Metlifecare property portfolio down $107m

Retirement specialist Metlifecare issued its interim report this week showing it owned properties valued at $532.2 million, down on $639.7 million previously.

Last month, the company reported a $61.9 million loss for the half-year to December 31 but detailed accounts reveal more about the business.

The company's properties were revalued and were hit by the downturn in the domestic economy, particularly the weaker property market, with revaluations in its large property portfolio contributing to the loss. The business still had positive operating cashflows, chairman Jim McLay said.

But he also wrote in the accounts about how sales of retirement units were suffering. "The current challenging market conditions have resulted in lower monthly volumes of residential property sales across New Zealand.

The company has experienced a reduction in the volume of sales and resales of occupation rights in its retirement villages and in the prices achieved," he wrote.

"While the total number of occupation right agreements entered into by prospective residents remains at levels consistent with previous periods, the timeframe to sell their existing homes and reach settlement on signed occupation right agreements has lengthened, resulting in the number of agreements achieving settlement reducing.

"As a result of the lower level of settlements, there has been an increase in the level of stock for sale. However, the revenue and cashflows associated with the excess stock are expected to be realised over time."

The company suspended dividend payments until next June "to retain cashflows and reduce debt".

The business wants to raise $37.8 million through the issue of new shares. Retirement Villages NZ, with an 82 per cent stake, is backing this.

"The company is currently negotiating new banking facilities to apply from April 1 and expects to be required to suspend the payment of dividends until June 30, 2010," the business said in notes to the accounts.

"In November 2008, the company identified the possibility that it might not meet financial ratios under its banking facility and approached its bankers to seek a waiver of certain covenants in that facility. The bankers agreed to this on the condition, amongst others, that the term of the facility has been shortened so that it expires on March 31, 2009.

The company is currently renegotiating with its bankers to set revised banking facility arrangements, including revised covenants, to extend the facility arrangement beyond March 31.

"The interim financial statements have been prepared on the basis that the banking facility arrangements are extended past March 31," notes to the accounts said.