Retirement village firm takes hit

New Zealand's largest retirement village developers and operators are Ryman Healthcare, Metlifecare and Summerset. Photo / Thinkstock

Retirement village developer Metlifecare suffered a net profit drop of almost 70 per cent, a result it attributed to less spectacular property value rises and the sale of a Christchurch retirement village.

The NZX-listed business made $20.8 million in the year to June 2011, down from last year's $67.5 million.

Its operating revenue fell from $136 million to $92 million and property revaluations which previously rose $73.2 million gained just $27.5 million this year.

Alan Edwards, managing director and chief executive, said the net profit figure was strongly influenced by the property valuation changes and the bottom line did not reflect the company's strong performance in the year.

Metlifecare is 82 per cent owned by Australia's Retirement Villages NZ.

On February 14, the company sold its Merivale retirement village to a Christchurch syndicate of investors for $26 million.

The business with an NZX market capitalisation of $238 million has total assets of $1.2 billion, down $29.3 million in the year.

Chairman Greg Flood said he was pleased with the result because strong cash flow had enabled Metlifecare to reduce debt and liabilities were down $50 million, largely driven by bank debt being paid off.

Total equity increased from $505 million to $526 million.

New Zealand's largest retirement village developers and operators are Ryman Healthcare, Metlifecare and Summerset.

Edwards said growth would come from development of four North Island sites. Two stages of Takapuna's The Poynton had been developed but a further two stages are planned.

Expansion of existing retirement villages at Paraparaumu, Tauranga and in West Auckland were also being examined.

An investor presentation issued with the result said people's ability to buy into a retirement village almost always required the sale of a family home and low residential real estate volumes influenced market conditions.

The year was slower than anticipated for settlements of village units, down 14.7 per cent on last year.

Occupancy of the first two stages of The Poynton is 44.3 per cent but excluding that big new high-rise village near Milford, occupancy levels in Metlifecare villages rose from 90.2 per cent to 91.2 per cent.

Metlifecare has 16 retirement villages with 2460 villas and apartments and nine care facilities with 407 beds.