average age of life in a RV is 8yrs approx .... says it all
stay in your own property as long as possible i reckon , not an institution
Printable View
My 83 year old brother and his wife are looking to move into a retirement village.
Reasons.
He has had a health scare requiring a pace maker to be fitted.
Wife had a bad fall last year.
A lot of their friends have died and few people now visit them.
A friend lives in a retirement village.Always a lot of organised activities,such as trips,outings,card schools,bowls and walks etc.
So livestyle ,safety and companionship are the driving forces.
The unit they are looking at in Hobart is approx $200,000 less they what their house will sell for.
DMF is 8% a year to max of 40% after 5 years.
I can't wait to move into a village when the time comes.
I really enjoyed living in the halls of residence during university.....so hoping it will be back to the future. No more cooking care of the cafeteria, cleaners, parties, drinking, girls. Just need to find the village with the best 'vibe'
Jest aside I think some people are more naturally inclined to having that social aspect as they age. I think I will be suited to it, even if is a far cry from the halcyon days.
Wow SP taking a hammering this morning
I would like to know the research behind that doc. How would they know how long those people would have lived had they not moved into a RV. They would have to be assiduous in eliminating as factors the difference in morbidities of new residents compared with the test group from the general population.
This is true, there's an epidemic of loneliness & a driver of people moving to RV's. Loneliness is a killer too.
Ive heard numerous cases from friends who's widowed parent or even couples have found a new lease of life with new friends since they moved into an RV.
That's why I lot of the marketing of RV's revolves around the social aspect.
40% is far too high for a DMF even if it accrues over 5 years. Surely that is an example of an Australian operator - the NZ model will kill them in direct competition!
But I will be 77 in May and have looked at many villages in Auckland and elsewhere just in case circumstances change. The facilities do vary, but I would be prepared to commit to a preferred choice if needs be, partnered or not at the time. An Apartment or Villa will not be for everyone but you can't ignore the sheer number of residents who have voted "Yes". Of course a care suite is another option altogether, based upon health needs.
Looks like they did
https://www.thepress.co.nz/business/...-record-profit
Meanwhile in Ryman Land:
https://www.nzherald.co.nz/business/...KMQVHKAWJOZP4/
Ryman Healthcare pausing $120 million plans for Takapuna construction site
[NZH Article Paywalllled for those who need to get a licence to view]
NZ Herald: "Ryman would be selling two sites and deferring work on another three" : Land at Kohimarama and in Newtown (Wellington) for sale, and pausing work at Takapuna, Ringwood East village (Melbourne), and Murray Halberg Village in Lynfield.
NZ Herald: Summerset Group boss Scott Scoullar explains why profit rose https://www.nzherald.co.nz/business/...D34VY4R27W2V4/
Q: Your revaluations went up, why when other listed are down?
A: Obviously, part of that is driven by us and our investment in building new products. We’ve added so much to the stock in the 2023 year (a $160m valuation uplift).
Sale today circa $4-55 C R a year ago $5-00 not the greatest investment for S Hers !!
Since CEO change in late 2021 Ryman has lost roughly 70% of its value ($3b+ off market cap) and turnaround plan launched early 2023 has not done anything for SP. Now trading 20% below NTA consistently. Value erosion has been extraordinary in this once stellar company.
https://www.nzx.com/announcements/429876
Ryman Healthcare has announced that Richard Umbers has resigned his position as Group CEO and will be leaving the company. Chair Dean Hamilton will act as Executive Chair and a search for the next Group CEO will commence.
Mr Hamilton said “Richard has led the company through an unprecedented time during the COVID pandemic, maintaining Ryman’s commitment to outstanding care, at the same time as progressing a number of significant changes. On behalf of the Board, I would like to thank Richard for his contribution and commitment to the company and wish him well for the future.”
Ryman is reaffirming its earnings guidance issued on 19 February 2024.
Mr Hamilton said, “Ryman is a proud company with a strong purpose. Kevin Hickman co-founded the company on two fundamental and important objectives that remain relevant to this day – to deliver great care for our residents, and to provide great returns for our shareholders.
