Originally Posted by
ronaldson
I wonder at what point any of the listed RV operators would consider their business "mature" and that they have reached an optimum size operationally, such as to withdraw from new development and consolidate to focus simply upon their residents and shareholders, and reduce risk accordingly?
At the moment development capital expenditure is the major cash outflow for all, with management seeking to structure development projects to ensure capital commitments match capacity limits whilst maintaining high build rates and keeping costly land banks on hand, and churning sales and resales as fast as market forces allow. Those where rest home beds predominate are (rightly) pivoting away as fast as they can so as to minimise dependence upon government funding support.
Some of the stresses the current approach delivers to shareholders have been manifesting. And this despite the demographic tailwinds blowing hardest just now. I would have thought that targetting, say, 2030 to scale back and consolidate to just operate then existing sites would be most beneficial to holders. I have the same view about listed property company entities where the share price has remained more or less static over decades despite buying, selling and developing over the intervening period. No doubt great fun for those involved but doesn't move the actual share price for more than a generation. Compare that with the outcome for those who buy or co-own a single property and divest after the same timespan and invariably the capital return is far higher.
Of course there are benefits to society/the aged community from the current approach but why should investors be responsible for that? So what is the endgame here, or indeed is there an end point envisaged at all or do we just continue until population growth and home ownership rates drop to unsustainable levels and the model fails? Interested in what current investors in the sector think given dividend growth/returns are no longer market leading.