OCA - Oceania Group - retirement villages

[Snow Leopard]

42c seems arbitrary. What's with that?

We may never see 42c... But I hope we do.

It is so sad that the youth of today do not know the significance of 42.
A generation of unhoopy froods who have no idea where their towel is.

:(

[Bjauck]

It is so sad that the youth of today do not know the significance of 42.
A generation of unhoopy froods who have no idea where their towel is.

:( If I have any available funds after the Infratil issue, I may add to my Oceania holding.

42 - significance being the number of the first black major league baseball player? Or. The Douglas Adams answer?

Personally I am more of a red dwarf fan, and prefer an Anglia to a Prefect!

[Daytr]

Hey Daytr, does this mean you agree with SailorRob and I that lower prices are in fact better than high.

Because you have spent a lot of time in the past arguing the opposite.

That is a very simplistic interpretation of what I have said.

What is obvious to everyone is that it depends on the outcome. Averaging down can be the worst or best thing to do, but either way it's a risky strategy.

If your view on the stock hasn't changed from when you first bought it then perhaps it's the right thing to do. However it's not without risk and this is where SailorBoy and I disagreed, he acted like there is no risk.

My recommendation would be to diversify risk, as effectively you are buying into the sector, certainly not the management, in fact I would say the management is one of the biggest risks, as they have under performed and the new CEO is untested.

So if I owned RYM, I might look at topping up with OCA, or vica versa, at 42c or equivalent, naturally. 😉

As I don't own either, I have the best position of all.

[Daytr]

If I have any available funds after the Infratil issue, I may add to my Oceania holding.

42 - significance being the number of the first black major league baseball player? Or. The Douglas Adams answer?

Personally I am more of a red dwarf fan, and prefer an Anglia to a Prefect!

Definitely a Douglas Adam's reference.
Such a clever book.

[ValueNZ]

That is a very simplistic interpretation of what I have said.

What is obvious to everyone is that it depends on the outcome. Averaging down can be the worst or best thing to do, but either way it's a risky strategy.

If your view on the stock hasn't changed from when you first bought it then perhaps it's the right thing to do. However it's not without risk and this is where SailorBoy and I disagreed, he acted like there is no risk.

My recommendation would be to diversify risk, as effectively you are buying into the sector, certainly not the management, in fact I would say the management is one of the biggest risks, as they have under performed and the new CEO is untested.

So if I owned RYM, I might look at topping up with OCA, or vica versa, at 42c or equivalent, naturally. 

As I don't own either, I have the best position of all.
Who and how have management underperformed? Which metrics have they underperformed on and what is this measured against. Cheers.

[Daytr]

Who and how have management underperformed? Which metrics have they underperformed on and what is this measured against. Cheers.

I'm not going to waste my time on here stating the bleeding obvious. And I'm sure many on here will appreciate that.

Crikey, if you don't think management has underperformed, its no wonder you think this OCA is worth so much.

I have pointed out so many areas of concern over the last few months, but apparently none of that matters. The market obviously disagrees.

One last thing? Why has there been a change in CEO?

[Balance]

At 42c I might get tempted.
Deeper value.

Institutional selling (out) and retail buying - only one way the sp is going until the instos stop selling and actually, start buying.

Downturn in property cycle still has at least a while more to go in the meantime.

[winner69]

Who and how have management underperformed? Which metrics have they underperformed on and what is this measured against. Cheers.

Brett failed badly to Shareholder Returns and Underlying EPS targets (AR says so)

Important targets I reckon and FAIL

[X-men]

Delusion..only dumb holders that keep wishing the share price down 👇👇👇

[nztx]

51c fellas. How low can it go? :t_up:

I'm loving it.


still 51 pennies - you can't be buying enuff :)

[nztx]

Delusion..only dumb holders that keep wishing the share price down ������


Do you have a link to that old "Ying Tong Song" by chance ? :)

we need some music to accompany the entertainment

The 1812 might scare some too much ..

[winner69]

Hey Value ….was that you picking up the 50 cent ones today

If so well done

[winner69]

Market Close report had this bit -

Small-cap aged care operator Radius Residential Care posted the day’s biggest gain across the main board, climbing 8.5%, or 1.2 cents, to 15.4 cents after Forsyth Barr started covering the stock, and pointed to long-term upside from an ageing population and shortfall of care beds.

Among other retirement village and aged care operators, Ryman Healthcare gained 3.3% to $3.75 on a volume of 1.6m, Summerset Holdings advanced 1.2% to $9.26 and Arvida rose 2.2% to 93 cents, while Oceania Healthcare was unchanged at 51 cents

Seems OCA still at bottom of pecking order

[Rawz]

Market Close report had this bit -

Small-cap aged care operator Radius Residential Care posted the day’s biggest gain across the main board, climbing 8.5%, or 1.2 cents, to 15.4 cents after Forsyth Barr started covering the stock, and pointed to long-term upside from an ageing population and shortfall of care beds.

Among other retirement village and aged care operators, Ryman Healthcare gained 3.3% to $3.75 on a volume of 1.6m, Summerset Holdings advanced 1.2% to $9.26 and Arvida rose 2.2% to 93 cents, while Oceania Healthcare was unchanged at 51 cents

Seems OCA still at bottom of pecking order

Not good winner. Or good? depends how you view money and things

[winner69]

Not good winner. Or good? depends how you view money and things

They might get that 42 yet

[Baa_Baa]

Seems OCA still at bottom of pecking order

Comparatively, and somewhat amazingly, RYM is actually at the bottom of the pecking order. Talk about a fall from grace! OCA are next though, ARV a bit above that and SUM way above, but flatlining. This sector has been absolutely hammered, forsaken and is now left to retail to squabble over the daily share prices.

It might be helpful for some who are watching the OCA market cap implosion, and might want to position for the inevitable return of the property market appreciation and interest rate reductions, that OCA trades are NOT dominated by insto's selling anymore. In fact it's a playground for the minnows.

The course of trades recently is showing that the daily trading is largely dominated by very low value and volume trades, very low. These are swinging the SP around 2-3 cents per day, but also down on aggregate. This is an indicator imo that the insto's have left the market to the retail, and the majority of retail that are left are trading parcels in the 10's or small 100's of dollars, with a few in the small 1000's.

This is a bottoming signal in the SP, though it could go on for some time yet. Chances of filling a substantial buy, or sell, at a fixed price are virtually zero.

Meanwhile, anyone who is remotely interested in getting some OCA, or some more, or the other RV's for that matter, would be well place to exercise some patience. There is nothing in the latest economic situation or forecasts to suggest that we won't get our fill or accumulation at even lower prices in the near/medium future.

As a friend said recently, and to paraphrase a Buffett saying "when it's raining gold, don't go outside with a thimble".

Or as someone else said that I can't remember, "Don't waste a good recession".

[Balance]

They might get that 42 yet

Notice how the instos are allowing the bids to build up before selling down?

The 300k+ odd at 50c must be looking tempting for one of them to provide.

[Mrbuyit]

Sold off my ATM last week at 7.55 and picked up some OCA at .51-.52

Time will tell if this turns out to be a garbage move or not..

[nztx]

Fancy thinking that there was huge gold to be made on NZX in the middle of a recessionary blizzard where most of the indicators are mostly pointing south and even the bravest of Comrades have gone underground into the safety of one of Robbo's recently excavated deep caverns :)

[Balance]

Index rebalancing on NZX today.

[allfromacell]

Index rebalancing on NZX today.

Plenty of opportunity at closing for institutions to sell into the 700k or so bids at $0.53, no one was interested.

[Baa_Baa]

Plenty of opportunity at closing for institutions to sell into the 700k or so bids at $0.53, no one was interested.

What? 3x average daily trading volume, all the $0.53's taken out, closed at $0.54. Normal minnows trading will resume on Monday.

[allfromacell]

What? 3x average daily trading volume, all the $0.53's taken out, closed at $0.54. Normal minnows trading will resume on Monday.