“Ryman continues to set the benchmark for retirement living and quality of care for our residents. However, in terms of returns to shareholders we have fallen considerably short in recent years. I look forward to working with the team, and eventually the new Group CEO, as we focus intently on restoring our financial performance and with that our returns to shareholders.”
“We will be providing an update on progress with the full year results announcement on 27 May 2024” Mr Hamilton said.
The Board of Ryman has determined that Mr Hamilton will be a non-independent director whilst he is the Executive Chair. A sub-committee of the Board will oversee the performance of the Executive Chair function during the period, and that committee will comprise independent directors Paula Jeffs (chair and lead independent director), Anthony Leighs and James Miller. Mr Hamilton will be paid a salary to be determined by the Board in coming weeks. He will not participate in any incentive schemes. To create capacity to take up this interim role, Mr Hamilton will temporarily reduce his duties as a director of Auckland International Airport.
Mr Umbers is leaving Ryman in accordance with his contractual terms.
Funny if Brent from Oceania ended up there eh
A common problem with the abrupt departure of a CEO, is that the financial results that follow are often a disaster (possibly priced into the market already in the case of Ryman).
Umbers fired.
don’t often wish for this sort of thing but have wanted him to move on for a while. Great to see strong board leadership here
Market close report
Ryman Healthcare was down 2c to an 11-year low of $4.32 following the sudden departure of chief executive Richard Umbers. Dean Hamilton will become the executive chair while a new chief executive is appointed. Ryman reaffirmed its full-year underlying profit guidance of $265m-$285m.
Sullivan said it’s never comforting “when you see a chief executive leave so quickly, and there must have been some unsettled conversations at the board level about Ryman’s performance.”
He suggested that a further capital raise may be in the offing as Ryman is building faster than it is generating cash at present. Ryman raised $902m on the market in February last year.
"Lessons from Ryman Healthcare"
https://www.nzshareholders.co.nz/scr...an-healthcare/
Ryman moving on from having a retailer as an CEO to having an agriculture man as CEO
Hamilton last exec role was with Silver Fern Farms ..turned that around
But apparently a good guy and well respected só Ryman in good hands . even though he doesnt seem to have had much impact have at Warehouse Group
Get behind Dean I say
So they have a market cap of $3Bln and raised $900M only a bit of a year ago.
Hi all. My latest column published on my Substack, Just the Business, looks at the man who has just become executive chair after the abrupt departure of former chief executive Richard Umbers.
The headline is: Who is Dean Hamilton and is he up to the Ryman challenge?
You can find it here: https://substack.com/@justthebusinessjennyruth
This price action is looking pretty dire - full fledged breakdown now. What is going on?
higher for longer... Oz real estate stonks not looking good either..
It probably didn’t help some analyst suggested the other day they might need to cap raise again
Ryman was all about growth ambition until the Covid era.
70% growth target by 2020 in 2015. https://www.nzherald.co.nz/business/...EF22BMITFHPHY/
The sky was never going to be the limit for house price inflation. Indigestion was going to set in. Although hindsight is great!
Close at $4.15 - this is a new 10+ year low point! No one predicted this during the stock's halcyon days. Perhaps growth should no longer be the ambition after a certain point - look for the sweet spot, scale back the overhead/development and treat shareholders with the respect they deserve.
Board members in this sector are captured by a vision of the social good to be achieved, which leads to excessive exposure to various risks inherent. And there are an escalating number of unlisted operators intent on eating their lunch in the more upmarket segment - think Hoppers, Generus Group and a number of others with scale who leave the care component alone. And quite a few now advertise that they share profits on exit as well, which has the capability to impact the conventional RV model.
Im thinking of all those funds ...ironically retirement funds who viewed RYM as "blue stock"...
Again I can fully understand why many people avoid the SM.
In NZ.
I remember visiting one of the investor presentations run by a sharebroking company. Ryman was one of the presenters and the shares were trading around $15. I said to one of the analysts with the sharebrokers, as I was munching on a free sausage roll, that I could not see how one could justify the share price of Rym based on their financials. The analyst, who was probably about half my age, told me that history indicated that no one regretted buying Rym shares.
