Retirement village operators

[penn]

Seems a good to me to combine the discussion into one thread. I hold MET SUM OCA.





I read this line on the MET thread.


"Thought of that when I.heard
Oceania a real dog eh .....doubt if the hype will even become reality"
(think it was winner) OCA is my largest holding, could you please explain why it's a dog?

[King1212]

Because Macquarie has heaps of shares on it and they will offload it again and sp won't go anywhere till they gone.

[percy]

Seems a good to me to combine the discussion into one thread. I hold MET SUM OCA.





I read this line on the MET thread.


"Thought of that when I.heard
Oceania a real dog eh .....doubt if the hype will even become reality"
(think it was winner) OCA is my largest holding, could you please explain why it's a dog?

I went to a Hobson Wealth presentation given by OCA's Earl Gasparich last night.
Very impressive what they are achieving, and their business model is developing as they want.
I think you are "well positioned" having OCA as your largest holding.

[penn]

Because Macquarie has heaps of shares on it and they will offload it again and sp won't go anywhere till they gone.
Ah, thanks for that, I thought it could have been worse ;)

[Beagle]

Earl a really nice guy and presents well. He concentrates heavily on where they're going as a company in their presentation. Its what he doesn't tell you that's of concern.
I remain sceptical that they can stop the ongoing erosion in profitability in the core care part of their business.
I am sceptical because there is a history of profit declining in this sector, (which still forms the vast bulk of their current business model), ongoing human resource cost increases are well above the rate of inflation or Government funding increases and their internal control and management systems in provision of care are very care focused and not operationally best of class in terms of efficiency.

I was reflecting on the weekend about how long it takes to change the culture of a company. Many of OCA's facilities were originally owned as I understand it by not for profit Presbyterian support services. I think this culture lingers and making money is a very long way from their primary focus.

Over the long run the change to a majority ORA model, (which will take another 5 years or so) will improve the profitability of this company, but there will still be about 40% of the old care model left even after all that time acting as a handbrake on earnings.

Macquarie overhang is another major issue that needs to be resolved.

I would need to see three things happen before I would be inclined towards investing again
1. The company clearly demonstrate that the core profitability of their care operations is not continuing to deteriorate
2. That the new business model is executing well and sales are tracking in line with expectations
3. Some further sell-down by Macquarie, preferably all of their stake.

MET is "in play" for takeover / merger and with it trading well below asset backing its the best pick in the sector at present.

Time is your friend with OCA. Shareholders will need plenty of patience and I don't think there's any hurry to invest.
The culture I see in OCA is people, (both residents and staff) come first, second, third, fourth and fifth. Some would say this is a good thing, as a shareholder I expect a more shareholder centric focus.

[RTM]

Earl a really nice guy and presents well. He concentrates heavily on where they're going as a company in their presentation. Its what he doesn't tell you that's of concern.
I remain sceptical that they can stop the ongoing erosion in profitability in the core care part of their business.
I am sceptical because there is a history of profit declining in this sector, (which still forms the vast bulk of their current business model), ongoing human resource cost increases are well above the rate of inflation or Government funding increases and their internal control and management systems in provision of care are very care focused and not operationally best of class in terms of efficiency.

I was reflecting on the weekend about how long it takes to change the culture of a company. Many of OCA's facilities were originally owned as I understand it by not for profit Presbyterian support services. I think this culture lingers and making money is a very long way from their primary focus.

Over the long run the change to a majority ORA model, (which will take another 5 years or so) will improve the profitability of this company, but there will still be about 40% of the old care model left even after all that time acting as a handbrake on earnings.

Macquarie overhang is another major issue that needs to be resolved.

I would need to see three things happen before I would be inclined towards investing again
1. The company clearly demonstrate that the core profitability of their care operations is not continuing to deteriorate
2. That the new business model is executing well and sales are tracking in line with expectations
3. Some further sell-down by Macquarie, preferably all of their stake.

MET is "in play" for takeover / merger and with it trading well below asset backing its the best pick in the sector at present.

Time is your friend with OCA. Shareholders will need plenty of patience and I don't think there's any hurry to invest.
The culture I see in OCA is people, (both residents and staff) come first, second, third, fourth and fifth. Some would say this is a good thing, as a shareholder I expect a more shareholder centric focus.

And like it or not....OCA may be closer to where companies generally need to get to. If not, then we shareholders will be facing more regulation from socialist leaning governments. As part of a diversified portfolio I am more than happy to hold Oceania. Feels fine. And I get to enjoy a decent dividend. And I expect slow steady share price growth over the years ahead. Perfect from my perspective. 4% of my portfolio. Also hold SUM (3%). That will do for me in this sector.

[percy]

Things I found of interest.
The main operators who concentrate on development are MET and SUM,with their more "lifestyle" villages.
ARV,OCA and RYM have similar business models,ie the balance between care and independent " right to occupy" units.
All operators are only developing "premium" care suites.
I was surprised to learn OCA sell "occupation right" to these premium care suites.Similar I take it to up front "right to occupy" units.
So more capital upfront.
No operator is building basic care units.This means if you can't afford a premium suite you have no chance of obtaining care.This is developing to be a future huge problem that will hit an unprepared government.
Brown field.OCA have a good land bank of villages that can be developed.
Green field.OCA are always looking for opportunities.Interesting to note St Heliers,because they have brought out some neighbours will be 50% larger than first thought.
Because retirement/care is the most profitable use of land all operators can afford to pay big prices for suitable sites.
Movement.Surprised to learn if you move into a retirement village,you may need two further moves to get the care you require,yet only one move if you chose OCA.
Macquarie will sell down at some stage.When they do OCA will lose their tax losses, and will have to start paying tax,which will mean dividends will then become imputated.So as long as Macquarie stay OCA will be able to take advantage of those tax losses.

[RTM]

Macquarie will sell down at some stage.When they do OCA will lose their tax losses, and will have to start paying tax,which will mean dividends will then become imputated.So as long as Macquarie stay OCA will be able to take advantage of those tax losses.

Thanks Percy. I am a little confused by what you are saying above ? Do you mean that when Macquarie sell...the dividends will no longer be imputed ?

[percy]

Thanks Percy. I am a little confused by what you are saying above ? Do you mean that when Macquarie sell...the dividends will no longer be imputed ?

As usual I am saying the opposite...!!..lol.
While Macquarie continue to hold ,OCA can use their [OCA's] tax losses.
Should Macquarie sell out OCA will not be able to take advantage of their [OCA's} tax losses.
When either Macquarie sell out, or OCA use up their tax losses, then they will start to pay tax.Once they start to pay tax,shareholders will start to receive imputated dividends.At present OCA's divie carries no imputation credits.
I am sorry I do not know at what [Macquarie sell down] level OCA will lose their tax losses.

[RTM]

As usual I am saying the opposite...!!..lol.
While Macquarie continue to hold ,OCA can use their [OCA's] tax losses.
Should Macquarie sell out OCA will not be able to take advantage of their [OCA's} tax losses.
When either Macquarie sell out, or OCA use up their tax losses, then they will start to pay tax.Once they start to pay tax,shareholders will start to receive imputated dividends.At present OCA's divie carries no imputation credits.
I am sorry I do not know at what [Macquarie sell down] level OCA will lose their tax losses.

OK...thanks...that's clear. I'll pop them back in the bottom draw and let them do their thing for a while again.

[Beagle]

Broadly speaking tax losses carried forward can only be utilised when at least 49% of shareholders who originally incurred that loss are still shareholders when the loss is claimed. Macquarie have about 42% if my memory serves me correctly, (after the sell-down in 2018). Its quite possible that the loss carried forward rules still applies as there may be more than 7% of other shareholders who carry the day.

When Macquarie continue their sell-down it is likely, (even if its only one more partial tranche), that the loss carried forward rules won't be met and OCA will have to pay more tax, lowering their net profit after tax. Most of these retirement companies pay very little tax but as OCA's primary business is care at present, (not development), this will hurt them and is another reason I don't hold. In time the dividends may be able to be partially imputed.

[percy]

A premium care suite in Christchurch costs an upfront payment "occupation right" of between $120,000 and $150,000, and a daily payment of $140.
A bedroom with ensuite and a lounge cum kitchenette.

[winner69]

From last OCA Annual Report:


Recognition of Deferred Tax on Tax Losses

The Company and its subsidiaries exited the former Oceania Healthcare Holdings Limited (”OHHL”) tax consolidated group from 31 May 2015. All tax losses incurred by the Company and its subsidiaries until 31 May 2015 are tax losses of the OHHL consolidated tax group (of which the Group is no longer a member).

On 5 September 2018 the Group forfeited all losses generated prior to the IPO of the Company as a result of the sale of 15.56% of OHHL’s shareholding (refer note 5.5). This resulted in the cessation of shareholder continuity.

The Group also utilised $21.9m of losses to offset additional taxable income arising from the change in recognition of DMF revenue as noted above.

After allowing for the utilisation of losses to offset additional taxable income arising from the change in recognition of DMF revenue, the forfeiture of losses generated prior to IPO on 5 September 2018, and taking into consideration the new losses generated in the year to 31 May 2019, the Group now has an estimated $25.6m (2018: $64.6m) of available tax losses at 31 May 2019. Of these total available tax losses, $12.2m may be forfeited in the event of a further sale of shares by OHHL.

A deferred tax asset totalling $3.8m has been recognised as at 31 May 2019, being the tax effect of the remaining $13.4m of tax losses (2018:nil). These are effectively the tax losses generated after 5 September 2018 which will be retained by the Group in the event of any further sale of shares by OHHL provided there are no other significant shareholding changes.

[Beagle]

Thanks for doing the work on this Winner.

[percy]

Yes thank you W69.

I note Turners volume has increased today,ahead of tomorrow's result.
I know you are getting rather excited,so pleasing to see you loading up.

[Beagle]

A premium care suite in Christchurch costs an upfront payment "occupation right" of between $120,000 and $150,000, and a daily payment of $140.
A bedroom with ensuite and a lounge cum kitchenette.

Is that with OCA ? You've got to buy the occupation right and this is amortised at (as I understand it 10% per annum) so on $150,000 that's $15,000 per annum plus also pay them $140 per day ? Don't you mean $140 per week ?

[RTM]

Is that with OCA ? You've got to buy the occupation right and this is amortised at (as I understand it 10% per annum) so on $150,000 that's $15,000 per annum plus also pay them $140 per day ? Don't you mean $140 per week ?

$140 per day ! Hope I don't get old. Ooops...already am....I mean older. No...that's not a good solution either.

[percy]

$140 per day ! Hope I don't get old. Ooops...already am....I mean older. No...that's not a good solution either.

My brother in law is paying over $1,000 a week for care,in an old retirement home,for a very small bedroom with a toilet.

[RTM]

My brother in law is paying over $1,000 a week for care,in an old retirement home,for a very small bedroom with a toilet.

Well…..they've got that new law...by the time I'm ready...the safeguards might be gone ?
No...shouldn't joke about that.
Looks like getting old is going to be an expensive business.
Thanks Percy....but I prefer not to think about it to much.
Cheers
RTM

[Joshuatree]

My brother in law is paying over $1,000 a week for care,in an old retirement home,for a very small bedroom with a toilet.

Over $1200 here for our Mother. Be wary when they want to shift your mum or dad to another level of care, they will try to up the room rate. Ask specifically before hand what the changes entail and take the name and date of the person you talk to.

[percy]

Before we brought our new unit/house we looked at retirement villages in our area.
Lack of privacy was what put us off most of them.
We brought our new house, for what an old refurbished villa would have cost us.
Perhaps in 10 years time when I am 80 we may have to look at retirement/care again.
I note the wife's uncle stayed in his own home, where he died at age 94.Social services provide a lot of help/care to keep people in their own home.
But paying $1,000 to $1,300 to live in a very old home,that stinks of boiled cabbage, does not appeal to me,however if I should have a stroke or get further demented, that will be my lot.

[percy]

Over $1200 here for our Mother. Be wary when they want to shift your mum or dad to another level of care, they will try to up the room rate. Ask specifically before hand what the changes entail and take the name and date of the person you talk to.

So the $140 per day OCA charge is reasonable.ie $980 per week.

[RTM]

My Mum, just turned 90, is still living in her own small home that Mum and Dad built to retire in. She counts the trucks going to Napier port for me.
Yes...she gets a fair bit of help now....but on balance its working out.
Its just fine until something goes wrong....a fall, sickness etc.
So far so good.

[penn]

Wow I just saw SUM 350,733 buy at $7.86 those are big boys playing now, should jump a bit on close!

[Joshuatree]

Before we brought our new unit/house we looked at retirement villages in our area.
Lack of privacy was what put us off most of them.
We brought our new house, for what an old refurbished villa would have cost us.
Perhaps in 10 years time when I am 80 we may have to look at retirement/care again.
I note the wife's uncle stayed in his own home, where he died at age 94.Social services provide a lot of help/care to keep people in their own home.
But paying $1,000 to $1,300 to live in a very old home,that stinks of boiled cabbage, does not appeal to me,however if I should have a stroke or get further demented, that will be my lot.

Cabbage is nothing think urine and poo in the heat of summer, from unchanged nappies some the time because of the understaffing and a few neglecting to do it.

[allfromacell]

Both MET and SUM up strongly on close, clearly someone knows something...

[penn]

Eww! Compact portable air conditioners are the answer there. But still not a life-style I would gladly choose.

[percy]

Cabbage is nothing think urine and poo in the heat of summer, from unchanged nappies all the time because of the understaffing and a few neglecting to do it.

I would rather not..............lol.

[Scrunch]

Both MET and SUM up strongly on close, clearly someone knows something...

On the few i checked there was a lot of big volumes on the close. My guess is some portfolio rearrangements rather than insightful buying. Even SKT TV was up 3c on the close.

[justakiwi]

You really should think before you open that mouth of yours and make blanket and offensively inaccurate statements like that :angry:

As a rest home caregiver I resent your disrespectful (to both residents and staff) comment. If you were standing next to me I’d bitch-slap you!

Come and visit our rest home and talk to our residents. Yes, we are all understaffed but we don’t neglect anyone and we definitely do not leave anyone sitting in soiled incontinence products “all the time” - or “any of the time.”

Unbelievable :crying:


Cabbage is nothing think urine and poo in the heat of summer, from unchanged nappies all the time because of the understaffing and a few neglecting to do it.

[couta1]

The fees all vary by Geographical area and if your not a private payer your only really paying your pension minus the $80 odd bucks a fortnight you get for pocket money so quite cheap for fully catered care.

[peat]

On the few i checked there was a lot of big volumes on the close. My guess is some portfolio rearrangements rather than insightful buying. Even SKT TV was up 3c on the close.

yeh RYM were down on larger than normal volume

[value_investor]

Both MET and SUM up strongly on close, clearly someone knows something...

