OCA - Oceania Group - retirement villages

[alokdhir]

Great call a couple of weeks ago …I think gibberish could become the new norm ……real TA stuff

Hope many you got on board ….esp the savvy traders amongst us …….or the desperately worried ones didn’t sell out

I did not know we are allowed to blow our own trumpet also ...then me have many trumpets to blow too ...lol :p

[psychic]

Winner called it, came on
here to say. Well done mate.

[percy]

Winner called it, came on
here to say. Well done mate.

Agree.
A good call by Winner.

[Rawz]

The best part about Winners call is when peat said it was gibberish lol

[alokdhir]

I was only joking about " Blowing your own trumpet " part but like always people see what they want to see ...well done mates :t_up:

[nztx]

Those bloated NTA values recorded on NZX across the sector certainly appear to be attracting
the punters in .. hopefully a few wild swings in Hipkins & Robbo's doctored goldfish bowl
of clueless uncertainty dont also turn around and deliver a dumping on all ;)

[ronaldson]

Steady progress to 89c today, which is well past Bull's breakout figure of 85c suggested earlier in the week. So all good for current holders.

[davflaws]

Those bloated NTA values recorded on NZX across the sector certainly appear to be attracting
the punters in .. hopefully a few wild swings in Hipkins & Robbo's doctored goldfish bowl
of clueless uncertainty dont also turn around and deliver a dumping on all ;)

Posts with this flavour and tone are probably better suited to the Elections Forum

[nztx]

Posts with this flavour and tone are probably better suited to the Elections Forum


Why ? .. they could easily deflate faster than a Leader's support in the right or wrong economic winds ;)

I didn't mention rising interest costs, staffing, other operating costs, slowing revaluations, staffing issues
and unfavourable political winds, changing demand for units etc .. which also may come into play :)

Let's face it -- the market aint exactly stupid if it's already factoring the extra yards between NTA
and SP with a cautious eye and wouldn't be without good reason :)

Why are you complaining if the noted differences are attracting a bit of buying attention ? ;)

[nztx]

I am going to borrow & doctor a clause from Recast's look at another Company:


"There is no doubt that capitalised REVALUATION income is not of the same quality as regular Retirement Care income."

:)

[bull....]

Steady progress to 89c today, which is well past Bull's breakout figure of 85c suggested earlier in the week. So all good for current holders.

yes nice breakup for the whole sector which i put down too hipkins comments around property market and immigration reversing sentiment rather quickly towards the sector
but i stick to what i said oversold bounce or genuine buying only time will tell.
if its a oversold bounce might get a continuation next week before consolidation if its a genuine buying opp guess prices are still cheap for them all.
people need to decide which camp they are in , we will all know in time which camp was right.

[Gunner]

The trend reversal does appear to be in. Approaching the 200ma and the weekly RSI is above 50. Fist time since about September 2021.

[Snow Leopard]

....
but i stick to what i said oversold bounce or genuine buying only time will tell.
if its a oversold bounce might get a continuation next week before consolidation if its a genuine buying opp guess prices are still cheap for them all.
people need to decide which camp they are in , we will all know in time which camp was right.

Tldr: it is going up and will continue to do so till it doesn't. :t_up:

Disc: I blame the government :ohmy:

[nztx]

A bit of a retrace back up to where it was in mid Oct 22

From here - will it resume the back downhill slide or continue climbing to recover more lost ground ?

2 years ago at this time 2021 - $1.58
1 year ago at this time 2022 - $1.14

Past trend in each of 2 preceding years at this time is retreating

Oversold ? Under valued ? or sector previously well out favour hence slide ?

2021 FY Div 3.4c V 2021 FY Div 3.5c Reduction 0.1c
2022 FY Div 3.4c V 2021 FY Div 3.4c No change

2023 Int Div 1.9c V 2022 Int Div 2.1c Reduction 0.2c

No Imputation credits on any dividends

[ValueNZ]

Those bloated NTA values recorded on NZX across the sector certainly appear to be attracting
the punters in .. hopefully a few wild swings in Hipkins & Robbo's doctored goldfish bowl
of clueless uncertainty dont also turn around and deliver a dumping on all ;)

What do you believe Oceania's true NTA is currently? NZX says $1.34, presumably that value can be calculated from their most recent annual report.

[nztx]

What do you believe Oceania's true NTA is currently? NZX says $1.34, presumably that value can be calculated from their most recent annual report.


The answer to that could be net realisable value of the properties on the market, if a buyer can be found
possibly at fire sale levels - again dependent on what the market says

The market that is NZX with SP values isn't silly and may well be factoring in the forward risks,
as with the sector as well

Any better ideas ? :)

[Maverick]

.....The market that is NZX with SP values isn't silly ...
That's twice you've said that lately , you're respect for Mr NZX is worth reconsidering.

If your good mate said OCA was worth $1.30, 3 months later $0.38 , then not much later you`re both back at the pub and he says its worth $1.59....then at a Christmas catchup he says its $75c ....
Surely you'd say to him he is very silly indeed and to keep his nonsense opinions to himself.

It is most fortunate for us that Mr NZX is even sillier than we are.

[nztx]

That's twice you've said that lately , you're respect for Mr NZX is worth reconsidering.

If your good mate said OCA was worth $1.30, 3 months later $0.38 , then not much later you`re both back at the pub and he says its worth $1.59....then at a Christmas catchup he says its $75c ....
Surely you'd say to him he is very silly indeed and to keep his nonsense opinions to himself.

It is most fortunate for us that Mr NZX is even sillier than we are.


Is it ? - Are you calling all the buyers & sellers on NZX who's collective efforts determine the SP going silly ? ;)

Surely their collective reasoning on what they may wish to pay on prevailing conditions is not silly ;)

[Maverick]

Is it ? - Are you calling all the buyers & sellers on NZX who's collective efforts determine the SP going silly ?


Yes....yes I am calling the sellers very silly.
https://getyarn.io/yarn-clip/2e8f58c2-9707-4d3d-b964-1b66d50460fe

[Snow Leopard]

https://cmfg.co.uk/wp-content/uploads/2018/08/Brexit-negotiations.jpg

Sorry, can never resist it :p

[ValueNZ]

Its okay... OCA shareholders can continue selling their shares to me at silly prices.

[Bjauck]

https://cmfg.co.uk/wp-content/uploads/2018/08/Brexit-negotiations.jpg

Sorry, can never resist it :p Ah the last word on silliness is definitely from Lord Kitchener/Chapman!

[BlackPeter]

Is it ? - Are you calling all the buyers & sellers on NZX who's collective efforts determine the SP going silly ? ;)

Surely their collective reasoning on what they may wish to pay on prevailing conditions is not silly ;)

You make with the loaded question above a number of wrong assumptions. Take an example: If you have a pub brawl with people beating each other up for no good reason, you can safely assume that a number of these "warriors" are intoxicated and behaving silly, but this does not mean all of them are. Same with the markets (no matter which stock exchange).

Just for clarity - I am not implying that most market participants are intoxicated, but there are many market situations where a material number of them behaves that way.

I assume you are aware of the formula Share Price = fundamental value + hype.

The silliness of markets comes from the hype component.

Have a look at securities without underlying value (like e.g. crypto currencies or NFT's) to better understand the impact of the hype component. You can observe otherwise seemingly reasonable people buying absolutely worthless securities for increasing amounts of money, just because they trust the bigger fool theory (or more likely because their reptile brain tells them that something which goes up always needs to keep going up - linear extrapolation) or because they fear to miss out.

These people might not be silly, but they do behave silly.

Obviously - this observation is strongest when your security has no underlying value, but it is as well observable for any stock where hype is just a part of the share price ... like e.g. OCA.

There was a time a couple of years ago where fear (one of the factors impacting on hype) brought the share price down to less than 40 cents, and short after that hype turned around (from negative to positive - FOMO) and the share price went up to $1.60 or so.

Absolutely silly behaviour, given that the underlying value of the investment didn't change during that time.

So - yes - markets (including he NZX) tend to behave silly, even if this does not mean that all market participants are silly. It is enough if a material number of market participants behave silly, as they do.

If you want to be successful as investor, you better learn to embrace this particular attribute of markets and learn how to exploit it.

Ah yes - and for your statement on "collective reasoning" above - behavioral sciences use for this the term "group think". Check this out, and you might find that this is clearly not a behaviour which should inspire confidence.

[FTG]

I assume you are aware of the formula Share Price = fundamental value + hype.

The silliness of markets comes from the hype component.



It's an ok formula, but perhaps not fully reflective of the real world? Let's refine it just a little....

Share Price = Fundamental value (+) Hype (-) Down-ramping.

in regards to market participants' 'silliness', it will operate in the sandpits where both the hyping and down-ramping crowds reside. ;)

[nztx]

It's an ok formula, but perhaps not fully reflective of the real world? Let's refine it just a little....

Share Price = Fundamental value (+) Hype (-) Down-ramping.

in regards to market participants' 'silliness', it will operate in the sandpits where both the hyping and down-ramping crowds reside. ;)


but dissecting the nuts & bolts of the financials wasn't downramping .. it had already long hit the bottom
before that happened, along with the rest of the sector :)

The figures and how parts of them have been treated don't lie :)

Perhaps someone will blame one of the more obscure of Political parties next for what the Sector & OCA have traversed in SP movements to lower levels than seen earlier in the 2 years .. ;)

Obviously when share prices were going up in preceeding 2 years to most recent two, there wasn't a complaint, scream or whisper from some quarters :)

[FTG]

but dissecting the nuts & bolts of the financials wasn't downramping

I don't disagree nztx. Dissecting the financials is a part of determining the Fundamental Value of the company.

[FTG]

It's an ok formula, but perhaps not fully reflective of the real world? Let's refine it just a little....

Share Price = Fundamental value (+) Hype (-) Down-ramping.



refining even further, perhaps presented even simpler...


Share Price = Fundamental value +/- market sentiment.

[winner69]

refining even further, perhaps presented even simpler...


Share Price = Fundamental value +/- market sentiment.

Big question - is Fundamental Value a real thing? Or is an illusory thing that people come up with and as such itself is subject to sentiment?

[ThaiJohn]

Hit .90 today. Definitely on the comeback.

[FTG]

Big question - is Fundamental Value a real thing? Or is an illusory thing that people come up and as such itself is subject to sentiment?

Haha - mmmm. What actually is 'Fundamental Value'?

In terms of a formula: Fundamental Value = Share Price +/- market sentiment ?

Yes the buyer and the seller may have a different view on what it is, and yes sentiment will have a bearing on that view. But remember....those differing views don't necessarily preclude them from coming to agreement on PRICE.

It seems to me that if anything is illusory, then it it would be the market sentiment. Positive/negative sentiment can evaporate as quickly, or slowly, as it was created.

[nztx]

Haha - mmmm. What actually is 'Fundamental Value'?

In terms of a formula: Fundamental Value = Share Price +/- market sentiment ?

Yes the buyer and the seller may have a different view on what it is, and yes sentiment will have a bearing on that view. But remmber....those differing views don't necessarily preclude them from coming to agreement on PRICE.

It seems to me that if anything is illusory, then it it would be the market sentiment. Positive/negative sentiment can evaporate as quickly, or slowly, as it was created.


With all this talk of FV's improving the market sentiment - does that mean the next dividend is going
to be hiked up a few pegs for BP's watching the poorer cousins in the sector ? :)

[SailorRob]

Is it ? - Are you calling all the buyers & sellers on NZX who's collective efforts determine the SP going silly ? ;)

Surely their collective reasoning on what they may wish to pay on prevailing conditions is not silly ;)


You're all wrong.

They're not silly, they are downright moronic.

I am presonally loving the oppertunity to transact with them and buy the better part of a billion dollar free loan for cents on the dollar and grab some of Miss Coutts hard cash for cents on her dollar, not to mention most of you as well (thanks).

Another place you're almost all wrong and displaying moronic behaviour is wanting this oppertunity to pass. I.e. wishing for the share price to rise/the morons to wisen up.

[bull....]

You're all wrong.

They're not silly, they are downright moronic.

I am presonally loving the oppertunity to transact with them and buy the better part of a billion dollar free loan for cents on the dollar and grab some of Miss Coutts hard cash for cents on her dollar, not to mention most of you as well (thanks).

Another place you're almost all wrong and displaying moronic behaviour is wanting this oppertunity to pass. I.e. wishing for the share price to rise/the morons to wisen up.

looks like the sailor has had to many rum rations today by the look of the grammer lol

[SailorRob]

looks like the sailor has had to many rum rations today by the look of the grammer lol


The grammer was perfect, you're talking about the spelling.

I have knocked back a hell of a lot of rum over the last Month though.

[Muse]

I have knocked back a hell of a lot of rum over the last Month though.

White or dark? Important to know who we are dealing with here

[SailorRob]

White or dark? Important to know who we are dealing with here

Didn't know there was such thing as white.

Have had;

Plantation Multi Vintage - product of Peru

Various Appeltons including some 1994, 21 year, 12 year and normal.

Flor De Cana 25 year old

Kraken black spiced

Old Monk

El Dordo 21 year aged

Bumbu Original and XO

Havana Club spiced

Interestingly some of the more expensive ones were given to me by people I had got into ARLP in 2020 where the current dividend has just exceeded the cost price of the shares.

The Bumbu Original is my favourite and far from the most expensive at $100 a litre.

Havana is incredible too for the price.

[Muse]

Didn't know there was such thing as white.

Have had;

Plantation Multi Vintage - product of Peru

Various Appeltons including some 1994, 21 year, 12 year and normal.

Flor De Cana 25 year old

Kraken black spiced

Old Monk

El Dordo 21 year aged

Bumbu Original and XO

Havana Club spiced

Interestingly some of the more expensive ones were given to me by people I had got into ARLP in 2020 where the current dividend has just exceeded the cost price of the shares.

The Bumbu Original is my favourite and far from the most expensive at $100 a litre.

Havana is incredible too for the price.

