OCA - Oceania Group - retirement villages

[ValueNZ]

Or simply put, they raise capital, use that capital to build units, sell the units & use the proceeds & debt to build more units, rinse & repeat.

Pretty standard developer practice, or any business really, who sells widgets to buy & sell more widgets.

No magic float.

Even SailorBoy finally agreed the 'float' doesn't even-tempered until they stop building and build a pile of cash from the DMF on resales.

Yeah Daytr, it's standard practice for property developers to recieve cash upon sale of a unit and retain ownership of that unit.

[Baa_Baa]

Or simply put, they raise capital, use that capital to build units, sell the units & use the proceeds & debt to build more units, rinse & repeat.

Pretty standard developer practice, or any business really, who sells widgets to buy & sell more widgets.

No magic float.

Not really, that's the standard property developer model. OCA don't really have to "raise capital' before they develop, that's only done when they want to accelerate development. There is plenty of capital available at no interest to develop their properties.

Look, people buy an ORA, OCA gets the whole amount including DMF, they can use that however they want to. When the resident departs, OCA pay back to the resident estate ORA-30%, when the ORA is re-sold. That 30% is never repaid while in meantime 100% of it is available for leveraging development.

Who cares wether it's called a 'float' or not, it is a very successful business model and about 95% of clients are satisfied with it. It's very similar across the whole RV sector. There's about 480 'retirement villages' in NZ and a large proportion of them sell ORA's for their independent living 'units'. It's just that not all of them are as focused on growth by development as the listed RV's are.

Really, the only question on my mind is whether OCA can convert all of their backlog of property into ORA's (sales), and start rewarding their shareholders.

It's not about SailerRob, though credit to him for expanding our minds as to strength and the sustainability of the business model through leverage of the large and ever growing pile of cash that will never be repaid, never incurs interest, is the foundation of growth. Time to move on.

[Baa_Baa]

Yeah Daytr, it's standard practice for property developers to recieve cash upon sale of a unit and retain ownership of that unit.

This is the big difference, but to be fair, a lot of the big developers (the listed ones) don't 'sell' their properties, they lease them out to renters and do retain ownership. The underlying difference between the RV's and the listed property developers is the upfront sale of an ORA (RV's), and how that can be leveraged, versus the build it-lease it model of the property developers. Both retain the assets, but the RV's realise substantially more cash upfront and can recycle it, than the regular listed property developers, who rely on payback over a much longer period.

[Snow Leopard]

There are some pretty weird beliefs on this thread.

But then I still believe in HGH.


AIR has a better 'float' than OCA.<sup>*

*</sup>subtle

[mistaTea]

There are some pretty weird beliefs on this thread.

But then I still believe in HGH.


AIR has a better 'float' than OCA.<sup>*

*</sup>subtle

The only ‘float’ OCA has is akin to my turd after a couple of pints of Guinness.

[Daytr]

Yeah Daytr, it's standard practice for property developers to recieve cash upon sale of a unit and retain ownership of that unit.

That ownership is only worth the DMF i.e the 30% plus the margin between buying back and reselling, less any refit costs.

And as I discussed with Sailorboy, that is the float, not the 100% of what they sell a unit for on day one.

[Daytr]

Not really, that's the standard property developer model. OCA don't really have to "raise capital' before they develop, that's only done when they want to accelerate development. There is plenty of capital available at no interest to develop their properties.

Look, people buy an ORA, OCA gets the whole amount including DMF, they can use that however they want to. When the resident departs, OCA pay back to the resident estate ORA-30%, when the ORA is re-sold. That 30% is never repaid while in meantime 100% of it is available for leveraging development.

Who cares wether it's called a 'float' or not, it is a very successful business model and about 95% of clients are satisfied with it. It's very similar across the whole RV sector. There's about 480 'retirement villages' in NZ and a large proportion of them sell ORA's for their independent living 'units'. It's just that not all of them are as focused on growth by development as the listed RV's are.

Really, the only question on my mind is whether OCA can convert all of their backlog of property into ORA's (sales), and start rewarding their shareholders.

It's not about SailerRob, though credit to him for expanding our minds as to strength and the sustainability of the business model through leverage of the large and ever growing pile of cash that will never be repaid, never incurs interest, is the foundation of growth. Time to move on.

The capital I refer to is the equity initially raised to float the company i.e what is owed to shareholders. They built the first lots, sold them & reinvest that capital & debt again, to develop more & so on.

That 30% is the DMF and this is the key to the ever expanding value or 'float', that plus any margin made on sales & resales.
Less any refit costs on the resales of course.

[mistaTea]

The capital I refer to is the equity initially raised to float the company i.e what is owed to shareholders. They built the first lots, sold them & reinvest that capital & debt again, to develop more & so on.

That 30% is the DMF and this is the key to the ever expanding value or 'float', that plus any margin made on sales & resales.
Less any refit costs on the resales of course.

Ever expanding is a big call, as construction costs have exploded while property prices have taken a hit as we have seen. Perhaps over the long run that figure will increase, but there are a lot of variables at play. And we should stop bandying around the term float, because I think it is incorrect and misleading.

Refit costs is another issue. Do RV operators fit the whole bill for this or do they charge departing residents for some of it?

Anyway, unlike the insurance industry (which actually does produce float, and can reinvest that money into anything they want) RV operators can only really invest their earnings (which is all the DMF is) from reselling units to build more units and hope the ponzi scheme can continue forever. In the meantime, using their earnings (plus a lot of debt) to build more units is expensive, takes a lot of time, is subject to all sorts of regulation, and depreciates.

The only companies that do produce float - insurers - have none of that. Another key difference.

But anyway, I will probably just get more -ve rep for not agreeing that OCA has float and is the most undervalued and awesome company on the NZX!

[winner69]

AIRflost is over $2 billion

And they get to keep a fair chunk of that when they cancel flights

So as Snowie says AIR has a better float than OCA ….subtle

[Valuegrowth]

AIRflost is over $2 billion

And they get to keep a fair chunk of that when they cancel flights

So as Snowie says AIR has a better float than OCA ….subtle

AIR will go up once cost of doing business come down.