(STRICT) OCA - Oceania Healthcare

[Hectorplains]

As at September 271 new and 73 resales available. of the 344 soem41 are Under Application which I assume is buyers in throes of buying.

Yeah, "under application" is unhelpful given that it's not a formal, defined legal term in New Zealand property law. It is commonly used by real estate agents to indicate the current status of a rental property listing, whereby a prospective tenant has submitted a formal application for a rental property, and the landlord or property manager is reviewing it (background checks, references etc.)   

[Basil]

It has been there every year since FY17.

That's a bizarre situation Ferg,

You may recall Ryman used to guarantee they would buyback a former resident's unit within 6 months and it used to form one of their key 7 promises which featured very prominently in their marketing including on their website.  It never used to be an issue for them when they had first mover advantage and most of their villages had waiting lists but as the market gradually changed after Summerset listed it was very quietly dropped many years ago as it stated costing them too much money and cash flow.

To the best of my knowledge the 12 month buyback that Oceania appears to be doing has never featured prominently in their marketing, (that said I no longer follow this company and only have an academic interest as to why it persistently underperforms, my unhealthy obsession with train wrecks, so this may have featured in their marketing at some point), and yet now appears to be on industry leading terms and is costing shareholders significant holding costs and cash flow with stock held for resale.    It appears this is another reason why OCA have always had very high stock level's and have woefully underperformed the sector since they listed.

It beggars belief they would not include this in their marketing as one of their key promises to residents and key points of difference to their competitors.

Questions shareholders might like to ponder
1. Why have OCA not promoted this policy as a key point of difference in their marketing material ?
2. What is this costing shareholders ?
3. If its not costing shareholders a lot in terms of holding costs and cash flow how else do you explain why shareholders have not received a single cent in dividends in years ?

Intelligent thoughts shared on this most unusual situation are welcome, the far too common abuse and personal attacks from the usual perpetrators are not.

[winner (n)]

As at September 73 resales available. Previous 12 months total sales were 330.

There were 271 new units for sale. Previous 12 months there were 159 sales

Resales seem to turnover well but new sales numbers highlight the ongoing problem in that takes a while to move on development stock.

[Greekwatchdog]

As at September 73 resales available. Previous 12 months total sales were 330.

There were 271 new units for sale. Previous 12 months there were 159 sales

Resales seem to turnover well but new sales numbers highlight the ongoing problem in that takes a while to move on development stock.

Thats what happens when you have so many appartments and care units to sell down.
Up to $0.90 today. Interesting increase post half year.

Thou to justify they still have to show the money to the market

[Ferg]

As at September 73 resales available. Previous 12 months total sales were 330.

There were 271 new units for sale. Previous 12 months there were 159 sales

Resales seem to turnover well but new sales numbers highlight the ongoing problem in that takes a while to move on development stock.

The 271 includes care suites so it's a mix of independent living units & care suites....not forgetting there were 40 new care suites delivered in HY26.

From memory Maverick mentioned it typically takes 3 years to sell down a newly built site.  There is often a slow start as people don't want to be first into an empty building, but once you surpass maybe 50%, then the buzz & momentum takes it to full capacity.  So the new stock numbers are sensitive to new builds plus I think everyone (myself included) over-estimated how fast The Helier would sell down.  Whilst it has stunning views and is a stunning complex, it's not 100% convenient in that older folk can't necessarily walk to the local village....what a shame, they have to go in the limo instead! 

Another thing to keep in mind with premium apartments such as The Helier, OCA changed their policy for recognising the DMF income for 'premium apartments' - this is a relatively new thing.  The impact is less revenue in the P&L for any reporting period, as the DMF that is charged in the first 3 years is now released into the P&L over 7 years instead of 5.  Previously all apartments were 5 years.  From AR25:

The timing of the recognition of deferred management fees is a critical accounting estimate and judgement. The deferred management fee is recognised on a straight line basis over the average expected occupancy. The expected periods of occupancy are based on historical Group averages, for the relevant accommodation they are estimated to be 7 years for units and premium apartments, 5 years for apartments and 3 years for care suites from the date of occupation.

[Buzz]

That's a bizarre situation Ferg,

You may recall Ryman used to guarantee they would buyback a former resident's unit within 6 months and it used to form one of their key 7 promises which featured very prominently in their marketing including on their website.  It never used to be an issue for them when they had first mover advantage and most of their villages had waiting lists but as the market gradually changed after Summerset listed it was very quietly dropped many years ago as it stated costing them too much money and cash flow.

To the best of my knowledge the 12 month buyback that Oceania appears to be doing has never featured prominently in their marketing, (that said I no longer follow this company and only have an academic interest as to why it persistently underperforms, my unhealthy obsession with train wrecks, so this may have featured in their marketing at some point), and yet now appears to be on industry leading terms and is costing shareholders significant holding costs and cash flow with stock held for resale.    It appears this is another reason why OCA have always had very high stock level's and have woefully underperformed the sector since they listed.

It beggars belief they would not include this in their marketing as one of their key promises to residents and key points of difference to their competitors.

Questions shareholders might like to ponder
1. Why have OCA not promoted this policy as a key point of difference in their marketing material ?
2. What is this costing shareholders ?
3. If its not costing shareholders a lot in terms of holding costs and cash flow how else do you explain why shareholders have not received a single cent in dividends in years ?

