ARV - Arvida Retirement Villages

[LoungeLizzard]

Excellent business all round - very positive acquisition and very fair treatment of retail investors. Top marks Arvida!

[Beagle]

https://www.nzherald.co.nz/business/...55LCABO3R6DQM/ Paywalled

[TFA]

Excellent business all round - very positive acquisition and very fair treatment of retail investors. Top marks Arvida!

Couldn't agree more. There are too many situations where retail investors get treated pretty badly. Arvida have thought this through very well

[Beagle]

Underlying earnings per share next year up ~ 15%, (plus more to come from adding value to the villages and buying them at a discount to NTA), so what happens to the share price when it comes out of the trading halt ? You would think this would be very positive for the share price as they now have quite a history of acquisitions. Forbar recently had a price target before this acquisition of $2.50...I can see that going up by about 15% to about $2.90. I hold a modest stake and hope to get a lot more in the $1.96 placement and will subscribe for all rights issued to me.

[turnip]

Couldn't agree more. There are too many situations where retail investors get treated pretty badly. Arvida have thought this through very well

From the offer document, shares acquired in the placement at $1.96 are also eligible for the rights offer at $1.85 and upcoming dividend, so it seems to me that existing retail shareholders are not getting a better deal than new shareholders who take part in the placement.

[bull....]

looks like the record date to be elegible for those 1.85 shares is 26 oct so buying on market to get the cheaper shares will support price. smart

[winner69]

Underlying earnings per share next year up ~ 15%, (plus more to come from adding value to the villages and buying them at a discount to NTA), so what happens to the share price when it comes out of the trading halt ? You would think this would be very positive for the share price as they now have quite a history of acquisitions. Forbar recently had a price target before this acquisition of $2.50...I can see that going up by about 15% to about $2.90. I hold a modest stake and hope to get a lot more in the $1.96 placement and will subscribe for all rights issued to me.

Beagle - I think your 15% is wrong

The presentation says they are comfortable with market consensus of Underlying Earnings of $67m........up 31% on F21 .....before the acquisition ......used this as the base for their EPS accretive workings

My calculates say that base FY22 eps is therefore 12.35 cents - up 29% on F21 .... WOW

Saying EPS accretive means EPS will be higher because of the acquisition .... yes?

Say a third of the $32m-$34m underlying earnings comes through in F22 on that takes the base $67m up to $78m ..... and on a weighted average number of shares gives EPS for F22 of about 13.6 cents ---- up 40% on F21


Too good to be true .... must have done something wrong .... but I don't think so ..... seeing it based on their admission that they comfortable with the F22 UE $67m (v $51m pcp)

[Snow Leopard]

From the offer document, shares acquired in the placement at $1.96 are also eligible for the rights offer at $1.85 and upcoming dividend, so it seems to me that existing retail shareholders are not getting a better deal than new shareholders who take part in the placement.

wot dividend?

half empty?

[winner69]

previous post sort of says that share price should be 260/270 if the market had recognised the F22 forecast ....and over 300 after the cap raise


What can go wrong

[Out to lunch]

The numbers look good but I want to put some pessimism on this:
- The villages are old. They need significant capex to remain competitive. Asbestos and weather-tightness issues. costed MET more than they thought. Debt will increase. Probably why 88% NTA was agreed. Open-ended remedial works and extra debt means more risk.
- North Shore is probably the most saturated RV catchment in NZ. Competition exists. 23% of the North Shore listings on trademe are Arena villages - this is above their market share.
- No/little continuum of care. Arena's villages do not have it. ARV could benefit from having these fill up their own care facilities. But still a con. I still dont fully understand what residents want in a village but i thought continuum of care was one of the top things.
- P/E sweated these assets hard and anecdotally reamed outgoing residents (not the DMF part). Obviously exercise extra caution whenever picking up a P/E asset.
- They note brownfield development around the edges but this seems marginal. You always throw this in to sweeten the investment thesis.
But lets be honest, the industry continues to be in growth - there are too many boomers willing to sell their mansions so they can enter a village. The product is generally great. Its hard to go wrong. Tide will only come out if house prices have a sustained fall or significant overbuilding.