b'ADVERTORIALSeniors Housing and Long-Term Care2023 OutlookSeniors housing is a vital and growing sector in the Canadian economy with a great deal ofpotential given the growing population of retiring and aging baby boomers. Over the next two decades, theAmong other trends, larger players areOur view is that it will take population of Canadians aged 75 andchoosing to divest smaller properties in18to24months for the sector to older is expected to grow fastest at oversecondary markets. At the same time,normalise with continued support from 110%, compared to 20% for the broadertheyre building for scale in larger urbanlenders and the government, helped population. With the life expectancy ofcentres. Operators are also leaving existingfurther by easing in both inflation and people aged 65 and over increasing 1 , sobusiness lines to focus on either long-terminterest ratepressures. too are the demands for services to carecare or retirement. While these moves for them. With waitlists growing andled to significant merger and acquisition government-funded construction andactivity over the last five years, dealsLets connect investment increasing, the opportunitieshave been challenged given the risingbmo.com/businesspropertiesin the sector are significant. Followingrate environment. Buyers are resisting are a few key trends and developmentspaying a premium for the promise ofRoy Diaswere tracking. future income, while sellers are taking aSenior Vice President & Head, While occupancies in the sector havewait-and-see approach, focusing insteadMedia, Equipment & Business on improving operations and cash flow.Properties Financing within fallen on average by 10% to 15% sinceHowever, we believe consolidation willBMO Commercial Bank, 2020, we expect this to stabilize and trendcontinue given the capacity of larger firmsCanadahigher by the end of 2024. Nonetheless,to support the higher costs associatedroy.dias@bmo.coma significant and increasing gap betweenwith construction and operations.demand and supply for seniors residencesSanjay Arorapersists. Many developers are on theOther developments to watch include: Managing Director & Regional sidelines because rising construction andVice President, Central and labour costs, higher interest rates andIncreasing regulation and higherEastern Canada, Business operating costs should persist in theProperty Finance, BMO slow lease-ups do not support investmentshort-to-medium term Commercial Bank, Canada return expectations. Uncertainty inConsumer demand for gatedsanjay.arora@bmo.comthe residential real estate market andcommunities with on-site amenities declining sales volumes caused by risingStephen Vermetteinterest rates are also impacting lease- should increaseManaging Director & Regional ups. Meanwhile, some long-term careOperators will remain focused onVice President Western projects are being sold for alternateincreasing occupancy levels andCanada, Business Property use as their licenses mature. To counterrevenues while managing costs Finance, BMO Commercial Bank, Canadathis trend, provincial governments areRecently announced changes to fast- stephen.vermette@bmo.comdoing their best to incent developmenttrack the accreditation of internationally by increasing funding and subsidies toeducated nurses 2should help manage developers and operators.current labour supply shortagesBMO Commercial Bank is a trade name used in Canada by Bank of Montreal, a CDIC member.1 https://www12.statcan.gc.ca/census-recensement/2021/as-sa/98-200-X/2021004/98-200-x2021004-eng.cfm2 https://www.cicnews.com/2023/01/provinces-working-to-make-it-easier-for-internationally-educated-nurses-to-work-in-canada-0132442.html#gs.xywbtx23-1015 Seniors Housing Advertorial Ev2.indd 1 2023-05-18 4:38:47 PM'