Okay you’re a legit seaman

[thegreatestben]

Glad you spell checked that one FM

[dubya]

Ya just gotta have a retirement village operator that offers continued care as one’s health circumstances change.

https://i.stuff.co.nz/business/property/300770425/honestly-i-just-dont-know-why-i-did-it-our-oldest-population-is-losing-money-by-buying-into-retirement-villages
https://i.stuff.co.nz/business/property/300770425/honestly-i-just-dont-know-why-i-did-it-our-oldest-population-is-losing-money-by-buying-into-retirement-villages

[Rawz]

Ya just gotta have a retirement village operator that offers continued care as one’s health circumstances change.

https://i.stuff.co.nz/business/property/300770425/honestly-i-just-dont-know-why-i-did-it-our-oldest-population-is-losing-money-by-buying-into-retirement-villages
https://i.stuff.co.nz/business/property/300770425/honestly-i-just-dont-know-why-i-did-it-our-oldest-population-is-losing-money-by-buying-into-retirement-villages

Interesting article. I do love it when people sign up to something and then blame the other party when it doesn’t go their way. Just like that article posted the other week about the Nelson family that are blaming the bank for high interest rates.

It’s clear change is coming. Not sure what that will mean, but what FBU are doing looks good

[justakiwi]

Which is precisely why Care Suites will, in my humble opinion, become the standard for "continuum of care" over the next decade.

No need to guess which provider is "best positioned" to meet that need.



Ya just gotta have a retirement village operator that offers continued care as one’s health circumstances change.

https://i.stuff.co.nz/business/property/300770425/honestly-i-just-dont-know-why-i-did-it-our-oldest-population-is-losing-money-by-buying-into-retirement-villages
https://i.stuff.co.nz/business/property/300770425/honestly-i-just-dont-know-why-i-did-it-our-oldest-population-is-losing-money-by-buying-into-retirement-villages

[Maverick]

Which is precisely why Care Suites will, in my humble opinion, become the standard for "continuum of care" over the next decade.

No need to guess which provider is "best positioned" to meet that need.
I got my wife to read that article to double check own reaction to it. She`s far , far more empathetic than I. But even she came to the same conclusion...what a dumb /misleading article.

The first lady has effectively paid $5k DMF fee for each year ( and reducing as she lives another year) to live in a gated community, presumably with a social calendar and with zero maintenance costs (saving a fortune over 20 years). Her financial advisor at the time of signing recommended she keep investing elsewhere as she aged which she obviously chose not to. Now she is grumpy and wants things sorted .....retrospectively!
Next poor soul is moaning basically because she bought a $2m unit which she now wishes she had bought the $1m one. She knew she had 90 days to withdraw but didn't.
The writer of this article is clearly trying to pull heartstrings of her readers. In reality things must be very well in RV land if this is all the fuss the author can conjure up...2 clients who want to blame others for their own choices and inactions.

What is of more interest to me is the words of Nick ( independent property expert from outside the RV space)...

Core Logic head of research, Nick Goodall, says retirement villages’ ORA model makes it difficult to measure the market, but, given the ageing population, he would not be surprised if values in the retirement sector held up better than the rest of the market.
“Especially as ‘buyers’ of these properties are likely to have equity built up from other property ownership and are therefore less affected by the affordability pressures faced by other owners/buyers due to increasing interest rates.”

This, coupled with multiple other sources indicate RV prices are not falling in fact the latest round of results show rises even as NZs average HPI has reduced 15% from peak. Brent also said recently "OCA are price setters not price takers". It is clear prices are not retreating nor looking like they will. The article also states the client pool is about to double in the next 20 years.

So while this article is obviously attempting to villainize the RV industry, all I see is more underscoring that's it a terrific place to invest with 98% happy residents.

[justakiwi]

I agree with you Mav, which is why I didn't bother to comment on the actual article, but to dubya's comments re continuity of care.

I do stand by what I said though - continuum of care is going to be a game changer in my opinion. People needing to move out of their home in their 80's are going to find the care suite model very attractive in more ways than one. They are the option that will provide the highest level of "peace of mind" both for the resident and their families.

If you had asked me five years ago, I would never have believed I would say this ... but if I was in the financial position to move into an RV at 80, I would choose a Care Suite without any hesitation whatsoever. Guaranteed home for life (barring the need for secure dementia care), continuum of care as my needs change, and a really pleasant/attractive suite with everything I could possibly need. OCA will be very well positioned.

As you say, the vast majority of people living in RVs (all levels of accommodation) are very happy. One should never underestimate the value of "peace of mind" in one's senior years. Its a damned shame the general public and media, are so quick to condemn. RVs are the future for Aged Care whether they like it or not, and I for one am happy about that, providing of course, those who need full government subsidisation, have access to care. As far as I am aware, OCA is the only provider that has committed to always providing that lower level of care.



I got my wife to read that article to double check own reaction to it. She`s a far , far more empathetic than I. Even she came to the same conclusion...what a dumb article.

<SNIP>

So while this article is obviously attempting to villainize the RV industry, all I see is more underscoring that's it a terrific place to invest with 98% happy residents.

[Baa_Baa]

Do any of the 'residents' in any RV, in any of the various types of accomodation, actually "own" their accomodation?

[Maverick]

If you had asked me five years ago, I would never have believed I would say this ... but if I was in the financial position to move into an RV at 80, I would choose a Care Suite without any hesitation whatsoever. Guaranteed home for life (barring the need for secure dementia care), continuum of care as my needs change, and a really pleasant/attractive suite with everything I could possibly need. OCA will be very well positioned.
.
Always good to hear your perspective JAK, especially you working at the coal face. My mum has just gone to a RYM dementia and I cant speak highly enough of the care she`s getting.
Those care givers are angels with the patience of a saint, they really are.

UBS did some work on what influences the choice for an RV.
No 1 - Care
No 2- Price
No 3- Location
No 4- Weekly fees.
No 5- Brand
No 6-Ease of visitation
No 7- Amenities
No 8- DMF/refurb cost on exit
(the ist 3 factors where far more important than the rest)

You are totally right ( of course) that care is paramount. Fletchers can build all the gated communities they like and even share the capital gains......without full on serious care offerings they are dreaming.

[Beau]

Always good to hear your perspective JAK, especially you working at the coal face. My mum has just gone to a RYM dementia and I cant speak highly enough of the care she`s getting.
Those care givers are angels with the patience of a saint, they really are.

UBS did some work on what influences the choice for an RV.
No 1 - Care
No 2- Price
No 3- Location
No 4- Weekly fees.
No 5- Brand
No 6-Ease of visitation
No 7- Amenities
No 8- DMF/refurb cost on exit
(the ist 3 factors where far more important than the rest)

You are totally right ( of course) that care is paramount. Fletchers can build all the gated communities they like and even share the capital gains......without full on serious care offerings they are dreaming.

Totally agree my Mums in Rymans and started with Townhouse to Resthome / Special Care Dementia / Hospital all with the care and attention top grade and piece of mind for the family. Smooth transition with each move huge difference when they cater for all.

[dobby41]

Totally agree my Mums in Rymans and started with Townhouse to Resthome / Special Care Dementia / Hospital all with the care and attention top grade and piece of mind for the family. Smooth transition with each move huge difference when they cater for all.

How did it work with the sale of the townhouse and the DMF loss etc?
Did money have to be added along the way to make up the time difference at each stage?

[Habits]

Just making you aware that ZB has been running several shows on the retirement industry, these last two days. This afternoon Simon Barnett and the other guy after 1pm, last night after 10pm Nathan King, and also Francesca Rudkin yesterday afternoon.

I only heard a few snippets, none positive. In case you want to look it up

[bottomfeeder]

I can't see the review coming up with anything materially different.

It seems the more you moan the more you think you are going to get. The big bugbear of the elderly is getting a share of the capital gains on the sale of your unit "Lu ence to occupy".

Now there are some differences to owning a licence to occupy and actually buying a unit outright.

Cost - An outright purchase of a unit will cost (in the initial outlay) much more than a licence to occupy.

Maintenance - Will an elderly person have sufficient funds to carry out the required maintenance or in fact want to for the relatively short time of ownership. Can you imagine a new roof, leaky home, outside repaint, garden maintenance, new fences. I could see the condition of units deteriorating rapidly which would erode prices. Where will the capital gains be then. There would be covenants to make sure regular maintenance and upgrades are carried out in a timely manner and to standards set out, in regard to materials, colours, etc.

Capital loss- Currently if you owned your unit, you could be facing losses rather than capital gains.

Continued ownership - The next purchaser will be specified as to standards that fit in with the village. Age, state of health, number of occupiers, visitors, etc which will reduce the marketability of the property. This will further reduce demand and value.

Interior- There would also have to be covenants as to standards of interior maintenance and refurbishment, which residents may not be able to afford.

I think when it is all thought out, this would scare the derley more if things were changed.

After all RV's are not Government Departments ir charities and are not making money hand over fist.

[Beau]

How did it work with the sale of the townhouse and the DMF loss etc?
Did money have to be added along the way to make up the time difference at each stage?
She was in The Townhouse for 3 years the DMF was pro rated over 5 years at 20% of purchase price.
The Town house sold straight away went into each stage of care paying extra monthly care premium
There was a couple months lapse with settlement because of covid lockdowns at time but the difference for premium was done at settlement.Weekly fee of $100 that was to never increase for duration in townhouse ceased when she moved out.

[dobby41]

She was in The Townhouse for 3 years the DMF was pro rated over 5 years at 20% of purchase price.
The Town house sold straight away went into each stage of care paying extra monthly care premium
There was a couple months lapse with settlement because of covid lockdowns at time but the difference for premium was done at settlement.Weekly fee of $100 that was to never increase for duration in townhouse ceased when she moved out.

Thanks a lot for the reply - I appreciate a view of how it actually works rather than the theoretical.

[winner69]

When is the OCA capital raise coming?

Before or at same time as half year result

[Greekwatchdog]

When is the OCA capital raise coming?

Before or at same time as half year result

Why do you think they need to do one?

[Balance]

When is the OCA capital raise coming?

Before or at same time as half year result

Ryman beat them to the punch but might as well go ahead now & beat the others?

[winner69]

Ryman beat them to the punch but might as well go ahead now & beat the others?

They might like the most leveraged status they will be inheriting soon.

[Rawz]

Ryman beat them to the punch but might as well go ahead now & beat the others?

OCA did it first. $100m at $1.30sp 2 years ago. Good on ya OCA

OCA debt to equity about half of RYM

[bull....]

When is the OCA capital raise coming?

Before or at same time as half year result

must be soon lol shaRE price hammered today

[winner69]

OCA did it first. $100m at $1.30sp 2 years ago. Good on ya OCA

OCA debt to equity about half of RYM

OCA debt ratio 34.1% ……will be higher than RYM after their cap raise

[Onemootpoint]

Big falls in the first 30 minutes today for OCA and SUM. The market initial react not liking the RYM news much.

[Sideshow Bob]

OCA debt ratio 34.1% ……will be higher than RYM after their cap raise

Probably also the cost of that debt.

OCA did that $100m bond issue at 3.3% a year or so ago, and have $125m bond at 2.3%.

Hopefully by the time they mature in 2027/8 then interest rates come back down again.......:sleep:

[Perky]

OCA debt ratio 34.1% ……will be higher than RYM after their cap raise


isn’t this debt ratio about normal for listed property stocks?
From the nz herald below.

At least the demand for places to live for oldies is a growing market due to natural demographics.
Id rather be invested in OCA at 34% than Arg at 32% when half of Arg properties related to office blocks and retail which are both about to **** themselves.

How indebted are our NZX-listed property entities?

Table with 5 columns and 8 rows. Currently displaying rows 1 to 8.

Last result
Reported gearing
Reported net debt
Reported total assets


Precinct*
1H22
32%
$1.1b
$3.6b


Kiwi Property
1H22
31%
$1b
$3.4b


Vital Healthcare
1H22
33%
$983m
$2.9b


Goodman
1H22
18%
$757m
$4.3b


Argosy
1H22
32%
$671m
$2.1b


Property For Industry
2H21
28%
$598m
$2.2b


Stride*
1H22
41%
$446m
$1.5b


Investore Property
1H22
30%
$337m
$1.1b





Notes: Subsequent to their result Precinct announced the establishment of a new partnership that will bring gearing down to ~20% Subsequent to their result Stride raised equity bringing gearing to 30%

Table: Herald Network graphic Source: All data is from the financial statements of the respective companies listed in the table, provided at each of their most recent earnings releases. Created with Datawrapper (https://www.datawrapper.de/_/xAhcJ)






https://stats.datawrapper.de/xAhcJ/datawrapper.gif?r=https%3A//datawrapper.dwcdn.net/xAhcJ/1/

[Rawz]

So basically RYM bringing their debt ratio down to OCA levels.

RYM 33.9%
OCA 34.1%

RYM just catching up to where OCA management have masterfully navigated the balance sheet. Clear well thought out decisions made by guru investment banking CEO over the last few years.

OCA SP should be up today. RYM announcement to bring debt ratio down to 34% made after must discussion with market gurus. This confirmation of preferred debt ratio levels is a positive for OCA

[winner69]

Ryman gave FY23 guidance today - FY23F underlying profit1 guidance in the range of $280 million - $290 million2, about 10% higher than FY22

Bad sign is that means second half underlying profit is going to be less than last year - sales not going that well?

Jeez hope OCA are going to do better than that - going backwards in H223 would result in full year being less than last year

Suppose we need to wait until end May to find out

OCA

[nztx]

CR's returning less that the going usuary rates would normally do what to the SP's
in the sector ? .. Slowing economy, Res Prop market losing steam, I think more space
needed at bottom of graph for new lows .. hopefully I'm wrong :)

[winner69]

Craigs reckon OCA next off rank to do a capital raise - say 'given higher capex density sites, already high gearing, and negative FCF generation, and we note OCA's stated intent to dispose of assets at its November result (which has not yet been successful and we think will struggle to be so).'

That comment re negative FCF generation is key .... they been burning through cash like its going out of fashion. Hence the desire to sell those sites which aren't doing anything for them.

[Perky]

That’s interesting Winner. I remember you posting this scenario a few weeks back and then we get the winner OCA cash burn graph to re-inforce the message.
Are you Craig’s..lol



What do Craig’s say about the more traditional listed REITS? Is it likely we could see capital raise or asset sales here. I reckon there might be some action somewhere in this space.

