Property developer and aged care firm hit by valuation falls
Falling property valuations and higher interest costs have hit the bottom-line results of property developer Asset Plus and aged care firm Radius Residential Care, both exposed to the property cycle.
Asset Plus considers new strategy
Asset Plus, which is managed by Centuria NZ, owned by ASX-listed Centuria Capital, reported a net loss of $13.05 million for the March 31 financial year, down from a $2.93m profit the previous year.
Shareholder dividends remain suspended and are subject to quarterly review based on the company’s future direction.
The company said the result was significantly impacted by revaluation losses, divestment and lower net rental due to vacancy, referring to an empty Auckland CBD office block vacated by Auckland Council, which has been sold for $65m on a deferred settlement basis, and Munroe Lane site in Albany that was delayed by Covid.
Other divestments included the sale of its Stoddard Road shopping centre for $36.75m, which was used to pay down debt, and the sale of Eastgate.
The company said a development lease with Auckland Council at Munroe Lane commenced on May 17 and leasing the remaining space remained a priority.
Chairman Bruce Cotterill said the result reflected a portfolio in both divestment and development mode.
“The Munroe Lane lease to Auckland Council has now commenced which is a significant achievement and milestone for the company after the development broke ground in October 2020. Completion of the divestment of Stoddard Road post balance date is a further milestone accomplished.”
Portfolio occupancy at balance date was 37 per cent, down from 58 per cent in the previous year but increased to 42 per cent after the sale of Stoddard Road and completion of Munroe Lane.
The fair value of investment property fell $12.69m, or 5.5 per cent, and the portfolio value at balance date was $216.6m with $98.0m of property held for sale. Post Munroe Lane and Stoddard the portfolio value will be around $188m.
Asset Plus had $71.4m of debt drawn at balance date, compared to $55.7m in the prior year. The company said dividends would likely remain suspended until the future direction of the business was confirmed.
Commenting on the outlook, Centuria NZ chief executive Mark Francis said the leasing of the balance of the Munroe Lane development remained the core focus.
“Thereafter, we will look to sell
Munroe Lane. If a sale of Munroe Lane occurs, it will position the company to consider its options which includes a wind-up or pivot in a new direction.
“The leasing of Munroe Lane and the final settlement of 35 Graham Street will influence the timing of such decisions, while market conditions at the time are likely to dictate the ultimate outcome.”
He added that any steps to sell Munroe Lane or subsequently wind up the company will require shareholder
approval.
Radius scraps final dividend
New Zealand’s smallest listed aged care and retirement village specialist Radius Residential Care posted a 10 per cent rise in revenue to $146.3m for the year to March 31, but turned in a net loss of $2.1m due to property revaluations and higher interest costs.
Underlying earnings before interest, tax, depreciation and amortisation increased 32 per cent to $14.2m.
The board declared no final dividend in respect of the 2023 financial year. Shareholders did receive an interim dividend of 0.7c per share.
“With the current economic and care home funding environments remaining challenging, Radius Care is focusing on the recently commenced business improvement programme including streamlining operations and portfolio optimisation,” said chief executive Andrew Peskett.
He described the past year as “extremely challenging” with ongoing Covid impacts and extreme weather events.
However, he said the company has been successful in recruiting a large number of internationally qualified nurses to help to fill vacancies “which will support our existing teams and place us in a strong position moving forward”.
Peskett said 57 employees who had been with the company for more than 10 years were each awarded shares valued at $1000 during the year.
Radius Care’s portfolio now consists of 24 facilities of which 13 are owned and 11 leased. There were 1889 available beds at balance date, an increase of 105 during the year.
The company said occupancy levels remained strong and “significantly above” industry averages.
Its development bank consists of 76 care beds and 311 units or care suites at the end of the period.
Executive chair Brian Cree singled out the performance of Matamata Country Lodge since it was acquired in September 2022.
“Within six months of acquisition . . . it has already delivered a valuation uplift of $4.3m. We were also extremely pleased to successfully complete a 24-bed extension at our Thornleigh Park care facility in New Plymouth in February 2023 on budget.”