Property boom and resales boost Metlifecare’s result
The business of getting old is proving highly profitable.
High turnover of Metlifecare units and the property boom in Auckland and the Bay of Plenty have boosted the profits of one of the nation’s biggest retirement businesses.
Chief executive Glen Sowry said profitability enabled the business to provide extremely high standards.
A record 86 per cent rise in after tax net profit was due mainly to valuation uplifts but village unit resales also boosted the bottom line.
Metlifecare’s assets grew from $2.2 billion to $2.6b in just one year, accounts showed. “What it shows is the growth in Auckland values because 42 per cent of asset base is in Auckland. If you translate that into value of our company, it’s 73 per cent,” Sowry said.
Metlifecare’s concentration and stronghold is in Auckland with 14 villages. Sowry acknowledged Met- lifecare residents did not benefit from big valuation increases when they left a village unit.
“They don’t participate in the capital gain as the structure works. But the resident avoids any liability or risk, paying for maintenance. We carry all the liability and risk and responsibility if there’s a problem with a unit that requires significant remediation. All of that is borne by the company and the resident has no exposure to that,” Sowry said.
“The real power of Metlifecare’s business is the resales which were $46.5 million in the latest year, up from $31.3m last year.
“The growth that we’ve had in profitability is not just valuations but also the amount of cash we’ve generated by reselling.”
Residents sell their units “when they exit — either going into care or if they pass away”.
“Our business is based on provid- ing people with care and a great lifestyle in their senior years.”
People must be 65 to buy into a Metlifecare village.
The business takes a 30 per cent deferred management fee after a resident has been in a village for three years, more than Ryman Healthcare and Summerset Group. That is the amount of money which a resident loses from their initial purchase price.
“We are one of the high ones. We believe in the premium nature of the village offering we have,” Sowry said.
Metlifecare’s annual meeting is at 2pm on October 25 at Alexandra Park.
The company’s shares closed up 26c yesterday at $6.34.