On Sunday, Welltower (NYSE: WELL) introduced it’s buying a portfolio of communities managed by Amica Senior Existence in Canada for a deal equal to nearly $3.2 billion USD.
Welltower is with the deal gaining 38 “extremely luxurious” communities and 9 growth parcels together with a minority possession curiosity in its new working companion. However greater than that, the corporate is ramping up its plans in Canada in a giant manner with different operators, together with Cogir, in a pattern that I feel the trade will see extra of in 2025 and past.
Whereas accessing Canadian markets is out of attain for a lot of U.S.-based senior dwelling firms, REITs like Weltower and Ventas (NYSE: VTR) have the dimensions and capital with which to make large performs north of the U.S. border.
By investing in Canadian operators and properties, firms like Ventas and Welltower are diversifying their portfolios past U.S. borders and gaining perception into fashions that might inform operations and improvements on this nation. Their Canadian companions additionally may finally develop in the US; already, Cogir’s U.S. arm is massive and rising.
Canadian markets additionally carry related demographics and provide tendencies as U.S.-based markets, with outsized development of the 80-plus inhabitants by way of 2030 however comparatively low ranges of newly constructed communities.
Welltower and Ventas already each have dozens of communities in Canada apiece, however given what I’ve heard and seen as of late, I feel they’re solely getting began increasing within the nation.
Welltower CEO Shankh Mitra believes Amica manages “the most effective senior dwelling portfolio that I’m conscious of on the earth.” He added that the sale from Ontario Academics’ Pension Plan is a component of a bigger pattern “towards massive Canadian pension funds to promote personal fairness and personal actual property belongings,” telling me there’ll doubtless be extra alternatives to upsize in Canada forward.
On this members-only SHN+ Replace, I study current feedback from REIT executives and supply the next takeaways:
– What holdings Welltower and Ventas have amassed in Canada in recent times
– Why competitors for offers will solely speed up north of the U.S. border
– Demographic tendencies propelling Canadian development methods ahead
Inside Welltower, Ventas development in Canada
Ventas and Welltower are usually not strangers to Canada. Each firms have had senior dwelling holdings there for years and have competed with one another to do offers north of the border. In 2025, I imagine these firms will proceed with these plans and speed up them additional.
Earlier than the Amica deal, Welltower had 134 properties in Canada, in line with its 4Q24 supplemental disclosure. By comparability, Welltower’s largest peer REIT, Ventas, had 84 communities in Canada as of December 31.
With its Amica acquisition, Welltower is following a blueprint it has taken earlier than. In late 2023, the corporate expanded its relationship with Cogir after closing a 12-property, $885 million CAD transaction. Particularly, the corporate stated it acquired the 12 lower-acuity communities below Cogir’s Jazz model at a reduction to alternative price.
As of the top of 2024, Welltower and Cogir had grown the portfolio to a mean of 98% occupancy, pushing its NOI 7.1% larger than underwriting. Occupancy on the finish of final 12 months additionally was 90 foundation factors larger and income per occupied room (RevPOR) was 4.2% larger than what Welltower assumed it could be at the moment.
Amica’s higher-acuity properties in Toronto, Vancouver, and Victoria, are “a pure complement in Canada to the decrease acuity mannequin of Cogir,” Welltower famous in its most up-to-date enterprise replace.
Ventas additionally sees Canada as an necessary a part of its general senior dwelling holdings. Among the many firm’s star performers north of the U.S. border – and general – is Le Groupe Maurice, which as of late final 12 months had nearly reached 100% occupancy for its 37-community portfolio owned by Ventas.
A few weeks in the past, I met with Ventas CIO and EVP of Senior Housing Justin Hutchens, who advised me that Le Groupe Maurice and its communities exemplify the “future” of senior dwelling with communities geared up with a variety of facilities together with golf simulators, bocce ball courts, massive health facilities, outside gardens and bowling alleys. The communities even have ground-floor house for eating places, grocery shops, salons and other forms of companies that older adults of at the moment frequented earlier than shifting in.
