Canada is “going gangbusters” on growth in the senior housing and care industry, reports the National Real Estate Investor, and Chartwell Seniors Housing REIT—one of the country’s largest in the sector—is making moves to pull out of its holdings in the U.S. in favor of focusing closer to home.
In the second quarter, Chartwell sold 11 U.S. seniors properties, mostly in central states, but also including a few in New York. In the same months, Chartwell doubled down on Canada by joining Toledo, Ohio-based Health Care REIT Inc. in a $936 million purchase of 42 properties formerly owned by Allegro Residences.
Chartwell CEO Brent Binions says that the move boosts the firm’s presence in Canada, which he currently considers the stronger market of the two countries. “Brookdale in the United States—they’re doing a good job managing our properties there, which we’re trying to streamline into a three-state region,” Binions says. “We manage our own properties here, so it makes sense to buy more here.”
While the demographics are similar—for example, both countries boast large baby boomer populations that are moving into retirement age—Canada’s economy has been stronger during the global downturn. Its financial sector did not get as overextended as America’s. And the more stable economy has created a strong footing for the seniors housing sector, Binions says.
“Canada is running a little ahead [and] the economy never really went into much of a tailspin,” he says. “The creation of new seniors housing supply has been at a rapid pace.”
Michael Berne, managing director of Lee & Associates’ new senior housing group, says Canada has some catching up to do in regard to private care offerings. “Many sites in Canada operate using home health care firms, similar to the older nursing homes in the United States today. Companies like Chartwell have been improving the market with more modern facilities, emulating what we have in the States,” he says.
A caveat, however, is that the conditions have created a boom in new development, putting some pressure on occupancies. In Chartwell’s portfolio, for example, occupancy rates are down from a peak of 93 percent to about 89 percent currently, Binions says.
Despite a surge in new development, however, the standard senior housing vacancy rate stands at about 10.6%, according to a mid-2012 report by the Canada Mortgage and Housing Corp. cited in the article.
Read the full piece at National Real Estate Investor.
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Written by Alyssa Gerace