Intelligent thoughts shared on this most unusual situation are welcome, the far too common abuse and personal attacks from the usual perpetrators are not.

So in your mind they're damned if they didn't, and damned if they do, either way, they're damned. There's no point in trying to answer your questions, you'll figure out a way to deflect and shaft OCA, as you always do.

80% up from the ridiculous low of 0.51 and people are still complaining! Any momentum trader would've spotted this and put aside their misgivings for a sizeable capital gain. LT investors on the other hand will have bought in large and reduced their average holding price, which most will be profitable by now.

Enough of the bagging OCA, the only remaining detractors are the ones who missed both the trade, and the LT accumulation.

[Ferg]

Good work there Ferg

Re DFM realised. I enquired once and was told it was the difference between the new DFM and the amount of the DMF included in the previous sale.

Thanks.

I think that has been mis-remembered.  At the time of the resale, the full DMF for the resale is not known given AFAIK it takes 25 months to charge the 30% (i.e. in months 1, 13 & 25).  It is the deduction from the ORA payment for an outgoing resident.

[winner (n)]

Thanks.

I think that has been mis-remembered.  At the time of the resale, the full DMF for the resale is not known given AFAIK it takes 25 months to charge the 30% (i.e. in months 1, 13 & 25).  It is the deduction from the ORA payment for an outgoing resident.

When it was explained to me it went along the lines like this -

A unit sold for say $600k is going to produce DMF $180k over x years

The unit resells some years later for say $800k so expected DMf from the resale is $240k

Realised Gain on DMF is $60k (new $240k less previous $280k)

Seemed to make sense

I might have been told incorrectly but that's how I have understood it ever since

Would love to be corrected if this is wrong.

[Dolcile]

I'm not sure if this is helpful but..

A unit sold for $600k with a 30% has a $180k DMF.

The DMF contractually accrues to the operator over a 3 year period (i.e. it becomes a receivable, net off the amount owed back to the resident).

The DMF income is recognised over the expected tenure of the resident, normally 9 years.

If the unit is later sold for $800k. The amount is allocated as follows:

$420k to repay outgoing resident/their estate

$180k to settle the amount owing by the resident to the operator

$200k is a realised capital gain (but doesn't flow through the income statement because there isn't actually a sale, there is just a change in value of the investment property.

[winner (n)]

Just seen a network graph of Directors of NZX50 companies.

If I read it right it seems Oceania Directors are also involved with Heartland, Mercury, Tourism Holdings, Skellerup and Ebos

Pretty diverse experience to bring to Oceania Boardroom

[winner (n)]

Good news ... OCA share price going to outperform the SUM share price in the future ... for how long nobody knows

Chart shows why. There's been an 'inflection' point and the line is 'pivoting' up wards

Many said it would take OCA 7 to 8 years to show their true worth. Maybe it's now happening

Hey Basil me ol' mate - did you think this would ever happen? A guy on the other channel is keen to hear what you think lol

You cannot view this attachment.

[Basil]

From your own chart it appears any deviation from the trend is very short lived. Just as well OCA shareholders know its different this time     Mind you its simply not plausible that the trend line continues as is, as it took less than 3 years for the price relativity to go from 10% to 5% so unless OCA goes into receivership in 2029 the trend simply has to change.

Good news ... OCA share price going to outperform the SUM share price in the future ... for how long nobody knows

[Greekwatchdog]

Good news ... OCA share price going to outperform the SUM share price in the future ... for how long nobody knows

Chart shows why. There's been an 'inflection' point and the line is 'pivoting' up wards

Many said it would take OCA 7 to 8 years to show their true worth. Maybe it's now happening

Hey Basil me ol' mate - did you think this would ever happen? A guy on the other channel is keen to hear what you think lol

You cannot view this attachment.

Not quite what you said, maybe you should quote for quote...

[winner (n)]

From your own chart it appears any deviation from the trend is very short lived. Just as well OCA shareholders know its different this time     Mind you its simply not plausible that the trend line continues as is, as it took less than 3 years for the price relativity to go from 10% to 5% so unless OCA goes into receivership in 2029 the trend simply has to change.

Yeah it couldn't go to zero so there had to be an inflection point some time eh

Not saying OCA outperforming SUM is an indictment on SUM - after all they reckon their NTA has an $12 plus uplift from current developments. Heck NTA is currently about $13 so goodness knows where SUM share price will end up

Basil, if OCA follows maybe time for you to get back in and have another go with them them. Could be more lucrative then the last go you had when selling at those highs around 150/160. You pretty good at gettingout near tops eh

[Basil]

Basil, if OCA follows maybe time for you to get back in and have another go with them them. Could be more lucrative then the last go you had when selling at those highs around 150/160. You pretty good at gettingout near tops eh

Thanks. Not sure how many are sitting on a 6 figure realized profit but I think there would not be very many.
Yes, I could freeride a stake and see what happens but the operational cash burn at a village level, (also a VERY serious problem for RYM), is deeply concerning.  One of my favorite sayings as an accountant is cash flow is the lifeblood of a business.  Without cash flow the model these companies rely upon is one of house price growth.  I still have serious reservations we'll see meaningful real inflation adjusted house price growth any year soon.
On a risk reward basis I see better opportunities elsewhere.

That point of inflection was supposed to be 6 years mate.  9 year mark coming up. Hmmm