Retirement Sector Stocks

[Poet]

I think the issue is more to do with the prices of units being completely out of whack with current property prices.  They are relying on people to sell their old 90's unrenovated homes for far more than the average home sale price, in order to cover the too high prices of the RV unit. 

At my Dad's SUM village, they are at their lowest occupancy level in years, due to a lot of units having been "sold" (and reported as such in SUM accounts) but nobody has moved in because they havent been able to sell their homes and actually settle on the sale.  Which is not surprising considering the price of the SUM units is now $820k while the average home price in Christchurch is $775k.   Add in RE commissions and legal fees on the sale, and the gap is even wider.

RV unit prices 2 years ago was $775k - so SUM have put prices up over the last 2 years, while property prices in Christchurch have been flat to falling slightly.  (Although the $400k loss on sale on the house down the road this year may be an indicator that is about to change)

Considering most people expect to sell their property, downsize into a RV unit, and still have a bit of money left over for a nice retirement, there is now a major problem.  Sellers cant afford to drop their prices because they need the money, so their homes sit unsold, and SUM units appear "sold" but remain empty. 

I would ignore NTA vallues for retirement villages.  They are going to have to lower their prices, and that NTA will drop significantly.  The market is pricing them correctly in my opinion.

Some good points although I suspect that the average home owned by a 70 year old will be of higher value than the the overall average house value

[KW]

Some good points although I suspect that the average home owned by a 70 year old will be of higher value than the the overall average house value

They are usually unrenovated since the 90s though - and in need of modernisation.  No double glazing or insulation.  And when you can go out to Rolleston or Halswell and buy a brand new 4 bedroom home for $750-$800k those tired old homes will need a decent discount to move.  Which looks to have started happening.

[Basil]

The real inflation adjusted loss in value is really ugly.  https://archive.ph/H5LuK

[winner (n)]

The real inflation adjusted loss in value is really ugly.  https://archive.ph/H5LuK

But you know those 21 peaks were a nonsense and unsustainable so the Hefald guy is talking nonsense

Current prices are back on long term trend ....somebody has to tell him that in real terms might get back to 2021 levels in the mid 2030's
.

[Redhorseshoe]

Just some info on OCA's new marketing team re the Helier around xmas time last year.

OCA logo is now on a local golf club electric carts due to a large donation.

A Info evening  and booze up was run for members  to have a look through.

Howerver it was noted that there was no follow up contact after the event which you would expect for a "dynamic sales team" being paid big dollars to land sales.

[Basil]

Heard Oceania add on the radio offering a $50,000 incentive package on new units at the Helier.  They are obviously struggling with sales to offer an incentive like that when they recently gave their units prices there a pretty big haircut.

[777]

Ryman are offering 10,000 New World Dollars if you sign up.Times are tough.

[Greekwatchdog]

Mets result up on revaluation gains. Paywalled article

https://www.nzherald.co.nz/property/...KFMP2NIDLDZDM/

[Basil]

https://www.nzherald.co.nz/property/retirement-village-giant-metlifecare-reports-strong-result-sells-5464m-occupation-rights/C2WI2RV6RZD5RKFMP2NIDLDZDM/

$66m profit on $6.96 Billion of assets, less than 1% return.  Hmmm

[winner (n)]

https://www.nzherald.co.nz/property/retirement-village-giant-metlifecare-reports-strong-result-sells-5464m-occupation-rights/C2WI2RV6RZD5RKFMP2NIDLDZDM/

$66m profit on $6.96 Billion of assets, less than 1% return.  Hmmm

Oceania NPAT as % assets is 1.2%

[Greekwatchdog]

Sounds like Earl up to his old tricks again and sprucing mediocrity up.

Anyway roll on 16th. Maybe us retail investors get some sort of update from OCA CEO, then maybe not given who we are treated

[winner (n)]

Sounds like Earl up to his old tricks again and sprucing mediocrity up.

Anyway roll on 316th. Maybe us retail investors get some sort of update from OCA CEO, then maybe not given who we are treated

Suzanne doesn't do a bad job of sprucing up mediocrity ... is it a necessary trait for CEOs in this sector

[Greekwatchdog]

Suzanne doesn't do a bad job of sprucing up mediocrity ... is it a necessary trait for CEOs in this sector

True, hopefully she can change that from here but they may require a change with a board that celebrate there on milestones, not those that are aligned to the shareholders

[Basil]

SUM returned $127m for the half year on $8.7B assets 1.46%, say 3% for the full year, approx triple that of OCA and MET.  3% not a terrible return on assets when most of the assets are funded by interest free perpetual loans from residents that are never repayable, (old loan is repaid only by new incoming resident and is not at the risk of the retirement village company..

The problem for the whole sector is what if the Govt mandates a, say, compulsory 6 month buy-back of units ?

[Dolcile]

Basil, I think you are hinting at this; but I think a better measure is return on total assets,net of resident liabilities. i.e. reflected the operators (and shareholders) interest in the assets.