Analyst asks if $22m enough to fix weathertight issues
New Zealand’s second-biggest listed retirement village owner and operator, Metlifecare, has set aside $22 million to fix weathertightness issues but one analyst is asking if it will be enough.
Arie Dekker, a Credit Suisse analyst, released a note headlined Additional remediation provisioning likely required, reacting to a Herald article about Metlifecare buildings with weathertightness issues in four villages: three in Auckland and one north of Wellington.
Chief executive Glen Sowry said Metlifecare was “reviewing all of our villages to identify areas of potential design risk and where remediation work may be required”.
Dekker raised the issue of the national portfolio review and its implications.
“The provision in the accounts currently is $22 million against the CBRE valuation of villages, being the estimate of the gross cash flows included for remediation work over a six-year period,” he said in the note.
However, in citing the extent of issues, Dekker wondered if $22m was enough.
“It is too early for Metlifecare to quantify the cost of remediation works at these sites while it is not discussing the broader portfolio implications at this point.
“It is also too early to understand whether remediation effects will necessitate residents to be rehoused for a period.”
Some residents are being rehoused in places which are fixed. Dekker had questions about the financial implications of the situation.
Sowry yesterday said as part of the company’s half-yearly planning cycle it reviewed projected and known remediation and long-term maintenance expenditure and determined what, if any, adjustments might be required.
Any changes would be included in the first-half-year financial results to be announced to the market on February 27, he said.
Asked when the review of all the buildings in the national portfolio would be completed Sowry said: “We will regularly be reviewing the longterm maintenance requirements into the future as any responsible asset owner would.”