Elderly care profits soar
More sales, higher prices and a lift in the value of its properties has delivered a 47 per cent jump in halfyear profit to $45 million for one of the largest retirement village operators, Arvida.
Arvida said the value of its properties rose by $35.3m in the six months to September 30. It sold more new units and had more resales of existing independentliving units and care suites at higher average prices than in the first half of the year.
The village operator owns and operates 32 villages and care facilities, comprising 4041 units, care suites and rest homes beds at September 30. Its total assets are worth $1.84 billion.
Arvida sold 44 new units in the half-year at an average price of $779,000, a 35 per cent increase from the $578,000 of the previous first half.
Arvida chief executive Bill McDonald said its new units’ prices reflected the sale price of properties in the areas they were located.
Average prices for new ‘‘villas’’ range from $530,000 to $1.22m.
Its average resale price was $364,000, 17 per cent higher than the $312,000 in the 2019 half-year.
The $364,000 average resale price reflected that almost double the number of the cheaper and smaller serviced apartments were sold (93) than the independent villas (53).
Its resale margin – the difference between the most recent resale and the previous resale – rose to 24 per cent compared to 22 per cent the previous half-year.
In the six months, the initial stage of the Waimea Plains development in Richmond was opened and the final 24-apartment block at Village at the Park in central Wellington and the final villa stage at Lauriston Park in Cambridge were completed.
In total, 94 new homes were delivered across eight development sites in the half.
Arvida expects to develop almost 1700 villas and care suites over the next five to seven years.
Its strategy has been to buy existing villages with potential for more development.
It was formed six years ago and brought 18 retirement villages under one ownership. Others have been purchased since. It listed on the New Zealand sharemarket in late 2014.
McDonald said it was the only large retirement village owner that was in the market to buy other villages but it was fussy about what it bought.
However, it was becoming more focused on greenfields development, he said. It was planning a new retirement village in Kerikeri in Northland where there was a lot of demand but a lack of options.
Its purchase of three luxury retirement villages – two in Tauranga and one in Queenstown – for $180m had been well supported by investors, from whom it raised about $140m for the purchase. With the deal came two very capable construction teams, he said.
About two-thirds of Arvida’s business is aged care rooms, suites and serviced apartments, occupied by retirees with more needs for services than those in independentliving units.