OCA - Oceania Group - retirement villages

[X-men]

Both OCA and ARV have been shortest by the same fundie. The price movements are almost identical

[Maverick]

Thanks for posting the Forbar debt analysis GreekWD.( On the" retirement village" thread)
Great to put the capital raising fear out there properly to bed.
It surely must make the OCA -CEO and CFO "employees of the month" for their applied prescience.

While I concur with 99% of the report there is one part I disagree with. Oca has never said anywhere , in any form, that they are throttling back construction. ARV certainly has. In fact OCA have clearly stated and tooled up for increased production the last few years with more staff and capital raises.

If anyone has any info on this I'd love to hear it.

[Antipodean]

Apologies for quoting myself SailorRob, I tried but can't find your insightful post about how RV's get free money from ORA's (debt income without interest) and leverage it, like insurance company's do by other means. This is the core to the maths of the investment thesis and how RV's distinguish themselves from traditional property developers who have to raise capital, with interest.

Possibly this...?

https://www.sharetrader.co.nz/showth...l=1#post983973

May also be worth reading this also...

https://www.sharetrader.co.nz/showth...ree#post987037

[bottomfeeder]

Thanks for posting the Forbar debt analysis GreekWD.( On the" retirement village" thread)
Great to put the capital raising fear out there properly to bed.
It surely must make the OCA -CEO and CFO "employees of the month" for their applied prescience.

While I concur with 99% of the report there is one part I disagree with. Oca has never said anywhere , in any form, that they are throttling back construction. ARV certainly has. In fact OCA have clearly stated and tooled up for increased production the last few years with more staff and capital raises.

If anyone has any info on this I'd love to hear it.

No knowledge specifically. I would think that they would have to wait for an improvement in SP to correctly manage a CR, unless they were desperate or wanted to kill the SP. I am sure the major shareholders would have something to say about that. To help the SP recover throttling back on construction temporarily would have to be on the cards. They would have to make the best and most efficient (profitable) use of the existing assets they have before building more. This would be especially true with the precarious economy, interest rates, property sales demand and prices.

I think that just makes common sense. Must be waiting for end of year results to announce their forward plan.

[SailorRob]

Possibly this...?

https://www.sharetrader.co.nz/showth...l=1#post983973

May also be worth reading this also...

https://www.sharetrader.co.nz/showth...ree#post987037

Thanks, those are the two I had in mind.

[bull....]

So the $917,647,000 Deferred management fee/refundable occupation license item on the balance sheet is essentially an interest free loan that cannot be called and is only paid back once the next lot of money has come through. It is a thing of immense beauty and the key to understanding the industry.

So it allows them to massively increase the amount of property they own and develop, at no cost or risk. Also worth noting here the terms and rate on their actual conventional debt which is outstanding, one bond is I think 2027 at 2.3% and the other 2028 at 3.3%. So massively negative in real terms.

So a conventional developer like you or I in simple terms, to build a million dollar house, we have to first get a million dollars, then build the house and then to build another one we either have to sell the first, or go to the bank and borrow against the first and maybe get 800k if we are lucky and subject to handing over the title to the first one to the bank and paying interest and introducing all kinds of risk.

OCA has their cake and eats it, they 'sell' the first house for more than a million while still owning it and don't pay any interest on the money they get and they don't have to pay it back (they keep a ton of it too) until it's been 'sold' again, and they do this until the cows come home and then do it some more. So they can never get into trouble with this type of liability, and it reminds me of float in the insurance industry which is fought over like crazy. Only this is way better as float is heavily regulated and you have to put up your own capital too.

Then as they develop more they get more of this free money and develop more... It's one hell of a business, and everyone is missing it as they think you're buying the net tangible assets but no, you are also buying the free billion dollars. I've never seen it discussed here but it's the real key to the business model.

the problem i see going forward they will not be able to leverage as much your free pool of money as you say
so returns will decline compared to the past

[SailorRob]

Thanks for posting the Forbar debt analysis GreekWD.( On the" retirement village" thread)
Great to put the capital raising fear out there properly to bed.
It surely must make the OCA -CEO and CFO "employees of the month" for their applied prescience.

I'm not complaining, but isn't this just capital allocation 101? They did exactly what they should have done but nothing special.

[Maverick]

I'm not complaining, but isn't this just capital allocation 101? They did exactly what they should have done but nothing special.

Couple of things their Sailor.
Yes, it is 101 in hindsight... BUT.....so was us selling houses and paying down debts last year and selling OCA for $1.50. We all see how obvious that was now but to actually act on it at the time is a different story. That is where the directors shone over their competitors who didn't get around to it at the time.

Second thing is the clever stuff in their loans fineprint that Forbar explain really well to us non bankers. The way OCA constructed the loans ( capex vs expenses treatment of interest costs etc)demonstrates skill of a high level of expertise .

I think my question may have been misunderstood Bottom Feeder. I believe , as does Forbar, that no capital raising is required either now or in the future.
Coupled with the mega development Helier about to sell down there will be sufficient cashflow.

My question on here is has anybody heard that OCA is slowing the build rate as per what Forbar are stating.
I read and listen to everything OCA and this is news to me.

Just wondering if I missed something. Nothing OCA has done or said to date indicates it's not business as usual. I also dont forsee any issues that will cause a change in their plan.

[Sideshow Bob]

Couple of things their Sailor.
Yes, it is 101 in hindsight... BUT.....so was us selling houses and paying down debts last year and selling OCA for $1.50. We all see how obvious that was now but to actually act on it at the time is a different story. That is where the directors shone over their competitors who didn't get around to it at the time.

Second thing is the clever stuff in their loans fineprint that Forbar explain really well to us non bankers. The way OCA constructed the loans ( capex vs expenses treatment of interest costs etc)demonstrates skill of a high level of expertise .

I think my question may have been misunderstood Bottom Feeder. I believe , as does Forbar, that no capital raising is required either now or in the future.
Coupled with the mega development Helier about to sell down there will be sufficient cashflow.

My question on here is has anybody heard that OCA is slowing the build rate as per what Forbar are stating.
I read and listen to everything OCA and this is news to me.

Just wondering if I missed something. Nothing OCA has done or said to date indicates it's not business as usual. I also dont forsee any issues that will cause a change in their plan.

Perhaps worth contacting OCA direct re build rate?? If they have said it they could point you in the right direction? Or otherwise it might be something they told analysts, or that Forbar's might have picked up on or read between the lines??

[justakiwi]

Mav, my guess is if you don't know about it, it's probably just the rumour mill at work

My question on here is has anybody heard that OCA is slowing the build rate as per what Forbar are stating.
I read and listen to everything OCA and this is news to me.