RYM-Ryman

[Basil]

Just a thought KW.  How's that gated community going to work out when your Dad's health deteriorates quite a bit further, (as it inevitably will), in the years ahead?  Its tough helping one's parents make decisions like this.  I visited 7 or 8 villages and helped my parents understand that they need to be thinking 10 years ahead to what their needs are going to be in the future, not what they are now.  That's a tough thing to help one's parents come to terms with.  Aging isn't much fun for them anyway but helping them to think that far ahead can be quite a confronting experience for them to come to terms with.  In my case that involved confronting my Dad's inevitable demise with dementia and knowing my Mum would likely be on her own for quite some time.  It worked out well for both of them.   I think continuum of care is very important and some villages provide this and make it easy to transition whereas others either don't provide it or make it expensive to transition.  Choose VERY carefully!

[KW]

Have Ryman lowered the price of the unit he was looking at.?
Over 50's gated community sounds OK.
Just watch out for "body corp" cost.Usually OK for newish units, but can get very expensive on older buildings/communities.
Also are the insurances in "the Body Corp" name.?

$166 a month for BC, including insurance.  Way cheaper than the weekly service fees at a RV

[KW]

Just a thought KW.  How's that gated community going to work out when your Dad's health deteriorates quite a bit further, (as it inevitably will), in the years ahead?  Its tough helping one's parents make decisions like this.  I visited 7 or 8 villages and helped my parents understand that they need to be thinking 10 years ahead to what their needs are going to be in the future, not what they are now.  That's a tough thing to help one's parents come to terms with.  Aging isn't much fun for them anyway but helping them to think that far ahead can be quite a confronting experience for them to come to terms with.  In my case that involved confronting my Dad's inevitable demise with dementia and knowing my Mum would likely be on her own for quite some time.  It worked out well for both of them.  I think continuum of care is very important and some villages provide this and make it easy to transition whereas others either don't provide it or make it expensive to transition.  Choose VERY carefully!

Well he can always sell up and buy into a serviced apartment or dementia unit later - at least he'd still have his capital to do that.  Or he could just drop dead in his garden one day and not have the problem lol.  Family history suggests the latter.  And there is no guarantee that he would be able to transition within a village anyway, especially if Ryman et al are all cutting back on building apartments and hospital units.  
The place is just across the road from the Ryman village, so he can visit his friends and use their amenities for free

[Basil]

Payment of Premium

Eligible retail shareholders who elected not to take up their entitlements and ineligible retail shareholders will receive the Premium (less any applicable withholding tax) for each New Share sold in the Retail Bookbuild.

The Retail Premium is expected to be paid to those retail shareholders on or about Tuesday, 14 March 2023.

Extract from this morning's announcement.  This suggests they think the payment may be taxable...which I must confess this got me scratching my head a bit.  Struggling to see how the sale of an entitlement to a discounted cash issue one elected not to participate in, a sale organized by bookbuild and not in fact the result of any action by a shareholder per se, rather a lack of action on their part, could possibly be considered to be on revenue account?  Surely this is part repayment of an entitlement on capital account and yet it appears RYM in their "infinite wisdom" may have decided otherwise.
Be interesting to see if they do take withholding tax out of the 14 March payment.  One thing I am absolutely certain of, RYM's highly paid external professional advisors are paid considerably more than I am so will have looked into this a lot deeper than I have.
I think it would add insult to injury if shareholders were taxed on the miserable 25 cent premium.
Talk about that rubbing salt into the wound of this disgraceful fiasco!

[Shareguy]

Extract from this morning's announcement.  This suggests they think the payment may be taxable...which I must confess this got me scratching my head a bit.  Struggling to see how the sale of an entitlement to a discounted cash issue one elected not to participate in, a sale organized by bookbuild and not in fact the result of any action by a shareholder per se, rather a lack of action on their part, could possibly be considered to be on revenue account?  Surely this is part repayment of an entitlement on capital account and yet it appears RYM in their "infinite wisdom" may have decided otherwise.
Be interesting to see if they do take withholding tax out of the 14 March payment.  One thing I am absolutely certain of, RYM's highly paid external professional advisors are paid considerably more than I am so will have looked into this a lot deeper than I have.
I think it would add insult to injury if shareholders were taxed on the miserable 25 cent premium.
Talk about that rubbing salt into the wound of this disgraceful fiasco!

