Tauranga pioneer Fraser Sanderson nets $180m in retirement village deal with NZX-listed Arvida

Queenstown Country Club has stunning views of The Remarkables ranges.

When Fraser Sanderson began the construction of landmark retirement apartments back in 1987, the concept came under criticism for something that would never appeal to the New Zealand market. Now these facilities are commonplace. Sanderson's vision of "families helping families" has played out and he and his family have cashed in big time.

After starting his first retirement village in 1987 just before the great sharemarket crash, Fraser Sanderson can now look forward to his own retirement having sold out to NZX-listed Arvida for $180 million.

The deal crystalises a lifetime of work for the 63-year-old, whose family-owned Sanderson Group was one of the first to enter the niche market for luxurious, quality, retirement homes and apartments.

"My wife Donna and my family have been trying to retire me for a number of years now," Tauranga-based Sanderson said, adding that they convinced him a couple of years ago to buy a campervan in England to travel around Europe in.

But every time he returned he'd end up going back to work.

"I just couldn't help myself … so I came to the realisation that the only way I'm really going to be able to retire is to let it go and get out altogether.

"Donna says to everyone she's got her boyfriend back. But I'm not sure how she's going to like having me fulltime!"

Fraser and Donna Sanderson at the Queenstown Country Club site before development started in 2016. Photo / Mountain Scene.

Sanderson is selling Bethlehem Country Club and Bethlehem Shores in Tauranga and the Queenstown Country Club to Arvida, which is funding the $180m acquisition through a shareholder rights issue, placement to new investors and debt finance.

The acquisition adds 326 independent living units to Arvida's existing portfolio of 3677 units and beds. It also provides for the future development of 504 units.

Sanderson said if he was ever going to sell the business it would be to Arvida, a company that he says shares his vision and high standards for residential care and retirement living.

He had previously sold two other businesses – Cascades in Hamilton and the Bethlehem Views rest home, hospital and dementia care centre to Arvida.

"So when they approached me, that part of the equation wasn't hard. I had seen they are competent operators and well known for keeping high standards and that's the legacy I wanted to continue."

Arvida chief executive Bill McDonald said the company had been talking to Sanderson since its initial public offer in 2016.

"We really value what Fraser has done over the years – he's got a great reputation in the market and created a really high quality product and it's something we think will fit really well into our portfolio."

Arvida CEO Bill McDonald.

Despite his plans for retirement, Sanderson is keeping some skin in the game. The deal includes $10m worth of Arvida shares and he's also retaining a small piece of land next to the Queenstown facility site to develop a commercial precinct that will include a crèche, medical and dementia facilities and some retail.

There are also early stage discussions with a private hospital operator about developing a hospital on the site. "There's an opportunity but it's not confirmed yet."

Family ties

Sanderson's family will also retain an interest in the retirement sector with son Nathan starting out on his own with a new development at Tamahere on the outskirts of Hamilton.

Nathan is starting out at aged 30, the same age his father was when he started.
"He will continue the cycle, carrying on my legacy," Sanderson said.

Daughter Olivia has also been involved in the group as a lawyer and has other business connections through her husband Fady Mishriki, who founded wireless charging technology company PowerbyProxi before recently selling to Apple for more than $100m.

Fraser has two other daughters, Alecia and Heidi, the latter whose husband Daryl Scott works as a consultant to Sanderson Group.

Sanderson senior also has three other children, Jeremy, Ben and Amy, from an earlier marriage and eight grandchildren all up.

"So I am looking forward to my retirement," he said.

"These villages represent the pinnacle of my life's work. It was important I found a safe pair of hands to look after them and my residents.

"Queenstown Country Club is my newest and best village. It will arguably be the most prestigious retirement village that New Zealand has seen," he said.

Fraser Sanderson. Photo / Supplied

Sanderson's first village was the Omokoroa Country Estate in Tauranga, which grew from about 70 small homes to 160 homes.

He then built the Bayswater Village at Mount Maunganui before buying the local speedway and converting that into a village.

From there it was the Cascades in Hamilton, Bethlehem Views and what he says is the crowning glory in the Queenstown Country Club.

McDonald says both the Bethlehem and Queenstown villages have been built to a high standard and provide significant scale and quality in prime locations.

"The brownfield development pipeline materially adds to our expansion plans and will deliver significant value to our shareholders over the long term."

In Queenstown Arvida will develop an additional 90-bed care facility as part of its expansion plan and the company will be taking on Sanderson's development team to drive the project.

"Post this transaction we are starting to focus more on the greenfield aspects of the business, but this is a very compelling transaction with over 500 units, de-risked mostly consented units to get on with. That will provide us with a pipeline to bring us through to a more long-term greenfield strategy."

Arvida said that based on its estimates of earnings the acquisitions will add $15.8m of underlying profit on a pro forma basis in the 2020 financial year and $19.4m the following year.

Trading in the stock has been halted pending completion of a $50m placement to be followed by a $92m 1-5.7 pro-rata renounceable rights issue at $1.15-a-share.
Arvida shares last traded at $1.38.