Sienna's operations, business and financial results; the successful completion of the Acquisitions and the financing thereof, including the Offering, and the financial and operating attributes of Sienna and the acquired properties as at the date hereof.
Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements. These forward-looking statements reflect current expectations of Sienna as at the date of this news release and speak only as at the date of this news release. Sienna does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.
There can be no assurance that forward-looking information will prove to be accurate, as actual results could differ materially from those expected, estimated or implied by such statements. Accordingly, readers should not place undue reliance on forward-looking information. Risk factors include, but are not limited to, failure by Sienna to complete the Acquisitions and the Offering on the terms and basis set out herein; failure to achieve the anticipated benefits of the Acquisitions; material adverse impacts and developments in the COVID-19 pandemic; and material shifts in demographic or economic trends. These factors are more fully described, in the "Risk Factors" section of Sienna's management's discussion and analysis for the year ended December 31, 2021 (the "MD&A"), and in materials filed with the securities regulatory authorities in Canada from time to time, including, but not limited to, the Company's annual information form and the preliminary short form prospectus for the Offering which are, or will be, as applicable, available under the Company's profile on SEDAR at www.sedar.com.
Certain terms used in this news release, such as OFFO per common share, AFFO per common share and Debt to Gross Book Value, are not measures defined under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. OFFO and AFFO should not be construed as alternatives to "net income" or "cash flow from operating activities" determined in accordance with IFRS as indicators of the Company's performance. The Company's method of calculating OFFO, AFFO and Debt to Gross Book Value may differ from other issuers' methods and accordingly, these measures may not be comparable to measures used by other issuers. The Company believes that OFFO is useful in the assessment of its operating performance, AFFO is a relevant measure of its ability to earn cash and pay dividends on its common shares and Debt to Gross Book Value is useful to monitor the Company's compliance with certain financial covenants. The definitions of these non-IFRS measures and an example of the reconciliation of OFFO and AFFO to the most directly comparable IFRS measure are provided on pages 3, 45 and 48 of the MD&A.
AVAILABILITY OF DOCUMENTS
Copies of Offering-related documents, such as the preliminary short form prospectus, underwriting agreement and marketing materials, will be available on SEDAR (www.sedar.com) as part of the public filings of Sienna.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Chief Financial Officer and Senior Vice President
Senior Vice President, Public Affairs and Marketing
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