Ryman Healthcare's Auckland landbank is growing.
New Zealand's biggest retirement owner/operator confirmed its acquisition of the former Kingsgate Hotel site on Campbell Rd between Greenlane and One Tree Hill, adding to its Auckland landbank.
That 1.6ha site opposite Cornwall Park will be redeveloped into a village with apartments and care services and Ryman chairman David Kirk said the development would cost about $100 million.
"The Greenlane village will include two- and three-bedroom independent apartments, serviced apartments and a care centre with resthome care as well as specialist dementia and hospital-level care," Ryman said.
In 2005, locals tried to stop Marlin Group's scheme for what was then the Logan Campbell Motor Lodge, which included plans for 141 apartments and a 100-bed boutique hotel.
Marlin wanted to add another floor to the existing hotel and build a pavilion bar and cafe, with a separate apartment block by the Campbell Rd entrance.
In 2010, Westpac advertised a mortgagee sale of the 220-bedroom hotel at 187 Campbell Rd that once swung to cabaret performances by Sir Howard Morrison. The original hotel entry and most of the buildings have been left in a derelict state but Colin Stewart of CBRE said at the time there were plenty of development options.
In the Devonport area, Ryman has leased the 4.2ha Wakakura ex-navy vacant land block from Ngati Whatua Orakei and says 300 people will live on that block which the hapu bought as part of its treaty settlement.
Last month, Ryman also said it had bought one of Auckland's biggest privately owned blocks of land, the 8.92ha Tropicana Farm in the Lynfield/Mt Roskill area, from Bill Subritzky. That property is off Hillsborough Rd and Commodore Drive flanks one side of it.
Tropicana farm in Mt Roskill.
Forsyth Barr analyst Jeremy Simpson said Ryman was the lowest-risk NZX-listed retirement play.
"Reasons for this include its needs-based portfolio (Ryman has a much larger percentage of care beds and serviced apartments than Metlifecare or Summerset), low level of existing or older villages in Auckland compared to Metlifecare which are likely to be more adversely impacted, it is the lowest-cost operator given its scale and in-house expertise, and its proven ability to continue to recycle capital and grow through the global finance crisis," Simpson said.
"In addition to the announcement that Ryman had acquired the very large Tropicana site in Auckland, Ryman has now also confirmed new sites at Campbell Rd, Greenlane, in Auckland and at Rangiora, north of Christchurch," he said.
"Over the last 18 months Ryman has significantly added to its development pipeline and at the current targeted build rate it has a 5.5-year land bank. Ryman has now confirmed the locations of all five planned Auckland villages (1400 units and 500 plus beds).
"Ryman currently only has three operational villages in the greater Auckland area out of a total of 26 villages nationwide."
Forsyth Barr expected net profit after tax would be $135 million in 2015, $155 million in 2016, then $180.7 million in 2017. Gross dividend yield is forecast to be 1.7 per cent in 2015, rising to 1.9 per cent and 2.2 per cent.
But Michael Nimot and Angela Webster of JLL predict a possible Auckland oversupply of retirement village units and questioned whether buying a unit is not such a good idea for the residents or their families, as house prices skyrocket and many parents attempt to help their kids get on to the property ladder.
Traditionally, retirees sell the family home to pay for a village unit, but the experts fears that if home ownership keeps falling, fewer people will be able to make that move.
Compounding the problem, even if older people do own a home, they may feel pressure to help their children and even grandchildren buy their first property, reducing the amount available to spend on a retirement unit, Nimot and Webster say in their 15-page NZ Retirement Village Database Whitepaper.
Summerset director Norah Barlow's keynote address to the Retirement Villages Association conference on June 24 raised the possibility of some operators failing, more law changes, more acquisitions and mergers and predicted consumers would become more demanding.
Planned new villages:
Brandon Park, Melbourne
Tropicana Farm, Blockhouse Bay, Auckland
New villages under construction:
Bruce McLaren Retirement Village, Howick, Auckland
Weary Dunlop Retirement Village, Wheelers Hill, Melbourne
[Source: Ryman Healthcare]