Greg NewmanChartwell Retirement ResidencesCSH.UN.TOTOP PICKNov 03, 2023

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.

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.

Owns shares in the company - has owned for many years.
Long term outlook for senior living is favorable.
Rising costs due to inflation starting to fall.
Occupancy rates recovering after Covid-19 (~80%).
Slow recovery after Covid-19.

Free cashflow seems to be inflecting. Last quarter was in line. Net operating income was up and moving higher. Occupancy up. Looks to be in the midst of a turnaround. Reasonable valuation of 14.9x. Sets up well from a PEG level. Caution: because debt matters, if inflation and interest rates stay high or go higher, this may not be the best name to own. Yield is 5.96%.

Interest-sensitive REIT, plus dramatically impacted by Covid. Reasonable valuation at 17x FFO, still lots of upside. Lots of upside to occupancy. Demographics are in their favour, it'll just take time. Attractive dividend yield around 6%.

Pandemic challenges continue, especially for labour. Good, long-term business. Costs have increased. Demand is still there. Starting to come back. Debt. Won't see dividend increases soon. If it goes up, take some money off the table. Better places to put your money.

Chart shows it's just starting to turn around from its downtrend. Would definitely recommend.

In very different sectors. Both trade at wide discount to NAV. Neither has catalysts on horizon. CSH.UN at risk of cutting distribution, which is not being covered due to lower occupancy. CSH trustees see growth coming, but can it recover occupancy levels lost during Covid? He's watching that, as it's hard to invest in the face of a possible cut. D.UN is in an extremely tough sector. Office space, globally, has suffered with work from home. Office sector is not dead, but vacancy rates are in high teens and climbing. A good operator, Dream still owns good office buildings, especially in Toronto. 

Going out a few years, there's a lack of homes and beds. Will be more growth in this area. Great demographic play, will do very well over next little while. They're trying different formats, which is very appealing.