RYM-Ryman

[KW]

I hear you but taking in funds and not using those funds to pay down debt also mathematically reduces the gearing ratio (but probably not to that extent).  I genuinely don't think that is what they will do with the funds.....as you say I also expect the CR funds will be used to pay down debt.  But I couldn't see in the press release where they actually say that.  To me it is shrinking away from the fact shareholders need to cough up so bankers can get their money out.  Shareholders are expected to bear more of the risk without any tangible rewards.  Irrespective of the view on that, my message remains they shouldn't disguise with flowery language the fact they are asking shareholders to cough up so they can pay down debts.  IMO they shouldn't sugar coat the press release and omit the reality.

I suspect they have a recalcitrant lender who is not prepared to extend and pretend and has put the hard word on them.  If not all of them lol.

The issue in my eyes is that the last raise was supposed to have sorted their debt level, yet all they did was borrow it all back again.  Whats to stop them doing it again?  $2.5B debt down to $1.6B debt, but back to $2.6B in another 2 years?

The costs to build are not coming down.  Inflation is going to rebound.  House prices are not going up.  These market conditions are here to stay for some time.  If they stopped building overnight, how operationally solvent are they? 

[KW]

Geez, talk about not being upfront.  There was a trading update in all that documentation as well

In a trading update with the capital raising material, Ryman said while sales volumes have been steady through to the third quarter of the March 2025 financial year, sales applications have declined "impacting projected sales volumes in 4Q25 and over 1H26".

Free cash flow: We expect free cash flow around negative $100m (previously guided negative $50–100 million range).

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[Basil]

Wow, what a total cluster f***
Pretty sure that originally, they were supposed to be cash flow positive in 2H FY25.
Quit the last of my OCA010 corporate bonds today completely exiting the RV sector.  The cash burn at a village operational level at OCA is deeply concerning.
I think there's huge systemic problems going forward with vast oversupply in the market and limited demand.  Capital gains are going to be harder to come by than hens teeth.
Need to play the acronym game again.  What's RYM an acronym for ?  A mate reckons "Rooted Your Money"  I reckon, Rorted Your Mother.

[Habitz]

Wow, what a total cluster f***
Pretty sure that originally, they were supposed to be cash flow positive in 2H FY25.
Quit the last of my OCA010 corporate bonds today completely exiting the RV sector.  The cash burn at a village operational level at OCA is deeply concerning.
I think there's huge systemic problems going forward with vast oversupply in the market and limited demand.  Capital gains are going to be harder to come by than hens teeth.
Need to play the acronym game again.  What's RYM an acronym for ?  A mate reckons "Rooted Your Money"  I reckon, Rorted Your Mother.

Rescue Your Mum or I like this one Rapid Yield Meltdown. When I needed the cash some months ago the RVs went first

[KW]

RYM (and maybe others) are starting to look more and more like institutions and not "villages".  Compare these 
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[Waltzing]

ticky tacky on cambridge st peters road...

its almost a verb now

got rymaned...

(smashed up)

[Basil]

Rescue Your Mum or I like this one Rapid Yield Meltdown. When I needed the cash some months ago the RVs went first

Reamed Your Money.  This is what happens when they suck a $Billion out of the market yet again, (much like they did 2 years ago).  It just sucks all the wind out of the sails of the market.  Its bloody frustrating.  If management weren't such completely incompetent Muppets, this never needed to happen.

I think most people's portfolio's today have had a bloody good Rymaning (Reaming). 

[Greekwatchdog]

I still cannot beleive no one really saw this coming. The last one was never enough. Then fancy releasing 4 different apartments on different properties at same time.

RYM have certainly FURBAR'd the NZX. Makes for good picking if your brave enough.

This is out of Herald. Articlr paywalled.

The Herald put a series of questions to James (CEO) this morning:

Q: Interest rates are falling, surely the cost of debt is down for you too and isn't such a problem?

A: "We saw rates move last week, but the property market and economic conditions are still very difficult and we don't have certainty around the timing of when the market might change."

Q: Why did you raise money at such a steep discount to what the company had been trading at?

A: "The offer pricing is based on market conditions, so that pricing reflects the market we're in today."

Q: Can you define growth that was mentioned yesterday as part of the $1b raise?

"The equity raise proceeds will be used to reduce debt and we're also targeting another $500m to be released from the balance sheet. As the market recovers and sales and trading conditions improve, this will give us the capacity for a return to disciplined growth."

Q: How did Ryman go selling sites in Kohimarama and Newtown in Wellington?

A: "The sites at Kohi and Newtown are currently held for sale. Newtown has sold, but has not been announced in the public arena yet because it's not material to trading."

Q: What about Takapuna, which is a hole beside a lake where work for a village is paused?

A: "That is in our landbank and in yesterday's update, we had it in our landbank."

Q: Why are third-quarter sales down so much?

A: "Due to the challenging market conditions constraining the ability of our customers to sell properties combined with elevated stock levels across the industry and the changes that Ryman made to its pricing model and also undertaking an organisational restructure during the third quarter. Of the three, the first two are outside our control, but we expect it to improve with time. The third one is within our control, so that's where we're focused."

Q: What effect is the massive re-levelling work at Edmund Hillary having on the business, what has that cost so far?

A: "That's within our capex guidance. It's a small component of that. That work is now nearing completion. We're hoping to finish in the next couple of months. That has impacted our residents. I want to acknowledge that. It's taken longer than expected."

Q: Why aren't those residents' weekly fees being cut in compensation?