I must be stupid…bought some ARV on Friday. First time on register…long term holder not trader.

[Rawz]

I must have missed that graph of winners when was it posted roughly?

[Perky]

17th Feb post #402 oca thread on the other site Rawz.

I feel sorry for Winner…has to double post everything…does an outstanding job for us all to learn.

Hopefully AI will deliver him a robot to help his admin staying on top of what’s posted where

[bottomfeeder]

OCA bonds up to 7.23 percent.

[Leemsip]

Hey bottom. How do you buy these bonds. Cant do it through ASB share trader?

[Aaron]

Hey bottom. How do you buy these bonds. Cant do it through ASB share trader?

If you mean ASB securities online then I think Bottomfeeder is looking at the OCA010 19/10/2027 2.3%.

Search OCA and click on OCA010 and it shows buy price and I may be wrong but the buy price represents the yield so you will be paying something less than a $1 for the bond to come to a 7.2% yield to maturity.

Regret trying to be helpful now, as I have not done this myself, clicked on buy and it came up with an 0800 number. I do not know the bond maths but I assume you tell ASB how much you want to pay and they will work out how many bonds you can get. Be interested to hear how you get on.

I recall an interesting discussion re buying bonds on the secondary market but cannot remember the thread, needless to say there were traps for newbies that I never considered such as the timing of cashflows. Most of the 7.2% arrives when the bond matures.

[Leemsip]

Thanks Aaron. Appreciate it

[Leemsip]

Ah so I did find out, called ASB.

You need to call them on the 0800 number, give them the yield you want to buy at and the amount and they will register it as a buy and it waits to get filled.

Suggested going onto the NZX site to look at all the bonds available.

[winner69]

OCA bonds up to 7.23 percent.

That 7.23% higher than ARV at 6.8% and RYM and SUM down in 6.20%/6.30% level

Oceania seen as 'riskiest' of the four?

Seems to be the case

[Leemsip]

Seems like a decent investment... presume the only case this doesnt pay out is if the company rolls over bankrupt.

[RGR367]

Seems like a decent investment... presume the only case this doesnt pay out is if the company rolls over bankrupt.

Worry not about the bond. Just keep on accumulating on your OCA shares.

[ValueNZ]

Worry not about the bond. Just keep on accumulating on your OCA shares.
Yep, 7.2% p.a becomes a real return of 0% p.a after you adjust for the current inflation rate... If you believe in OCA as a company you'd realise there are much better returns to be had purchasing the stock since its currently trading at a discounted rate.

[Aaron]

Seems like a decent investment... presume the only case this doesnt pay out is if the company rolls over bankrupt.

If they get into financial difficulty, I assume they would cut dividends first then do a cash raise from shareholders who need to join in (usually at a discount) or get their shareholding diluted I think when times are desperate they can even offer large institutional investors great deals at the expense of small shareholders.

If the worst happens at least bond holders are ahead of shareholders in the queue in the winding up. (Then we would see how relevant NTA is.)

I did read that financial markets are able to look through any potential problems such as recession and see a good long term result.

Also if I understand this correctly other investors were suggesting bonds are good at these yields as at 7.23% you maintain purchasing power and if the faeces hits the fan central banks will drop interest rates and you will get a capital gain on your bond if you resell on the secondary market to buy the even cheaper shares.

Just a thought based on what I have read. Not acting on this though, although it sounds plausible.

[justakiwi]

If any of you genuinely believe there is a rats arse chance of OCA (or any of these four providers) "winding up" - you need your heads read.

[CD_CHCH]

If any of you genuinely believe there is a rats arse chance of OCA (or any of these four providers) "winding up" - you need your heads read.

Never say never...


While I personally believe it is unlikely that OCA will fail (or wind up) history shows there are many companies that people thought wouldn't "wind-up" that no longer exist:


Blockbuster
Enron
Pan-Am
TOYS R US
Borders
Compaq
Holden


Or for some closer to home examples of brands that vanished:


3 Guys
Big Fresh
D.I.C. (department store)
DEKA (New Zealand)
Haywrights
Hill and Stewart
Kirkcaldie & Stains
Woolworths

[justakiwi]

I appreciate that, but the continual “the sky is falling” narrative, without any real foundation, is wearing thin. OCA is not going bust. Neither are the others. They are simply experiencing a temporary glitch in the matrix as pretty much everyone is, to some extent, right now. Things will recover. Who knows when, but this is the nature of investing and it puzzles me why so many so-called experienced investors here are down ramping OCA, without let up, while other very experienced investors here are taking the opportunity to buy in.

All this doom and gloom detracts from useful discussion about the business.




Never say never...


While I personally believe it is unlikely that OCA will fail (or wind up) history shows there are many companies that people thought wouldn't "wind-up" that no longer exist:


Blockbuster
Enron
Pan-Am
TOYS R US
Borders
Compaq
Holden


Or for some closer to home examples of brands that vanished:


3 Guys
Big Fresh
D.I.C. (department store)
DEKA (New Zealand)
Haywrights
Hill and Stewart
Kirkcaldie & Stains
Woolworths

[Baa_Baa]

I appreciate that, but the continual “the sky is falling” narrative, without any real foundation, is wearing thin. OCA is not going bust. Neither are the others. They are simply experiencing a temporary glitch in the matrix as pretty much everyone is, to some extent, right now. Things will recover. Who knows when, but this is the nature of investing and it puzzles me why so many so-called experienced investors here are down ramping OCA, without let up, while other very experienced investors here are taking the opportunity to buy in.

All this doom and gloom detracts from useful discussion about the business.

It's OK JK to ask the questions, it's not down ramping. Dickheads who like to feed cabbage to residents (and others of similar doom and gloom ilk), well that's just them non-holders, jilted ex-lovers stirring and obvious nonsense that belittles them, not the intelligence of the reader.

For ages RV has been peaches and cream, then the REIT sector goes on a down-rating, while the big guys are still talking their game, then boom, RYM does a billion$ CR and SUM go out testing appetite for a $125m Bond offer. Something's not right. All of them are well leveraged, have massively increased marketing, with special offers etc. It's all about Cash Flow, even large successful businesses need to maintain cash flow, if they can't do that, they can't paid the bills/debts, things can go pear shaped very quickly.

An open mind is important, looking through the 'alarm bells', others raise, making a call on whether it's real or not, whether it's important or not. There's no doubt that the demographic will supply increasing numbers of customers, but a cash flow crisis, or a stressed balance sheet, or creditors wanting their money back, or any of those sort of 'must have' business sureties, are more important than the glossy 'everything's OK, nothing to see here, she'll be right' rhetoric that all the RV's are prone to.

So watch for sales throughout - very important, cash flows particularly, manageable debt, changes (reductions) to build pipeline, sales of redundant property, etc etc. They all have to click together. Without those adaptations to market forces, even a very large business can get into trouble surprisingly quickly.

[RupertBear]

It's OK JK to ask the questions, it's not down ramping. Dickheads who like to feed cabbage to residents (and others of similar doom and gloom ilk), well that's just them non-holders, jilted ex-lovers stirring and obvious nonsense that belittles them, not the intelligence of the reader.

For ages RV has been peaches and cream, then the REIT sector goes on a down-rating, while the big guys are still talking their game, then boom, RYM does a billion$ CR and SUM go out testing appetite for a $125m Bond offer. Something's not right. All of them are well leveraged, have massively increased marketing, with special offers etc. It's all about Cash Flow, even large successful businesses need to maintain cash flow, if they can't do that, they can't paid the bills/debts, things can go pear shaped very quickly.

An open mind is important, looking through the 'alarm bells', others raise, making a call on whether it's real or not, whether it's important or not. There's no doubt that the demographic will supply increasing numbers of customers, but a cash flow crisis, or a stressed balance sheet, or creditors wanting their money back, or any of those sort of 'must have' business sureties, are more important than the glossy 'everything's OK, nothing to see here, she'll be right' rhetoric that all the RV's are prone to.

So watch for sales throughout - very important, cash flows particularly, manageable debt, changes (reductions) to build pipeline, sales of redundant property, etc etc. They all have to click together. Without those adaptations to market forces, even a very large business can get into trouble surprisingly quickly.

An excellent post thanks Baa Baa. I would give you a positive rep for it but I have to share the love first :D

[Bjauck]

Yep, 7.2% p.a becomes a real return of 0% p.a after you adjust for the current inflation rate... If you believe in OCA as a company you'd realise there are much better returns to be had purchasing the stock since its currently trading at a discounted rate. There is no certainty with respect to stock prices. NZ taxes both the capital gain and interest paid on financial arrangements, and there is no allowance for inflation. So If the bonds are returning 7.23% then you need to deduct your marginal income tax rate - say 39% - so the after tax annual return is 4.41%. With inflation at 7.2% then the real return is about negative 2.79%.

[dubya]

An excellent post thanks Baa Baa. I would give you a positive rep for it but I have to share the love first :D

Ditto :) :)

[Aaron]

If any of you genuinely believe there is a rats arse chance of OCA (or any of these four providers) "winding up" - you need your heads read.

I have not even looked at an OCA annual report so do not be alarmed by anything I say, but just pointing out equity risk is higher than that of the bond holders and was just wondering if perhaps OCA bonds will provide a better return in the short term (2-3 years) with a chance to buy shares cheaper after the recession and the central bank pivot.

I did have a read of the Arvida 2022 annual report and that company made some money from management fees but mostly profit was from revaluations and development margins. Those two sources of "profit" have been removed for now, so maybe as a conservative, risk averse investor if I switched to bonds I might do better in some companies as the equity risk premium for RVs seems to have disappeared at least until interest rates start dropping again.

Speculating and jumping around is probably not advisable or profitable as we are constantly told by the managed funds industry "shares for the long term" and "time in the market, not timing the market"

Baa baa great post but did you really have to use the word "dickhead" sometimes you can get your point across without using profanities.

[percy]

Stock levels.
Cash Flow.
When I was selling books to schools I always started the year with massive negative cash flow,and a massive stock holding.
This focused my attention.:
The main concern was the quality of my stock.?.............As I knew my clients requirements my stock was quality.
And the demand.?.......................................... ....................With schools reopening in February. demand was assured
Cash Flow.As I had finished buying,and was about to start selling cash flow would right itself very quickly.Which it did.
So I ask myself what is difference between OCA and my book business.Are the business dynamics the same?.
OCA.
Stock Levels
....................Good stock of excellent new units,and ongoing good sales of "used" units.
Cash Flow
..................Demand is assured with aging population.
....................Slow or stop new developments and cash flow will come right .
...................Sale of no longer required villages will reduce debt.
Appears the dynamics of book selling and retirement villages have a lot in common.

[justakiwi]

Excellent post as usual, and yes, I do get that.




So watch for sales throughout - very important, cash flows particularly, manageable debt, changes (reductions) to build pipeline, sales of redundant property, etc etc. They all have to click together. Without those adaptations to market forces, even a very large business can get into trouble surprisingly quickly.

[justakiwi]

Which is precisely why focusing on share price in some of these discussions, is a waste of time and energy. If the company one invests in, is still doing what it said it would and is showing that it is adapting as needed to outside influences out of its control, I'm not about to panic and sell up, just because the share price has dropped today, or because the share price isn't where I think it should be. I have no problem with constructive discussion. I do get frustrated with the non-constructive negativity. And I don't just mean with OCA.

To be honest, I don't think it makes a huge amount of difference which RV one invests in right now. They will all still be around, and making money, in 2, 5, 10, 15 years. And at some point down the track, the share price of each company will be more closely aligned to where we currently wish they were.

Long term.



Speculating and jumping around is probably not advisable or profitable as we are constantly told by the managed funds industry "shares for the long term" and "time in the market, not timing the market"


And sometimes, you really can't.


Baa baa great post but did you really have to use the word "dickhead" sometimes you can get your point across without using profanities.

[Rawz]

lol classic OCA shenanigans

[Leemsip]

Not to stir the pot too much on this, but experience is that as the share price falls the voices get louder and more annoyed with any percieved "down rampers". ATM thread was amazing.

Should get pretty loud on here at 70c in 6 months or so... Ill put a note in the diary. In the meantime Ill be busy loosing $$ on Oz coal and oil stonks.

[bull....]

hammertime heading back to lows on those debt level fears ?

[Onemootpoint]

Not to stir the pot too much on this…….

………Should get pretty loud on here at 70c in 6 months or so... I’ll put a note in the diary.

Definitely stirring the pot a bit.:p ��…..or perhaps the current direction of the share price doing it for us. ��

[Leemsip]

I reckon the property market is headed for huge comeuppance.... so (acknowledging the good points from JAK) the sector will follow..

[ThaiJohn]

I'm busy topping up. Toooo cheap.:t_up:

[Ggcc]

I reckon the property market is headed for huge comeuppance.... so (acknowledging the good points from JAK) the sector will follow..
Until we get housing sorted prices will only continue to go up in long run once inflation is under control and interest rates start dropping

[Old mate]

Must be a few more people in the market for a house with all the properties red stickered around the country.

[winner69]

Must be a few more people in the market for a house with all the properties red stickered around the country.

Might even be the tipping point for the older ones to move into a safe(r) haven of a retirement home.

[percy]

Might even be the tipping point for the older ones to move into a safe(r) haven ofvhis retirement home.

I think you are right.

[Blue Skies]

Must be a few more people in the market for a house with all the properties red stickered around the country.


Agreed, & not just the red stickered ones.
The ferocity of the cyclone & deluge from the atmospheric rain event was a shock with many elderly people realising even if they didn't have trees come down, power cuts, leaks, minor flooding etc, how vulnerable they are.
As well as the weather impacts, the stories of looting etc, might be a bit of a circuit breaker in terms of families procrastinating & for others a re-evaluation of the benefits, security & peace of mind of moving to a RV.

Disc long term holder OCA & SUM.

[justakiwi]

I think this is a real possibility. Imagine how this must have been for elderly folk still living in their own home. As you say, even if they were not in the worst affected areas, the weather itself would have been pretty terrifying for them, and a huge worry for their families, especially if they could not get to them, or contact them.