A large player, or larger groups of players have perhaps warmed to the sight of retirement villages I think after seeing all the long term data.

[Joshuatree]

You really should think before you open that mouth of yours and make blanket and offensively inaccurate statements like that :angry:

As a rest home caregiver I resent your disrespectful (to both residents and staff) comment. If you were standing next to me I’d bitch-slap you!

Come and visit our rest home and talk to our residents. Yes, we are all understaffed but we don’t neglect anyone and we definitely do not leave anyone sitting in soiled incontinence products “all the time” - or “any of the time.”

Unbelievable :crying:

Deny my experience all you want but its my truth and i know that. Get real it happens. People who wont accept other peoples experiences and your threat of violence suggests you are in the wrong job!

[justakiwi]

My "threat of violence" was an emotional reaction to your nasty comment about rest homes, and not serious, as you know full well. I am passionate about my job.it is one of the most under valued and under appreciated jobs, and I get defensive when people like you make disrespectful, generalised claims about the care our elderly receive.Yes, there are some carers who should not be working in the area, but the vast majority of us put everything we have into our jobs and we 100% care about our residents. If you (and others) are so disgusted with the care provided, why on earth would you ever invest in the sector?

I apologise for my bitch slap comment, but you are wrong about me. Every resident I care for is important to me. I care about each and every one of them. They are treated with respect, compassion and love. Always.


Deny my experience all you want but its my truth and i know that. Get real it happens. People who wont accept other peoples experiences and your threat of violence suggests you are in the wrong job!

[iceman]

Deny my experience all you want but its my truth and i know that. Get real it happens. People who wont accept other peoples experiences and your threat of violence suggests you are in the wrong job!


A very unfair and uncalled for comment

[couta1]

A bitch slap sounds just the ticket in this case.

[Beagle]

May I suggest we get back to the business of comparing retirement village companies and their merits.
I see SUM has made some good announcements this morning :)

[Joshuatree]

My "threat of violence" was an emotional reaction to your nasty comment about rest homes, and not serious, as you know full well. I am passionate about my job.it is one of the most under valued and under appreciated jobs, and I get defensive when people like you make disrespectful, generalised claims about the care our elderly receive.Yes, there are some carers who should not be working in the area, but the vast majority of us put everything we have into our jobs and we 100% care about our residents. If you (and others) are so disgusted with the care provided, why on earth would you ever invest in the sector?

I apologise for my bitch slap comment, but you are wrong about me. Every resident I care for is important to me. I care about each and every one of them. They are treated with respect, compassion and love. Always.

Accepted and im sure you do.And as i noted staff are overworked so cant always pickup on an aroma from residents in their lazyboys on wheels as they rush past a room call ,way down the corridor . Sadly at the care place i visit most of the long term carers and nurses who had been there a long time and who had a calling to do this work left when new management came in. Very different now. I have also been told by a carer at one place Adult nappies are issued at a two a day limit and she has had to sneak another one for a resident.

[Joshuatree]

A bitch slap sounds just the ticket in this case.

Sounds like you need a patch, plenty of gangs out there, who disrespect women as well.

[justakiwi]

“aromas” are not always what a bystander might think they are. The reality is, that no matter how often we change someone’s incontinence products, or how often we assist them with showering/washing, sometimes there is always a lingering smell. Many elderly residents have catheters or colostomy bags. They are very effective solutions to what would otherwise be very difficult and potentially embarrassing situations for people, but they are not 100% odour-proof. If these people were living in their own home, or yours, chances are you would experience “aromas.” It is not specific to rest homes.

If you were to come visit our rest home and wander around chatting with our residents, you would find that they are all very happy with the care we give them. Families also genuinely appreciate the love and care we show their loved ones. Just last week the family of a resident who passed away (in our care) came along and put on afternoon tea all the staff and residents. This was their way of saying “thank you” for the (their words) “Incredible care” we gave their father. They were with him every day - day and night - for about 10 days, before he died, and they saw first hand just how much we care. They were so grateful that their father was able to stay in his rest home “home” to die, and not have to be taken to hospital or hospice. Many tears were shed when he died, and more at the afternoon tea. Not the least of which were our tears.

I have recently trained to be a supervisor. When I work a supervising shift, I work from 3.30 - 11pm. Over tea time we have 3 staff on. After 7.30pm there is me, and one caregiver. We have no RN on during that time. I am responsible for administering medications, including controlled drugs such as morphine. I am responsible for 32 residents. If there is an emergency such as a fire, a resident has a medical issue or accident, I am the one who must act and make the appropriate decisions. If somebody passes away on my shift, I have to manage that and follow the relevant procedures. For all of this additional responsibility I am paid an additional - on top of my standard caregiver rate - $5.60 (after tax and KiwiSaver deductions). That’s it. My dedication, passion and willingness to step up and assume a supervisor’s position, is worth a mere $5.60.

I don’t do this for the money.


Accepted and im sure you do.And as i noted staff are overworked so cant always pickup on an aroma from residents in their lazyboys on wheels as they rush past a room call ,way down the corridor . Sadly at the care place i visit most of the long term carers and nurses who had been there a long time and who had a calling to do this work left when new management came in. Very different now. I have also been told by a carer at one place Adult nappies are issued at a two a day limit and she has had to sneak another one for a resident.

[Beagle]

justakiwi - Good on you mate. We need heaps more people just like you !

[percy]

Agree.
If I need care I think I will send her a PM, and try and get into the care home she works at.!!

[Joshuatree]

Ditto sounds like the best of the best.:)

[penn]

May I suggest we get back to the business of comparing retirement village companies and their merits.
I see SUM has made some good announcements this morning :)


The St Johns site looks like a real winner. It will provide a home for over 400 residents and enjoy expansive views over Auckland City and Rangitoto at the higher levels. Should see some good profit from this one!

[couta1]

Sounds like you need a patch, plenty of gangs out there, who disrespect women as well. Typical deflection, own the slap and take it like a man.

[mondograss]

The St Johns site looks like a real winner. It will provide a home for over 400 residents and enjoy expansive views over Auckland City and Rangitoto at the higher levels. Should see some good profit from this one!

If they're lucky, they'll get a good view of the new Rymans on Kohimarama Road.

[Joshuatree]

Typical deflection, own the slap and take it like a man.

Justfying violence in an old school redneck way.WOW.

[justakiwi]

I think we have all made our points, so .....


May I suggest we get back to the business of comparing retirement village companies and their merits.
I see SUM has made some good announcements this morning :)

[Blue Skies]

I see the Blind Institute HQ site in Parnell is being demolished to make way for a new retirement village. With the adjoining property added on after they bowled the house, it's going to be a large site in a premium position. Anyone know who's building this & any details?

[mondograss]

I see the Blind Institute HQ site in Parnell is being demolished to make way for a new retirement village. With the adjoining property added on after they bowled the house, it's going to be a large site in a premium position. Anyone know who's building this & any details?

The Summerset one in Parnell is further down, so it's not them and Aveo already have one in the area.

[dabsman]

Retirement sector on fire - MET takeover, RYM and ARV at record levels, SUM on a big run. Even unloved OCA up 10% in short time. Happy to hold all of these :)

[Maverick]

Its just gob-smacking to me of the speed the share prices are climbing.Boring old MET and RYM are now worth 5 % more today that yesterday. Pretty well all the retirement companies are now worth 25-30% more than 2 months ago (except OCA - of course.) I still don`t consider any of them to now be pricey, even now. Considering the pattern of the industries YOY growth, its just they were soooo cheap back then.

Its a bit sad for little ol` OCA though being left out of the party. Its barely farted while the others are roaring. Accordingly I`ve recently done more workings and reworkings on the spreadsheets looking particularly, with Beagles valid points in mind, about their care side not doing well to this point (it is especially warranted as this is where they are expanding into).
From these updated projections I have, once again, proven to myself that the future numbers are still very solid.

My workings have the care profit improving at 10% yoy and village profit at 20% yoy. (for those that might not be aware, the 2 divisions are very separate, both financially and in practice) Interestingly, the maths say the care profit increases an extra 1% each year while the village side diminishes about 1 % yoy. Due to the higher weighting of the village v`s care the combined profit increases remain a fairly constant 20% YOY increase overall. There is only a few years of data to draw on so I accept the future projections will vary greatly so I have tried to be conservative.

Of course these are just my unproven workings and no evidence of any good news, if I am right, will be apparent until late January. So until then I continue to wait and watch the others leap ahead. If things are actually on track and OCA is performing "only" inline with everyone else then at some point there is a large wave of catch up needed to happen.

I am enjoying watching you all doing very well in the mean time.

[Blue Skies]

Earlier this week was talking to an Auckland buyer ( going to a lot of auctions & missed out on a couple of properties due strong bidding ) who said the Auckland market has really ignited again with these low interest rates, dozens of people at open homes & property prices going up at rate of $20,000 per month. (this in the around $1M category).

Looks like there's a revaluation of retirement sector which was so unloved in flat property market.

Makes sense why Adrian Orr has not removed LVR's if market has taken off again.

[limmy]

Why wouldn't this sector do well ? NZ is one of the best countries in the world to retire in.

[beetills]

Just been reading that Heritage Lifecare (Aus) has purchased Golden Healthcare to becomes NZ 3rd largest operator.

[percy]

Just been reading that Heritage Lifecare (Aus) has purchased Golden Healthcare to becomes NZ 3rd largest operator.

OCA's Earl read it too,but said they are.

[winner69]

Norah still busy as .....good to see.

[winner69]

Interesting financials that Heritage have.

[penn]

Interesting financials that Heritage have.

Do Heritage have a Stock ticker on the ASX? Wondered where to see their financials.

[Maverick]

Thought it was about time to revisit basic PE`s on the village shares after all the share price changes of the last few months skyrocketing.(Except OCA aye Winner)

I know some very esteemed accountants here don't like PE`s for measuring every company's value but for me it's the cornerstone to weigh up whether a share is “ under”, “over” or “about right.” I apply it to every investment I make including rental houses. (disc; I don't have any rental houses with the crazy PEs they have these days - even in Wanganui)

The following figures are all based on underlying profits. I have made notes on the dates for the latest profits being used as ALL these villages grow so fast that the results get out of date fast.

RYM, PE30.2 Based on its very recent HY1 annual forecast for 5 months from now.
ARV, PE 18.9. From its HY1 report 1 month ago.
SUM,PE 15.2. Based on a forecast annual profit (by myself and others here of 116 million) in 2 weeks time.(I know this profit is not fact but basing it on last year's actual result is now out of date)
MET, PE 13.4. Based on annual results delivered 4 months ago. If it`s leaky building costs, which are finite, were not included then it would be PE-12.4
OCA.PE 13.3. Based on last annual actual underlying profit. This figure is now 7 months out of date. (My own figures point to a strong HY1 profit increase in January which would make the PE 9.7 but this is my own workings so one should do there own forecasting here.)

So for me;
RYM is way too dear
ARV is fair value. (sold out 100% today, sorry TJ, just better value out there.)
SUM is still cheap given its very strong growth history,
MET, well that's a double whammy right now with the takeover drama. Its seems to be a very good buy on fundamentals alone and then a marvelous punt with the takeover thing on top of that. Probably a screaming buy before the impending announcement.
OCA. Very cheap and it all depends on its upcoming HY1 result as to how cheap it is.

Merry Christmas everyone. See you next year.

[bull....]

Thought it was about time to revisit basic PE`s on the village shares after all the share price changes of the last few months skyrocketing.(Except OCA aye Winner)

I know some very esteemed accountants here don't like PE`s for measuring every company's value but for me it's the cornerstone to weigh up whether a share is “ under”, “over” or “about right.” I apply it to every investment I make including rental houses. (disc; I don't have any rental houses with the crazy PEs they have these days - even in Wanganui)

The following figures are all based on underlying profits. I have made notes on the dates for the latest profits being used as ALL these villages grow so fast that the results get out of date fast.

RYM, PE30.2 Based on its very recent HY1 annual forecast for 5 months from now.
ARV, PE 18.9. From its HY1 report 1 month ago.
SUM,PE 15.2. Based on a forecast annual profit (by myself and others here of 116 million) in 2 weeks time.(I know this profit is not fact but basing it on last year's actual result is now out of date)
MET, PE 13.4. Based on annual results delivered 4 months ago. If it`s leaky building costs, which are finite, were not included then it would be PE-12.4
OCA.PE 13.3. Based on last annual actual underlying profit. This figure is now 7 months out of date. (My own figures point to a strong HY1 profit increase in January which would make the PE 9.7 but this is my own workings so one should do there own forecasting here.)

So for me;
RYM is way too dear
ARV is fair value. (sold out 100% today, sorry TJ, just better value out there.)
SUM is still cheap given its very strong growth history,
MET, well that's a double whammy right now with the takeover drama. Its seems to be a very good buy on fundamentals alone and then a marvelous punt with the takeover thing on top of that. Probably a screaming buy before the impending announcement.
OCA. Very cheap and it all depends on its upcoming HY1 result as to how cheap it is.

Merry Christmas everyone. See you next year.



good points at the top of the 87 crash property developers were very expensive. ( not saying this is the top) but a good point by mav to watch

[Beagle]

Great post Maverick.
Very nice work on normalising MET's underlying earnings for finite remediation costs, something I had not thought to do and that's after gnawing away at that bone for quite a while, so very nicely done ! Wishing you a merry Christmas and a prosperous new year mate.

I think the prospects for this whole sector are very good for 2020 but in the rush of chasing investment gains lets all take a minute at 2.11 p.m. this afternoon to extend our thoughts and prayers for the victims of the White Island tragedy and pray for the recovery of over 20 people still in intensive care.

[penn]

Mr or Mrs Onion put an interesting list of Last years returns for the listed operators, hope its ok to re post it here as I don't read all the threads I nearly missed it.
ARV 38.47%
MET 16.42%
OCA 4.36%
RYM 44.61%
SUM 26.45%
(includes dividends)

[Beagle]

That's fine but my firm view is that you get a much better feel for how successful the relative merits of each business model are within the sector by taking a 5 year view which removes any untoward one-off factors affecting returns in any one year . (I'll leave the maths to someone else as I can't be bothered).

[Onion]

That's fine but my firm view is that you get a much better feel for how successful the relative merits of each business model are within the sector by taking a 5 year view which removes any untoward one-off factors affecting returns in any one year . (I'll leave the maths to someone else as I can't be bothered).

OK - just for fun - this is not a fair comparison as there are a few trades along the way and different entry point...

