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16-04-2019, 10:23 AM
#3501
You are right - as at May 2016 OCA was worse... it had $259m in debt with 'just' $783m in total assets - as bad as sum others!
What I find most interesting is the Change in fair value of investment property (that has helped support this asset growth, leading to this low ratio of 17%)... it has gone from $34m booked gain in FY15, up to $50m in FY16, then $57m in FY17, and a banger of a FY18 with $68min (wow that is another $175m in paper money generated in 3 years)... so if the music were to stop, and the results at half year seemed to indicate it has pretty much stopped (with fair value change in HF18 being $34.1m vs just $1.6m in HF19 - or even worse, dare I say it, start to go backwards in FY19 or FY20), and total assets were to stay around the $1.2b mark for a year or two while borrowings jumped closer to $300m for a year or two - we will see a dramatic jump from that low 17% figure you correctly point out it was at half year, to 25% - a near 50% increase in less than 2 years... OCA have shown already profit with their care side of things profit is going backwards (hopefully only a temporary thing), so they really need to do the property development side of things (and, most importantly, selling those ORA's) really really well! I have confidence they can do so, but as it was already pointed out on this thread, they sold more stuff at half year, yet still managed to make less money (???), hence I have my concerns, which have only been amplified by the bigly record smashing borrowing.
Last edited by trader_jackson; 16-04-2019 at 10:26 AM.
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16-04-2019, 10:31 AM
#3502
Any REIT running at a 25% leverage ratio would be considered by most to be leveraged very conservatively. Bit bored with the debt discussion to be honest. Debt is simply a tool to grow the company, and the company is focusing on providing needs based services that will be in great demand in the years ahead. I think the debt is very conservative in the circumstances and have no qualms about it whatsoever.
Ecclesiastes 11:2: Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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16-04-2019, 10:33 AM
#3503
Originally Posted by Beagle
Good stuff, that's telling him !
One of the other big issues that I have only touched on, but dont have the hard data on is the number of care workers.
As we age we are not being replaced by younger people at the same rate. So the number of Care Workers, relative to the number of aged people is going to reduce.
Hospitals dont want the aged - so they will have to be out in the community.
Care workers wont want to be driving all over town to look after a portfolio of old folks still living in their home.
Aged care workers will likely much prefer working in a decent environment for a solid working day for a decent wage where decent resources are close at hand.
One of the realities we are faced with is looking after our aging partner. When our back is knackered and we are tired of wiping up more poo a decent aged care facility for both people is going to look mighty attractive, no matter what the prevailing property market is doing.
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16-04-2019, 10:43 AM
#3504
Originally Posted by Beagle
Any REIT running at a 25% leverage ratio would be considered by most to be leveraged very conservatively. Bit bored with the debt discussion to be honest. Debt is simply a tool to grow the company, and the company is focusing on providing needs based services that will be in great demand in the years ahead. I think the debt is very conservative in the circumstances and have no qualms about it whatsoever.
Yes running a certain level of debt is not only necessary but in most cases very prudent.
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16-04-2019, 11:33 AM
#3505
Originally Posted by minimoke
One of the other big issues that I have only touched on, but dont have the hard data on is the number of care workers.
As we age we are not being replaced by younger people at the same rate. So the number of Care Workers, relative to the number of aged people is going to reduce.
Hospitals dont want the aged - so they will have to be out in the community.
Care workers wont want to be driving all over town to look after a portfolio of old folks still living in their home.
Aged care workers will likely much prefer working in a decent environment for a solid working day for a decent wage where decent resources are close at hand.
One of the realities we are faced with is looking after our aging partner. When our back is knackered and we are tired of wiping up more poo a decent aged care facility for both people is going to look mighty attractive, no matter what the prevailing property market is doing.
Yeah, tell me about it mate. Its really hard for a partner to put a loved one in a care facility, (my Mum held on for too long when Dad got dementia and it really took a toll on her), but its a bit easier when they know that the care facility is top notch and has the best facilities and care in the industry. I think the whole care suite thing is something that's going to be in massive demand in the years ahead. It's certainly a feel good investment too when you know residents are going to be well cared for and have first class facilities tailored to meet their needs.
Ecclesiastes 11:2: Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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16-04-2019, 12:00 PM
#3506
Warren, the love of your life Liz loves her tennis. Shes had many senior roles with NZ Tennis and Auckland Tennis over the years
Maybe shes mates with our Jayne
At the top of every bubble, everyone is convinced it's not yet a bubble.
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16-04-2019, 12:38 PM
#3507
Originally Posted by Beagle
Any REIT running at a 25% leverage ratio would be considered by most to be leveraged very conservatively. Bit bored with the debt discussion to be honest. Debt is simply a tool to grow the company, and the company is focusing on providing needs based services that will be in great demand in the years ahead. I think the debt is very conservative in the circumstances and have no qualms about it whatsoever.
Beagle.
I now understand OCA financing a lot better. You write well and most clearly. Many thanks for your excell input.
I too have no qualms re my considerable (for me) investment. But as I saw my loved mother enjoy her care suite and the quality of care at OCA (compared to where she had been in care before) and I looked at the BoD made up of Nursing , Building , and Aged care experts plus our Liz and our Earl, I had every confidence!
What a bargain.
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17-04-2019, 05:09 PM
#3508
Sorry if this has already been addressed...
Regarding the Refundable occupation right agreements carried as liabilities on the balance sheet, how relevant are these as debt when they are not refunded until a new occupant has paid for their occupation licence? I hope this makes sense. It appears that this is a debt which is never required to be paid off or refinanced.
Thanks in advance.
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17-04-2019, 05:34 PM
#3509
Originally Posted by SailorRob
Sorry if this has already been addressed...
Regarding the Refundable occupation right agreements carried as liabilities on the balance sheet, how relevant are these as debt when they are not refunded until a new occupant has paid for their occupation licence? I hope this makes sense. It appears that this is a debt which is never required to be paid off or refinanced.
Thanks in advance.
Hello SailorRob.
These are non interest bearing liabilities, (with one caveat) and you are quite right that they do not have to be paid until the unit is resold to a new incoming resident.
A kind and very good friend of mine with industry contacts this week informed me that OCA are changing their ORA agreement model such that the estate will be paid "interest" if the unit is not resold within six months of becoming vacant. What this interest rate is I am not sure but I see this small tweak to their business model as good as it moves them into line with the general industry standard although in this case they only have to pay interest whereas some other companies like RYM for example have to repurchase the ORA agreement (AKA compulsory repurchase) to pay the ORA liability after the six month period if the unit isn't sold.
Hope that helps and welcome to the forum.
Last edited by Beagle; 17-04-2019 at 05:36 PM.
Ecclesiastes 11:2: Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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17-04-2019, 06:04 PM
#3510
I do not think OCA are right in changing their policy of not buying back after 6 months.
For an estate to have to wait longer than 6 months means OCA are not focussed on the unit's resale.ie they are no longer customer focussed.A big red flag to me.We have seen The Australian Banking Royal Commission findings on what happened when banks put their own interests before their customers.This is the same.
I would therefore not enter any retirement village, without the 6 months repurchase clause being in place.
In fact I will seriously think about retaining my OCA shares.
Last edited by percy; 17-04-2019 at 06:23 PM.
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