Ryman Healthcare, which posted a 23 per cent gain in first-half profit, will spend $200 million building its third retirement village in Melbourne as part of its planned expansion in Australia's second-biggest city.
The Christchurch-based company purchased a 2.5 hectare site in Burwood East, part of a Frasers Property Australia redevelopment of the 20.5-hectare former Burwood East brickworks, it said in a statement. The site will be redeveloped into a $200 million retirement village for more than 400 residents, with independent living apartments and an aged care centre including specialist dementia care.
"We're delighted to announce we've bought our third site in Melbourne," managing director Simon Challies said. "It is in a very established section of Melbourne with Box Hill to the north and Mount Waverley to the south and is one of the largest undeveloped sites in the eastern suburbs. Our research shows there is a shortage of care options in the surrounding area and the new village will meet that need."
Ryman expanded into Australia with the first residents moving into its Wheelers Hill village in May 2014, and development continuing on the Brandon Park site it bought in 2014. It signalled this purchase when posting its first-half profit in November, saying it had signed a contract to buy a third site in Melbourne.
The company's profit advanced to $132.6 million in the six months ended September 30, 2015, from $107.9 million a year earlier. Some 160 units were completed in the first half and it expects to build 450 units and 330 residential care beds in the second half, keeping it on track to complete a record 950 units for the year ending March 31, up from 875 last year.
Like other retirement village developers and operators, Ryman is looking to latch onto an ageing demographic, and expects to have five villages in Melbourne by 2020. Ryman is New Zealand's largest retirement village operator, with 9,000 residents at 30 villages.
The shares dropped fell 1.1 percent to $7.95, and have fallen 5.4 percent this year. The stock is rated an average 'hold' based on five analyst recommendations compiled by Reuters, with a median target price of $8.53.