OCA - Oceania Group - retirement villages

[ValueNZ]

That's a good point re the payout is not payable until there is a buyer on the resale & it does derisk the business somewhat.

Yes, and the float is totally unregulated! OCA can do whatever they want with it. Unlike the insurance industry.

Which is pretty crazy in our quasi socialist state.

[Cupsy]

Just estimate what the rent would be on a villa etc over a 7 year average vs the 30% not payable back by OCA, less what refurb costs OCA need to pay.

This is assuming no capital gain on the resale.

How much in refurb costs are required after 7 years?(i cant imagine much), i don't see the point you are making, I can't see the way higher ruturns you are speaking of, why don't you spell it out for me (I'm not very bright).

[mistaTea]

Interesting that the Retirement Villages Act 2003 does not put any limits on the resale period.

Not an issue when things are booming along but could be in a downturn. In theory the operator could wait indefinitely to get the price they want for the resale before having to pay out the original occupant.

In reality it only impacts the timing of cashflow but does not protect against market downturns. If the market drops they have to lower their prices like everyone else.

It would be a scandal of the operator was rejecting offers out of hand and not negotiating on good faith while someone is waiting for their money.

Here is a summary of the Financial Protection part of the Act…

Point 6 of the Retirement Villages Act 2003 focuses on the financial protections afforded to residents of retirement villages in New Zealand. Here are the detailed aspects of this point:

### 1. **Management Fees**
- **Charges and Fees**: The Act requires clear disclosure of all fees and charges that a resident will incur, including management fees. These are to be outlined in the occupation right agreement.
- **Transparency**: Operators must ensure that all fees are transparent and justified, detailing what services and amenities these fees cover.

### 2. **Capital Return**
- **Exit Payments**: The Act addresses the conditions under which the capital invested by a resident will be returned upon their exit from the village. This typically happens when the unit is resold.
- **Timing of Payments**: There is no specified maximum time limit within the Act itself for when the operator must resell a unit and return the exit entitlements to the former resident. This is often governed by the terms of the occupation right agreement.
- **Depreciation and Refurbishment**: Details about how the return amount might be adjusted for wear and tear or necessary refurbishments before resale are typically included in the occupation right agreement.

### 3. **Maintenance and Refurbishment**
- **Maintenance Obligations**: Operators are responsible for the maintenance of the village's facilities and individual units to ensure they remain in good condition and retain their value.
- **Refurbishment Costs**: The costs involved in refurbishing a unit upon a resident's exit may be shared between the operator and the resident, as stipulated in the occupation right agreement. This includes updating fixtures, painting, and making repairs as needed to make the unit saleable.

### 4. **Financial Reserves**
- **Long-Term Maintenance Plan**: Operators are required to have a long-term maintenance plan that includes setting aside funds to cover significant repairs and replacements.
- **Reserve Funds**: Adequate reserve funds must be maintained to ensure that the village can meet its long-term obligations without imposing unexpected costs on residents.

### 5. **Insurance**
- **Coverage**: The Act ensures that operators must have adequate insurance for the property and operations of the village, covering potential damages and liabilities.

### 6. **Consultation**
- **Resident Involvement**: Residents must be consulted on significant financial decisions that affect the village, particularly those related to major projects or changes in fee structures.

These financial protections are essential for ensuring that the interests of residents are safeguarded, particularly regarding the significant financial investment they make when entering a retirement village.

[SailorRob]

Just estimate what the rent would be on a villa etc over a 7 year average vs the 30% not payable back by OCA, less what refurb costs OCA need to pay.

This is assuming no capital gain on the resale.

Morning Daytr, I do understand the point that you are making. If this was your privately owned business, would you rent out the villas or would you continue to operate as they do now.

Please provide a concise but clear reasoning with your answer.

[Daytr]

Morning Daytr, I do understand the point that you are making. If this was your privately owned business, would you rent out the villas or would you continue to operate as they do now.

Please provide a concise but clear reasoning with your answer.

My only point is it's not a free loan.
The business model makes sense, I.e the use of the money up front plus the interest cost if they borrowed the equivalent from the bank would be higher than the rent they could receive.
So OCA are probably paying 4 - 5% interest effectively on those funds rather than maybe 8% commercial rate from a bank.

Shame you had to fire off a whole bunch of insults to finally get to a point where you understand it.

[Daytr]

Interesting that the Retirement Villages Act 2003 does not put any limits on the resale period.

Not an issue when things are booming along but could be in a downturn. In theory the operator could wait indefinitely to get the price they want for the resale before having to pay out the original occupant.

In reality it only impacts the timing of cashflow but does not protect against market downturns. If the market drops they have to lower their prices like everyone else.

It would be a scandal of the operator was rejecting offers out of hand and not negotiating on good faith while someone is waiting for their money.

