Chartwell Seniors Housing Real Estate Investment Trust - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- real estate investment trust granted relief to use a test based on net operating income rather than income from continuing operations for the purposes of the requirement to file business acquisition reports in respect of acquisitions.

Rules Cited

National Instrument 51-102 - Continuous Disclosure Obligations.

April 21, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, SASKATCHEWAN, MANITOBA,

ONTARIO, QUEBEC, NEW BRUNSWICK,

NOVA SCOTIA, AND NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CHARTWELL SENIORS HOUSING

REAL ESTATE INVESTMENT TRUST

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia and Newfoundland and Labrador (collectively, the Jurisdictions) has received an application from Chartwell Seniors Housing Real Estate Investment Trust (the REIT) for a decision pursuant to the securities legislation in the Jurisdictions (the Legislation) granting relief to use the NOI test (as defined below) rather than the income test for the REIT's continuous disclosure obligations in respect of acquisitions completed in 2006 and all future seniors housing and related business acquisitions completed in any following years, subject to the REIT continuing to be solely engaged in the business of seniors housing and related businesses (the Requested Relief).

Under the Mutual Reliance Review System for Exemptive Relief Applications:

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions or in Québec Commission Notice 14-101 have the same meaning in this decision unless they are defined in this decision.

Representations

This decision is based on the following facts represented by the REIT:

1. The REIT is an unincorporated, open-ended investment trust established under the laws of the Province of Ontario by a declaration of trust with its head office located in Mississauga, Ontario.

2. The REIT is a reporting issuer under the securities legislation of each of the provinces of Canada.

3. The units of the REIT are listed and posted for trading on the Toronto Stock Exchange under the trading symbol CSH.UN.

4. The REIT completed its initial public offering (the IPO) on November 14, 2003 pursuant to its final long form prospectus dated October 31, 2003.

5. The proceeds of the IPO were used by the REIT to indirectly acquire a portfolio of seniors housing facilities pursuant to multiple acquisition agreements with different vendors. Since the IPO the REIT has completed acquisitions of a number of seniors housing facilities and expects to complete additional acquisitions this year and in subsequent years.

6. The tests for whether or not an acquisition is significant under National Instrument 51-102 -- Continuous Disclosure Obligations are substantially identical to the significance tests under the previous National Instrument 44-101 -- Short Form Prospectus Distributions.

7. The use of a test (the NOI test) based on net operating income (calculated as revenue less operating expenses and less allowance for bad debt, but before deducting principal and interest payments, depreciation allowances and costs of capital expenditures), rather than using income from continuing operations, provides a more realistic indication of the significance of the acquisitions and its results are generally consistent with the asset test and investment test. The NOI test also closely reflects the intent of the income test.

8. The approach of using the NOI test rather than the income test, which underlies the Requested Relief, has been approved by the Canadian Securities Administrators in connection with the REIT's 2005 BAR obligations and in connection with two prospectuses.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted.