[Spidey]

I'm in the initial stages of research on Chartwell Seniors housing REIT, CSH.UN. The P/B looks very attractive at 0.74, as does the dividend yield at 14.4 and of course, the sector in general looks demographically promising. My concerns are a negative EPS for the previous year which resulted in a dividend cut.

Any REIT experts out there who may be able to comment??

 

[FrugalTrader]

I'm in the initial stages of research on Chartwell Seniors housing REIT, CSH.UN. The P/B looks very attractive at 0.74, as does the dividend yield at 14.4 and of course, the sector in general looks demographically promising. My concerns are a negative EPS for the previous year which resulted in a dividend cut.

Any REIT experts out there who may be able to comment??

For me, the most important aspect of an income trust is the sustainability of the distributions. For that, the AFFO (adjusted funds from operations) needs to be calculated. It's basically net income + amortization/depreciation - capital expenditures. (http://www.investopedia.com/terms/a/affo.asp)

If you're not much into balance sheets/cash flow statements, most analyst reports will report the AFFO for you.

 

[RI.ca]

REITinvestor release for CSH.UN dated April 15th. You can get its current ratings & rankings free on the website along with a detailed drill down conducted for each REIT.




REITinvestor.ca remains cautious on Chartwell REIT with a neutral #3 Ranking.
Chartwell Seniors Housing REIT (CSH.UN - TSX)

April 15, 2009 REITinvestor.ca remains cautious on Chartwell REIT with a neutral #3 Ranking. REITinvestor.ca, a private subscriber-based independent rating & ranking service, has maintained its neutral #3 ranking of CSH.UN but today increased its target price to $5.00 from $4.75. . . Short term REITinvvestro.ca TA expects CSH.UN pull to retest near $4.10 - $4.25. A hold of $4.00 would likely start a new leg up to test $5.00. resistance. We would be extremely cautious near $5.00. A two day consecutive close above $5.00 would be negate our concern for that level. Alternatively, a fail to hold $3.75 would be extremely bearish with a much lower target price near $3.00. Our current Ri.ca ranking for CSH.UN is neutral #3 despite the interesting yield at >16%. Concern remains liquidity, which is on the low side near 5% of debt. The recently released news, $63.5M refinancing and interest saving although positive, will not impact the bottom line drastically. CSH.UN needs to rebuild its liquidity reserves. In the interim we expect sideways movement in the stock price until improved liquidity. Further out we remain extremely concerned that Chartwell may need to cut distribution in 2010 or 2011 in order to refinance $125m debenture coming due December 2011. At the very least a new debenture will likely come with a coupon rate in excess of 10%. CSH.UN units closed on Tuesday April 14th at $4.53 per unit on the TSX. For more information, visit REITinvestor.ca

DISCLOSURE: REITinvestor.ca maintains its own investment fund and currently is not holding units of CSH.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing.

 

[RI.ca]

The $5.00 price target was hit last Monday, and since then the units have shot down to $4.70 and are now back up flirting with the $5.00 level.

 

[Arcaneind]

I should buy Chartwell...

...simply because they are building a retirement home that is screwing up the view from my house!!

Maybe I wouldn't feel so bad if I owned a brick or two in the building and they were paying me monthly.

 

[Spidey]

Thanks for passing along the info, RI.

 

[RI.ca]

REITinvestor.ca confirms neutral #3 ranking and remains cautious on CSH.UN, but today has raised its three-month target from $5.00 to $5.80

Chartwell Seniors Housing REIT (CSH.UN - TSX) May 15, 2009 REITinvestor.ca confirms neutral #3 ranking and remains cautious on CSH.UN, but today has raised its three-month target from $5.00 to $5.80. REITinvestor.ca, a private subscriber-based independent rating & and ranking service, has maintained its neutral #3 ranking of CSH.UN, but today increased its target price to $5.80. In the short term, REITinvestor.ca TA got its expected CSH.UN pull to retest near $4.10 - $4.25, and is currently testing $5.00. A hold of $4.60 would likely start a new leg up to test $6.00. Alternatively, a fail to hold $4.60 would signal a retrace to $3.75- $4.00 ahead. Following a review of CSH.UN Q1-09 Report, REITinvestor.ca notes the following: - Chartwell reported that AFFO has increased 31% from $0.16 Q1-08 to $0.21 Q1-09. Assuming that this healthy move can be sustained, CSH.UN is no longer in excess of a 100% Payout Ratio. REITinvestor.ca estimates its 2009 AFFO to be $0.80, and its Payout Ratio to be 95%. - REITinvestor.ca estimates a slight improvement in total liquidity in Q1-09 to $77M in cash and undrawn lines. However, the liquidity-to-debt ratio remains on the low side at 3.9%. Liquidity could be further improved in 2009 with the repayment of mezzanine loans due. - Management reports that its operating line of $90M, which expires in June, is expected to be renewed. - Chartwell’s senior management has reduced its ownership in Spectrum, a developing partner. This relationship remains somewhat suspect to conflict of Interest. Chartwell reported $45.2M in mezzanine loans borrowed by Spectrum was secured by second mortgage loans against 30 seniors’ housing projects, with cross default and corporate guarantees from Spectrum. Chartwell reported that a portion of $4.8M due from Spectrum was past due. - REITinvestor.ca remains concerned that further difficulties with Spectrum and Groupe Melior will persist in the future, and may negatively affect the financial health of Chartwell. - Chartwell has no US mortgages coming due until 2013, and continues to have low interest access to CMHC-insured financing in Canada. - Chartwell lowered its distribution to unit holders by approximately 30% in March 2008, from $0.08875 to $0.06167. It currently has no plans to change distributions going forward. CSH.UN units closed on Friday, May 15, 2009 at $5.02 per unit on the TSX. For more information, visit REITinvestor.ca

DISCLOSURE: REITinvestor.ca maintains its own investment fund and currently is not holding units of CSH.UN. REITinvestor.ca does not provide investment advice nor does it recommend the purchase or sale of securities including any REIT units it covers. Please consult your personal professional advisor before investing.

 

[joes_k]

Be careful of this and any nursing home REITS.

Many do not qualify as REITS under the new tax rules coming into effect in 2011 and therefore will be taxable.

Perhaps someone can clarify whether Chartwell is defined as a REIT under the new tax regime.

 

[ethos1]

Be careful of this and any nursing home REITS.

.

such as exe.un

http://www.google.com/finance?q=TSE:exe.UN

 

[RI.ca]

Its possible that CSH.UN will not qualify as a REIT with the new restrictions, however for the time being that should not cause much concern for investors. Down the road it could be an important issue.

 

[KaeJS]

Stock has been getting crushed for obvious reasons.

Am I foolish to be buying here? Because I am.

Other than debt load and higher expenses (rising rates) what am I missing?

Seems like they should be able to get through this. I can't see this not getting back to double digits.

 

[AltaRed]

The bigger issue ultimately may be what future role, if any, will the private sector have in assisted living facilities and retirement homes given the horrors of private sector performance in particular during the height of the covid crisis. Unfortunately, much of the furor has dissipated (how soon people forget) and the sector will likely lurch into the next lethal coronavirus crisis in the same state.

I used to be an investor in this REIT sector since it seemed like a relatively bullet proof concept with no lack of people wanting space but I exited about 8 years ago. It would seem to me to be better to be invested in broader apartment residential instead, e.g. CAR.UN.

 

[KaeJS]

The bigger issue ultimately may be what future role, if any, will the private sector have in assisted living facilities and retirement homes given the horrors of private sector performance in particular during the height of the covid crisis. Unfortunately, much of the furor has dissipated (how soon people forget) and the sector will likely lurch into the next lethal coronavirus crisis in the same state.

I used to be an investor in this REIT sector since it seemed like a relatively bullet proof concept with no lack of people wanting space but I exited about 8 years ago. It would seem to me to be better to be invested in broader apartment residential instead, e.g. CAR.UN.

Thank you for your response.

You make a valid point.

I own CAR.UN, as well.

 

[londoncalling]

I got crushed in this space as well when I chose Extendicare which was an even worse play than Chartwell. I like the play on aging demographics but for some reason can't find a way to play it. From an allocation perspective I should be adding to residential REITs but am having a hard time finding the play. Currency spread is really making it hard for me to pick up some US alternatives. I may also choose to buy an individual property instead if real estate has a major correction. Of course price is a small consideration compared to carrying costs, etc but that is a discussion that has been covered a ton already. I think you will do well on your investment in CAR and wish you all the best with Chartwell

 

[dubmac]

CSH-UN-T has a dividend payout ratio on the G&M Investor page listed at 2,778%

 

[AltaRed]

Yield percentages don't mean much without context.

The yield today is 0.051 paid monthly, or 61.2 cents annually. With today's closing price, today's yield percentage is 7.24%

 

[Synergy]

I still like CSH and think it will be a decent long term play. It DRIPs well. It's going to take some time for them to recover from COVID. Occupancy needs to improve.

Sometimes your dogs become your top performers one day.

 

[KaeJS]

I still like CSH and think it will be a decent long term play. It DRIPs well. It's going to take some time for them to recover from COVID. Occupancy needs to improve.

Sometimes your dogs become your top performers one day.

Occupancy will improve.
They are the big dogs in the space.
Nice buildings.
Nice advertising.

I think they know what they are doing. But it might take a few years to see some true potential come out.

I also don't think the private sector is in trouble here. Our government can barely handle healthcare. They can't handle public retirement homes.