I think a lot of families will seriously consider a move to RV living now, where their loved ones will be well looked after in an emergency situation like this, and will not have to be worried about losing electricity or water, running out of food or medications etc.

These kinds of disasters just reinforce the important of "peace of mind" and security.


Agreed, & not just the red stickered ones.
The ferocity of the cyclone & deluge from the atmospheric rain event was a shock with many elderly people realising even if they didn't have trees come down, power cuts, leaks, minor flooding etc, how vulnerable they are.
As well as the weather impacts, the stories of looting etc, might be a bit of a circuit breaker in terms of families procrastinating & for others a re-evaluation of the benefits, security & peace of mind of moving to a RV.

Disc long term holder OCA & SUM.

[Baa_Baa]

This and a number of other insights in the article "The number of properties listed on the site was up 30% year-on-year but demand was down 56%" .https://www.stuff.co.nz/life-style/homed/real-estate/300812765/the-retirement-units-selling-for-more-than-3m

[Bjauck]

Thanks for that analysis Mav, and I share your appreciation for Ferg's hard work and BP's response. I am not only learning a lot, but also enjoying the tone of the thread.
Ditto from me. The OCA thread is maturing. It is always good to read how things operate from various angles and viewpoints, whether tax, business, accountant, shareholder or customer or, as highlighted recently by RYM, American creditor.

[winner69]

Metlife Care first half result not that good ….reading between the lines the cost of running villages and caring for people is skyrocketing, maybe even getting out of control

All the profits (and heaps more ) from a strong sales performance disappear into a black hole

I’d expect the sector reporting to follow suit this year

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/407101/389050.pdf

[Bjauck]

Metlife Care first half result not that good ….reading between the lines the cost of running villages and caring for people is skyrocketing, maybe even getting out of control

All the profits (and heaps more ) from a strong sales performance disappear into a black hole

I’d expect the sector reporting to follow suit this year

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/407101/389050.pdf From the looks of that summary, MET Net profit was impacted by increasing running costs but it was more severely impacted by a much reduced property revaluation gain.

[BlackPeter]

From the looks of that summary, MET Net profit was impacted by increasing running costs but it was more severely impacted by a much reduced property revaluation gain.

Which might be pretty symptomatic for all retirement villages. I suppose they all will need to learn to live in future with reduced property revaluation gains ... and while some of the Covid related costs might fade away - higher staffing costs won't go away either.

Question is - who is going to give?

I guess its not that difficult - either we reduce as society the service to elderlies and accept that more and more of them might live (and die) without support under the next bridge. This model works, that's how they do it in e.g. India and more and more in the US (well, for the 60 to 80% who are poor).

Or we decide to keep supporting our elderlies (like e.g. in the Scandinavian countries) and are happy to see a significant amount of public and private resources going into the care of elderlies. This model works as well but requires a higher tax take.

Obviously, we can as well go for some hybrid like e.g. in Singapore. Affordable basic care for residents, supported by an army of (de facto) slave labourers from surrounding low wage countries ... or we could go the German way - support care with sometimes more and sometimes less legal but always cheap work from Eastern Europe, supplemented by sending care patients into low wage countries like e.g. Thailand.

As a society we clearly need to rethink where we want to go, and how we are going to fund it. I have however no doubt that there always will be people who can afford care in an retirement village (with or without state support) ... and it is the job of these providers to shape a business model which works for them and their shareholders (otherwise they just will go away).

Anyway - it will be good to bring this discussion out into the daylight and to see how our politicians and our retirement village providers position themselves.

[bull....]

i be the usual outsider on this thread to all the positive people and bet its going to new lows.

[justakiwi]

You may be right, and I'm sure that would make you happy. But if it does, it will be temporary, as always.

Those of us holding long term, are not worried.



i be the usual outsider on this thread to all the positive people and bet its going to new lows.

[bull....]

You may be right, and I'm sure that would make you happy. But if it does, it will be temporary, as always.

Those of us holding long term, are not worried.

yes i be pleased ... why cause it confirms my analysis was right that a be the only reason be pleased

[bottomfeeder]

yes i be pleased ... why cause it confirms my analysis was right that a be the only reason be pleased

Just another opportunity to accumulate more.

[justakiwi]

Deleted....................

[mike2020]

Privately-owned $5.3 billion retirement giant Metlifecare pushed revenue up 32 per cent in the latest half-year from rising sales and retaining 30 per cent of residents’ money once they leave.
The company, which delisted from the NZX after a takeover three years ago, said its new unit sales and deferred management fee from resales meant it made more money.
The company, whose villages are mainly in the North Island, retains 30 per cent of the money elderly residents pay on entry.

The first three sentences in The Herald, gives you clear indication of the writers attitude towards the industry?

[bottomfeeder]

Privately-owned $5.3 billion retirement giant Metlifecare pushed revenue up 32 per cent in the latest half-year from rising sales and retaining 30 per cent of residents’ money once they leave.
The company, which delisted from the NZX after a takeover three years ago, said its new unit sales and deferred management fee from resales meant it made more money.
The company, whose villages are mainly in the North Island, retains 30 per cent of the money elderly residents pay on entry.

The first three sentences in The Herald, gives you clear indication of the writers attitude towards the industry?

A lot of misinformation out there. So easy to manipulate statistics.

30% after one year is a hell of a lot of difference to 30% after 10 years.

[winner69]

From the other place an interesting post

Speaking of renting retirement villages, INA in Australia just reported. Share price got hammered after the outlook was revised from 30% EBIT growth to 0-10% growth.

"The Group anticipates settling 370-420 homes in FY23, as new homes complete in the second half. This compares to expected settlements of 460-485 announced on 10 November 2022.
The Group is building approximately 500 new homes in FY23 and now expects homes previously anticipated to settle in FY23 to drift into FY24"

Things seem to be changing quickly, could be a warning for the NZ operators.

[percy]

From the other place an interesting post

Speaking of renting retirement villages, INA in Australia just reported. Share price got hammered after the outlook was revised from 30% EBIT growth to 0-10% growth.

"The Group anticipates settling 370-420 homes in FY23, as new homes complete in the second half. This compares to expected settlements of 460-485 announced on 10 November 2022.
The Group is building approximately 500 new homes in FY23 and now expects homes previously anticipated to settle in FY23 to drift into FY24"

Things seem to be changing quickly, could be a warning for the NZ operators.

In fact it appears the NZ operators woke up to slowing sales over 6 months ago.
Again in this sector they are most probably well ahead of their Aussie cousins,even INA's very experienced Simon Owen.

[Greekwatchdog]

From the other place an interesting post

Speaking of renting retirement villages, INA in Australia just reported. Share price got hammered after the outlook was revised from 30% EBIT growth to 0-10% growth.

"The Group anticipates settling 370-420 homes in FY23, as new homes complete in the second half. This compares to expected settlements of 460-485 announced on 10 November 2022.
The Group is building approximately 500 new homes in FY23 and now expects homes previously anticipated to settle in FY23 to drift into FY24"
Things seem to be changing quickly, could be a warning for the NZ operators.

Thanks Winner69, but this would have more relevance on the Generic "Retirement Village" Thread don't you think?

[SailorRob]

I haven't been keeping up with the thread of late, but hopefully someone has pointed out the outstanding capital allocation of OCA in comparison to the trainwreck allocation of the supposedly far superior Ryman?

[Balance]

I haven't been keeping up with the thread of late, but hopefully someone has pointed out the outstanding capital allocation of OCA in comparison to the trainwreck allocation of the supposedly far superior Ryman?

Wait for OCA’s next CR - certain inevitability now about it happening with bankers & financiers spooked by just how profound the property downturn is.

[Ggcc]

Wait for OCA’s next CR - certain inevitability now about it happening with bankers & financiers spooked by just how profound the property downturn is.
We might see houses spike in Napier/Hastings as the amount of houses yellow or red stickered seems to sound over 100

[SailorRob]

Wait for OCA’s next CR - certain inevitability now about it happening with bankers & financiers spooked by just how profound the property downturn is.


If they issue stock for cash at current prices while paying out cash as a dividend then they need hanging drawing and quartering. That would be the most unbelievably stupid thing to do.

[winner69]

If they issue stock for cash at current prices while paying out cash as a dividend then they need hanging drawing and quartering. That would be the most unbelievably stupid thing to do.

Over the last few years they have raised about $130m of new capital while paying about $130m in divies

Many people say that hasn't been stupid and praise the financial awareness of OCA management

[Antipodean]

Suspension of dividend would be more prudent if there is a need for it.

[SailorRob]

Over the last few years they have raised about $130m of new capital while paying about $130m in divies

Many people say that hasn't been stupid and praise the financial awareness of OCA management


I can tell you right now that there is no praise for the financial awareness in this comment.

Sometimes raising equity capital and paying dividends is by far the smartest thing that a company can do.

Sometimes raising equity is massively value destructive and paying dividends at the same time doubles the stupidity.

Sometimes buying back shares is the smartest thing a company can do.

Sometimes canceling the dividend and using the cash saved to buy back shares is very clever.


Now I wonder what can make all of these 'sometimes' only?


If your house market value drops from 1 million to 100k, do you start selling pieces of your house at the 100k valuation to pay the power bill, or should you have sold a bit of it at the 1 million value?

[bull....]

If they issue stock for cash at current prices while paying out cash as a dividend then they need hanging drawing and quartering. That would be the most unbelievably stupid thing to do.

lol ryman comes to mind.
Ive always been in the camp oca will stop paying a div at some stage and for that matter reduced div's in the whole sector will probably occur.

not so good from a compounding point of view when a div stops

[SailorRob]

lol ryman comes to mind.
Ive always been in the camp oca will stop paying a div at some stage and for that matter reduced div's in the whole sector will probably occur.

not so good from a compounding point of view when a div stops

Wrong.

It's exactly the opposite.

It's far far better from a compounding point of view.

Reinvesting in businesses is how compounding works. Not by paying earnings out.

[bull....]

Wrong.

It's exactly the opposite.

It's far far better from a compounding point of view.

Reinvesting in businesses is how compounding works. Not by paying earnings out.

sure but we are talking about OCA here and if OCA stop's paying a div that would suggest they are not re-investing for growth but trying to stay alive.
therefore it is not good from a compounding point of view as most likely the share will go much lower when div stops so any gains you have made previous period's will be wiped out.

[limmy]

sure but we are talking about OCA here and if OCA stop's paying a div that would suggest they are not re-investing for growth but trying to stay alive.
therefore it is not good from a compounding point of view as most likely the share will go much lower when div stops so any gains you have made previous period's will be wiped out.
Yes, many buy OCA because of its high dividend yield.

[SailorRob]

sure but we are talking about OCA here and if OCA stop's paying a div that would suggest they are not re-investing for growth but trying to stay alive.
therefore it is not good from a compounding point of view as most likely the share will go much lower when div stops so any gains you have made previous period's will be wiped out.


Yep that's fair, I was strictly talking about business compounding not stock price, but one in same over long term. But agree with your thinking.

[peat]

The sharp fall during February has made RSI go even lower than before almost reaching zero now. so that's telling us zero strength, and there are no signs of RSI divergence. (often shown before a turning point)

14507
not much to cling to at this point for signs of a turnaround.

I still hold the same amount I have for ages. very much in the red - no intention of selling, or buying more .
so i feel your pain OCA, and look forward to the return of rising property prices and falling interest rates.

[Baa_Baa]

The sharp fall during February has made RSI go even lower than before almost reaching zero now. so that's telling us zero strength, and there are no signs of RSI divergence. (often shown before a turning point)

14507
not much to cling to at this point for signs of a turnaround.

I still hold the same amount I have for ages. very much in the red - no intention of selling, or buying more .
so i feel your pain OCA, and look forward to the return of rising property prices and falling interest rates.

I'm buying more, yeah, I have a lot already (relatively), managed to get my average down. But before the diversification and balanced portfolio police come and get me, I'm more than happy to take advantage of such discounts to NTA while still getting a modest dividend which I take as more shares in the DRP. Long term.

We've had a very long time of very little value opportunities in the market, years if you reflect on it, then despite how quickly this has come about, we have value everywhere. The challenge is really only deciding where the value is, and when to get into it.

I'm not waiting anymore, but my entries/accumulations are smaller and spread over a longer timeframe. Currently less than 50% invested, but that's because of two things, my stocks have been hammered, and I have built up a war chest greater than 50% of portfolio, which will deploy when I want to.

Such a massive change in the market in such a short time, this is a decade opportunity, I'm not going to miss being part of it.

[SailorRob]

The sharp fall during February has made RSI go even lower than before almost reaching zero now. so that's telling us zero strength, and there are no signs of RSI divergence. (often shown before a turning point)

14507
not much to cling to at this point for signs of a turnaround.

I still hold the same amount I have for ages. very much in the red - no intention of selling, or buying more .
so i feel your pain OCA, and look forward to the return of rising property prices and falling interest rates.

How much more pain would you be in if Oceania was given to your family for free? The entire company?

I think you'd be in ecstasy.

[SailorRob]

I'm buying more, yeah, I have a lot already (relatively), managed to get my average down. But before the diversification and balanced portfolio police come and get me, I'm more than happy to take advantage of such discounts to NTA while still getting a modest dividend which I take as more shares in the DRP. Long term.

We've had a very long time of very little value opportunities in the market, years if you reflect on it, then despite how quickly this has come about, we have value everywhere. The challenge is really only deciding where the value is, and when to get into it.

I'm not waiting anymore, but my entries/accumulations are smaller and spread over a longer timeframe. Currently less than 50% invested, but that's because of two things, my stocks have been hammered, and I have built up a war chest greater than 50% of portfolio, which will deploy when I want to.

Such a massive change in the market in such a short time, this is a decade opportunity, I'm not going to miss being part of it.

Agree, value is everywhere.

This is a massive opportunity (in general) that most will miss, and I fear you'll be in that camp with 50% + cash. It will be pure luck if you can deploy that into better opportunities than exist now but you may be able to.

I'd argue this isn't the time to be 50% invested but 300% or much more if you have access to the correct type of capital.

Hopefully there are no diversity and balance pumpers on sharetrader.

[ValueNZ]

How much more pain would you be in if Oceania was given to your family for free? The entire company?

