Chartwell Retirement Residences (CSH.UN.TO)

This is a better story now. It had invested in retirement homes in Canada and in the US. In the US, you had to deal with regulations, unionization and the rates of return that were poor. They have since exited the US and are trying to make a cleaner story, which is all Canadian. Also, it is a demographic story. Not that expensive. Not a bad Buy now.

This is going to be dropped from the REIT Index in June. For some time it technically hasn’t been a REIT, but a SIFT. It has to do with how much of its income does not come directly from property, but from other services. He still loves the name; however there may be some selling coming up in June. He would Buy on any weakness.

The largest Senior Housing operator in Canada. She likes this industry. The demographics obviously work in their favour. The seniors’ population of 75+ is going to double over the next 20-30 years. The penetration of seniors in housing communities is actually very low, and that can increase over time as people live longer and require more care. Just announced they were selling their US operations, so they will be getting a big whack of cash of about $420 million. Attractive yield of about 4.5%-5%.

One of the major attractions of the seniors housing REIT is the demographics tailwind. This happens to be the biggest in Canada. Recently sold its US properties, which could be very, very timely because of the currency. This will allow them to pay down some debt. Dividend yield of 4.56%.

(A Top Pick April 29/14. Up 22.96%.) This is supported by both the demographics and the business. We have an aging population that needs more care.

Seniors housing play. Just sold off their US assets. Some think the value was not as good at it could have been. Will repatriate the funds back into Canada. This year there will be a good supply/demand balance. He would add to it here. The dividend is sustainable. They have a dominant share in Canada.

(A Top Pick March 19/14. Up 23.18%.) Recently sold some of their US assets. This has been an M&A candidate for some time. Large US healthcare REITs have been looking to grow their portfolios and their cost of capital is very attractive, so the sale of assets was not a surprise. It simplifies the business, because it will now be a fully Canadian seniors housing REIT. This will help them reduce their leverage and will probably end up focusing on developments and redevelopments in Canada.

A demographic play. Occupancy was 93% pre-recession. This is improving. They increased distribution 2% recently. They said they wouldn`t increase the distribution until they felt an increase each year was sustainable.

Got a new CEO five years ago. They had a lot of debt and now they are waiting for the dividend to go up. They have said they will do it when they can continue to do so on an ongoing basis. He would not sell until the dividend was raised.

(A Top Pick April 29/14. Up 24.7%.) A core holding in any portfolio. The demographics that are with the seniors housing’s trend are very strong. Companies like this are specialists in providing this kind of care. Because of this, their portfolio continues to attract a lot of interest from the user base, but is also attracting a lot of interest from the Americans. They have been coming up into Canada and spending significant amounts of money on our seniors housing buildings. This could be a possible take out in the future.

Doing very well. Their Q3 same property net operating income growth is 2.6% and he expects this momentum to continue through 2016. Have been selling their non-core and investing in their core developments. That is pretty well done now and will be turning to developments. He models 10% AFFO growth over the next couple of years. Trading in line with the rest of the REIT sector. The balance sheet has been improving. Payout ratio is reasonable at 69%.

There is some economic sensitivity because the rooms are expensive and in tougher economic times the vacancy rates might go up a bit. However, they seem to improve their occupancy quarter after quarter.

Retirement homes. Have spent the last couple of years making it a cleaner story. Retirement space is very complicated because they have to deal with government, demographics, senior citizens being unable to pay, etc. What you want is a story that is not as complicated as that. This is the right time to still own this as it is a great cash flow business. Occupancy rates are on a higher trend. About a 7% yield.

The leader in seniors housing in Canada. The stock has done quite well. It’s a combination of interest rates moderating and less inflation concerns and the general weaker economy. REITs generally have done quite well in the past month. The company was restructuring their US operations and focusing on certain regions, selling off some assets and reinvesting in Canada. Thinks they are at a point now where they should be able to start increasing distributions in the next year. Likes the demographics of an older population creating an increasing demand for seniors housing. Wait for a pullback below $12. Dividend yield of 4.3%.

Has liked this consistently for the last several years. Going forward, it is a company that is going to benefit from an aging population. A headwind for the stock, prior to 2014, has been an excess supply. Supply exceeded demand from 2011 to 2013. 2014 was the 1^st year where demand exceeded supply. Going forward, because you are going to have lower supply, you should see occupancy tick higher, hopefully in the lower 90%s, which will really drive cash flow growth. Thinks it is a potential prime acquisition candidate for a US player that may want to enter into the Canadian market.