A: "Residents had not been offered a reduction in weekly fees because this is a one-off. We've been doing everything we can to minimise the impact on residents as much as we can. Monitoring [of gas] is part of safe work practices. We're making sure the site is safe for our residents. The bowling green has been resurfaced."

The company owns 49 villages, which are home to 15,337 residents. It employs 7758 staff and has eight new developments under construction.

[Basil]

Reading between the lines of the RYM cap raise it seems that RYM have shot themselves in the foot by raising their DMF to 30% while simultaneously abolishing the fixed fees for life model. what they don't seem to have done is to lower their asking prices; their model was always (IMO) to inflate the asking prices so as to be able to discount the DMF and fix the fees.
Abolishing one side of the equation while hanging onto the other side has chased their buyers away - what was supposed to be a win-win for RYM has turned out to be a lose-lose.
On a positive note though, one might imagine those non-RYM buyers have now headed in the direction of OCA and others

I'd be buying more except for the fact that OCA is still keeping shareholders in the dark about sales progress (so the possibility that they too will try a cap raise is still on the table).

Come on OCA, front up!

This from Poet on the other channel was a good post.  I think he's right.  RYM units have always been the most expensive in the market and been able to be sold on that basis because of the inducements, (low weekly fees fixed for life and 20% DMF).  Only complete Muppets would think you can take away those major inducements and it won't impact sales.  I think SUM will be a main beneficiary of RYM's gross incompetence.

[mike2023]

I visited a RYM village in Hamilton yesterday. I'd live there and I don't even like Hamilton much. Parklike resort, all it needed were some pearly gates. I asked a few questions, 600 residents, 480 independent living 120 care or apartment. 2% empty spread between the two but with a wait list. 4 years old, great cafe with a view and very reasonably priced. Bowling green well attended on the day. I have seen their new sites in Christchurch and Cambridge, I can't see how it will remain uninvestable over the longer term.

[Basil]

Hope the underwriters have deep pockets.  Market is saying they've had enough of them handing around the begging bowl because they can't get the basics right.  Match price in opening session at this stage with 4 minutes to open is well south of the capital raise price of $3.05 at $2.90.
RYM's management efforts in recent years no better than OCA bumbling efforts so deserves to be trading on the same metrics in my opinion. 
Last stated NTA is $6.02 and this capital raise, (if successful), will reduce that to approx $5 by my calculations.  Apply the same ~55% discount to NTA that OCA are trading on and its plausible to make the case they're only really worth 45% of $5 = $2.25!

Of course all the brokerage firms will issue glowing reports in due course that they've turned a corner, trying to extricate themselves from all the shares they got caught with in the underwrite...that's my prediction.

I've seem quite a few RYM villages.  Some of them are very nice, (especially the giant Edmund Hillary village but that's sinking into the ground as it was built on a former rubbish dump), and others bear a startling resemblance to a bunch of glorified prison cells.

[KW]

I visited a RYM village in Hamilton yesterday. I'd live there and I don't even like Hamilton much. Parklike resort, all it needed were some pearly gates. I asked a few questions, 600 residents, 480 independent living 120 care or apartment. 2% empty spread between the two but with a wait list. 4 years old, great cafe with a view and very reasonably priced. Bowling green well attended on the day. I have seen their new sites in Christchurch and Cambridge, I can't see how it will remain uninvestable over the longer term.

You can have a great product, and still go broke.  Its whether or not you have a great business model that matters.  

I looked at a number of villages in Chch in 2023.  Kevin Hickman (in build stage) was too crowded, no privacy, just an obvious grab for money by stuffing as many units and apartments on a site with no thought given to the amenity of the residents there.  Ngaio Marsh (in the photo above) was lovely, but RYM was skimping on their post occupancy refurbs, and merely giving them a lick of paint and new carpet.  They still had original kitchens and bathrooms (circa 1999) yet were still charging the same amount as the brand new units in other villages. 

[Basil]

Kevin Hickman (in build stage) was too crowded, no privacy, just an obvious grab for money by stuffing as many units and apartments on a site with no thought given to the amenity of the residents there.

Basically, everything they've been developing since Simon Challis left the company.   

[KW]

This from Poet on the other channel was a good post.  I think he's right.  RYM units have always been the most expensive in the market and been able to be sold on that basis because of the inducements, (low weekly fees fixed for life and 20% DMF).  Only complete Muppets would think you can take away those major inducements and it won't impact sales.  I think SUM will be a main beneficiary of RYM's gross incompetence.

The irony is if RYM dropped the price of their units, that would enable vendors to drop the price of their houses to get a sale over the line.  But they arent, they're doing "cashback" offers (or idiotic travel vouchers).  This is because they cannot drop prices without triggering an overall devaluation of their portfolio values, and triggering bank covenant breaches.  Caught between rock and hard place. 

Hopefully the cap raising will take the bank pressure off and allow them to start meeting the market.  Even if this means statutory losses for the next few years.  Better to be operationally profitable and take a statutory loss, then to be operationally insolvent while booking statutory profits.

[KW]

I still cannot beleive no one really saw this coming. The last one was never enough. Then fancy releasing 4 different apartments on different properties at same time.

Most people did see this coming.  Thats why the share price has been in a downtrend since 2021 and the last capital raising did nothing to change that.  You only needed to watch the debt level start tracking back up every six months, and you knew that the last cap raising did absolutely nothing except transfer the debt from a private credit provider to a commercial bank.