How was the sausage roll.Remember that about 2011 they had had 1/5 split.
TBH...lets be fair....There are are a huge number of us (born 1956) ...world wide that will probably end up in one of these entites.
Perhaps it has been another case of "irrational exurberance".....as once a wise man said.
BTW Kiwi did you ask that analyst how many shares he had.
If there is a growing shortage of beds, perhaps any government reform of the sector’s tax and regulatory framework may investigate mandating a certain minimum ratio of (barely profitable) standard rest home beds per number of ORAs supplied, in exchange for minimal reforms of the ORA system. Otherwise more operators would desert rest homes in favour of profitable ORAs. It would perhaps appeal to the Coalition government if it would mean taxpayers would not be required to further subsidise rest home care to make it appeal to investors.
Sobering to see that Ryman has been the worse performing RV stock since 2022 although all three non-performers, RYM, OCA & ARV, have cost shareholders very very dearly to be in them in the last 2 years+. Have left out SUM as it broke the down trend line in the last year.
Interesting to note that all three follow the overall same trend line (down, up and down) so the sp performance malaise appears to be an industry wide issue rather than just a specific stock.
Market waking up to just how cashflow hungry the three RV operators are and how they have been piling on debt to pay dividends as well as pay for ever more expensive land and developments.
[https://nz.finance.yahoo.com/chart/R...RkaW5nIjowfX0-
Yeah the free sausage roll was great. The stock brokers know how to put on a good feed. I did not ask the analyst, who looked to be still in his 20s, if he actually owned any shares in Rym. Gordon MacCleod presented for Ryman and he was an impressive speaker. The guys from Freightways and one of the power companies (cant remember which one) were pretty good as well - but not as polished as Gordy. I just had the feeling that the analyst thought I was a silly old fool for even questioning the value of the bluest of blue chips- Ryman.
Hi all. My latest column published on my Substack, Just the Business, takes a look at the NZX-listed retirement operators and how they rank, including that Summerset is likely to overtake Ryman as the largest in the sector in a few years. The headline is: Mirror, Mirror on the wall, which is the biggest retirement village operator?
And you can find it here:
https://substack.com/@justthebusinessjennyruth
A big drop to $4.07 at close of trade. How long until SUM is three times the SP of RYM? It used to be said that the ratio was 2:1 in favour of RYM. Those days are long gone.
Down to $3.80 now. Any sign of the bottom?
$3.76 now. How low can it go?
I used to believe in buy and hold.. but blue chip once king of the NZX RYM is exactly why you can never buy and hold forever.
"Buy and hold" has never been valid for a single stock, only for a broadly diversified index - preferably cap weighted too? I think so but would need to take another look at Stocks for the Long Run. I think that's right.
Got to be worth a punt now? I haven't held for a long time - got out at 14.76 my software is telling me. Complete luck as I decided holding 4 retirement stocks was too little diversification. Ended up holding SUM and have now got a little OCA but a free carry. I going to get me some RYM I think at these prices. What could go wrong are the famous last words right?
Nasty share eh....same like RBD....keep going down....maybe filing delisting
Sp back to where it was in 2012!
Something just does not add up.
Balance ....was that after the 1/5 share split....if so then it does add up yes ?
Balance ...hello are you there..
https://simplywall.st/stocks/nz/heal...ares/ownership
Top 25 Shareholders own 45% of the company:
1) Karori Capital 7.67%
2) Universal-Luxonburg-SA 6%
3) Blackrock 5.57%
4) Some bloke named Kevin 4.5%
5) JP Morgan 3.5%
6) Vangaurd 3%
Where did Karori capital come from, registered in 2020 on shortland street. Most kiwi thing ever.
Unless it's a subsidairy of blackrock or an Aussie investment bank which might explain things.
Acatis was loving it
ttps://stocknessmonster.com/announcements/rym.nzx-426884/
Acatis is selling it
https://stocknessmonster.com/announc...ym.nzx-380195/
https://www.youtube.com/watch?v=7UYgQU5Q8n0
The video is from the 2022 RV Capital Annual Meeting (Mar 26, 2022).
