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Co-founder of Retirement Residences REIT, now competitor, trying to buy firm.
Tara Perkins
A co-founder and former trustee of Retirement Residences Real Estate Investment Trust (TSX:RRR.UN) is trying to buy the company.
George Kuhl left as the REIT's vice-chairman in October to start a competitor, All Senior Care Living Centres Ltd.
On Wednesday, Kuhl said he and a private equity partner have made an informal cash takeover bid for Retirement REIT.
``We believe that a sale of the trust is in the best interests of all parties and would provide the best value to unitholders,'' Kuhl said in a statement, without specifying the terms of his offer.
``We urge the board of trustees to begin a competitive process to allow the entry of bidders who will deliver maximum value to unitholders.''
Mississauga, Ont.-based Retirement Residences REIT, which has 215 retirement homes and long-term-care facilities in Canada and the United States, disclosed Jan. 12 that it had received an unsolicited informal takeover proposal.
That prompted speculation that the bidder was Chartwell Seniors Housing REIT (TSX:CSH.UN).
Michael Fraser, chief financial officer of All Senior Care, said in an interview Wednesday that Kuhl's bid was made Jan. 23.
``We don't know how long this (other) player's been there. We don't want to be left out of the party,'' he said, adding that Kuhl has been putting together a bid for months.
The proposal is backed by an unnamed ``very large U.S.-based equity player,'' said Fraser, a former vice-president of Retirement Residences REIT.
``Both of us didn't like the direction of the company,'' is all he would say of his and Kuhl's resignations.
Executives of Retirement Residences REIT did not immediately return calls, but the trust issued a release late Wednesday acknowledging it had received ``expressions of interest'' from other parties, including Kuhl and his partner.
``(The REIT) has formed a special committee of its board of trustees to deal with the unsolicited approach that it has received,'' the trust said.
``The special committee has been actively engaged in considering this approach and other strategic alternatives available to Retirement REIT in the circumstances.''
All Seniors Care currently has two operating properties, but the private company controls more than five million units of Retirement Residences REIT, Kuhl said in a letter to the board.
The REIT has about 92.4 million units outstanding.
Kuhl wrote that he is concerned the board's failure to act promptly to create an open sale process will cause the unit price to fall, ``causing direct damage to unitholders.''
He added that All Seniors Care has spoken with other significant unitholders who ``are in total alignment'' with his views.
In its Jan. 12 disclosure of an informal bid, Retirement REIT gave no timetable for evaluating the proposal.
``Somebody has expressed an interest, and we have struck a special committee to look at their expression of interest,'' chief financial officer David Beirnes said at the time.
That disclosure pushed Retirement Residences REIT units up five per cent to $10.17. On Wednesday, the units closed at $9.81, down four cents on the day, representing a market value of about $911 million.
The units have a 52-week high and low of $10.84 and $7.13 and an indicated yield of 8.5 per cent.
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