Slowing property market hits Melifecare

Glen Sowry, chief executive of Metlifecare

Metlifecare, New Zealand’s second-largest listed retirement village operator, has reported a significant slump in profits for the first half of the year thanks to a slowing property market.

Profits fell 57% to NZ$24.5 million (US$16.8 million) on revenues that gained 9.7% to NZ$61.9 million.

The value of the company’s total assets at balance date was up 11% at NZ$3.4 billion. “While the housing market overall has been moderating as we expected, our resale prices were seven percent higher than the same period last year and we’ve been consistently outperforming the markets in which we operate,” said chief executive Glen Sowry.

Metlifecare settled 170 resales of occupation right agreements during the period, up 13% on last year, with a further 78 homes under contract. The average selling price per home rose 7% to NZ$572,000, driving a 21% lift in realised resales gains to NZ$32.1 million.

“The strong resales performance reflects the ongoing demand for our villages,” Sowry said. Applications for the first half were 16% higher than the same period last year.

Sales of new homes completed late in the first half were described as “pleasing”, with 56 new occupation right agreements settled during the period, up 70% on last year, and with an additional 50 homes under contract at balance date. The total realised development margin was NZ$9.3 million, 50% higher than last year.

Metlifecare’s development programme is on track to deliver 215 new homes and care beds for the current financial year. While the programme is heavily weighted to the second half of the year, the first half saw the completion of Pinesong Village’s new care home, where 20 care suites and care apartments now provide hospital and rest home level care. The remainder of the financial year’s construction programme includes two new 24-apartment buildings at Greenwich Gardens; new villas at Papamoa Beach and Crestwood villages; new homestead-style care homes at Papamoa Beach Village and The Avenues; and 55 villas and apartments at Metlifecare’s new Gulf Rise village at Red Beach, on Auckland’s Hibiscus Coast.

The group increased its debt facility to NZ$450 million at the end of the last year and said that it is considering a retail bond.

Shares of Metlifecare dropped almost 2.5% on the news to NZ$5.12. They are down 16.7% over the past year.