Sienna Senior Living Inc (SIA.TO)

Has had a love/hate relationship over the years. Right now he thinks it is a little expensive. Missed on their last quarter however the stock continued to go up. Prefers Chartwell Seniors Housing (CSH.UN-T). You are safe in this sector as there is a demographic shift as older people need more care. There is a lot of money coming from the US and buying into the Canadian sector. They view it as very safe with the discount to what US seniors homes are trading at.

Long Leisureworld Seniors Care 3.474% Secured Debentures due 2021, Short Gov’t of Canada 3.5% Jun 2020 Bond. He only cares about LW-T and the short is to take care of interest rate exposure. There is the potential for a very big capital gain on LW-T. The government has stopped giving new licenses for this business. It reduces competition. There are 80k long term care beds in Ontario and a waiting list of 21k. They will be 100% occupied because of the waiting list. It is like a regulated utility with increasing profit.(Stock price will not match as this is a bond.)

Likes this one. Sees this growing at about 14%. Dividend looks pretty good with the payout ratio of 70%. Cheap relative to some others. Probably fairly valued here because of its higher risk profile. He would Buy at around $13.

This is one of his longest holding REITs. He likes it because the composition is mostly old age homes, so it has the demographics behind it. They have consistently delivered on the dividend. His company has a target of $13.25. He is starting to take some money off the table on this. 7% yield.

Leisure World (LW-T) or Chartwell (CSH.UN-T)? He likes both. This one is very cheap at 8.7X 2014 estimates. Also, have very low payout ratio of 70%. He sees 15% compounding growth from 2013 to 2015 with their successful integration with their specialty care purchase.

Government sponsored long term care. Will continue to look after our aging. Expanding business into retirement homes and other ways of caring for our older demographic. Selling at $11.50 and buying at $11.

Their numbers just came out and their compound annual growth rate for the next 2 years would be about 15% each year. There is probably more upside from these levels. Buy on a little bit of a pull back.

Has always been a fan of this one. With the 2^nd quarter results, he did reduce from overweight. Has a great yield from an income that is basically supported by the provincial government. They do have issues that they are working through and there will be more noise on the stock, which will create volatility. They have to refinance a very large bond that is coming due in 2015. If you have too much, you could trim on strength. Dividend is very safe.

Dropped 20% in mid-August. The stock actually held in while the rest of the market was collapsing, which gave it tremendous outperformance. However, earnings have surprised to the negative. Have 6 retirement homes and the rest are long-term care, government contract. At this level, it offers a very attractive yield. 8.7% yield.

This company is going to have to spend a lot of CapX for upgrading existing properties. Also, they are going into the retirement home business, which is a lot more competitive. There are better choices out there.

Leisure World (LW-T) or Chartwell (CSH.UN-T)? Doesn’t own because it is long-term care and long-term care has next to no growth in the cash flow stream. Assets are in Ontario and BC. Have to do a significant amount of redevelopment in roughly half their portfolio in the next few years, which is all CapX with no general upside. Have to redevelop these assets to an A or B quality standard.

Trading Leisureworld (LW-T) for RioCan (REI.UN-T)? An interesting trade as you are looking at 2 very different sectors. Riocan will give you a little bit more volatility. He really likes Leisureworld, one of his favourites. Long-term care for seniors. You have a backstop for leases as the government is paying for those homes. You have opportunity to grow cash flow on the other side of the business. Very high yield with a low payout. 7.5% yield.

Their specialty care acquisition that they just did looks accretive. 7% dividend yield looks safe. Payout ratio of about 86%. A compelling valuation. Trades at about 10X. The one fly in the ointment is that it has very sluggish growth of only about 2% in the next couple of years. He would put money into Chartwell (CSH.UN –T) over this one.

Likes that 90% of assets are nursing homes in Ontario. Demographic play. Better funding after the last formulary adjustment. Numbers are good, nice chart and it is a defensive asset. Traded out because it was at an expensive price point.

(Market Call Minute) Is cutting back but relatively high payout ratio and limited room for capital appreciation.