The massive tranche was pulled post market close, left unsatisfied. I know it's just balancing the point is it was a good opportunity for anyone looking to exit if they wanted to

[Baa_Baa]

The massive tranche was pulled post market close, left unsatisfied. I know it's just balancing the point is it was a good opportunity for anyone looking to exit if they wanted to

Ok yeah, got ya. Hard to believe there's anyone left who would be looking to exit at $0.53, and make a profit doing so.

[ValueNZ]

Insider buying a couple days ago which is always good to see.

https://www.nzx.com/announcements/433168

What is not nice is +8% on the share price.

[winner69]

Oh dear, Warriors sink to new lows with an embarrassing 66-6 loss to bottom placed Titans, yes the bottom team thrashed the Warriors. Fans are calling for the Wahs to hang their heads in shame but most are keeping the faith and remind us next week is the start of a big revival and ‘this will be our year’. UP THE WAHS

Big game of rugby tonight …Blues probably will win the Super Rugby title. It’s 21 years since they last won it. Wahs fan will be saying if the Blues can do it so can we.

Oceania share price finished strongly to be 1 cent up for the week. Even though the share price still pretty low fans still believe in the company and get excited by committing more cash to the recovery. Of note there are signs of more fans joining the party, like reports of one fan selling his A2 shares to do so. Things looking good …this is still going to be the year, even if they have a bad report like the Warriors. GO OCEANIA YOU BEAUTIFUL THING.

Casual observer still thinks this is just fans raving and hoping ….and this week really showed ‘this is our year’ is still just a dream. But without dreams there’s nothing for fans to rave about eh.

[Baa_Baa]

Casual observer still thinks this is just fans raving and hoping ….and this week really showed ‘this is our year’ is still just a dream. But without dreams there’s nothing for fans to rave about eh.

Those focused on SP upside, this week would have been a stinker if it wasn't for quarterly S&P NZX rebalancing. Friday saw some bigger money making their moves, volume on the day 3x average, whereas prior to that the minnows owned the stock, moving a few 10's or 100's, generally down. Normality will return next week, there is nothing except maybe a glimmer of hope in a 0.2% GDP growth, that will breathe life back into the SP. That said, long term value investors will be oohing and aahing over the opportunity at these SP's.

[Greekwatchdog]

I am waiting for Winners report to come out after such a pathetic and soft performance by the Warriors.

Just as well OCA have been building towards the future regardless of where share price is currently.

Warriors are a joke

[Mrbuyit]

Perhaps poor timing of my purchase, although motivation was more about ATM feeling a little shaky with the SML goings on. In saying that the short term shows ATM ~60c down, but where it goes from here us anyones guess.

With the warriors losing in such spectacular fashion surely OCA will be into the 40s next week!

[Baa_Baa]

With the warriors losing in such spectacular fashion surely OCA will be into the 40s next week!

Quite possible it could go into the 40's, I have a large overweight cash position looking for a home, but not keen to blow any of it on a severe down trend.

Funny thing the stock market, like if you have 100 shares and the price moves 1 cent, you make or lose $1. If you have 1000 shares, you're moving $10 either way. 5000 shares, it's $50. 10000 shares, it's $100. 50000 shares, it's $500. 100000 shares, every cent is a $1000 movement. 1,000,000 shares, every time some minnow drops into the 1 cent lower bid or buys the 1 cent higher ask, that's a $10,000 movement. I don't like it when the minnows own the market.

Maybe I should open a Sharsies account and join the minnows? See if I can day trade the cost of dinner for two and a bottle of wine each day. That'd probably mean I'd need a $10k stake and be quick on the 1-minute chart.

We used to have a fine old character Craic on this forum, he'd exclusively day trade Telecom/Spark, in between threatening his life with wild chainsawing episodes. Just a few hundy each trade, skim a profit, move on to the next day. Probably work for SPK with it's liquidity, maybe not so much for OCA? I wonder how Craic is, probably not so good, he hasn't posted for a few years.

[Baa_Baa]

We used to have a fine old character Craic on this forum, he'd exclusively day trade Telecom/Spark, in between threatening his life with wild chainsawing episodes. Just a few hundy each trade, skim a profit, move on to the next day. Probably work for SPK with it's liquidity, maybe not so much for OCA? I wonder how Craic is, probably not so good, he hasn't posted for a few years.

Jeepers, that long! Craic last posted Sept 2018. :(

[ValueNZ]

Funny thing the stock market, like if you have 100 shares and the price moves 1 cent, you make or lose $1. If you have 1000 shares, you're moving $10 either way. 5000 shares, it's $50. 10000 shares, it's $100. 50000 shares, it's $500. 100000 shares, every cent is a $1000 movement. 1,000,000 shares, every time some minnow drops into the 1 cent lower bid or buys the 1 cent higher ask, that's a $10,000 movement. I don't like it when the minnows own the market

Baa_Baa, how have you made or lost anything if a share is traded in a transaction you're not involved in? Punters transacting with each other changes nothing about the business nor your shareholding. It does however provide you with the opportunity to buy or sell at advantageous prices if you so choose.

[winner69]

Comments post match -

@JasonCParis
All @NZWarriors fans are gutted with how we played today, but the bye rounds are deceiving. So remember that we are only two wins away from 5th and one win away from 6th. In a year when anyone can be beaten, it’s still our year.

@JasonCParis
Better to have that @NZWarriors performance in the middle of the season vrs the end. No one will be more gutted than the team. We will win next week against the broncos and get the season back on track.

BaaBaa commented (abbreviated) ‘..this week would have been a stinker….’ ….. ‘Normality will return next week’ …….’That said, long term value investors will be oohing and aahing over the opportunity at these SP's.’

Another Oceania fan raved ‘Just as well OCA have been building towards the future regardless of where share price is currently. ‘ and added that the Warriors ‘area joke’ …..implying Oceania aren’t a joke but a beautiful thing

True fandom being shown by both Warriors and Oceania fans here. Both remain loyal and faithful and full of belief and full of hope. Quite revealing.

Casual observer probably thinks both the Warriors and Oceania (the company) are at best pretty ordinary and that will show in the results and ‘this is our year’ won’t

[Daytr]

Comments post match -

@JasonCParis
All @NZWarriors fans are gutted with how we played today, but the bye rounds are deceiving. So remember that we are only two wins away from 5th and one win away from 6th. In a year when anyone can be beaten, it’s still our year.

@JasonCParis
Better to have that @NZWarriors performance in the middle of the season vrs the end. No one will be more gutted than the team. We will win next week against the broncos and get the season back on track.

BaaBaa commented (abbreviated) ‘..this week would have been a stinker….’ ….. ‘Normality will return next week’ …….’That said, long term value investors will be oohing and aahing over the opportunity at these SP's.’

Another Oceania fan raved ‘Just as well OCA have been building towards the future regardless of where share price is currently. ‘ and added that the Warriors ‘area joke’ …..implying Oceania aren’t a joke but a beautiful thing

True fandom being shown by both Warriors and Oceania fans here. Both remain loyal and faithful and full of belief and full of hope. Quite revealing.

Casual observer probably thinks both the Warriors and Oceania (the company) are at best pretty ordinary and that will show in the results and ‘this is our year’ won’t

At least Jason didn't say the better team lost tonight as that would have been a stretch. 🤣

Vern Cotter said "losing to the Crusaders was just what the Blues needed to get them to the title."
"The Warriors losing to cellar dwellers by a record margin is just what the Wahs needed," said no one ever. 😅

There's consolation for the Chiefs supporters, at least they aren't a Wahs fan.
Unless of course like many do, they support both, then that would be like owning OCA & RYM for the last two years. But next year is your year!
Funny enough, actually I think it might be.
Not before the magical 42c though.

[winner69]

Those focused on SP upside, this week would have been a stinker if it wasn't for quarterly S&P NZX rebalancing. Friday saw some bigger money making their moves, volume on the day 3x average, whereas prior to that the minnows owned the stock, moving a few 10's or 100's, generally down. Normality will return next week, there is nothing except maybe a glimmer of hope in a 0.2% GDP growth, that will breathe life back into the SP. That said, long term value investors will be oohing and aahing over the opportunity at these SP's.

