Pandemic-influenced valuation writedowns in the property portfolio of NZX-listed retirement specialist Oceania Healthcare pushed the business into the red to make a $13.6 million net loss after tax.
That was down from last year's $45.4m profit. But operating revenue for the business headed by Earl Gasparich rose from $187m to $193.6m. The result is for the year to May 31, 2020.
"Significant changes" in CBRE's valuations assumptions led to a negative fair value movement, the business said. Accounts showed valuations fell $22.5m, compared to last year when they rose $33.8m.
"Reported net loss after tax of $13.6m was due to unrealised movements in the valuation of investment property, including changes to key valuation assumptions made in response to Covid-19," Oceania has just announced this morning.
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Total assets were up by 10.7 per cent to $1.5b reflecting significant development capital expenditure and new aged care centres completed. But investors get less because the dividend has been reduced.
Operating revenue rose $7m because of increased aged care occupancy, higher income from premium rooms and increased income from retirement village operations, the business says.
Underlying net profit after tax of $42.9m was $7.8m or 15.4 per cent lower than the prior corresponding period due to higher interest costs to fund development activity and higher depreciation charges from completed projects.
Operating cashflow increased by 11.3% to $99.4m as a result of sale proceeds from developments completed in the previous financial year.
Aged care occupancy of 93.7% at aged care sites not impacted by redevelopment activity, as compared to the prior corresponding period occupancy of 93.2%.
A final dividend per share was declared of 1.2 cents, paid on August 17. The full year dividend is 3.5 cents per share.
Gasparich said the loss reflected changes to key valuation assumptions made in response to Covid-19.
But that excluded the increase in value of property, plant and equipment from the care suites completed at Awatere in Hamilton and Green Gables in Nelson. Together, those 151 new care suites added $21.9m to assets this year, he said.
During level 4 of the lockdown, no prospective residents could be shown through villages or settlements take place on applications for new occupation right agreements. That hurt earnings over this time, Gasparich said.
"We had achieved good sales in the months leading up to the lockdown and were on track to meet our targets for the full year after a strong first half. In level 2 of the lockdown, we experienced a strong increase in inquiries and have taken significantly higher applications over late May and June than we recorded last year," he said.
Occupancy was 93.7 per cent, up on last year's 93.2 per cent, primarily due to refurbishing the portfolio and converting older, standard aged care rooms into its premium care suite products.
This month, the Auckland office of JLL said the number of New Zealanders living in retirement villages rose from 43,000 to 45,000 in the last year, an extra 11,900 new units are planned and the fastest-expanding listed owner/operator is Summerset Group.
The JLL NZ retirement villages and aged care white paper, written by JLL senior research analyst Lisa Chen, said Summerset has the biggest development pipeline after buying seven sites last year. It plans 4726 new units. Ryman Healthcare is second busiest, planning 2816 units. Arvida Group plans 1484 units, Metlifecare 1348 units, Oceania 1119 units and Bupa NZ 448 units.
About 70 per cent of Summerset's, Ryman's and Metlifecare's plans are for new villages but 90 per cent of Oceania's and Arvida's plans are to expand existing villages. Bupa is split more evenly between new villages and expansion of existing villages, JLL found.
Of the 11,941 new units planned by the big six operators, 6027 are in the golden triangle between Auckland, Hamilton and Tauranga.