Ryman Healthcare chief executive Naomi James says the $1 billion would go to repay debt and cover fees.
Ryman Healthcare chief executive Naomi James said an internal reorganisation and changes to weekly and deferred management fees meant the company underwent significant changes late last year.
When asked about the $1 billion capital raise announced yesterday and declining sales, she said: “In hindsight, we probably made too much change at once.”
She was referring to the October 1 changes where weekly fees were not necessarily fixed for a resident’s life and instead of keeping only 20% of elderly people’s money, the company now keeps 30%.
“We’ve been very up front about that in the update,” James said, referring to yesterday’s investor presentation telling how gross sale applications were down 60% due to three factors:
James, who joined the business in only November, said all the $1b would go to repay debt and cover fees.
Weekly fee and deferred management changes were made on October 1, she said.
New residents could pick fixed or indexed fees. A standard deferred management fee was now 30% instead of the previous 20%, but there were other options for people with less capital and Ryman could adjust that aspect too, James said.
Ryman’s investor presentation yesterday indicated a tough environment: “Continued challenging market conditions including illiquid housing markets and elevated stock levels across the industry have been amplified by near-term loss of sales momentum following changes to ORA (occupation rights agreement) pricing model and organisational restructure in third quarter 2025.”
Yesterday, Ryman said it wanted the $1b via a heavily discounted capital raise to cut debt and enable growth, after 2023’s $902m raise.
Ryman’s debt will sink from $2.56b to $1.59b. James said $970m would be to repay debt and the rest was transaction fees.
The $1b placement and entitlement offer is pitched at $3.05 a share and is a 21.9% discount to the theoretical ex-rights price going on Ryman’s closing price of $4.31 on Friday.
Chairman Dean Hamilton said yesterday the money would reset the company’s balance sheet, cut gearing from 37.3% to 23.1% and provide Ryman with “the foundations to deliver further transformation initiatives, with a renewed focus on its operational reset”.
Shane Solly, portfolio manager at Harbour Asset Management, said yesterday the move would allow Ryman to reduce balance-sheet risk and would allow it to get on with its restructuring.
In November, Ryman reported it had halved its net profit after tax and was suffering rising vacancies in its properties, then running at 12.1% empty.
In November 2023, the company described the housing market as “challenging” and former CEO Richard Umbers said Ryman would be selling two sites and deferring work on another three:
The company indicated changes to its occupation rights agreement pricing models had an effect.
That follows its announcement last year of a review to keep 30% of elderly people’s money rather than the below-industry 20% previously. Fixed-for-life weekly fees for new residents were also reviewed.
The Herald put a series of questions to James this morning:
Q: Interest rates are falling, surely the cost of debt is down for you too and isn’t such a problem?
A: “We saw rates move last week, but the property market and economic conditions are still very difficult and we don’t have certainty around the timing of when the market might change.”
Q: Why did you raise money at such a steep discount to what the company had been trading at?
A: “The offer pricing is based on market conditions, so that pricing reflects the market we’re in today.”
Q: Can you define growth that was mentioned yesterday as part of the $1b raise?
“The equity raise proceeds will be used to reduce debt and we’re also targeting another $500m to be released from the balance sheet. As the market recovers and sales and trading conditions improve, this will give us the capacity for a return to disciplined growth.”
Q: How did Ryman go selling sites in Kohimarama and Newtown in Wellington?
A: “The sites at Kohi and Newtown are currently held for sale. Newtown has sold, but has not been announced in the public arena yet because it’s not material to trading.”
Q: What about Takapuna, which is a hole beside a lake where work for a village is paused?
A: “That is in our landbank and in yesterday’s update, we had it in our landbank.”
Q: Why are third-quarter sales down so much?
A: “Due to the challenging market conditions constraining the ability of our customers to sell properties combined with elevated stock levels across the industry and the changes that Ryman made to its pricing model and also undertaking an organisational restructure during the third quarter. Of the three, the first two are outside our control, but we expect it to improve with time. The third one is within our control, so that’s where we’re focused.”
Q: What effect is the massive re-levelling work at Edmund Hillary having on the business, what has that cost so far?
A: “That’s within our capex guidance. It’s a small component of that. That work is now nearing completion. We’re hoping to finish in the next couple of months. That has impacted our residents. I want to acknowledge that. It’s taken longer than expected.”
Q: Why aren’t those residents' weekly fees being cut in compensation?
A: “Residents had not been offered a reduction in weekly fees because this is a one-off. We’ve been doing everything we can to minimise the impact on residents as much as we can. Monitoring [of gas] is part of safe work practices. We’re making sure the site is safe for our residents. The bowling green has been resurfaced.”
The company owns 49 villages, which are home to 15,337 residents. It employs 7758 staff and has eight new developments under construction.
Anne Gibson has been the Herald’s property editor for 25 years, written books and covered property extensively here and overseas.
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