Interesting to compare AOG investment property valuation metrics with those of Ryman.
For starters, AOG assume the ILU's turn over in 10 years and SA's in 4 years. Ryman uses more "out there metrics" of ILU's at 7 years and SA's at 3 to 4 years.
With the average age of AOG residents at 83 (versus industry average of 80) surely our opportunity to grab DMF cash is getting stronger.
The discount rate used by Ryman is also lower - 12.51% for Auckland, 13.42% for the rest of NZ and 14% for Melbourne.
Contrasting this, AOG use 12.5% to 15.25%...having pushed out the discount rates for secondary market communities by 0.5% to 0.75% in FY18.
Thinking about it, is the discount rate of the "rest of the NZ market" at 13.51% too rich when compared to our "secondary markets" at around 14% to 15.25% - I think so.
My summary: When compared to the market leader, the AOG investment property valuations are solid and should weather any RE downturn better. Put another way, the $3.92 of NTA isn't 'soft' as some might imply.
AOG Price at posting:
$1.99 Sentiment: Hold Disclosure: Held