Minnows moving stock UP this week?

It’s 55 at the mo

[Daytr]

Minnows moving stock UP this week?

It’s 55 at the mo

Minnows indeed. Tiny volume.

[mike2020]

Does the RAD result today shine some light through OCAs window?

[winner69]

Does the RAD result today shine some light through OCAs window?


Result was out a few weeks ago so unlikely any new material in Annual Report

Share price going well though

[ValueNZ]

https://www.nzx.com/announcements/433480
Elizabeth Coutts buys another 10k shares.

Might be peanuts but still a positive sign.

[ValueNZ]

Deleted...

[winner69]

https://www.nzx.com/announcements/433480
Elizabeth Coutts buys another 10k shares.

Might be peanuts but still a positive sign.

Poor Liz … didn’t put much in this time did she

Her average cost is now $1.03 and she’s now $983k (nearly a million bucks) out of the money

Good she keeping the faith and remaining loyal though ….but is it really a ‘positive sign’

Interesting that Greg hasn’t bought any for a while …maybe saving up for the capital raise when it comes.

[Greekwatchdog]

[QUOTE=winner69;1058280]Poor Liz … didn’t put much in this time did she

Her average cost is now $1.03 and she’s now $983k (nearly a million bucks) out of the money

Good she keeping the faith and remaining loyal though ….but is it really a ‘positive sign’


You seem to worry about this more than she does. I wonder when the worm turn what you will say then Winner?

[Bjauck]

Poor Liz … didn’t put much in this time did she

Her average cost is now $1.03 and she’s now $983k (nearly a million bucks) out of the money

Good she keeping the faith and remaining loyal though ….but is it really a ‘positive sign’

Interesting that Greg hasn’t bought any for a while …maybe saving up for the capital raise when it comes. Post balance date OCA sold two sites and a third had been conditionally sold. Do you think they need a capital raising in addition to site sales?

In addition to Coutts, there was the notice about a week ago stating Isaac also bought another 50,000 on market. Not large amounts, however they are on-market purchases nonetheless.

[winner69]

You seem to worry about this more than she does. I wonder when the worm turn what you will say then Winner?

No doubt she’s hoping the worm will turn …if it does I’ll be cheering her on

Directors buying often seen as a good sign …but following Liz for 7 years or so not been a good strategy

J

[winner69]

Post balance date OCA sold two sites and a third had been conditionally sold. Do you think they need a capital raising in addition to site sales?

In addition to Coutts, there was the notice about a week stating Isaac also bought another 50,000 on market. Not large amounts, however on-market purchases nonetheless.


All depends on how strong sales have been since …… but debt levels pushing limits of respectability and what market thinks as safe só come November anything could happen

[winner69]

ASM tomorrow

Wonder how many have followed me in voting NO for re-election of Alan Isaac and Dame Kerry …both been hanging around the Oceania Boardroom for too long

[Balance]

Spoke to a banker yesterday who is in the bank’s property development lending division.

He has not seen the development market so ‘dead’ with banks and financiers hardly doing any lending due to lack of demand and bankable projects. A lot of distressed developers out there running out of time to stave off receivership by selling their completed developments and/or land. The smart ones got out earlier by taking a haircut or two if necessary.

He cited the example of one developer who completed a 20 units terrace housing development recently and successfully sold the 20 units - but only after he dropped the price from $900k to $700k per unit. Still made money as the developer bought the land with RC and BC in a receivership sale last year.

Read the above positively if you are so inclined (lack of supply in the future) or negatively if you are otherwise inclined (very limited demand especially for properties over $1.5m).

[Toddy]

Spoke to a banker yesterday who is in the bank’s property development lending division.

He has not seen the development market so ‘dead’ with banks and financiers hardly doing any lending due to lack of demand and bankable projects. A lot of distressed developers out there running out of time to stave off receivership by selling their completed developments and/or land. The smart ones got out earlier by taking a haircut or two if necessary.

He cited the example of one developer who completed a 20 units terrace housing development recently and successfully sold the 20 units - but only after he dropped the price from $900k to $700k per unit. Still made money as the developer bought the land with RC and BC in a receivership sale last year.

Read the above positively if you are so inclined (lack of supply in the future) or negatively if you are otherwise inclined (very limited demand especially for properties over $1.5m).

Yes, it will get messy, that's for sure. Stay away from the sector with your investment decisions. The tail may be long and drawn out.
I haven't heard much from the crowd singing from the hills lately about how a 'trade' is better than giving your kids a 'University education'.

[ValueNZ]

Anyone willing to take a screen recording of the meeting for me? I'd really appreciate it.

[allfromacell]

The meeting announcements have been released and all marked as 'price sensitive' although I cannot see anything new in the content.

[Balance]

All depends on how strong sales have been since …… but debt levels pushing limits of respectability and what market thinks as safe só come November anything could happen

Not a word on sales post balance date from what I can glean from the notes of the meeting.

[allfromacell]

Not a word on sales post balance date from what I can glean from the notes of the meeting.

24 apartment sales at The Helier now and I think I heard 8 care suits.

Maverick asking fantastic questions as always. Thanks Mav, even though you don't post here anymore your contributions are stil felt and valued by us holders.

[Balance]

24 apartment sales at The Helier now and I think I heard 8 care suits.

Maverick asking fantastic questions as always. Thanks Mav, even though you don't post here anymore your contributions are stil felt and valued by us holders.

So in the last 3 months, OCA sold another 4 apartments and 4 care suites at The Helier?

[peat]

Why is climate such a big deal to this company

They choose and build the sites they own so surely due diligence is done on flooding risk at that time.

Why so much focus on this issue for them.... it is just a waste of their effort for virtue signalling purposes. Remember how Synlait went pink and look whats happened to them.

[Gerald]

Any juicy questions? Had the privilege of catching the catching the insightful ones last year on native trees, recycling and how that lady was really interested in getting costs for a room at the Helier.

[winner69]

Any juicy questions? Had the privilege of catching the catching the insightful ones last year on native trees, recycling and how that lady was really interested in getting costs for a room at the Helier.

Parking or lack of it was the big issue this year

Mav mentioned peak debt but didn't get much feed back

That's about it

[allfromacell]

Parking or lack of it was the big issue this year

Mav mentioned peak debt but didn't get much feed back

That's about it

I read into the response from Brent that peak debt was definitely behind us.

Car parks were definitely a big agenda item this year.

[blackcap]

Why is climate such a big deal to this company

They choose and build the sites they own so surely due diligence is done on flooding risk at that time.

Why so much focus on this issue for them.... it is just a waste of their effort for virtue signalling purposes. Remember how Synlait went pink and look whats happened to them.

It's a red herring for me when companies waste lots of resources on climate. Makes me want to avoid investing in them as I am not sure my money should be used for climate related disclosures and mitigations.

[Perky]

Unfortunately I think you will find the companies have no choice in the matter…they probably don’t want to do the climate reporting either.
you can read a bit more here…but there has been a glut of first reports hitting the market lately
https://www.fma.govt.nz/business/services/climate-reporting-entities/#:~:text=Requirements%20for%20Climate%20Reporting% 20Entities&text=Prepare%20climate%20statements%20in%20accorda nce,or%20after%2027%20October%202024.


https://www.fma.govt.nz/assets/Guidance/CRD-What-you-need-to-know.pdf

[blackcap]

Unfortunately I think you will find the companies have no choice in the matter…they probably don’t want to do the reporting either.
you can read a bit more here…but there has been a glut of first reports hitting the market lately
https://www.fma.govt.nz/business/services/climate-reporting-entities/#:~:text=Requirements%20for%20Climate%20Reporting% 20Entities&text=Prepare%20climate%20statements%20in%20accorda nce,or%20after%2027%20October%202024.


https://www.fma.govt.nz/assets/Guidance/CRD-What-you-need-to-know.pdf

You are right, there is a new climate related reporting thingee, if your capitalisation is over $60m you have to include this in the Ann Report. It is costing companies a lot of money as they want to get it right.

