Virtual reality (VR) is increasingly used as a platform for social interaction, including as a means for older adults to maintain engagement. However, there has been limited research to examine the features of social VR that are most relevant to older adults experiences. The current study was conducted to qualitatively analyze the behavior of older adults in a collaborative VR environment and evaluate aspects of design that affected their engagement outcomes. We paired 36 participants over the age of 60, from three diverse geographic locations, and asked them to interact in collaborative VR modules. Video-based observation methods and thematic analyses were used to study the resulting interactions. The results indicated a strong link between perceived spatial presence in the VR and social engagement, while also highlighting the importance of individual personality and compatibility. The study provides new insights into design guidelines that could improve social VR programs for older adults.