@madamswer - I'd certainly appreciate you input and thoughts on...

@madamswer - I'd certainly appreciate you input and thoughts on this especially as you have previously had REG as a Tier 1 investment.

I've been doing considerable reading in the aged care sector, the financial handling of RAD's (Refundable Accomodation Deposits) on the books of the majors (in particularly REG and EHE) and the potential liability these could become as redemptions occur, as well as the leveraging & free cash flow calculations due to these on the balance sheets of the majors. Although the average redemption here is suggested to be 2.5 years, my thinking is that with medical improvements these redemptions will extend and possibly not impact as much as suggested. There also seems to be a move towards DAP's (Daily Accomodationn Payments) rather than or in combination with RADSwhich may also impact the capital inflows.
I'm also concerned that the government is likely to crack down on the ramping of ACFI's (Aged Care Funding Instruments), this has been a significant source of revenue (particularly for EHE on their acquisitions) when they reclassify residents and claim more payments. The govt has already flagged that they are uncomfortable with the increased levels and is causing pressure on their funding.

I am struggling to get comfortable with committing capital to REG (even though I believe it's in the buy zone here) with so many moving parts, especially considering the funding remains at the whims of governments and political parties. The government certainly needs the help of the key players going forward.

Any thoughts would be appreciated.