This article is from the Australian Property Journal archive
Dual-listed retirement village operator Summerset Group Holdings posted a record full-year underlying profit in 2024 on the back its highest ever sales figures, despite “one of the most challenging” years the company has seen, while it is considering changed to its care model due to aged care underfunding in New Zealand.
Listed in both New Zealand and Australia, Summerset has a land bank portfolio of 6,147 homes and 1,396 care homes across the two countries – almost entirely weighted to the former. Its first Australian care residents moving into its Cranbourne North, Melbourne village in March last year, while it has started construction at its second Australian village in Chirnside Park and has been granted planning permits for villages in Torquay and Oakleigh South.
Summerset posted a profit of NZ$206.4 million, up 8%, after recording a 12% increase in sales of occupation rights to 1,238.
It delivered 708 new homes under occupation right agreement (ORA) in the year, 32 of which were in Australia. The total was up 10% on FY23.
“We have continued to deliver value for our residents and shareholders during a year which has been one of the most challenging we’ve seen as a company,” said Summereset chair Mark Verbiest.
“Like most other businesses in 2024 we had to work within an environment where higher costs, inflation and the subdued residential property market all made our work harder. Despite these challenges, we have continued to grow.
Summerset CEO Scott Scoullar said the company’s broadacre build strategy was a “continued strength”.
“We continue to see the benefits of our regionally diverse portfolio with eight regions seeing over 30 sales settlements across 2024, highlighting the broad appeal and strength of our villages nationwide. When we exclude the three new village centre buildings we opened this year our uncontracted stock is down between 20-50% year-on-year across our home types, a very pleasing result in a tough market,” Scoullar said.
Summerset’s flagship village, St Johns, was delivered in October and opened by New Zealand Prime Minister Christopher Luxon in December. The complex comprises six multi-storey buildings with views of Auckland city and Rangitoto, on a 2.6-hectare site.
The company was building on 20 sites across New Zealand and Australia in 2024 and also delivered main buildings at its Boulcott (Lower Hutt). Summerset reported a development margin of 28.9%, down from 31.6%, driven by a change in the company’s sales mix with a higher proportion of care and memory care suites sold than previous years.
Scoullar said that Summerset was considering changes to its care model due to the state of aged care underfunding in New Zealand.
“While we’ve created greater financial certainty for ourselves, and our residents, by moving to care ORAs at many of our villages there is still a major gap between our aged care funding and the costs of running our care centres,” he said.
“We are currently reviewing our policies and where this funding gap is leaving us. We will have to consider making our care centres available to our village residents only and no longer accepting referrals from the public health system.
“It’s not a step we want to take but we need to focus our limited funding and staffing resources on our village residents and their needs. We don’t want to end up overstretching our staff. We know this will mean a bigger burden will be placed on the public health system, but we can’t keep taking the strain.”