ARV - Arvida Group

[Basil]

there is a big step between a firm offer and a highly conditional unsolicited non-binding bid.

No kidding, Sherlock.  All bids start as non-binding and highly conditional.

My take on this. ARV directors just handed potential shareholders another reason not to own this stock because of their intransigent promotion of self-interest.  No fund in their right mind is going to offer more than that now with the dirty dishwater weak economy we have so ARV shareholders are stuck in an asset with meagre earnings and almost no chance of a takeover eventuating which renderings their highest of sector discount to NTA as virtually worthless.  It's disgraceful this offer wasn't fully explored to see if it could be developed into a firm offer whereupon the owners of this business voted on it, not the Muppets who think they know best.  The whole board should resign.

[entrep]

Takeover offers all ready to be rejected seem to follow that Susan Paterson around

STU ERD ......."..

SKT

[winner (n)]

Piece on NBR about how market telling RV players to focus on cash flows rather than growth per se

Mad3 comment that ARV didn't get the memo ...and also said it's not a good sign when debt > market cap

This chart said it all ...one really cool chart

Article here ....maybe paywalled
https://www.nbr.co.nz/margin-call/show-me-the-money/

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[BlackPeter]

Looks like a double bottom in the low 90íes to me ... which would be a bullish signal.

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All up from here?

[winner (n)]

Thought ARV share price was heading to $1

No on it's way up again

[Cookie]

Looks pretty bad across the RV sector.
Perhaps Arvida should have taken up on the takeover offer.

I suspect it was the European fund that owns Metlifecare that submitted the offer. Pure speculation and based on a couple of interesting reddit posts prior to the takeover offer.

[BlackPeter]

Looks pretty bad across the RV sector.
Perhaps Arvida should have taken up on the takeover offer.

I suspect it was the European fund that owns Metlifecare that submitted the offer. Pure speculation and based on a couple of interesting reddit posts prior to the takeover offer.

Looks pretty bad across the RV sector.
Perhaps Arvida should have taken up on the takeover offer.

Hmm - sounds like proposing a permanent "solution" (i.e. sell out) to a temporary problem (market jitter due to some temporary uncertainty about interest rates and inflation), but I guess that's what they say about suicide as well.

Sure retirement sector currently scratching along the bottom, but this is typically not the time one should sell ones investment (by accepting a takeover), isn't it? , unless your assumption is it will never ever get better again.

Here are some hints:

As soon as interest rates go down, retirement sector will go up. And they will go down, maybe not this year (though they might), but then the next.

As soon as housing sector jitters finish (and they will, they always do), retirement sector will go up.

As soon as wealthy baby boomers start in earnest to look for a nice place to spend lifes autumn, retirement sector will go up. Hint: The first boomer year (born 1946) turn this year 78. Do you sense the demand rising?

[Cookie]

Looks pretty bad across the RV sector.
Perhaps Arvida should have taken up on the takeover offer.

Hmm - sounds like proposing a permanent "solution" (i.e. sell out) to a temporary problem (market jitter due to some temporary uncertainty about interest rates and inflation), but I guess that's what they say about suicide as well.

Sure retirement sector currently scratching along the bottom, but this is typically not the time one should sell ones investment (by accepting a takeover), isn't it? , unless your assumption is it will never ever get better again.

Here are some hints:

As soon as interest rates go down, retirement sector will go up. And they will go down, maybe not this year (though they might), but then the next.

As soon as housing sector jitters finish (and they will, they always do), retirement sector will go up.

As soon as wealthy baby boomers start in earnest to look for a nice place to spend lifes autumn, retirement sector will go up. Hint: The first boomer year (born 1946) turn this year 78. Do you sense the demand rising?

I have been looking at demographics for the past couple of months.
Bare in mind I am thinking out loud here. Is it possible that in the last few years all or most RV providers have been focusing developing standard beds/units and less on the specialised options i.e currently do we have excess supply of standard beds/units and conversely do we have enough special care beds given the less return on them.

Granted this is from 2017/2018, but I imagine the percentages are still relevant.

the percentage of the population living in a care home (interRAI New Zealand 2017/18):

between the ages of 65-74 = approximately 1%
between the ages of 75-84 = approximately 6%
and from the age of 85+ = approximately 27%.

I don't dispute that interest rates have an effect. But what is the greater factor at this moment in time. If I recall correctly the RV industry have been building at a compound rate of 7% for a while now. . Will supply meet demand in the next couple months, next year, or year after?. Like I said, just thinking out loud.

[BlackPeter]

I have been looking at demographics for the past couple of months.
Bare in mind I am thinking out loud here. Is it possible that in the last few years all or most RV providers have been focusing developing standard beds/units and less on the specialised options i.e currently do we have excess supply of standard beds/units and conversely do we have enough special care beds given the less return on them.

Granted this is from 2017/2018, but I imagine the percentages are still relevant.

the percentage of the population living in a care home (interRAI New Zealand 2017/18):

between the ages of 65-74 = approximately 1%
between the ages of 75-84 = approximately 6%
and from the age of 85+ = approximately 27%.

I don't dispute that interest rates have an effect. But what is the greater factor at this moment in time. If I recall correctly the RV industry have been building at a compound rate of 7% for a while now. . Will supply meet demand in the next couple months, next year, or year after?. Like I said, just thinking out loud.

Good on you for doing some research, even when the number of care home places needed is not the same as the number of places for retirements homes taken up.