Rob Vinall founded, RV Capital, an investment fund that focuses on quality companies.
The fund's Compounded Annual Gain from 2008 - 2021 is 19.1%
(Overall Gain Sep 2008 - Dec 2021 is 911.6%)
https://www.rvcapital.ch/
Yeah just found the shareholding information:
https://www.companyhub.nz/companyDet...=9429048853866
Mr cummings gets points for being culturally literate, but he is from Victoria.
Nearly 7 mil of trades today.
Wonder if ACC is dipping its feet in the water? More to the point did the punters buy all they wanted or will the sp keep jogging along tomorrow?
Hi all. My latest column published on my Substack, Just the Business, previews what the listed retirement village operators will tell us when they report their annual results on Friday this week and Tuesday and Wednesday next week.
The headline is: Can the listed retirement village operators dispel some murk?
And you can find it here:
https://substack.com/@justthebusinessjennyruth
https://www.nzx.com/announcements/431747
Turnaround underway
Highlights
•Total revenue of $689.9 million, up 18% on FY23
•Reported net profit after tax (NPAT) of $4.8 million, down from $257.8 million in FY23
•IFRS profit before tax and fair-value movements (PBTF) of -$324.5 million (-47.2cps), down from -$225.3 million in FY23 (-43.6cps per share)
•PBTF includes $283.9 million of one-off costs which predominantly reflects impairments relating to the company’s land bank
•Cash flow from existing operations1 of $43.3 million, an improvement of $51.8 million on the prior year
•Cash flow from development activity1 of -$230.2 million, an improvement of $150.8 million on the prior year
•Underlying profit1 of $270.0 million, down 11% on the prior year, and in-line with February 2024 guidance of $265 – 285 million
•Welcomed over 1,500 residents to our retirement villages and over 2,200 into our aged care facilities
•Completed two villages (John Flynn, William Sanders), opened three (Northwood, Patrick Hogan and Bert Newton) and commenced one new development (Mulgrave)
Ryman Healthcare Limited (Ryman) has reported an 18% increase in revenue to $689.9 million for the year ended 31 March 2024, driven by growth in care, village and deferred management fees. However, the combined impact of impairments and other one-off costs ($283.9 million, FY23: $175.4 million) and a lower fair value gain on investment properties, has led to a significant reduction in NPAT to $4.8 million against the $257.8 million achieved in FY23.
This result has been achieved against a particularly challenging operating environment with residential property markets subdued and cost inflation impacting all areas of the business.
Executive Chair, Dean Hamilton commented, “The reported profit result was clearly disappointing as the company took the hard decision to reassess the carrying value of a number of its assets in light of the current economic environment and also place higher hurdles on new developments. Despite these non-cash write-downs, it was pleasing that the company achieved an improvement in cash flow from existing operations to $43.3 million (-$8.5 million in FY23). Contributing to this was a record number of ORA resale settlements, which continues to underline the attractiveness of the Ryman offering.”
Ryman achieved an underlying profit of $270.0 million, down 11% on the $301.9 million achieved in the prior year, and within its February 2024 guidance range of $265 – 285 million. The reduction in underlying profit on FY23 was primarily a result of lower margins on new developments which have suffered from higher costs to complete through construction inflation, the impact of delays and higher interest costs.
Ryman has traditionally used underlying profit as a key measure of its financial performance. It now believes that there are better indicators of performance.
Moving forward, Ryman will focus on three key financial performance metrics:
1.Cash flow from existing operations;
2.Cash flow from development activity; and
3.IFRS profit before tax and fair value movements (PBTF) per share
Operational performance
During the year Ryman welcomed its first residents at three new villages – Northwood in Christchurch, Patrick Hogan in Cambridge and Bert Newton in Melbourne. In addition, it opened a new care centre at Deborah Cheetham in Melbourne, finishing the year with 48 operating villages, home to some 14,600 residents.
Occupancy in its mature aged care centres has returned to pre-COVID levels at 96.3%, up from 94.6% in FY23. Ryman welcomed 1,500 residents to its independent and serviced retirement units, and over 2,200 into its aged care facilities.