In the last 5 years (rough entry point noted), total return, not annualised:

ARV 30.28% (early/mid '18 onward plus more this year)
MET 11.85% (lateish '15 onward)
OCA 7.05% ('17 and '18)
RYM 31.61% (lateish '15 onward)
SUM 34.66% ('13 onward so 5y+)

My assessment:

RYM, SUM: nice, predictable. Despite contrary opinions regarding RYM valuation the SP stays up there.
ARV: nice spike in SP recently
MET: laggard for a long time, recent SP rise is flattering, was until recently around 0% return!
OCA: Held back by the significant shareholder's overhang? Similar model to ARV so when will the SP follow?


PS: Don't treat these as accurate comparisons, different time periods can produce misleading results!

[Beagle]

Looked up the share prices 5 years ago and compared to now, (have not adjusted returns for dividends paid or any rights issues)

MET, then $4.28, now $6.01 up 40%
ARV, then $0.92, now $1.70 up 85%
RYM, then $8.25, now $15.72 up 90.5%
SUM, then $2.81, now $7.71 up 274% (Excess return has not come about by PE expansion, in fact quite the opposite, PE has significantly contracted)

Anyone wondering which business model delivers superior returns over time, need wonder no longer.

[winner69]

Looked up the share prices 5 years ago and compared to now, (have not adjusted returns for dividends paid or any rights issues)

MET, then $4.28, now $6.01 up 40%
ARV, then $0.92, now $1.70 up 85%
RYM, then $8.25, now $15.72 up 90.5%
SUM, then $2.81, now $7.71 up 274% (Excess return has not come about by PE expansion, in fact quite the opposite, PE has significantly contracted)

Anyone wondering which business model delivers superior returns over time, need wonder no longer.

A bit misleading - you've used most favourable period possibe to allow SUM to win this 'race' - 5 years ago SUM share price was in a state of despair after falling about 30% that year

And it has been rerated big time - 5 years ago SUM share price only 32% of RYM share price


But nonetheless it was when SUM was the most undervalued and so a great time to buy.

[couta1]

A bit misleading - you've used most favourable period possibe to allow SUM to win this 'race' - 5 years ago SUM share price was in a state of despair after falling about 30% that year

And it has been rerated big time - 5 years ago SUM share price only 32% of RYM share price


But nonetheless it was when SUM was the most undervalued and so a great time to buy. Yes exactly, go back a bit further and a different picture emerges and after all at the end of the day SUM will ever only be worth around 50% of RYM as proved by a long history.

[Beagle]

A bit misleading - you've used most favourable period possibe to allow SUM to win this 'race' - 5 years ago SUM share price was in a state of despair after falling about 30% that year

And it has been rerated big time - 5 years ago SUM share price only 32% of RYM share price


But nonetheless it was when SUM was the most undervalued and so a great time to buy.

Perhaps it was a bit lucky but I didn't hand pick the start date, I simply told the story of what has actually happened over the last 5 years. Quite possibly worth noting that RYM's forward PE wasn't always ~ double that of SUM's but I think you know that already :)

Anyway...I am bored...we must be getting close to a MET announcement / progress update any day now surely...

[macduffy]

The "50% of RYM" theory works pretty well these days, couta but it's not always a good idea to extrapolate a straight line too far into the future!

:mellow:

[Beagle]

Possibly worth noting the very well performing Kingfish group have more by value of SUM in their portfolio than RYM, despite the latter having four times the market capitalization. I don't hold overvalued stocks so don't own any RYM.

[penn]

The "50% of RYM" theory works pretty well these days, couta but it's not always a good idea to extrapolate a straight line too far into the future!

:mellow:
So true, and I am feeling a bit 'uneasy' about the massive advertising by all five at the moment, they all seem to have sizable land-banking, and forward build on the books, but are we making enough old people at present? Medical advances sure are giving them a chance to live longer, (if they wish to)

[couta1]

Possibly worth noting the very well performing Kingfish group have more by value of SUM in their portfolio than RYM, despite the latter having four times the market capitalization. I don't hold overvalued stocks so don't own any RYM. Lol, some overvalued stocks have made me a lot of coin especially the milky variety.

[Beagle]

The NZX50 is up 29% this year mate.

[couta1]

The NZX50 is up 29% this year mate. Just did a total calc on all my trading/divvies and current portfolio increase and I'm up about 24% and that's with a couple of major milk tanker leaks.PS-Good chance of coming home hard on the home straight to top that 29%.

[winner69]

The NZX50 is up 29% this year mate.

So sum shares in particular have under performed this year

[Baa_Baa]

So sum shares in particular have under performed this year

Not for buyers at the lows 😀

[Beagle]

So sum shares in particular have under performed this year

SUM still lower than they were in August 2018 mate and are still incredibly cheap for their track record of growth and prospects.
2020 going to be a huge year for SUM in my opinion.

[winner69]

If the MET things goes ahead no doubt most of the proceeds will stay in the sector

That’ll create a lot of buying

Good eh

[Lola]

if the met things goes ahead no doubt most of the proceeds will stay in the sector

that’ll create a lot of buying

good eh

interesting announcement from pil today....another option to look at. But bal may not approve.

[Beagle]

If the MET things goes ahead no doubt most of the proceeds will stay in the sector

That’ll create a lot of buying

Good eh

Yes, SUM things make a lot of good common sense.

[Joshuatree]

interesting announcement from pil today....another option to look at. But bal may not approve.

So Taciturn Lola. :confused::DCare to put some flesh on the bones of your words, a link maybe, thanks.

[King1212]

On PIL announcement

[Joshuatree]

Thanks , here i will put the link in for both of you. PIL mkt cap $4.3 million.;)


Promisia Integrative Limited (“PIL”) - Suspension (https://www.nzx.com/announcements/346305)

"NZXR has suspended the quotation of PIL ordinary shares after the announcement by PIL that it had entered into a conditional agreement to acquire certain aged care facilities (the “Acquisition”). The Acquisition constitutes a reverse listing which, in accordance with NZX guidance, triggers a suspension of quotation."

[penn]

Interesting that SUM are going up with MET, I thought that the more shares needed for a takeover then if SUM was one of the other two bidders for MET their share price would be static or down. The ones going down today are RYM and ARV .

[oldtech]

SUM have been heading up since July, so I'm not sure this is related to MET

[macduffy]

Interesting that SUM are going up with MET, I thought that the more shares needed for a takeover then if SUM was one of the other two bidders for MET their share price would be static or down. The ones going down today are RYM and ARV .

I doubt that SUM is one of the bidders, they have their own comprehensive expansion plans. However, if they were and if they planned a scrip offer, it would make sense to bid their shares up to minimise the cost ( in shares) to them.

[Baa_Baa]

Couta1 theorem sure is spooky, with most talk about the RYM:SUM ratio reversion to mean 50%, then this week SUM $8 and RYM $16!

Looking more closely, the ratios of RYM:AllOthers is volatile, some are trending positively, others not so. So far I've found no correlation of the theorem to anything useful, like timing buys or sells, for any of the operators. Fun though not particularly useful.

1090710908

[Beagle]

Is more than a little spooky. The other day I noted way back in 2011 when SUM first listed the situation prevailed even then.
Thankfully the past no matter how sticky is not always a good guide to the future and I note for many years the two stocks traded on not dissimilar underlying PE's.
That situation is vastly different today.

At the mid point of RYM's forecast 31/3/20 underlying profit of $257.5m RYM trades on a forward earnings of 51.5 cps = forward PE at $16 of 31.
If SUM make $117m underlying for 31/12/19 that's also 51.5 cps, that's right folks exactly the same, and SUM's only a forward PE of just 15.5.

SUM trading at half the PE is not common over the years comparing these two and reflects the fact that SUM's earnings have grown much faster than RYM's over the 8 years since its listed that we can compare these two.

Heck, if SUM lifts its build rate in 2020 and the real estate market is strong so we get a ~ 25% lift in underlying profit for 2020 to 64.4 cps at $8 (even though this is a fresh all time high), SUM could be trading on a forward PE for 2020 of just 12.4 times earnings. WOW, that is stupidly cheap and this sector is going to be on fire and flush with well over $1.5 billion dollars of capital looking for a new home after the probable MET takeover. SUM were nearly $8 way back in August 2018 so in relative terms has done very little in gains for well over a year.

2020 could be SUM's year and with a resurgent real estate market there's no logical reason why we shouldn't see some PE expansion up towards the market median PE of 19.
How good could it get for SUM in 2020 ?. 19 x 64.4 cps underlying earnings = $12.23. We could see 50% added to SUM's price in 2020 in a favourable rerating scenario. One day the market will wake up to what a phenomenal growth story SUM has been since it listed, maybe after a decade of fantastic growth, heck that's late 2021, not that far away and could be $15 by then. I think its time to add SUM more to my position.

[winner69]

Is more than a little spooky. The other day I noted way back in 2011 when SUM first listed the situation prevailed even then.
Thankfully the past no matter how sticky is not always a good guide to the future and I note for many years the two stocks traded on not dissimilar underlying PE's.
That situation is vastly different today.

At the mid point of RYM's forecast 31/3/20 underlying profit of $257.5m RYM trades on a forward earnings of 51.5 cps = forward PE at $16 of 31.
If SUM make $117m underlying for 31/12/19 that's also 51.5 cps, that's right folks exactly the same, and SUM's only a forward PE of just 15.5.

SUM trading at half the PE is not common over the years comparing these two and reflects the fact that SUM's earnings have grown much faster than RYM's over the 8 years since its listed that we can compare these two.

Heck, if SUM lifts its build rate in 2020 and the real estate market is strong so we get a ~ 25% lift in underlying profit for 2020 to 64.4 cps at $8 (even though this is a fresh all time high), SUM could be trading on a forward PE for 2020 of just 12.4 times earnings. WOW, that is stupidly cheap and this sector is going to be on fire and flush with well over $1.5 billion dollars of capital looking for a new home after the probable MET takeover. SUM were nearly $8 way back in August 2018 so in relative terms has done very little in gains for well over a year.

2020 could be SUM's year and with a resurgent real estate market there's no logical reason why we shouldn't see some PE expansion up towards the market median PE of 19.
How good could it get for SUM in 2020 ?. 19 x 64.4 cps underlying earnings = $12.23. We could see 50% added to SUM's price in 2020 in a favourable rerating scenario. One day the market will wake up to what a phenomenal growth story SUM has been since it listed, maybe after a decade of fantastic growth, heck that's late 2021, not that far away and could be $15 by then. I think its time to add SUM more to my position.

I’ve copied this over to the SUM thread - deserves to be there in case some miss it

Property market in 2020 - Westpac who are usually the gloomiest of the Bank commentators are getting excited - there 7% increase in prices forecast for 2020 is likely to happen before April they say (7% annual increase as at March) and revised their year end forecast to somewhere near 10%

That’s good eh

[Beagle]

I’ve copied this over to the SUM thread - deserves to be there in case some miss it

Property market in 2020 - Westpac who are usually the gloomiest of the Bank commentators are getting excited - there 7% increase in prices forecast for 2020 is likely to happen before April they say (7% annual increase as at March) and revised their full year forecast to somewhere near 10%

That’s good eh

Thanks, I was thinking of doing the same but you beat me to it. Yes it is good and I have been thinking for some months now that 100 year low interest rates would have a significant impact.

[stoploss]

Thanks, I was thinking of doing the same but you beat me to it. Yes it is good and I have been thinking for some months now that 100 year low interest rates would have a significant impact.

Further to this ANZ set a new lending record for a week this month ( I think 09-14 Dec ) this beat a record set in 2015.
So pretty sure Auckland would have turned around , Wellington has had a good 3 months to end the year for sure.

[penn]

Both OCA and SUM off to the races today! so nice to see.

[tobo]

I wonder how much is advance buying to replace MET with other retirement stocks, versus reassessment of the 'correct' value relative to MET value. (Or is a lot of it straight TA knee-jerk response.)
Will there be another spurt when the big funds go to replace MET in a month of two, once they get paid out?

[Beagle]

I wonder how much is advance buying to replace MET with other retirement stocks, versus reassessment of the 'correct' value relative to MET value. (Or is a lot of it straight TA knee-jerk response.)
Will there be another spurt when the big funds go to replace MET in a month of two, once they get paid out?

The money has to go somewhere and there's about $1.5 Billion of it.

[Oliver Mander]

The money has to go somewhere and there's about $1.5 Billion of it.

ARV also up a creditable 17 cents....

[limmy]

The whole sector seems to be enjoying a big boom, because of the MET takeover offer.
Probably not a good time to start investing in this sector at the moment ?

[Beagle]

The whole sector seems to be enjoying a big boom, because of the MET takeover offer.
Probably not a good time to start investing in this sector at the moment ?

Track record is what you should be focused on now. Does your favourite choice(s) in this sector have a long and well proven track record of growing earnings per share to justify the current price ?

[limmy]

I also hold RYM and SUM, and I think the sector is sound, especially with the baby boomers adding to an aging population.
I'm just wondering if it's currently overbought because of the MET offer.

Would it be wiser to wait for the takeover news and cash overflow to settle down first and then reinvest in the sector, say in the new year ?

[Beagle]

I also hold RYM and SUM, and I think the sector is sound, especially with the baby boomers adding to an aging population.
I'm just wondering if it's currently overbought because of the MET offer.

Would it be wiser to wait for the takeover news and cash overflow to settle down first and then reinvest in the sector, say in the new year ?

Tough question to answer. No question some people are already investing additional capital into the sector from cash reserves knowing their cash is highly likely to be replenished, so at the risk of overstating the completely obvious, the proposed MET takeover is already having a significant effect.

My view on this is that 1.5 billion or thereabouts is a heck of a lot of money looking for a replacement home and that a fair bit of that will get reallocated by institutions to other companies in the retirement sector. That's quite a tailwind for the sector going into 2020 to go with the pretty strong tailwind of a resurgent property market, especially in Auckland. I have posted in detail in the SUM thread where I think it could go in the next few years and that is one of the stocks that is not expensive based on its past well proven track record of growth. Add in the tailwinds now prevailing and I think SUM is going to have a truly outstanding year in 2020. Bear in mind it was ~ $8 way back in August 2018 so its very easy to make the case that you haven't missed the boat on that one.

ARV's slower eps growth, has averaged late single digits over the years leaves me underwhelmed and thinking $2 is getting quite pricey but there's such a tailwind in the sector it could easily go higher still. RYM is around 32 times next years underlying earnings and is also very pricey in my view. OCA a dark horse of the field and tough one to know how its going to go.
I have been buying SUM with existing cash reserves, knowing they are highly likely to be replenished from the MET takeover so am backing my opinion with action. That's my 2 cents worth, and what I am doing, hope it helps.

[limmy]

Tough question to answer. No question some people are already investing additional capital into the sector from cash reserves knowing their cash is highly likely to be replenished, so at the risk of overstating the completely obvious, the proposed MET takeover is already having a significant effect.

