This article is from the Australian Property Journal archive
RETIREMENT village operator Summerset has acquired second property in Victoria off the back of an 8% growth in underlying profit for FY19.
Summerset posted an underlying profit of NZ$106.2 million, up 8% on FY18. Including the impact of valuations, net profit was down 18% to NZ$175.3 million, due largely to fewer retirement unit deliveries in the financial year.
CEO Julian Cook said 2019 had been a good year for the company.
“We started 2019 with Auckland and Christchurch’s residential property markets pulling back but through the second half of the year there has been a noticeable lift in activity and Q4 new sales were our second highest ever.”
Through 2019 Summerset delivered 354 new homes, down from 454 in 2018. Significant progress was made on two new main buildings that will deliver another 152 retirement units in Christchurch and Hamilton, starting from March 2020.
“We are satisfied with our delivery progress through 2019. We built 354 new homes, made substantial progress on another 152 units, and opened three new retirement villages,” Cook said. “We have another three villages which will open in 2020.”
Summerset yesterday bought a second Australian property in Torquay, just five months after its first land acquisition in Melbourne.
The 8.3-hectare property located 95 kms south west of Melbourne and 22 kilometres from Geelong, is off Briody Drive.
“We’ve spent 18 months familiarising ourselves in the Australian market. Our growth strategy in Australia is to take the best elements of our integrated-village model from New Zealand and adjust it for the Australian market.
“Our research shows there’s an unmet demand for retirement villages in Australia which offer a continuum of care model. This means accommodation from independent living through to fully supported rest home or hospital care,”
Cook said the Torquay retirement village would complement Summerset’s other retirement village offering in Cranbourne North, Melbourne.
“There is currently only one retirement village with continuum of care in Torquay. The number of people aged 75+ in the Bellarine area is expected to increase by 77% by 2031. The proposed village will have independent living units, including villas and townhouses, serviced apartments, and a residential aged care facility with care and memory care suites for people living with dementia,” he added.
Looking ahead, Cook said the business was not expecting underlying profit growth in 2020, largely due to the investment in care wages and development margins returning to the medium-term guidance of 20% to 25%.
He said the business expects to return to profit growth in FY2021 and beyond.
The board has declared an unimputed final 2019 dividend of NZ 7.7 cents per share, bringing the total dividend payment to NZ 14.1 cents per share, up 6.8% on FY18.
