Chartwell Retirement Residences (CSH.UN.TO)

Does not own shares, or any real estate REIT companies. Rising interest rates, and Covid-19 pandemic have been very hard on REIT companies. Retirement homes continue to rise in demand, but not investing at this time. 

Upscale to mid-market retirement homes. Premier operator. Demographic wave. 80+ age cohort in Canada will grow 4.3% per year for the next 20 years. Limited new supply of 1%, and there's already a deficit of housing. Occupancy of 86%, on path for 95% by end of next year. Every 1% of occupancy equals over $8M in revenue. Great path to increase NAV. Compelling supply/demand backdrop in favour of landlords. Yield is 5%.

He's shifted investments from multi-family units to retirement. Canadians are aging and will need home. There's a shortage. It's in an unregulated sector, so rental rates can increase. Likes this because CSH makes homes, not long-term care. Occupancy rate is now 86%, and he predicts 90% by year's end, then above 90% in 2025. This organic growth will increase cash flow.

Demand/supply is what stands out, and recovery in demand. Over-supply of retirement homes going into pandemic, almost non-existent today. Finally seeing baby boomers as prime renters for its homes. Next decade will see big demand growth. Occupancy finally at 85% on road to 95%, compared to peak of 93%. Big 18% discount to NAV. Operates quite well. Yield is 5%.

People are once again feeling comfortable going into retirement homes. It now has close to a 90% occupancy rate. He is looking for a price target of $14.

Homes not only for seniors, but also for those transitioning from owning their own home. Flexible format for this is key. Good job of providing support through the living transition. Fell during Covid, doing better since then. Quality is very good.

One issue is the risk of an event such as Covid. Good story. Good dividend. REIT sector, but in a niche area that has demographic tailwinds over the next several years. We need more of this housing.

It has a lot of liability as seen during the pandemic. The demographics are good with an aging population but their occupancy rate is still below Covid levels. She prefers Savaria because people want to stay in their homes.

Rebounding since interest rates have started to stabilize and fall. A name he likes in the REIT space. Name makes sense based on low vacancy rate, demand for this type of housing. Attractive dividend yield 5.1%, looks very secure. 

If interest rates go down, will be good for business (real estate in general). Would wait for share price to fall before buying. Expecting strength going forward. Balance sheets protected. 

Pandemic hit hard with lower occupancy and higher expenses. Still hasn't recovered to level of earnings in 2019. 15x multiple, attractive for a demographically strong business. Still upside on occupancy and operating income. Still attractive today. An income pick.

One knock is 75% payout ratio, but very well supported. A fair amount of leverage, which is standard for real estate companies. Just over the border into investment grade credit rating, and cost of funding is their biggest expense, so they work to keep that manageable. Reasonable outlook for growth. 

Space has lagged in recovery post-Covid, with lower occupancy and higher costs. Occupancy recovery not seen until this year, it's now generating down to the bottom line. Distribution sustainability is now obvious. Demographic boom could generate material cashflow growth, increasing NAV. Yield is 6%.

Pandemic costs are waning. Likes the sector demographics. Mainly private pay, recently sold off LTC in Ontario. Targets higher-income households, giving them more flexibility to pass through rising costs.

Demand for senior services not going away. Free cash flow getting stronger. Strong dividend yield that is reliable. Occupancy is recovering after Covid-19. Believes share price is presenting value. Seeing room for lots of growth. 

Expensive earnings multiple because earnings are still coming off a trough, where occupancy is still recovering. The recovery is beginning in earnest, except where there's an oversupply as in Durham and Ottawa. Wide discount to NAV, debt, yet growing cashflow. If occupancy can improve over the next 6-18 months, investors will be rewarded. Quality portfolio.

Expecting healthcare sector to increase in demand.
Strong franchise within the company.
Earnings/cash flow estimates expected to grow at record rate.
Occupancy rates increasing after Covid-19.
Current share price at 20% to NAV - good time to buy.
Expecting a $12 share price in 2024.