OCA - Oceania Group - retirement villages

[Habits]

Sobering reality check for the overheated property market - South Auckland house sold at open auction for 40% below CV.

https://www.oneroof.co.nz/news/south...below-cv-41695

Only eight bidders were in the auction room at Ray White Manukau’s offices on Wednesday, mostly to watch. not to buy. Of the six properties on the slate that afternoon, one sold under the hammer, another sold during a pause in proceedings and a third had been picked up the night before after the vendor accepted a pre-auction offer.

The brisque and business-like atmosphere was a far cry from the excitement and desperation seen in the same room the year before, when crowds spilled out into the hallway and properties sold for big sums.

Ray White Manukau’s weekly auctions are viewed by many as a bellwether of the wider market mood in South Auckland. The sale prices achieved on Wednesday indicate the market has well and truly changed and the heat of last year has cooled.

A three-bedroom deceased estate in tidy, original condition on Antsy Place, Mangere sold under the hammer for $740,000, 40% less than its $1.225m ratings valuation, despite five bidders competing. A three-bedroom house in Belleek Close, Weymouth, sold for an undisclosed sum after bidding paused at $715,000. It had a CV of $900,000.

Living in a street named Antsy would make anyone pleased to leave I would think. The common reposte is that CV does not represent market value, it is a generic figure for rating purposes but it does become a guide of sorts. I was looking at a property this week where the CV is nearly 3 mil, that is a joke it is probably actually worth 800k if that. If the vendor is stoopid they will be completely misguided by the CV in this case.

[Baa_Baa]

Assuming all those that brought they still hold them and weren't just traders.

Which is a very very very heroic assumption.

Hero or not, you might be surprised to know that the vast majority of shareholders aren't 'traders'. You're talking many many millions of share here, the top 10 registered shareholders for example, are depositories and custodians, they're big, very big and typically don't 'trade' market fluctuations unless their customers want in or out, but maybe if they're a broker and change their weighting to under or over perform or in between they will re-balance.

Anyway, ~130m shares were bought below 80 cents fairly recently, that's way more volume than retail traders which might indicate that the stock is fairly tightly held and the big players took up the opportunity of distressed market conditions to accumulate, and they're still well within the money. The same accumulations might be happening now.

OCA share traders are on the fringe of the total volume, but granted, this is or has been way more volatile in the past few years, so that fringe trading if they know what they're doing could be quite happy. Good luck to them, the long term investors just keep on accumulating more and more, especially when the market gifts them assets at low share prices, massive discounts to NTA, and increasing yields.

[Baa_Baa]

There's another thing in play here, bear with me.

If you have a few hundred or thousand shares, they're easily moved if you're a trader or investor, up or down. But if you have tens or hundreds of thousands or millions of shares it's not so easy.

I recall some guru investor once saying, sorry I can't remember who, but if you're a long term accumulator of equity assets and end up with a very large holding, relative to your portfolio, the day you sell you've doubled your trading fees which can be very substantial for large trades, and become liable for capital gains taxes at whatever rate you fall in to if you're selling at a profit. Then if you decide to buy back you've tripled your trading fees.

No one ever mentions this about short term or momentum trading, ever. They go on about yield this and dividend % that, but don't disclose or even acknowledge ... - initial buy fees + yield while held + capital profits - minus sell trading fees - minus tax on profit - minus fees to buy back in = what actual return?

That's a math thing no trader on here has ever in my experience, has ever disclosed.

[Muse]

There's another thing in play here, bear with me.

If you have a few hundred or thousand shares, they're easily moved if you're a trader or investor, up or down. But if you have tens or hundreds of thousands or millions of shares it's not so easy.

I recall some guru investor once saying, sorry I can't remember who, but if you're a long term accumulator of equity assets and end up with a very large holding, relative to your portfolio, the day you sell you've doubled your trading fees which can be very substantial for large trades, and become liable for capital gains taxes at whatever rate you fall in to if you're selling at a profit. Then if you decide to buy back you've tripled your trading fees.

No one ever mentions this about short term or momentum trading, ever. They go on about yield this and dividend % that, but don't disclose or even acknowledge ... - initial buy fees + yield while held + capital profits - minus sell trading fees - minus tax on profit - minus fees to buy back in = what actual return?

That's a math thing no trader on here has ever in my experience, has ever disclosed.

well said baa baa.

[allfromacell]

Sobering reality check for the overheated property market - South Auckland house sold at open auction for 40% below CV.

I don't personally own any residential property but if my portfolio had only fallen by the amount the NZ residential market has so far this downturn I'd be a pretty happy camper.

NZ residential prices especially in the higher end of the market are actually holding up very well compared to property based equities and REITs, for now at least.

The property market will hopefully continue to fall and regain some sense of normality because what we've had over the past few years has been dangerous. Prices will likely be supported somewhat by high construction costs, especially the good quality stuff but land values do need to fall further for the sake of our society.

For the most up to date data (hours old) one can browse the interest.co.nz auction results page and find plenty of high quality homes selling for significantly above their CVs.

https://www.interest.co.nz/property/...uction-results

[nztx]

OCA at 95c, a 28% discount to NTA seems well undervalued

Approx 2 years it was roughly at same level before traversing upwards in mid Sep 2020

Perhaps some like me aren't yet convinced enough it's hit the bottom of the trough
for the current economic climate or that a worthwhile reversal will be imminent just yet ..