Well done picking that up Basil. The mind boggles.

[Mos]

I have a small free carry Ryman holding getting smaller by the day. The fixed fees for life deal must really be hurting in these times of high cost inflation. Will certainly be a contributing factor to deteriorating operating cash flow with no respite on the horizon unfortunately. Aside from property headwinds and unproven management, this seems like a factor that will be a real sea anchor.

[Basil]

You raise a very good point Mos that hasn't had a lot of discussion around here.
RYM over the years have a long history of marketing new developments at local bowling club's and selling off the plans with the carrot of very cheap weekly fees fixed for life.  $99 per week was the go for many of their units in years gone by and would be hopelessly inadequate in today's high inflationary environment in terms of village operating costs.  That carrot is probably more expensive these days but nevertheless I think their M.O. in terms of marketing strategy remains the same.

To the best of my knowledge all the operators except SUM offer fixed fees for life.  My understanding is that SUM's board were always very reluctant to follow this trend and maintained the right to adjust weekly fees in line with the increase in superannuation, (which I note has just had a significant boost from 1 April 2023), because they were concerned about the very thing we are experiencing now, high inflation.  I had quite a few discussions with Julian Cook the former CEO about this.  I was all for the fixed fees for life and suggested to Julian he build the cost into the asking price of the units.  I think he and the board have distinguished themselves very well here pushing back against this widespread fixed fee for life marketing tool and conferred upon themselves a significant operational advantage going forward.  Julian Cook's answer to me was always, we have no trouble selling our units with weekly fees indexed to increases in the superannuation.  People understand that prices go up over time.

I think the difference between RYM and SUM here is that RYM try and contrive a sense that people are getting something for nothing whereas of course there are no free lunches and RYM price this apparent advantage and the apparent advantage of only a 20% DMF cost into their asking prices.  Average independent unit asking price in Auckland for RYM ~ $1.4m, Summerset ~ $1.0m, (source recent investor presentations).
How are RYM going to sell down $1.4m units in Auckland with the average house price here only $1.0m?
Their answer is the units are still affordable on the basis of comparisons in the surrounding catchment suburbs. (generally considered to be within 10km's).

Food for thought.  If the real estate market keeps falling, maybe people will need to consider cheaper units outside on their immediate neighbourhood?  Maybe this confers even more advantage upon SUM?

[BlackPeter]

You raise a very good point Mos that hasn't had a lot of discussion around here.
RYM over the years have a long history of marketing new developments at local bowling club's and selling off the plans with the carrot of very cheap weekly fees fixed for life.  $99 per week was the go for many of their units in years gone by and would be hopelessly inadequate in today's high inflationary environment in terms of village operating costs.  That carrot is probably more expensive these days but nevertheless I think their M.O. in terms of marketing strategy remains the same.

To the best of my knowledge all the operators except SUM offer fixed fees for life.  My understanding is that SUM's board were always very reluctant to follow this trend and maintained the right to adjust weekly fees in line with the increase in superannuation, (which I note has just had a significant boost from 1 April 2023), because they were concerned about the very thing we are experiencing now, high inflation.  I had quite a few discussions with Julian Cook the former CEO about this.  I was all for the fixed fees for life and suggested to Julian he build the cost into the asking price of the units.  I think he and the board have distinguished themselves very well here pushing back against this widespread fixed fee for life marketing tool and conferred upon themselves a significant operational advantage going forward.  Julian Cook's answer to me was always, we have no trouble selling our units with weekly fees indexed to increases in the superannuation.  People understand that prices go up over time.

