Chartwell Retirement Residences (CSH.UN.TO)

One of their peers was taken out by a pension fund, CPP. This moved up their price. She could see more M&A activity.

Continues to like this. It is very operationally intensive and you need to see an increase in occupancy before it dramatically improves the bottom line. It is starting to get there. This is one of the first years where supply/demand are going to remain very well-balanced, and he thinks demand is going to exceed supply this year. He sees $1 or $2 of capital appreciation potential in addition to the dividend.

It had a dip down when it was removed from the REIT index. She likes the industry. They recently sold off their US portfolio. They paid off some debt. They have an attractive yield and she sees it slowly increasing over time. It held up well in this market. There is always in the background that they could be taken out by a US company. They are good operators.

(Top Pick Jul 15/14, Up 14.13%) They went too aggressively into the US. A lot of US health care REITs have shown an interest in Canada.

Removed from the REIT index last week. Retirement homes, nursing homes. They did very poorly in the US and got out. They now have the ability to spend and acquire. You are playing the proper demographic. He thinks it is on the cheaper side, as are many of these. You may see more M&A in this sector.

(A Top Pick of his in May.) This has huge demographic tailwinds behind it. Recently sold all their US properties, and reinvested some of those funds in Canada. Very good payout ratio. Yield of about 5.5%. A good, long term play for both income and capital appreciation.

Largest seniors housing operator in Canada. Attractive dividend yield of 4.8%. Have only recently started to increase their distributions, which is good in a rising rate environment. She likes the industry because it bodes well with aging demographics. The seniors’ population is going to double over the next 10-20 years at a much faster pace than the overall general population. Recently sold all of its US properties and have decided to refocus on Canada.

Recently another such company was bought out at a 13% premium. You could apply this premium to this company. He likes it because they divested their US business. They have a tremendous pipeline of projects. Investors get a very good yield and should be buying it. The company just announced a buyback program. It is at a discount to NAV. He prefers an operator that has real estate behind them, rather than a manufacturer of products that seniors’ use.

He really likes this at this price. The stock has pulled back. DRIP is a great way to continue to own it and increase your investment in it longer-term. The nice thing about the seniors sector is that it is going to be supported by favourable demographics. The number of people over 75 is going to double within the next 25 years. The caveat is that it is very operationally intensive and expenses have to be managed very carefully. We are finally seeing demand exceed supply.

Has been moved out of the REIT Index, which is part of the reason for its drop. Dividend of about 4.8%, which should grow about 5.4%. The demographics certainly make sense. He is relatively neutral on REITs, given that rising interest rates are not great for real estate trusts.

When comparing to other REITs, the dividend has to do with the payout ratio. It is very safe and well covered. It was removed from the REIT index because it is not technically a REIT and so index vehicles had to sell it. This made a fantastic opportunity to own this company.

(Kicked out of the REIT sector because it doesn’t qualify anymore. Looked on more as healthcare.) It is still interest sensitive. Chart shows a huge leg lower this year, along with the higher yield. The trend is still very much lower. You probably want to stay away from this one right now.

Likes the aging demographics and the Senior Housing industry. The seniors’ population is going to be growing much higher than the general population. This has been trending down because 1) the prospect of rising interest rates and 2) this is being removed from the REITs Index in mid June, and she expects there is going to be a lot of Index selling.

This really depends on your view on the whole retirement residence area. Demographics are good because of our aging population. One of the difficulties is getting staff. Labour costs are something you have to watch quite closely. Has come off in the last few months, mostly because of worries about what is going to happen with US interest rate increases. If you don’t think rates are going to go up much in the next year, this is a pretty good buying opportunity.

The retirement residence business in general is a growth area because of the aging population. They tend to be good businesses over the long-term. Seeing that the stock has been under pressure, legging in is probably the right thing to do. His preference would be Extendicare (EXE-T).