MET - Metlifecare - one for the fundies?

[silu]

fwiw I did a trip around Auckland looking at retirement villages from the outside just to get an overlook of things. As Beagle noted I have noticed the MET's units did look more in need of maintenance as others. After that I have sold almost all of my holdings in MET. Sometimes numbers can't give someone a clear enough picture.

[WAIKEN]

I think the buy back is to defend a potential takeover. Only a few instos need to be appraoched by a suitor to get over 50% support

[Maverick]

My Thoughts.
Remediation work for MET old units with moisture ingress and other issues is almost certain to cost substantially more than MET have already provided in their accounts.

The average age of MET's units is the oldest in the industry so there is probably imbedded deep cycle maintenance issues elsewhere.

The concentration of their villages in the Auckland area is I believe the highest in the industry.

The vast majority of their villages do not offer much other than independent living. They are the diametric opposite of RYM's full continuum of care model which is the security of continuum of care that older folks are really looking for.
You are right Winner that it is sad they are looking at a buyback because its sad that they don't realise that the market is trying to tell them that the product they're offering is substandard to what people really want.

The market is not as stupid as MET directors think it is.

I wonder if there will be any rationalisation/takeovers in the retirement sector, surely there will be at some stage.(whs-Noel lemmings, db-tuatara,Westpac-trusbank,thl-apollo?)
While it's been a while since I've personally done any billion dollar deals I reckon MET should make a pass at OCA. Get on the phone to Maquarie to see if there willing to trade.
Now , to be upfront I've made llittle personal effort in finding out properly about MET , but if Beagles post above is a fair representation (I'm sure it would be) then I see the two dovetailing nicely to leap frog up the ladder;
Oca is more spread over the country than Auckland to spread risk for MET.
Oca is largely 'late stage care" focused and Met could feed into them from their villa's where locations allow,
Met has very low debt and large enough to swallow up Oca while it's selling for virtually asset backing, with a couple of consents thrown in to boot.
The combined experience of the two making over units could work nicely together.
buying oca would be cash acreditive.
And lastly.......if you get on the phone right now,more than a third of OCA up for sale.

well , I tried to look out there for other opportunities other than OCA on snow leopards suggestion , and end up back at square one.

[Bjauck]

Given the negativity surrounding it and the underperformance of MET's SP compared with other NZ retirement/property stocks over the past 2 to 3 years much of its bad news may have been well factored in. MET itself may be a more likely takeover target as opposed to being an acquirer.

However as NZ exchange listed companies have either been decamping for overseas exchanges or being bought up by overseas investors, it could be that any acquisitions of NZ based companies will be by foreign concerns. Given the expensive land values in NZ, it could well be that even foreign investors may keep clear of making acquisitions of NZ companies with substantial investments in NZ real estate?

[Beagle]

Not a good idea to mix bad wine with good wine Maverick. The directors of MET simply don't "get it" that what their villages offer is not what retiring people want.
They need to modernise their existing villages to offer at least a reasonable continuum of care model.

[Bjauck]

Not a good idea to mix bad wine with good wine Maverick. The directors of MET simply don't "get it" that what their villages offer is not what retiring people want.
They need to modernise their existing villages to offer at least a reasonable continuum of care model.

I am not sure what the benefit is of "continuum of care". My only experience is of my parents' friend who was resident of a village with a full range of rest home and hospital level care facilities. She had an OCA for a serviced apartment but When she required hospital level care she had to move out of her village and into another facility with a hospital vacancy.

As far as I can see "continuum of care" is of benefit if you are in a position to be able to wait until a vacancy opens up in the hospital or rest home facilities in your village. However what proportion of people needing care are able to wait it out?

disc: oca and met holder

[Beagle]

I am not sure what the benefit is of "continuum of care". My only experience is of my parents' friend who was resident of a village with a full range of rest home and hospital level care facilities. She had an OCA for a serviced apartment but When she required hospital level care she had to move out of her village and into another facility with a hospital vacancy.

As far as I can see "continuum of care" is of benefit if you are in a position to be able to wait until a vacancy opens up in the hospital or rest home facilities in your village. However what proportion of people needing care are able to wait it out?

disc: oca and met holder

Possibly best to ask a Ryman shareholder mate but I believe that whilst there's no guarantees that one can shift when they need to as their needs change, I understand existing residents within a village generally get first dibs on more advanced care spaces as compared to outsiders coming from say a MET village hoping to get a space.
I know for some Ryman villages a couple might move from an independent living 2-3 bedroom townhouse down to a non serviced or serviced apartment and then one or other as needs arise to hospital or dementia level care. Ryman don't charge commissions on downsizing like SUM other companies do. I think it just gives extra peace of mind but as you suggest there possibly are no guarantees or timing but I presume one's condition generally changes somewhat gradually. On the other side of the ledger someone coming from a wholly independent living village at MET is possibly like a beggar trying to beg to get into a new care suite and may have to shift well out of the area to get one, (which can be tough on the remaining partner still living independently especially if they can't drive to visit their partner)

[Bjauck]

The ability to downsize without incurring extra commissions and also to switch to a different village within the same company could be planned ahead with the gradual degeneration that often comes with advancing years.

However when it comes to the care facilities, the final deterioration/accident requiring full care at rest home or hospital level seems less predictable. Also government subsidies available in such situations can only be made available when the need actually arises. A person is less likely to want put their name on a waiting list to move into a high level of care before it is necessary - and when it is necessary, it is an urgent situation especially where the need is for hospital-level care.

[Beagle]

Thing is MET aren't really providing much assurance with late stage care...the vast majority of their villages are independent living with some assistance only.
Retired folk want peace of mind (which is a valuable commodity) that care facilities are going to be there when they need them. MET simply isn't perceived to be meeting their needs and the directors seem slow to understand that peace of mind is what elderly people want.

This is one of the reasons the shares are trading at a fairly significant discount to NTA now which I calculated at 25% yesterday. Is that a big enough discount to get me interested in owning MET ?. Not really because I don't really believe in their business model but 35-40% discount to NTA might be more interesting.

[dobby41]

Possibly best to ask a Ryman shareholder mate but I believe that whilst there's no guarantees that one can shift when they need to as their needs change, I understand existing residents within a village generally get first dibs on more advanced care spaces as compared to outsiders coming from say a MET village hoping to get a space.
I know for some Ryman villages a couple might move from an independent living 2-3 bedroom townhouse down to a non serviced or serviced apartment and then one or other as needs arise to hospital or dementia level care.

There is also the possible need to have a few days or weeks in care which Ryman allow for - move from villa to hospital for a wee bit then back. Your partner is then able to visit more easily as you are still in the village.
A more holistic care model.