Manager Phil Mulcahy (left) and Summerset Group chief executive officer Julian Cook outside Summerset in the River City.PHOTO/STUART MUNRO
Summerset in the River City holds a special place in the history of the Summerset Holdings Group.
The Wanganui East retirement village was the Wellington-based company's first complex established in 1997 with 70 stand-alone villas and 18 apartments.
More than 2900 New Zealanders call a Summerset village home, and the group is the third largest retirement village operator and the second largest developer with 18 villages built in just 17 years - and more are planned.
It was started by Wellington-based property developer John O'Sullivan in 1994 in the Kapiti and Horowhenua regions. O'Sullivan had the idea to create a retirement village community his grandmother would happily call home.
The Wanganui East complex not only had villas where people could live independently, but a rest home and hospital facility. This model, called integrated care, has remained the blueprint for most of its villages that followed.
Summerset provides what the industry calls a "continuum of care" with villages able to provide full care should the residents' circumstances change.
Julian Cook took over as chief executive for the group in April this year, after four years as chief financial officer and 11 years before that in the banking industry.
Mr Cook visited the Wanganui village recently and in an interview with the Chronicle said the group was well positioned.
"Our main focus is on growth. We're building about 250 homes across the country this year and 100 care beds. Next year, we're building about 300 homes."
But he said this is a not a one-off programme; Summerset will be doing this every year.
It has just opened three villages - in Hobsonville and Karaka in Auckland, as well as New Plymouth, along with a major extension at Trentham. And it's a pattern that will keep repeating.
He said expansion of the Wanganui East village was not likely in the immediate future.
"We don't have any land right beside the village but we'll always be looking. I'd never say we'd never come here and do another one.
"There's a lot of growth (around the country) but we don't want to forget about the village that started us off because this one formed the base of our business."
Mr Cook said there would always be investment in the city site in future. It had installed a cafe in the Wanganui East complex and was one of the first in the group.
The retirement industry was certainly one of increasing growth and he said the projected "tsunami" of retirees - the baby boomers getting to 65 - is coming.
"It really starts in another two to three years and there's going to be some phenomenal growth. It's been growing at about 5000 per annum up and down the country. Over the next 20 years it will be at least 20,000 per annum."
In any language these are big numbers but they get even bigger. From 2011 to 2031, the over-75s double to about 500,000 then out to 2046 it triples to 750,000. In his words the growth is "colossal".
How Summerset does its business is simple enough. Like other players, it gets Government subsidies, but deferred management fees is its main revenue stream. These fees are based on the purchase value of the "right to occupy" the property and, in Summerset's case, that is usually set at about 25 per cent.
What this means is that when the resident dies, 75 per cent of the value of the villa or unit is passed back to the deceased's estate with 25 per cent retained by Summerset.
Mr Cook said while people were now comfortable with the funding concept it wasn't always like that.
"When they started out there was uncertainty around what would be provided and what they were buying into. But, what we're seeing now is that as more people come into them the more others learn about them. Their friends come in and realise why people have taken that option so it gathers momentum.
"This system lets us sell these units much cheaper than we would if we didn't have that fee system in place. Often our units are a lot cheaper than the homes these residents have come from in terms of maintenance. It's new or near-new and we refurbish the units every time they change hands," he said.
"And the resident also knows that if anything goes wrong maintenance-wise, it's our cost and we fix it. Your gardens are all taken care of and you've got all the usual amenities like the cafe here and a recreation centre.
"People always want to understand how it works and need time to think about it. But when they look at what they get versus staying in their own home, I think they're pretty happy. Lately, Summerset's share price had dipped, but he said that had no impact on their operation.
"Profits and earnings are going well, which is important not only for shareholders but the residents as well. They don't want to come to a retirement village that's losing money. They want to be in one that's financially stable and has good capital backing, that way you know if something breaks it'll be fixed."