Property revaluations reduce profits

AUCKLAND: Delisted, privatelyowned retirement giant Metlifecare has pushed up revenue 13%, but suffered a 74% profit drop due to weaker property revaluations.

Revenue at the company with $5 billion of assets rose from $143 million in the June 30, 2021 year to $163 million in the June 30, 2022 year.

But net profit after tax fell from $307 million to $78.6 million when last year’s $335 million property revaluations sank to $111 million in the latest period, because of valuation assumptions about the state of the residential property market and other factors.

The company is headed by Earl Gasparich, appointed last June. Last year, the company expanded significantly, buying six existing villages and a commercial laundry from the Selwyn Foundation. Around 1000 people live in those Selwyn villages.

‘‘They’re buying everything,’’ said one industry insider, commenting on media speculation

Metlifecare might buy the New Zealand assets of the Bupa business or other businesses.

Australian media said this month that Bupa’s New Zealand rest home care business was up for sale, and NZXlisted Oceania Healthcare or Metlifecare were possible bidders. A Bupa New Zealand spokesman said it didn’t comment on market speculation.

Asked if it was keen to develop, operate and/or manage a new village on Remuera’s $90 million 3.1ha exCaughey Preston resthome site, Mr Gasparich didn’t confirm anything.

Asked if it might buy the $400 million Real Living — same response.

Nor did he comment on any possible Bupa NZ sale.

‘‘Metlifecare is continually exploring opportunities to expand our land bank and care portfolio to support our growth strategy. Mergers and acquisitions are part of this strategy, as evidenced by the Merivale and Selwyn Foundation acquisitions already this year. We are aware of those opportunities you mention, however, it is inappropriate for us to comment on speculation,’’ Mr Gasparich said.

Metlifecare was established in 1984, and 6500 New Zealanders live in its 33 villages. It employs 1700 staff, has 4630 independent living homes, 472 assisted living units or apartments, and 842 beds and suites in its hospitals or care homes, its latest annual report says.

In one of the largest refinancing deals of the last year, the company restructured $1.25 billion of debt and established facilities to borrow an extra $650 million for development.

The company is different from most other national retirement village chains because all but one of its properties are in the North Island. Most other chains have more of a geographic spread. Metlifecare owns only one South Island property — a development site.

Most of its properties are in Auckland: 19 villages, nine care centres and three greenfield sites for development, the annual report said.

In 2020, Swedish investment firm EQT took over and delisted the company from the NZX.

In the June 30, 2022 annual report, Metlifecare chairman Paul McClintock and chief executive officer Mr Gasparich said total assets rose significantly by $889 million to reach $5 billion, ‘‘largely driven by the Selwyn acquisition and the completion of 199 new independent living units or care beds’’.

Debt rose by $384 million to $742.6 million, reflecting what the company called ‘‘increased momentum in building the development pipeline, developing new units and villages and the Selwyn acquisition’’. Gearing is 28% of asset valuations.

The company also acknowledged the change in NPAT, saying that was ‘‘largely driven by lower fair value movement, partially due to the moderation of key assumptions in the valuation of the company’s investment property portfolio and higher operating expenses, as we increased the pace of investment for growth and absorbed inflationary cost pressures’’.

Metlifecare was a very different business from what its owners bought in November 2020, they said.

‘‘We now have a significantly larger portfolio of retirement and aged care villages and a comprehensive development pipeline, driving our trajectory to future growth across more geographical locations.’’

New villages are being opened along with new hospitals, which the two men call care centres. But the company is also buying new greenfield sites as well as the Selwyn purchase, which included a commercial laundry.

Growth had been achieved in an environment where Covid hit, which had resulted in a challenging labour market and increasing economic issues, it said.

The company now had a landbank which could be developed into 3100 units. It had bought six premium greenfield sites in the past 12 months.

‘‘While organic growth will always be our priority, we will selectively explore acquisitions that can both accelerate key strategic goals and add value to the business,’’ it said. —