The slowing property market hit listed retirement specialist Metlifecare's bottom line, with net profit after tax falling 68 per cent from $122.6 million last year to $39.2m due to less spectacular valuation rises, yet revenue rose from $114m to $141m.

Property revaluations last year were $132.7m rise but only $53.9m this year at the business which owns assets valued at $3.5 billion.

Metlifecare, trading around $4.40, has a market capitalisation of $938m.

Glen Sowry, chief executive, said operating performance for the year to June 30 had improved due to higher sales volumes, strong pricing and continued investment in villages and resident services. Underlying profit before tax rose 4 per cent to $90m.


"Although the housing market has been somewhat softer, occupancy is very strong at 97 per cent and we have continued to have a very strong sales result. Pricing has more than held up and continued to improve year on year. The average prices lifted by 6 per cent.

"The demand for our villages and care has remained strong over the year. We settled 7 per cent more occupation right agreements with 6 per cent higher average prices, outperforming both the market and unit prices assumed in the valuation.

"Our care business has performed very well, with consistently high occupancy and strong
premium revenues driving a significantly higher contribution," Sowry said.

Metlifecare's total assets grew by 7 per cent, a statement said.

Shane Solly of Harbour Asset Management said sales had been strong over the year "and they are continuing to invest. Some may have been expecting activity in the retirement sector to have been slowing, but what the profit results season is showing is that there is good demand for retirement living from the quality providers, even in a softer Auckland residential market".

Sowry said Metlifecare's general manager of development, Charlie Anderson, had left "and we're now in the process of recruiting a new development chief. He has been here just over four years. He came here to do a three-year term and that was extended".

An investor presentation said $55m was being spent on leaky buildings within five Metlifecare villages over a seven-year period: $1m in 2017, $6m in 2018, $11m in 2019, $14m in 2020, $11m in 2021, $8m in 2022 and $5m in 2023.

Years are to June 30, so Sowry said the highest single annual amount of $14m was being spent in this current financial year.


On top of the $55m in capital expenditure, a further $9m is forecast in operating expenses, bringing the total expense to fix the places to $64m.

Glen Sowry, Metlifecare chief executive. Photo / Warren Buckland
Glen Sowry, Metlifecare chief executive. Photo / Warren Buckland

"FY20 is when we are forecasting peak investment," Sowry said of building repairs, listing villages where work is necessary as Henderson's Waitākere Gardens, Titirangi's Pinesong, South Auckland's Dannemora, Tauranga's Greenwood Park and Kapiti's Coastal Villas.

"Most of the $14m is being spent at Waitākere and Dannemora which have bigger apartment blocks," he said of this current year's work.

"The other three villages have villas which are less complex. At Dannemora, we're working on the first eight and then move to the next eight so 16 in total need attention. At Waitākere, we have done the first 16 at Rosecourt and we are moving to the Millbrook building where there are about 30 or 35 apartments," Sowry said.

Large Metlifecare developments are under way at Beachlands, Botany, Gulf Rise and Orion Pt, all in the Auckland area.

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No guidance was given in today's result on the FY20 financials, although chair Kim Ellis and the board had been "encouraged by the company's sale performance and strong cash flows in a challenging market", a statement said.

"We believe the high demand, strong pricing and resident satisfaction is proof of our compelling customer proposition."

The full-year dividend is 11 cents per share, with the final instalment of 7.25c paid on September 13.

In June, Metlifecare became the first retirement village operator and the second New Zealand company to win a house land purchase standing consent from the Overseas Investment Office, meaning it can buy without needing permission each time.

Metlifecare is defined as an overseas entity because more than a quarter of its shares are held by offshore investors.