I think the difference between RYM and SUM here is that RYM try and contrive a sense that people are getting something for nothing whereas of course there are no free lunches and RYM price this apparent advantage and the apparent advantage of only a 20% DMF cost into their asking prices.  Average independent unit asking price in Auckland for RYM ~ $1.4m, Summerset ~ $1.0m, (source recent investor presentations).
How are RYM going to sell down $1.4m units in Auckland with the average house price here only $1.0m?
Their answer is the units are still affordable on the basis of comparisons in the surrounding catchment suburbs. (generally considered to be within 10km's).

Food for thought.  If the real estate market keeps falling, maybe people will need to consider cheaper units outside on their immediate neighbourhood?  Maybe this confers even more advantage upon SUM?

Wasn't there a beagle on the other forum complaining over years about SUM not offering fixed fees for life? Bad management at that time.

I understand circumstances do change ... but that's the problem with long term contracts, they don't.

[Basil]

Wasn't there a beagle on the other forum complaining over years about SUM not offering fixed fees for life? Bad management at that time.

I understand circumstances do change ... but that's the problem with long term contracts, they don't.

I still believe they could have made more money using the strategy I recommended when inflation was low, anyone's guess now.  The psychology behind fixed fees for life is it's a profoundly compelling marketing tool.  Older folks crave certainty with their costs.
Anyway back to RYM.  I think the board and management have a HUGE job to do to win back the trust of investors after this atrocious fiasco.

[BlackPeter]

I still believe they could have made more money using the strategy I recommended when inflation was low, anyone's guess now.  The psychology behind fixed fees for life is it's a profoundly compelling marketing tool.  Older folks crave certainty with their costs.
Anyway back to RYM.  I think the board and management have a HUGE job to do to win back the trust of investors after this atrocious fiasco.

No doubt - a meaningful "mea culpa" in combination with a "lessons learnt" and an approved implementation plan would not hurt.

However - Rymans problems getting caught pants down in the US dollar loan trap has absolutely nothing to do with fixed maintenance costs for their residents.

Just to be clear - I have not really any heart blood in the latter discussion, but I think it is a red herring anyway.

[Mos]

The numbers indicate that there is a real challenge with costs which I think is exacerbated by the fixed fees for life in a time of high inflation. Analysing underlying earnings for H1 FY22 of $95.9m is comprised of new sales margin $28.5 m, resales margin $78.0 m, DMF $23 m less OTHER NET COSTS of $33.6 m. By comparison H1 FY23 underlying earnings were $138.8 m is comprised of new sales margin $45.4 m, resales margin $126.7 m, DMF 29.0 m less OTHER NET COSTS of $62.3 m. Meaning that other net costs increased by 85% over the prior comparable period and were more than twice the sum earned as DMF. It seems to me that this strong growth in other net costs is likely to continue with fixed fees for life being outpaced by escalating inflationary costs. I see Ryman are have responded by changing the 20% DMF to 4 years rather than 5 years but this mitigation only applies to new residents and will not solve for existing residents with an average tenure of 5.9 years in ILUs.

[winner (n)]

Had this site for years and finally doing something with it ....still a hole in the ground so as multi story will take a while to generate cash

They left one feature off ....funeral homes are nearby

https://www.rymanhealthcare.co.nz/retirement-villages/wellington/newtown

[winner (n)]

Ryman has appointed CFO David Bennett to the newly created role of chief strategy officer.

Wonder if sideways move?

I'd rather be a CSO than a CFO anyway ...prob a bit more exciting.

[Mos]

Ryman has appointed CFO David Bennett to the newly created role of chief strategy officer.

Wonder if sideways move?

I'd rather be a CSO than a CFO anyway ...prob a bit more exciting.

Group CEO, NZ CEO, Australia CEO, Chief Strategy Officer, Chief Financial Officer - a lot of Chiefs!

[Hectorplains]

Group CEO, NZ CEO, Australia CEO, Chief Strategy Officer, Chief Financial Officer - a lot of Chiefs!

CSO, eh.  So he's got to be the man with the plan then.   No doubt he'll be getting right on releasing a strategic plan.   Strategic plans are cool, they're like a plain plan but even more plan-y. I wonder if the opposite is a non-strategic plan 🤔