Archive | Summerset

Summerset just behind 2017 with retirement unit sales

Retirement village owner, developer & operator Summerset Group Holdings Ltd sold rights to occupy 148 units in the September quarter, 7 behind the previous year at this point.

The company recorded 82 new sales (97 in the September 2017 quarter) & 66 (58) resales.

Summerset achieved total sales of 682 units in 2017 (382 new, 300 resales) and would need 235 sales in the final quarter to match that.

Chief executive Julian Cook said the company was still on track to deliver 450 new units this year, the same as last year.

Attribution: Company release.

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Summerset buys at Papamoa

Summerset Group Holdings Ltd has bought an 8ha site at Papamoa Beach for its first Tauranga retirement village. It expects to open the new village in 2020.

The property is 4km east of the Papamoa town centre & 11km from Tauranga’s central business district.

Summerset chief executive Julian Cook said today the area was underserved by villages offering a continuum of care for residents. He said the new village would have about 280 homes, including serviced apartments & 2- & 3-bedroom villas. It would also provide a care centre with resthome & hospital-level care, and a memory care centre proviing one-bedroom apartments for people with dementia.

Mr Cook said total construction investment would exceed $150 million and a construction crew of at least 250.

Summerset is on track to build 450 retirement units this year. It has 23 villages completed or in development & 9 greenfield sites.

Attribution: Company release.

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Summerset issues full $125 million of bonds

Retirement village owner, operator & developer Summerset Group Holdings Ltd has issued the full allocation of $125 million of 7-year bonds after doubling its allowance for oversubscriptions to $50 million 10 days ago.

The interest rate has been set at a fixed 4.2%/year. The bonds are guaranteed, secured, unsubordinated & fixed rate.

Deputy chief executive & chief financial officer Scott Scoullar said today Summerset would use the proceeds to repay a portion of existing drawn bank debt and for general corporate purposes.

Earlier story:
15 September 2018: Summerset doubles bond oversubscription allocation

Attribution: Company release.

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Summerset doubles bond oversubscription allocation

Summerset Group Holdings Ltd lifted its bond issue to $125 million on Friday by doubling the level of oversubscriptions from $25 million to $50 million.

The margin has been set at 1.65%/year and the interest rate at 4.20%/year.

The minimum interest rate indicated before the bookbuild was 4.15%/year, and the indicative margin range for the bonds was 1.65-1.75%/year.

The 7-year fixed-rate bonds will go to New Zealand institutional & retail investors who participated in the bookbuild process. All the bonds have been allocated to intermediaries for distribution to their clients. There’s no public pool.

The bonds will be issued on Monday 24 September.

Earlier story:
4 September 218: Summerset to seek $100 million in bond issue

Attribution: Company release.

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Summerset to seek $100 million in bond issue

Published 4 September 2018
Retirement village developer, owner & operator Summerset Group Holdings Ltd said yesterday it was considering a bond issue of up to $100 million, including $25 million of oversubscriptions.

The bonds, aimed at New Zealand institutional & retail investors, would be unsubordinated, have a 7-year term and be fixed rate, with a guarantee & security package provided by the Summerset guaranteeing group.

Summerset made its first retail bond issue in June 2017.

Chair Rob Campbell said the offer was expected to open next week.

Attribution: Company release.

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Summerset to make retail bond offer

Summerset Group Holdings Ltd said on Monday it would offer $100 million of 7-year fixed-rate bonds in a retail offer.

The retirement village developer, owner & operator said it would offer the bonds to NZ institutional & retail investors.

Summerset said the interest rate would be the sum of the margin plus the 7-year base rate, but in any case would be no less than the minimum interest rate of 4.15%/year. The indicative margin range for the bonds is 1.65-1.75%/year. The margin & interest rate will be set following a bookbuild process on Friday.

The offer will close on Friday following the bookbuild, and the bonds expected to be issued on Monday 24 September.

Link: Indicative terms sheet

Attribution: Company release.

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Summerset lifts underlying profit on fatter margins, feels impact of flatter housing market, looks at Australia

Retirement village operator Summerset Group Holdings Ltd said yesterday strong margins on both sales & resales lifted its underlying profit for the June half by 27% to $45.2 million, in line with the profit guidance provided in early July.

