Not a word on sales post balance date from what I can glean from the notes of the meeting.
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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.
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.
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/ser...ctober%202024.
https://www.fma.govt.nz/assets/Guida...ed-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.
Bet they just don't care about the SP.....they all still get their $$$ wages
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.
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.
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.
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.
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.
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!
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.
Does anybody know how much The Helier actually cost to develop?
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
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."
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
House prices need to fall further ….
https://www.rnz.co.nz/news/business/...ome-affordable
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.
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?
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.
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.
Another insider buy :t_up:
Sally Evans picks up another 61k shares
https://www.nzx.com/announcements/433869
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 ? ;)
Director buys on market at 54 cents, not a ripple on Share Trader. The times we live in.
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.
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 :)
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?
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?
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.
Good most Muse …very thoughtful and I hope most read it as it’s full of very good insights
I
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.
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.
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.
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.
superfluous to requirement
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.
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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.
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.
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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.
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You're also ignoring the 'weekly fees' and somehow writing that off as 'body corporate', but it's real money cashflow, every week.
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.
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Attachment 15174
This cup of Latte is more intelligent than the current conversation on the thread.
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Gosh..wtf happened today ..SP closed at 54c...
Must be the turn around story??
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..
Waterford Retirement at Hobsonville Point in lockdown.
Covid.
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
Property market in hibernation.
https://www.stuff.co.nz/home-propert...-qv-data-shows