Welcome back from North Korea SailorBoy.
Great entertainment.
And I'm convinced, smashing into the piggy bank as we speak.
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Welcome back from North Korea SailorBoy.
Great entertainment.
And I'm convinced, smashing into the piggy bank as we speak.
Here's a thought.
Maybe value the assets like a bond.
What discount would the face value of the assets be returning about half what I can get in the bank?
Anyone?
I would not pay 2.7 billion for those assets outright. Only makes sense with the float, you might do OK without it but I wouldn't be interested.
But paying 400 million for the use of all the 2.7 billion of assets, with a low cost for 600 million in debt funding is a different question.
For them to only get a 1.5% return off the assets would be incredibly useless but the equity would still see a decent return.
Did you ever get to understand Markel? Way more complicated than OCA but worth the effort, up a hell of a lot since we discussed but still incredibly cheap.
superfluous to requirement
Residential property returns are the best they have been in years, lower capital value outlay, much higher rents, about to be an increase in tax deductibility on interest and perhaps lower mortgage rates going forward.
The problem is OCA doesn't get those rental returns as they sell the right to occupy and the only rental return they get is on care suites, but they don't make any money.
So effectively you ae relying on the $152k profit they may make per re-sale and any profit on new sales (with margins being squeezed) less any operational loss.
On average they should make $40M in resales, as long as they can resell the unit and it doesn't end up in stock.
Then whatever they make in profit on new sales.
Less operating loss.
I think SailorRob's $40M net estimate is about right unless we get surprised by a bigger operating loss,
Well you would be paying $1Bln for the use of $2.7Bln of assets as you are inheriting the debt.
One thing we know is that the debt to the company doesn't change in value.
The assets though can and as you have said yourself you wouldn't pay $2.7Bln for the assets.
ROE of 10% on equity before tax sounds about fair value to me.
If the property picks up the number and margin on sales & resales will improve.
But that's purely relying on the macro.
As I have said on many occasions, they need to start operating at least at break even or better, a profit