RE:Top Pick Sienna Senior Living (SIA TSX)
A leading owner of over 7,000 long-term care homes (LTC) and nearly 5,000 retirement homes, located primarily in Ontario, with properties in Saskatchewan, British Columbia, and Alberta.
According to Cushman & Wakefield, supply and demand fundamentals in Canadian seniors housing continue to be strong. Population growth in the 80+ age cohort is expected to average over 4 per cent annually for the next 10 years and new supply as a percent of inventory is currently less than 1 per cent.
Sienna is seeing these strong fundamentals drive performance in its retirement homes with occupancy of 92.1 per cent in Q2 2025. Management’s expectation is that occupancy will reach 95 per cent by the first quarter of 2026. Same-property NOI grew 8.2 per cent year-over year in Q2 driven by this strong occupancy growth combined with over 250bps of margin expansion year-over-year.
The long-term care segment of Sienna’s business is also strong with two LTC developments currently under construction and expected to open before year-end. These developments will grow earnings by five to six per cent and reduce the average age of the portfolio reducing ongoing maintenance capex costs.
The Ontario government also raised the maximum funding subsidy this year for GTA-based long-term care redevelopments from $370,000 per bed to $640,000 per bed which should provide Sienna with the ability to profitably redevelop multiple GTA-based long-term care homes.
Earlier in 2025, Sienna acquired Cawthra Gardens, a well-located Class A LTC property in Mississauga, at a 6.75 per cent year-one cap rate. This highly sought-after property is located near two other Sienna assets, creating potential for management cost synergies and incremental earnings accretion. Sienna remains well-positioned for long-term earnings growth supported by strong demographic trends and limited new supply in the sector. The Company has efficient access to capital through its ATM equity issuance program and is actively pursuing accretive acquisition and development opportunities. Stable cash flows, combined with visible earnings growth potential, support the long-term upside in Sienna’s shares.
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