Ryman profit drops, but result reveals Aussies paying less to live in retirement villages than New Zealanders
Friday, 19 May 2023
Trans-Tasman retirement village operator Ryman Healthcare made an after-tax profit of $257.8 million in the financial year ending March 31.
That was lower than its $692.9m profit last year, thanks largely to a slower rise in the prices it could charge people for the right to live in its village units.
The value of its retirement village units rose by $73.6m during the year, compared to $467.1m in the previous 12-month period.
Retirement village operators set the prices for occupational right agreements (ORAs) in each of their villages in relation to house prices in the immediate vicinity, so people selling their homes to move into villages retain some capital for spending.
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The company’s investor presentation to investors on the NZX sharemarket showed Aucklanders paying $1.06m for an independent two-bed Ryman unit, compared to the median Auckland house price of $1.29m.
In Melbourne, the median house was worth $1.51m, and the price for an independent two-bed unit in a Ryman village was $940,000.
That meant Aucklanders faced unit prices that were just 18% lower than the median house price in their areas, while people in Melbourne faced unit prices 38% below local median house prices.
Resale margins had increased despite faltering house prices, Ryman said, and the number of units resold remained “steady”, only slightly down on the previous year.
The value of the ORAs sold rose from $1.08 billion to $1.17b.
In total, Ryman had 9142 retirement village units, and 4456 aged care beds, but its “land bank” of units and beds under development would add another 4512 units, and 1356 aged care beds.
Ryman’s total assets were worth $12.51b at the end of March, up 14.1% on the same month last year.
Group chief executive Richard Umbers said the company had reprioritised its development programme for the coming two years to focus on lower-density villages.
The company remained “committed to providing a continuum of care for all Ryman residents”, a reference to people in retirement villages being able to move into rest home-level care in a Ryman village should they be no longer able to live independently.
Earlier this month the Commerce Commission announced an investigation into complaints from retirement village residents and Consumer NZ, the latter which had complained that residents were enticed into retirement villages with the promise of continuity of care which was not always available.
A government review of 20-year-old retirement village laws is also under way, and a public consultation document is expected to be released in September.
The Retirement Village Residents Association has been pushing for villages to share capital gains with residents.
At May 19, Ryman was in the process of building 14 villages, with some of the work behind schedule thanks to disruptions caused by the Covid-19 pandemic. Nine of the villages under construction are in New Zealand, and five in Australia.
That includes five in Auckland, two in Christchurch, one in Havelock North and one in Cambridge.
Ryman has launched a sustainability strategy, and has signed a deal with renewable energy developer Solar Bay that would see power provided to its village operations by a new solar farm under development in Maungaturoto in Northland.
The company also overhauled its capital structure during the year, raising $902.4m in equity in March 2023, and reducing debt.
The company is also expecting to announce a boardroom refresh.
Umbers said: “The strength of the Ryman team gives me every confidence that we will deliver on our care promise, reposition the business to capitalise on future opportunities and improve financial performance.”