OCA - Oceania Group - retirement villages

[Gunner]

I would argue that it was a typo, whereas most of the things I mock stem from a limited proficiency in the English language.

Prove instead of proof is not a typo, there instead of their
If my general command of the language was even 1/10 as bad as you're then I'd admit I waz a hippocrit

One assumes you're lashing out irrationally because you're embarrassed. The 1/10 comment is not backed by rational information. Irrational traits are not ideal characteristics of an investor.

[SailorRob]

One assumes you're lashing out irrationally because you're embarrassed. The 1/10 comment is not backed by rational information. Irrational traits are not ideal characteristics of an investor.

That assumption is wrong.

However you are correct my 1/10 comment is not backed by anything but a suspicion.

I have reviewed the last 40 of your posts and I am totally wrong. I'm confusing you with some of the others.

The data is there and the data clearly shows that I was wrong.

[winner69]

Mav mentioned this the other day when discussing the high margins OCA were getting -

The thing that makes this absurd margin reality (for now) is that apartment building construction also always has 3-5 years of capital gains baked in at the sell down phase. OCA has also been clear to tell us that until now all construction contracts have been held at rates before the rampant construction price rises of the last few years. So we are getting new retail sales prices now on stuff built at 2019 build prices. And we know how significant building cost increases have been the last 2 years.

Thanks for reminding us of that. It is indeed something Oceania have been at pains to remind us off.

With all these ‘rampart construction price rises of last few years’ it’s a wonder the contractors haven’t gone broke in the process….if anything we should be grateful to them for continuing to build at ‘cheap’ rates

A few years ago The Helier was touted as a $120m project but now it seems to be a $150m project. No idea where they pull these figures from but if it’s the cost then the costs have increased by 25% …hmmmm

[Gunner]

Mav mentioned this the other day when discussing the high margins OCA were getting -

The thing that makes this absurd margin reality (for now) is that apartment building construction also always has 3-5 years of capital gains baked in at the sell down phase. OCA has also been clear to tell us that until now all construction contracts have been held at rates before the rampant construction price rises of the last few years. So we are getting new retail sales prices now on stuff built at 2019 build prices. And we know how significant building cost increases have been the last 2 years.

Thanks for reminding us of that. It is indeed something Oceania have been at pains to remind us off.

With all these ‘rampart construction price rises of last few years’ it’s a wonder the contractors haven’t gone broke in the process….if anything we should be grateful to them for continuing to build at ‘cheap’ rates

A few years ago The Helier was touted as a $120m project but now it seems to be a $150m project. No idea where they pull these figures from but if it’s the cost then the costs have increased by 25% …hmmmm

I'm a quantity surveyor and I'd be very surprised if the contractor does not have some form of price escalation in their contract. The contract can be lump sum and have tags that allows for material reprieve over a certain period of time for example. Entering a contract in 2019 with no provisions for price escalation would be highly unlikely.

[WAIKEN]

I see OCA reaching NTA IN 2024 and moving beyond that figure.
I have had a lot of success buying at a discount to NTA over many years. Some assets are tricky such as stock of a manufacturer or specialized buildings as Freezing Works. I see RV assets as similar to other commercial and even residential property assets. I asked a manager in one of the big three commercial real estate firms recently if sophisticated long term investors were looking through the current devaluations in commercial properties owing to the higher interest rates determining cap rates and thus valuations. He said they were and many dis their own appraisal of the actual cost of land per metre and the actual replacement construction costs per metre. He sees commercial valuations rising from early 2024.
OCAs NTA will be way below replacement costs and it owns some very large well located and valuable sites based on the land alone. The care suites are a very valuable asset. I have a relative who consults to government bodies suing his deep commercial experience. He told me the health system is currently in crisis. The Government is totally reliable on the RV sector to provide beds for the sick elderly. Our care suites will find their own commercial path. When MET got to half of its NTA I bought heavily and sold just below the Swedish funds 6.00 offer. The offer went sideways when covid hit and the NTA was smashed again. When it again approached 50% of NTA I bough again and sold just below the revised offer price on market. Recently I topped my ARV holding at 0.92 as it was too deeply discounted to NTA. They have since gone to 1.25 and I am predicting they will reach current NTA of 1.90 By the end of 2024. I have had big OCA holding for a number of years and I am now in buyer mode.

