Originally Posted by
Baa_Baa
The business model won't collapse, because listed RV's will imo just pass on to residents, the maintenance costs from unintended consequences of revisions to the Act, which would be cost neutral. It might be more significant to non-listed RV's if they can't or don't pass on those costs.
Nor will it be overly affected by having to pay back the 'loan' within 12 months, less 20-30% margin, when the retiree 'leaves', as most are already paid back well before that 12 months proposed limit.
Both of these though, are rounding errors financially in the scheme of things.
From a quick review, the listed RV's are largely already doing what the proposed legislation amendments suggest. I can't speak for the non-listed privately owned RV's as I don't know.
I didn't see a retrospective application of the proposed legislation amendments, which is a bit surprising as it then would only advantage new comers contracts, and all existing contracts would remain unchanged. That seems to be a disparity. I need to review that again, might have missed something.
The business model of the listed RV's are not overly affected by the proposed legislative amendments as they are deeply founded in interest free 'loans' from residents (the float) and how that is leveraged by them for growth, which does not appear to be in scope of the proposed amendments. Another thing I need to deep dive into.
I'll read the discussion paper again in detail when I have some time, but on face value it appears to be insignificant to the listed RV's who are already doing most of it.
At least now we have some insight into the proposed amendments, which if it turns out to be insignificant or less than significant to the listed RV's, the risk premium discount imposed by the share market on listed RV's SP's to-date, might just dissipate, ergo a re-rate could be coming. I estimate the uncertainty leading up to this has been a 30-50% risk premium loss on the share price.
And if so, it will be across all listed RV's who have suffered this burden of previously unknown regulatory change hanging over them. I suspect these massive discounts to NTA and other measures will in time be reversed. Perhaps sooner than later.