Now the answer for the question "are there enough care home places for elderlies in New Zealand" (i.e. is there enough supply to satisfy the demand for care home places) is easy:

https://www.rnz.co.nz/news/business/496390/demand-for-retirement-villages-outstripping-supply#:~:text=Real%20estate%20firm%20JLL's%20new,satisfy%20New%20Zealand's%20ageing%20population..

Answer: There are not, and given inceased life expectancy and less and less fitness of many in higher age is there no doubt that the demand for care home places will further rise.

More complicated is it to answer the question "are there enough (or already too many) places in upmarket retirement villages in NZ"?

While this question is clearly to a degree correlated with your research above, it is not the whole story. Into a retirement village get mainly people who can afford to pay (there are some state funded exceptions) - and - some (many) of the retirement villages offer near cruiseship experience - i.e. there are as well people moving in who would otherwise not need to go into a care home. They just like the gym around the corner, the swimming pool, the bowling green in front of their villa and the entertainment program.

So - the question is, how many people who would benefit from (or enjoy) living in an upmarket retirement village can afford to live there? I don't think that your research will give us this answer, but if you find it, I would be interested.

Looking at the tendency - the number of candidates in the relevant age group (75+) is clearly rising - and this group brings as well increasing wealth. For the next 3 decades (give or take some years) will generations with high homeownership rates move into the relevant bracket - in 2022 was the average age for a first home buyer 36, which would be still four decades away from the ideal retirement home age.

But sure - while everybody might like to drive a Rolls Royce (well, I don't, but lets say it for arguments sake), many will only be able to afford a Toyota, and some will need to be happy with a 2nd hand Fiat 500. If you are saying the industry did build too many Rolls Royce and now we have not enough Fiats - you might be right. But honestly - I don't know the answer to that and I am sure, this is something which will regulate itself over some years (vs. decades) to come.
 
Just stop building Rolls Royce - and remember - a used Rolls Royce increases in value, so not a lot of damage done ;

[Cookie]

Good on you for doing some research, even when the number of care home places needed is not the same as the number of places for retirements homes taken up.

Now the answer for the question "are there enough care home places for elderlies in New Zealand" (i.e. is there enough supply to satisfy the demand for care home places) is easy:

https://www.rnz.co.nz/news/business/496390/demand-for-retirement-villages-outstripping-supply#:~:text=Real%20estate%20firm%20JLL's%20new,satisfy%20New%20Zealand's%20ageing%20population..

Answer: There are not, and given inceased life expectancy and less and less fitness of many in higher age is there no doubt that the demand for care home places will further rise.

More complicated is it to answer the question "are there enough (or already too many) places in upmarket retirement villages in NZ"?

While this question is clearly to a degree correlated with your research above, it is not the whole story. Into a retirement village get mainly people who can afford to pay (there are some state funded exceptions) - and - some (many) of the retirement villages offer near cruiseship experience - i.e. there are as well people moving in who would otherwise not need to go into a care home. They just like the gym around the corner, the swimming pool, the bowling green in front of their villa and the entertainment program.

So - the question is, how many people who would benefit from (or enjoy) living in an upmarket retirement village can afford to live there? I don't think that your research will give us this answer, but if you find it, I would be interested.

Looking at the tendency - the number of candidates in the relevant age group (75+) is clearly rising - and this group brings as well increasing wealth. For the next 3 decades (give or take some years) will generations with high homeownership rates move into the relevant bracket - in 2022 was the average age for a first home buyer 36, which would be still four decades away from the ideal retirement home age.

But sure - while everybody might like to drive a Rolls Royce (well, I don't, but lets say it for arguments sake), many will only be able to afford a Toyota, and some will need to be happy with a 2nd hand Fiat 500. If you are saying the industry did build too many Rolls Royce and now we have not enough Fiats - you might be right. But honestly - I don't know the answer to that and I am sure, this is something which will regulate itself over some years (vs. decades) to come.
 
Just stop building Rolls Royce - and remember - a used Rolls Royce increases in value, so not a lot of damage done ;

I accept demographic trends is one of many cogs in the overall scheme of things. I have no doubt supply will equate to and potentially be overwhelmed by demand over time. When? I don't know. That is the tricky bit for the investor. We are trying to make the money grow and not lose out on the opportunity cost. Not an issue if one is prepared to dca over time.

In terms of whether current product offering meets demand/needs. I can't say.
One would think that they had "focus groups" in front of them before committing to the build. Capital allocation is the defining measure of any management.


Anyway it's always good to have a discussion. Whether right or wrong.
 

[winner (n)]

ACC like Arvida ...another 1%

[BlackPeter]

ACC like Arvida ...another 1%

And lets face it - sometimes hey get it right, and sometimes the get it wrong - just like any of us ;

I do think however in this case they have a point.

[Untamed]

I will be very interested to see who the buyer is. Anyone have any inside info or thoughts on who it might be?

https://www.nzx.com/announcements/428152

[Basil]

Looks to be one of their older villages.  3% discount to valuation is a very good result in this market with the shares trading at a ~ 50% discount to NTA.  https://www.arvida.co.nz/living-with-arvida/communities/strathallan  I have no idea who the buyer is but doubt it's any of the listed companies in this sector.

The directors and management have a heck of a lot to prove to investors to show they were looking after their interests in turning down a $1.70 takeover offer.  I am deeply skeptical the share price will be above $1.70 any year soon.  In the meantime, the unimputed dividend yield is best described as pathetic.

[Untamed]

You are correct.

Not sure if the information I have learned today, is public knowledge yet, so will err on the side of caution and not share anything more, but suffice to say, it is literally the last buyer I would have ever expected it to be.

I have no idea who the buyer is but doubt it's any of the listed companies in this sector.