Keppel acquires 50% stake in US senior housing operator Watermark

KEPPEL Corporation is going into the senior housing sector, with its subsidiary Keppel Capital Senior Living acquiring a 50 per cent stake in United States senior housing operator Watermark Retirement Communities.

Keppel Capital Senior Living entered a conditional equity purchase agreement with Watermark on Thursday, Keppel announced after the market closed.

The agreement is for a 50 per cent stake in Watermark, as well as 50 per cent of the minority interests held by Watermark's owners in certain retirement communities managed by Watermark, for a purchase price of up to around US$77.3 million. It will be funded by Keppel's internal financial resources.

Watermark currently manages 52 senior housing communities in 21 states across the US, with a definitive pipeline that will bring the portfolio to more than 60 communities by 2020. It has about 9,400 beds under management at present. Post-acquisition, Watermark's existing senior management team will continue to be responsible for its day-to-day operations.

Noting rising demand for senior care services and retirement communities against a backdrop of fast-ageing populations, Keppel Corporation chief executive officer Loh Chin Hua said: "Watermark is an established developer and operator of senior living communities with a strong track record. This acquisition is a strategic move for Keppel to expand into this new growth sector, leveraging Watermark's deep expertise and agile business model. It will also expand the range of asset classes that Keppel Capital is involved in."

"As a solutions provider for sustainable urbanisation, Keppel is well placed to expand our capabilities into the senior living sector with a view to offering customised solutions to Singapore and other markets in Asia," he added.

Outside the US, Watermark has also formed Watermark Senior Living China, targeting the Greater China region, and has a joint venture with a Chinese state-owned financial and insurance group to manage its senior living projects across China.

Completion of the acquisition is expected to take place in three tranches, with the first expected to take place by April 2019. The transaction is not expected to have any material impact on the earnings per share and net tangible asset per share of Keppel Corporation for the financial year ending Dec 31, 2018.

Keppel Corporation shares closed down 13 Singapore cents or 1.9 per cent at S$6.77 on Thursday, before the announcement.