Arvida Group is buying a portfolio of villages for $180 million and will fund the purchase through a combination of new equity and debt.
The retirement home operator said it has reached a deal to buy Bethlehem Country Club and Bethlehem Shores in Tauranga and the Queenstown Country Club. Completion of the acquisition is expected to occur on July 31, subject to customary closing conditions
"The acquisitions align with our strategy to own quality villages of scale. We now look forward to realising the potential of the development pipeline and introducing a continuum of care," Arvida chair Peter Wilson said.
The purchase will be funded through an underwritten placement of $50 million of shares at $1.25 each. A total of $92 million will come from a 1-for-5.7 pro-rata renounceable rights offer at an issue price of $1.15 per share. An additional $10 million of new Arvida shares will be issued to the vendors at market price and there will be $32 million of bank debt.
The villages are being acquired in an off-market transaction from interests controlled by Mr Fraser Sanderson, a long-term developer of high-quality retirement villages in New Zealand.
Mr Sanderson said "these villages represent the pinnacle of my life's work. It was important I found a safe pair of hands to look after them and my residents."
"Queenstown Country Club is my newest and best village. It will arguably be the most prestigious retirement village that New Zealand has seen," he said.
Arvida shares last traded at $1.38. Trading in the stock has been halted pending completion of the placement.
Both the placement and rights Issue have been fully underwritten by Forsyth Barr Group and Jarden Partners. The rights issue offer document will be sent to shareholders on July 4 and the offer will close July 15.
The villages are being acquired in an off-market transaction from interests controlled by Fraser Sanderson, a long-term developer of high-quality retirement villages in New Zealand.
The acquisition adds 326 independent living units to Arvida's existing portfolio of 3,677 units and beds. It provides for the future development of 504 units, the addition of which substantially increases Arvida's development pipeline in key growth areas, the company said. As a result, Arvida's target annual build rate from FY21 and beyond will increase to 250 plus units.
"The villages have been built to a high standard and represent an opportunity to acquire a portfolio of significant scale and quality in prime locations," chief executive Bill McDonald said. "The brownfield development pipeline materially adds to our expansion plans and will deliver significant value to our shareholders over the long term."
Arvida said - based on its estimates of earnings - the acquisitions will add $15.8 million of underlying profit on a pro forma basis in the 2020 financial year and $19.4 million the following year.