Very annoying and more wastage of resources to satisfy the bureaucrats.

[ValueNZ]

Any juicy questions? Had the privilege of catching the catching the insightful ones last year on native trees, recycling and how that lady was really interested in getting costs for a room at the Helier.
One shareholder asked the board if they were sorry about the share price lol

[X-men]

Bet they just don't care about the SP.....they all still get their $$$ wages

[winner69]

One shareholder asked the board if they were sorry about the share price lol

What was the response?

[ValueNZ]

What was the response?
Can't remember exactly but it was a no. After all they don't control the prices at which people transact their shares...

I've sent an email to their investor enquiry address asking for a copy of the recording of the meeting, I'll share that here if they send me it.

[ronaldson]

In my opinion the trouble with all RV listed operators ( I exclude those companies that are fully aged care ), unlike companies in other sectors, is that both Board members and senior executives are not actually shareholder focused at all. Rather, they have the underlying belief that their mission is to benefit society by providing and building out secure village accommodation for the monied elderly via an endless pipeline of development, as a social good.

Indeed, I would be inclined to feel that way myself in their shoes, as the alternative would be depicted as capturing and milking for profit a dependant and vulnerable segment of the population.

Recent experience, evident with a number of operators, is that focus has become misplaced and they have lost their way so that shareholders have had a distinctly negative outcome. There are natural limits with regard to the extent of activity and asset base that the available shareholder capital should support. I have not seen, ever, any commentary as to what scale is desired to optimise shareholder outcomes, nor any assessment of when expansion should be curtailed in the interests of ensuring a stable longterm return to shareholders that realises embedded value and derisks activity.

OCA is no exception. The Board would be best advised to divest all but the most promising of sites held and restructure the business to operate the optimum asset base in the best interests of shareholders. The fact is that will not be contemplated because there are no kudos for doing that, and the underlying assumption appears to be that demographic tailwinds will provide support forever. Some analysis is needed as to how the model actually benefits shareholders.

[winner69]

Well done the mighty Warriors, a 32-16;win over the Broncos. Even though Broncos were missing a few star players it was still an impressive win. Last weeks big disappointment is now behind them and everything is back on track. Fans excited again and this is really going to be ‘our year’ UP THE WAHS

Oceania had a mixed week with the share price down 1 cent to 53 ….and still drifting down from 73 cents at the beginning of this year. Highlight of the week was the fans getting together (and watching livestream) to celebrate the past year’s successes and to hear from the bosses how well things are going. Seems we have a great team and a great plan and its all working out great with a bright future ahead. One solitary fan asked if the bosses were sorry about the results (shareprice) and in true Warriors mode the CEO blamed the referee and it wasn’t their fault. Things looking good ….GO OCEANIA YOU BEAUTIFUL THING.

A casual observer would still think that progress by either isn’t really that good and the fans are really still hoping like hell that their dreams will burst into reality later this year.

[Baa_Baa]

In my opinion the trouble with all RV listed operators ( I exclude those companies that are fully aged care ), unlike companies in other sectors, is that both Board members and senior executives are not actually shareholder focused at all.

As you've put this on the OCA thread, albeit referring to all listed RV's, I was wondering what you might think they could do to be more "shareholder focused", bearing in mind a couple of Directors have very large shareholdings and exec's are remunerated with share options. I suppose it will vary about what different shareholders want or expect.

It seems that you might think stopping development and asset growth and consequent growth in future cashflows, and just consolidating now, removing development expenses, divesting underperforming assets (they're already doing that), and feast on the capped but modest cashflows that results, would be more "shareholder focused"?

I would beg to differ, as a shareholder I didn't buy this for dividend earnings at this early stage in OCA's listed lifetime, this and the whole sector are woeful dividend payers. I didn't buy it either, for a short/medium term sugar hit on the shareprice, fortunately I suppose as we can see that the market has other plans. Albeit that play into my hands as I can buy a lot more OCA cheaply at ridiculously low multiples to asset value, without any consideration for future cashflows or distributions.

I bought it, and some other RV's, as a proxy development property play with a unique-to-sector capitalisation model that will develop and grow assets, and cashflows, ad infinitum until the market cannot sustain utilisation, which on sector demographics is decades away.

When that saturation point comes though, then yes I agree, stop all development costs, get rid of any underperforming assets if there are any left, optimise operating performance and drink from the cashflow firehose with outrageous distributions of excess profits to shareholders.

If I thought being "shareholder focused" was anything other than that, I would have sold my holding some time ago.

[winner69]

CEO is ‘incentivised’ by having Total Shareholder Return as one of the LTI targets.

Not a very demanding target ….but that doesn’t seem to work insofar as shareholders are concerned.

[Balance]

Just saw a big block of new premium terrace apartments in The Helier catchment area dropped the asking price of individual units by 23% yesterday.

Developer accepting reality after the units were advertised for $2.2m+ from a year ago.

But hi, OCA’s properties are special - they can only ever rise in values so as W69 would say, no worries!

[Daytr]

As you've put this on the OCA thread, albeit referring to all listed RV's, I was wondering what you might think they could do to be more "shareholder focused", bearing in mind a couple of Directors have very large shareholdings and exec's are remunerated with share options. I suppose it will vary about what different shareholders want or expect.

It seems that you might think stopping development and asset growth and consequent growth in future cashflows, and just consolidating now, removing development expenses, divesting underperforming assets (they're already doing that), and feast on the capped but modest cashflows that results, would be more "shareholder focused"?

I would beg to differ, as a shareholder I didn't buy this for dividend earnings at this early stage in OCA's listed lifetime, this and the whole sector are woeful dividend payers. I didn't buy it either, for a short/medium term sugar hit on the shareprice, fortunately I suppose as we can see that the market has other plans. Albeit that play into my hands as I can buy a lot more OCA cheaply at ridiculously low multiples to asset value, without any consideration for future cashflows or distributions.

I bought it, and some other RV's, as a proxy development property play with a unique-to-sector capitalisation model that will develop and grow assets, and cashflows, ad infinitum until the market cannot sustain utilisation, which on sector demographics is decades away.

When that saturation point comes though, then yes I agree, stop all development costs, get rid of any underperforming assets if there are any left, optimise operating performance and drink from the cashflow firehose with outrageous distributions of excess profits to shareholders.

If I thought being "shareholder focused" was anything other than that, I would have sold my holding some time ago.

That's all well in good Baa_Baa and each to their own etc, but why hang on to a proxy property development play post the Covid property sugar rush and a higher interest rate cycle?

Investors that have, have sat on a lame duck for the best part of three years and seen their investment shrink to 1/3rd of its peak value.
Sticking it in the bank would have been a much better option.

If I was a long term holder and weathered the storm (and perhaps there is more bad weather to come who knows) would I sell out now?
Probably not and I might be doing what you are doing in averaging down, but probably not in the same company, as you say it's a proxy. So if I owned OCA, I would probably by RYM or visa versa.

It was just obvious to me, post Covid, the Government was throwing everything at the property market legislatively to slow it down & increase supply and interest rates were going up fast.

Interestingly now the Government has reversed those things, seem to be getting out of building state houses, developers are going broke and perhaps interest rates will start to come down in the near future.

Only to have 3 times the money earning interest or invested in appreciating stocks for the last few years to reinvest now.

This is not to rub your nose in it, but I am questioning why hold an investment as a proxy to a market that had so many changes that would all negatively impact the sector.

[winner69]

Just saw a big block of new premium terrace apartments in The Helier catchment area dropped the asking price of individual units by 23% yesterday.

Developer accepting reality after the units were advertised for $2.2m+ from a year ago.

But hi, OCA’s properties are special - they can only ever rise in values so as W69 would say, no worries!

Oceania have ‘sold’ 4 more units at The Helier since March ……..no mention of price but who cares ….no worries

[winner69]

Does anybody know how much The Helier actually cost to develop?