Ryman continued to be recognised by the industry for delivering great care and resident experience and is proud to be named Reader’s Digest Most Trusted Brand in aged care and retirement living in New Zealand for the tenth time as well as being named ‘Operator of the Year-Ageing in Place’ at the 2024 Asia Pacific Eldercare Innovation Awards.
Development update
During the year, Ryman completed developments at both John Flynn (Melbourne) and William Sanders (Devonport). “These are fabulous new villages for our residents, with state-of-the-art amenities and a continuum of care,” said Mr Hamilton.
At year end, 10 villages are under active construction, nine of which have already opened to residents. The current build program is unusually skewed to main buildings, of which four are expected to be completed in FY25.
There were 736 units and beds recognised in its FY24 build rate, which includes both complete and near complete units and beds. Going forward, Ryman intends to adopt a simpler measure with build rate reported on a complete basis, including only units and beds which are able to be occupied.
Mr Hamilton commented: “We have increased our focus on the efficiency of our new village developments, with a much stronger lens on expected cash recycling and net present value. As a result of this, sites in our land bank at Kohimarama, Karori and Newtown (decision taken in FY23) are being held for sale, and our sites at Takapuna and Ringwood East have been put back into the land bank. Carrying values for these sites, and our site at Mt Eliza, have been written down to either an unconditional sale value (for Newtown) or a market value, resulting in an impairment of $211.0 million being recognised in FY24.”
Ryman acquired a further parcel of land at Deborah Cheetham in Victoria. This 2.0ha site will support an additional 58 two- and three-bedroom townhouses, which will be supported by the recently opened main building.
Ryman’s land bank at 31 March 2024 has 5,371 units and beds available for development, including 2,627 at sites currently under active development, and 2,744 at the balance of sites.
Capital management
Ryman continues to be committed to prudent capital management. The Board made the decision during the year to suspend dividends. The need to continue to spend capital to complete committed village buildings and the desire to limit increased borrowings being key factors behind the decision.
As previously communicated the company intends to undertake a further review of the dividend policy at FY26. Any future dividend policy is expected to be based on cash flow.
At March 2024, net interest bearing debt was $2.51 billion, up $0.21 billion from March 2023 and in-line with the position at September 2023. Total funding headroom at March 2024 was $507 million (undrawn facilities and cash).
Gearing of 36.2% has increased 3.1 percentage points reflecting both higher debt and the impact on shareholders equity from valuation movements and impairments. This sits slightly above its medium-term target of 30-35%.
“The financial focus of the Board is to strengthen cash flow outcomes from existing operations and to recycle capital on new developments. Over time, we aim to grow the value of Ryman whilst gradually reducing our net debt position,” said Mr Hamilton.
Governance and leadership changes
“The year has seen a significant refresh at both Board and management,” said Mr Hamilton. “During FY24 three directors retired and four new directors were appointed to the Ryman Board, demonstrating its commitment to refreshing Board membership and bringing new capability and experience to governing the company.”
There was also significant change in Ryman’s senior leadership team. New executive appointments were made including Rob Woodgate as Group Chief Financial Officer and Marsha Cadman as Chief Transformation and Strategy Officer, combining two previous executive roles.
In April 2024, Ryman announced that Group Chief Executive Officer Richard Umbers had resigned. The search for a new Group CEO is underway.
Turnaround underway
FY24 marked a year of significant change for the company as it embarks on getting fit for the future.
Mr Hamilton said: “We are clear on two things - our residents remain at the heart of what we do, and our villages are the place where we create value. Everything else we do is in support of these two principles.”
“We’re refining our strategy and driving a transformation program that will place stronger emphasis on our financial performance, while maintaining our commitment to purpose-driven care and exceptional resident experience. We know we need to create a more sustainable balance.”
“Our areas of financial focus are on improving the financial performance of our existing villages, improving the efficiency of our new developments and creating a sustainable and fit for purpose structure to support our village and new development activities. We need to get fit for the future,” he added.
Aged care legislative environment
Throughout the year, Ryman continued to advocate for change to the current aged care funding models in both New Zealand and Australia. As the ageing population expands and longevity increases, more older people are occupying hospital beds and require care, putting huge pressure on healthcare systems.
