Summerset opens Melbourne office as it looks to Australia for growth
By Sophie Boot
April 27 (BusinessDesk) - Summerset Group has opened an office in Melbourne as it mulls expanding into Australia as it continues to buy and develop across New Zealand.
At the retirement village developer and operator's annual meeting this afternoon, chair Rob Campbell said the new Melbourne office is being headed up by its former general manager of development Paul Morris who is now the company's general manager of development for Australia, according to speech notes published to the NZX.
"Last year I indicated we would commence investigating Australia as a potential market for expansion. Since that time we have been working through assessing this market and how we would position ourselves and operate within it," Campbell said. "We continue to work through the appropriate due diligence required before entering a new market. We have no further announcements to make at this time, suffice to say we are taking this very seriously and have dedicated the appropriate resource and focus to the opportunity."
Chief executive Julian Cook said the company sees further growth likely to come from Australia, which was an exciting opportunity but "it is important that we plan carefully to ensure we succeed and we are committed to doing just this."
Campbell first raised the prospect of moving into Australia at the company's annual meeting in 2017, when he said it was a possibility which would require extensive research, among other considerations of how Summerset could expand its core model of services.
Today, Campbell said the company, which houses over 4,700 residents, has more than doubled in size since it listed on the NZX in 2011 and is "likely to double again in the next five years as we continue to grow and as the 70-plus population continues to increase."
In February, Summerset reported it had lifted annual earnings for calendar 2017 by 44 percent to $81.7 million, ahead of forecast. Net profit jumped 54 percent to $223.4 million, as the value of the company's investment properties increased by $218 million, compared with a $143.5 million gain a year earlier.
Summerset built a record 450 retirement units in 2017, up from 409 units the previous year, and plans to match that level again this year. At year's end, Summerset's land bank represented about 2,841 retirement units and 396 care beds, or about six years' supply. It has 23 villages being developed or completed across New Zealand, and seven sites ready for development.
Cook said the company still expects its New Zealand build rate to rise to around 600 retirement units over the coming two-to-three years, and doesn't expect to increase it beyond that unless it sees particularly strong demand, but will increase its land bank to support that building rate.
"We are a New Zealand-wide operator and our land bank acquisitions are likely to reflect this," Cook said. "The diversity of our operations has been a strength for us in the past as we have seen different dynamics at play in different parts of the country over time, for example currently the Auckland residential market is flattening despite a still heated construction market. This is in contrast to much of the rest of the country."
The company's shares were unchanged at $6.86, and have gained 33 percent in the past 12 months.