Thanks winner69, nice chart. Perhaps add Promisia (PIL) at some stage. Penny stock for sure but the assets backed in are already established and form a base for future acquisitions.
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Thanks winner69, nice chart. Perhaps add Promisia (PIL) at some stage. Penny stock for sure but the assets backed in are already established and form a base for future acquisitions.
Anyone investing or looked into SRF (Senior Trust Retirement Village Listed Fund)? Looks like a good dividend stock, but curious as to why anyone would choose to apply directly with them (https://www.seniortrust.co.nz/) rather than just buy via NZX.
new index to follow unit prices cool
The Forsyth Barr analysts research the big four sharemarket-listed retirement village businesses. The companies are Ryman Healthcare, Summerset Group, Oceania Healthcare and Arvida.
A new index created by Ibbotson and Montgomerie showed an increase in the prices of units, or villas as they are called, of 4.4 per cent in January and February but prices flattened in March and April.
https://www.stuff.co.nz/business/125...market-bonanza
Posted that on 07/05 under OCA.
For Bars latest below..
Aged Care Sector
Montgomerie-Ibbotson Aged Care Pricing Index
After a strong start to the year, our analysis suggests the Montgomerie-Ibbotson (MI) aged-care pricing index has been flat
over the last two months, increasing our confidence in its accuracy. We believe stable prices reflect two key factors; (1)
pricing caution from the listed operators in light of the government's housing policy announcement, and (2) potential
pricing timing discrepancies given the aged care operators don't typically review prices on a monthly basis. Looking
forward, we remain positive on the sector and believe the pricing "buffer" built up by the operators following New
Zealand's strong recent house price inflation (HPI) provides resilience in the event of a slowing housing market and further
optionality if prices remain stable or continue to trend upwards.
MI aged care pricing index flat over the past two months
Following a strong lift in prices to start 2021 with January up +0.5% and February up +2.9%, the MI aged care pricing index has
been flat through March and April. Independent Living Units (ILUs) were the key driver of change to start the year (up +4.4%) and
while there has been no change in ILU pricing through March and April we have again seen minimal change in Serviced Apartment/
Care Suite (SA/CS) pricing. This SA/CS pricing trend relative to ILUs is somewhat surprising but likely reflects the defensive and less
cyclically exposed nature of the product. Summerset (SUM), Arvida (ARV) and Ryman (RYM) all show broadly flat prices over the past
two months but we have seen a slight tick up in Oceania's (OCA's) ILU and SA/CS pricing, albeit caution the material sample size
difference for OCA versus RYM and SUM.
Pent up house price inflation provides a "buffer"
One of the key takeaways from our recent aged care tour was the "buffer" retirement village operators have to further increase prices
following the shift in New Zealand house prices over the past twelve months (c. +20%). Numerous operators on our tour suggested
that, while prices have increased modestly in recent months, there are more price rises on the horizon given some opted to delay
pricing decisions in light of COVID-19 uncertainty through the second half of CY20. Our analysis suggests these price increases are
yet to occur, likely in-part due to the government's housing policy announcement on March 23. We view this buffer as important to
help provide price resilience in a slowing market but also add further optionality going forward.
How is everyone working out valuations for retirement villages? Purely doing discounted cash flows? Based on discounted dividends? NTA and EPS growth?
Interested as they are like a REIT but a service and real estate agent business on the side too
Interesting article in Herald. (Paywalled) https://www.nzherald.co.nz/business/...7MNM4E7X33LMM/
Food for Thought - Fletchers upping competitive pressure...(from Fletchers update in the Herald today)
https://www.nzherald.co.nz/business/...4YMD2WBGLH72A/ (Paywalled)
Fletchers challenge to Retirement specialists eg OCA etc
Retirement village homes are planned at Manukau's Waiata Shores and Red Beach on the Hibiscus Coast "and looking to grow delivery through FY24-25 to 100 units," Evans said. These plans were in response to older people who wanted to stay in such communities struggling to find one, two or three-bedroom retirement homes.
"Based on an established occupation rights agreement structure but with a differentiated deferred management fee of 15 per cent plus sharing of capital gains with residents," Evans' slide said on retirement village developments.
That is a big challenge to six major sector giants who charge 20 to 30 per cent deferred management fees and hand over zero capital gains to owners.
Retirement village owners promise to address long waits for refunds and review occupation rights agreements
https://www.stuff.co.nz/business/125...hts-agreements
Wasn’t sure where to post this but it applies to any retirement village provider that also provides care. I have only just become aware of this today. I am now busy trying to find out if I can transfer from my current Careerforce course to this new one. Very keen to do the Palliative Care strand in particular, and possibly the other two down the track.