[Balance]

Oceania have ‘sold’ 4 more units at The Helier since March ……..no mention of price but who cares ….no worries

Not a worry indeed - Brent has already stated that they are NOT dropping their prices due to the quality of their offering.

[winner69]

Quote from Ron’s post -

Indeed, I would be inclined to feel that way myself in their shoes, as the alternative would be depicted as capturing and milking for profit a dependant and vulnerable segment of the population.

Recent experience, evident with a number of operators, is that focus has become misplaced and they have lost their way so that shareholders have had a distinctly negative outcome. There are natural limits with regard to the extent of activity and asset base that the available shareholder capital should support. I have not seen, ever, any commentary as to what scale is desired to optimise shareholder outcomes, nor any assessment of when expansion should be curtailed in the interests of ensuring a stable longterm return to shareholders that realises embedded value and derisks activity.

Agree that focus has been misplaced and that shareholders are bottom of the list …even though mention ‘equal focus’ on key stakeholders.

It was evident that the Oceania ASM was a necessary evil and something that had to be done. Well timed having it afternoon before a long weekend and enthusiasm shown by Directors etc almost zilch…highlight was CEO squirming when blaming the market for the low share price….no remorse whatsoever …maybe he’s forgotten that growing earnings might actually help.

Ron, good post. Maybe what you are saying is that property development and caring/looking after people aren’t compatible after all and don’t make for a solid foundation to make real shareholder value

[allfromacell]

Does anybody know how much The Helier actually cost to develop?

Not sure it's been disclosed but I wonder if they still feel they will recoup by the end of FY25. If not, no worries FY26.

"Bianca Fledderus


Yes. Okay. But -- so based on that, it sounds like first half of '25 may still be quite weak on sales for The Helier and then hopefully, we'll see an improvement in sort of second half of '25 for that village?




Brent Pattison


Yes. I think we're not necessarily seeing it the same as that, but I think we're just being cautious. And we know that it's something that people are focused. That's a flagship property for us, so we're been cautious. But what we have done is run various scenarios. And under each of those scenarios, we're confident that we will be cash positive with the sales that we'll make out to FY '25. So we would have recovered our investment effectively."

[winner69]

I’m getting confused

Some are saying Helier apartment sales now total 24 …20 at March plus 4 Brent mentioned the other day

In that analyst briefing Brent said 13 sales to March …plus the 4 gives 17

Wonder if it’s 17 or 24 so far?

[allfromacell]

I’m getting confused

Some are saying Helier apartment sales now total 24 …20 at March plus 4 Brent mentioned the other day

In that analyst briefing Brent said 13 sales to March …plus the 4 gives 17

Wonder if it’s 17 or 24 so far?

The quote at the AR call was

"So we have 13 that have been -- 13 IOU that have been recognized in April '24. And we have 4 care residents. We have 7 under application, where we've seen settlements in May -- April and May of IOU and 2 additional applications for care residence."

At the AGM he said 24 apartment sales which I take as of June 27..

So sounds like 13 'sold' to April and 11 since March

[Greekwatchdog]

Does anybody know how much The Helier actually cost to develop?

close to if not slightly more than $150m and according to Brent will be paid for end Full Year 25. Guess in sales.

[Balance]

Oceania have ‘sold’ 4 more units at The Helier since March ……..no mention of price but who cares ….no worries

House prices need to fall further ….

https://www.rnz.co.nz/news/business/521022/house-prices-need-to-fall-a-further-16-percent-to-become-affordable

[X-men]

How...?? I don't see the prices will go down.

https://www.nzherald.co.nz/business/business-outlook-gets-gloomier-but-offers-hope-for-falling-inflation-nzier/YI4H2KBSHFBXZAZEKOXNT3WRW4/

Wages increase, materials increase...assets increase.

Unless the government created massive unemployment and credit crunch....like 2008-2009.

[Greekwatchdog]

House prices need to fall further ….

https://www.rnz.co.nz/news/business/521022/house-prices-need-to-fall-a-further-16-percent-to-become-affordable

So you post this on OCA when it should be on the generic thread. Your shorts are all the same.
And another thing. OCA has never priced their products at top end of where housing prices are as per where market prices are they use another tool to price, therefore leaving lots of space.

[Balance]

So you post this on OCA when it should be on the generic thread. Your shorts are all the same.
And another thing. OCA has never priced their products at top end of where housing prices are as per where market prices are they use another tool to price, therefore leaving lots of space.

No shorts here, gwd.

Why did I post here? Because this is the active RV thread and most widely read thread.

Posters here should be aware of property dynamics - especially when this company’s property values increase year on year irrespective of the reality of decreases in property values out there.

Fair enough?

[winner69]

So you post this on OCA when it should be on the generic thread. Your shorts are all the same.
And another thing. OCA has never priced their products at top end of where housing prices are as per where market prices are they use another tool to price, therefore leaving lots of space.

Brent keeps reminding us that Oceania are price makers

[Baa_Baa]

Posters here should be aware of property dynamics - especially when this company’s property values increase year on year irrespective of the reality of decreases in property values out there.

Fair enough?

Why do you think that is, with an independent valuer and no director meddling in asset price valuations (unlike some other RV's)?

Might it be because the assets are not targeted at the general property market, but towards a niche retiree market that has the money to buy ORA's?

Or maybe that the general residential property market is not as comparable to RV's as the share market sees to assume it it?

Or maybe it's the inherent 15%+ discount to the property market that the RV's position their ORA sells prices at?

Maybe it's because the independent valuer is fudging the asset value so that they can keep the contract and get the valuation job next year?

What do you think, it seems incongruous that the RV's assets values are consistently contradicting the primary residential property market?

[Balance]

Why do you think that is, with an independent valuer and no director meddling in asset price valuations (unlike some other RV's)?

Might it be because the assets are not targeted at the general property market, but towards a niche retiree market that has the money to buy ORA's?

Or maybe that the general residential property market is not as comparable to RV's as the share market sees to assume it it?

Or maybe it's the inherent 15%+ discount to the property market that the RV's position their ORA sells prices at?

Maybe it's because the independent valuer is fudging the asset value so that they can keep the contract and get the valuation job next year?

What do you think, it seems incongruous that the RV's assets values are consistently contradicting the primary residential property market?

Excellent questions, Baa_Baa.

What I can tell you is that we have talked to a RV specialist valuer (based in Orewa, north of Auckland of all places) and he said that RV units should be actuarial based DCF valuation.

In reality, he said that valuers can use several methods and most RV players use the most favorable valuation method, depending on what outcomes they want.

[Daytr]

Why do you think that is, with an independent valuer and no director meddling in asset price valuations (unlike some other RV's)?

Might it be because the assets are not targeted at the general property market, but towards a niche retiree market that has the money to buy ORA's?

Or maybe that the general residential property market is not as comparable to RV's as the share market sees to assume it it?

Or maybe it's the inherent 15%+ discount to the property market that the RV's position their ORA sells prices at?

Maybe it's because the independent valuer is fudging the asset value so that they can keep the contract and get the valuation job next year?

What do you think, it seems incongruous that the RV's assets values are consistently contradicting the primary residential property market?

Balance is just stirring and some of you bit.
I don't think many of Bishop's colleagues nor voters will back him on that. With construction companies going bust left right and center, who is going to take on more development land. Certainly not the retirement sector, they are in divestment mode.

Yes the NZ property market is very expensive in international terms, but so is the cost to build and there is still a shortage of property.

Many of the dynamics that hurt the property market in recent years have flipped, funny enough come from Bishop's own Government.

[ValueNZ]

Another insider buy :t_up:

Sally Evans picks up another 61k shares

https://www.nzx.com/announcements/433869

[winner69]

Excellent questions, Baa_Baa.

What I can tell you is that we have talked to a RV specialist valuer (based in Orewa, north of Auckland of all places) and he said that RV units should be actuarial based DCF valuation.

In reality, he said that valuers can use several methods and most RV players use the most favorable valuation method, depending on what outcomes they want.