As highlighted in the first phase of a Te Whata Ora Health New Zealand commissioned review, the sector is facing unprecedented challenges and financial pressures, leading to bed closures and limited new builds in the face of growing demand.
“We need Governments to acknowledge the crucial role the retirement living sector has to play in meeting the housing and health needs of the growing number of older people in both countries,” said Mr Hamilton.
He added: “Funding for aged residential care has proven to be far too low for a sustainable aged care sector in New Zealand. As providers, we are limited by law as to what we are paid by health authorities and what we can charge residents for added services. The model needs urgent change to ensure bed numbers are not only retained but there are incentives for significant new beds to be built. New Zealanders deserve to have a choice in the products and services they wish to receive as they age. We’re optimistic that the new coalition Government will create positive change to enable sustainable and equitable access.”
In Australia, Ryman has been actively engaging with the Government on key industry issues. It provided a submission to the Aged Care Task Force, which subsequently provided recommendations to the Government in March 2024, including support for a co-contribution model. This a positive sign for the industry.
Sustainability progress
Ryman is committed to its sustainability journey and decarbonising its operations. It has today released its first Sustainability Report (available on its website) which showcases progress across three key priority areas: climate change, quality care and Indigenous engagement.
Ryman announced during the year that its greenhouse gas emissions targets have been validated by the Science Based Targets initiative (SBTi). This achievement has been reached following Ryman formally setting an emissions reduction target of 42% for scopes 1 and 2, to be achieved by 2030 relative to a base year of 2021.
In addition, Ryman’s first Climate-Related Disclosures Report (CRD) will be published within its upcoming FY24 Annual Report. This highlights how the company is embedding climate considerations into its business model, as well as the impact its business has on the climate.
FY25 outlook
“Current economic conditions remain challenging in both New Zealand and Victoria, and it is unclear when interest rates will begin to decline and support improved housing markets conditions and liquidity.”
“Key to our performance in FY25 will be our ability to maintain high occupancy in our existing facilities and settle new units and beds as they come onstream throughout the year,” said Mr Hamilton.
FY25 guidance:
·We continue to target positive free cash flow (representing the combination of cash flow from existing operations and cash flow from development activity);
·We expect to complete 850-950 retirement village units and aged care beds, which includes 650 aged care beds and serviced apartments in four main buildings that will be opened, and 200-300 independent retirement village units.
·We expect to spend $700 – 820 million on capex including $600 – 700 million on development activity, and $100 – 120 million on existing operations.
Ryman’s outlook for FY25 is based on current market conditions and its assessment of the future.
Looking ahead
Mr Hamilton said: “2024 is a significant year for Ryman marking our 40th anniversary since opening our first village in New Zealand, our 10-year anniversary since opening our first village in Victoria, and our 25th anniversary of being listed on the NZX. Whilst we have plenty to be proud of in our history, we know we need to improve our financial performance and the Board and management are aligned on this intent.”
How can you call writing down impairments relating to land banking as 'one off' costs.
I should have thought about it before I posted. I know two separate family's that were paid 3.2m for their houses here in Auckland that were worth 2m at the time from OCA. Probably 3years ago. Two houses have been knocked over but no further progress.
It was like winning the lotto.
It is good and heartening imo to see Ryman being realistic about the weak state of the property market.
Writing down the value of the land which they grossly overpaid for is but the first step in restoring credibility with the market - but an excellent first step.
You read the report about net debt being $2.5bn, gearing at 36% and a desire to gradually reduce net debt. It was only 14 months ago they raised $900m in an equity raise and you wonder where they would be had that not happened!
I see Umbers got $1,525,000 for leaving.
6 months notice and severance and a bit of a bonus
NZ Herald: Ryman Healthcare selling former Victoria University Karori campus after company profit plummets. "There was an impairment loss of $37.6m for the Karori site and a sale was expected within 12 months, it said"
https://www.nzherald.co.nz/nz/ryman-...AO5BK5NE2UEFE/
Just curious ..did anyone on this thread actually meet and talk to this umbers bloke.