I think you'd be in ecstasy.
The pain for most people comes from falling asset prices, not the purchasing of assets at low prices. Unfortunately it is human nature to place much weighting on the current $ value of their portfolio, even if it makes no difference to the investor what the current market price is unless they decide to sell their holdings.

I agree with your premise that people should be happy when shares fall (as a result of a change in market sentiment rather than the fundaments of the business) since it allows them to purchase more shares for the same amount of money; Just as people are happier when the price of everyday goods fall.

[percy]

The pain for most people comes from falling asset prices, not the purchasing of assets at low prices. Unfortunately it is human nature to place much weighting on the current $ value of their portfolio, even if it makes no difference to the investor what the current market price is unless they decide to sell their holdings.

I agree with your premise that people should be happy when shares fall (as a result of a change in market sentiment rather than the fundaments of the business) since it allows them to purchase more shares for the same amount of money; Just as people are happier when the price of everyday goods fall.

Yes I have enjoyed topping up on a share when it has fallen.I a company I have held a long time and know well.
However, I much prefer adding at new highs.[ie when the company's fundamentals have improved,such as a surprise earnings upgrade].

[Onemootpoint]

The pain for most people comes from falling asset prices, not the purchasing of assets at low prices. Unfortunately it is human nature to place much weighting on the current $ value of their portfolio, even if it makes no difference to the investor what the current market price is unless they decide to sell their holdings.

I agree with your premise that people should be happy when shares fall (as a result of a change in market sentiment rather than the fundaments of the business) since it allows them to purchase more shares for the same amount of money; Just as people are happier when the price of everyday goods fall.


True re human nature - although - Depends a bit on why those hypothetical share prices are falling and whether the fall can be reversed in good time.

Not specifically referring to OCA. For all I know it could be well up 12 months from now if economic circumstances show signs of flattening off and hope returns.

[Balance]

The property market is in dire straits out there with prices in some areas in free fall as developers bail out to try and stave off financial difficulties & receivership.

Have had multiple inquiries from developers needing refinancing desperately after their existing as well as their planned developments fail to sell.

One development in West Auckland has seen prices dropped from. $950k to $750k - still no presale takers.

Don’t read and take too much notice of what the banks and real estate sources are saying - they are doing the exact opposite of what they are saying.

The screws are started to really tighten and short of an immigration influx, things are extremely grim out there.

[Balance]

Imo, all the RV listed companies are but real estate developers - they are going to need to do CR like Ryman given the state of the property market.

That’s the time to consider increasing exposure if you are already a shareholder imo.

The banks are in defensive lending mode currently and as we have seen with Ryman, it is one thing to have standby bank facilities but another thing to draw down on them when you really need to!!!

[SailorRob]

The pain for most people comes from falling asset prices, not the purchasing of assets at low prices. Unfortunately it is human nature to place much weighting on the current $ value of their portfolio, even if it makes no difference to the investor what the current market price is unless they decide to sell their holdings.

I agree with your premise that people should be happy when shares fall (as a result of a change in market sentiment rather than the fundaments of the business) since it allows them to purchase more shares for the same amount of money; Just as people are happier when the price of everyday goods fall.

Yeah it's all about the reinvestment of dividends too, and possibility of share buy backs. I did a deep analysis of the dividend reinvestment math on OCA a while back.

[SailorRob]

Yes I have enjoyed topping up on a share when it has fallen.I a company I have held a long time and know well.
However, I much prefer adding at new highs.[ie when the company's fundamentals have improved,such as a surprise earnings upgrade].

What you should care about and ONLY care about is topping up when the value difference is greater. If you top up at new high after good news you may or may not be getting better value than buying after it's fallen. Often buying after fallen is idiotic too.

[SailorRob]

The property market is in dire straits out there with prices in some areas in free fall as developers bail out to try and stave off financial difficulties & receivership.

Have had multiple inquiries from developers needing refinancing desperately after their existing as well as their planned developments fail to sell.

One development in West Auckland has seen prices dropped from. $950k to $750k - still no presale takers.

Don’t read and take too much notice of what the banks and real estate sources are saying - they are doing the exact opposite of what they are saying.

The screws are started to really tighten and short of an immigration influx, things are extremely grim out there.

Thanks for this information Balance, comes as no surprise. Banks and Real Estate media doing what they always do. Bull****ting.

[SailorRob]

Imo, all the RV listed companies are but real estate developers - they are going to need to do CR like Ryman given the state of the property market.

That’s the time to consider increasing exposure if you are already a shareholder imo.

The banks are in defensive lending mode currently and as we have seen with Ryman, it is one thing to have standby bank facilities but another thing to draw down on them when you really need to!!!


Yes, developers. But the source of funds is the difference.

[Balance]

Yes, developers. But the source of funds is the difference.

That was true until they started loading up on debt to develop ever bigger projects without presales.

The development market has turned and the RVs have been caught with expensive land and unsold stock - funded by debt.

I suspect many RV investors have never seen a development property downturn before. They all start with developers buying and paying for ever more expensive land.

Sp action - retail buying and institutional selling. Who have the bigger firepower?

[bottomfeeder]

That was true until they started loading up on debt to develop ever bigger projects without presales.

The development market has turned and the RVs have been caught with expensive land and unsold stock - funded by debt.

I suspect many RV investors have never seen a development property downturn before. They all start with developers buying and paying for ever more expensive land.

I would suggest that a CR would devastate the SP. They would have to make it at 60 cents. We all know that the SP on the market would drop to that. Not the right time for a capital raise and I believe the Directors know that. I dont see a CR being considered.

They have a bank facility, and with a MCap of 1/2 billion even at this low SP, that draw down will be the way to go. They have plenty of equity and the drawdown will be no trouble. I also think that they will stop any further development that hasnt already started, perhaps sell surplus property, and as a last resort cease dividends for a year. The latter will also devastate the SP down to 60 cents as well, so it will only be as a last resort.

So much speculation and doom and gloom. Thats what has made the SP what it is. Lets wait for the next result, I think we will be pleasantly surprised. Note also that continuous disclosure rules require just that "continuous disclosure" so any material events have not surfaced and not likely that they will.

[bottomfeeder]

When Legend Balance puts down a negative comment the SP drops by a cent or two. Shuddup Man. LOL or more negativity so I can accumulate more at 73.

[Balance]

When Legend Balance puts down a negative comment the SP drops by a cent or two. Shuddup Man. LOL or more negativity so I can accumulate more at 73.

I can see the CR being done at 50c if the directors do not move soon.

The banks out there are limiting their exposure to developers, be them residential or RVs.

Have a look at OCA’s debt profile over the years - you can see it climbing higher and higher year after year as the company embarked on its aggressive growth program. Similar with all the RVs really.

[Balance]

So much speculation and doom and gloom. Thats what has made the SP what it is. Lets wait for the next result, I think we will be pleasantly surprised. Note also that continuous disclosure rules require just that "continuous disclosure" so any material events have not surfaced and not likely that they will.

Remember how Ryman’s sp kept falling until the CR?

Where was the continuous disclosure?

Don’t rely on the CD regime to tell you what is going on!

I warned about Ryman’s CR well ahead of time and a few posters wrote that I was smoking something!

Another (panda-NZ) wrote they should do a share buyback using debt instead!!! Not surprising with panda-NZ as he lives in Labour’s fantasy world of money appearing from thin air, not hard work or savings.

[Antipodean]

$230m of debt headroom still available not enough?

[bottomfeeder]

Remember how Ryman’s sp kept falling until the CR?

Where was the continuous disclosure?

Don’t rely on the CD regime to tell you what is going on!

I warned about Ryman’s CR well ahead of time and a few posters wrote that I was smoking something!

Another (panda-NZ) wrote they should do a share buyback using debt instead!!! Not surprising with panda-NZ as he lives in Labour’s fantasy world of money appearing from thin air, not hard work or savings.

A CR does worry me, as it will worry every shareholder holding the Market Cap of 1/2 billion. Just about half of what it should be. The Directors would be committing corporate suicide to do that at this stage of the SP. I think there are other ways of holding off on development costs and expansion. I am not panicking YET.

[Balance]

$230m of debt headroom still available not enough?

Drawdown of debt facilities is subject to a company meeting negative pledge covenants on a continuous basis. That’s how Ryman still got into trouble despite having undrawn debt facilities.

Property values dropping combined with negative cashflow from operations are a bad combination when it comes to continuous compliance with debt covenants.

Anyway, I am simply imparting my experience from years of dealing with developers and banks. Take it as one person’s view, correct or incorrect.

[Entrep]

I can see the CR being done at 50c if the directors do not move soon.

Agree. CR is coming. Question is at what price.

[bull....]

Agree, value is everywhere.

This is a massive opportunity (in general) that most will miss, and I fear you'll be in that camp with 50% + cash. It will be pure luck if you can deploy that into better opportunities than exist now but you may be able to.

I'd argue this isn't the time to be 50% invested but 300% or much more if you have access to the correct type of capital.

Hopefully there are no diversity and balance pumpers on sharetrader.

new lows coming :t_up: :t_up: we should all re - joice

[Balance]

Agree. CR is coming. Question is at what price.

The longer they wait, the lower the price.

Need to lance the boil.

[bottomfeeder]

Drawdown of debt facilities is subject to a company meeting negative pledge covenants on a continuous basis. That’s how Ryman still got into trouble despite having undrawn debt facilities.

Property values dropping combined with negative cashflow from operations are a bad combination when it comes to continuous compliance with debt covenants.

Anyway, I am simply imparting my experience from years of dealing with developers and banks. Take it as one person’s view, correct or incorrect.

Who knows what the future will bring and I respect your opinion. But there is no room for extreme negativity in investing.

I take issue with the notion that the "licence to occupy" value is somehow a mandatory tie to the current value of property. Mind you there is a lot of negative extreme thoughts about the crash in the property market. I havent seen it yet. There are those desperate sellers that have to sell, and there are properties selling at lower prices, but it certainly isnt at the stage of collapse.

OCA is not a non profit organisation. There are times that it is best to forgo a sale of a "licence to occupy" rather than sell for the sake of making a sale. The market is a dynamic being, and there will be ebbs and falls. Remember when people where buying willy nilly when mortgage rates came down to 2%. As if that was going to last. Some were paying exorbitant prices because of FOMO. I expect when inflation flows through to the housing market ( and it has to come, you cant keep building at inflationery prices, yet expect second hand stock to keep dropping in price.) we will see a resurgence in value.

You have to be a bit naive to think that nothing has already been factored into the SP at this stage. but is yet to come.

Intesting to see where we are in twelve to fifteen months time. I will still be a shareholder. We will revisit this whole scenario then.

Lastly while years of dealing with developers and banks has given you a wide experience, I would suggest that OCA and the economic climate today has not been seen for that many years and is something new.

[Rawz]

Balance if the cap raise is so obvious and it will be at 50 cents if they dont hurry up then im sure you have a big short on? easy money it seems

[Balance]

Balance if the cap raise is so obvious and it will be at 50 cents if they dont hurry up then im sure you have a big short on? easy money it seems

I have stated before and will state again - I do not do shorting.

As for the CR, it is but my opinion and the 50c is an inevitability unless they get on with it.

And btw, CR at 50c does not mean the sp has to be at 50c - Ryman did it’s capital raise at $5 with its sp at $6.

And of course my opinion can and has been wrong in the past!

[bottomfeeder]

I have stated before and will state again - I do not do shorting.

As for the CR, it is but my opinion and the 50c is an inevitability unless they get on with it.

And btw, CR at 50c does not mean the sp has to be at 50c - Ryman did it’s capital raise at $5 with its sp at $6.

And of course my opinion can and has been wrong in the past!

And you think you are not overreacting. When I said a CR would have to be at 60 cents (which is a lesser margin than Ryman) you had to say 50 cents. And away the scaremongerers ran with it. Lets be realistic rather than panickers. One sure way to lose on the market is to panic or listen and react to panic.

[Balance]

And you think you are not overreacting. When I said a CR would have to be at 60 cents (which is a lesser margin than Ryman) you had to say 50 cents. And away the scaremongerers ran with it. Lets be realistic rather than panickers. One sure way to lose on the market is to panic or listen and react to panic.

Many accused me of scaremongering on Ryman.

Have I posted anything today of a scaremongering nature?

I have stated that the RV sector is in retreat with expensive debt funded land banking and as such, unsustainable funding given the state of the property market.

OCA can choose not to do a CR and ride it out. That is definitely an option but at what cost if the need arose later?

The mistake that the RVs made was to keep buying ever more expensive land using debt, thinking that the boom was going to last forever.

[bull....]

pretty obvious they will have to cut the div otherwise a cap raise would be foolish if they did that and then kept paying a div

[Balance]

pretty obvious they will have to cut the div otherwise a cap raise would be foolish if they did that and then kept paying a div

I think they will continue to pay a dividend to keep faith with shareholders who bought for yield.

An underwritten CR means they will get the money irrespective if they decided to go ahead.

[SailorRob]

That was true until they started loading up on debt to develop ever bigger projects without presales.

The development market has turned and the RVs have been caught with expensive land and unsold stock - funded by debt.

I suspect many RV investors have never seen a development property downturn before. They all start with developers buying and paying for ever more expensive land.

Sp action - retail buying and institutional selling. Who have the bigger firepower?


Loading up on debt?

At 20% of total assets they have hardly loaded up and the interests rate and the terms are incredible.

They don't have enough more like and your comment re Panda - they are absolutely right, should be doing massive debt funded share buyback provided they can keep running the show on op cash flow. Cancel the dividend as well.

Should be run as if it was a family owned business.

[SailorRob]

I would suggest that a CR would devastate the SP. They would have to make it at 60 cents. We all know that the SP on the market would drop to that. Not the right time for a capital raise and I believe the Directors know that. I dont see a CR being considered.

They have a bank facility, and with a MCap of 1/2 billion even at this low SP, that draw down will be the way to go. They have plenty of equity and the drawdown will be no trouble. I also think that they will stop any further development that hasnt already started, perhaps sell surplus property, and as a last resort cease dividends for a year. The latter will also devastate the SP down to 60 cents as well, so it will only be as a last resort.

