Thinking big on retirement property

By COLIN TAYLOR

Building a 10,000sq m retirement village - about a quarter the size of the St Lukes shopping centre in Auckland - every three weeks sounds pretty easy the way Bill Colson tells it.

Colson, owner and president of the biggest retirement village company in the world, zipped down to Auckland from North America on his French-built Dassault Falcon jetliner to speak to the annual conference of the Retirement Villages Association.

Colson explained to the 200 delegates how his company, the Holiday Retirement Corporation of Salem, Oregon, constructs prefabricated retirement villages in Calgary, Canada, and trundles them on trucks to sites in Canada and across the border in the United States.

The superstructures of the hotel-style villages are erected within five weeks and tenders are called locally for electrical work, plumbing, interior decorating and landscaping. The villages are fully operational within six months.

Colson's company, founded in 1971, owns and operates retirement-related properties worth $4.3 billion and employs a workforce of 12,500.

Its portfolio includes 282 retirement villages in 41 US states and seven Canadian provinces.

The company also owns 99 per cent of the Peverel Group, the largest operator of senior sheltered housing in Britain, with more than 95,000 units and flats.

In 1999, Colson crossed the Channel and established the Serience Group. Now the fifth largest senior housing operator in France, it has 37 facilities and 3500 units.

Colson has come a long way from the youngster who spent five years washing dishes in a hospital to see himself through school.

His properties are oriented towards the "middle-market senior" over the age of 75.

Colson's retirement villages offer internal apartments at a straight monthly rental. To relinquish a village apartment, a resident simply gives 30 days' notice.

The individual home units within the retirement village are mainly 55sq m one-bedroom apartments. However, 35 per cent are 43sq m studios and there are some 780sq m two-bedroom units.

The average rent for a retirement village unit is $2810 a month. That includes three meals a day served in a community dining room and access to village facilities.

Colson says his set-up is probably similar to the "serviced-apartment" concept offered by New Zealand retirement villages.

Meals are standardised throughout the group, but modifications are made to suit local tastes.

"For example, we serve grits for breakfast in the Southern States, but there's no way you'd get a Canadian to eat grits," says Colson.

In Britain and New Zealand, retirement village units usually have their own kitchen but this isn't the case in the US and Canada. If residents want to cook, "test kitchens" are available within the village. But, after experiencing the luxury of having quality meals served in dining rooms, few cook.

"Maybe one in a 100 will take us up on cooking their own meals. The fact is that by 80 years of age most women are sick of it. It's a real freedom for women to get rid of their kitchen," Colson says.

"My wife can't wait to get rid of the kitchen and to be liberated from the cooking."

Medical and nursing services are not provided. Residents needing this level of care hire outside agencies.

Colson says the average occupancy rate for his properties is 90 per cent.

A construction company formed to build the retirement villages is suitably named Colson & Colson Construction and is the seventh largest "multi-family" builder in the US. The current cost of building and erecting the prefabricated retirement villages is $117 for one-tenth of a sq m.

Colson says his retirement villages are all private pay - not Government subsidised - and are not targeted at the rich or the very poor. The average resident, he says, is a former hardworking, frugal middle-class professional. About 20 per cent are retired teachers.

Some residents could be considered "poor" in terms of their retirement income compared with the income of the average American worker.

In contrast to New Zealand, where retirees can enter a retirement village from 55 years of age, his residents are about 80 when they enter a village, and the average age of a resident is 83.6 years.

"No one would walk near our buildings at 55," he says.

The entry age means few lengthy occupancies - the longest is 16 years.

Colson unabashedly says his company's aim is to "make money, provide the best service we can at a fair cost and to make our customers happy".

"A lot of these people have had tough lives and may have recently lost a spouse or even a son or daughter. They deserve the very best we can offer them in their twilight years."

The company's catchcry is "The Holiday Touch", which is defined as "the philosophy that every retiree deserves care and respect". The decree to company employees is, they "must treat each village resident as they would expected to be treated themselves".

One attraction for residents in good health is that anyone living in a Colson facility can stay in another facility free in any other city or country.

"We advertise our facilities in Hawaii for this reason. We have some people who tend to be just a bit younger than the rest - maybe late 70s or so - who just travel from one village to another. They're on the go like young kids. They'll travel for a year or two, then find somewhere they really like and settle down."

Colson believes the key ingredients to the company's success are "focusing on simple systems, common purchasing, dietary planning, consistent operating policies and procedures, and divisional and regional facility management".

Most of the group's retirement village managers are 50-plus years old and "we usually get at least 10 years of good work out of them".

The managers' contract includes a base salary and a bonus scheme based on the income generated by individual properties. Managers often earn $20,000 to $24,000 a year in bonuses and some as much as $43,000 a year.

Colson says retirement villages he and his wife visited in Auckland are "among the nicest we have seen anywhere in the world. They match anything we have in the US or Europe - or even better."

He says New Zealand would be smart to target middle-and-upper income American retirees to live in local retirement villages during the summer. New Zealand's image is extremely good in the US and Canada, he says.

"I've never heard a bad word said against this country. It has the right climate, and the right politics - notwithstanding the current 'mini-rift', which is nothing."

Colson says a big threat to his business has been the dramatic drop in interest rates because most retirees depend on interest from invested money.

"I've been in this business 35 years and this has never happened before. The interest rates were always very high or medium.

"I thought interest rates would never drop to 1 per cent in the US and Canada, but here they are. It really hurts."

And Colson is scared of Sars getting into his Toronto villages.

"If you ever think you're bullet proof in business - you aren't."