SUM - Summerset Group

[percy]

I wonder how much the retirement property sector is at risk from government intervention or policy?

Very little risk as it is in the government's interest for the private sector to build retirement units.
I understand future projections are there are not enough units being built.

[macduffy]

Does anyone know how retirement homes work, in terms of paying for the stay?

The short answer is that residents buy a right to occupy which is refunded, less an amount calculated on a pre-determined formula, when the occupant ceases to occupy! A monthly management fee is also payable by the occupant - to cover "common" outgoings such as insurance on the buildings, maintenance, gardening etc. Occupants pay their own utilities - electricity, phone and insurance on contents. Ryman, for one, guarantee that the management fee is fixed for the full term of occupation.

E and OE

[Baa_Baa]

The short answer is that residents buy a right to occupy which is refunded, less an amount calculated on a pre-determined formula, when the occupant ceases to occupy! A monthly management fee is also payable by the occupant - to cover "common" outgoings such as insurance on the buildings, maintenance, gardening etc. Occupants pay their own utilities - electricity, phone and insurance on contents. Ryman, for one, guarantee that the management fee is fixed for the full term of occupation.

E and OE

Then after 'retirement' in the owner occupied 'rest homes' the inevitable follows, it is in the interest of the 'rest homes' to provide for the full pathway to gods waiting room, as it maximises revenue. Despite the reverse correlation to feebleness, revenue is maximised by longevity. This involves not gutting the retirees equity completely if it is avoidable, as that is required to fund the early subsequent stages. The next step on the pathway being the move from the 'retirement home' to the 'communal' rest home, which is expensive, unlike though analogous to a backpackers for old or in-firmed folks. When that equity is gone which it will be for many of the long lived, the state chips in, which is fortunate as many have nothing left, but not all. Still, the rest home provider prospers. Most but not all will have lost their marbles as they progress to high-needs then to hospital care, the fortunate few have family or trustees minding their care. Still, the rest home provider prospers. After that it's gods waiting room, just waiting for the time until they ride the gurney to the exit. End of prosperity, end of life. Still, the rest home providers prosper, until it's over and done with. What a great investment.

[trader_jackson]

Very little risk as it is in the government's interest for the private sector to build retirement units.
I understand future projections are there are not enough units being built.

I think I saw somewhere that in the short supply was expected to meet demand quite well, if not slightly exceed it, mainly due to SUM (and others) going on a 'building spree', what SUM does have in its favor is that its villages are generally good quality (position wise and build wise).., those that are not that great, or are not "needs based" will suffer a little short term. The big boom will also be those needing care, not just going to live in apartments (where I know the big money is)... perceptions towards destroying wealth by going to live in a retirement village apartment are changing slightly in the older population, with some even preferring in-home care

[trader_jackson]

Share price has barely moved around since the results... no surprise for me, even with the results being slightly better than expected... we all know it was already fully priced in

[Lewylewylewy]

Thanks for the info. I read an article saying that govt paid about $800-$900pw per person, then the retiree can to up further to get extras to make their stay nicer.

[fungus pudding]

Thanks for the info. I read an article saying that govt paid about $800-$900pw per person, then the retiree can to up further to get extras to make their stay nicer.

I thought the govt, subsidy only kicked in once personal funds are exhausted. But I could be way off beam there. It's a long time since I was involved with anyone requiring rest home care.

[percy]

I thought the govt, subsidy only kicked in once personal funds are exhausted. But I could be way off beam there. It's a long time since I was involved with anyone requiring rest home care.

That's the way it is.
Trader Jackson.SP has not factored in the fact SUM have laid the foundations for increased build rate,or the growth in development margin,or increasing resales.I expect we will see SUM rerated upwards shortly.
Lewylewylewy.I am sorry I can't find or remember where I saw it but the article did say if RYM,MET,SUM upped their build rate considerably there would still be a massive under supply of retirement units.We must also remember these companies could stop building in NZ and concentrate in Australia should the NZ government change the rules.

[Baa_Baa]

I thought the govt, subsidy only kicked in once personal funds are exhausted. But I could be way off beam there. It's a long time since I was involved with anyone requiring rest home care.

It's not quite that simple as there are a number of variables associated with; an individuals needs; their age; whether they have a partner relationship (or not); dependents; their assets and financial means. For retirement/rest home/high needs/hospital care, the good news for investors is that at all stages of the pathway to exit, the funding be it from individuals or the government is channeled to the provider. This of course is about funding needs and care, it is not the other aspect of aged care homes being the property portfolio. It is explained here: http://www.workandincome.govt.nz/doc...re-subsidy.pdf

[Bjauck]

I thought the govt, subsidy only kicked in once personal funds are exhausted. But I could be way off beam there. It's a long time since I was involved with anyone requiring rest home care.

Yep your right...but only a small percent actually have enough assets - or rather, assessable assets and income - not to be able to get any rest home subsidy apparently. The full unsubsidised cost that people have to pay for Hospital level care is capped at the same amount for the full cost for rest home care. The government (Hospital Boards) then pays the extra (top up) cost for hospital level care for all rest home hospital residents.