Arvida seeks $77m for village buys

Arvida Group plans to raise $77 million in a discounted rights issue to help pay for three new retirement villages it says will boost annual earnings by 8 per cent.

The Auckland-based retirement village group wants to sell about 66.9 million shares in a fully underwritten one-for-five pro rata renounceable rights issue at $1.15 apiece, an 11 per cent discount to Monday’s closing price of $1.29.

The funds raised will go towards the $106m acquisition of the Mary Doyle Lifecare village in Havelock North, the Strathallan village in Timaru and a 50 per cent stake in Wellington’s Village at the Park Lifecare.

The rest of the deal will be funded through the issue of $16m of stock to the vendors and $16m of bank debt.

The acquisitions will add a further 451 retirement units and 315 aged care beds to Arvida’s existing 26 retirement villages, and add 110 consented units to its development pipeline.

The NZX-listed company expects the buys will add an extra $9m to annual underlying profit in the year to March 31, 2018, and boost underlying earnings per share by 8 per cent.

“We are delighted to add another three quality villages to our portfolio,” said chairman Peter Wilson.

“Hurst Lifecare’s desire to receive Arvida shares is a strong endorsement of our strategy from a longstanding industry participant,” he said, referring to the vendor of the Mary Doyle and Strathallan villages.

Arvida has been expanding its portfolio since listing in late 2014 through a merger of 17 villages and raised $41.8m through a rights issue in October to buy three sites.

The company expects developments at Village in the Park and Mary Doyle to boost earnings further, with the consented units seen coming on stream over the next four years.

The Village in the Park will be a joint venture with existing owner Wellington Tenths Trust, which was embroiled in a long-running fraud case involving former chair Ngatata Love, who was convicted last year of accepting a secret payment while chair of the trust.

Shareholders on the register at the close of trading on September 20 will be eligible to participate in the offer, which closes on October 9.

Forsyth Barr has fully underwritten the offer.