No, they crossed the 5% threshold on the 17th March.
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Ok, I think I got it, they sold at around $9 in Feb and then re-bought at $6.66 to go over the 5%.
Thanks
It is 17 years since I started that thread on Ryman, and the industry has had a terrific run, and had irresistible tailwinds, could not really fail. However now it seems to have reached the point where competition has grown, capacity has growth it has now matured and is no longer the growth sector it once was. The easy money has all been had.
Plus right now it is the most exposed sector to the virus, should it take hold, if it was not for that I would be buying up at these prices for the dividends, but it a big risk and essentially you are placing a bet that the virus will not hit us hard.
I'd like to reinvest back into Sum at some stage. I sold back November for $7.45 and really kicked myself as it went to over $9.
I'm going to hold off for now. I'm happy to drip feed into some index funds but I don't feel like a gamble on individual shares or even sectors.
Long run I really like the sector a LOT. The business model is a fantastic one for shareholders and its incredibly tax efficient. The long term demographics are superb but it does seem with multiple new entrants including many unlisted ones the market is presently saturated with supply as evidenced by almost all operators struggling to sell their units and having big plans for further expansion.
Bringing up the various share price graphs for the companies in this sector I have never witnessed anything like the "falling off the face of a cliff" images that present, which are confronting to say the very least.
I think with the virus risk, oversupply which will get worse with significant planned capacity expansion by most operators, we are headed to a day of reckoning for the sector. SUM could not have timed their Australian expansion and massive land acquisition program worse. Most of their profits are from property development and their gearing is towards the higher end of this sector, RYM is actually the worst at just on 40%. RYM and SUM's prices still look very vulnerable to me.
I do not foresee that any company in this sector deserves to trade on a premium to NTA and think RYM has the most to lose from here. SUM is probably next in line as its property development profits come under serious pressure. ARV might hold up a bit better with its more modest debt level's, development plans and care focus and OCA has copped the most savage beating of them all despite the vast bulk of its business model being Govt funded care beds. I expect the takeover of MET to be withdrawn and a serious downward rerating on its share price.
Interesting times ahead for the industry in the near term. Long term I really like the sector but in the short term there are some serious challenges ahead, no question. (Disc 0.8% portfolio allocation to OCA, was 1% earlier in the week lol)….so if a week is a long time in politics it sure is a long time in this sector too ! I am very cautious on the sector but mindful there is very deep value in OCA with it trading well below half its NAV, (a situation that is unique to this sector at present).
Challenges down the track ? Could we see even more new entrants offering to split the capital gain with residents ? Might there be retirement villages set up where retirees simply pay a weekly rent and don't have to come up with any up front cost ?
In terms of SUM, I will let TA tell me where the bottom is, its simply too hard to predict.
Add in what residents are owed SUM is 63% geared.
Just as well those loans are interest free and not repayable upon demand :) Notice how none of the retirement companies guarantee to pay the estate out within 6 months any more ? Ryman and others used too. The removal of that guarantee was a big clue the fundamentals of this sector have really changed.
Effectively the companies have shifted this repayment obligation on to the new incoming resident.
Plenty of talk in today's update about bank facility headroom and ability to scale back development as well as extra costs for more staff in care facilities and security staff.
Pretty obvious no growth SUM has become negative growth SUM.
Annual meeting - virtual meeting only. Interesting times we live in.
https://www.nzx.com/announcements/350404
The oversupply of ORA units was obvious before the epidemic. I have long thought that alternative occupancy structures should be an option. They had the luxury of sticking to ORAs when supply could barely keep up with demand. I think minimum ages used to be lower. They could drop minimum ages down to 60 or 55 or so with lease agreements for younger ages including an option to purchase an ORA at age 70. Lease agreements could be for a year prepaid. At the end of the day, the villages are well designed valuable assets, especially in Auckland which is likely to remain overcrowded.
Couta wanted me to post that according to his relativity theory 1 SUM = 5 OCA. With OCA at 43 cents with its predominant Govt funded model that makes SUM, (without the security of Govt funding for most of its business model), fair value just $2.15 :eek2: