Why are saying that Bull? seriously , I'm keen to understand your point.
Its Helier that IS going to get the cashflow turned around. Brent said the updated sales numbers at the AGM , he also commented that it was selling faster than anticipated. And from what I have verified from visiting .Those comments and my numbers say it will all be sold within 1.5-2 years in this environment. That's all cashflow coming in instead of outflow as it has been.
Your comments dont line up with my observations and workings...?
you may have mis-understood what i was trying to say
you are correct in what you say about sales and i was agreeing with what you said sort off but suggesting to you meaningful cashflow is not for yrs. You are talking about sales , im talking about cash flow , these are very different things.
anyway to cut to the chase when valuing a retirement village ie the helier which is a immature village the meaningful cashflows will come on the roll-over ie when the first lot of re-sales for this village start occurring , not on original sales ( which have most of the costs to come out off )
Your analysis of sale and profit is good mav but you should take it the next step and do a cashflow valuation ie dcf as this is how they are measured.
OCA have a data analyst employed who im sure has all the data you need to perform this if you want and they are willing to tell you.
Bull ….the view will be that building Helier is a ‘sunk cost’ and a component of the previous years large cash burn
Looking forward Helier sales are all cash in the bank from now …even.leading to positive cash flows maybe
I don’t get it, W69 so if someone can enlighten, it will be appreciated.
Developers who overpaid for land and suffered severe costs overruns on projects in recent times have hit the wall and the banks are also nursing numerous similar distressed projects out there.
Why is OCA so special that it’s not a problem with its portfolio of developments where it has overpaid for land & suffered horrendous cost overruns like Helier?
you may have mis-understood what i was trying to say
you are correct in what you say about sales and i was agreeing with what you said sort off but suggesting to you meaningful cashflow is not for yrs. You are talking about sales , Im talking about cash flow , these are very different things.
Im not sure we agree here Bull. An ORA sale is a combo of recovered capital plus (30-35%)margin...its all cash in OCAs bank. The recovered capital part never has to be paid back so that`s cash being kept by OCA. So sales ARE cashflow.
anyway to cut to the chase when valuing a retirement village ie the helier which is a immature village the meaningful cashflows will come on the roll-over ie when the first lot of re-sales for this village start occurring , not on original sales ( which have most of the costs to come out off )
I`m nor sure where you got this from...I do know Julian from Sum said the good profits dont show up until first set of resales ( that`s more about progressive pricing when you have a waiting list) .... I view resale profits simply as just inflation indexing for the years out from now.
The costs to come out for what has been already built has already paid by debt , but the debt , ( although real) doesn`t need to be repaid as the residents up front payment that now sits in OCAs money jar as a permanent loan has now neutralized it to zero. The real capex from the past has now been paid back now by a permant interest free loan from the resident (with a significant cherry on top.) The moment an ORA happens then the DMF then starts deducting. This DMF is a whopper 30% spread over 5 years.
Your analysis of sale and profit is good mav but you should take it the next step and do a cashflow valuation ie dcf as this is how they are measured.
OCA have a data analyst employed who I`m sure has all the data you need to perform this if you want and they are willing to tell you.
Ill post a table screen shot below of a small piece of my cashflow that I use. Its basic but no need to get too keen on some very big assumptions. The white is historical and the yellow is forcast. See I have got OCA reinstating the divi this winter. Note also the cashflow turns positive now while including $80m on continued capex
Ill post the table later when i figure out how to do it.
That`s the best I can Bull....gonna have to get out your magnifying glass.
So there`s the cash flow I expect ...
Our basic difference is I think...
I see sales as profit AND cashflow.
You see sales as just profit and no cashflow. ( like a standard property developer not using ORA`s)
I`m not sure why you dont see that "cash float " the resident just paid up front is now sitting in OCAs accounts to use as they please. ( either building more units elsewhere or paying debt.) It never has to be paid back while new residents are lining up to take it over on resale.
The ORA set up is the key difference of why RVs will keep making money in a stagnant property market and developers dont.
I have to leave for a week or so shortly so I wont have time to respond further for now.
Ill post the table later when i figure out how to do it.
Hi Mav, I just want to confirm the margin on build cost you quote is correct? 30 - 35% seems high to me.
Also if that's the case, why aren't they making a hell of a lot more money?
Originally Posted by SailorRob
Reply With Quote
Bookmarks