OCA - Oceania Group - retirement villages

[Cupsy]

Nice post ValueNZ - I can't give you any rep given I have to spread it around. Nice to see analysts are finally getting "it".

Something else to ponder about ORAs:

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How should we think of a liability that is perpetual and non-interest-bearing? [snip] If RYM were to sell the right to the net cash flow from its current occupational advances (excluding revaluation gains which RYM is accounting for elsewhere), a buyer would have to wait until the end of useful life of the unit that the occupational advance is backing to receive the cash flow. With 30 years and a 7% cost of debt, that would suggest a haircut of close to 90%.

I ask my self what is the point they are trying to make here in simple terms?

[tipsy]

So close but so far. You will get there one day!

[Cupsy]

So close but so far. You will get there one day!

You could always enlighten me?

[tipsy]

You could always enlighten me?

Sorry man, was supposed to be in reply to DayT that it's just like any other developer sale.

Hit the 'reply' instead of the 'reply with quote'

[Cupsy]

Oh OK, I deleted most of my post cause I thought it must have been a disaster 😂😂

[thegreatestben]

Your posts are always good and most welcome here Cupsy.

[Ferg]

I ask my self what is the point they are trying to make here in simple terms?

It's a poorly worded article as a whole but what the analysts are trying to say is that given the ORA effectively does not have to be repaid for 30 years and there is no interest on it during that time, then the discounted value of the ORA today is around 10% of the current book value when you consider the time value of money. The ORA is classified as a debt according to IFRS accounting rules, but the FB analysis says that an ORA is similar to a long dated 'account payable'. In summation, FB are saying IFRS accounting throws up some anomalies for RVs. In addition, FB stated the RV assets are unlikely to be overstated, but the liabilities certainly are overstated.

[Cupsy]

Your posts are always good and most welcome here Cupsy.

Much appreciated, thank you.

[Cupsy]

It's a poorly worded article as a whole but what the analysts are trying to say is that given the ORA effectively does not have to be repaid for 30 years and there is no interest on it during that time, then the discounted value of the ORA today is around 10% of the current book value when you consider the time value of money. The ORA is classified as a debt according to IFRS accounting rules, but the FB analysis says that an ORA is similar to a long dated 'account payable'. In summation, FB are saying IFRS accounting throws up some anomalies for RVs. In addition, FB stated the RV assets are unlikely to be overstated, but the liabilities certainly are overstated.

Thank you for taking the time to post this Ferg, very much appreciated.