RYM-Ryman

[Basil]

He's not that old and is still fully functional so only looking at a decent sized independent living unit.  He would prefer something with a garden.  His friends have bought a $1M+ 3 bedroom apartment in KH and they are the ones who have talked him into it, so he's off for a look see this week.  I think he wants to be with people he knows, so that is the Ryman KH or The Russley one which has nothing suitable available.  The location of the Ryman one is quite good, close to Yaldhurst which is where he was looking previously to buy a house, because I told him if he moved further out I wouldnt be visiting 

I might suggest he at least has a look through the Summerset one at Avonhead.

Good to share happy times with your friends as you get older.  No worries about it being more expensive, I am sure he has a kind daughter who could easily afford to loan him a few hundred thousand interest free and wouldn't miss it     

[winner (n)]

Man from Castlepoint says Ryman a classic value trap

Mind you he could have replaced Ryman with say Oceania and said Oceania a classic value trap


https://www.nbr.co.nz/margin-call/ryman-looks-like-a-classic-value-trap/
Possibly paywalled

[Basil]

Forsyth Barr warns on debt level's in certain sectors and singles out Ryman - paywalled
https://www.nzherald.co.nz/business/debt-warning-analysts-are-avoiding-these-highly-leveraged-sectors/LGKHWCGNN5ALTBKUG7DU52QYZI/
Says others in the sector should be okay if interest rates rise another 1-2 percent.

[winner (n)]

Cool chart from that NBR article on Rymans debt over the years

You cannot view this attachment.

[Basil]

WOW - you weren't kidding when you said that was STELLAR growth in debt and yet RYM bonds trade about 75 bps lower than OCA bonds in the NZDX debt market...go figure?

[Minimoke]

Cool chart from that NBR article on Rymans debt over the years

You cannot view this attachment.

probably need a chart of their assets as well.

[winner (n)]

probably need a chart of their assets as well.

Would look good as well but probably not as steep the last few years ...hence market concern

[Minimoke]

Heres a 7 year summaryYou cannot view this attachment.

[winner (n)]

Heres a 7 year summaryYou cannot view this attachment.

That debt ratio shot up to 45.2% at half year ....that's what has spooked many

[Teitei]

That debt ratio shot up to 45.2% at half year ....that's what has spooked many

Do total investment property assets to equity ratio.

I have it at $8.7 billion to $3.6 billion so 2.41 times.

Means a 10% fall in property values impact NTA by 24.1%.

NTA as at 30 Sep 2022 was $7.13 so allowing for say, 15% fall in property values will reduce NTA by 36% = $4.56.

RYM sp today at $6.30 implies market sees RYM's property values only down 5% - rather heroic assumption.

Surely a capital raising is on the way to reduce debt.

[Minimoke]

That debt ratio shot up to 45.2% at half year ....that's what has spooked many

Debt, in itself doesn't worry me. First thing I look for is ability to repay costs of debt. Then ability to repay in conjunction with capital management plan. Also what the debt is used for (I'm not a fan of borrowing to pay dividends). And the asset/equity ratio.

Rymans would make me feel very uncomfortable. Its going the wrong way in times of increasing interest rates.

[Basil]

Ryman have always priced their units right at the top end of the market.
I understand they are 'delivering" a lot in the current half.
"Deliver" is a euphemistic term in the industry because that simply means "completed".
The question now that real estate has fallen quite a bit is will people still be drawn to their high priced units given they're getting a lot less for their homes?
I think the chance of a major capital raise this year is VERY high.

[KW]

Well we all saw that coming LOL

$902M capital raising, and suspension of the dividend
https://www.interest.co.nz/business/119662/retirement-village-operator-ryman-says-it-has-higher-debt-it-comfortable-current

Ryman had also slowed and/or paused construction at six existing sites and revised its development pipeline towards lower density developments, "reflecting prudent management decisions made in response to elevated debt levels and changing market conditions including rising interest rates, the outlook for residential house prices, elevated construction costs and supply chain constraints".

The company is expecting to report an "underlying profit" for the year to the end of March 2023 of approximately $280 million – $290 million. 

It says following completion of the share offer, "Ryman intends to re-commence construction of certain projects on a staggered basis and the delivery of its re-prioritised pipeline".  Ryman's re-prioritised development pipeline is to deliver approximately 1,000 new retirement village units and care beds in the 2023 financial year, 750-800 new retirement village units and care beds in 2024, and 850-900 new retirement village units and care beds in 2025 "to reflect prudent management in changing market conditions".

[BlackPeter]

Well we all saw that coming LOL

$902M capital raising, and suspension of the dividend
https://www.interest.co.nz/business/119662/retirement-village-operator-ryman-says-it-has-higher-debt-it-comfortable-current

Ryman had also slowed and/or paused construction at six existing sites and revised its development pipeline towards lower density developments, "reflecting prudent management decisions made in response to elevated debt levels and changing market conditions including rising interest rates, the outlook for residential house prices, elevated construction costs and supply chain constraints".

The company is expecting to report an "underlying profit" for the year to the end of March 2023 of approximately $280 million – $290 million.

It says following completion of the share offer, "Ryman intends to re-commence construction of certain projects on a staggered basis and the delivery of its re-prioritised pipeline".  Ryman's re-prioritised development pipeline is to deliver approximately 1,000 new retirement village units and care beds in the 2023 financial year, 750-800 new retirement village units and care beds in 2024, and 850-900 new retirement village units and care beds in 2025 "to reflect prudent management in changing market conditions".

Mmh - just looking at your standard footer. I suppose you don't recommend to holders to take up their rights (which basically would be buying in a downtrend), do you?

Or do you feel that normal TA rules do not apply to a CR?

[KW]

Mmh - just looking at your standard footer. I suppose you don't recommend to holders to take up their rights (which basically would be buying in a downtrend), do you?

Or do you feel that normal TA rules do not apply to a CR?

I'm not a financial advisor so I'm not advising anyone to do anything.  All I can say is that I never have this problem, as I would not be in the position of being a current RYM shareholder, therefore would not have to decide to take up rights or not.  

The problem with capital raisings done at big discounts that trash the share price (and therefore disrupt the TA) and designed to bail companies out rather than to grow them and add future earnings, is that there still remains the risk of more downgrades in the future.