Chartwell Retirement Residences (CSH.UN.TO)

Thinks we are 5-10% from a bottom in general in the sector. You are going to see a significant increase in the aged portion of the population. There was excess supply in 2011 but going forward it will be a dividend growth story. Discount relative to its peer growth. If it gets much below a drop of 9% it becomes an acquisition candidate.

Stock has been a little bit weaker the last 3-4 months. It would have come down with the REIT group on the fear that the real estate market was topping out. Feels this is a little different and this could represent a great entry point. Demographics favour the growth of the seniors housing sector. Very, very well managed. High occupancy rates. They are moving a little bit more out of the US and back into Canada, which makes him feel a little more comfortable. 5.65% dividend yield.

Senior housing operator. Likes the industry and the demographics. Penetration in senior housing is very low and hopefully it will increase over time. Have been deleveraging its balance sheet and hasn’t increased the distribution over the last few years. Balance sheet is now strong and the payout ratio is below the target she has. Very good chance they will be increasing distributions over the next 6-12 months. Yield of 5.70%.

Leisure World (LW-T) or Chartwell (CSH.UN-T)? Prefers Chartwell. Has significant turnaround. B leveraging, simplifying the business model, new management. 5.5% dividend yield is safe. Worth $10.50-$11.

A great way to play the seniors trend and they are the most experienced management team in managing these assets. On risks, this is somewhat tied to the housing market as they are going to sell a home to move a senior into their home. If you believe home values are going to go down in Canada, which he doesn’t, this might give you some concern.

Very well-positioned to increase occupancy and rents. Canadians over age 70 is going to increase by more than 50% within the next 10 years, meaning a lot more people are going to be living in retirement residences and senior housing.

(A Top Pick July 7/12. Up 8.53%.) All the REITs were hit with the rising interest rates and the stock came back about 10% in the last month. Great buying opportunity. Demographics will work in their favour. Occupancy is just about 90% right now and can easily get back to the 92%-93% level. Refocusing on their Canadian operations and selling non-core assets in the US, which she likes. Good yield at 5.6%.

(Market Call Minute.) Management has done a great job of bringing down leverage and payout ratio and you can see occupancy gains in their portfolio.

A little puzzled by the downturn in this stock. Feels it has come down because of concerns about real estate, which he doesn’t feel are well-founded for this company. Earnings have been very solid. 5.59% dividend yield.

One of the issues is that we think it is a huge, growing business. There is a lot of capacity out there because it is not a difficult business to get into. A well run company. Getting impacted by fear of rising interest rates. REIT game is over because of rising interest rates.

What would you recommend for a high end assisted living property investment? It’s a risky call this week because there are a lot of REITs in the sector that focus on assisted living. The 2 he follows are Chartwell (CSH.UN-T) and Healthlease (HLP.UN-T). This one has done very well historically. They have to adjust some accounting issues so a lot of investors are worried but it doesn’t impact cash flow at all. Very solid company with good occupancy, good payout ratio and decent growth. If interest rates went up to 10%, these are going to get hit.

He is very comfortable with their financial reporting even if not IFRS. Sees an opportunity to take advantage of a great real estate class. Seniors living should be a core part of any portfolio. Prefers LW-T if you need a higher yield.

Just purchased some of their convertible debentures. Had a nice run with the rest of the group but in this tailback, a debenture is a chicken’s way to buy it, in the sense that if it goes higher, it’ll be in the money and you’ll be forced into the equity, but if things don’t work out, you have the yield on the bond so your downside would be 3%-4% versus 15%-20%. 5.3% dividend yield is safe.

(A Top Pick June 12/12. Up 17.71%.) Really likes it down at these levels. Has pulled back on higher interest rate environment fears. This one has the ability to grow their cash flow. Hasn’t raise their dividends in the last 2 years but there is a good chance they will do this later on this year. Yield in excess of 5%. Still likes.

There are other REITs that he would prefer. Have never adjusted their balance sheet, as all the other Cdn REITs have done, for the IFRS accounting changes. Therefore it is difficult to know what the fundamental value is. Most of the others are selling at around their BV.