Cooling valuation gains hit Summerset profit
Summerset Group reported a slightly lower first half net profit as valuation gains for the retirement village operator and developer continued to ease but its total assets jumped to more than $3 billion.
Underlying earnings, which strip out fair value movements in the value of the portfolio, rose to $47.8 million in the six months ended June 30, up 6 per cent from $45.2m the year before.
Net profit, however, fell 4 per cent to $92.6m. The Wellington-based company registered an $85.7m unrealised gain on its $3.03b property portfolio, compared to a $92.8m gain a year earlier. The value of the total assets lifted 24 per cent on the year. Its total assets have grown almost five times since 2011.
“The fair value movement reflects ongoing strong value growth across the business and is close to the increase seen in the prior comparable period. This is despite the flattening property market in some areas of the country,” said chief executive Julian Cook.
Regarding the slowing property market, “we continue to see increased settlement times for residents selling their home before entering our villages in Auckland and Christchurch. Overall, however, we are still seeing a strong demand.”
Summerset’s board declared an interim dividend of 6.4 cents per share, with an August 27 record date, payable on September 9. That compares to 6 cents in the prior year and represents 30 per cent of underlying profit.
Total sales of occupation rights eased 7 per cent to 278 from 299 in the first half of last year.
New occupation rights were down 6 per cent at 136 but gross proceeds were up 22 per cent at $95.3m.
Average gross proceeds per new sale settlement were $701,000 up from $540,000 in the first half of the prior year.
The resale of occupation rights fell 8 per cent to 142.
Its average gross proceeds per resale settlement were $430,000 versus $415,000 in the prior year. Summerset delivered 139 new homes in the half year. Cook said the company expects to deliver around 350 homes this year and continues to explore expansion across the Tasman.
“We are in the process of carrying out due diligence on a number of potential sites in Melbourne, Victoria,” he said.
The shares last traded at $5.84 and are down 8.3 per cent so far this year.