OCA - Oceania Group - retirement villages

[SailorRob]

You don't seam to understand that the market treats retirement villages like REITS based on their main source of income, but sure - you think you are right and the market is wrong, I get it. You are not the only one ;

Still - I prefer to apply the well known Swedish army rule: If the terrain is different from you map, than trust the terrain.

Maybe you should review your map ;

If the terrain is different to your map you're looking at the wrong map bro.

That's what you're doing here.

[BlackPeter]

anyway back to oca be interesting if any of the oca supporters could explain to us what is oca competitive advantage ie moat ... as buffett said the key is not accessing how much an industry is going to affect society or how much it will grow but rather determining it competitive advantage

Two quite obvious differences:

OCA started with lots of crappy old people homes in outstanding locations and are turning them into top quality developments. In Real Estate Speak: Buy the cheapest house in the dearest street"- this is what they did.

Most of the others (except ARV) started with greenfield development - more straight forward and no additional pain for juggling exiting residents and building activities, but obviously they need to pay more to get for pristine sites (if they get them at all).

Which of the both groups will win the race - I think the jury is still out, though some of the traders around here seem to have made up their mind already. I think they are calling the race too early ... but maybe traders just have a too short attention span?

My vote is for top sites at low cost, even if it takes a bit longer to get it all churning.

The other major difference is obviously OCA's focus on care: Clearly - higher cost, but as well higher turnover. As well - their services are need based, i.e. clients have less options to choose whether they want to move in. If you need care, you need care.

My vote is for need based services - much more reliable than offering "nice to have's" like SUM (and to a degree) RYM.

Again - time will tell.

[SailorRob]

You don't seam to understand that the market treats retirement villages like REITS based on their main source of income, but sure - you think you are right and the market is wrong, I get it. You are not the only one ;

Still - I prefer to apply the well known Swedish army rule: If the terrain is different from you map, than trust the terrain.

Maybe you should review your map ;

As I feel sorry for you a simple explanation that you should be able to understand if you take some time with it.

Take two IDENTICAL REIT's. They own virtually the same assets producing the same income.

Now REIT A is funded entirely with 50/50 Equity and debt capital.

REIT B is funded by 50/50 Equity and interest free non recourse capital.

Which will produce massively superior returns for the owners?

What if one could then increase the interest free capital at a CAGR of 26% while the other had to borrow?

[bull....]

Well how do you then explain the RV stocks tracking the rubbish like Argosy?

Totally different model but caught up in the same malaise.

One has few capital, the other does not.

there not , property stocks are actually performance wise doing better at this point in time , but they could very well catch up when cap rates are adjusted with time. maybe to do with rv sales being more regular than property co's sales for the basis of valuations

[BlackPeter]

It doesn't have one. It's that simple.

Very few of the companies I own really do. They are much rarer than most people think and those that do are handicapped by a higher price.

Some could argue that it has small advantages over the others but they would be hard to measure and fleeting at best.

Anyone arguing the continuum of care or any other points of difference, well there is nothing stopping the others offering the same.

They have no pricing power.

I think you are missing an important point: OCA still in the process of completing their moat. Sure - everybody else could do that as well, but it will take as much time as it takes OCA to turn crappy old people homes into pristine and flash units offering continuity of care. As you easily can see from the howling of detractors on this threat, short sighted traders don't want to invest money in building a moat. That's the reason, they never will buy into a company with a moat while it is still cheap - and if it isn't anymore, they will complain its too dear.

[BlackPeter]

Well how do you then explain the RV stocks tracking the rubbish like Argosy?

Totally different model but caught up in the same malaise.

One has few capital, the other does not.

Maybe you should test the REIT model instead of rubbishing it. If the map is different to the terrain ... trust the terrain ;

[BlackPeter]

Maybe, just maybe BlackPeter you should learn how to read a balance sheet.

It's nothing to do with income sport. It's funding.

Returns on shareholders capital.

Spend the day looking into it.

I can read a balance sheet. It appears though, that you don't seem to be able to look at the big picture ;

[justakiwi]

Well said. This is precisely what so many people simply fail to understand about OCA, or about aged care in general. I have tried to offer my perspective as someone who works in the sector and has a basic understanding of the needs of the elderly. Many here, and some who have gone elsewhere, have used "care" as a reason to continuously bash OCA. In their eyes OCA's focus on continuity of care, makes them the dog of the sector. For those of us who "get it" - it makes them the smartest.

The other major difference is obviously OCA's focus on care: Clearly - higher cost, but as well higher turnover. As well - their services are need based, i.e. clients have less options to choose whether they want to move in. If you need care, you need care.

My vote is for need based services - much more reliable than offering "nice to have's" like SUM (and to a degree) RYM.

Again - time will tell.

[SailorRob]

Maybe you should test the REIT model instead of rubbishing it. If the map is different to the terrain ... trust the terrain ;

I trust a decade of cash flow statements more than anything else.

That's where I've made all my money.

[Gunner]

I trust a decade of cash flow statements more than anything else.

That's where I've made all my money.

What have you made on OCA?