ARV - Arvida Group

[Perky]

Adviser's assessed valuation range at NZ$1.63 to NZ$1.94 per share

Directors all say sell...no other offer yet

But now the reports out let's see

[winner (n)]

Grant Samuel has been engaged to prepare the Independent Adviser's Report

I reckon they'll come up with a price range of $1.65 to $1.80 and say the offer is fair

Report ended up with an expanded range $1.63 to $1.94

Wasn't to far off ...but so predictable eh

[Basil]

https://api.nzx.com/public/announcement/438860/attachment/428081/438860-428081.pdf

More than 99% of votes cast supported the takeover.  A damming indictment of management who previously turned down the offer saying it was well below ARV's intrinsic value.  That earlier statement would have had some credibility if ARV were not such an abject failure in achieving reasonable development margins, which have been very consistently right throughout ARV's listed history, right at the very bottom of the sector by a VERY long way.  Some aspects to their development model simply didn't work.

[winner (n)]

Arvida put out a half year report

From what you can make out from brief detail a real disappointing it was

If takeover wasn't on methinks there would have been carnage

Lucky there was a decent get out of jail card


https://api.nzx.com/public/announcement/442194/attachment/432270/442194-432270.pdf

[Basil]

$1.70 tomorrow as compared to updated NTA $2.14
The most disappointing thing about ARV's tenure of a decade on the NZX was they never seemed to be able to generate decent development margins, which were consistently the lowest of the sector by a very long way.  If it weren't for that, this could have been a good company.

[winner (n)]

$1.70 tomorrow as compared to updated NTA $2.14
The most disappointing thing about ARV's tenure of a decade on the NZX was they never seemed to be able to generate decent development margins, which were consistently the lowest of the sector by a very long way.  If it weren't for that, this could have been a good company.

Last year H1 development margin was about 17%

This year it's even lower ....down 14% .....and there were fewer new sales (number of new sales not disclosed except saying lower but $ sales down 18% on last year)

[winner (n)]

The Interim Report clearly shows that the cost of caring for people and running villages are growing faster than income ......running at quite a 'loss'

Without property related activity the P&L abd Cash Flows are bit sad looking

[Buzz]

Without property related activity the P&L abd Cash Flows are bit sad looking

That's the dumbest thing I can remember being said about any RV which are at their core, property & development investments!

The only sad thing about the ARV report IMO is that the investors got shafted in the buyout at 0.79x NTA.

[winner (n)]

That's the dumbest thing I can remember being said about any RV which are at their core, property & development investments!

The only sad thing about the ARV report IMO is that the investors got shafted in the buyout at 0.79x NTA.

Thanks for the compliments Buzz, appreciate them

But I keep hearing that profits from 'property and development investments' subsidise the cost of looking after people and running villages.

What I was saying was that the 'subsidy' is getting bigger and bigger. In Arvida's case could be as high as $50m this year.

If that keeps up the present value of future subsidies is about $300m .......which happens to be about the difference between NTA and what Arvida sold for ...maybe shareholders did not get 'shafted' after all.

[Basil]

BINGO. Run the same common sense over OCA and their discount to NTA is probably about right.
I think the other point worth noting is that there are many commercial property stocks that do not have the handicap of care centers costing them tens of millions in operational losses per annum, that trade a fairly sizeable discounts to their NTA, e.g. ARG current price $1.09 v NTA of $1.46
ARG only trades at 75 cents on the dollar so those getting 79.4 cps on the dollar cash today considering ARV's massive losses on care are getting a fair deal in my opinion for what is a company that has been managed quite poorly.  Put in a decent development team and the value accrual to private equity should be good and belongs to them as they're the ones introducing quality Intellectual property.   The CEO of Arvida always seemed intensely focused on all things ESG, like the CEOs that come and go for another ugly duckling in this sector.  How's that working out for shareholders so far...

[Basil]

That's the dumbest thing I can remember being said about any RV which are at their core, property & development investments!

The only sad thing about the ARV report IMO is that the investors got shafted in the buyout at 0.79x NTA.

Worth noting that 99.04% of shareholders voted for the scheme.  I suppose you think those shareholders and institutions managers are all dumb too?
https://api.nzx.com/public/announcement/438860/attachment/428081/438860-428081.pdf
Maybe they understand that assets are only worth what they earn and if a whole bunch of assets are tied up in loss making activities that cost tens of millions per annum that heavily impairs the overall asset value.  Something to keep in mind for the other company in this sector that's losing even more every year on their extensive care operations eh.  Interesting that both MET and now ARV have been taken over and yet nobody is interested in taking over OCA.

[winner (n)]

I note that the beloved Norah Barlow has joined the Arvida Board

[Basil]

Crickey

[winner (n)]

Crickey

She was CEO of Heriatge Life but is standing down from that role so our Brett Pattison can take over

Crikey

[Basil]

Recycling ♻️