Ryman rides the retirement wave

The grey tsunami has boosted demand at Ryman Healthcare villages to new levels with the highest ever value of contracts for new units sold off the plans.

Health reasons or ‘‘lifechanging’’ events provided Ryman with constant new business as more people bought licences to occupy units, rather than movements in the general property market, chief executive Gordon MacLeod said at a recent investment briefing.

Ryman had increased pay rates in June for its registered nurses to compete with the public sector, despite no additional government funding, at a cost of $5 million so far this financial year.

‘‘This investment, along with other initiatives, has ensured that we are not in the position of many other aged care providers who are reporting significant nursing vacancies,’’ Ryman chairman David Kerr said.

Ryman charges residents a deferred management fee which covers the cost of the shared facilities in the village, and the cost of refurbishing their units once they leave or die.

It is capped at 20 per cent of the cost of the unit, which it says is the lowest in the industry. Resales gains from this source were $49m during the six months reporting period ending September 2018.

Ryman’s biggest earner was care fees paid by residents or health boards of $147m with management fees of $38m. The total management and care income of $187m compared with $165m in the previous corresponding period.

Unrealised property revaluations added $155m to make $342m in total income.

When the property revaluations are left out, and expenses of $172m accounted for, the underlying profit was $97m available for dividends or reinvestment, which was 13 per cent higher than the previous corresponding period.

Ryman now has more than $2 billion in assets. It owns 33 villages and plans to seek planning consent for three more, in Karori, Havelock North and Hobsonville, in the next three or four months. Two more Auckland villages are due to open soon, at Lynfield and Devonport, and work has restarted at River Rd in Hamilton. Overall occupancy at all villages is 97 per cent.

The full-year underlying profit was expected to be $223m to $238m.

Ryman shareholders will receive an increased interim dividend of 10.8 cents per share, an increase of 13.7 per cent.

The shares are trading at about

$11.59 each, down on the $14 height of two months ago.

The gross dividend yield was

1.17 per cent and the price-earnings ratio was 14.8.