[RTM]

Thanks Waiken for sharing your observations.
Appreciated. I would be buying more too if they weren’t already a solid % of my portfolio.
RTM

[kiora]

"Now if income growth were the only factor, then property would double every twenty years. But clearly it’s not the only factor."
"Let’s call this figure our fair market price.

A house that was worth $170,000 in 2000 should be worth $730,000 today purely based on equivalent affordability or % of income used to service the debt."
https://www.squirrel.co.nz/blogs/hou...t-housing-boom

[winner69]

I'm a quantity surveyor and I'd be very surprised if the contractor does not have some form of price escalation in their contract. The contract can be lump sum and have tags that allows for material reprieve over a certain period of time for example. Entering a contract in 2019 with no provisions for price escalation would be highly unlikely.

Thanks Gunner for that insight from an industry perspective. Good stuff.

Good that Rob hasn’t challenged you to ‘prove’ it eh

[ValueNZ]

Thanks Gunner for that insight from an industry perspective. Good stuff.

Good that Rob hasn’t challenged you to ‘prove’ it eh

I'd appreciate someone trying to find some more information regarding the construction contracts, All I can seem to find about it is from the last years annual meeting transcript. Which is "We have observed some supply chain disruptions, particularly Gib products as well as access to some specialty sub trades, both of which have been well managed and mitigated to date. We have entered into fixed price contracts with our construction partners for the development activities underway for FY2023 and FY2024." And also "Our most recent fixed price contract was initially negotiated at 50% fixed and then a further 23% was fixed after careful assessment of the potential future escalation on this component of trades. The balance 27% is carried at our risk with an appropriate specific contingency allowance to cover potential escalation which is determined jointly by the contractor, their subcontractors and our independent Quantity Surveyor."

Speaking of annual meetings, Oceania has one coming up on the 25th of August. It's probably worth discussing on this forum what questions we are wanting to ask the board of directors, any ideas anyone? I'm pretty sure they can be typed online from what I can tell.

[SailorRob]

I see OCA reaching NTA IN 2024 and moving beyond that figure.
I have had a lot of success buying at a discount to NTA over many years. Some assets are tricky such as stock of a manufacturer or specialized buildings as Freezing Works. I see RV assets as similar to other commercial and even residential property assets. I asked a manager in one of the big three commercial real estate firms recently if sophisticated long term investors were looking through the current devaluations in commercial properties owing to the higher interest rates determining cap rates and thus valuations. He said they were and many dis their own appraisal of the actual cost of land per metre and the actual replacement construction costs per metre. He sees commercial valuations rising from early 2024.
OCAs NTA will be way below replacement costs and it owns some very large well located and valuable sites based on the land alone. The care suites are a very valuable asset. I have a relative who consults to government bodies suing his deep commercial experience. He told me the health system is currently in crisis. The Government is totally reliable on the RV sector to provide beds for the sick elderly. Our care suites will find their own commercial path. When MET got to half of its NTA I bought heavily and sold just below the Swedish funds 6.00 offer. The offer went sideways when covid hit and the NTA was smashed again. When it again approached 50% of NTA I bough again and sold just below the revised offer price on market. Recently I topped my ARV holding at 0.92 as it was too deeply discounted to NTA. They have since gone to 1.25 and I am predicting they will reach current NTA of 1.90 By the end of 2024. I have had big OCA holding for a number of years and I am now in buyer mode.

'I see OCA reaching NTA IN 2024 and moving beyond that figure'.

You are predicting a 67% + rise within a period of 18 Months. What is your past success rate been of these types of calls? That is a huge move in a very specific time period.

Also with the mate in management, who sees the valuations turning in EARLY 2024. Why is he in management when there is an asset class that they can apply a lot of leverage too, with the ability to predict the turn like they are claiming, surely they would have made a lot of money doing this for themselves and not have to work for someone else in a management role? Does he hot have a vested interest?

I have had a lot of success buying at a discount to NTA over many years. Some assets are tricky such as stock of a manufacturer or specialized buildings as Freezing Works.

Good points, all NTA's are certainly not created equal, replacement costs are totally irrelevant for many, including much commercial property. But not so with OCA.


I'm also an OCA bull, but you've made some big and bold calls when OCA has left many very smart people in the dust from the IPO. I'd be pretty careful with predicting anything like you have within a very small time frame.