If Canada's seniors housing entrepreneurs had an annual meeting, they could probably hold it in a phone booth.

And that suits entrepreneur Stephen Suske just fine.

The crafty real estate veteran began to gravitate toward the fragmented seniors housing market in the early 1990s when he recognized that the industry in Canada was populated by very few big-time entrepreneurs and many small-time mom-and-pop operators.

And Suske, vice-chairman and president of Chartwell Seniors Housing Real Estate Investment Trust (REIT), has certainly made the most of that window of opportunity in a thriving industry. Since founding the Chartwell Seniors Housing REIT in 2003, Suske's visionary leadership has spurred explosive growth in the organization, which has more than doubled its operations in North America in a span of two and a half years, giving it a market capitalization of about $680 million.

Brennan O'Connor, Business Edge
Chartwell president Stephen Suske has the company poised to continue its dynamic growth with $625 million earmarked for investment this year.

Revenue in 2005 was $224.6 million, a 63-per-cent increase from 2004's $137.8 million. That still leaves it behind industry leader Retirement Residences REIT, which has a market cap of about $916 million and revenue of $1.071 billion in 2005 and $1.018 billion in 2004.

But Chartwell, now Canada's second-largest owner and operator in the seniors housing sector, is poised to continue its dynamic growth with $625 million earmarked this year for investment. In one fell swoop recently, Chartwell announced $316 million in acquisitions and development projects in Canada and the U.S. that will swell its property portfolio by 3,387 suites.

That's a giant step in a seniors housing industry known for baby steps.

Which suits Stephen Suske just fine.

1. What career did you aspire to as a youngster?

"I've always been kind of entrepreneurial, so I always knew business was where I should have been. It was in the family. My father worked his way up from an office boy to executive vice-president of a trucking company."

2. How did you get started in the senior housing industry?

"I got involved with an individual who was trying to buy Erin Mills Lodge in Mississauga, and I took a position in the deal in 1992. Before long I bought another home, and once I got into that business, I said, 'Jeez, I like this business.' I enjoy the fact that we're actually in the warmth and caring business. And that goes back to my BA-in-philosophy thing and the idea of making a contribution to society and to Canada. I liked the service component of the business, I liked the fact that it was business and I liked the fact that the business was essentially unsophisticated. So there were a lot of opportunities for bright, young guys - like the guys I've collected to work with me to grow the business. Philosophically, it was the way I viewed the world - I believe we're in the business of looking after people's Moms and Dads and that's first and foremost. We're passionate about that here, and at the same time it's a business and we're running it like a business."

3. Why did you take Chartwell Care Corp. public as a real estate investment trust in 2003?

"The problem in seniors housing is that it is very capital intensive and there was also something happening in real estate in the 1990s that was called a securitization of real estate. In other words, real estate companies were going public to get aligned with capital. So we made the decision that we had to become a seniors housing REIT if we were going to grow. So I started talking to a couple of my competitors and convinced them that we could put our properties together. We put together a program, we got RBC (Royal Bank of Canada) to be our lead (investor) and we went public in November of 2003. We raised $253 million. The share price started at $10 and we're now trading at about $14. It's been good for investors and good for us, and we've been able to grow the business accretively."

4. How has the seniors housing industry changed since you became involved?

"The big change is that when I first got involved, smaller one-bedrooms (suites) and studios were the norm. Now, that's completely changed. Families and residents are looking for larger one-bedrooms and larger two-bedrooms with elaborate common areas, wellness programs, Internet cafes and vibrant social activity programs. Demand is growing and it's a real challenge keeping up with the supply. There's a requirement for 11,000 new beds in Canada across the full spectrum of (seniors) care across the whole country every year until 2021. Then, it is like a hockey stick (chart). Then it takes off. Just to keep up with the demand, there's a requirement for a hundred new facilities every year in Canada. The need for seniors housing is just growing phenomenally."

5. What's your current growth strategy to meet that demand?

"We have four growth engines. We're growing through acquisitions in both Canada and the United States. We have this relationship with Spectrum (Seniors Housing Development Corp.), which is working on about 20 to 22 new facilities every year across the country. We're growing internally through facilities that have expansion capabilities and waiting lists. And we're also continuing strong growth in the third-party management business, because we believe that's very much a pipeline for new acquisitions and development opportunities."

6. What kind of growth are you anticipating in the next five to 10 years?

"When we did the IPO (initial public offering) in '03, we had 10,445 suites and now we have 23,000. That's not a bad run - we've doubled our size in two and a half years."

7. So how long do you expect it will be before you double your size again?

"Well, we're opportunistic. One of the things that is happening in this business is that the top 10 guys (seniors housing companies) in Canada have only 23 per cent of the market share, which means the other 77 per cent are owned by ma-and-pa operations. Being a public company allows us to consolidate a fragmented market, so there are all kinds of opportunities. Plus, there's the growth in the market because of the demographics."

8. What's your company's level of interest in Retirement Residences REIT, which is on the market?

"We're evaluating whether or not we will put in a bid. It's got to be accretive to our unitholders. It's got to be a situation where 'one-plus-one-equals-four' type of thing. We're still going through the numbers."

9. Extendicare has also attracted interest as a takeover target. Does that interest you?

"No, we're not interested in them. We're more heavily weighted to the light-care end of the market and they're clearly at the heavier-care end of the market. We're into seniors apartments, light-care retirement homes and full-care retirement homes but we're not as heavily into assisted living and long-term care homes because, from a demographic point of view, the wave of the Baby Boomers will first hit seniors housing and light-care retirement homes. The margins are better (in seniors housing and light-care retirement homes) and, quite frankly, it's a bigger market."