My view on this is that 1.5 billion or thereabouts is a heck of a lot of money looking for a replacement home and that a fair bit of that will get reallocated by institutions to other companies in the retirement sector. That's quite a tailwind for the sector going into 2020 to go with the pretty strong tailwind of a resurgent property market, especially in Auckland. I have posted in detail in the SUM thread where I think it could go in the next few years and that is one of the stocks that is not expensive based on its past well proven track record of growth. Add in the tailwinds now prevailing and I think SUM is going to have a truly outstanding year in 2020. Bear in mind it was ~ $8 way back in August 2018 so its very easy to make the case that you haven't missed the boat on that one.

ARV's slower eps growth, has averaged late single digits over the years leaves me underwhelmed and thinking $2 is getting quite pricey but there's such a tailwind in the sector it could easily go higher still. RYM is around 32 times next years underlying earnings and is also very pricey in my view. OCA a dark horse of the field and tough one to know how its going to go.
I have been buying SUM with existing cash reserves, knowing they are highly likely to be replenished from the MET takeover so am backing my opinion with action. That's my 2 cents worth, and what I am doing, hope it helps.
Thanks Mr. Beagle for a very good response. I've held RYM, SUM and MET since 2015, thinking these are the 3 highest market capitalised stocks. If the MET takeover goes ahead, I'll be down to only RYM and SUM. I'm beginning to lean towards replenishing my investment in the sector with more SUM and less RYM with the potential capital return for MET.
I think this will be the right approach, since ARV and OCA both do not have a lengthy proven track record.
Thanks again for helping me derive this clarity.

[couta1]

Lol theres no way I could bring myself to buy any of these stocks at current prices especially since a certain milky one is currently in a suppressed state ready for its next run up, if you are long and bought cheaper then that's a different story.

[winner69]

Lol theres no way I could bring myself to buy any of these stocks at current prices especially since a certain milky one is currently in a suppressed state ready for its next run up, if you are long and bought cheaper then that's a different story.

You probably the only wise one here today mate

Rest of us are all over excited

Look back in a year and Couts will probably be telling us ‘I told you so’

[couta1]

You probably the only wise one here today mate

Rest of us are all over excited

Look back in a year and Couts will probably be telling us ‘I told you so’ Pays to filter out the irrational noise at both ends of the spectrum, the truth more often than not lies in the middle.

[winner69]

Pays to filter out the irrational noise at both ends of the spectrum, the truth more often than not lies in the middle.

Agree Couts me old mate - you do have to wonder what you are actually buying when you pay nearly 9 bucks for less than 5 bucks of assets eh

[limmy]

Lol theres no way I could bring myself to buy any of these stocks at current prices especially since a certain milky one is currently in a suppressed state ready for its next run up, if you are long and bought cheaper then that's a different story.
Yes, I hold ATM as well. Buying more ATM could be a good strategy also, especially if more people realise that the retirement home sector is overbought and that the A2 company has more potential to grow its margins, now that the former CEO, Geoff Babidge is back in charged.

I suppose the retirement sector will stay in focus until the next downturn in Auckland property prices or if the bigger companies report a slow down in greenfield projects ?

[Beagle]

PEG of ATM is about 1.0 which suggests fair value. PEG of SUM is 0.4 which suggest its extremely good value based one earnings growth.

Coutts me ol mate. A PEG is not something you hang your wife's washing out with :p
https://www.investopedia.com/terms/p/pegratio.asp

[couta1]

PEG of ATM is about 1.0 which suggests fair value. PEG of SUM is 0.4 which suggest its extremely good value based one earnings growth.

Coutts me ol mate. A PEG is not something you hang your wife's washing out with :p
https://www.investopedia.com/terms/p/pegratio.asp Lol mate you get too hung up on all these ratios.

[Beagle]

Lol mate you get too hung up on all these ratios.

You should try and understand them mate. Its how you measure relative value between shares.

[couta1]

You should try and understand them mate. Its how you measure relative value between shares. I do understand them but I dont think you quite got my post, you must be pegged out after Christmas.

[Beagle]

I like crunching the numbers properly.

[winner69]

Lol mate you get too hung up on all these ratios.

Hey Couts - we’re going to get bamboozled when beagle goes beyond ratios and starts applying ‘ probabilities’ to things happening and coming up with ‘expected returns’

An accountonomist way what you were saying earlier - need to filter out the irrational noise at both ends of the spectrum, and find the truth more often than not lies in the middle.

[couta1]

Hey Couts - we’re going to get bamboozled when beagle goes beyond ratios and starts applying ‘ probabilities’ to things happening and coming up with ‘expected returns’

An accountonomist way what you were saying earlier - need to filter out the irrational noise at both ends of the spectrum, and find the truth more often than not lies in the middle. I've been doing a lot of refresher study of the known universe lately but I reckon Beagle is more of an expanding universe kinda dog so once he's sussed out how fast the universe is expanding he's going to apply the same rate to the probability of the SUM share price trajectory.

[winner69]

I've been doing a lot of refresher study of the known universe lately but I reckon Beagle is more of an expanding universe kinda dog so once he's sussed out how fast the universe is expanding he's going to apply the same rate to the probability of the SUM share price trajectory.

That Edwin Hubble was a pretty clever guy ....Not like that guy Ben Graham who made up a formula based on what he Felt was right and then declared it was a load of the proverbial anyway.

I beginning to worry about Beagle - if he does suss how fast the universe is expanding he might ask is the universe infinite ...and then conclude that the SUM share price could go to infinity.

[Beagle]

While you guys are trying to figure out the mysteries of the universe, maybe its time to consider this
“The most powerful force in the universe is compound interest” – Albert Einstein
http://www.datagenetics.com/blog/april22014/index.html

SUM closed today at 6.59 times its IPO price from 8 years ago. No way it could triple from here in the next 3-4 years...or is there...
In that 8 years the PE has basically halved so none of that gain is off PE expansion, quite the contrary. Compound high growth is an incredible thing, Albert Einstein is absolutely right.

[Cadalac123]

I feel like some of these SP gains are clearly FOMO? people thinking they are missing out on these amazing retirement stocks.. bubble

[Snoopy]

I feel like some of these SP gains are clearly FOMO? people thinking they are missing out on these amazing retirement stocks.. bubble


I tend to agree with your sentiment Cadalac. Mind you, I am a disinterested party. I have never invested in the retirement sector. This isn't because I don't want to invest in it. It is because I haven't seen the value that would make such an investment worthwhile, in my view (in hindsight a wrong call, albeit I would still argue not a foolish one).

Ryman has been on my 'outer radar' for close to twenty years. It has always looked expensive to me. And from a distance my perception of an excessive price was driven by the excesses of the property market creating a future 'property bank' of capital appreciation on Ryman's owned units come occupation right resale time.

I have been looking more closely at Ryman's and others over the last 18 months with the 'Auckland Property Slump'. But really all that happened was that property prices reduced from 'Insane and Certifiable Levels' to 'Unattainably Expensive'. I don't call that a correction. And now apparently prices are on the rise again. I think the NZ property market is at unsustainable levels and is being pumped up by the lowest interest rates in living memory and the high price of building new. One of the pumping factors, allowing multimillionaire overseas owners to come in pump up prices has been turned off. But ultimately if those living and working in New Zealand on NZ wages can't afford to pay more for their homes, then property prices cannot rise. Yes I know that immigration is still high. But so is the governmental resolve to solve the property crisis.

The very factor that has caused the boom in retirement village operators could easily go into reverse. Instead of having a property bank of realisable gains on unit sales, you could end up with a property bank of embedded losses leading to crushing write downs just as cash costs due to cuts in government funding for care beds go higher. I went to a retirement village Christmas function last week where the manager said that the only way they could keep up their villages care beds to a high standard was to subsidize that side of the business from occupation right resales out in the occupy your own villa section of the village. I think if the property market does slow down for ten years many villages operating today will be in serious trouble.

SNOOPY

discl: Not an investor in the retirement sector, and it has now moved off my watch list.

[couta1]

I tend to agree with your sentiment Cadalac. Mind you, I am a disinterested party. I have never invested in the retirement sector. This isn't because I don't want to invest in it. It is because I haven't seen the value that would make such an investment worthwhile, in my view.

Ryman has been on my 'outer radar' for close to twenty years. It has always looked expensive to me. And from a distance my perception of an excessive price was driven by the excesses of the property market creating a future 'property bank' of capital appreciation on Ryman's owned units come occupation right resale time.

I have been looking more closely over the last 18 months with the 'Auckland Property Slump'. But really all that happened was that property prices reduced from 'Insane and Certifiable Levels' to 'Unattainably Expensive'. I don't call that a correction. Stocks like RYM/FPH/MFT always look expensive yet they keep increasing in price, I remember holding FPH for a while when it was $3 only about 6 yrs ago, some investors have the nous and ability to just buy these stocks and sit on them for a long period of time making huge gains for themselves and kudos to them, I intend to do the same with my PAZ holding but I'm more of a trader nowadays so are unlikely to have many stocks which are true long term holds excepting HLG which is my long term income hold.

[Snoopy]

Stocks like RYM/FPH/MFT always look expensive yet they keep increasing in price, I remember holding FPH for a while when it was $3 only about 6 yrs ago, some investors have the nous and ability to just buy these stocks and sit on them for a long period of time making huge gains for themselves and kudos to them.


How much is 'nous' and how much is 'luck' though? I would like to think that I invest with 'nous', yet I know a large portion of the return game is 'luck' - like when an entire sector is rerated from historical norms. That is something really difficult to predict. If you don't have a model to calculate how much Ryman is really worth, is it 'nous' to hold onto your Ryman shares just because they have done you well in the past?

But retirement villages relying on property appreciation: that is easy to predict up to a point. Perhaps if I was living in Auckland over the last twenty years I would have understand the property market in that city better and had the 'nous' to invest in Ryman's 15 years ago. But I didn't live there and don't live there. I guess I am recycling the old line that short term the market is a voting machine but long term it is a weighing machine. At some point there has to be something behind the scenes happening to justify that share price squiggly line going up.

The only thing I can see that is pushing retirement shares higher is historical trends which if they haven't changed already must go into reverse in the very near future. You can't build a business case on the hope of property values increasing from already exorbitant to irrational levels. That is my view. Mind you that was also my view 15 years ago. But the higher property prices go eventually I will be proved right - even if 'eventually' turns out to be after I am dead!

SNOOPY

[Bjauck]

Stocks like RYM/FPH/MFT always look expensive yet they keep increasing in price, I remember holding FPH for a while when it was $3 only about 6 yrs ago, some investors have the nous and ability to just buy these stocks and sit on them for a long period of time making huge gains for themselves and kudos to them, I intend to do the same with my PAZ holding but I'm more of a trader nowadays so are unlikely to have many stocks which are true long term holds excepting HLG which is my long term income hold. I remember my broker saying that FPH was "overpriced" when it was about $3.

I listened and decided not to add my holding then so I ended up adding to an underperforming stock because it was about "to turn around under a new CEO". It ended turning around 360 degrees and went further down....

[justakiwi]

This is my concern too. People are living much longer, staying in their own homes longer, and by the time they need to move elsewhere, chances are they are going to need a higher level of care than village units will provide. Down the track the greater need will be more care beds, not more occupy your own villas. How are these companies proposing to provide a higher number and level of care beds/services, when their villa sales drop? I have seen mention of the impact of higher staffing costs - we are not well paid - but you can’t provide quality care without staff. In 10 years (probably less) the rest home I work in, will not be able to manage with our current staffing levels. We already have several residents who should probably be in hospital level care. More and more people require two staff for toileting/mobilising. In other words, the needs of our elderly are increasing rapidly and what was once “low level” care (rest home care) is very quickly becoming something else.

It isn’t even just about the property market slowing down. It is about a potential reduction in the suitability of villa life for our elderly down the track.


I went to a retirement village Christmas function last week where the manager said that the only way they could keep up their villages care beds to a high standard was to subsidize that side of the business from occupation right resales out in the occupy your own villa section of the village. I think if the property market does slow down for ten years many villages operating today will be in serious trouble.

SNOOPY

discl: Not an investor in the retirement sector, and it has now moved off my watch list.

[Beagle]

SUM people simply don't get the retirement sector and that's fine, their loss. Perhaps they could point me in the direction of another share with a 36% average annual growth in earnings in the last 8 years, one that's trading on a forward FY20 PE in the mid teens ? Probably best I don't hold my breath waiting for that insight to be shared :)

[peat]

The only thing I can see that is pushing retirement shares higher is historical trends

SNOOPY

its a wall of money looking for a home though. That's what drives stockmarkets higher and yes it is exacerbated by straight line projections and bandwagon jumpers with no concept of value but if the amount of money seeking returns continues to grow then that places higher bases for support levels on prices.
And my theory is that capitalist cycles get larger and larger as they progress toward their crash burn and resurrect stages. So there are good reasons why the market continues to go higher and higher until irrational exuberance is long forgotten and this time its different statements are coming from all directions.

[Beagle]

The other Beagle needs to get around and visit a few retirement villages and get an understanding of why people want to live there but my sense is he is so far removed from the hunt he'll head off in another direction for probably many years and miss heaps more gains coming.

Penetration rate amongst the oldies is just over 12% and I think this will steadily rise over the years ahead to 17-18% as more and more people recognise the many benefits of retirement village living. Massive tsunami of oldies approaching retirement village living age will ensure exceptionally strong demand growth for at least the next 25 years.

[Lola]

The other Beagle needs to get around and visit a few retirement villages and get an understanding of why people want to live there but my sense is he is so far removed from the hunt he'll head off in another direction for probably many years and miss heaps more gains coming.

Penetration rate amongst the oldies is just over 12% and I think this will steadily rise over the years ahead to 17-18% as more and more people recognise the many benefits of retirement village living. Massive tsunami of oldies approaching retirement village living age will ensure exceptionally strong demand growth for at least the next 25 years.

It’ll be interesting to watch how the new PIL performs in this space.

[Maverick]

Thought it was about time to revisit basic PE`s on the village shares after all the share price changes of the last few months skyrocketing.(Except OCA aye Winner)

I know some very esteemed accountants here don't like PE`s for measuring every company's value but for me it's the cornerstone to weigh up whether a share is “ under”, “over” or “about right.” I apply it to every investment I make including rental houses. (disc; I don't have any rental houses with the crazy PEs they have these days - even in Wanganui)

The following figures are all based on underlying profits. I have made notes on the dates for the latest profits being used as ALL these villages grow so fast that the results get out of date fast.

