Leisureworld purchase revs up retirement debate

Does an Australian investment bank's $598-million acquisition of Canada's biggest private operator of retirement homes this week mean investors should rush out and pump their capital into comparable publicly traded companies in the retirement-related and health care sectors whose key target markets are the aging and the elderly?

It depends who you talk to.

David Cork says not yet, at least not if your hope is to garner big rewards from the aging baby boom generation.

"I think you're way too early," said Mr. Cork, a director with investment dealer Scotia Capital Inc. in Ottawa and author of two books on investing: The Pig and the Python: How to Prosper from the Aging Baby Boom and Bulls, Bears and Pigs. "The big years for the baby boom are '57, '58, '59, '60, '61. Those years are where a huge part of the baby boom is hanging out, and those people haven't turned 50 yet."

"Remember, the boomers aren't there at the moment," concurred University of Toronto demographer David Foot, author of the perennial bestseller about the baby boom generation, Boom Bust and Echo: How to Profit from the Coming Demographic Shift. "It's the boomers' parents that are there . . . the Roaring Twenties generation."

Although this older generation is providing significant growth for the retirement home sector at the moment, Prof. Foot warned that "not many people were born in the 1930s, so you're not going to see the same speed of growth carry over to the next generation."

Mr. Foot and Mr. Cork made their comments following news earlier this week that Macquarie Bank Ltd., the largest investment bank in Australia, had struck a deal to buy Leisureworld Caregiving Centres of Markham, Ont.

The Canadian company, controlled by chief executive officer Herman Grad, owns 19 long-term care facilities in Ontario, along with two retirement homes and one independent living facility, with a total of 3,275 beds.

Macquarie already has interests in the retirement home and health care businesses in Australia. No stranger to Canada, it is a member of the investor group that owns Ontario's Highway 407 toll road and is participating in the expansion of the Vancouver to Whistler, B.C., road link known as the Sea-to-Sky Highway.

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