Chartwell Retirement Residences (TSE:CSH.UN) reported a 25% increase in third-quarter funds from operations per unit as higher occupancy and revenue helped lift earnings across its retirement residence portfolio.
CEO Vlad Volodarski said the quarter marked the company’s 13th consecutive quarter of double-digit FFO per-unit growth. He also said Chartwell expects its current portfolio of recently acquired growth properties to reach an average occupancy of 95% within about 12 months, although the makeup of that portfolio will change as properties are acquired or move into the same-property group.
FFO rose to CAD 100.8 million, or CAD 0.30 per unit, from CAD 73.1 million, or CAD 0.24 per unit, a year earlier. CFO Jeffrey Brown said reported FFO excluded CAD 1.4 million of income guarantees related to recently acquired properties.
Net income was CAD 115 million, compared with a net loss of CAD 5.2 million in the third quarter of 2025. Brown said the improvement primarily reflected a CAD 113.3 million gain on asset disposals, higher property revenue and other items, partly offset by expenses including taxes, depreciation, operating costs and finance costs.
Occupancy and pricing lift property earnings
Same-property adjusted net operating income increased 14.1% to reflect higher occupancy and revenue. Weighted average occupancy rose 230 basis points to 94.8%, while the adjusted operating margin increased by the same amount to 43.4%. Revenue per occupied suite grew 5.8%.
During the question-and-answer session, Brown said revenue per occupied suite growth was approximately 5.5% excluding prior-period funding. Chartwell is targeting increases for existing residents slightly above inflation and adjusting market pricing locally, he said. Incentives fell to 4.5% of resident revenue in the quarter from 4.8% a year earlier.
President and Chief Operating Officer Karen Sullivan said permanent move-ins exceeded permanent move-outs by 234 units during the quarter. She also said staffing agency costs declined 37% year to date compared with 2025, helped by recruitment and retention efforts.
For the first nine months of 2026, direct operating expenses per occupied suite rose 1.8% in the stabilized same-property portfolio. Brown said Chartwell believes it can keep growth in that measure below 4% over its three-year strategy period, but noted that occupancy gains had helped hold down the per-suite figure. As occupancy stabilizes at higher levels, growth could move closer to 4%, he said.
Volodarski said Chartwell expects average total compensation increases of 4% to 5% in 2027, consistent with recent years and above the historical range of 2% to 3%.
Growth portfolio offers occupancy upside
Chartwell’s growth portfolio consisted of 52 properties and approximately 9,300 suites at its ownership share, or about 35% of its total suites. The portfolio averaged 91.6% occupancy in the third quarter and had a 46% adjusted operating margin, Brown said.
Closing the gap between that occupancy level and the company’s same-property target of more than 95% represents approximately CAD 14.7 million in annualized revenue opportunity, according to Brown. He cautioned that new acquisitions and properties moving into the same-property portfolio would change the composition of the growth group.
Volodarski said the current growth portfolio includes both stabilized properties and residences in the early stages of leasing, some of which are 50% to 60% occupied. Those with more vacant space are expected to contribute more to occupancy growth.
Chartwell is not changing its 2028 occupancy target of more than 95%, Volodarski said, noting that the company and the industry have little historical experience operating at current occupancy levels. He said the company would nevertheless seek to outperform the target.
Development plans face rate pressure
Chartwell’s development pipeline comprises 38 projects with approximately 9,456 suites, including eight projects under construction and 30 in pre-development, Chief Investment Officer Jonathan Boulakia said. The projects span British Columbia, Alberta, Ontario and Quebec.
Volodarski said higher interest rates are making some pre-development projects with thinner projected returns harder to start and that some will be deferred. He expects additional projects to begin next year but said it was premature to specify how many. Projects already underway remain economical, he said.
On acquisitions, Boulakia described the pipeline for the next few quarters as strong and said Chartwell was seeing activity across its markets. He said demand remained strong for both Class A and non-core assets, with little adjustment in pricing despite rate volatility.
Chartwell completed the CAD 136 million acquisition of the 237-suite Greenway Retirement Residence in Brampton, Ontario, on Sept. 1. Volodarski said the property was not yet at stabilized occupancy and had room to grow. The company also sold an Ontario property for CAD 91 million on Sept. 1 and two properties in Quebec and Ontario for a combined CAD 49.8 million on Oct. 1.
As of Nov. 5, Chartwell had CAD 573.4 million in liquidity, including cash and available borrowing capacity. Brown said the company issued no trust units under its at-the-market program during the third quarter, meeting its capital needs through retained cash flow and disposition proceeds.
About Chartwell Retirement Residences (TSE:CSH.UN)
Chartwell is in the business of serving and caring for Canada’s seniors, committed to its vision of Making People’s Lives BETTER and to providing a happier, healthier, and more fulfilling life experience for its residents. Chartwell is an unincorporated, open-ended real estate trust which indirectly owns and operates a complete range of seniors housing communities, from independent living through to assisted living and long term care. Chartwell is one of the largest operators in Canada, serving over 30,000 residents in four provinces across the country.