RYM, PE30.2 Based on its very recent HY1 annual forecast for 5 months from now.
ARV, PE 18.9. From its HY1 report 1 month ago.
SUM,PE 15.2. Based on a forecast annual profit (by myself and others here of 116 million) in 2 weeks time.(I know this profit is not fact but basing it on last year's actual result is now out of date)
MET, PE 13.4. Based on annual results delivered 4 months ago. If it`s leaky building costs, which are finite, were not included then it would be PE-12.4
OCA.PE 13.3. Based on last annual actual underlying profit. This figure is now 7 months out of date. (My own figures point to a strong HY1 profit increase in January which would make the PE 9.7 but this is my own workings so one should do there own forecasting here.)

So for me;
RYM is way too dear
ARV is fair value. (sold out 100% today, sorry TJ, just better value out there.)
SUM is still cheap given its very strong growth history,
MET, well that's a double whammy right now with the takeover drama. Its seems to be a very good buy on fundamentals alone and then a marvelous punt with the takeover thing on top of that. Probably a screaming buy before the impending announcement.
OCA. Very cheap and it all depends on its upcoming HY1 result as to how cheap it

I did this post 2 weeks ago and that was about when the share prices went nuts , so time for updating the new PE's under the same parameters as above
RYM PE 32
ARV pe 21.4
SUM pe 17.5
MET PE 15.5 (at 7.00 share price)
OCA pe 15.7 (my forecast as per above PE 11.5)

It is worth noting that these PE's are not tax imputed as most NZX other companies are.

For me the changes are :
ARV is now too dear for its slower (than its peers )EPS growth.
SUM no longer cheap but still good value long term.
OCA , at worst if the upcoming announcement is flat it is still fair value when compared to its peers. There is however plenty of upside if it can demonstrate the usual village growth achieved by its peers (which all use the same old DMF model) and care profit is at least "flat."

[mfd]

SUM people simply don't get the retirement sector and that's fine, their loss. Perhaps they could point me in the direction of another share with a 36% average annual growth in earnings in the last 8 years, one that's trading on a forward FY20 PE in the mid teens ? Probably best I don't hold my breath waiting for that insight to be shared :)

Not quite, but CDI comes close. FY2018 profit of $33.6 million, FY2010 profit $2.9 million = 35.7% CAGR. I'll have to disappoint you on the PE in the mid teens though, CDI is only trading at a PE of about 11. Also trading well under NTA (market cap $252 million, they own land worth $338 million as of the last annual report and about $40 million in cash).

I guess SUM is not a bad second option if you already have enough CDI.

[Snoopy]

Not quite, but CDI comes close. FY2018 profit of $33.6 million, FY2010 profit $2.9 million = 35.7% CAGR. I'll have to disappoint you on the PE in the mid teens though, CDI is only trading at a PE of about 11. Also trading well under NTA (market cap $252 million, they own land worth $338 million as of the last annual report and about $40 million in cash).

I guess SUM is not a bad second option if you already have enough CDI.


I have to admit I have cast my eye over CDI mfd.

A significant difference between the 'good' retirement village operators and CDI is that the likes of Ryman have their own team of builders as well as their own land bank. Thus Ryman can control all steps of the project development process, whereas CDI cannot. This could leave CDI land values liable to be written down as building cots rise so that the CDI total subdivision development costs remain competitive (?).

SNOOPY

[mfd]

I have to admit I have cast my eye over CDI mfd.

A significant difference between the 'good' retirement village operators and CDI is that the likes of Ryman have their own team of builders as well as their own land bank. Thus Ryman can control all steps of the project development process, whereas CDI cannot. This could leave CDI land values liable to be written down as building cots rise so that the CDI total subdivision development costs remain competitive (?).

SNOOPY

A fair comment. I'd argue that having your own builders only delays the inevitable - if it's materials inflation then it doesn't help much, if it's labour inflation they won't hang around for long if Ryman doesn't pay them competitively. The other side of this coin is CDI have very low overheads. They run without debt, and if the market turns to custard they just retrench and wait for it to pass. From 2007 to 2008, CDI's revenue fell from $39.5 million to $5 million, and they still turned a profit of $1.6 million. Keeping the work outsourced makes the company better able to adapt to external conditions.

I appreciate the business model is very different to the retirement operators, just offering it up as it more than meets Beagle's request. I own both. Liquidity could be an issue with CDI for some, but with the size of my portfolio it's not a concern.

[Snoopy]

I'd argue that having your own builders only delays the inevitable - if it's materials inflation then it doesn't help much, if it's labour inflation they won't hang around for long if Ryman doesn't pay them competitively.


Good points. Perhaps the real savings for the likes of Rymans in employing their own building team is:

1/ Not having members of their building team declaring bankruptcy,
2/ Consequently not losing money on any contractors bankruptcy, AND
3/ Not having to go and scout out replacement builders once the old contractor is 'off the scene'.

Also I have visited different Ryman villages and they have a 'cookie cutter ' look. By that I mean that if you show me a one off photograph of a Ryman village, I could probably identify it as such. But as for where that village is located, I would have no idea. Ryman don't seem to push avant-garde architecture that requires tricky one off building solutions. Consequently the mechanics of the build between villages do not vary that much. And a competent building team at one site will likely do an a similarly excellent job at the next site.



The other side of this coin is CDI have very low overheads. They run without debt, and if the market turns to custard they just retrench and wait for it to pass. From 2007 to 2008, CDI's revenue fell from $39.5 million to $5 million, and they still turned a profit of $1.6 million. Keeping the work outsourced makes the company better able to adapt to external conditions.


CDI had revenue drop by over 75% over 2007 to 2008 yet still kept their profit constant at $1.6m! That is astonishing. Mfd, are you able to provide more insight as to now this was achieved?

SNOOPY

[tobo]

... Ryman villages and they have a 'cookie cutter ' look.
... Ryman don't seem to push avant-garde architecture that requires tricky one off building solutions.

Therein lies one problem with the cost of building.
Why would you want tricky one off building solutions for routine building (unless it was the only way to build on particularly tricky land).
Even Mercedes make hundreds of identical cars, let alone Toyota.

Sorry for the digression.

[mfd]

CDI had revenue drop by over 75% over 2007 to 2008 yet still kept their profit constant at $1.6m! That is astonishing. Mfd, are you able to provide more insight as to now this was achieved?

SNOOPY

To clarify, they did not keep profit constant, it fell from $15 million to $1.6 million. My point is that the company is very resilient to external shocks, partially due to outsourcing a lot of their work. The overheads are very low, and there is no debt. It's quite impressive that their growth has been similar to SUM, despite the lack of leverage, over the last decade. To be fair, CDI was coming off of a low point 8 years ago, so this time frame is extremely flattering, but I did not choose it.

[Beagle]

To clarify, they did not keep profit constant, it fell from $15 million to $1.6 million. My point is that the company is very resilient to external shocks, partially due to outsourcing a lot of their work. The overheads are very low, and there is no debt. It's quite impressive that their growth has been similar to SUM, despite the lack of leverage, over the last decade. To be fair, CDI was coming off of a low point 8 years ago, so this time frame is extremely flattering, but I did not choose it.

Fair enough you didn't choose the 8 year timeframe but well worth noting that I only chose 8 years because that period encapsulates the entire listed history of SUM and as such gives the most accurate picture possible of their long term compound average growth rate. That's the spirit in which I chose that timeframe. 8 years is so flattering to CDI such as to give a grossly disingenuous view of their long term growth rate, in my opinion.

Looking at CDI I think given the nature of the company one should consider as a reference starting point their profit before the GFC hit to give a view across the business cycles and I note their net profit after tax was $9.1m in 2006. $33.6m 12 years later gives an average compound growth rate of just under 12%. (An impressive achievement nonetheless and the PE is cheap so thankyou, I might run the ruler over them in the near term).

Worth highlighting too that their earnings are more variable whereas SUM's underlying profit has increased every single year. Also worth noting as an industry comparison thing (given SUM weren't around during the GFC) that RYM increased underlying profit every year throughout the GFC which underscores the robustness of the retirement sector's business model.

In summary, retirement companies give more consistent earnings growth despite economic conditions as bad as the GFC and are therefore less risky and good ones deliver vastly higher compound earnings growth than CDI has managed to achieve.

Its interesting comparing the basic differences between the business models. CDI develop and sell their properties once and pay full tax on their development margin.
Retirement companies develop and get their margin and sell a licence to occupy the same properties over and over and over again and get a fat margin every time they are resold AND get all capital gains over the long run AND are very tax efficient.

There's a heck of a lot to like about the retirement village business model.

[trader_jackson]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12297437

"Ryman Healthcare led the market lower, down 5.1 per cent at $16.33 with 250,000 shares traded, almost half its 513,000 average. The country's biggest listed retirement village operator gained 52.1 per cent this year.

Arvida Group fell 1.5 per cent to $1.92, ending the year up 52.9 per cent, while Oceania Healthcare was down 2.2 per cent at $1.32, for an annual gain of 23.4 per cent. Summerset Group fell 1.7 per cent to $8.90, ending the year up 39.7 per cent."

that dog ARV has taken it out another year... out of the 5 years it been listed, it has been the best performer (in the listed sector) for at least 2 of them... some might be surprised to hear such things given the chat on each of the listed sectors threads.

[justakiwi]

Out of curiosity, have those of you invested in retirement villages, visited a local facility to see first hand what they offer, how they operate, get feedback from staff/residents? If so, was this something villages were happy to let you do as a potential investor, or did you just rock up and give the impression you might be looking for a bed/unit and ask for a tour?

[winner69]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12297437

"Ryman Healthcare led the market lower, down 5.1 per cent at $16.33 with 250,000 shares traded, almost half its 513,000 average. The country's biggest listed retirement village operator gained 52.1 per cent this year.

Arvida Group fell 1.5 per cent to $1.92, ending the year up 52.9 per cent, while Oceania Healthcare was down 2.2 per cent at $1.32, for an annual gain of 23.4 per cent. Summerset Group fell 1.7 per cent to $8.90, ending the year up 39.7 per cent."

that dog ARV has taken it out another year... out of the 5 years it been listed, it has been the best performer (in the listed sector) for at least 2 of them... some might be surprised to hear such things given the chat on each of the listed sectors threads.

The Dogs of the Dow is used by some to base their investments on

So in this sector 2020 will the year for the ‘dogs’ ....go SUM and OCA

[Brain]

This is my concern too. People are living much longer, staying in their own homes longer, and by the time they need to move elsewhere, chances are they are going to need a higher level of care than village units will provide. Down the track the greater need will be more care beds, not more occupy your own villas. How are these companies proposing to provide a higher number and level of care beds/services, when their villa sales drop? I have seen mention of the impact of higher staffing costs - we are not well paid - but you can’t provide quality care without staff. In 10 years (probably less) the rest home I work in, will not be able to manage with our current staffing levels. We already have several residents who should probably be in hospital level care. More and more people require two staff for toileting/mobilising. In other words, the needs of our elderly are increasing rapidly and what was once “low level” care (rest home care) is very quickly becoming something else.

It isn’t even just about the property market slowing down. It is about a potential reduction in the suitability of villa life for our elderly down the track.

Good to get the views from someone at the coal face. Possibly the Oceania model may be better in the long run with their greater emphasis on care as opposed to independent living.

[Bjauck]

Out of curiosity, have those of you invested in retirement villages, visited a local facility to see first hand what they offer, how they operate, get feedback from staff/residents? If so, was this something villages were happy to let you do as a potential investor, or did you just rock up and give the impression you might be looking for a bed/unit and ask for a tour? A close relative was in Oceania care and I have often visited several family friends in Summerset villages. At Oceania I had a good look around including frequent perusal through the logbooks left for unit licensees' hand written maintenance requests and frank feedback. On the back of witnessing changes over several years at Oceania I decided to buy a shareholding.

[justakiwi]

Good to know Oceania is listening to their licensees and initiating changes as a result of their feedback.


A close relative was in Oceania care and I have often visited several family friends in Summerset villages. At Oceania I had a good look around including frequent perusal through the logbooks left for unit licensees' hand written maintenance requests and frank feedback. On the back of witnessing changes over several years at Oceania I decided to buy a shareholding.

[Bjauck]

Good to get the views from someone at the coal face. Possibly the Oceania model may be better in the long run with their greater emphasis on care as opposed to independent living.

I agree. However a caveat for that may be the adequate funding for such long term care. A great proportion of those higher needs residents may require government assistance. There will always be pressure on government to contain the cost of Health care. In the face of the continued absence of a general CGT, how much extra tax on Income will be necessary to fund the medical cost of the oncoming grey tsunami? Will the government need to revisit the means testing threshholds for single and married people?

[trader_jackson]

Good to get the views from someone at the coal face. Possibly the Oceania model may be better in the long run with their greater emphasis on care as opposed to independent living.

you mean the Oceania/Arvida/Ryman model?
aka not just Oceania... in fact by mid next year summerset will be the only listed 'retirement operator' that doesn't have a serious focus on care (and also the only ones that lose money on their care operation they say)... and I think sum people haven't realized that it is the focus on care that is beginning to drive demand for units more and more, not just units pumped out annually in nice places - all the listed operators can do this.

To expand on the critical point above, on a report produced by FNZ (now Jarden) 27 July 2018: "... significant difference between those operators with a focus on care (OCA & RYM) and those that have a greater retirement weighting. Both OCA and RYM have sufficient earnings from care to offset overheads and village services deficits while SUM and MET do not. We also note the high quality of OCA’s disclosure by segment, which provides greater confidence in understanding the core profitability of the business. We highlight that similar analysis is not possible for aged care counterpart ARV, given its financial and operating disclosure is more limited." Further analysis (and disclosures) by ARV would indicate they too "have sufficient earnings from care to offset overheads and village services deficits."

[Beagle]

The Dogs of the Dow is used by some to base their investments on

So in this sector 2020 will the year for the ‘dogs’ ....go SUM and OCA

Agree. Some companies have got ahead of themselves in terms of share price relative to earnings while SUM others have heaps of capital gain potential in 2020.
SUM's turn for 50%+ gain coming right up.

[Beagle]

I think a certain percentage of Australians are going to give up on retiring in Australia with the heat and bushfire risks and retire here instead.
Unprecedented bushfires and global warming a long term tailwind to retirement stocks in N.Z. with our much more moderate climate ?

[RTM]

I think a certain percentage of Australians are going to give up on retiring in Australia with the heat and bushfire risks and retire here instead.
Unprecedented bushfires and global warming a long term tailwind to retirement stocks in N.Z. with our much more moderate climate ?

OOOooooooops

[couta1]

I think a certain percentage of Australians are going to give up on retiring in Australia with the heat and bushfire risks and retire here instead.
Unprecedented bushfires and global warming a long term tailwind to retirement stocks in N.Z. with our much more moderate climate ? It would help immensly if they ignorned the global warming impact bs and developed comprehensive fire break and controlled burn off systems instead, fires can only thrive if given fuel.