So much speculation and doom and gloom. Thats what has made the SP what it is. Lets wait for the next result, I think we will be pleasantly surprised. Note also that continuous disclosure rules require just that "continuous disclosure" so any material events have not surfaced and not likely that they will.

Great post, yeah they are hardly overleveraged.

20% of firm assets at lowest rates in 5000 years, terms are great. More please.

The best thing with this company is the insiders have skin in the game and will be playing the ball to suit.

As for cycles and all that, who's the old boy with massive equity stake who's been doing this for 40 years, Tomlinson?

If they do Cap raise then will hurt them as much as us.

Scrap the stupid dividend if need be.

[Balance]

Loading up on debt?

At 20% of total assets they have hardly loaded up and the interests rate and the terms are incredible.

They don't have enough more like and your comment re Panda - they are absolutely right, should be doing massive debt funded share buyback provided they can keep running the show on op cash flow. Cancel the dividend as well.

Should be run as if it was a family owned business.

Read carefully :

“Started loading up on debt … without presales.”

Ryman already showed what happened - OCA will surely follow imo.

As for massive buyback using debt, try finding a bank to do that. And where’s the operating cashflow?


Ryman must have considered that so very diligently to add value to shareholders!!!!

LOL!!!!!

[SailorRob]

Read carefully :

“Started loading up on debt … without presales.”

Ryman already showed what happened - OCA will surely follow imo.

As for massive buyback using debt, try finding a bank to do that. And where’s the operating cashflow?


Ryman must have considered that so very diligently to add value to shareholders!!!!

LOL!!!!!


So they couldn't borrow money or use existing facilities for general corporate purposes?

Plenty of cashflow the way I look at it.

They have already done a cap raise - at the correct time.

[Ferg]

“Started loading up on debt … without presales.”

Have you got a source for that Balance? My intel suggests OCA presales are going well on some developments.

[bull....]

The sharp fall during February has made RSI go even lower than before almost reaching zero now. so that's telling us zero strength, and there are no signs of RSI divergence. (often shown before a turning point)

14507
not much to cling to at this point for signs of a turnaround.

I still hold the same amount I have for ages. very much in the red - no intention of selling, or buying more .
so i feel your pain OCA, and look forward to the return of rising property prices and falling interest rates.

technically a break below 75c looks very bad :scared: lower bollinger says a fall to 70c would be possible on such a breakdown
when technicals match fundamental outlook that is one powerful signal

[bottomfeeder]

The rumour mill creates fact. As we have had no recent updates it is easy to downramp and set the rot in. No doubt the possibities are endless, yet the worry for the future is the greatest motivator of panic. There are also no doubt relatively a lot of investors and even fund managers who read this forum. Anything that pricks their ears, and while I can't see a CR, the SP will drop further on the rumour.

Anything is possible, even a CR. Yet we don't know the current cash flow of the company yet are surmising its a disaster.

Nevertheless I will accumulate more, but not yet, will have to see how this bear run will carry on.

[bottomfeeder]

Next it will be Arvida on the firing line. If not already there at their sub standard SP

[Rawz]

I would be 100% supportive of dropping the dividend. no point in it without the imp credits and then raising capital

[nztx]

The rumour mill creates fact. As we have had no recent updates it is easy to downramp and set the rot in. No doubt the possibities are endless, yet the worry for the future is the greatest motivator of panic. There are also no doubt relatively a lot of investors and even fund managers who read this forum. Anything that pricks their ears, and while I can't see a CR, the SP will drop further on the rumour.

Anything is possible, even a CR. Yet we don't know the current cash flow of the company yet are surmising its a disaster.

Nevertheless I will accumulate more, but not yet, will have to see how this bear run will carry on.

In times of the market retreating - will the sector not follow suit ? :)

[bottomfeeder]

I would be 100% supportive of dropping the dividend. no point in it without the imp credits and then raising capital

Yep me too. Many others too no doubt.

[Greekwatchdog]

I don't see the need for a CR. With the selling of St Helliers & Waimarie amongst others that will improve any cash flow issues should there be any. If OCA/ARV stopped Purchasing Land/Villages and just finished there current builds and sold these down they would have no debt. If they dropped the Dividend for 12 months I am happy with that too. Time will tell. They Board and CEO are not the most forth coming with info to the market, a grudge I have held for a very long time.

[Baa_Baa]

In times of the market retreating - will the sector not follow suit ?

Keep up https://invst.ly/-h3k4

[SailorRob]

Yep me too. Many others too no doubt.

There is no point in it at all really whilst they're growing and need capital.

Very happy that the directors have real skin in the game, at least you then know that any decisions they make are for the benefit of shareholders, or best efforts anyway.

[SailorRob]

I don't see the need to a CR. With the selling of St Helliers & Waimarie amongst others that will improve any cash flow issues should there be any. If OCA/ARV stopped Purchasing Land/Villages and just finished there current builds and sold these down they would have no debt. If they dropped the Dividend for 12 months I am happy with that too. Time will tell. They Board and CEO are not the most forth coming with info to the market, a grudge I have held for a very long time.

Well said.

[bull....]

There is no point in it at all really whilst they're growing and need capital.

Very happy that the directors have real skin in the game, at least you then know that any decisions they make are for the benefit of shareholders, or best efforts anyway.

there skin in the game is vanishing by the day.
hope not to many people think following director buying and selling is a good strategy

[Greekwatchdog]

there skin in the game is vanishing by the day.
hope not to many people think following director buying and selling is a good strategy

Your short sighted Bull. Your a trader. They are not. Remember everyone has different views and timelines.

[bull....]

Your short sighted Bull. Your a trader. They are not. Remember everyone has different views and timelines.

yes i can see what is right in front of me which seems better than trying to crystal ball gaze

[winner69]

there skin in the game is vanishing by the day.
hope not to many people think following director buying and selling is a good strategy

Chair Liz keeps averaging down but heck she's now $634k under water

Suppose she says heck I've got so much skin in the game it's all going to be OK

[bottomfeeder]

Chair Liz keeps averaging down but heck she's now $634k under water

Suppose she says heck I've got so much skin in the game it's all going to be OK

Hope she is right, I feel I have so much skin in the game as well.

[percy]

Chair Liz keeps averaging down but heck she's now $634k under water

Suppose she says heck I've got so much skin in the game it's all going to be OK

I am sure she and fellow director,Greg Tomlinson, know the path to the "road to redemption".

[winner69]

$230m of debt headroom still available not enough?

If they took that $230m up their debt/equity ratio would be a bit higher than RYM's was prompting the capital raise

[bull....]

If they took that $230m up their debt/equity ratio would be a bit higher than RYM's was prompting the capital raise

guess they could do a briscoe's type sale to help

[ThaiJohn]

It could become a takeover target if it gets much cheaper.

[Balance]

Have you got a source for that Balance? My intel suggests OCA presales are going well on some developments.

Your intel is similar to what the company stated at last year’s AGM : “We are now starting to observe a level of presales for our new care suite developments, including at Lady Allum which opened recently.”

Which is of course very different from proceeding with a development with presales!

What the RVs like OCA have been doing is paying up for development sites at ever more expensive prices and then, going ahead with building retirement and care units without presales in expectation that the units will sell like hot cakes pre or post completion. In residential property market terminology, ‘spec’ builds.

Prudent property developers go ahead with developments when they have secured firm, committed and legal presales.

As I wrote before, the RVs have been using debt in recent years to pursue such ‘spec’ developments. This is where they are getting caught with the drastic market down turn.

[Ferg]

Thanks Balance. Understood - so you are referring to presales where people buy off the plans and then the developer proceeds with construction, whereas the RV's are building new sites and counting "presales" as sales that occur some time during the build process but before completion. Gotcha. I agree it is quite a different risk profile and one that likely comes at a price, either way. BTW I wasn't referring to suites per se - in some cases a single apartment can sell for the same value as 9 or more suites.

I get that sources of funds are drying up for the some of the relatively smaller or mid-sized developers who can't sell their latest 'spec' development (the not so 'prudent' ones). As you too would have seen before....it is always the last deal that pushes such developers under and they usually blame the banks ("if only the bank had extended my credit by 6 months" etc). I don't see the RVs being in the same boat as those developers given the fixed price construction contracts, the established credit facilities and headroom, and the market intel and research that goes into new builds prior to acquiring land and/or turning over the first sod.

Ryman however is another story - what they did was inexcusable turning a USD denominated fixed interest payment flow into a NZD denominated floating rate payment flow. IMO they could have hedged the FX part without making it a floating interest rate. OCA on the other hand have no USD exposure and have fixed ~69% of their interest bearing debts for FY23 at an average cost of under 3%, they have plenty of headroom (in both funding and covenants per the last HY report) and the vast majority of their liabilities incur 0% interest (being the ORAs).

[percy]

Thanks Balance. Understood - so you are referring to presales where people buy off the plans and then the developer proceeds with construction, whereas the RV's are building new sites and counting "presales" as sales that occur some time during the build process but before completion. Gotcha. I agree it is quite a different risk profile and one that likely comes at a price, either way. BTW I wasn't referring to suites per se - in some cases a single apartment can sell for the same value as 9 or more suites.

I get that sources of funds are drying up for the some of the relatively smaller or mid-sized developers who can't sell their latest 'spec' development (the not so 'prudent' ones). As you too would have seen before....it is always the last deal that pushes such developers under and they usually blame the banks ("if only the bank had extended my credit by 6 months" etc). I don't see the RVs being in the same boat as those developers given the fixed price construction contracts, the established credit facilities and headroom, and the market intel and research that goes into new builds prior to acquiring land and/or turning over the first sod.

Ryman however is another story - what they did was inexcusable turning a USD denominated fixed interest payment flow into a NZD denominated floating rate payment flow. IMO they could have hedged the FX part without making it a floating interest rate. OCA on the other hand have no USD exposure and have fixed ~69% of their interest bearing debts for FY23 at an average cost of under 3%, they have plenty of headroom (in both funding and covenants per the last HY report) and the vast majority of their liabilities incur 0% interest (being the ORAs).

Thanks for your post.

[nztx]

It could become a takeover target if it gets much cheaper.


Are the Swedes who swallowed MetLifeProp a few years back ready for another discounted chomp in the Sector ? ;)

Who else has enough available readies unless another suitor is prepared to throw some of their scrip around
for a bit of predatory motions and expansion ? :)

Perhaps some of the foreign or Aussie Vulture funds might start taking an interest ?

[bull....]

Are the Swedes who swallowed MetLifeProp a few years back ready for another discounted chomp in the Sector ? ;)

Who else has enough available readies unless another suitor is prepared to throw some of their scrip around
for a bit of predatory motions and expansion ? :)

Perhaps some of the foreign or Aussie Vulture funds might start taking an interest ?

fat chance i reckon.
not even corporate's or private equity want to touch this space at the moment
ie bupa had to with drawl there sale i guess to no interest or if there was interest it must have been at much lower valuations

[SailorRob]

fat chance i reckon.
not even corporate's or private equity want to touch this space at the moment
ie bupa had to with drawl there sale i guess to no interest or if there was interest it must have been at much lower valuations

Do you mean Bupa made a sale using a American Southern state accent? Was this some type of sales ploy to sound like the local yokels or something?

[850man]

Are the Swedes who swallowed MetLifeProp a few years back ready for another discounted chomp in the Sector ? ;)

Who else has enough available readies unless another suitor is prepared to throw some of their scrip around
for a bit of predatory motions and expansion ? :)

Perhaps some of the foreign or Aussie Vulture funds might start taking an interest ?

If they do get approached, let's hope the board don't hand it all over at 55% of NTA :eek2:

[Leemsip]

getting a bit ugly today....
no volume... highest bid is 61c, ask is 69c...

Guess the market waiting and seeing

[Baa_Baa]

getting a bit ugly today....
no volume... highest bid is 61c, ask is 69c...

Guess the market waiting and seeing

What are you looking at? Bid is .73 Ask is .74

[Rawz]

What are you looking at? Bid is .73 Ask is .74

Maybe he is looking into the future, hope not :scared:

[Leemsip]

ah sorry.... looking on asx...
not looking nearly as ugly...

[bottomfeeder]

Too many downrampers, the rot is setting in a bit. Unfortunate that a good company with excellent management is being savaged by innuendo, misinformation, exaggeration, and emotive language. No doubt that is why the SP is stagnating. Sounds like Mafs all over again.

I've been harrased and told to get my facts straight in the past, I make the same suggestions to everyone else.

[Greekwatchdog]

Too many downrampers, the rot is setting in a bit. Unfortunate that a good company with excellent management is being savaged by innuendo, misinformation, exaggeration, and emotive language. No doubt that is why the SP is stagnating. Sounds like Mafs all over again.

I've been harrassed and told to get my facts straight in the past, I make the same suggestions to everyone else.

Well said Bottomfeeder.

[SailorRob]

If they do get approached, let's hope the board don't hand it all over at 55% of NTA :eek2:

This is where the board being large shareholders steps in. It's their company.

[Forrestdun]

I think the huge amount of funds that Ryman is trying to raise will also be impacting the sector as people sell OCA, ARV and SUM to take part.

[Rawz]

Was MET acquired for a discount to NTA or premium? Does anyone recall?

[Curly]

Too many downrampers, the rot is setting in a bit. Unfortunate that a good company with excellent management is being savaged by innuendo, misinformation, exaggeration, and emotive language. No doubt that is why the SP is stagnating. Sounds like Mafs all over again.

I've been harrased and told to get my facts straight in the past, I make the same suggestions to everyone else.

Well said bottom. I agree.

[SailorRob]

Is a company that has a billion dollar non callable interest free loan and another 500 million on very low rates for decent duration, worth more in a higher rate environment or less?

[nztx]

What's the Bricks & Mortar worth ? ;)

[SailorRob]

What's the Bricks & Mortar worth ? ;)

Far far more than the cost price.

It was all built in the old version of colourful pictures of dead people and queer birds. Managed by the two fat controllers, the new versions are worth much less.

[davflaws]

Far far more than the cost price.

It was all built in the old version of colourful pictures of dead people and queer birds. Managed by the two fat controllers, the new versions are worth much less.
I really don't understand the second paragraph of your post. Can you put it in other words please.

