Lender welcomes investor influx
Researchers at agency JLL estimate that potential demand for retirement villages over the next 20 years is about 11 a year.
The executive director of the Senior Trust Retirement Village Listed Fund, Scott Lester, said his board expects about half will be satisfied by larger operators such as Ryman Healthcare.
But the other half were likely to be built by private developers and supported by funders such as the Senior Trust fund, he said.
The NZX-listed fund has doubled in asset size, largely as a result of investors in another justclosed fund reinvesting their money, he said.
It was launched in 2015 with the intention of closing after the maximum 45 million units valued at $1 had been taken up by investors, which was expected to take until about 2020.
But the recent influx of new investors has seen 35 million units taken up, and Lester expects it will be filled in the coming months.
The units will be paid back on the maturity date of March 2021, and the loans it has made to retirement village developers are staged to be repaid by then.
Distributions have been paid at a rate of 6.6 per cent a year, slightly above the predicted 6 per cent and higher than most longer bank term deposits, which are currently being offered at about
3.4 per cent.
Lester said there were about
780 investors in Senior Trust, following a recent influx of younger investors.
The fund currently has loan agreements for $3.5m to Palm Grove Partnership in Orewa in Auckland, $14 million to Quail Ridge Country Club at Kerikeri,
$900,000 to Hauraki Village in Paeroa, $15m to Whitby Village
(2009) in Wellington, $9m to Arrowtown Lifestyle Retirement Village, and $3.5m to Roys Bay Estate at Wanaka.
The loans to the developments are at interest rates between 10 per cent and 14 per cent.
The Palm Grove investment is a related-party transaction because of common shareholdings with Senior Trust directors and senior managers.
The villages are at different construction stages. For example, earthworks at the Wanaka village close to the waterfront are nearing completion.