[RTM]

I think a certain percentage of Australians are going to give up on retiring in Australia with the heat and bushfire risks and retire here instead.
Unprecedented bushfires and global warming a long term tailwind to retirement stocks in N.Z. with our much more moderate climate ?

Retirement stocks and real estate in general.

[Beagle]

Retirement stocks and real estate in general.

Yes, fair comment which is a roundabout way is also good for retirement stocks here. Its always been a very hot and dry continent, much more so now days.

[winner69]

A CSIRO study from 10 years ago concluded that recent events in Australia more likely to happen 2020 onwards ....and continue to get worse

Interestingly the same report said such events are likely on the East Coast areas of NZ, Wellington and Nelson/Marlborough by 2030

Didn’t Nelson have a big fire last year?

[Beagle]

Might be a good time for a bunch of retirement villages in Dunedin...a high of only 14 today in the middle of summer probably gives residents every chance of dodging global warming completely, in fact they might welcome it lol

[winner69]

Might be a good time for a bunch of retirement villages in Dunedin...a high of only 14 today in the middle of summer probably gives residents every chance of dodging global warming completely, in fact they might welcome it lol

But a decent quake could send a lot of Dunedin slip sliding into the harbour ...Much of Dunedin is built on schist bedrock and covered with a thick layer of mudstone, with a top coating of sand and clay-rich cenzoic alluvial soil. This type of surface becomes slick during even moderate rainfall. Abbotsford was only a warning

[couta1]

But a decent quake could send a lot of Dunedin slip sliding into the harbour ...Much of Dunedin is built on schist bedrock and covered with a thick layer of mudstone, with a top coating of sand and clay-rich cenzoic alluvial soil. This type of surface becomes slick during even moderate rainfall. Abbotsford was only a warning Sir David Attenborough reckons if humans dont control populations then nature will do the job for us, I reckon hes right aye.

[winner69]

Sir David Attenborough reckons if humans dont control populations then nature will do the job for us, I reckon hes right aye.

He’s so depressing that Sir David

But David and Jacinda seemed to get on like old mates at a recent global forum when she said going to do a lot to save the world - "like embed targets, that meet the ambition that we need" and "endures beyond us as individuals".

So we are OK

[Beagle]

https://www.msn.com/en-nz/money/news/aussies-and-expats-fleeing-bushfires-might-boost-nz-economy-economist/ar-BBZ7wgs?ocid=spartandhp

Tailwind for all retirement companies ?

[Dlownz]

Just a little food for thought.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12307734

[peat]

Just a little food for thought.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12307734
the guts of the article for those w/o Prem

"I would not want my relations to be residents in something awash with debt and either going bust or skimping on care — whether that's private equity or anyone," he says. "Regulators should do more to ensure that operators have a stable financial base and prevent excessive profit extraction."

[bull....]

see the market is starting to see the risk of viruses in retirement villages as a risk to valuations . rightly so

[bull....]

just as i have been warning the retirement stocks business model is going to come crashing down due to corona

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12315045

Coronavirus: Retirement village sector chiefs form task force to protect elderly

all it take is 1 community outbreak in a village and they will be toast. i might buy some ryman at 50c then

[Cadalac123]

just as i have been warning the retirement stocks business model is going to come crashing down due to corona

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12315045

Coronavirus: Retirement village sector chiefs form task force to protect elderly

all it take is 1 community outbreak in a village and they will be toast. i might buy some ryman at 50c then

Wow bull do you think we are going to experience a dip even worse than the Great Depression???

[bull....]

Wow bull do you think we are going to experience a dip even worse than the Great Depression???

lol seriously though would you move into one or buy one if they become virus hotbeds and if a large % of old people die wheres the market?

[Cadalac123]

lol seriously though would you move into one or buy one if they become virus hotbeds and if a large % of old people die wheres the market?

Sadly some people don’t have a choice and get forced into these retirement homes I don’t think the families of these people are automatically going to want them back home

[Blue Skies]

Sadly some people don’t have a choice and get forced into these retirement homes I don’t think the families of these people are automatically going to want them back home


So true, and when you think about it they may be much better off in a Retirement Village than their own homes.
They still have people contact living at home and at least there's an immediate high level of professional care if they get sick in a Retirement Village which isn't going to be available at home.
Am sure my elderly relatives feel far safer facing this threat in a Retirement Village than they would feel living on their own.

[bull....]

large part of businesses for these companies is property development

[Jaa]

large part of businesses for these companies is property development



Yes, but surely the attraction of those properties is a safe, fun place to retire to? The most profitable segment is the retirement village lifestylers that could still live in their own homes but enjoy the community aspects. People could think they are safer in their own homes now.

Thus some long term damage to the appeal of retirement village living. Which could depress the price of their property sales.

[bull....]

Coronavirus: 43,000 NZ retirement village residents 'at high risk at infection' - analysts
Retirement chiefs are meeting tomorrow to discuss a co-ordinated approach to the threat

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12316900


businesses will be toast if virus gets bad , probably why they meeting

[youngatheart]

Coronavirus: 43,000 NZ retirement village residents 'at high risk at infection' - analysts
Retirement chiefs are meeting tomorrow to discuss a co-ordinated approach to the threat

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12316900


businesses will be toast if virus gets bad , probably why they meeting

This is a good thing and could bring about a small shift in confidence. Particularly OCA at a crazy - 40% below it's NTA!

[bull....]

This is a good thing and could bring about a small shift in confidence. Particularly OCA at a crazy - 40% below it's NTA!

could easliy be 5% to nta in 6 mths too at current pricing

[justakiwi]

Sorry, but your post has forced me out of the lurk only promise I made to myself, but I can’t let this one go.

You are so wrong. The vast majority of elderly people living in retirement homes/rest homes, were not forced to live their. Many of them made the decision for themselves because they were no longer able to remain in their own home and/or they did not want to live with family, even if their family was willing to have them. Others, realised that they could no longer manage at home, that their adult children were not in a position to care for them, so a rest home situation was the best option for them. Very few residents are in these places against their will.

Not everyone is in the position to take on the care of an elderly parent. It may not be a viable financial option for them, they may not have sufficient room in their home for an extra person, especially if they are renting. They may have health issues of their own. There are all manner of reasons why it may not be an option. They may also have personality conflicts with their parents, which means, no matter how much they love each other, neither party wants to live with the other. Nobody should be made to feel guilty about this.

I work in a rest home and I see loving adult children/families visiting their parents often. I see grandchildren and great grandchildren coming to visit. Some more often than others, but this is due to individual situations/commitments - not because they don’t care. You are making judgments on people you do not know and whose situations you know nothing about.

Rest homes are not “institutions.” They are “home” for the residents who live in them. When you hear someone who has been to hospital for some reason, come back to the rest home and say “I am so happy to be home!” you know they mean it. Even more so, when someone who is dying, thanks you (as a caregiver) for making it possible for him/her to die “at home” rather than have to go to hospital or hospice.

To reference “Game of Thrones” - “you know nothing Jon Snow.”


Sadly some people don’t have a choice and get forced into these retirement homes I don’t think the families of these people are automatically going to want them back home

[percy]

Sorry, but your post has forced me out of the lurk only promise I made to myself, but I can’t let this one go.

You are so wrong. The vast majority of elderly people living in retirement homes/rest homes, were not forced to live their. Many of them made the decision for themselves because they were no longer able to remain in their own home and/or they did not want to live with family, even if their family was willing to have them. Others, realised that they could no longer manage at home, that their adult children were not in a position to care for them, so a rest home situation was the best option for them. Very few residents are in these places against their will.

Not everyone is in the position to take on the care of an elderly parent. It may not be a viable financial option for them, they may not have sufficient room in their home for an extra person, especially if they are renting. They may have health issues of their own. There are all manner of reasons why it may not be an option. They may also have personality conflicts with their parents, which means, no matter how much they love each other, neither party wants to live with the other. Nobody should be made to feel guilty about this.

I work in a rest home and I see loving adult children/families visiting their parents often. I see grandchildren and great grandchildren coming to visit. Some more often than others, but this is due to individual situations/commitments - not because they don’t care. You are making judgments on people you do not know and whose situations you know nothing about.

Rest homes are not “institutions.” They are “home” for the residents who live in them. When you hear someone who has been to hospital for some reason, come back to the rest home and say “I am so happy to be home!” you know they mean it. Even more so, when someone who is dying, thanks you (as a caregiver) for making it possible for him/her to die “at home” rather than have to go to hospital or hospice.

To reference “Game of Thrones” - “you know nothing Jon Snow.”

Excellent post.

[RupertBear]

Sorry, but your post has forced me out of the lurk only promise I made to myself, but I can’t let this one go.

You are so wrong. The vast majority of elderly people living in retirement homes/rest homes, were not forced to live their. Many of them made the decision for themselves because they were no longer able to remain in their own home and/or they did not want to live with family, even if their family was willing to have them. Others, realised that they could no longer manage at home, that their adult children were not in a position to care for them, so a rest home situation was the best option for them. Very few residents are in these places against their will.

Not everyone is in the position to take on the care of an elderly parent. It may not be a viable financial option for them, they may not have sufficient room in their home for an extra person, especially if they are renting. They may have health issues of their own. There are all manner of reasons why it may not be an option. They may also have personality conflicts with their parents, which means, no matter how much they love each other, neither party wants to live with the other. Nobody should be made to feel guilty about this.

I work in a rest home and I see loving adult children/families visiting their parents often. I see grandchildren and great grandchildren coming to visit. Some more often than others, but this is due to individual situations/commitments - not because they don’t care. You are making judgments on people you do not know and whose situations you know nothing about.

Rest homes are not “institutions.” They are “home” for the residents who live in them. When you hear someone who has been to hospital for some reason, come back to the rest home and say “I am so happy to be home!” you know they mean it. Even more so, when someone who is dying, thanks you (as a caregiver) for making it possible for him/her to die “at home” rather than have to go to hospital or hospice.

To reference “Game of Thrones” - “you know nothing Jon Snow.”

Well said :)

[macduffy]

Yes, justakiwi, excellent post!

:)

[Blue Skies]

Justakiwi, Many thanks

[44wishlists]

The best comment so far!

[Chinesekiwi]

Good on you Justakiwi - your'e there and you see it.

Your opinion is greatly appreciated, thank you.

[Entrep]

Nice post above Justakiwi

Back to price discussion though, agree and obviously retirement villages are highly vulnerable to the virus, but the SP response of OCA etc seem to be pricing in armageddon and it running rampant? Retirement villages probably in fact have the best protections in place right to stop it spreading. Seems overdone vs the rest of the market?

[whatsup]

Sorry, but your post has forced me out of the lurk only promise I made to myself, but I can’t let this one go.

You are so wrong. The vast majority of elderly people living in retirement homes/rest homes, were not forced to live their. Many of them made the decision for themselves because they were no longer able to remain in their own home and/or they did not want to live with family, even if their family was willing to have them. Others, realised that they could no longer manage at home, that their adult children were not in a position to care for them, so a rest home situation was the best option for them. Very few residents are in these places against their will.

Not everyone is in the position to take on the care of an elderly parent. It may not be a viable financial option for them, they may not have sufficient room in their home for an extra person, especially if they are renting. They may have health issues of their own. There are all manner of reasons why it may not be an option. They may also have personality conflicts with their parents, which means, no matter how much they love each other, neither party wants to live with the other. Nobody should be made to feel guilty about this.

I work in a rest home and I see loving adult children/families visiting their parents often. I see grandchildren and great grandchildren coming to visit. Some more often than others, but this is due to individual situations/commitments - not because they don’t care. You are making judgments on people you do not know and whose situations you know nothing about.

Rest homes are not “institutions.” They are “home” for the residents who live in them. When you hear someone who has been to hospital for some reason, come back to the rest home and say “I am so happy to be home!” you know they mean it. Even more so, when someone who is dying, thanks you (as a caregiver) for making it possible for him/her to die “at home” rather than have to go to hospital or hospice.

To reference “Game of Thrones” - “you know nothing Jon Snow.”


Great reply, IMHO the truth/facts should never hurt !

[macduffy]

Nice post above Justakiwi

Back to price discussion though, agree and obviously retirement villages are highly vulnerable to the virus, but the SP response of OCA etc seem to be pricing in armageddon and it running rampant? Retirement villages probably in fact have the best protections in place right to stop it spreading. Seems overdone vs the rest of the market?

Probably not overdone when you consider the degree of the threat to these companies' businesses if the virus gets a hold in a village.

[skid]

It is definitely a gamble financially....we dont know how bad the virus will spread...but if worse comes to worse...retirement villages could well be following airlines.....I think the downside has the edge on the upside atm.......In a humanitarian sense it would be a disaster...no one would want to see it...but

[Zaphod]

It is definitely a gamble financially....we dont know how bad the virus will spread...but if worse comes to worse...retirement villages could well be following airlines.....I think the downside has the edge on the upside atm.......In a humanitarian sense it would be a disaster...no one would want to see it...but

Perhaps, but retirement villages also have a much greater on-site capacity to reduce the spread & to deal with infections, as opposed to those living in their own private residences.

[Beagle]

Perhaps, but retirement villages also have a much greater on-site capacity to reduce the spread & to deal with infections, as opposed to those living in their own private residences.

Its all about perception, the truth doesn't come into it. If people perceive they are safer in their own homes then unit sales will dry up very quickly.

[troyvdh]

I heard a wee whisper...ARV may be shutting its doors tomorrow..

[Jerry]

Taking the long view, retirement homes are just that, a collection of potential homes. As far as who occupies them, that is the choice of the managers. If the demographics alter and there is a drop in the number of very old, then some villages may just become housing estates or apartments. There is still good value there.

[King1212]

They are already have plans in place... stricken the visitors...checking staff movement on traveling n etc. So far... nothing to worry...spoke to my mate...manager at one of rest home

[trader_jackson]

I heard a wee whisper...ARV may be shutting its doors tomorrow..

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12317619

Where did you hear this whisper? Seems like the complete opposite to what you've heard has happened... being that it seems like almost every other village is "shutting its doors" but it is less clear what is happening for ARV

[Bjauck]

Taking the long view, retirement homes are just that, a collection of potential homes. As far as who occupies them, that is the choice of the managers. If the demographics alter and there is a drop in the number of very old, then some villages may just become housing estates or apartments. There is still good value there. Precisely, the appeal of tranquil & well tended communities is not limited to the over 70's. Over the years some operators had been raising the minimum age. So I guess they could drop the minimum too. If needs be, for younger age groups they could investigate introducing alternatives to the ORA occupancy system.

[Vaygor1]

Perhaps, but retirement villages also have a much greater on-site capacity to reduce the spread & to deal with infections, as opposed to those living in their own private residences.

