Put an order in @75c and forget about it for a month.
Good luck.
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Hi Snoopy,
I've tried to think about your response from your point of view as much as it doesn't suit with what I want to hear , I accept your points are all true.I do agree that OCA are:
A.using leverage to grow.
B.are susceptible to large property price drops
C. Their pricing is influenced by there competitors.
I don't however agree that 10% return on a care suit (on the clients funding) is an subpar when compared to 4% on a more expensive villa...OCA just upscale the C/S volume.
the risks you outline are real so what now?
A. Developments -therefore more leverage-are done in accordance with demand , are predictable , and are easily throttled up/ down to suit. (SUM,MET and ARV have slowed villa development back accordingly).
B. Hard to see a large property fall happening in NZ with what I'm seeing and hearing travelling NZ right now, that includes Wtgn, Chch(yes, of course I visited Windermere), Westcoast,Queenstown(visited ARV new Villas) So Let's not worry about proprety crashes for now in this current environment.
C.they have niched themselves into care suites and very high end catchments out of direct line of competition.
I reckon OCA have mitigated, and have also been lucky, of all the risks you mention very well.
The biggest mistake I see almost everyone making is not "risking enough."
When I say "risk" , I don't mean "gambling", I mean the "risk" that can be mitigated by personal effort and research.
No need to convince me Beagle. I don't live in Auckland so have never been seduced to run a rental property to plug into those 'mega capital gains'. Seeing myself as a New Zealander, rather than a global property citizen, I never understood why anyone would sell up from another part of NZ and move to Auckland. The higher salaries available in some corporate work always seemed to be balanced out by higher direct (housing) and indirect costs (like excessive commuting). Of course not living there, I wasn't on the spot to see the huge increase in immigrants and the associated housing demand, coupled with those with borrowing headroom, racing to get on the property bandwagon. Over the last twenty years in particular, those factors saw Auckland house values skyrocket from what I had perceived as very expensive levels. But Auckland is now severely unaffordable not only in NZ terms, but on a global basis.
https://www.nzherald.co.nz/nz/news/a...ectid=12193684
Look at the global cities that are now relatively cheaper (and some significantly so) in price to household earnings ratio than Auckland: London, New York, Amsterdam, Paris, Brisbane, Perth, Tokyo, and San Francisco for starters. It does make me wonder how far the NZ property boom can drive prices. It will take over twenty years of wage increases for Aucklanders for Auckland house prices to go from 'severely unaffordable' to simply 'unaffordable', provided Auckland house prices flat line for twenty years. That last bit seems very unlikely. So the only solution I can see to this affordability dilemma is at least one, and probably a series of house price crashes. Given that likelihood, in my view, I think all of those retirement village operators with a strong Auckland base are sitting on a disappearing equity time bomb. The leverage in making up themselves the losses from their leveraged loaned (by the resident occupiers) equity coupled with the loss of their development portfolio at the same time will likely cause them to collapse. And given how overvalued house prices are in Auckland on a global basis, I can't see a way out of this 'ultimate fate'.
Oh I get that. But you left out Winner's observation on the 'other half of the business' where he dissects the half yearly cashflow, separating the running costs from the development margins.
It looks like Oceania is inherently loss making and only being saved by property development. It is a bit of a problem where your core main activity, looking after the elderly, is a loss making business, don't you think?
SNOOPY
No Snoopy its not a concern because one swallow does not a summer make.
Going to be strong end to the week I reckon
This is where I reference the Black Monday thread ;+)
I'm quite nervous/excited that something big is going to happen soon.
Its more than a feeling (ask Boston!) and is based on those magic shapes (harmonic patterns) I see that dont work all the time (but when they do!)
This from the CEO's report in 2017:
"Caring for the safety of our team is just as important to us as caring for our residents. We understand our risk profile and with operating safely at the forefront of our minds we track a range of indicators. During 2017 we redesigned our moving and handling training programme, introduced new regional safety representatives and trialled a new injury management process that will now be delivered nationally"
I would not be surprised to see losses in OCA for up to the next 2 years or even longer.
M2 surging to its highest levels in the US (not sure what its at here now) will likely lead to money firing asset prices higher long term occurring to the latest graphs.
Off topic, i really do enjoy the contributions of MR B and have followed him and MR Percy over many many years. I am please to say i am often too slow to the sell when they are long gone and taken all the profits! I would also like to say that as a young guy the ACA accountants in rural new zealand in the early to late 1980's were very very innovate in there use of technologies for very sophisticate financial reporting considering the limitation of the technologies but the reporting today i consider is not as sophisticated considering the CPU power available on the desktop now connected to central server CPU's over Http. I think those accountants from that time deserve some credit . Prehaps i just met the cream of the crop. Dont underestimate your ACA's its just the system today means that have to spent more time on compliance and not so much time on using there creative reporting talents. Thank you MR B.