Chartwell Retirement Residences (CSH.UN.TO)

A sector he likes, but has not gone into. Everyone recognizes the demographic imperative. We have more people over 65 than under 14 for the first time in history. The evidence is that they can make money and these guys are one of the better operators. It is more like a hotel than an apartment building in that there is high staffing.

They have been a problem for so many years. They blew their brains out trying to get into the US. But now, since they sold those assets, they lowered their debt and own good assets now. Retirement residences are better than nursing homes.

He looks at financials and meets with management as well as visiting facilities. It is especially important with seniors’ housing because it is so operationally intensive. It is important that the properties are as fully leased as possible. You have to assess demand and supply of real estate. It has been very hard for them to push occupancy over 90% but they have finally done it. In the future the demand will increase. The payout ratio and the balance sheet are reasonable. They could buy back stock or make acquisitions. There is a speculation they could get a bid from a US buyer. He is comfortable buying it here.

Has often used this as a core holding. Their market focus is on seniors’ retirement homes. They are able to provide an excellent service and are excellent operators, but also combine that with real estate expertise and development. He wants to continue to be invested in this for a long time. 4.3% dividend yield.

(Top Pick Dec 9/14, Up 14.23%) She continues to like it. They were quick to re-deploy their capital from selling off US holdings. People are living longer, increasing demand.

A good, long term play. They have one of the largest public portfolios in Canada. A very attractive asset for perhaps a US company that is looking to expand, or perhaps a Canadian pension fund. If nothing happens, you collect a very good dividend. This is slow, steady growth, and should do quite well in this low interest rate environment.

Stock vs. Stock. EXE-T vs. CSH.UN-T. EXE-T is more into nursing homes. CSH.UN-T is more focused on retirement care, which is privately funded. He would not be adding to it right now. EXE-T looks like it is trading at a slight premium to its NAV. CSH.UN-T is affected by the 4.5% cap rate that another was taken out at. It would have room to move in the case of a takeover, but is trading rich relative to other REITs otherwise.

(A Top Pick Nov 11/14. Up 17.65%.) Likes the seniors housing community. Everyone is getting older. Statscan just came out that presently the 65+ population is about 16% of the Canadian population. They envision that in 15 years it is going to be 25%. Penetration rate is still very low in Canada at about 8%, so she can envision that the demand will grow. This company divested their US assets and are focused in Canada. Pays a nice distribution of around 4%.

Demographics are good behind the retirement business and these are good operators. They sold off their US portfolio and are expanding in Canada. He continues to like it. What is the next one? They kept on getting taken out.

(A Top Pick Oct 6/15. Up 4.93%.) He picked this because it fits in with a dominant theme that he likes, healthcare.

Really likes the seniors’ housing space in Canada. It is supported by great long-term demographics. The biggest issue in the last few years is that the sector has been oversupplied. This is probably the 1^st year where you are going to see demand exceed supply. This will show up in higher occupancy and rent in 2016. Thinks there is at least an upside of $1-$2 next year, in addition to the healthy dividend yield.

A very well-run company. It has the demographic tailwind behind it. The demand is going to be there. Have run their business very well. Recently made an interesting move by cashing in their chips in the US and taking advantage of the US$. Solid dividend that is well covered by their cash flow.

Trading at 28X earnings. This is in an interesting part of the business, retirement residences, where there is a lot of future demand. Looking at the balance sheet from his perspective, the BV has been steadily going down. Those kinds of companies make him queasy. He likes to see companies where the BV is rising. There are better yields out there than this.

The sector is incredibly hot. They benefited from recent M & A activity in the sector. You had to deal with this US exposure in the past, but now they have cleaned up the balance sheet by selling the US assets. It is expensive because there is this underlying tone that all seniors housing will be bought out. It is a tough business with a lot of regulations. It has outperformed because of the repositioning and restructuring. He preferred ACC-T, but he exited the space in favour of apartments.

The REITs surprised him in how well they held up. Investors are seeking out yield. It is an outperformer and satisfies one of his dominant themes of aging population. There is some growth possibilities in addition to the decent yield.