Renaissance Lifestyle Communities, a seniors' housing real estate firm, is taking its chances in a rocky market and going public through a $250-million capital offering.
Founded just this year, Renaissance plans to use the money raised in the IPO to partly pay for a portfolio of 20 private-pay seniors' housing facilities in British Columbia, Alberta, Saskatchewan and Ontario. The company's strategy is straightforward: the population is aging and every year there are more seniors who are looking for places to live.
Within this market, three types of housing accommodations exist: independent serviced living, assisted living and long-term care. Renaissance will predominately operate communities in the first two divisions, which means it will provide a lower level of care because the occupants are more independent, and there isn't much provincial regulation. (Long-term care facilities have their budgets determined by the provincial governments, which pay their bills.)
Think of these private-pay communities as places where seniors want to live, rather than where they have to because they're sick or incapable of taking care of themselves.
Although the real estate sector has been one of the strongest performers in a shaky market, and the last big IPO came from Dundee International REIT , there's no guarantee this thing will sell. Few financings are being launched these days, and many firms have shelved their IPOs, including Hudson's Bay Co.
Still, Renaissance has opted to roll the dice and has filed its preliminary prospectus. On top of its real estate pitch, the company is expected to offer up a juicy yield in the area of 8 per cent, which could lure retail investors.
Because the company is so new, it needs experienced management to make it work. Renaissance's chief executive officer is Ian McAuley, the former president and CEO of Superior Lodging Corp., which has hotel investments worth $500-million. He also founded that firm.
A more familiar name to public investors is also on board. Stephen Suske, the former CEO of Chartwell Seniors Housing REIT, is Renaissance's chairman, a new role since stepping down from Chartwell in March, 2009, after its stock fell all the way down to $4 per share.
Mr. Suske is also connected to the acquired properties. From 2003 to 2007 he was the chairman of Spectrum, and Spectrum is selling four of its retirement communities to Renaissance.
In total, the 20 retirement communities to be purchased by Renaissance will cost $580-million. Some of that will come from the IPO funds, and the remaining portion will be paid for using $277-million in mortgages that have already been lined up, plus a $60-million revolving credit facility.
BMO Nesbitt Burns is leading the IPO.