How did he come across as.
In the past ive always had a great deal of respect for J Ryder and for the late K Hickman.
So Ryman bought it for $28m (yes, $28m) in 2016 and now, they are writing the value of the land down by $37.6m!?
Begs the question of how much revaluation ‘gains’ the site has yielded Ryman in the last 7 years before reality bit this year!!!!
No wonder the market has rightly not taken any heed of Ryman’s NTA backing. All smoke and mirrors.
Good decision. Who would want to retire in Karori anyway.
The new CEO is clearly onto it.
For Bars Review
At its FY24 result Ryman Healthcare's (RYM) new management and board lifted the veil on a decade plus of opaque accounting practices and half truths. What was behind the veil was worse than we had anticipated. The aggressive revenue recognition and poor cash recovery of capex was largely expected. Capitalising village start up costs (now abandoned), a meaningful valuation uplift (~+NZ$400m, now written down) at directors' discretion, as well as overstating expected cash recycling from villages under construction to the tune of ~NZ$250m was not. RYM needs a clear break with the past, and that, we believe, it has got. An entirely new management team and largely a new board, unencumbered by the past, has set out a credible path forward, focusing on all the right things. Namely, cash recovery of new developments and increasing cash generation of existing villages. The transition will be more painful than was expected, but the end result has the potential to be better. RYM is currently under earning meaningfully on its ~NZ$13bn of assets, with the sector's lowest (by far) deferred management fees and ‘fixed fees for life’. The new management made it clear that everything is on the table and current levels of profitability is unacceptable. We reiterate OUTPERFORM, with a reduced target price of NZ$7.25.
What's changed?
Earnings: Annuity EBITDA reduced -13%/-6% over FY25/FY26, +2% in FY27 with less capitalised costs the key driver.
Target price: Reduced to NZ$7.25 (from NZ$8.25), driven by reduced annuity estimates, lower dividends and higher core debt.
Finding firmer ground
The aged care sector operates with largely non-GAAP measures as a marker of performance. RYM is making a clean break from the past. Going forward, cash generation and audited earning will be the focus. We expect the rest of the sector to eventually follow suit. With RYM's change of focus comes numerous minor and major changes in how it reports. The most relevant relates to lower capitalising of costs, abandoning new sale gains, and now only reporting units and beds that have been delivered. RYM also provided numerous new disclosures, in particular, in relation to cash generation for care, villages and head office. Over time this should provide firmer ground to stand on.
Fundamentals slightly ahead of expectations with strong DMF and resales gains more than offsetting higher costs
Fundamentals played second fiddle on the day, but RYM delivered a decent underlying result, with cash generation and annuity EBITDA slightly ahead of our estimates. Net debt remained broadly stable in 2H24 as guided. DMF and resales gains were strong, partly offset by higher costs. Guided deliveries for FY25 were ahead of expectations, but the change in approach makes it hard to compare. Build rate guidance for FY26/FY27 was substantially below our estimates and even further below previous ambitions. This make sense. RYM reiterated that it does not need capital, but our estimate of core debt has increased to well over NZ$1bn.
FY24 result; the good, the bad & the ugly
The good
DMF grew +15% year-over-year in 2H24, +5% ahead of our forecast. DMF is now up +50% over the last three years. Likely partly due to shortening the contractual terms over which the DMF is recognised. DMF is included in audited earnings.
Resale gains and resales cash flow. Resales gains increased +11% year-over-year and against our expectations of broadly flat. Resales cash flow was up +75% year-over-year to a record high of ~NZ$144m in 2H24, ~+NZ$30m ahead of our estimates. Since FY23, resales cash flow is up >+NZ$100m, almost +60%, and has more than doubled over the last three years. RYM’s future treatment of the non-GAAP resales gain is ‘up for review’ but we expect at least the cash component (after ~NZ$20m of refurbishment costs) to feature going forward.
The bad
Impairment loss of NZ$244m. This primarily relates to the parts of the land bank with uncertain development plans.
~800 units and beds previously counted as delivered on a part complete basis taken out of its assets. Early recognition of deliveries has been known, and to some degree a communicated feature of RYM’s for a long time. The magnitude was larger than we had anticipated.