I have asked a fair few people of varying ages (but all over 60) if they've been spooked into not entering a retirement village due to this outbreak. They all felt the opposite. Better to be where you can get help, in an environment with the facilities and the processes to mitigate the probability and the consequences of catching it... goes for any disease or illness, including the common cold. In their minds, a rest home is closer to the environment of a hospital. Their perceived risks and concerns lie more with going to church. a library, or a school gala.

[Raz]

I recall a MOH investigation across a several rest homes/retirement villages (across companies) in a certain city last year as the fatality rate from the flu season and resulting pneumonia spiked. It happens often like cruse ships with norovirus ....it an environment conducive to it. They keep it on the down low yet it often occurs..if this gets a hold I'm placing my money it will happen in at least one rest home, perhaps not one of the main ones ..when that happens i will look at buying in early. The systems have been there all along and they have failed constantly..nothing to do with level of care or the staff care.

This time it will get publicity unlike the common flu, the PR risk is substantial.

[Vaygor1]

... This time it will get publicity unlike the common flu, the PR risk is substantial.

You have a valid point. The press will thrive on it while conveniently ignoring the stats of those who die at home of the same ailments.

[Mr Slothbear]

Glad to see you posting again Vaygor. Always value and appreciate your posts.

[ynot]

One would have to think that once the Cvirus has run its course and mass fear has departed the markets, sanity will prevail, retirement villages will continue to be obvious destinations for the elderly.

[youngatheart]

Oh dear, with stories like this in the herald it's to see any hope soon.... https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12317950

"Along with cruise ships, nursing homes have emerged as a focus of heightened concern in the global pandemic. At least 30 of Washington state's more than 50 deaths have been linked to one nursing home. Most of the dead were residents."

Let's hope it never happens here.

[bull....]

Oh dear, with stories like this in the herald it's to see any hope soon.... https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12317950

"Along with cruise ships, nursing homes have emerged as a focus of heightened concern in the global pandemic. At least 30 of Washington state's more than 50 deaths have been linked to one nursing home. Most of the dead were residents."

Let's hope it never happens here.

yep one of the highest risk investments at the moment. any ryman , summerset, arvida , ocenia caught in a lockdown senario could easliy be toast as far as business goes

[Blue Skies]

Oh dear, with stories like this in the herald it's to see any hope soon.... https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12317950

"Along with cruise ships, nursing homes have emerged as a focus of heightened concern in the global pandemic. At least 30 of Washington state's more than 50 deaths have been linked to one nursing home. Most of the dead were residents."

Let's hope it never happens here.

I think there is a significant difference between US Nursing Homes and our Retirement Villages.

[fish]

yep one of the highest risk investments at the moment. any ryman , summerset, arvida , ocenia caught in a lockdown senario could easliy be toast as far as business goes

no way will it happen here unlee resthome operators are very ignorant and you live in a country that called covid -19 a hoax and failed to isolate.

you have to let the virus in.
Then neglect its spread

[bull....]

no way will it happen here unlee resthome operators are very ignorant and you live in a country that called covid -19 a hoax and failed to isolate.

you have to let the virus in.
Then neglect its spread

but how do you stop a perfectly healthy looking person going in who is a carrier. it is proven these people are carriers

[bull....]

another risk for these operators on top of the virus

Property prices will fall for the next six months, with house price inflation slowing to 0% by next March, according to ASB economistsHouse prices fell by about 10% through the GFC in 2008

https://www.goodreturns.co.nz/article/976516494/house-prices-to-fall-for-six-months-asb.html


there goes there development margins

[fish]

another risk for these operators on top of the virus

Property prices will fall for the next six months, with house price inflation slowing to 0% by next March, according to ASB economistsHouse prices fell by about 10% through the GFC in 2008

https://www.goodreturns.co.nz/article/976516494/house-prices-to-fall-for-six-months-asb.html


there goes there development margins

Their development margins are high and may well be reduced but I suspect profits will be made.
This is different to the GFC.Kiwis returning home may put pressure on house prices.
We will keep on getting old and demand for retirement villages/ resthome places may increase.
A retirement village may be the safest place to be atm

[trader_jackson]

another risk for these operators on top of the virus

Property prices will fall for the next six months, with house price inflation slowing to 0% by next March, according to ASB economists

House prices fell by about 10% through the GFC in 2008

https://www.goodreturns.co.nz/article/976516494/house-prices-to-fall-for-six-months-asb.html


there goes there development margins

And yet with OCA, within 1 month, it is now at a over 40% discount to NTA... are house prices going to drop by 40%?
OCA Development margins are well higher than 10% as well...

[fish]

Coronavirus: 43,000 NZ retirement village residents 'at high risk at infection' - analysts
Retirement chiefs are meeting tomorrow to discuss a co-ordinated approach to the threat

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12316900


businesses will be toast if virus gets bad , probably why they meeting

A great idea to have a meeting and formulate a plan
Hopefully Isolation and screen all staff

[bull....]

And yet with OCA, within 1 month, it is now at a over 40% discount to NTA... are house prices going to drop by 40%?
OCA Development margins are well higher than 10% as well...

think your find at next results nta has dropped

[bull....]

rea in australia yesterday withdrawl there guidance for year due to virus , saying property listings have dropped and they dont know whats going to happen with property market

[trader_jackson]

think your find at next results nta has dropped
By over 40% in 6 months?

[bull....]

By over 40% in 6 months?

there a property company so should trade at a discount to nta anyway

[Blue Skies]

Oh dear!
Nursing home Ellerslie Gardens Lifecare in lockdown after a nightshift worker returning from Zimbabwe on 10 March prior to self isolation period coming in & to work on 15 March tested positive today.
Hopefully no contact with residents.

How tragic & slack they were allowed to go to work in such a vulnerable sector without management enforcing best practice self isolating first.
And don't give me that 'we were only following guidelines' excuse.

[Beagle]

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12318815 Norah Barlow Hmmm

[bull....]

yep what i been saying you cant stop the virus getting into retirement villages. only matter of time esp with the way govt is controlling the spread

[Blue Skies]

yep what i been saying you cant stop the virus getting into retirement villages. only matter of time esp with the way govt is controlling the spread


It shouldn't be entirely up to the govt to control the spread.

So many want less govt regulation (look at National's 'gona throw all the regulations on the bonfire' promise, though haven't heard much about that lately ) & less interference, and yet don't take responsibility, don't step up to Best Practice policies but just do the bare minimum.

Bleeding obvious in this sector when your dealing with extremely vulnerable elderly people & your supposed to have specialist knowledge & expertise & care, to have made anyone returning from overseas self isolate or be tested before returning to work.

[Xerof]

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12318815 Norah Barlow Hmmm

Wouldn't you think retirement villages, of all places, would have insisted ANY staff member returning from overseas should be required to self-isolate. I realise she returned before that 'official' requirement, but c'mon.

Oh, I see blue skies made the same observation. Agree

[Beagle]

It shouldn't be entirely up to the govt to control the spread.

So many want less govt regulation (look at National's 'gona throw all the regulations on the bonfire' promise, though haven't heard much about that lately ) & less interference, and yet don't take responsibility, don't step up to Best Practice policies but just do the bare minimum.

Bleeding obvious in this sector when your dealing with extremely vulnerable elderly people & your supposed to have specialist knowledge & expertise & care, to have made anyone returning from overseas self isolate or be tested before returning to work.

Norah Barlow's "outstanding" leadership eh.

[bull....]

with the govt herd immunity strategy its inevitable there will be a lock down even with the measures in place. ie infected workers

[whatsup]

If I had parents who were in any retirement villages I would if possible take them out of that facility and install them in a motel unit close by to my home and look after them myself if I could not take care of them in my own home, imho one cannot trust the domestic staff no matter how stringent the retirement village is, slip ups happen.

[bull....]

i have been told by someone that certain manufacturers to the building industry will close doors at level 4 . therefore if true they will not be able to build apartments anymore. anyone else heard the same

[mp52]

If I had parents who were in any retirement villages I would if possible take them out of that facility and install them in a motel unit close by to my home and look after them myself if I could not take care of them in my own home, imho one cannot trust the domestic staff no matter how stringent the retirement village is, slip ups happen.

That's a fun opinion but I'm inclined to trust an environment of regulated and monitored foot-traffic and a work-force remunerated whether or not they turn up to work and given front-line training in management of infectious disease versus a panicking family full of "suppose we should really not be doing this - it might be the last time for awhile but it's only [name here]" types and in an environment where well-wishing do-gooders and even neer-do-wellers are loose on the streets.

[Valiant]

i have been told by someone that certain manufacturers to the building industry will close doors at level 4 . therefore if true they will not be able to build apartments anymore. anyone else heard the same

Are you referring to suppliers or contractors? I personally haven't heard this and the enactment of alert level 4 will be different depending on the sector, contractor, client and contract agreement.
With regards to existing contracts, if there are site closures this does not necessarily imply a negative result for a contractor or principal: https://www.bellgully.com/publications/the-impact-of-covid-19-on-construction-projects

[bull....]

Are you referring to suppliers or contractors? I personally haven't heard this and the enactment of alert level 4 will be different depending on the sector, contractor, client and contract agreement.
With regards to existing contracts, if there are site closures this does not necessarily imply a negative result for a contractor or principal: https://www.bellgully.com/publications/the-impact-of-covid-19-on-construction-projects

suppliers i was told

[troyvdh]

dear mp52 you jest surely..your trust I can assure is misplaced.Im a nurse who in recent days have visited my mother in a rest home...Im no perfectionist but I saw some very poor decicion making.

[Bjauck]

If I had parents who were in any retirement villages I would if possible take them out of that facility and install them in a motel unit close by to my home and look after them myself if I could not take care of them in my own home, imho one cannot trust the domestic staff no matter how stringent the retirement village is, slip ups happen. Just make sure you clean the motel unit thoroughly from top to bottom before they move in. To be honest I would think their unit in a village would be much safer and more secure. Villages have comprehensive Covid-19 plans. Motel units - it would be up to the the individual occupants and the owner. Are you confusing independent units with the rest home facilities in villages?

[whatsup]

Just make sure you clean the motel unit thoroughly from top to bottom before they move in. To be honest I would think their unit in a village would be much safer and more secure. Villages have comprehensive Covid-19 plans. Motel units - it would be up to the the individual occupants and the owner. Are you confusing independent units with the rest home facilities in villages?

Good comment but at lease one can hire specialist cleaners to do that job before moving in , but with the comings and goings of staff, suppliers, visitors and residents all movement is almost impossible to police.

[ratkin]

Just make sure you clean the motel unit thoroughly from top to bottom before they move in. To be honest I would think their unit in a village would be much safer and more secure. Villages have comprehensive Covid-19 plans. Motel units - it would be up to the the individual occupants and the owner. Are you confusing independent units with the rest home facilities in villages?

We already saw yesterday that some of their plans are a joke. They literally let Mr Virus walk straight in.

[Bjauck]

We already saw yesterday that some of their plans are a joke. They literally let Mr Virus walk straight in. Rest home nurse.

[Bjauck]

Good comment but at lease one can hire specialist cleaners to do that job before moving in , but with the comings and goings of staff, suppliers, visitors and residents all movement is almost impossible to police. Quite a few villages are in lockdown - not even family can visit the independent units.

I would wager that the residents in the units are better protected than individuals still in their own houses in the community, especially if the rest of their family are living overseas or in other parts of the country.

[ratkin]

Quite a few villages are in lockdown - not even family can visit the independent units.

I would wager that the residents in the units are better protected than individuals still in their own houses in the community, especially if the rest of their family are living overseas or in other parts of the country.

Another case just announced That ccomment did not age well

[Zaphod]

Another case just announced That ccomment did not age well

It's not a complete protection against contraction of the virus. Nothing is. At least in that environment they have access to specialised care. At home? Not so much. They in the best place IMO.

[bull....]

people need to read the ryman announcement to get a feel of things to come

Ryman Healthcare advises that, due to the Government’s announcement yesterday afternoon that New Zealand will be moving to Level 4 on the COVID-19 alert system on March 25, Ryman is withdrawing previously communicated profit and build rate guidance.

https://www.nzx.com/announcements/350500

all retirement stocks will be same boat

[ratkin]

people need to read the ryman announcement to get a feel of things to come

Ryman Healthcare advises that, due to the Government’s announcement yesterday afternoon that New Zealand will be moving to Level 4 on the COVID-19 alert system on March 25, Ryman is withdrawing previously communicated profit and build rate guidance.

https://www.nzx.com/announcements/350500

all retirement stocks will be same boat

Am curious, why does a lockdown impact on their profit. I can see they may change future plans, but other than extra security what are their additional costs?

Perhaps their sales team and other non medical employees are going into lockdown so units may stay empty for longer, that is all I can think of

[iceman]

people need to read the ryman announcement to get a feel of things to come

Ryman Healthcare advises that, due to the Government’s announcement yesterday afternoon that New Zealand will be moving to Level 4 on the COVID-19 alert system on March 25, Ryman is withdrawing previously communicated profit and build rate guidance.

https://www.nzx.com/announcements/350500

all retirement stocks will be same boat

It is not going to be limited to retirement stocks. It will apply to a majority of the stocks on the NZX. How could any Director possibly put their name to a forecast right now !

[trader_jackson]

Retirement villages (at least those who aren't as reliant on build rates and have a solid, profitable, care operation) should really be able to ride this out better than that of say retail (eg Michael Hill) who now will have to close down completely and may find (when things do open back up) there is no money to purchase jewellery while there is a near endless stream of people getting older, needing increased community, security and care, every minute/day/hour... and yet the share price of the operators would indicate they are in the same, if not worse, boat than the like of say Michael Hill.

[forest]

Retirement villages (at least those who aren't as reliant on build rates and have a solid, profitable, care operation) should really be able to ride this out better than that of say retail (eg Michael Hill) who now will have to close down completely and may find (when things do open back up) there is no money to purchase jewellery while there is a near endless stream of people getting older, needing increased community, security and care, every minute/day/hour... and yet the share price of the operators would indicate they are in the same, if not worse, boat than the like of say Michael Hill.

I wonder since construction and building of essential services is still allowed, if that includes the hospital parts of the retirement villages.
Those hospital wards are now more needed than ever.

[iceman]

Retirement villages (at least those who aren't as reliant on build rates and have a solid, profitable, care operation) should really be able to ride this out better than that of say retail (eg Michael Hill) who now will have to close down completely and may find (when things do open back up) there is no money to purchase jewellery while there is a near endless stream of people getting older, needing increased community, security and care, every minute/day/hour... and yet the share price of the operators would indicate they are in the same, if not worse, boat than the like of say Michael Hill.