“If you stroll in, you are feeling an prompt power,” Hutchens advised me.
The comparatively modest measurement of each firms’ portfolios in Canada tells me there’s doubtless extra room for each to develop there, if the chance is true – and there might already be offers underway that might shut sooner or later.
Mitra and Welltower administration spoke concerning the REIT and its plans throughout a current assembly on the Citi 2025 International Property CEO Convention this week. One element that caught my consideration was the truth that Welltower’s leaders stated that they had labored on the Amica deal for “10-plus” years, with the current acquisition the fruits of a protracted ready interval.
“It’s the highest-quality portfolio, and it comes with large development prospects, from leasing up seven buildings which are newly delivered to buying seven extra buildings which are in development as they’re accomplished with out taking development or growth danger,” stated Welltower Co-President and Chief Funding Officer Nikhil Chaudhri throughout the firm’s presentation at Citi on March 4.
Mitra stated the corporate’s leaders finally closed the deal throughout a six-hour negotiation on the home of Amica CEO Jens Cermak.
“I’m a handshake individual. I’ve by no means walked away from any offers I’ve ever stated I’m going to do,” Mitra added.
That anecdote, coupled with what I’ve heard current leaders say about Canada, inform me that they see the nation filled with alternatives price ready for – and I’d not be stunned if Ventas or Welltower are engaged on different offers up north, ready within the wings to pounce on them when the chance is true.
Of explicit curiosity to me is the truth that Canadian operators have approaches which are totally different than these typical in the US, and extra cross-pollination of concepts and practices between the 2 international locations may spur innovation.
Contemplate PARC Retirement Residing, which made the SHN “Suppliers to Watch” function in 2021. The corporate’s method to eco-friendly options, common design and partnerships involving scholar housing are among the many components that make it stand out.
After which there’s Optima Residing, a Canada-based operator that has been honored in SHN’s Facet Awards program for its gross sales and advertising initiatives. Optima has leveraged facilities comparable to pickleball courts and pubs to create themed occasions that draw youthful prospects to its communities.
“It’s about how we leverage engagement and we’re creating that function,” Co-Founder and Principal Karim Kassam stated on the 2025 SHN Gross sales & Advertising and marketing Convention. “Now you’ve gotten a pool of certified leads that you simply don’t have to take a position advertising {dollars} on since you’re creating that interplay proper there.”
Canada ripe for extra senior dwelling development
Even a cursory take a look at demographics in Canada reveals that the nation carries the same demand upside because the U.S. For that reason alone, I feel it is going to stay a goal through which to deploy capital and make new investments within the years forward.
Weighted common senior dwelling occupancy in Canada has grown from a low of 71% within the first quarter of 2021 to about 88% in 2024, with rising leasing velocity and optimistic internet absorption in most markets, in line with a September 2024 Cushman & Wakefield evaluation of senior housing tendencies in 17 Canadian markets.
On the identical time, hire development is accelerating, with common will increase within the 3% to five% vary in 2024 in comparison with 2023, in line with the report.
As of 2023, there have been about 7.6 million adults in Canada aged 65 and older, accounting for about one-fifth of all individuals there, in line with Statistics Canada, the nation’s official statistics workplace. By 2030, individuals aged 65 and older may characterize as a lot as 23.4% of the full inhabitants within the nation.
On the identical time, annual deliveries of latest senior housing communities in Canada dipped in 2023 and 2024, in line with Cushman and Wakefield information cited by Welltower.
All of this suits into the said targets of REITs like Ventas and Welltower, which have sought as of late to purchase high-performing senior dwelling portfolios at a reduction to alternative price.
Placing the items collectively, each Welltower and Ventas have said they see a whole lot of promise of their present Canadian holdings. And with demographics trending in the suitable course, aligning with these firms’ acquisition methods, I imagine we’ll see extra growth north of the border forward.
