Canadian Apartment Properties Real Estate Investment Trust T.CAR.UN

Top Pick Details

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First stock in the clip. GLTA

https://www.bnnbloomberg.ca/video/andrew-moffs-top-picks~2171033

Chartwell Retirement Residences is the largest seniors housing owner and operator in Canada, owning interests in or managing over 200 communities encompassing 30,804 suites across the country. It operates across the full spectrum of the seniors housing industry, including retirement homes (91 per cent of NOI) and long-term care homes (nine per cent of NOI). The Trust also has a sizable retirement home development pipeline, a portion of which it owns and manages directly and a portion of which is owned with strategic development partners.

Chartwell is an attractive investment opportunity due to its strong growth prospects and compelling valuation. As the Canadian population increasingly becomes vaccinated, a recovery in the seniors housing sector has become more likely, and Chartwell should benefit by regaining occupancy lost during the pandemic. As of February 2021, occupancy in Chartwell’s retirement portfolio was down 10.1 per cent year-over-year to 78.7 per cent and 11.3 per cent below what management would consider to be a stabilized rate. As a result, units have fallen over 20 per cent since its pre-pandemic high of $14.47 per unit.

However, given the strong rollout of vaccines in its target market (nearly 60 per cent of adults aged 80 and older, and 91 per cent of seniors who live in congregate settings have received one dose of a COVID- 19 vaccine), Chartwell should be able to recover the occupancy lost during the pandemic over the next few years. If Chartwell is able to regain occupancy back to pre-pandemic levels, it represents an opportunity for them to increase its funds from operations by over 40 per cent from its pandemic lows. Despite this opportunity, units remain undervalued, trading at a 18 per cent discount to its stabilized NAV and priced at only 13.4x 2022 consensus FFO. This compares to U.S. peers that are trading between 18.2x and 23.7x 2022 FFO.

With a robust growth profile, compelling valuation, a well covered 5.2 per cent dividend, and the vaccine rollout beginning to gain traction across Canada, Chartwell remains a highly attractive investment.

TOP PICK

 

Canadian Apartment Properties

(CAR.UN-T)

March 30, 2021
 

He likes its valuation and its concentration in the GTA, its largest market. Immigration and foreign students returning will drive growth. During Covid, millennials returned home, but after mass vaccinations, this cohort will return to the apartment market and create a bounceback. CAP REIT will definitely benefit from this pent-up demand. He sees a lot of upside in earnings and a NAV basis later this year. CAP REIT is very undervalued.
 

INVESTMENT COMPANIES/FUNDS

Andrew Moffs 

 

Price

$54.000

Owned

Yes