[SailorRob]

I really don't understand the second paragraph of your post. Can you put it in other words please.

It was all built with old New Zealand dollars, before the currency was dramatically devalued.

I should have said colourful notes.

So assets built with old dollars but earn new dollars. I'll find a quote from Buffett describing the effects.

But essentially replacement value is nominally going to be much higher.

[bull....]

Too many downrampers, the rot is setting in a bit. Unfortunate that a good company with excellent management is being savaged by innuendo, misinformation, exaggeration, and emotive language. No doubt that is why the SP is stagnating. Sounds like Mafs all over again.

I've been harrased and told to get my facts straight in the past, I make the same suggestions to everyone else.

lol , guess that's why rym , sum and arv are down similar % too.
bloody down ramper's have caused all these stocks too fall and what is amazing they are all down similar %. it must be algo driven down rampers

[Bjauck]

I really don't understand the second paragraph of your post. Can you put it in other words please. Something to do with a story by Roald Dahl or Wilbert Awdry? Charles III’s currency is worth quite a bit less than his mother’s

[Entrep]

Too many downrampers, the rot is setting in a bit. Unfortunate that a good company with excellent management is being savaged by innuendo, misinformation, exaggeration, and emotive language. No doubt that is why the SP is stagnating. Sounds like Mafs all over again.

I've been harrased and told to get my facts straight in the past, I make the same suggestions to everyone else.

I was going to post that you think too highly of an anonymous forum, but then I thought that maybe the NZ market is so miniscule, the postings here could have some effect.

[Rawz]

I dont think retail investors move SPs of companies like OCA

Maybe IKE or GEN type companies

[winner69]

Jenny Ruth BusinessDesk did a piece on retirement sector cash flows and quoted Decker from Jardens a lot -main point being Underlying Profit is not a good measure of cash flow and companies should be using AFFO (– adjusted funds from operations).

Piece in the article quoting Decker - “Ryman has produced $33m of Jarden Affo over the past five years versus over $1b of underlying profit and $539m of cash dividends,”

Pretty damning

My workings seem to indicate that Oceania has produced negative AFFO the last few years .... and still pays dividends

I wonder how Oceania will be presenting cash flow in results announcement ... spotlight has been on Ryman and Summerset showed some initiative in presenting their steady state cash flow (positive)

[bull....]

Jenny Ruth BusinessDesk did a piece on retirement sector cash flows and quoted Decker from Jardens a lot -main point being Underlying Profit is not a good measure of cash flow and companies should be using AFFO (– adjusted funds from operations).

Piece in the article quoting Decker - “Ryman has produced $33m of Jarden Affo over the past five years versus over $1b of underlying profit and $539m of cash dividends,”

Pretty damning

My workings seem to indicate that Oceania has produced negative AFFO the last few years .... and still pays dividends

I wonder how Oceania will be presenting cash flow in results announcement ... spotlight has been on Ryman and Summerset showed some initiative in presenting their steady state cash flow (positive)

careful winner posting material which could be considered negative might bring out the pitchfork party

[bottomfeeder]

I dont think retail investors move SPs of companies like OCA

Maybe IKE or GEN type companies

Interesting, but who moves the market. Broker commentators, (not always) tend to follow the herd. When prices are down they scorn the stock, when prices are up, they praise it. Funds are not in the market continuously, but rather in a buy stage, or a sell stage, but mostly hold stage.

I think retail investors are in the market continuously and buy and sell emotively.

So I think that retail investors do move the SP and they are those that not necessarily follow forum predictions, but follow a general mood.

My feelings anyway.

[ThaiJohn]

Large parcel went through a few minutes ago.



72

1,578,199

12:51

[bull....]

yep that 75c i mentioned was line in the sand someone ditching before it plummets

[bottomfeeder]

Large parcel went through a few minutes ago.



72

1,578,199

12:51



Not an open market trade. Looks like the same broker. Could be rejigging ownership, or associated parties skullduggery.

Maybe repricing before the end of financial year. Wouldnt read too much into it.

[ronaldson]

Metlifecare has just got OIO approval for two land purchases in Pukekohe and Havelock North for new villages, so the industry is still intent upon providing further accommodation opportunity for the elderly notwithstanding the current economic/interest rate circumstances.

Demographic tail winds, once established, have an almost unstoppable momentum which can continue to overwhelm other sentiments.

[bottomfeeder]

Metlifecare has just got OIO approval for two land purchases in Pukekohe and Havelock North for new villages, so the industry is still intent upon providing further accommodation opportunity for the elderly notwithstanding the current economic/interest rate circumstances.

Demographic tail winds, once established, have an almost unstoppable momentum which can continue to overwhelm other sentiments.

Large capital expenditure, is unlikely to be influenced by current sentiment, but more by future planning and possibilities. Bodes well for the future of the whole industry.

[winner69]

Large parcel went through a few minutes ago.



72

1,578,199

12:51



Desperate seller willing to accept 72 cents?

[nztx]

Desperate seller willing to accept 72 cents?


Could have been less next week ? :)

[nztx]

Metlifecare has just got OIO approval for two land purchases in Pukekohe and Havelock North for new villages, so the industry is still intent upon providing further accommodation opportunity for the elderly notwithstanding the current economic/interest rate circumstances.

Demographic tail winds, once established, have an almost unstoppable momentum which can continue to overwhelm other sentiments.


When's the Swedish offer for another larger chunk of the sector due ?

Will 60c be the starting dough thrown in the ring ? :)

[Bjauck]

Desperate seller willing to accept 72 cents? …or a Happy buyer wanting a cheap chunk?

[justakiwi]

Would be me if I had any money ;)


…or a Happy buyer wanting a cheap chunk?

[bull....]

i wouldnt , maybe why the person ditched out yesterday

February sees record drop for property prices
https://www.newshub.co.nz/home/money/2023/03/february-sees-record-drop-for-property-prices-but-apartment-costs-are-going-against-cooling-housing-market-trade-me.html

[BlackPeter]

i wouldnt , maybe why the person ditched out yesterday

February sees record drop for property prices
https://www.newshub.co.nz/home/money/2023/03/february-sees-record-drop-for-property-prices-but-apartment-costs-are-going-against-cooling-housing-market-trade-me.html

LOL - isn't it amazing how different people can interpret the same set of data? :

https://www.oneroof.co.nz/news/tony-alexander-why-collapse-of-silicon-valley-bank-is-a-good-thing-for-nz-house-prices-43229

[allfromacell]

LOL - isn't it amazing how different people can interpret the same set of data? :

https://www.oneroof.co.nz/news/tony-alexander-why-collapse-of-silicon-valley-bank-is-a-good-thing-for-nz-house-prices-43229

Looks like two different data sets, I'd pay more attention the the REINZ data.

[Maverick]

Hi guys, thought a post is now well overdue after a significant absence.

I've been cycling the “Tour Aotearoa” so far more preoccupied with other aspects of life
i.e. where the next TipTop diary is. ( it was also insightful to get so many aspects on what life is going like for NZ`ers )

OCA haven't made an announcement of any value for 4 months now there is only industry and macro wide news .

Here's a summary of how i've been thinking during this time;
RYM needed a massive capital raise.
A. OCA did theirs a while back when they announced a higher build rate increase. They currently have by my calcs about 140 new apartments for sale . This is about 30% more than normal.
B. They also have Helier and Christchurch Windermere about to deliver. Brent said this will be about the top of their debt value as all these start selling down. Again by my calc`s , if they stopped building today , these selling down fully will pay off ALL of OCAs debt.
C. OCA has already raised extra money at a favorable time at superb rates, simultaneously expanding the debt facilities.
D. Directors being heavily stacked towards bankers and accountants
E. OCAs DMF and sale margins are higher than RYM.
F. and already having a DRP scheme in place.
-In my opinion , due to these factors OCA, will not have to do a further capital raise.

SUM`s profit report.
An excellent result exactly where it should have been . Strong evidence the industry is moving forward as the juggernaut is as it always has been.
The only disappointment in the whole report to me was that the Govt has done NOTHING since announcing pay parity with DHB nurses 3 months ago.

Interest rates and share price
What I do observe is that the RV Share prices are now almost disconnected to company performance and asset backing. Rather it now seems clear, to me at least , that the share price is now predominantly set inversely by NZ 10 year bond rates. Particularly OCA.
See attached graph below of NZ10 year bonds ( blue line) versus OCA share price.( black line)
On a positive note here , anecdotally after traveling through NZ , meeting large amounts of kiwis and seeing recent NZ bonds/ US10year treasury movements it's possible we have passed peak inflation. Meaning this could be at or near the bottom of the share price plummet.
Notice on the graph how the share price has not picked up recently despite bonds falling as it normally would. One of these 2 values will need to correct and last I looked the NZ and US economy is bigger than OCA share price.

14516

Earnings FY23
I still fundamentally expect a FY23 underlying profit of around $62m. That's about 10% up on last FY.
This calculation has low “news sales” expectations and no contribution from the 2 large deliveries about to complete.
No matter what good result OCA puts in this FY23 , it seems unlikely that it will affect the SP much. At least we long term shareholders will enjoy an increased dividend as we wait. Wasn't that always the plan anyway?

Despite a relentlessly brutal 18 months share price wise my continued confidence in the industry and company continues. OCAs strategy of care + quality at the top end and my respect for its management team means I will not be selling. In the meantime I expect an escalating growing underlying profit as their execution starts to gain traction.

At some point a turn around in inflation/ and therefore market sentiment has to occur and we can see when it does happen it happens fast. It is my opinion that the former has already started.

[Greekwatchdog]

Hi guys, thought a post is now well overdue after a significant absence.

I've been cycling the “Tour Aotearoa” so far more preoccupied with other aspects of life
i.e. where the next TipTop diary is. ( it was also insightful to get so many aspects on what life is going like for NZ`ers )

OCA haven't made an announcement of any value for 4 months now there is only industry and macro wide news .

Here's a summary of how i've been thinking during this time;
RYM needed a massive capital raise.
A. OCA did theirs a while back when they announced a higher build rate increase. They currently have by my calcs about 140 new apartments for sale . This is about 30% more than normal.
B. They also have Helier and Christchurch Windermere about to deliver. Brent said this will be about the top of their debt value as all these start selling down. Again by my calc`s , if they stopped building today , these selling down fully will pay off ALL of OCAs debt.
C. OCA has already raised extra money at a favorable time at superb rates, simultaneously expanding the debt facilities.
D. Directors being heavily stacked towards bankers and accountants
E. OCAs DMF and sale margins are higher than RYM.
F. and already having a DRP scheme in place.
-In my opinion , due to these factors OCA, will not have to do a further capital raise.

SUM`s profit report.
An excellent result exactly where it should have been . Strong evidence the industry is moving forward as the juggernaut is as it always has been.
The only disappointment in the whole report to me was that the Govt has done NOTHING since announcing pay parity with DHB nurses 3 months ago.

Interest rates and share price
What I do observe is that the RV Share prices are now almost disconnected to company performance and asset backing. Rather it now seems clear, to me at least , that the share price is now predominantly set inversely by NZ 10 year bond rates. Particularly OCA.
See attached graph below of NZ10 year bonds ( blue line) versus OCA share price.( black line)
On a positive note here , anecdotally after traveling through NZ , meeting large amounts of kiwis and seeing recent NZ bonds/ US10year treasury movements it's possible we have passed peak inflation. Meaning this could be at or near the bottom of the share price plummet.
Notice on the graph how the share price has not picked up recently despite bonds falling as it normally would. One of these 2 values will need to correct and last I looked the NZ and US economy is bigger than OCA share price.

14516

Earnings FY23
I still fundamentally expect a FY23 underlying profit of around $62m. That's about 10% up on last FY.
This calculation has low “news sales” expectations and no contribution from the 2 large deliveries about to complete.
No matter what good result OCA puts in this FY23 , it seems unlikely that it will affect the SP much. At least we long term shareholders will enjoy an increased dividend as we wait. Wasn't that always the plan anyway?

Despite a relentlessly brutal 18 months share price wise my continued confidence in the industry and company continues. OCAs strategy of care + quality at the top end and my respect for its management team means I will not be selling. In the meantime I expect an escalating growing underlying profit as their execution starts to gain traction.

At some point a turn around in inflation/ and therefore market sentiment has to occur and we can see when it does happen it happens fast. It is my opinion that the former has already started.

Thanks Maverick for sharing your views.

I have also mentioned on here a number of times that OCA don't require a CR. But those who don't understand OCA world seem rather convinced that they require one. Anyway back to the OCA juggernaut.

I thought SUM's result was outstanding given the macro goings on for past 12 months and was somewhat encouraged. So hoping for positive vibes in May when OCA report, then I always held belief that OCA was 2023/24 beyond.

Glad you enjoyed your tour of our Beautiful country. GWD

[SailorRob]

Hi guys, thought a post is now well overdue after a significant absence.

I've been cycling the “Tour Aotearoa” so far more preoccupied with other aspects of life
i.e. where the next TipTop diary is. ( it was also insightful to get so many aspects on what life is going like for NZ`ers )

OCA haven't made an announcement of any value for 4 months now there is only industry and macro wide news .

Here's a summary of how i've been thinking during this time;
RYM needed a massive capital raise.
A. OCA did theirs a while back when they announced a higher build rate increase. They currently have by my calcs about 140 new apartments for sale . This is about 30% more than normal.
B. They also have Helier and Christchurch Windermere about to deliver. Brent said this will be about the top of their debt value as all these start selling down. Again by my calc`s , if they stopped building today , these selling down fully will pay off ALL of OCAs debt.
C. OCA has already raised extra money at a favorable time at superb rates, simultaneously expanding the debt facilities.
D. Directors being heavily stacked towards bankers and accountants
E. OCAs DMF and sale margins are higher than RYM.
F. and already having a DRP scheme in place.
-In my opinion , due to these factors OCA, will not have to do a further capital raise.

SUM`s profit report.
An excellent result exactly where it should have been . Strong evidence the industry is moving forward as the juggernaut is as it always has been.
The only disappointment in the whole report to me was that the Govt has done NOTHING since announcing pay parity with DHB nurses 3 months ago.

