Retirement village operators

[Beagle]

Good work Winner, many thanks. If we adjust returns for the premiums to NTA though....

ARV 9% / 1.2 = 7.5% per annum + 4% estimated dividend yield = adjusted gains as a percentage of the share price paid plus dividend yield = 11.5% per annum value accretion on capital invested
RYM 16% / 2.5 = 6.4% per annum + 2% estimated dividend yield = adjusted gains as a percentage of the share price paid plus dividend yield = 8.4% per annum value accretion on capital invested
SUM 26% / 2.2 = 11.8% per annum + 2% estimated dividend yield = adjusted gains as a percentage of the share price paid plus dividend yield = 13.8% per annum value accretion on capital invested
OCA 13% / 1.2 = 10.83% per annum + 4% estimated dividend yield = adjusted gains as a percentage of the share price paid plus dividend yield = 14.83% per annum value accretion on capital invested

If one is measuring total comprehensive income and using total NTA gains, realized (AKA underlying profit) and unrealized plus dividends paid as their yardstick of how much value accretion a company provides then the premium one pays relative to NTA is a vital factor in determining total value accretion as a percentage of the share price paid for each company

I would argue SUM's premium is therefore worth it, whereas RYM's premium to NTA means people are paying over the odds for this sector for the value accretion they receive.

I think OCA have done extremely well considering for most of that time they have been behind the curve with overhauling their business model.

Feels good to have some SUM back in my portfolio. Might add sum more.

[winner69]

Good work Winner, many thanks. If we adjust returns for the premiums to NTA though....

ARV 9% / 1.2 = 7.5% per annum + 4% estimated dividend yield = adjusted gains as a percentage of the share price paid plus dividend yield = 11.5% per annum value accretion on capital invested
RYM 16% / 2.5 = 6.4% per annum + 2% estimated dividend yield = adjusted gains as a percentage of the share price paid plus dividend yield = 8.4% per annum value accretion on capital invested
SUM 26% / 2.2 = 11.8% per annum + 2% estimated dividend yield = adjusted gains as a percentage of the share price paid plus dividend yield = 13.8% per annum value accretion on capital invested
OCA 13% / 1.2 = 10.83% per annum + 4% estimated dividend yield = adjusted gains as a percentage of the share price paid plus dividend yield = 14.83% per annum value accretion on capital invested

If one is measuring total comprehensive income and using total NTA gains, realized (AKA underlying profit) and unrealized plus dividends paid as their yardstick of how much value accretion a company provides then the premium one pays relative to NTA is a vital factor in determining total value accretion as a percentage of the share price paid for each company

I would argue SUM's premium is therefore worth it, whereas RYM's premium to NTA means people are paying over the odds for this sector for the value accretion they receive.

I think OCA have done extremely well considering for most of that time they have been behind the curve with overhauling their business model.

Feels good to have some SUM back in my portfolio. Might add sum more.

This puts OCA in good light ….especially as now they past the inflection point.

[Beagle]

This puts OCA in good light ….especially as now they past the inflection point.

Yes it certainly does shine the spotlight on them, especially considering they were carrying a lot of extra cost while they demolished old facilities and rebuilt. In my opinion this highlights the lack of understanding of their financial statements. Past the point of inflection is one thing but the big gains from their redevelopment program start 2-3 years down the track and continue to build from there. I suspect Maverick is onto something with his huge stake and will do incredibly well in the long term.

SUM have done very well too, especially for those that bought at cheaper prices. Vast land bank and well proven business model.

[whome]

Huge thanks to both Winner and Beagle for your analysis. I wish I had your insightful intuition for making sense of the numbers - and the time. Trying hard to learn from you.

[justakiwi]

Posting here as relevant to all providers and aged care in general. We have often discussed what the future of aged care might look like in terms of age of admission to care etc. Next week, we have a new resident moving in to our rest home (rest home level care only). First time resident, moving out of home. Age 98. Currently still very independent and not yet needing a higher level of care.

The dynamics are already beginning to change. What that will mean long term, remains to be seen, but one thing is certain. Aged care in 10, 20, 30 years, will be vastly different that it is now.

P.S the flip side of the above scenario, is we are expecting a significant wave of alcohol related dementia admissions to care (of some sort). This most commonly affects men over 45, with a long history of alcohol abuse, but can affect women and men of all ages. This kind of dementia will present a multitude of "problems" for residential care providers/staff. Many people in this category will be in their late 40s/50s. That in itself will present major challenges.

[Arthur]

Interesting thanks justskiwi. What is the life expectancy of the alcohol related dementia "guests" ? Are there any special places that they are accommodated in? They sound like they would require special care.

[justakiwi]

To be honest, I know very little about this, but senior staff with nursing backgrounds have commented that there will be an influx of people with this dementia, in the future. Not sure how that is determined but possibly on national statistics related to alcohol abuse?

As a caregiver, the main issue for me would be, will the person continue to have access to alcohol in care? If so, how would we manage that? Our residents are allowed alcohol on site and we even provide it at Happy Hour each week, but managing it for someone with alcoholism, would be a whole different story.

From what I can tell, there are few/no residential care facilities specifically for these people - so they will most probably end up in an aged care facility by default. From their dementia/cognitive impairment point of view, we would no doubt manage them as we do any other resident with dementia. It would be the alcohol side of things that would worry me.

Interesting thanks justskiwi. What is the life expectancy of the alcohol related dementia "guests" ? Are there any special places that they are accommodated in? They sound like they would require special care.

[dobby41]

Staff shortages are now the issue.
Why don't they do something about it? Pay more maybe.
Maybe they could offer training scholarships or something (with bonds after)?
https://www.newshub.co.nz/home/new-z...shortages.html

[Bjauck]

To be honest, I know very little about this, but senior staff with nursing backgrounds have commented that there will be an influx of people with this dementia, in the future. Not sure how that is determined but possibly on national statistics related to alcohol abuse?

As a caregiver, the main issue for me would be, will the person continue to have access to alcohol in care? If so, how would we manage that? Our residents are allowed alcohol on site and we even provide it at Happy Hour each week, but managing it for someone with alcoholism, would be a whole different story.

From what I can tell, there are few/no residential care facilities specifically for these people - so they will most probably end up in an aged care facility by default. From their dementia/cognitive impairment point of view, we would no doubt manage them as we do any other resident with dementia. It would be the alcohol side of things that would worry me.

Do people with alcohol related dementia still crave alcohol as their dementia progresses? I imagine it depends whether the craving is a mental or physical craving. The reason I ask - A regular drinking but non-alcoholic family member, who always used to have a glass of beer at lunch and a glass of whiskey and water at night got dementia. As their dementia progressed, they forgot that they drank regularly. They also forgot their food preferences and habits too.

[justakiwi]

As I said, I don't know a great deal about this, but I understand it is the only kind of dementia where progression can be halted, IF the person stops drinking. The cognitive damage that has already occurred can't be reversed, but stopping drinking will stop the dementia from developing any further.

Don't take this as gospel though please, as I only have very limited knowledge.

Do people with alcohol related dementia still crave alcohol as their dementia progresses? I imagine it depends whether the craving is a mental or physical craving. The reason I ask - A regular drinking but non-alcoholic family member, who always used to have a glass of beer at lunch and a glass of whiskey and water at night got dementia. As their dementia progressed, they forgot that they drank regularly. They also forgot their food preferences and habits too.