What Balance has just said is summarised in the AR -

The fair value of investment properties is determined by the Directors after taking into consideration the valuations undertaken by CBRE as independent valuers ……..

Daytr Balance not stirring

[Daytr]

What Balance has just said is summarised in the AR -

The fair value of investment properties is determined by the Directors after taking into consideration the valuations undertaken by CBRE as independent valuers ……..

Daytr Balance not stirring

I'm not talking about valuations, if they are correct or not and I have stated my suspicions before that current prices may not have been reflected in OCAs valuations.

Where he is stirring is using a headline, "house prices need to fall further..."

[Baa_Baa]

What Balance has just said is summarised in the AR -

The fair value of investment properties is determined by the Directors after taking into consideration the valuations undertaken by CBRE as independent valuers ……..

Daytr Balance not stirring

At the ASM, the CEO stated clearly that the Directors & management did not adjust the valuers valuation.

[ValueNZ]

What Balance has just said is summarised in the AR -

The fair value of investment properties is determined by the Directors after taking into consideration the valuations undertaken by CBRE as independent valuers ……..

Daytr Balance not stirring
Can't remember where it was said, maybe the AGM, but the directors made no changes to the valuations made by the independent valuers.

[Balance]

At the ASM, the CEO stated clearly that the Directors & management did not adjust the valuers valuation.

Comes down to what valuation method is agreed to and used in the first place.

[nztx]

Hmmm .. dont like revaluations any more .. that's curious .. how will anyone have a measuring stick on the hidden deep value with that sort of carry on ? ;)

[bull....]

Hmmm .. dont like revaluations any more .. that's curious .. how will anyone have a measuring stick on the hidden deep value with that sort of carry on ? ;)

deeper value in the 40s perhaps ?

[mike2020]

Director buys on market at 54 cents, not a ripple on Share Trader. The times we live in.

[winner69]

Director buys on market at 54 cents, not a ripple on Share Trader. The times we live in.

Value gave it the :t_up: at 10.35

Seemed rather excited :)

[mike2020]

Value gave it the :t_up: at 10.35

Seemed rather excited :)

I didn't notice, looking at the close today no one else did either.

[Balance]

Director buys on market at 54 cents, not a ripple on Share Trader. The times we live in.

Who would want to follow the directors after their track record over the last 3 years of buying OCA shares!!!!

But then, this could be the turning point?

[Toddy]

Today's close looks very much like the bottom price during the covid panick.

Who would have ever thought that OCA would ever touch 51 cents again in a BAU environment.

[nztx]

Who would want to follow the directors after their track record over the last 3 years of buying OCA shares!!!!

But then, this could be the turning point?


Heck if everyone can buy in the 40's and know there's a director of two to unload the bundlle off to in late 50' s or even 60's - then there doesn't seem to be a problem .. Let's Rinse & Repeat and keep them so busy they don't get a chance to look see what's going on .. :)

What's the bet the directors will run out of buckets before any recognisable deep value comes bubbling to the surface :)

[ValueNZ]

Today's close looks very much like the bottom price during the covid panick.

Who would have ever thought that OCA would ever touch 51 cents again in a BAU environment.
OCA transacted at 38c at one point during the covid panic.

I actually think OCA is "cheaper" today than it was at that low, seeing as the business has grown it's assets significantly in the meantime.

[Balance]

OCA transacted at 38c at one point during the covid panic.

I actually think OCA is "cheaper" today than it was at that low, seeing as the business has grown it's assets significantly in the meantime.

Grown its debts and overvalued developments/land since Covid.

[Baa_Baa]

Grown its debts and overvalued developments/land since Covid.

What is it and why, do you hate on OCA so much and have nothing to say on any of the other RV threads? Is OCA just a proxy for all listed RV's and you assume an audience here for your grandstanding and down ramping? Interested to know.

Incidentally, OCA has suffered by far the most SP damage relative to NTA than any other RV. Maybe that's the point, to gouge out a few more % points downside to NTA and then scoop up a NTA discount to SP bargain ... "when the dealings done".

[Balance]

What is it and why, do you hate on OCA so much and have nothing to say on any of the other RV threads? Is OCA just a proxy for all listed RV's and you assume an audience here for your grandstanding and down ramping? Interested to know.

Incidentally, OCA has suffered by far the most SP damage relative to NTA than any other RV. Maybe that's the point, to gouge out a few more % points downside to NTA and then scoop up a NTA discount to SP bargain ... "when the dealings done".

One by one, the other RVs being Arv & Ryman, have fronted up to their overvaluations.

OCA has not and it's obvious the market does not believe the directors and management so I am simply highlighting some of the reasons why.

You have a problem with that? Why so? Is it not better to be aware than not?

[Baa_Baa]

One by one, the other RVs being Arv & Ryman, have fronted up to their overvaluations.

OCA has not and it's obvious the market does not believe the directors and management so I am simply highlighting the reasons why.

You have a problem with that?

No, no problem with that, not at all, it's just your opinion. So what do you think the additional punishment should be to OCA's NTA valuation and SP compared to now, given it's already the greatest discount to NTA of all RV's, that in your opinion hasn't already been price in to the SP?

[Balance]

No, no problem with that, not at all, it's just your opinion. So what do you think the additional punishment should be to OCA's NTA valuation and SP compared to now, given it's already the greatest discount to NTA of all RV's, that in your opinion hasn't already been price in to the SP?

I don't have an opinion on that - it's the market's view that OCA's valuation is suspect so it's up to OCA to clear that up.

[Muse]

The market's discount to reported NTA isn't (just) about skepticism of the book value of assets or fears on where they may head. The focus on this misses (at least) two important issues in my opinion.

Issue 1) Overhead Costs. Let's assume the book value of NTA is correct and thus fair market value. But the value of those assets comes along with a large and growing overhead cost base that isn't capitalised into those reported figures. Dumb analogies are often useful ones so lets say there is a house that has an official property value of $1m. But in purchasing that house you must also be obliged to pay $60k (growing briskly each year) to some over inflated management company and locked into perpetuity. Sure - on a strict property value basis it may be worth $1m but surely its not worth that once the impact of its management contract is considered. You'd want to take the PV of those overhead costs (or simply apply a multiple to them) and add that to NTA if one was determined to look solely at NTA as a value determinant.

Issue 2) Returns on Equity. OCA's returns on equity are poor on any basis; the various statutory npats (reported/comprehensive) or the reasonably bogus underlying earnings. Again - dumb analogy - but lets say an equity investor has a cost of equity of 10% (nice round #), and an asset has a return on equity of (say) 5% (these are just strawman numbers before anyone gets worked up). There is no way the marginal investor who sets the market price would pay book value for an asset producing approximately half of his/her required return all things equal. They would just pay the appropriate discount to NTA to true up their cost of equity. Adopting that framework into the real world, they would also make an adjustment based on the realistic level of compounded growth that asset could achieve in the future. The discussion around the float being an asset ignores the truth that in its present liability form it enhances the ROE. Returns on equity would be substantially worse if they were removed from the analysis. A second devils advocate argument would be the ROEs are deminished because a lot of capex has been put in place but hasn't been given the time to earn (and will in the fullness of time). That I have some sympathy for but that's likewise been the case for a while.

One final point and its been done to death but are the cashflow from operations. Jarden have done excellent work on OCA's adjusted funds from operations which digs into OCA's free cashflow from core operations (ie excluding new ORA sales and development capex & buybacks) which according to their analysis shows an increasingly negative cashflow profile. I'd imagine some much more informed than I posters here (like Ferg) would have seen this and make the argument that the analysis is unfair because it includes all the headoffice cost in core operations and doesn't pro-rata some out to development and its an interesting point to ponder, but it doesn't explain away that under Jarden's analysis OCA used to be reasonably cashflow positive on a core cashflow basis (+$18m in 2018) compared to circa negative 26m in 2024 (with 2h FY24 its worst on record).

