Canada is among the major global markets seeing surging housing demand for senior citizens. That makes sense, as demographic shifts continue, and the country’s population ages into retirement at a rapid clip.
Now, Canada is among the advanced economies that are focused more on immigration than many of its counterparts, and that could lead to better growth over the medium term if these trends continue. But for those native-born Canadians out there who aren’t having kids, the economic model that’s in place may be one that will be hard to call “sustainable” over the long term, when it comes time for the younger Millennial and Gen Z generations to retire.
With that said, investors looking to take advantage of an aging demographic in Canada do have options to invest in these trends. Here are two ways to play the rise in demand for senior housing in Canada right now.
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Chartwell Retirement Residences
Based in Mississauga, Chartwell Retirement Residences (TSX:CSH.UN) is among the leading real estate investment trusts (REITs) involved in providing senior housing and related services to folks across Canada and in the United States.
The company indirectly owns, operates, and manages retirement and long-term care facilities for senior citizens, including independent living, assisted living, and long-term care facilities. These facilities are integral pieces to the senior housing discussion, and rising demand has been one of the key drivers of this stock’s recent outperformance (see chart above).
With more than 25,000 residences in Canada, Chartwell is among the market leaders in Canada, and is positioned for growth as the Canadian population continues to age. Particularly focused on growth, Chartwell is increasingly looking to expand into the B.C. market, a move many investors seem to believe will pay off over the long-term. The company has recently agreed to issue $300 million in additional equity to support these initiatives, something the market appears to like given the upside of these expansion plans.
Sienna Senior Living
Sienna Senior Living (TSX:SIA) is another top publicly traded REIT focused on senior housing, with a disproportionate focus on the Ontario market. The company manages and operates 82 senior housing facilities and 12 facilities belonging to third parties in Ontario, British Columbia, Alberta, and Saskatchewan.
Sienna is one of the largest owners and operators of senior living facilities, with 93 high-quality residences. Under the brand ‘Aspira’, the company offers a variety of living arrangements, including independent living, assisted living, memory care, independent supportive living, and long-term care. Sienna sets itself apart from its competitors by providing a range of care facilities, including government-paid full nursing care and paid-assisted living care in Canada.
I tend to think this model is one that many investors may like more than Chartwell’s, and that explains the company’s relative outperformance over the past five years. This is a stock that’s now not far off from its all-time high, and a move toward $20 per share would bring this stock into spitting distance of this target. For now, it appears many investors are bullish on the company’s prospects, as lower interest rates have also juiced this sector considerably in Canada.
We’ll have to see how things play out for both operators, but I do think investors looking for more holistic exposure to this space may want to consider Sienna over Chartwell. For now, this is a sector I’ll be keeping a close eye on, and I intend to provide updates on these companies moving forward as the environment shifts and changes.
