Ryman and Summerset Shares down?

[Beachboy51]

​I am wondering why the shares in these two companies have been down over the last couple of months compared to the significant rises in previous months?
Also Summerset for the previous few months was worth more than Ryman, but now they are about the same price or even Ryman is more than Summerset?
Has something happened to Summerset shares?

[winner69]

​I am wondering why the shares in these two companies have been down over the last couple of months compared to the significant rises in previous months?
Also Summerset for the previous few months was worth more than Ryman, but now they are about the same price or even Ryman is more than Summerset?
Has something happened to Summerset shares?

Baa-baa posted this OCA thread …seems a pretty good explanation


Retirement village sector doesn't like Covid, on or about the end of August, OCA, RYM, SUM all came off peaks and have trended down since. MACD's on all of them are very similar, as is RSI oversold.

That's my take on it, too much of a co-incidence that they all turn over around the same day and have continued down.

[Muse]

​I am wondering why the shares in these two companies have been down over the last couple of months compared to the significant rises in previous months?
Also Summerset for the previous few months was worth more than Ryman, but now they are about the same price or even Ryman is more than Summerset?
Has something happened to Summerset shares?

My two cents on the trends impacting the industry as a whole, in no particular order.

worries over the spread of covid in the retirement sector, what it could mean and lead to. Additional costs in terms of PP&E, security for paused construction (below), etc;
lockdowns both here in and australia paused construction of new retirement villages (slowing all important NTA growth) & significantly slowed settlements of new units & resales (this ought to unwind if history is a guide);
arvida undertook a large capital raise to fund an acquisition which could have seen some shareholders sell other exposures in the industry to meet their funding requirements;
inflation is rising rapidly & interest rates will rise quickly. Impacts higher leveraged providers but more significantly quickly rising interest rates do not bode well for further gains in the housing market which (more or less) occupational right prices are tethered to. I personally see a lot of risk around the housing market - perhaps not in the next 3-6 months as there is a sugar rush of aucklanders flooding back into the market making up for lost time. But net population growth is extremely low, building is extremely high and the net housing shortage is dramatically being closed, interest rates WILL rise (question is how much), 300bn of fixed mortgages come up for repricing in the next 12 months....a lot of underlying fundamental support for price inflation to slow or fall;
inflation in wages, and building materials in particular, are driving up the costs of development. meanwhile the outlook for unit sales prices isn't looking that flash (could even have some headwinds) which compresses development margins;
there is an awful lot of press around revising aged care legislation to make it more equitable. Almost all the mooted changes look bad for the industry but who knows how many of them could actually be implemented.


Summerset have been killing it in terms of growing their NTA. Ryman quite a bit behind, followed by OCA. Underlying NTA of the 3 if all rebased to 100 at January 2017, Summerset would be 253, Ryman 180, OCA 158.

Disc: I hold summerset & oca. some private interests as well.

[winner69]

My two cents on the trends impacting the industry as a whole, in no particular order.

worries over the spread of covid in the retirement sector, what it could mean and lead to. Additional costs in terms of PP&E, security for paused construction (below), etc;
lockdowns both here in and australia paused construction of new retirement villages (slowing all important NTA growth) & significantly slowed settlements of new units & resales (this ought to unwind if history is a guide);
arvida undertook a large capital raise to fund an acquisition which could have seen some shareholders sell other exposures in the industry to meet their funding requirements;
inflation is rising rapidly & interest rates will rise quickly. Impacts higher leveraged providers but more significantly quickly rising interest rates do not bode well for further gains in the housing market which (more or less) occupational right prices are tethered to. I personally see a lot of risk around the housing market - perhaps not in the next 3-6 months as there is a sugar rush of aucklanders flooding back into the market making up for lost time. But net population growth is extremely low, building is extremely high and the net housing shortage is dramatically being closed, interest rates WILL rise (question is how much), 300bn of fixed mortgages come up for repricing in the next 12 months....a lot of underlying fundamental support for price inflation to slow or fall;
inflation in wages, and building materials in particular, are driving up the costs of development. meanwhile the outlook for unit sales prices isn't looking that flash (could even have some headwinds) which compresses development margins;
there is an awful lot of press around revising aged care legislation to make it more equitable. Almost all the mooted changes look bad for the industry but who knows how many of them could actually be implemented.


Summerset have been killing it in terms of growing their NTA. Ryman quite a bit behind, followed by OCA. Underlying NTA of the 3 if all rebased to 100 at January 2017, Summerset would be 253, Ryman 180, OCA 158.

Disc: I hold summerset & oca. some private interests as well.

What's ARV NTA based to Jan 17 --- bottom of the plle?

[Muse]

yeah dunno, not one I've followed.
personally quite like SUM - should have rebalanced some of my OCA exposure to that a while ago - but OCA still delivering my +15% IRR so I'm content enough. but I fear headwinds for the whole sector, even if they have a damn fine business model (for now - thanks Labour).

[Beagle]

OCA only just doing 15% IRR having floated just on 4.5 years ago @ 79 cents. Ignoring dividends they should be $1.485 by now with 15% compound growth so i suppose with dividends they are just about doing 15% ?...(can't be bothered working it out exactly).

Interestingly CBRE when doing their valuations discount future cash flows of units at about 14%. Maybe all we can realistically expect going forward given the headwinds you've outlined.

Like it or not it would appear units in "boutique" villages that are not the full feature lifestyle experience that the bigger villages in say Ryman have, do not appear to be keeping pace with the real estate market and villages that do offer a complete lifestyle experience.

It's dawning on me that people really want the whole nine yards of recreational facilities regardless of whether they intend to use them or not. Perhaps contentment is all about perception and the mere fact that the facilities are available is enough to make people more content and pay more up front ?

Thoughts ?

[Muse]

OCA only just doing 15% IRR having floated just on 4.5 years ago @ 79 cents. Ignoring dividends they should be $1.485 by now with 15% compound growth so i suppose with dividends they are just about doing 15% ?...(can't be bothered working it out exactly).

Interestingly CBRE when doing their valuations discount future cash flows of units at about 14%. Maybe all we can realistically expect going forward given the headwinds you've outlined.

Like it or not it would appear units in "boutique" villages that are not the full feature lifestyle experience that the bigger villages in say Ryman have, do not appear to be keeping pace with the real estate market and villages that do offer a complete lifestyle experience.

It's dawning on me that people really want the whole nine yards of recreational facilities regardless of whether they intend to use them or not. Perhaps contentment is all about perception and the mere fact that the facilities are available is enough to make people more content and pay more up front ?

Thoughts ?

Aye - NTA are really just a valuers DCFs at a given WACC (sometimes tiered WACCs for various stages/times of development). But then the market comes along and slaps a premium on the NTA (they all trade above 1x NTA), which is really them saying they have lower return / cost of equity requirements, and/or think the operator will be more aggressive with greenfields.

With nta premiums falling perhaps investors buying shares are saying nah i need more return with interest rates going up or think NTA or development margins will slow.

Interesting re small units vs lifestyle units. John Ryder who cofounded ryman has a big lifestyle orientated operation going, along with lots of other private operators.

[Panda-NZ-]

Two ETFs = AGNG and MILN. The battle of the generations.

MILN outperforms contrary to what you would expect. Maybe the sector simply isn't meant to be from here on out with rising interest rates?

Although, aging populations both here and in europe are mega rich compared to the senior poverty which is common in America.