It would be worthwhile for investors to consider OCA's debt headroom available to fund future development as well. Total drawn debt including bonds has doubled since FY21 and new facilities saw its headroom (undrawn funds available to be drawdown) peak at $195m in FY22. The last reported figure shows available gross headroom of only $61m - a huge compression in the capital available to fund future development and operational losses. So using the framework I talked to in issue two - that an asset earning a return below the cost of equity needs to be able to grow quickly to compensate for the below target returns - OCA's development capability is being impacted by a lack of headroom and this potentially leads to the discount ascribed by the market. If a growth company stops growing, the market reacts harshly by adjusting the multiple ascribed to it. Sure OCA can try to get new and enlarged facilities and it probably will at some point but the bank lending to it has been flat for the two years after years of lending to it. They will be informed by their interest coverage ratio and debt to (net debt + equity) covenants which OCA is presently okay on. The ICR is well north but only due to the sublime hedges OCA took out when rates were at rock bottom - I believe I read OCA would possibly be in breach if the interest rates were unhedged. And at 38.3% loan to value ratio they are below the 50% covenant but likewise they were only at 30.8% in FY22 so that's a lot of growth in gearing in just two years and probably mutes the banks appetite to grow the facilities at anywhere near the level they did in the past.

I think OCA's suspension of dividends, pullback on development, and appointment of a new CEO are a tacit acknowledgement of the realities in the paragraph above and I'd reasonably expect the new CEO to undertake some meaningful (& urgent) cost cutting measures once into the role.


I'm no an expert on OCA or aged care / RMs and the opinions above are just random musings based on a quick perusal of some recent accounts and research. I totally acknowledge the deep discount to NTA but I don't have a view on if that is too harsh or not from my back of the envelope look. I just think there are some aspects that feed into the discount applied into the market that aren't discussed in this thread so thought I'd add an outsiders perspective.

[davflaws]

I'm no an expert on OCA or aged care / RMs and the opinions above are just random musings based on a quick perusal of some recent accounts and research. I totally acknowledge the deep discount to NTA but I don't have a view on if that is too harsh or not from my back of the envelope look. I just think there are some aspects that feed into the discount applied into the market that aren't discussed in this thread so thought I'd add an outsiders perspective.

I appreciate your thoughtful and informative contribution.

[winner69]

Good most Muse …very thoughtful and I hope most read it as it’s full of very good insights

I

[Balance]

Good most Muse …very thoughtful and I hope most read it as it’s full of very good insights

I

Excellent summation and very helpful.

Superior assessment & analysis than most of the navel gazing posts blaming all and sundry about how and why OCA is trading at the deep discount to NTA.

[Daytr]

Well said Muse, I don't necessarily agree with your entire synopsis, however you put forward valid points of view.

The cashflow of operations I agree have been done to death, but many of the faithful continue to believe that the deteriorating performance in this area doesn't matter which I have found quite incredible.

The DMF made is now pretty much fully offset by the day to day losses of running the villages etc. Costs have ballooned, particularly labour costs and fees haven't kept pace.

[ValueNZ]

Issue 1) Overhead Costs. Let's assume the book value of NTA is correct and thus fair market value. But the value of those assets comes along with a large and growing overhead cost base that isn't capitalised into those reported figures. Dumb analogies are often useful ones so lets say there is a house that has an official property value of $1m. But in purchasing that house you must also be obliged to pay $60k (growing briskly each year) to some over inflated management company and locked into perpetuity. Sure - on a strict property value basis it may be worth $1m but surely its not worth that once the impact of its management contract is considered. You'd want to take the PV of those overhead costs (or simply apply a multiple to them) and add that to NTA if one was determined to look solely at NTA as a value determinant.
Muse you have to look at the NET cash generated from those assets. And not just the profit, but the interest free non callable loans that allow the business to grow incredibly quickly.

Issue 2) Returns on Equity. OCA's returns on equity are poor on any basis; the various statutory npats (reported/comprehensive) or the reasonably bogus underlying earnings. Again - dumb analogy - but lets say an equity investor has a cost of equity of 10% (nice round #), and an asset has a return on equity of (say) 5% (these are just strawman numbers before anyone gets worked up). There is no way the marginal investor who sets the market price would pay book value for an asset producing approximately half of his/her required return all things equal. They would just pay the appropriate discount to NTA to true up their cost of equity. Adopting that framework into the real world, they would also make an adjustment based on the realistic level of compounded growth that asset could achieve in the future. The discussion around the float being an asset ignores the truth that in its present liability form it enhances the ROE. Returns on equity would be substantially worse if they were removed from the analysis. A second devils advocate argument would be the ROEs are deminished because a lot of capex has been put in place but hasn't been given the time to earn (and will in the fullness of time). That I have some sympathy for but that's likewise been the case for a while.
I do agree with the premise that businesses that don't generate a sufficient return on equity should have a low P/B. But that only applies to businesses that generate a long run low ROE. The retirement village sector has historically produced very high returns on equity for the simple reason that they have access to huge amounts of costless float. It's hard to tell whether we'd see that level of profitability again, but the margin of safety is so great at 51c that we should earn a decent return from here regardless.

[Balance]

Muse you have to look at the NET cash generated from those assets. And not just the profit, but the interest free non callable loans that allow the business to grow incredibly quickly. And management has used the so-called interest free loans and ever more debt to load up on ever mopre expensive and non-profitable developments.

I do agree with the premise that businesses that don't generate a sufficient return on equity should have a low P/B. But that only applies to businesses that generate a long run low ROE. The retirement village sector has historically produced very high returns on equity for the simple reason that they have access to huge amounts of costless float. It's hard to tell whether we'd see that level of profitability again, but the margin of safety is so great at 51c that we should earn a decent return from here regardless. Same comment as above.

Still the same old 'float' blah blah blah.

[Daytr]

Still the same old 'float' blah blah blah.

And the term loans, but apparently they aren't loans, but when they want them to be loans, they are loans. 🤣

They forget about the asset they have provided to the tenant for free! No rent. Why?
Because it's a sale not a loan.
A sale of the right to use the unit for the duration.

[Cupsy]

And the term loans, but apparently they aren't loans, but when they want them to be loans, they are loans. 🤣

They forget about the asset they have provided to the tenant for free! No rent. Why?
Because it's a sale not a loan.
A sale of the right to use the unit for the duration.

I thought the ORA was a refundable occupation licence payment, that gives the group a legal right to set-off any amounts owing by the resident. And its not provided for free as there is a DMF cost (and potentially other costs).

[Daytr]

I thought the ORA was a refundable occupation licence payment, that gives the group a legal right to set-off any amounts owing by the resident. And its not provided for free as there is a DMF cost (and potentially other costs).

Sure there is a DMF at the end, but they aren't paying rent.
What would the rent be over the average 7 years? Let alone the interest cost of not receiving that rent as you go?
So technically neither the 'loan' nor the occupation is free. They do however subsidize each other I suppose.

[Cupsy]

Sure there is a DMF at the end, but they aren't paying rent.
What would the rent be over the average 7 years? Let alone the interest cost of not receiving that rent as you go?
So technically neither the 'loan' nor the occupation is free. They do however subsidize each other I suppose.

The balance of the occupation licence payment is held "free" for the duration is it not? (no interest is payable on that money [Ora less dmf] as far as i am aware), the DMF and other payments I assume are similar in value to what could be earned in rent (haven't confirmed that though).

[Daytr]

The balance of the occupation licence payment is held "free" for the duration is it not? (no interest is payable on that money [Ora less dmf] as far as i am aware), the DMF and other payments I assume are similar in value to what could be earned in rent (haven't confirmed that though).

Yes I think you need to check that.

[Cupsy]

Yes I think you need to check that.
Average rental return is around 4.5% per year isn't it? approx 30% over a 7 year period?
Paid up front with the ora model.
(Some one orrect me if I'm wrong)

[allfromacell]

Average rental return is around 4.5% per year isn't it? approx 30% over a 7 year period?
Paid up front with the ora model.
(Some one orrect me if I'm wrong)

Yes plus a 10% P.A weekly fee, should be a bit more than expected rental yeild.

