The third-largest retirement village operator has transformed in secret since it was bought by private equity in 2020. Will the better business find its way back the public market?
Since it exited the New Zealand stock exchange in 2020, Metlifecare has built and acquired new retirement villages including more aged care beds, and expanded into the South Island.
Its owner, Swedish private equity firm EQT, has reinvested every dollar the business has made back into it.
“I think allof this transformation needed to take place outside of the public spotlight,” Metlifecare chief executive Earl Gasparich told Markets with Madison.
“We really have gone through the boldest of changes that you’d expect of a company of our scale in New Zealand. It’s been executed at considerable pace.”
Metlife just reported a 21.5% increase in annual net profit to $53 million, from $221.9m of revenue, which included a boost in the value of its properties.
When it was listed, the country’s third-largest retirement village company “had some rocky times”, he said.
The main factors being a lack of land banked, an inconsistent build rate, not enough care beds, weather-tightness issues in some of its buildings, and a drive to fulfil short-term investor demands for returns.
“As opposed to what strategically needs to happen in this company to position it for long-term growth.
“The public market is unforgiving when it comes to year-on-year returns.”
Metlifecare CEO Earl Gasparich says the nation's third-largest retirement village company has undergone a significant transformation behind closed doors over the past four years.
All of those issues had now been addressed.
“I think we’re a far more resilient, far more diversified, and far higher-growth engine than what we’ve been in the past.”
Investors had discounted retirement village stocks throughout this economic cycle, due to dampened property valuations, an easing off of development plans and higher interest rates making their debt more expensive.
Some of the stocks were trading below their net asset value.
Arvida, Oceania and Ryman Healthcare had suspended dividends, while Ryman was selling land site and Oceania Healthcare was selling older villages.
But Gasparich said the sector had been “oversold”.
Summerset was an outlier, continuing to expand - as reflected in its share price, which had risen more than 10% year to date.
If Arvida exits the exchange, could Metlife replace it with a comeback to the public market? Watch today’s episode of Markets with Madison above to find out.
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Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.
Madison Reidy is host and executive producer of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
