Chartwell Retirement Residences (CSH.UN.TO)

(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.

Likes it a lot. It is a great company. If interest rates rise quickly it would be a problem, but you should be comfortable with the kind of income you are getting today. They are good operators. The demographics are behind them. There is a big push into occupancy. There has been American interest in these and it gives you down side protection.

A seniors’ home operator, and she likes that space because of aging demographics. The seniors population in Canada is going to be growing at a faster rate than the general population over the next 10 years. Also, seniors are living longer and need more care. Before the 2008 recession, occupancy was in the 94%-95% range, and currently is at around 90%. So there is no reason why occupancy can’t improve. A nice place to hide to get the dividend yield of 4.6%.

It continues to do well. It would run into trouble in a rising rate environment. It should continue with slow growth going forward.

Likes the demographic tailwinds. If rates are going to rise, you want to own a REIT with a low payout ratio, a high growth rate, improving leverage, organic growth and one that can focus on developments. This company displays all of this. It is also a potential takeover target.

This is in the seniors’ home sector. Has great demographics, as older ones need more care. Plus there is a lot of US interest in this space. Great name.

The leading seniors housing operator in Canada. About 80% of their suites are in Canada with 20% in US. Have refocused by selling off non-core properties in the US and putting the money back into Canada. She likes the demographics. We are all living longer. The population of seniors, 75+, is going to be growing at 3 times the general population rate. The penetration of seniors housing is quite low. Yield of 4.66%, but they are at the point where they could be increasing this in the next year.

A good story. He is modeling 7% compounded annual growth. Sees a strong 2nd half coming from ramped up sales and marketing. Have had this really nice strategy of recycling capital from non-core properties and putting them into higher quality, which should continue to drive multiple expansion. It is a potential takeover target. Long term tailwinds of seniors’ assisted living. He would try to buy it on a bit of a pullback.

A great demographic play. The population in that range will double over the next 10 years. In the last 4 years we have seen a 10% increase in costs. This year we should see a greater increase in demand growth than supply growth.

She likes it. One of the better REITS to buy in this environment. Less interest rate sensitive. They can pass through inflation increases to customers. They have improved operational performance under their new CEO and they have new runway. They ate their way through supply and demand issues. They are at 89% occupancy. Payout is reasonable and they might increase it next year. One of the better companies in the group. 5% yield is absolutely sustainable. A little room for capital appreciation. There has been a lot of M&A activity in the US in this area.