Operating expenses, even allowing for a change in capitalisation policy and deducting some one-off costs, was ~+NZ$10m–$15m (~+3% to 5%) ahead of our 2H24 estimates.
The ugly
RYM took a ~NZ$400m write down on the fair value of its assets. We understand previous management had used a ‘directors' range assumption’ adjustment to the independent valuation of its properties. This involved assuming that new residents would pay a 30% DMF with no price adjustment. This compares to the valuers' assumptions of 20%, what RYM currently charges.
Capitalisation of village start-up costs. It was revealed that RYM has historically capitalised start-up costs for new villages. This will not happen on a go forward basis.
RYM restated its expectations of capital recycling from 10 villages under construction down by -NZ$256m. NZ$160m of this related to ‘correction of cost allocation … relating to head office and interest’.
Thanks for sharing.
I agree with the previous poster, new management taking the hit before their term of responsibility starts.
I don't see an increase in DMF impacting sales particularly, especially if it only moves to 25% rather than 30%. It appears though that DMF isn't a huge consideration for buyers as it's expected.
Fee generation will improve, although that will take some time to feed through the life cycle of the current residents.
Hi all. My latest column published on my Substack, Just the Business, looks at Ryman's annual results. The headline is: Ryman clears some murk but the emerging picture is ugly
And you can find it here:
https://justthebusinessjennyruth.substack.com/
Is there any thoughts of a CR ?
I thought the lower DMF was offset by the purchase price for unit occupation rights being higher on 'like for like' units at Rymans? So the actual cash taken from the resident was more or less equivalent to villages run by other operators, despite the DMF being lower? Or have I got that wrong?
SNOOPY
Not sure Snoop, or how to identify but considering they currently only take 20%, to recoup that in the price would mean for every dollar difference in DMF they would have to charge $5 in the upfront justvto bring it to 25%. They also have to return that higher amount in the future to the resident.
Yes that is right. Which is why the Ryman unit is priced higher than equivalent unit under one of the other of the big 3 RV village owners. IOW it is a smokescreen that makes the resident *think* they are getting a more generous deal, when in fact they are not.
But that is the beauty of the RV model as it stands today. Ryman do not have to return a higher amount to the resident when they move out. It is the incoming resident that takes their place that pays the previous resident out with the 'higher amount'. From an operational perspective, the value of the unit, once the occupational rights have been sold for the first time, is a red herring. If Ryman prices the unit high, but then uses a lower DMF percentage to make residents *think* they are getting a good deal, they can still get the same dollar fee in dollar terms than they would have with a lower occupational unit price and a higher DMF percentage fee. And this illusion of a 'bargain for residents' carries on, in perpetuity.
SNOOPY
Hmmm I think you can quibble over who pays. When I say RYM pays a higher amount, I.e that's a liability in the accounts.
Anyway my question is, do you have evidence that RYM are selling at a higher price for the same thing than other providers?
Are their new build margins significantly higher than other providers?
That would appear to me to have a pretty big impact on a potential resident decision to buy.
At some point there could be value play. Market participants could take positively when they see falling debt in their books. For me first sign for turnaround is consolidation and low debt or manageable debt along with positive business environment in the sector. In some countries population growth is going to slow down. Regular CR is not a good thing. Shares can be diluted.
No, I don't have any evidence that Ryman are selling at a higher price point the same thing.as other providers. Apart from anecdotal comments I thought that I read some time ago on this forum? Or maybe it was KW when she and her father were looking at a suitable retirement village for him in Christchurch on that other forum? I guess with real estate, value is difficult thing to pin down. Put an identical unit on different sites and the outlook view, proximity to neighbours and the access to differing village facilities can all influence opinion on 'value'.
SNOOPY
Is it possible that there has already been value there? RYM has taken a new format of reporting results from this year, which is clearly much better. I intend to believe its NTA $6.01 now is more reliable, and if this is the case, current SP is only around 60% of NTA. That for me means value.
If signs you mentioned came out, SP would have been up by 30% or more. So now it's time to accumulate.