This is an excellent initiative on the part of the government and will have a significant impact on the quality of caregivers working in aged care. Not compulsory currently, but I suspect providers may well choose to make it so down the track. Apologies if it has already been posted/everyone is already aware.
Joint media release from Careerforce and NZACA
21 April 2021
“If we are looking for any positives arising from the Covid-19 pandemic, one has to be the greater recognition and appreciation of our essential workers, and the importance of attracting and upskilling the aged care workforce”. Jane Wenman, Chief Executive of Industry Training Organisation Careerforce was commenting as she announced the launch of its new Apprenticeship in Aged Care, with specialisations in dementia, palliative care, and complex conditions. “We’re excited by the launch of this new programme, and the important role it will play in supporting critical workforce upskilling”.
The aged care sector expressed the need for a more specialised programme to help cope with increasingly challenging demands from an ageing population. “We have seen how the essential aged care workforce stepped up during the lockdown. This new aged care apprenticeship programme will give these workers the opportunity to become specialist healthcare assistants providing palliative care, dementia care and supporting people with complex conditions,” says Wenman.
The New Zealand Aged Care Association (NZACA) welcomes the new apprenticeship programme. NZACA Chief Executive, Simon Wallace says. “Workforce development is a top priority for the NZACA and its members that make up more than 90% of the 40,000 rest home beds in the sector. Healthcare assistants make up the largest proportion of the aged residential care (ARC) workforce at around 22,000 and the COVID-19 pandemic has demonstrated the increasing importance of the role. The Aged Care Apprenticeship is a welcome initiative to both upskill our current workforce and attract more Kiwis into the sector.”
The Healthcare Assistance for Aged Care apprenticeship programme is targeted at those working with elderly people in aged residential care facilities, specialised dementia units, therapeutic programmes, community support, hospitals, primary care or hospice environments.
Wallace expects a high uptake of the programme. “The NZACA and its members have been calling for such an apprenticeship programme to ensure our sector has the workforce able to provide a consistently high quality of care. I expect this will be welcome news to our members and there will be a high uptake.”
With the Targeted Training and Apprenticeship Fund (TTAF), Careerforce apprenticeship programmes are currently fees free for enrolments through to December 2022. Employers may also qualify for the Government’s Apprenticeship Boost fund – designed to help employers retain and bring on new apprentices by providing them with up to a maximum of $16,000 for each apprentice they enroll.
“In an historically underfunded industry, the TTAF and Apprenticeship Boost will be well received by employers,” says Wallace.
This level 4 complex apprenticeship programme is designed to be completed in 2 years on-the-job, and apprentices will have the support of Apprenticeship Advisors who will provide pastoral care.
“There is certainly a high level of commitment involved in any upskilling opportunity especially if you are also working. However, we are committed to supporting the aged care apprentices to have the best possible experience,” says Wenman.
The NZACA is looking forward to working together with Careerforce to benefit the aged care sector and the older New Zealanders being cared for.“
Business Desk has an article by Jenny Ruth, critical of the CFFC submission on retirement sector companies. Worth reading but paywalled, unfortunately.
It was focussed on OCA. Jenny has taken the Retirement Commission to task about it. It was written by policy wonks using hearsay and without peer review. Generally a bit of research of highly dubious quality by the Retirement Commission.
In the Herald today -
The document out today said: "There was strong support for reaching some arrangement to share the capital gain between the resident and the operator."
No reason that facilities with a different model can't be set up. There are already some. People can choose the contract they prefer, and if there is enough demand for a different model then the market will eventually offer these. Provided the supplier can make a buck, or is a charitable organisation.
Residents who buy into the occupational rights model may be older but that doesn't mean they are stupid. And clearly they have assets. And there's the rub. How much of the support for capital gain is from family hoping to inherit.
http://www.nzherald.co.nz/business/r...5MH5JWOHYUSC5E
A case of being careful what you wish for: if all the changes being demanded (or even some of them) get pushed through then the supply of retirement units will reduce and the cost of the remaining supply will go up. Economics 101.
Another opinion piece today -
How residents get trapped in the retirement village paradox
Maybe I have to resile from my view above that older doesn't necessarily stupid, if this excerpt is true:
... It’s in the occupation right agreement, we all know that. But every meeting I go to my first question to an audience is how many have read your ORA and understood it since you moved in? An average 2% of hands go up and that’s appalling. At the front end of the exercise, they go to the lawyer because they have to … then they put the agreement in a drawer and forget it.”
https://thespinoff.co.nz/business/09...llage-paradox/