Summerset moving ahead with Australian expansion plans

Summerset has bought its first land in Australia. Photo / File

Summerset is moving ahead with its expansion plans across the Tasman and said it has purchased its first land in Australia.

It did not disclose a price, citing commercial sensitivity, but said the acquisition and subsequent development will be funded from existing bank facilities.

The retirement village owner and operator had a bank facility of $500 million with undrawn capacity of $235.7 million as of June 30.

Summerset's move to Australia follows in the footsteps of Ryman Healthcare which opened its first village in Melbourne in 2014 and announced the purchase of its 10th site in Melbourne in May this year.

Last February, it signalled it was looking at land in Victoria, Australia and today said the eight-hectare property is in Cranbourne North, an established suburb in the south-east of Melbourne.

According to chief executive Julian Cook, the Melbourne residential property market is starting to recover after a period of decline. "Over the last three months, residential prices in Melbourne have started to increase following around 12 months where prices declined approximately 11 per cent," he said.

While he said the demand for Summerset's retirement living and aged care is not driven by the residential property market, "the stabilisation of the residential housing market does mean we are entering the market at a good point in the property cycle."

The site is located close to a number of shopping centres, a golf course, public transport and will be adjacent to a public reserve with walking tracks, it said.

Summerset has 28 villages completed or in development across New Zealand. It has an additional 10 domestic sites for development and now one in Melbourne. Its total assets stood at $3 billion as of June 30.

The stock last traded at $6.93 and has lifted 0.3 per cent so far this year. The stock had fallen to a low of $5.35 in June as lower valuation gains - due to a cooling property market - weighed on its net profit.

Net profit in the six months to June 30 fell 4 per cent to $92.6 million. The Wellington-based company registered an $85.7 million unrealised gain on its $3.03 billion property portfolio, compared to a $92.8 million gain a year earlier.

- BusinessDesk