McCarthy & Stone (MCS)

[Asagi]

any thoughts on retirement McCarthy and Stone (MCS) the UK's leading developer and manager of retirement communities?

Market cap: £375m
Bid:offer 70.4p:70.7p
P/E (14 months ending October 2019) 9.1
P/E (y/e Oct 2020): £65m loss forecast
P/E (2021): 239 (slim profit forecast)
P/TBV: 0.54
52 week low:high 36.5p:160.2p

It has done well previously and I have always regarded it as a strong play on the UK's ageing population and of course the housing market.

The shares have fallen hard with COVID and have only recovered slightly. From HY to end-April, published July 15th:

Currently only one confirmed case on our developments
...
Monthly cash burn reduced from c.£10m to c.£7m during the lockdown period


Outlook:
Early activities demonstrate that sales leads and gross reservation rates are increasing in line with this gradual ramp up plan

https://otp.tools.investis.com/clients/ ... id=1402302

I guess I worry that COVID concerns will see sales delayed as people put off moving, due to the risk of moving into a home and becoming infected. Nevertheless, the value is clear. Do you have anything to add on this one?

Regards,

Asagi (no position)

[scrumpyjack]

Don't know that much about them but there had been quite a lot of publicity about them selling unfair leases etc and people finding the resale values of their homes was far far lower than had been paid for them.

I think they have moved into a rental business model option, which may be a good idea.

There was a widely publicised incident a couple of years ago where an irate subcontractor took a bulldozer and drove through 4 or 5 of their new homes. From the media photos it appeared they were built very flimsily! But perhaps all new homes are like that now?

I'll stick with Barrett and Persimmon

[dealtn]

Don't know that much about them but there had been quite a lot of publicity about them selling unfair leases etc and people finding the resale values of their homes was far far lower than had been paid for them.

I think they have moved into a rental business model option, which may be a good idea.

There was a widely publicised incident a couple of years ago where an irate subcontractor took a bulldozer and drove through 4 or 5 of their new homes. From the media photos it appeared they were built very flimsily! But perhaps all new homes are like that now?

I'll stick with Barrett and Persimmon

I haven't looked at them, and may add them to the "to do" list.

What's the issue with unfair leases? I can imagine retirement properties having different leases to other types of properties due to the provision of communal areas/facilities you wouldn't expect in a normal block of flats for instance.

[ReformedCharacter]

What's the issue with unfair leases? I can imagine retirement properties having different leases to other types of properties due to the provision of communal areas/facilities you wouldn't expect in a normal block of flats for instance.

https://www.theguardian.com/money/2019/ ... rthy-stone

I think they also had a spot on Radio 4's 'You and Yours' about similar issues. Doesn't necessarily make them a bad investment of course.

RC

[dealtn]

What's the issue with unfair leases? I can imagine retirement properties having different leases to other types of properties due to the provision of communal areas/facilities you wouldn't expect in a normal block of flats for instance.

https://www.theguardian.com/money/2019/ ... rthy-stone

I think they also had a spot on Radio 4's 'You and Yours' about similar issues. Doesn't necessarily make them a bad investment of course.

RC

Thank you. It seems, if this is representative, that it is the level of service charges, not the lease itself. I recognise that services provided would be higher than in other types of flats. I wonder how different this companies offering is to other similar operators.