Thank you money123 for raising the matter of inaccurate negative reporting by Mathew Cranston in the AFR. He is clearly just regurgitating the propaganda from the shorters. Yesterdays article on RAD’s is misleading and deceptive. As you say it is a biased attack and plainly promoted so the shorters can profit. In my opinion these people are diabolical.
The reality is the net RAD inflows are at a lower level than last year but they are still a positive inflow. All the hypothetical nonsense about a big shift in new residents paying with daily payment rather then RAD is just bogus. Made up mumbo jumbo.
My sums show this reduced net RAD inflow is fully accounted for by the drop in occupancy from 94.4% to 93.1%. This fall in occupancy is in my view temporary being caused by bad press and poor company marketing. I see no reason why occupancy will not revert to similar levels to its peers at about 95%.
I would like to add I consider thinking of a RAD as a liability is incorrect. It should be viewed as a revolving fund like an insurance float. RAD’s are paid out as residents leave but are consistently replaced by a usually higher RAD from the incoming resident. The RAD amount is linked to average house prices in the area and that is why it has been rising in recent years. If over time there is a sustained trend for residents choosing to pay with a daily payment rather than RAD then the profitability of EHE (and its peers) will rise as revenue increases.
EHE Price at posting:
$2.70 Sentiment: Buy Disclosure: Held