Interest rates and share price
What I do observe is that the RV Share prices are now almost disconnected to company performance and asset backing. Rather it now seems clear, to me at least , that the share price is now predominantly set inversely by NZ 10 year bond rates. Particularly OCA.
See attached graph below of NZ10 year bonds ( blue line) versus OCA share price.( black line)
On a positive note here , anecdotally after traveling through NZ , meeting large amounts of kiwis and seeing recent NZ bonds/ US10year treasury movements it's possible we have passed peak inflation. Meaning this could be at or near the bottom of the share price plummet.
Notice on the graph how the share price has not picked up recently despite bonds falling as it normally would. One of these 2 values will need to correct and last I looked the NZ and US economy is bigger than OCA share price.

14516

Earnings FY23
I still fundamentally expect a FY23 underlying profit of around $62m. That's about 10% up on last FY.
This calculation has low “news sales” expectations and no contribution from the 2 large deliveries about to complete.
No matter what good result OCA puts in this FY23 , it seems unlikely that it will affect the SP much. At least we long term shareholders will enjoy an increased dividend as we wait. Wasn't that always the plan anyway?

Despite a relentlessly brutal 18 months share price wise my continued confidence in the industry and company continues. OCAs strategy of care + quality at the top end and my respect for its management team means I will not be selling. In the meantime I expect an escalating growing underlying profit as their execution starts to gain traction.

At some point a turn around in inflation/ and therefore market sentiment has to occur and we can see when it does happen it happens fast. It is my opinion that the former has already started.



Nice write up Mav, you must have a different definition of 'brutal'. The share price action is the exact opposite of brutal, it's been beautiful.

[RTM]

Nice write up Mav, you must have a different definition of 'brutal'. The share price action is the exact opposite of brutal, it's been beautiful.

Thanks for your comments Maverick. I largely agree...and also concur with SailorRob's idea.....bought a few more and will do so again should they continue to drop.
Worked really well in 2020 and I'm hoping for the same outcome at todays price.

[Balance]

Had another look at OCA’s financials again in the face of relentless pressure on the housing sector out there with prices in some suburbs down 40%. The consensus is that property prices out there are down on average between 20% to 25% so far, since they peaked in Nov 2021.

Observations:

The accounts of the RVs completely defy logic - they were still recording upward revaluations in 2022 in the face of falling property prices. The market obviously does not believe the RVs which is why their share prices are marked down so severely.

If we take OCA as an example, the company sat on $1.6 billion of investment property assets as at 30 Sept 2022, $964m of equity and $500m of debt.

If we allow for a fall in OCA’s valuation by 20% as an example, the numbers change to :

$1.28 billion in investment property assets and $644m of equity. Debt obviously remains the same at $500m.

A 25% fall in property values would have assets at $1.2 billion and equity at $564m.

Leverage - great on the way up, extremely painful on the way down.

So when does the property cycle turn and move back up? History suggests it will be 2026 before the market turns.

[SailorRob]

Had another look at OCA’s financials again in the face of relentless pressure on the housing sector out there with prices in some suburbs down 40%. The consensus is that property prices out there are down on average between 20% to 25% so far, since they peaked in Nov 2021.

Observations:

The accounts of the RVs completely defy logic - they were still recording upward revaluations in 2022 in the face of falling property prices. The market obviously does not believe the RVs which is why their share prices are marked down so severely.

If we take OCA as an example, the company sat on $1.6 billion of investment property assets as at 30 Sept 2022, $964m of equity and $500m of debt.

If we allow for a fall in OCA’s valuation by 20% as an example, the numbers change to :

$1.28 billion in investment property assets and $644m of equity. Debt obviously remains the same at $500m.

A 25% fall in property values would have assets at $1.2 billion and equity at $564m.

Leverage - great on the way up, extremely painful on the way down.

So when does the property cycle turn and move back up? History suggests it will be 2026 before the market turns.


All smoke and mirrors... An asset is worth what it can produce in cash over the long term after accounting for all expenses properly and future cash flows are discounted appropriately.

We're not buying OCA for what some plonker says the property is worth based on what other plonkers have been paying.

Don't forget most of the leverage is free.

[forest]

Had another look at OCA’s financials again in the face of relentless pressure on the housing sector out there with prices in some suburbs down 40%. The consensus is that property prices out there are down on average between 20% to 25% so far, since they peaked in Nov 2021.

Observations:

The accounts of the RVs completely defy logic - they were still recording upward revaluations in 2022 in the face of falling property prices. The market obviously does not believe the RVs which is why their share prices are marked down so severely.

If we take OCA as an example, the company sat on $1.6 billion of investment property assets as at 30 Sept 2022, $964m of equity and $500m of debt.

If we allow for a fall in OCA’s valuation by 20% as an example, the numbers change to :

$1.28 billion in investment property assets and $644m of equity. Debt obviously remains the same at $500m.

A 25% fall in property values would have assets at $1.2 billion and equity at $564m.

Leverage - great on the way up, extremely painful on the way down.

So when does the property cycle turn and move back up? History suggests it will be 2026 before the market turns.

The market seem to agree with your observation as the Share Price at the moment of app 73 cents giving it a market cap of about $520m.
Close enough to your equity number with a 25% fall in property values of $564m
Would you say OCA is close to fair value as it is trading slightly below NTA and likely to make around $60m underlying Profit with brings the P/E around 9?
This seems not to demanding for a dividend paying company.

[Balance]

All smoke and mirrors... An asset is worth what it can produce in cash over the long term after accounting for all expenses properly and future cash flows are discounted appropriately.

We're not buying OCA for what some plonker says the property is worth based on what other plonkers have been paying.

Don't forget most of the leverage is free.

Like it or not, that’s what the property game is all about - plonkers buying off one another based upon what other plonkers (including you!) are paying.

The leverage is free which is why the RVs traded at huge premiums on the way up - now comes the reverse.

[SailorRob]

Like it or not, that’s what the property game is all about - plonkers buying off one another based upon what other plonkers (including you!) are paying.

The leverage is free which is why the RVs traded at huge premiums on the way up - now comes the reverse.


Not at all. The game I play is based on what hard cash assets can produce, not what I think I can sell something for to a plonker.

We're not paying 25 times revenue...

The value of the assets will be determined by the cash they produce.

[Balance]

Not at all. The game I play is based on what hard cash assets can produce, not what I think I can sell something for to a plonker.

We're not paying 25 times revenue...

The value of the assets will be determined by the cash they produce.

So you can keep waiting as the RVs are all about asset accumulation & ever generous rewards for the management, not cash generation!!!!

Thought you would have worked that one out by now!

[SailorRob]

So you can keep waiting as the RVs are all about asset accumulation & ever generous rewards for the management, not cash generation!!!!

Thought you would have worked that one out by now!


I'm a little slow on things.

You keep doing what you're doing and I'll keep doing what I do and one of us will be happy.

[Balance]

I'm a little slow on things.

You keep doing what you're doing and I'll keep doing what I do and one of us will be happy.

Guess both of us will be happy when OCA is at 40c then?

Since you like an ever lower sp? :t_up:

And I like to invest when the uptrend has started. :t_up:

[SailorRob]

Guess both of us will be happy when OCA is at 40c then?

Since you like an ever lower sp? :t_up:


Correct. I will be much happier than last time it hit 40c and boy was I happy then.

But... if they called me up and asked me to take it for free I'd be even happier.

I am not at all bothered about what other people think the company is worth or what they're prepared to buy/sell it for, but I will take advantage of it if I think the situation is advantageous.

I care only about the assets they have in terms of how much cash they can generate sustainably over the long term and how they are funded.

[bottomfeeder]

Had another look at OCA’s financials again in the face of relentless pressure on the housing sector out there with prices in some suburbs down 40%. The consensus is that property prices out there are down on average between 20% to 25% so far, since they peaked in Nov 2021.


So when does the property cycle turn and move back up? History suggests it will be 2026 before the market turns.

Have to take issue with a few items. I dont think we can follow history right at the moment. We have had some events recently which have not been seen in history for many many years. When were mortgage interest rates down to 3.5%. When did we have the property market so hot as it was during Covid. When did we have Covid before. When did we last have CPI at over 7% and construction index over 20%. When did we have a European war that threatens the stability of the world economy.

I doubt the drop in property values by 40%. There is not a blanket drop in property prices. There are certainly those that need to sell due to over commitment, other financial requirements etc, but that does not set the values at -40% across the board. The house next door to me is on the market and it looks like it is going to sell at the value set a year and a half ago.

Retirement villages are not in a position where they have to drop their prices to sell. After all they retain ownership of their properties, and if they do drop the price of their licence to occupy, the round will come again sooner rather than later.

Also they have other income streams which have less impact than pure property prices.

Nevertheless the SP has been savaged lately, and when they will recover is open to much speculation. I would suggest very few people know when a recovery in SP will come.

Lastly, you dont make money by buying in a bull market, but waiting till the bear market is getting lowest. Sometimes you have to hold at the bear market prices. Interest rates could start to turn at any time, just need a few more banks in trouble. Recession is already on its cusp in many economies and we could see interest rates dropping again. Still very painfull being in the market at the moment, not just OCA but most equities.

[SailorRob]

Have to take issue with a few items. I dont think we can follow history right at the moment. We have had some events recently which have not been seen in history for many many years. When were mortgage interest rates down to 3.5%. When did we have the property market so hot as it was during Covid. When did we have Covid before. When did we last have CPI at over 7% and construction index over 20%. When did we have a European war that threatens the stability of the world economy.

I doubt the drop in property values by 40%. There is not a blanket drop in property prices. There are certainly those that need to sell due to over commitment, other financial requirements etc, but that does not set the values at -40% across the board. The house next door to me is on the market and it looks like it is going to sell at the value set a year and a half ago.

Retirement villages are not in a position where they have to drop their prices to sell. After all they retain ownership of their properties, and if they do drop the price of their licence to occupy, the round will come again sooner rather than later.

Also they have other income streams which have less impact than pure property prices.

Nevertheless the SP has been savaged lately, and when they will recover is open to much speculation. I would suggest very few people know when a recovery in SP will come.

Lastly, you dont make money by buying in a bull market, but waiting till the bear market is getting lowest. Sometimes you have to hold at the bear market prices. Interest rates could start to turn at any time, just need a few more banks in trouble. Recession is already on its cusp in many economies and we could see interest rates dropping again. Still very painfull being in the market at the moment, not just OCA but most equities.


Painful?? What the hell is wrong with you?

This is bliss, the best thing that could happen....

Prices rising is what true pain is like. 2021 was utter hell...

If you like looking at pretty green colors on a screen then maybe 2021 was your thing. If you want to make money, you want red and seas of it and for a very long time.

[Bob50]

Nice write up Mav, you must have a different definition of 'brutal'. The share price action is the exact opposite of brutal, it's been beautiful.

The investor type- buy and hold - may find this comment foolish and insensitive.

[nztx]

The two year SP graph has a beautiful slope to it .. all the way from $1.57 too :)

[mike2020]

The investor type- buy and hold - may find this comment foolish and insensitive.

I think he is planning to buy and hold. Your investor may see it as an opportunity to add. The first time someone said 'it's only a loss if I sell' was a revelation to me at the time. That guy held on to his land four more years and made a killing.

[bull....]

Nice write up Mav, you must have a different definition of 'brutal'. The share price action is the exact opposite of brutal, it's been beautiful.

did you apply this logic too chase corp too ?

[SailorRob]

The investor type- buy and hold - may find this comment foolish and insensitive.


This is one of the most foolish comments I have seen in a while and displays a gross ignorance of everything that is buy and hold LONG term investing.

I painstakingly laid out the math in an earlier comment showing what would happen with reinvesting dividends with a much lower share price vs a rising share price.

I suggest you wise up and fast.

[SailorRob]

did you apply this logic too chase corp too ?


You have to understand what you're doing as with all investing.

[SailorRob]

I think he is planning to buy and hold. Your investor may see it as an opportunity to add. The first time someone said 'it's only a loss if I sell' was a revelation to me at the time. That guy held on to his land four more years and made a killing.


Sometimes that can work but the 'only a loss if I sell' has to be analysed very carefully.

There are MANY situations where this is kidding yourself.

If I sink my boat, I've lost nothing unless I sell it...

[mike2020]

Sometimes that can work but the 'only a loss if I sell' has to be analysed very carefully.

There are MANY situations where this is kidding yourself.

If I sink my boat, I've lost nothing unless I sell it...

I insure everything. If your selling a sunken boat it better have Percys gold onboard.

[SailorRob]

I insure everything. If your selling a sunken boat it better have Percys gold onboard.


Well you are engaging in a transaction where the math means you are quite sure to lose. But as a benefactor of your premiums I thank you for your business.

In aggregate all insured lose money and a LOT of it, if you think you're going to be a winner then good luck.

If there are losses you cannot afford to bear then it can make sense but otherwise don't engage, unless you think the contract is mispriced

As with gambling, the house has the odds.

[SailorRob]

I insure everything. If your selling a sunken boat it better have Percys gold onboard.


Munger explaining it;


You should insure against things that you can’t afford to pay for yourself. But if you can afford to take the bumps — some unusual expense coming along doesn’t really hurt you that much — why would you want to fool around with some insurance company if your house burned down? I would just write a check and rebuild it.


All intelligent people do it my way. Well, I won’t say all… Maybe I should say all intelligent people should do it my way. There should be way more self-insurance in life. There’s a lot of waste. You’re paying, when you buy insurance, for the other fellow’s frauds — and there is a lot of fraud in life.


If you can afford to take the risk yourself and not fool around with claims and this and that and commissions and time, of course you should self-insure. It’s simpler and so forth. Think of what I’ve saved in my life. With one exception, I’ve never carried collision insurance on a car and, once I got rich, I stopped carrying fire insurance on houses. I just self-insure. That is the right way to do it.


BQ: That’s a little bit of a surprising take from a guy who’s vice-chairman of Berkshire, which has so many insurance companies.
CM: I’d rather tell it the way it is than tell it in a way that helps Berkshire. I’m not going to tell it differently than I think it really is just because it’s better for Berkshire. Even though it’s bad for Berkshire, I will tell you that if you can afford to self-insure, then self-insure.