[Daytr]

Average rental return is around 4.5% per year isn't it? approx 30% over a 7 year period?
Paid up front with the ora model.
(Some one orrect me if I'm wrong)

4.5% compounding.
Also refurb costs have to come out if the DMF which isn't typical for a 7 year old rental.

[Daytr]

Yes plus a 10% P.A weekly fee, should be a bit more than expected rental yeild.

10% of what?
Fees are for services, like a body corporate, nothing to do with rent. And they don't appear to be covering the costs.

[Cupsy]

4.5% compounding.

Compounding? Can you show the maths on that? I don't understand.

[allfromacell]

Fees are for services, like a body corporate, nothing to do with rent. And they don't appear to be covering the costs.

When residential housing is leased to a tenant costs such as maintenance and insurance are built into rent.

Similarly if I rent an apartment and pay a body corporate I would pass this on in rent.

I understand your point but if you want to compare incoming revenue from ILUs to rent you should include weekly fees.

[Daytr]

Compounding? Can you show the maths on that? I don't understand.

Well as rent would be paid monthly for agreements sake instead of $300k on a million over 7 years it's worth circa $370k. Could be more if the rent was invested at higher than the 4.5% yeild. I.e if the rent was put in the bank.

It's still a good deal for the operator, but it's not free.

[Daytr]

When residential housing is leased to a tenant costs such as maintenance and insurance are built into rent.

Similarly if I rent an apartment and pay a body corporate I would pass this on in rent.

I understand your point but if you want to compare incoming revenue from ILUs to rent you should include weekly fees.

Yep I get ya, but i don't think this can be included using a 4.5% yeild.

[Cupsy]

Well as rent would be paid monthly for agreements sake instead of $300k on a million over 7 years it's worth circa $370k. Could be more if the rent was invested at higher than the 4.5% yeild. I.e if the rent was put in the bank.

It's still a good deal for the operator, but it's not free.

How does it compound? (Im pretty sure you investing the rent does not make it a compounding investment).

[Daytr]

How does it compound? (Im pretty sure you investing the rent does not make it a compounding investment).

Rent money is paid right? Typically actually fortnightly not monthly so my example is conservative.
What is done with the money over the 7 years ? It's not put under the mattress.
I'm just using the banking it and earning interest as an example, again conservative.

[Baa_Baa]

Well as rent would be paid monthly for agreements sake instead of $300k on a million over 7 years it's worth circa $370k. Could be more if the rent was invested at higher than the 4.5% yeild. I.e if the rent was put in the bank.

It's still a good deal for the operator, but it's not free.

What is stopping "the operator" from putting the whole $1m in the bank for the average 7 years tenure? Why focus only on the difference of 30% that is not repayable at end of term? This seems to assume the operator does not have absolute 100% control over the full $1m and can do anything they want with it, until such time as the 70% needs to be repaid.

[Cupsy]

Well as rent would be paid monthly for agreements sake instead of $300k on a million over 7 years it's worth circa $370k. Could be more if the rent was invested at higher than the 4.5% yeild. I.e if the rent was put in the bank.

It's still a good deal for the operator, but it's not free.



Rent money is paid right? Typically actually fortnightly not monthly so my example is conservative.
What is done with the money over the 7 years ? It's not put under the mattress.
I'm just using the banking it and earning interest as an example, again conservative.

Ok in that case it's not a compounding investment (the rent income), and you would be better off with the dmf as you recieve the money at the start of the term (all the dmf money at the start would earn more in the bank from the start than being added incrementally).

[Baa_Baa]

You're also ignoring the 'weekly fees' and somehow writing that off as 'body corporate', but it's real money cashflow, every week.

[Daytr]

You're also ignoring the 'weekly fees' and somehow writing that off as 'body corporate', but it's real money cashflow, every week.

Nope, I'm not ignoring it, unless you are ignoring the costs that outweigh what the fees are supposed to cover.
And fees aren't paid up front.

[Daytr]

Ok in that case it's not a compounding investment (the rent income), and you would be better off with the dmf as you recieve the money at the start of the term (all the dmf money at the start would earn more in the bank from the start than being added incrementally).

Yes & no.
The rent would be compounding over time as would the full amount of DMF.
If the DMF or prepaid rent is 30% of the ORA then the operator is only being paid 70% for the value of the property upfront.
It can't be counted it twice, I.e a 30% profit on the sale. As the operators do call them sales after all.

So you either take 30% out of the profit of the sale and call it prepaid rent, or account for it as 100% sale, but not both.

[Cupsy]

Yes & no.
The rent would be compounding over time as would the full amount of DMF.
If the DMF or prepaid rent is 30% of the ORA then the operator is only being paid 70% for the value of the property upfront.
It can't be counted it twice, I.e a 30% profit on the sale. As the operators do call them sales after all.

So you either take 30% out of the profit of the sale and call it prepaid rent, or account for it as 100% sale, but not both.

The operator is paid the full ora upfront, the way the dmf is handled with the accounting is a different story. There is no profit from property sale as there is no property sale, it's a refundable occupation licence payment.

[Snow Leopard]

15174

This cup of Latte is more intelligent than the current conversation on the thread.

[Cupsy]

15174

This cup of Latte is more intelligent than the current conversation on the thread.

Ouch, what did I do to deserve that.

[Baa_Baa]

This cup of Latte is more intelligent than the current conversation on the thread.

You said recently said, "watch this space", well we're still waiting, for your insightful although predictably acerbic contribution.

Let the dogs out Snowy.

[ValueNZ]

Ouch, what did I do to deserve that.

Snow Leopard is just bitter about holding OCA at $1.60...

[ValueNZ]

Rent money is paid right? Typically actually fortnightly not monthly so my example is conservative.
What is done with the money over the 7 years ? It's not put under the mattress.
I'm just using the banking it and earning interest as an example, again conservative.
Now apply that same logic to the ORA payment.

[ValueNZ]

Well as rent would be paid monthly for agreements sake instead of $300k on a million over 7 years it's worth circa $370k. Could be more if the rent was invested at higher than the 4.5% yeild. I.e if the rent was put in the bank.

It's still a good deal for the operator, but it's not free.
But the DMF is all upfront - aka a way better deal. Time value of money and all that

[Daytr]

But the DMF is all upfront - aka a way better deal. Time value of money and all that

Sure, as I said as long as it's not being double counted in your value model on profits in sales.

[X-men]

Gosh..wtf happened today ..SP closed at 54c...

Must be the turn around story??

[winner69]

Despair for the Warriors as they lose 13-12 in extra time to the Bulldogs. Probably the better team but execution was not quite there and of course the ref didn’t help them. Leaves them 14th out of 17 on the table. But fans aren’t daunted. Chief fan Jason tweeted “The @NZWarriors were Warriors. So proud. #UpTheWahs” But fans say Wahs showed enough tonight that they remain title contenders. Yes, ‘this is our year’. UP THE WAHS

Oceania share price finished the week up a tad to 54 cents. Still languishing badly and YTD is 149th out of 170 on the table. LpAkin to refs being against the Wahs fans are saying the market is against Oceania. Not much happened this week but one insider.did buy some shares which got fans excited and kept the ‘this is our year’ mantra alive. GO OCEANIA YOU BEAUTIFUL THING

A casual observer notes that both Warriors and Oceania are languishing near the bottom of the table. That must mean something, both performance and results. Hard to see ‘this is our year’ becoming real for either..

[dreamcatcher]

Waterford Retirement at Hobsonville Point in lockdown.

Covid.

[nztx]

Waterford Retirement at Hobsonville Point in lockdown.

Covid.



Oh dear .. not again .. must be a lot of it around

[Bjauck]

Oh dear .. not again .. must be a lot of it around I have been shopping for two households of neighbours who have Covid. Worse than any other surge.

[X-men]

Shut the whole country down again!!! everyone takes 3 months off...stay home...save live....all will get fully paid...

Courtesy of Jacinda and Robertson Co