Originally Posted by
Beagle
I think the issue Winner is getting at and its a concern for investors generally in the sector is what constitutes "delivery" of new units.
I used to think delivery meant the unit was delivered to the incoming resident, i.e. they took possession of the license to occupy.
When any company in this sector says we delivered XYZ units in the year it probably means they completed the construction and fit out to a standard of "practical completion".
It may not mean Council have signed off with final code of compliance or the landscaping and finishing touches are complete.
For example with stage 2 Awatere in Hamilton, 63 units "completed" in March 2022.
It would seem few were sold and yet SUM in this sector presell almost all their village units before completion...maybe people should have a think about why some villages completely sell out before completion and others hardly presell any.
From the call, there were 450 units unsold as at balance date, (a whole years worth of sales and a vastly higher stock situation that any other company in this sector). That number was confirmed twice because the analyst that asked the question was obviously deeply surprised by answer the first time. Some of the care suites in that number, about 80 by my calculations have been temporarily made available as premium accommodation rooms.
During the year they sold only 184 new units and there were 266 resales....but they have 450 new care suites and units available for sale and another 113 care suites due for completion this half. Over the last 5 years their margin on care has declined from 19% to 12% despite the much touted care suites being sold to us as the panacea for all their problems with low returns on care. Hmmm
I think the huge level of unsold units and the way returns on care have radically declined since they listed speaks for itself. Care suites are clearly not finding favour with elderly residents needing care. Good luck...to me the business model is working very well for residents, staff and management but doesn't work well for shareholders.
Disc: No vested interest, not short and not looking to buy them at a lower price because in the long run I think SUM's business model is vastly superior.