Livelier retirement villages pay off
Menus by a celebrity chef and more appealing activities are what retirement village operator Metlifecare believes is behind a big rise in demand for its units.
The company announced a record net profit of $251.5 million yesterday, up 10 per cent on the previous year to June 30.
Chief executive Glen Sowry said the result was boosted by a 14 per cent increase in the value of its assets, now worth $3 billion, but also significant gains from resales and development margins.
Underlying profit was $82.1m, up 24 per cent.
Sowry said demand for Metlifecare’s units had remained ‘‘consistently high’’, with 98 per cent village occupancy.
He put part of this down to some hard work put into the quality and amenity of the villages, particularly a partnership with chef Simon Gault, and technologically-aided craft classes called the Makers Movement.
‘‘We did a lot of research last year to really understand the wants and needs and expectations of existing residents and one of the things that really came out of that clearly was the quality of the food and dining experience – not just in the retirement village independent part, but also in the care homes.’’
As a result the initiatives were attracting more inquiries and ‘‘enabling Metlifecare to positively differentiate itself in an increasingly competitive market space’’.
Another factor in the record results was a buoyant real estate market, which helped set the price of village units.
‘‘Somewhere around 70 [per cent] to 75 per cent of the median house price is where we typically pitch the price of one of our units,’’ Sowry said, ‘‘because what a lot of folk do when they buy a retirement village unit is sell the family home, and in most if not all cases, they are hoping to release some equity.’’
So while the property market was a driver in this year’s result, ‘‘ultimately if the product and the experience we offer residents isn’t compelling or attractive, they’re not going to buy it’’, he said.
That was especially true as baby boomers retired. ‘‘That’s our customer of the future and so we’re very focused at looking ahead at what their expectations and needs are going to be.’’
During the year the company completed 235 new units and care beds, more than double last year’s rate, and bought land for a new village in Botany, east Auckland.
Shareholders will receive a 40 per cent jump in total dividend at 8.05 cents a share.