Central Park Lodge Long Term Care Real Estate Investment Trust has 69 long-term care centres with almost 9,400 residents in BC, Alberta, Manitoba, Ontario and Quebec. Partly through its acquisition of a company called Subacute Care, it has another 20 facilities with more than 2,200 residents in the United States.
Designed to capitalize on tax breaks, REITs are created to own and, in some cases, operate income-producing real estate such as shopping malls, apartment buildings and nursing homes. Management of the facilities is often contracted to another company or subsidiary. CPL REIT buys properties operated as long-term care facilities, then leases these properties to wholly owned subsidiaries. REITs are exempted from Canadian income tax if they distribute all of their net income to unitholders annually. REITs are also not subject to corporate or capital gains taxes.
Revenues for CPL REIT have been on the upswing with an increase of nearly 20 per cent in the third quarter of 2000 compared to the same quarter in 1999. Revenues now stand at approximately $130 million. In 1998 CPLs profit was over $11 million and in 1999 it made a profit of $412 million.
The major unitholders of CPL REIT are Guardian Capital, Central Park Lodges and Paul Reichmann. Paul and Barry Reichmann are also shareholders in Central Park Lodges, which has a contract to manage many CPL REIT-owned facilities.
The board of CPL REIT reads like a Whos Who of the Canadian financial l0069te, starting with president and real estate giant Barry Reichmann. Trustees include: Paul Reichmann, chair and CEO of Reichmann International Development; Douglas Basset, vice-chair of CTV and a director of the CIBC, Mercedes Benz Canada Inc., and Rothmans Inc.; John Crow, former governor of the Bank of Canada; Darcy McKeough, former Ontario treasurer and also a director of Americare Corp.; and Calvin Stiller, chair and CEO of the Canadian Medical Discoveries Fund, professor of medicine at the University of Western Ontario, director of Drug Royalty Corp. and co-founder of Diversicare.
CPL facilities have come under fire for poor conditions. A March 1999 inspection of CPL-owned Versa Care in Ottawa found 22 violations of provincial standards including filthy wheelchairs, poorly kept patient records and improper drug storage. Some of the specific findings in the ministrys report included: a strong urine odour in parts of the home; dirty floors, brushes, toothbrushes and denture cups; as well as extremely dirty chairs, wheelchairs and walkers. Food preparation practices were said to compromise nutritive values, flavour, colour, texture, appearance and palatability.
The Reichmann brothers also own 53 per cent of Balanced Care, operating assisted living centres in the United States.