Retirement village operator Summerset's headline profits have fallen on reduced property value gains, however, stripping out the one-offs, its underlying profit increased on the back of strong development margins and new sales demand.
Summerset by the Park Rest Home, in Flatbush. Photo: Google
The company delivered 223 new retirement units, which was its second highest first half ever. However, overall first half sales were 511 which was down from 978 a year ago, limited by the availability of stock.
[Ll] Property value gains $136.7m vs $260.2m
- Net profit $134.6m vs $263.8m
- Revenue $114.1m vs $94.9m
- Underlying profit $82.5m vs $75.5m
- Interim dividend 10.7 cents a share
Chief executive Scott Scoullar said the result was "pleasing" considering the disruptions that the Omicron wave created.
"Our residents in the care and memory care centres are at most risk from Covid-19, in order to keep them safe we've had to take a more cautious approach than the rest of the country and continuously adjust our pandemic response to ensure we stay ahead of potential issues for our residents," Scoullar said.
In addition to Omicron, Summerset responded well to the economic and housing market pressures in the country over the past six months, Scoullar said.
"While the residential property market rose significantly over the two years to December 2021, we did not increase our own pricing at the same rate. This provided us with a buffer going into what could be a flat to declining market in the coming months.
"We're not seeing excesses of stock or any changes in demand either, our available retirement units have stayed steady, and demand doesn't appear to be tethered to the property market."
Inquiry levels remained high and waitlists were strong, and the company did not see an increase in days to sell or settle for residents moving in, Scoullar said.
Summerset's total assets grew 23 percent to $5.4 billion.
Three new sites purchased
Summerset also announced the purchase of three new properties - two in New Zealand and one in Australia.
The New Zealand sites were in Masterton and Rotorua, while the Australian purchase was in Mernda, Victoria. The New Zealand sites would each offer more than 300 units and the Australian site gave the company capacity to build 1700 units in Victoria.
Summerset said the combined investment in the three sites would be greater than $600m.
The Masterton site would be in Landsdowne, in the subdivision of Cashmere Downs, and the Rotorua site would be in Fairy Springs.
"The Wairarapa has a rapidly growing ageing population, with the number of people aged 75-plus forecast to increase 50 percent in the next six years. And, of course, it's just over the hill from Wellington and many Wellingtonians will relish the chance to retire amongst the Wairarapa's vineyards, golf courses, and settled climate," Scoullar said.
"The Rotorua area doesn't have a retirement village offering like ours currently, and with a strong 75-plus population expected to increase by 30 percent in the next six years Summerset is pleased to be able to bring our unrivalled continuum of care retirement village offering to Rotorua."