OCA - Oceania Group - retirement villages

[Snow Leopard]

ALL of you are WRONG.

but some of you are wronger than others.

Snow Leopard Lunch:

image from here

[SailorRob]

I assume you've included pre-IPO data to get a CAGR that high. This probably sounds newbie but how do I access those financial statements prior to the ones published in their annual reports? Thanks

Good question, from the IPO document.

IPO Documents are a must read even if it's many years later.

[bull....]

ALL of you are WRONG.

but some of you are wronger than others.

Snow Leopard Lunch:

image from here

lol so true

they often say the more banter in a thread the more of a dog it is.

[winner69]

ALL of you are WRONG.

but some of you are wronger than others.

Snow Leopard Lunch:

image from here

Good one Snowy ….something wrong with some posters thinking if they are all wrong eh ….and some wringer than others

[SailorRob]

ALL of you are WRONG.

but some of you are wronger than others.

Snow Leopard Lunch:

image from here

I'd have to agree considering the well thought out and expressed reasoning you have showed. Very hard to argue.

[SailorRob]

So Sailor you buying OCA for the float.. but why not SUM or RYM etc.. they got a float too, and bigger..?

Why OCA

In what way are you measuring the float to say it's bigger?

[ValueNZ]

In what way are you measuring the float to say it's bigger?

From memory OCA has the largest float in relation to market cap.
Don't quote me on this but I think it goes OCA, ARV, RYM, SUM, RAD.

[SailorRob]

Because OCA is under a dollar n Sum n RYM sp are too high

So OCA is cheap as chips...like BPG CEO said...cheap like Tuesday's Taco in USA

Yeah and Berkshire is way too high at $850,000 a share. MEE today at less than 1 cent is much cheaper.

[bull....]

You don't need to. It's been done already by the guys whose full time job it is to follow this stock closer, better & more professionally than any of us can dream of.
I don't need to dust off my textbooks for the definitions you'll use.

According to Arie Dekker of Jarden it was -$10m for FY23.

I'd still love to have Liz muddle around a response to the question though without a pre-prepared script or access to someone prompting her with answers.

dekker is better at analysis than those in this thread

[SailorRob]

I think people are indoctrinated into the classic property investment model of, buy a property with debt and rent it out, hopefully covering all expenses and making a profit.

RV's are property businesses, but they aren't like that simple model. Lets make it personal, you buy an initial property with bank debt, but instead of just renting it out, you convince your tenant to pay you at the time of sale, the value of the property at ~15% discount to it's market value (money in the bank) and you guarantee you will pay back that money less 20-30% when they leave. So you have that money, interest free, until they leave.

The next property you build/buy, is with the money your first tenants 'loaned' to you interest free. And when you 'sell' the right to occupy that next property, you do so at a margin to what it cost to buy or build. And so on and so forth.

You'd only get more interest liable money from the bank if you wanted to accelerate the investment in building or getting more property, which as above, is rinse and repeat, but obviously more costly as you have to pay interest on that bank loan. In other words, the RV model is still sustainable without bank loans, if they don't want to accelerate development or land bank.

In the meantime, your tenants pay you rent as well! They wouldn't 'buy' (ORA) the property AND pay rent, unless there were some wrap-around services, whether they need it, or not, or may need it sometime. So they not only pay you for the property, but they pay you rent for it as well.

So the more properties you fund through your 'tenants' deposits and rent, the more properties you have and tenants and funding (loans) and rent, and growth in your properties assets increases and this goes on and on ad infinitum. Even if the costs to provide the wrap-around services that the tenants may or may not require, exceed what the rental income is, is largely immaterial. That is the fringe around the core property and growth business model. Call it a loss leader, or whatever.

One day your tenant leaves. Your rental income stops, but they or their estate pay you by deduction from the amount you pay back of their 'loan', to renovate the property (DMF) before you sell the right to occupy again, and get the next 'loan' and rental income from it. Then, when you sell the property to the next person, you pay the original tenant back the 'loan', less 20-30% retained margin.

This is nothing like a standard property investment company, there is one huge difference. The power of the float, which is the no interest payable 'loan' from the residents, and the leverage that comes from that.

As an investor, this is what you're buying into and hope to see continue to grow over time, the growth in property assets and income streams, funded by no interest loans that sustain various margins. When the market wakes up again and realises RV's aren't traditional commercial property investments and have demographic tailwinds for decades to come, we should expect continued growth and substantial re-rates in the market valuation of the companies SP.

This is all well and good Baa_Baa, but what about the free cash flow?

(JOKE)

Great write up as you know I have posted many similar but this is really good. Very interesting you bring up the services possibly exceeding rental income and thus being a loss leader, this again reminds me of insurance where much of the industry runs at a loss on the underwriting and associated expenses, in order to get vast sums of cheap float to make an investing margin on. NOT Berkshire or Markel, but most.

The model you have explained above is truly exceptional as anyone who has studied businesses in great detail over a long period of time will understand.

The pushback is always from those for which it is a vast intellectual stretch to be able to understand it (imagine trying to explain insurance to them)

No question that analyst that Jigger goes on about understands the 'interest free loan' aspect but they don't truly appreciate it for what it is, and how rare this is.

As I have said the discount to true NTA isn't 50% its more like 75%, this float is such an asset that it would make Buffett blush.