RE:RE:EXE short position at 2,814,753 as of Jan 15th 2019Thanks for the comment KC8, we seem to be pretty much in agreement about Extendicares prospects going forward, both in the near term and in the longer term....
Given that years of shift working have left me an incurable insomniac I'll go into a bit detail as to the rationale for my opninon that seems to be a small point of difference.
Firstly though, I do think the near term prospects for Extendicare are storng....I just happen to think that the potential for the biggest growth is coming over the next 3 to 10 years. Do note that my opinions aren't based on any scientific studies or anything of that sort, aside from basic demographics (population studies).
I'm 52 years old and live a couple hours outisde of Toronto. The real estate market here has popped over the past 3 years as many retirees from the GTA are cashing in their housing lottery tickets and moving here where houses are still much cheaper. After getting $1 million or so for their GTA properties many are moving to towns like mine where a 3 bedroom 2 and 1/2 bath SFD with a 2 car garage and 2,000 odd sq/ft house can be had for $400 or $500K and they're saying "I'll take 2".
Why aren't they moving to retirement living communities or residences? Some are no doubt, but many are still very active...and like being around people of varying ages, especially kids. Many enjoy gardening, or have hobby's that require a workshop or at least a basement type workspace or studio....
The town I live in has a median age of about 60 years, meaning half the population is older and half younger. My neighbours on one side...sadly the husband just past away a few months after moving into a very nice, almost hotel like, seniors residence. His wife though didn't want to join him, and now that her husband is passed she's bound and determined to stay in the house as long as possible. She's about 75 now, and keeping up the house is hard and her daughter is trying to convince her to sell and to move into a seniors residence....my neighbour recognizes that eventually it'll happen...but she wants to leave it as long as possible.
Look at the ads on TV for a product like the stiar lift....."stay in your home" is part of their marketing strategy. Another neighbour a few doors down did move a couple years back....his wife has mobility issues and even with a stair lift it was too much, they moved into a seniors condiminium...the wife loves it but the husband hates it, he likes to open his door and go outside....not open his door, walk 50 feet to the elevator, then get off the elevator and walk another 50 feet to the double doors....
Someone who has lived in a house for most or all of their adult lives....no matter how posh a retirement home is, many are not going to go until or unless they have to.
My 75 spit ball is basically a guess.....that's roughly the age I figure that it becomes not a matter of choice but of necessity. Obviously some will need to go sooner and others later....and some very lucky individuals maybe not at all. But I figure 75 is as good a guess as any for the average age at which moving to a facility like those Extenidcare provides becomes a need.
No doubt you've heard about the baby boom generation being called 'the pig in the python'. Its a huge mass moving through the population....and its had a massive impact on everything from housing and education to car buying and investing. Boomers move into a segment and it soars, then they move out and it goes bust....
I believe that will happen with senior living residences....the baby boomers will send demand through the roof....and my guess is it'll peak in about 10 years, then after flat lining for a while...that it will start to decline. Kind of like all the elementary schools you see boards closing now that student populations are dropping as the population ages.
Anyway....cheers. I could write more...I have a particular hate on for CHIP Mortgages, those high interest, payment differed loans that are marketed as "reverse" mortgages when they are anything but.