The sector mostly reports valuation gains as it's Surplus - with in most cases trading
activities excluding revaluations etc being break even - at least last time I looked.

That's enough of a caution for me in looking for confirmation of upwards recognised
& sustained by the market first

[Baa_Baa]

Oceania has completed the acquisitions of Remuera Rise and Bream Bay Village (ref pg 9 & 10).

[bottomfeeder]

There's another thing in play here, bear with me.

If you have a few hundred or thousand shares, they're easily moved if you're a trader or investor, up or down. But if you have tens or hundreds of thousands or millions of shares it's not so easy.

I recall some guru investor once saying, sorry I can't remember who, but if you're a long term accumulator of equity assets and end up with a very large holding, relative to your portfolio, the day you sell you've doubled your trading fees which can be very substantial for large trades, and become liable for capital gains taxes at whatever rate you fall in to if you're selling at a profit. Then if you decide to buy back you've tripled your trading fees.

No one ever mentions this about short term or momentum trading, ever. They go on about yield this and dividend % that, but don't disclose or even acknowledge ... - initial buy fees + yield while held + capital profits - minus sell trading fees - minus tax on profit - minus fees to buy back in = what actual return?

That's a math thing no trader on here has ever in my experience, has ever disclosed.

It all depends on the trading SP margin. That's why traders love volatility. The bigger and quicker the movements the more chance you will complete a successful trade. Traders do not necessarily trade all or large parcels of shares. Sometimes you have to whittle away at profits. After all no one knows what tomorrow will bring. I would only trade a full holding if there was a significant uplift in the SP. Brokerage is only a small cost in any case. Mind you I have modified my trading now. I am a long term holder of OCA and does not form a part of my trading stock, since 31 March. Now SKT is another kettle of fish. I don't trade ARV either since 31 March.

[jagger]

Either way, it's a huge assumption to believe that 1:1 that the majority of those who purchased (i.e. ultimate beneficial shareholders, not just a custodial account they sit under) below 80c are still holding and didn't take profit at some point on the way up to $1.60 (or at some point on the way down since).

Any given shareholder may have had multiple entry & exit points over that time period so who knows what the average cost is across the register.

[whome]

Sobering reality check for the overheated property market - South Auckland house sold at open auction for 40% below CV.

https://www.oneroof.co.nz/news/south...below-cv-41695

Only eight bidders were in the auction room at Ray White Manukau’s offices on Wednesday, mostly to watch. not to buy. Of the six properties on the slate that afternoon, one sold under the hammer, another sold during a pause in proceedings and a third had been picked up the night before after the vendor accepted a pre-auction offer.

The brisque and business-like atmosphere was a far cry from the excitement and desperation seen in the same room the year before, when crowds spilled out into the hallway and properties sold for big sums.

Ray White Manukau’s weekly auctions are viewed by many as a bellwether of the wider market mood in South Auckland. The sale prices achieved on Wednesday indicate the market has well and truly changed and the heat of last year has cooled.

A three-bedroom deceased estate in tidy, original condition on Antsy Place, Mangere sold under the hammer for $740,000, 40% less than its $1.225m ratings valuation, despite five bidders competing. A three-bedroom house in Belleek Close, Weymouth, sold for an undisclosed sum after bidding paused at $715,000. It had a CV of $900,000.

Balance, your post is very true. In another life I enjoyed 6 years as an RE agent ’94 -2000. Used to monitor Manukau sales then as it represents a large x-section of housing across various sectors ie lower socioeconomic areas of Sth Auck, areas of rapid in-fill development like Papatoetoe, some new housing in the eastern parts and areas reflecting middle income rises. ’98 - 2000 became a time of stalled house prices in NZ with whole extended families moving to Oz as the mining boom and better job prospects had begun in Oz. (Jump to the present – does the govt really think nurses and their families are going to stick around being over-worked for bad pay). Another good indicator was the house price index figures used to closely mirror the net migration curve - until Labour began including foreign students in the net figures to make their own situation look more favourable - blah.

Anyhoo – my view on the housing market and its effect on RV share prices is that while house prices have dropped a bit lately, they have only fallen by a pittance compared to the huge rises in recent years. While house prices reflect the immediate supply and demand position, the real knock-on effect and the one that hits the RV unit sales market is that the number of settled house sales have virtually stalled completely. I believe we could have a long period of several years where house prices won’t crash but linger along as those homeowners who have considered the move to an RV unit delay selling as they have seen the dangled carrot of high house prices and hope they might return. (Not talking here about the 3 primary reasons for selling a house ie death, divorce and de bank). The net effect has been a virtual halt in RV unit sales as the target market for RV sales are people who can afford to wait a bit longer as uncertainty is no help when selling your largest asset.

When will the housing market improve? As a quick means of monitoring house price movements, just count the number of open home signs at intersections. Wouldn’t be an RE agent for quids right now – long hours of doing open homes and sales few and far between. 2001 – 2002 saw the housing market start to recover rapidly, and that will happen again. I shall continue to monitor house sale settlement numbers and the average time to sell as indicators of an imminent RV stock recovery that will also eventually recover as the tailwinds remain strong but I could be out for some time.

Discl. – Out of all RV stocks, preserving capital.