10. What's your main goal in building your company?

"We're working hard at becoming the best. In three years, we want to be one of Canada's best employers. That's principally our goal, because we believe that the manager on our team in each one of our homes has to be the best in the business. We fundamentally believe that if you've got good staff in the field, they're going to make the residents and their families very happy. And that will, by word of mouth, keep your homes full and that will result in happy unitholders. Do we want to be the biggest? I wouldn't say that. But we want to be the best, that's for sure."

11. Are you a bit perplexed by the performance of the units (which are down about 13 per cent year to date)?

"No, we're not because there are good reasons. We have a huge acquisition pipeline coming out, so we think there's a real buying opportunity. We did this raise of $185 million and in order to do that you have to give investors a discount on the value. We did $1.07 last year in distributable income. The street is saying that we're going to do $1.17 this year, so that's pretty significant growth. And the management feels confident that we're going to do that. How are we going to do that? Through acquisitions. We've got $625 million in our model (for 2006 investments). This deal we recently announced (to acquire interests in new facilities in Canada and the U.S. and expand existing facilities) will get us half-way there. It's a long-term play. The best thing about this REIT is that nine per cent of the REIT is owned by management. And that's all we own, except our houses. So our skin's in the game."

12. What's the biggest challenge for the seniors housing industry in Canada?

"Keeping up with demand. But the biggest challenge that we have is attracting and retaining great people to manage our homes. Interest rates may go up and down, and construction costs may go up and down. But at the end of the day, it's those great managers that you need in seniors housing that make the difference."

13. What's your view of the care the elderly are receiving in Canada?

"I think there have been some of these ma-and-pa operators that have been bad for the business. But I think the bad ones are getting swallowed up and really professional managers like Chartwell are doing more and more. It's a business, but at the same time you're looking after the elderly. So you've always got to be mindful of that. This is not financial engineering."

14. What does Chartwell do to ensure that residents are in a safe and comfortable environment?

"I go back again to the people we hire who are philosophically on the same page as us, who understand it's a real calling to be servicing seniors and their families. We have all the processes, procedures and all the policies and everything you can imagine to make sure that seniors are getting the best care."

15. Is there enough affordable housing for seniors in Canada?

"That's one of the sad things about seniors housing in this country - (this issue of) where all the poor people are going to stay.

"To be honest with you, many of our homes are for the mid to higher (range). That's going to be a real challenge for society."

16. What's your opinion about the state of the real estate market and talk of a bubble?

"That's why I like our business. There's lots of people getting older every day, right? So there's this demographic thing. The reason why there is a bubble is because there's no inflation in the system. Interest rates remained historically low and that's good for real estate. So do I think the bubble is going to burst? I don't think so. But that's one man's view. I think inflation is deader than a doornail in this country."

17. What style of leadership has worked for you?

"I tend to be a collaborator, bringing people together, sitting down, hashing through ideas and coming to a situation that's a win-win for everybody. That's my strength."

18. What kind of corporate governance do you strive for?

"No. 1, Chartwell REIT is a post-Enron company. So therefore our corporate governance and the way we set up the REIT in 2003 is very modern, very up to date and very good when it comes to corporate governance. All the decisions about the company, the direction of the company and the strategic plan for the company is all approved by an independent board, and any of the acquisitions we've made are all approved by the independent directors. So I think that Chartwell's got great governance. I further think that Bill 198 (Canada's corporate governance regulations) that everybody's complaining about just makes you better, too. I think we're a buttoned-down company that is complying with all the Bill 198 stuff and I think we have corporate governance that is second to none in the REIT world."

19. How do you see your role evolving in the company?

"Well, I'm 55 and I think I've got another 10 years to go. I know that we have a lot of great young guys here who I do a lot of mentoring with, and I think the company will be well served by them. But I'm not going anywhere soon."

20. What's the driving force that gets you up in the morning to come to work?

"I just absolutely love what I do. We've created a great company, and I love it."

Stephen Suske

* Titles: President, vice-chairman, Chartwell Seniors Housing Real Estate Investment Trust; chairman, Spectrum Seniors Housing Development Corp.

* Born/Raised/Age: Woodstock, Ont./55.

* Education: University of Western Ontario, MBA, BA (philosophy).

* Career: Suske has been involved in the seniors housing industry since 1992. In 2003, he founded Chartwell Seniors REIT. He began his entrepreneurial career in real estate investment finance in 1979 with Halcion Holdings, after serving as an executive assistant to cabinet minister Bud Cullen in the Liberal government from 1977 to 1979.

* Wedding bells: Suske will be married in June and honeymoon in Italy.

* Pastime: Reading.

* Favourite book: A Man For All Seasons.

* Drives to work in: 2006 Cadillac.

Chartwell Seniors Housing REIT

* Profile: Chartwell is an investment trust that is the second-largest owner and operator in the Canadian seniors housing sector. The company has more than 23,000 seniors housing suites owned, managed or under development in North America.

* Key Stats: Chartwell recently announced investments of $316 million in acquisitions and development projects in Canada and the U.S. that will boost its portfolio of properties by 3,387 suites. It plans to invest $625 million in the seniors housing market in 2006.

* Key Partners: Chartwell has an exclusive option to purchase facilities from Spectrum Seniors Houston Development, Canada's largest seniors housing development company, and has a joint-venture partnership with ING Real Estate Australia in its U.S. operations.

* Unit Price (TSX:CSH.UN): $13.85 (52-week range, $13.42-$16.35).

* Website: www.chartwellreit.ca

* Head Office: 100 Milverton Drive, Suite 700, Mississauga, Ont.

L5R 4H1.

* Phone/Fax: 905-501-9219/501-0813.

(Gyle Konotopetz can be reached at gyle@businessedge.ca)