SUM - Summerset Group

[percy]

Do n't tell Sauce but I own shares in both.
Very important announcement by SUM.
Am I allowed to say both are "very well positioned" !!!!!!!!!!!!!!!!!! lol.

[NZSilver]

Have been keeping an eye on this one over the last few months, after todays announcement I bought in!

[CJ]

Also Ryman pays a healthy div,

Compared to 'Smokin Cubans', I guess a 2.2% div would be considered healthy.

[ratkin]

. Ryman has a reputation for quality and waiting lists for its units so can still command price premiums, but Summersets villages are generally in the smaller centres and less premium locations... they would be more susceptible to declining asset values in a slump than Ryman

Your wrong to say that Ryman has more of a reputation for quality than Summerset , summerset has just taken out award for third year running.
i see no reason why the value of a summerset property would decline at a quicker rate

[Sauce]

Disagree Ratkin. Summerset have an excellent reputation and I admire what Norah and her team are doing, but there are a couple of differences that make me think Ryman is better.

1. Ryman villages are larger, and are mostly all built at once, so there aren't any facilities missing. I had the chance to tour a summerset village up in Warkworth around-4 months ago, and while the better part of 100 residential units were built for those in independent living (and had been for around a year-18 months), the aged care, restaurant, recreational facilities and similar were still being built. So Ryman can deliver the whole continuum of care and better facilities right from the get go.

2. Ryman offer dementia level care at their villages. Summerset are planning to deliver this, but presently can only look after residents with mild/moderate levels of cognitive impairment. This is a big selling point for Ryman in that a resident knows that once they move in, they can stay at the village until they eventually join the choir invisible. They don't need to move elsewhere.

3. Summerset have a design philosophy called "Lifemark", which essentially incorporates design changes in buildings to assist the elderly in living more easily, eg wider door frames, power points located at knee/hip height instead of ankle height. While these Lifemark design features are meant with the best intentions, there is also some resistance from residents and potential residents who feel its ugly and pandering (some of the old ladies considering villages are fiercely proud and don't like the idea of conceding weakness at bending over, or having ugly TV power cables running up the wall. You might think I'm nuts raising this, but I have done lots of homework.

I don't mean to raise the above to suggest Summerset is inferior or that I am negative. I like Summerset as a company, and am impressed with what they are doing. They deserve their awards. I just have seen a lot of evidence to suggest that Ryman offers a wider selection of benefits to residents, and that as a stock, Ryman is better. I've even heard Norah Barlow describe SUM to a room of potential investors as "Ryman Jr".

I agree that there is no reason to suspect why in a property slump that Summerset values would decrease at a worse rate than Ryman. Summerset's villages may be smaller but they are still desirable places for people to live, and the demographic tailwinds will work in their favour too.

FYI - I sold my SUM because I found a better investment opportunity on the NZX and needed cash to invest in it. I also felt SUM was the most fully valued in my portfolio, and because RYM is my biggest holding, I was happy to just hold the one company.

Brilliant post Sparky
In charlie munger parlance: "I have nothing to add"
Regards,
Sauce

[Sauce]

Don't tell Sauce but I own shares in both.

I will block my eyes Percy..

[Sauce]

Having read over my post, I do have one qualifier to add to point 1 which is that when I say mostly built at once, I specifically mean the "big building and gardens" which houses the cafe, clinics, open areas, recreational spaces and large amounts of apartment units.

As the village fills up over a year or two, they then will have other stages to add, but the point I am trying to make is that the village experience starts from day one for a resident, whereas at other non Ryman villages like the Summerset Falls village they get their unit, but essentially live in a terraced home gated community without common areas like a bowls court, cafe, medical facilities, dementia levels etc. Ryman has the scale to build the fixed cost part of the village from the get go, then add the variable cost elements like extra residential units as needed.

I agree. It's the scale advantage (which manifests in many areas like the ones you have outlined and more) combined with the REAL 'full continuum of care,' that is the key to RYM's moat.

Shifting the mix towards care beds at a scale that is highly profitable, when other villages are not, in advance of the flood of over 85's is a very important strategic move also.

SUM will have some issues as their villages mature as some residents will not be able to get the care they need and may need to move - as you have pointed out - this is my understanding from my research also.

Care beds are a loss leader for SUM but not for RYM, and SUM make a big deal about their 'full continuum of care' but its not as 'full' as they imply.

Regards,

Sauce

[mamos]

What about the relative quality of their sites?

[Hoop]

currently 215 up 11 +5.4%.... ...back into the blue sky (no resistance area)

[ratkin]

What about the relative quality of their sites?

Wel, Summerset have just won the australasian award for the best retirement home provider , for the third consecutive year. They must be doing something right

“Ann Richards said Summerset stood out because of its unwavering commitment to being a totally customer centric company.
"Summerset has assembled the best all round management team in Australasia. It is unique in that it has managed to combine balance sheet drive and maintain 'customer centric' policies