OCA - Oceania Group - retirement villages

[Baa_Baa]

Don't know about them but the top gun team are feeling pretty good aren't they Just the start though...lots of fun in the years to come.

Reading these forums, it doesn’t seem that many have a long term view, but that’s what makes buying at historical lows so compelling. If one has a view for the future, OCA is a no brainer.

[Waltzing]

Retirement sector = long term unless housing is replaced as a base asset class by something else.?

Global crisis are buying time events for this sector surely?

Notice Mr B's large investment in this sector.

A ten year investment?

[Beagle]

Yes I am looking at this as a ten year investment or more.
Julian Cook of Summerset once told me you don't make the real money out of retirement villages until the ten year point.
To understand what he means by this is to understand this sector.

In SUM's case their average resident stay's about 9 years. (In OCA's case its going to be a lot less, but I digress).
Its one thing to develop a village and get a development margin on units sold, (which actually isn't much when you consider that a lot of common area buildings and facilities have to be built at the same time which don't really give much of a return at all)

What's he's talking about is the real money, not the 25% development margin.
For example John and Jenny buy a lovely unit at say Ellerslie for say $650K. Nine years later when they pass away their estate gets back about $450K after deductions but the unit is resold for $1,450K with nine years compound capital growth in value and the company makes $1m tax free on resale which is obviously vastly more than the 25% development margin when the $650K unit was first sold = $162K which was taxable.

The secret sauce that very few people are understanding with OCA is that the churn will be much faster...clipping the ticket for 30% every few years.

We will see tremendous gains in the next decade or two, and in OCA's case their dividend yield is the highest in the sector and dividends will grow really strongly in the future so its the perfect retirement stock for me.

Take SUM as an example to help understand what sort of returns compound tax free growth produces. They listed in November 2011 at $1.30, now just on $10 and not quite 9 years old. Check out the returns on RYM shares since they listed and you start to understand the power of compound tax free growth.

I think with this post I might have talked myself into getting even more...it wouldn't be the first time that in putting my thoughts down on paper, (so too speak) I've realized the full extent of the opportunity and bought more.

[Waltzing]

Thank you MR B and im sure all investors are interested in the OCA model to provide an opportunity to add balance to their portfolios.

Yes we have had a small order in for a few days now in holding company to add to our allotment in sector and expect to add more over the coming 2 years.

[Wsp]

Beagle,
Why will the churn be faster for OCA compared to the other retirement stocks?

[wagwan]

Beagle,
Why will the churn be faster for OCA compared to the other retirement stocks?

Larger portion of OCA suites being care-based, by nature higher churning and generally speaking older occupants

[Beagle]

Larger portion of OCA suites being care-based, by nature higher churning and generally speaking older occupants

Same goes for their apartments.

[dubya]

Larger portion of OCA suites being care-based, by nature higher churning and generally speaking older occupants

Also these were the DMF fees for OCA about 18 months ago. I don't think they've changed.

Individual accommodation: 30% over three years. (10% per year accrued and apportioned on a monthly basis)

Care Suites: 30% over three years. (First year fixed at 15% - irrespective of whether a person stays one week or eleven months. Second year 10% and third year 5%. Second and third years accrued and apportioned on a monthly basis)

[Waltzing]

Thank you @ 1.29 for holding company today.

DISC: Bought back at 1.09 privately. Traded at ranges .70 - 1.30.

now holding long term or until model fails to work.

[Cyclical]

Traded at ranges .70 - 1.30.

Crazy how quickly it's come up really...only recently we were talking OCA must surely ride the rising tide with the rest of the sector. I look back to when it was around the 70c mark, trying to talk my parents into getting into it with their expiring TD's, conservatively telling them that if you don't double your money from these levels in 5 years, then I'll eat my hat. Of course we're not quite there yet, but something tells me my hat's safe lol.

Then at about the 80c mark asking my bank manager if I could borrow against the house to buy a few more...unfortunately it was against their policy...should have changed banks! Anyways, well positioned with this making up about 70% of current portfolio at an average of 79c..in it for the long term. Can't sell cos of tax, can't buy anymore as I need to diversify!