Highlights from TD REIT conference from the panel discussion. In general, fairly upbeat and TD conclusions from the discussion below. In general, conclusion was: "The Seniors Housing sector in our view is primed for a more pronounced NOI recovery in 2024 with management teams pointing to a reduction in agency staffing costs, lower staff turnover, and strong demand in most of their markets. "
from the note:
Chartwell Retirement Residences, Extendicare & Sienna Senior Living
• Agency staffing costs appeared to be trending lower across the industry, with only select markets (e.g. Quebec City for Chartwell) still seeing elevated levels of agency staff utilization. General turnover amongst staff also appears to be trending lower.
• Chartwell and Sienna noted that homes are operating with less restrictions in the event of an outbreak compared to pre-pandemic (due to new risk-based rules). We believe this could result in a change in the typical seasonality of Seniors' Housing occupancy trends where the dip in Q4/Q1 could potentially be less severe going forward.
• Chartwell and Sienna both pointed to strong demand for retirement homes and in turn healthy occupancy levels across most of their respective portfolios. Sienna however noted that some homes that either need repositioning or operational improvements (some of these homes are ~70% occupied) have lagged the broader portfolio and also pointed to weakness within the Ottawa market (occupancy currently in the high-80% range) due to oversupply. Chartwell pointed
to weakness within the Durham, Ottawa, Quebec City and Calgary markets.
• Extendicare noted it expects an announcement on additional capital funding programs for LTC redevelopment projects in the spring. Companies also expressed optimism on additional occupancy funding that will more accurately reflect recent inflationary pressures.
• On home health care, Extendicare management expects margins to climb back into the low-double digit range as staffing levels continue to increase.
• Chartwell expects Seniors' Housing transaction activity to pick up in 2024 due to a narrowing bid-ask spread, while Sienna still sees the bid-ask spread as being too wide