Property prices boost aged care profits

  • 24/02/2016

Aged care and retirement village operators Metlifecare and Summerset Group have announced big profits in the past financial year and half-year, mainly due to the impact of booming property prices.

Metlifecare's net profit more than tripled. For the six months to December 31 it made $125.7 million, up from $37.7m in the prior half, although underlying profit, which removes property revaluations measures, rose 29 percent to $33.5m.

Summerset Group announced underlying profit for the 2015 financial year of $37.8 million, a 55 percent increase on profit from the previous year.

The result reflects continued momentum for Summerset which benefited from strong sales across its nationwide network of villages and an increase in re-sales of occupation rights.

Summerset chief executive Julian Cook said the result reflected the company's continued focus on expansion across New Zealand.

"We are very pleased with our results for 2015. Our growing presence in Auckland coupled with strong demand across our other villages resulted in a record 578 retirement unit sales.  We opened our first village in Christchurch, Summerset at Wigram, as well as three village and care centres in the North Island and commenced construction on our Ellerslie village in Auckland."

Metlifecare, which operates 25 retirement villages and nine care facilities nationwide employing more than 1000 staff, benefited from last year's rampant property market, particularly in Auckland and Bay of Plenty. The fair value movement of investment property leapt 298 percent on the prior period to $128.5m.

Metlifecare chief executive Alan Edwards said the company's low level of debt and significant funding headroom allows it to seek further brownfield and greenfield opportunities.

"This is another strong result and we are pleased that the villages in Auckland and the Bay of Plenty have experienced strong value growth on the back of a solid real estate market," he said.

"With the number of New Zealanders aged over 75 years expected to almost double in the next 30 years, the bulk of them in the upper North Island, Metlifecare's development pipeline is strategically focused in these regions."

Summerset has recently opened village and care centres in Katikati, Karaka and New Plymouth, and their Ellerslie site is due to open in 2017.

Metlifecare currently has 307 units under construction, up 55 percent on the previous period. During the half, it completed 41 units and 36 care beds. The company expects to deliver a further 28 units in the second half at Oakridge Villas and Papamoa Beach Village.

The overall target is to deliver a range of 105 to 160 units and beds in the 2016 financial year.

NZN / Newshub.