Oceania Healthcare lifted reported net profit after tax from $1.3 million to $14.9m for the half-year to November 30, 2019.
New Zealand's third-largest aged care residential business after Ryman Healthcare and BUPA has just announced an unaudited underlying net profit after tax for the half-year up 17.6 per cent from $20.5m to $24.1m.
"Reported net profit after tax takes into account all the valuation uplift which was strong whereas underlying net profit after tax takes those valuation gains out but includes what we have actually sold," said chief executive Earl Gasparich.
Operating revenue rose from $96.4m to $97.9m.
Total assets rose 23.8 per cent or $287.7m to hit $1.5b and Oceania said much more was to come.
"Completion of 265 new retirement village units and aged care beds for the year
ending May 31, 2020 is on track with 90 care suites at Awatere in Hamilton already
completed in July and 10 villas at Whitianga in the Coromandel," it announced this morning.
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Gasparich said: "The first half of the financial year reflects the strong sales momentum at our two new Auckland villages - The Sands and Meadowbank stage four as well as continued strong demand for our new premium care suites across the country".
Around half the units - 31 at Browns Bay's The Sands and 24 at stage four at Meadowbank - sold within the November-ended six months, he said.
"Sales volume and pricing at these two luxury Auckland sites are to expectation and reflect their prime locations", Gasparich said.
Oceania got standing consent from the Overseas Investment Office for residential land purchases. Its foreign ownership meant it needed special clearance to skirt the foreign investor ban on lifestyle and residential properties.
Around 43 per cent of Oceania's shares are owned by funds managed by Australian-headquartered Macquarie, hence the retirement business is classed as a foreign entity in New Zealand.
Oceania was established in 2005, has about 2500 staff, 25 villages where around 4000 people live, about 1000 independent villas and apartments and a further 2500 hospital beds of which more than 400 are care "suites" which are more upmarket than many retirement village hospital beds. It provides dementia, respite and palliative care.
Its share price has rocketed lately, piling on a third in just a few days. It was trading at $1 last August but shot up to $1.35 just before Christmas, around the same time a takeover was announced for rival Metlifecare.
Oceania's market capitalisation is $798m.
In its last full financial year, it developed 272 new units and what it calls care suites which are upmarket hospital beds but expanded into rooms, often with kitchens and lounge areas more like a small retirement village unit.
Its big projects were stage four of Meadowbank, the first stage of its new The BayView in Tauranga and Browns Bay's The Sands, Awatere in Hamilton and St Helier's Waimarie St in Auckland.
It also has a big planned work pipeline at Auckland's Lady Allum and Eden.
Gasparich has predicted the first of the baby-boomer generation will be more discerning than many of the older people who have bought into retirement villages.
Many of those boomers will be richer, with large amounts of capital tied in their existing homes so they will have the money to pay for places in better villages, he has predicted.
"They're looking for much better-aged care than just government-funded care," he says.
A bed that attracts a premium accommodation charge for care above the government-mandated minimum produces ebitda between $5000 and $20,000 a year on top of that – daily additional charges can range from $10 to $70 but the average in New Zealand is $20, he says.
So Oceania can make more money out of providing better-quality hospital beds or 'care suites' for more needy residents.
Real estate specialists JLL last year estimated around 41,009 New Zealanders live in retirement villages, accounting for 13 per cent of the 75+ population. This country now has more than 400 villages with around 31,545 units.