Agree and have dumped my few remaining HLG shares this morning and bought OCA with the funds

[trader_jackson]

a rest home in Hamilton is a suspected cluster of community transmission...
https://www.stuff.co.nz/national/health/coronavirus/120594481/coronavirus-four-staff-members-at-hamilton-rest-home-have-tested-positive-for-covid19?cid=facebook.post&fbclid=IwAR2zZ_UiCJvA3KwlI3dwfEG_B37mm5eFKhIPD5XCv mUF_aKqRoJi8_9tpow

[ratkin]

Cluster in a rest home in Christchurch.

Why does it always end up in the resthomes? There is hardly any community spread, and they are being very careful yet it is straight in there. Same in other countries too.

Makes me wonder if there are loads of really mild cases everywhere, and it only gets noticed when it infects an old person as they are more symptomatic.

[ynot]

Cluster in a rest home in Christchurch.

Why does it always end up in the resthomes? There is hardly any community spread, and they are being very careful yet it is straight in there. Same in other countries too.

Makes me wonder if there are loads of really mild cases everywhere, and it only gets noticed when it infects an old person as they are more symptomatic.

Yes, talking to a tradie I know working in construction a month back said a lot of young guys he had come across on the job earlier in the year had varying symptoms of a mild flue. Unusual for Feb /march !

[iceman]

Cluster in a rest home in Christchurch.

Why does it always end up in the resthomes? There is hardly any community spread, and they are being very careful yet it is straight in there. Same in other countries too.

Makes me wonder if there are loads of really mild cases everywhere, and it only gets noticed when it infects an old person as they are more symptomatic.

There was a very good article in the Daily Telegraph a day or two ago about a different approach and much wider testing regime in Iceland. There they have found over 50% of confirmed cases asymptomatic. I think that answers your question. It was time consuming to set up a "free trial" account so I've copied the article below for those that are interested :

How Iceland turned into the world's biggest study of Covid-19 - and what it's teaching us
Mass testing has avoided lockdowns - but does this tiny island nation have all the answers?

By
Thor Fanndal
REYKJAVIK
4 April 2020 • 2:09pm
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At the latest count 22,195 people had been tested - amounting to six per cent of the population. 1,364 have tested positive and four people have died.
At the latest count 22,195 people had been tested - amounting to six per cent of the population. 1,364 have tested positive and four people have died.

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You would be forgiven for thinking the tiny island nation of Iceland is being ravaged by coronavirus.

Raw data shows the highest proportion of confirmed cases anywhere in the world - 1,300 among a population of 365,000.

But step outside into the bright spring sunshine and you won't see ghostly quiet streets and shuttered businesses like in Italy and Spain.

Instead the cafes, pubs and shops are doing a gentle trade, while schools remain open and travel is unhindered - even tourists are welcomed, the ones that manage to book a flight.

The reason behind the high numbers is the most aggressive Covid-19 testing regime anywhere in the world.

In proportion to population, Iceland has now screened five times as many as in South Korea - the poster country for a national Covid response - and 30 times as many as the UK has managed.

At the latest count 22,195 people had been tested - amounting to six per cent of the population. 1,364 have tested positive and four people have died.

With the results authorities are able to pursue aggressive quarantines for those with a higher statistical chance of infection, to slow the spread without a draconian nationwide shutdown.


Across the world, countries tend to have settled into two camps in fighting the virus: containment or mitigation, Thorolfur Gudnason, the government's chief epidemiologist, tells The Telegraph.

"It's like you would choose one or the other," he says. "Iceland is doing both."

Mr Gudnason's team of 60 police investigators and healthcare workers act as detectives on each confirmed case, tracking down those they have come in contact with.

Testing is carried out by The National Health Service on those showing symptoms. But on top of this, a biopharma company, deCODE Genetics, has been screening random samples of the population to build the world's most extensive study yet of how the virus behaves in a population
Testing is carried out by The National Health Service on those showing symptoms. But on top of this, a biopharma company, deCODE Genetics, has been screening random samples of the population to build the world's most extensive study yet of how the virus behaves in a population
Testing is carried out by The National Health Service on those showing symptoms. But on top of this, a biopharma company, deCODE Genetics, has been screening random samples of the population to build the world's most extensive study yet of how the virus behaves in a population.

Early results show 50 per cent of carriers of the virus are asymptomatic. It has also revealed up to 40 'mutations', or strains, of the disease.

“We can determine the geographic origin of the virus in every single [virus] in Iceland,” Kári Stefánsson, founder of deCODE says.

They claim to have traced strains back to Italy, Austria, the US, and seven cases in particular to one undisclosed football match in the UK.

Crucially, all the testing has meant Iceland has been able to avoid a lockdown or quarantine as cases are tracked, traced and isolated before spreading rapidly - thus alleviating pressure on the hospitals.


The data rolling in has meant authorities can "more accurately design methods" of controlling the virus, Mr Stefánsson says.

So far there is a government ban on gatherings of more than 20 people and light guidelines on social distancing.

The guidance is imposed not by force but by trust, Katrín Jakobsdottir, Iceland's prime minister, tells The Telegraph .

"Iceland has a history of socially liberal culture," she says. "That means acceptance of differences and minorities, but in this case, it means to trust, not to force. We have no tradition of militarism or an army. We ask for cooperation, rather than force it."

She adds that the science approach allows her to leave the virus policy "out of the battlefield of politics".

The limited guidelines means business is slow for most shops, but with few exceptions the country is open for business.

Icelanders can still get their morning coffee, sit down at local bookshops. Even stop at a local ice-cream parlour.

Citizens going about their business in Reykjavik
In Reykjavik, life goes on as normal
At Reykjavík Roasters, a small but popular independent cafe in Reykjavík's centre, customers trickle in despite the pandemic. The city's centre is unusually calm.

“Honestly, what I miss more than anything are the public pools” pensioner Auður Styrkásdóttir says apologetically, adding “this is a luxury.”

One of the main benefits of Iceland's system is the school programme has been largely unaffected.

Pre-schools, primary, and secondary schools have stayed open while higher education has moved online.

Some people have taken to social media asking why children's safety is perhaps taken less seriously than those of adult students.

Mr Gudnason points out that closing down institutions that serve children has a more significant social impact

"Our study suggests that children are less effective in spreading this virus than adults. We measure every decision with it's effectiveness and closing these institutions is unlikely to produce meaningful results at this time."

Part of Iceland's success story is it's readiness.

"We realised at the end of 2019 that we should prepare for a pandemic," Mr Gudnason says.

"Our emergency system is clear, it is efficient and importantly frequently in use. Be it storms, avalanches, volcanic eruptions or a pandemic the system is the same. Health authorities step into a well-oiled machine, highly trained infrastructure and years of experience in building communication channels and trust."

On Friday the head of Iceland's response, Víðir Reynisson, warned against drawing too much from the Iceland model, pointing out that the country's size, strong channels of communication and social cohesion helped.

"There are many factors that make things easier on us," he said.

[RTM]

"Early results show 50 per cent of carriers of the virus are asymptomatic. It has also revealed up to 40 'mutations', or strains, of the disease.

“We can determine the geographic origin of the virus in every single [virus] in Iceland,” Kári Stefánsson, founder of deCODE says.

They claim to have traced strains back to Italy, Austria, the US, and seven cases in particular to one undisclosed football match in the UK. "

Thanks Iceman....the above bit really interesting.
Total population less than 400K makes it a lot easier to manage as well I think.
I expect quite a bit of scrutiny about the speed and ability of our traceback and what the government is doing in this area. This bit is critical.

[Bjauck]

Cluster in a rest home in Christchurch.

Why does it always end up in the resthomes? There is hardly any community spread, and they are being very careful yet it is straight in there. ...

Rest home residents and rest home hospital residents require fairly comprehensive care by carers and nurses. This is unavoidable. Consequently it puts both employees and residents at risk of viral transmissions and communicable diseases. Even when care is taken to prevent spread.

Unlike both the young and elderly people who are able to live independently, the elderly (and those who have debilitating conditions) who need to live in care, cannot self isolate. Likewise those who are employed in care and nursing cannot self-isolate; they can only try their darnedest to self-protect, whist still imparting the necessary care for their clients/patients.

[justakiwi]

We are all doing out best to keep it out. Staff are going to work and going home to lockdown, just as everyone else is. Some staff however, will have partners or adult children working in essential services, just as they are. They still have to live under the same roof. I am one of the lucky ones, living alone so my “home” bubble consists of just myself. Not everyone is in that situation however.

You also need to remember that there are no guarantees about the 15 days incubation period. Who knows exactly what it is and whether it is the same for everyone? We have only been in lockdown for 18 days - so the virus could have been incubating in those rest homes from before lockdown.

Either way, residents in rest homes are being cared for as always and will continue to be. I guarantee if you walked into our rest home today, and asked our residents if they would prefer to be moved elsewhere for the lockdown, they would say “No. This is my home and I am as safe here as anywhere right now.”

We are experiencing a unique situation globally. We have never experienced anything like this before, so there is no rule book to follow. Humans are not infallible. Not politicians, not medical professionals, not share traders/investors, not you and definitely not me. Lessons will be learned and hopefully if we are ever unfortunate enough to go through something like this again in the future, we will have a better understanding and we will be better prepared. Globally, nationally and as individuals.


Cluster in a rest home in Christchurch.

Why does it always end up in the resthomes? There is hardly any community spread, and they are being very careful yet it is straight in there. Same in other countries too.

Makes me wonder if there are loads of really mild cases everywhere, and it only gets noticed when it infects an old person as they are more symptomatic.

[ratkin]

Either way, attacking or judging rest homes right now, is unfair and serves no useful purpose. Residents in rest homes are being cared for as always and will continue to be. I guarantee if you walked into our rest home today, and asked our residents if they would prefer to be moved elsewhere for the lockdown, they would say “No. This is my home and I am as safe here as anywhere right now.”


I did not attack rest homes, I am just wondering how they are so over represented in case numbers world wide.

[Cyclical]

I did not attack rest homes, I am just wondering how they are so over represented in case numbers world wide.

I think justakiwi has summed up the challenges pretty well. When you consider there ~3000 staff at OCA alone, most of which don't have the luxury of working from home, the odds of it getting into some rest homes is pretty high, especially if there are asymptomatic carriers out there.

[macduffy]

I did not attack rest homes, I am just wondering how they are so over represented in case numbers world wide.

They are also over-represented in the particularly vulnerable groups - elderly, other health conditions, lower resistance to disease.

[justakiwi]

Yes, I realised that so edited my post straight away. Apologies.


I did not attack rest homes, I am just wondering how they are so over represented in case numbers world wide.

[Onion]

Exclusive: Industry body estimates up to 1,000 people may have died in care homes so far

https://www.theguardian.com/world/2020/apr/09/covid-19-hundreds-of-uk-care-home-deaths-not-added-to-official-toll
(https://www.theguardian.com/world/2020/apr/09/covid-19-hundreds-of-uk-care-home-deaths-not-added-to-official-toll)
Let us hope like hell we squash the curve as there is probably no reason to believe that NZ could prevent the same from happening here. By which I do not intend to imply that the NZ providers aren't doing what they need to do to prevent and control.

[Ggcc]

https://www.theguardian.com/world/2020/apr/09/covid-19-hundreds-of-uk-care-home-deaths-not-added-to-official-toll
(https://www.theguardian.com/world/2020/apr/09/covid-19-hundreds-of-uk-care-home-deaths-not-added-to-official-toll)
Let us hope like hell we squash the curve as there is probably no reason to believe that NZ could prevent the same from happening here. By which I do not intend to imply that the NZ providers aren't doing what they need to do to prevent and control.
I question that it happens here. I know of a few suspected cases in rest homes in Hawkes Bay, but management are remaining tight lipped about it. Would they need to reveal that to the market or no??

[fish]

I question that it happens here. I know of a few suspected cases in rest homes in Hawkes Bay, but management are remaining tight lipped about it. Would they need to reveal that to the market or no??

We will probably never know-even if they could get to a testing station they would probably be refused .If they managed to get into a hospital with respiratory problems they would be tested.

[stoploss]

We will probably never know-even if they could get to a testing station they would probably be refused .If they managed to get into a hospital with respiratory problems they would be tested.
They said on the news they struggle to test in retirement homes . Some don’t understand whats happening to them and it’s not a pleasant procedure so meets resistance from others .

[Ggcc]

We will probably never know-even if they could get to a testing station they would probably be refused .If they managed to get into a hospital with respiratory problems they would be tested.
Yeah I saw the news tonight where they mentioned the test is quite invasive and that it is difficult to test on the elderly.

[Oliver Mander]

Hi...this was a brief discussion started on the SUM thread, but I've posted here as relevant to all retirement operators.
The link to the comparative NZ Herald article is here: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12323990
The physical edition of the paper had some graphs in it also, that did not make it to the online version. They compared figures for development, resales and care (ie, operations supporting the three major income streams). The graphs are attached in this post. Note that SUM's resales figure have been annualised to a full year from the last half-year report.
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[Dlownz]

Hi...this was a brief discussion started on the SUM thread, but I've posted here as relevant to all retirement operators.
The link to the comparative NZ Herald article is here: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12323990
The physical edition of the paper had some graphs in it also, that did not make it to the online version. They compared figures for development, resales and care (ie, operations supporting the three major income streams). The graphs are attached in this post. Note that SUM's resales figure have been annualised to a full year from the last half-year report.
11261
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Great article sylverster. Always enjoy reading your articles. Always my favourite on nz herald. Maybe you can start up a thread with nz herald articles by you. As long as the links don't become broken.

[Baa_Baa]

He also announced a new cluster at an aged-care facility in Auckland, with now 10 people having been found to have Covid-19 (https://www.stuff.co.nz/national/health/coronavirus/120987412/coronavirus-fifth-auckland-cluster-linked-to-rest-home). Poor souls.

Is it a listed company?

[Maverick]

Hi...this was a brief discussion started on the SUM thread, but I've posted here as relevant to all retirement operators.
The link to the comparative NZ Herald article is here: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12323990
The physical edition of the paper had some graphs in it also, that did not make it to the online version. They compared figures for development, resales and care (ie, operations supporting the three major income streams). The graphs are attached in this post. Note that SUM's resales figure have been annualised to a full year from the last half-year report.
11261
11262
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Great charts Sylvester, thanks for posting.
There is a mistake made by the NZ Herald which needs pointing out for anyone using these charts to compare companies.
The OCA build rate on the first chart “2020 devepments” is stated as 165 and is incorrect. That is actually their 2HY rate or a typo, it should be 265 when compared annually with the rest.
More importantly this means the “green dot” above this figure should be on 6.8% (not 4.3%). This is worth noting as it demonstrates its building ambitions are up towards RYM and SUM rather than sharing last place with MET as per the published chart


The figures used for the other companies are all correct.

[ratkin]

3300 of the deaths in the US have been people in care homes.

The UK does not even include care home deaths in it’s daily statistics. If it did they wouod have been way past the 1000 cases per day mark buy now.