Here is a summary of the Financial Protection part of the Act…

Point 6 of the Retirement Villages Act 2003 focuses on the financial protections afforded to residents of retirement villages in New Zealand. Here are the detailed aspects of this point:

### 1. **Management Fees**
- **Charges and Fees**: The Act requires clear disclosure of all fees and charges that a resident will incur, including management fees. These are to be outlined in the occupation right agreement.
- **Transparency**: Operators must ensure that all fees are transparent and justified, detailing what services and amenities these fees cover.

### 2. **Capital Return**
- **Exit Payments**: The Act addresses the conditions under which the capital invested by a resident will be returned upon their exit from the village. This typically happens when the unit is resold.
- **Timing of Payments**: There is no specified maximum time limit within the Act itself for when the operator must resell a unit and return the exit entitlements to the former resident. This is often governed by the terms of the occupation right agreement.
- **Depreciation and Refurbishment**: Details about how the return amount might be adjusted for wear and tear or necessary refurbishments before resale are typically included in the occupation right agreement.

### 3. **Maintenance and Refurbishment**
- **Maintenance Obligations**: Operators are responsible for the maintenance of the village's facilities and individual units to ensure they remain in good condition and retain their value.
- **Refurbishment Costs**: The costs involved in refurbishing a unit upon a resident's exit may be shared between the operator and the resident, as stipulated in the occupation right agreement. This includes updating fixtures, painting, and making repairs as needed to make the unit saleable.

### 4. **Financial Reserves**
- **Long-Term Maintenance Plan**: Operators are required to have a long-term maintenance plan that includes setting aside funds to cover significant repairs and replacements.
- **Reserve Funds**: Adequate reserve funds must be maintained to ensure that the village can meet its long-term obligations without imposing unexpected costs on residents.

### 5. **Insurance**
- **Coverage**: The Act ensures that operators must have adequate insurance for the property and operations of the village, covering potential damages and liabilities.

### 6. **Consultation**
- **Resident Involvement**: Residents must be consulted on significant financial decisions that affect the village, particularly those related to major projects or changes in fee structures.

These financial protections are essential for ensuring that the interests of residents are safeguarded, particularly regarding the significant financial investment they make when entering a retirement village.

It's another good point MistaTea & this occurred to me after ValueNZ's post.
What if OCA or any operator has a backlog of exited customers to be settled through resales?
Some could quite likely be deceased estate waiting on this to be settled.

What determines a reasonable price OCA has to accept if there are no other offers?
It's probably in the fine print of the owner occupier agreement somewhere.

[SailorRob]

My only point is it's not a free loan.
The business model makes sense, I.e the use of the money up front plus the interest cost if they borrowed the equivalent from the bank would be higher than the rent they could receive.
So OCA are probably paying 4 - 5% interest effectively on those funds rather than maybe 8% commercial rate from a bank.

Shame you had to fire off a whole bunch of insults to finally get to a point where you understand it.

Really? They are paying nearly twice as much for those funds than the money they got from the bond market back when.

So they'd be better having just rented out the villas and got that 3% money from bond market.

I do NOT agree with you Day Trader. I said I get the point you're making. It is however WRONG.

Have you heard of a thing called deferred management fee?

[winner69]

……….
Interestingly Winner69 was also there discussing with Sauce back then and appeared to understand it, and must have made an absolute killing on SUM, but now can only harp on about the Warriors and 'hope that the share price recovers by the end of the day' Super odd. You'd think his understanding would have increased massively by now and having seen the model work with SUM...

Hey Rob, this ‘Harping on about the Warriors’ isn’t making comment about Oceania’s fundamentals etc etc …it’s part of study into fandom

A study into the almost fanatical Oceania fans and how they ‘behave’ when the market per se doesn’t recognise its greatness and how it’s so similar to the Wahs disciples who keep harping on how their great team will be NRL champions this year.

So guys keep posting and providing more raw material and insights to help with this study

[SailorRob]

Hey Rob, this ‘Harping on about the Warriors’ isn’t making comment about Oceania’s fundamentals etc etc …it’s part of study into fandom

A study into the almost fanatical Oceania fans and how they ‘behave’ when the market per se doesn’t recognise its greatness and how it’s so similar to the Wahs disciples who keep harping on how their great team will be NRL champions this year.

So guys keep posting and providing more raw material and insights to help with this study

Fair point, but you should go back and look through SUM forum, 2011. Meet your
former self.

Also worth noting that the market was wrong about most of the NZX 50 for a whole decade when it was bloody obvious.

Look at the massive destruction across many of these former blue chips, they were never worth what they were trading for.

The refinery was drastically mispriced for 20 plus years...

Do you know who Sauce is/was?

[winner69]

Fair point, but you should go back and look through SUM forum, 2011. Meet your
former self.

Also worth noting that the market was wrong about most of the NZX 50 for a whole decade when it was bloody obvious.

Look at the massive destruction across many of these former blue chips, they were never worth what they were trading for.

The refinery was drastically mispriced for 20 plus years...

Do you know who Sauce is/was?

Sauce a good guy but gave up posting publicly years ago

Could still be mates with MistaTea