Grey tsunami boosts coffers
Retirement village operator Oceania Healthcare has opened two new villages in recent months and is on track to reach the targets it forecast when it listed on the New Zealand and Australian stock exchanges a year ago.
Oceania is one of the largest operators and developers of agedcare village facilities, with 51 throughout New Zealand representing nearly 4000 beds.
Sharebroking firm Macquarie recently sponsored a presentation that said the agedhealthcare sector was expected to double over the next 20 years as more people reached 80-plus age.
‘‘A high proportion of care revenue is government funded, about 80 per cent, which provides stable cashflows. This stable cashflow underpins dividends to shareholders.’’
New Zealand regulators had also recognised growing demand and permitted the industry to introduce private charging for aged care services, analysts said.
This year Oceania opened new villages at Meadowbank and Elmwood in Auckland.
Chief executive Earl Gasparich said the company was beginning to show the market its ‘‘point of difference’’ in terms of its weighting of aged-care suites within its facilities.
Oceania had also bought more land for future developments in Auckland over the past year and was advancing plans to redevelop other sites. Auckland purchases included a neighbouring site to its Mt Eden village, and a greenfields site in Waimarie St, St Heliers.
The company has other development land in Hawke’s Bay, Nelson and Christchurch, with new builds under way at The Sands and Meadowbank in Auckland, Melrose in Tauranga and Trevellyn in Hamilton.
Another big player in the sector, Summerset Group Holdings, is building on 20 years of operation with 23 villages for 4700 residents and another seven properties at development stages.
Last year it was awarded the ‘‘best built environment’’ award at the New Zealand Aged Care Association annual conference for its purpose-built memory care centre in Levin.
The memory care concept sees people with dementia living in their own one-bedroom apartment, within a secure specialistcare centre.
From April this year Summerset put in place wage increases for housekeepers, laundry, cafe, and kitchen assistants, with the hourly wage increasing to $17.25 an hour – 75 cents more than the Government’s current minimum wage.
After six years listed on the NZX, Summerset has more than doubled in size and expects to double again within five years.
In 2017 Summerset delivered a net profit after tax of $223 million, a 54 per cent increase on 2016.
Its newest village is at Ellerslie, Auckland, which will house 400 residents, and it has applied to the Auckland Council for resource consent to develop 340 homes on 2.5 hectares on St Johns Rd in Auckland.
Consents are also being sought from the Tasman District Council for a proposed village in Richmond, while plans for a Boulcott, Lower Hutt, village have been submitted to the Hutt City Council.
Design planning for Summerset’s seventh Auckland village in Cheshire Street, Parnell, was also moving ahead, chairman Rob Campbell told shareholders at the recent annual meeting.
Construction is under way at Casebrook village in Christchurch, and Rototuna village in Hamilton, and the company has bought a new development site at Te Awa in Napier.
Summerset was the first village operator to issue a $100m retail bond in 2017, spreading its funding sources and lengthening debt repayment.
Like most other operators in the sector it paid a small dividend to shareholders and reinvested profits into future developments.