Originally Posted by
Balance
Few companies (HLG, BGP and STU come to mind) operate with zero debt - in fact, a prudent level of debt optimizes shareholders' returns by lowering the cost of capital.
So it is unrealistic to expect OCA to operate with zero debt and as a property development and investment company, it shouldn't.
The issue for OCA is what should be an appropriate and prudent level of debt.
If you look at OCA's transformative strategy, I believe it has been poorly executed - case in point, I believe that The Helier was a bridge too far for OCA which moved into the super-premium RV market without proper appraisal of how a property downturn would impact on its financials. It used debt to outbid and purchase very expensive land in Kohimarama and a very costly development which is now sapping cash flow and incurring interest costs with diminishing returns.