Under IFRS (international financial reporting standards), net profit fell 9.2% to $82 million. Underlying profit includes realised resale gains, development margin & deferred tax expense, minus the fair value movement of investment property. Under IFRS, fair value is included.

Financial & operational highlights (2017 first half in brackets):

Net profit after tax under NZ IFRS, down 9.2% to $81.97 million ($90.25 million)
Investment property fair value movement, down 10.1% to $78.3 million ($87.1 million)
Underlying profit, up 26.8% to $45.2 million ($35.7 million)
Total revenue, up 29.5% to $65.7 million ($50.7 million)
Net operating cashflow, up 7.4% to $92.8 million ($86.4 million)
Total assets, up 25.2% to $2.42 billion ($1.9 billion)
Net tangible assets, up 32.2% to 377.85c/share (285.72c/share)
Basic earnings/share, down 10% to 37.22c (41.37c)
Diluted earnings/share, down 10.2% to 36.53c (40.67c)
Interim dividend, up 54% to 6c/share (3.9c/share)
Total occupation right sales, down 7.4% to 299 (323)
New sales, down 19% to 145 (179)
Resales, up 6.9% to 154 (144)
New units delivered, down 3.5% to 165 (171), but on track for delivery of 450 for the full financial year
Development margin, 17.9% higher at 33% (28%)
Realised development margin, up 21.3% to $25.8 million ($21.3 million)
Gross new sale proceeds, up 3.2% to $78.3 million ($75.9 million)
Resale realised gains, up 38.3% to $14.9 million ($10.8 million)
Sales margins lift returns, fair value fall reflects flatter property market

Chief executive Julian Cook said the underlying profit increase was driven primarily by strong margins on both new & resales: “While sales volumes were lower than the same period of 2017, we are seeing good levels of contracts on homes – both on resales & homes to be completed before the end of 2018 – many of which will settle in the second half of the year.”

He said the lower fair value movement reflected smaller price increases in response to the flattening property market being seen in some areas of the country.

As for the sharp increase in development margin, up from 28% to 33%, Mr Cook said the result was “pleasing, but reflects the particular mix of retirement units settled in this period, and our long-run expectations for development margin are less than this”.

Summerset grew total assets by 25% from a year ago to $2.4 billion.

“We delivered 165 new homes this half year and we are on target to meet our build rate of 450 homes for the year. This is despite continuing pressure from the Auckland construction market. Our key construction activity in Auckland is to complete our Hobsonville village, main apartment buildings at Ellerslie, and new villa builds at Karaka & Warkworth.”

Residents moved into the first homes at Casebrook (Christchurch) & Rototuna (Hamilton) villages in the June half.

Summerset recently received resource consent for its proposed Avonhead village in Christchurch, and is awaiting the outcome of consent applications for proposed villages in Boulcott (Lower Hutt) & Kenepuru (Wellington). Resource consent for its proposed village in St Johns (Auckland) has recently been declined.

“We are currently working through this decision, but remain confident we will be able to progress a successful village on this site,” Mr Cook said. “There is strong demand for all of these villages and we are keen to progress them as soon as possible.”

Company sees gains from staff benefits

In May, Summerset announced additional staff benefits, including a day of leave for staff birthdays, travel voucher prizes every quarter and paid sick leave from the first day of employment. These complement the staff benefits announced in 2017.

“Pleasingly we’ve seen the staff attrition rate at our villages drop by 8% in the last 12 months, and the company-wide attrition rate has reduced almost 7% over the same period. We believe this is a result of both the investment we are making in our staff and the Government’s equal pay settlement.

“However we are seeing the shortages in care staff increase due to the changes introduced to immigration last year by the previous government. We believe it is important the current government recognises the importance of immigration alongside local training & development to ensure there are sufficient qualified & competent people in the aged-care sector.”

Mr Cook said Summerset continued to investigate the feasibility of an Australian expansion. It has opened an office in Melbourne with a dedicated team who are working through the appropriate diligence process. The company said it was making good progress.

Attribution: Company release.

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Summerset buys site for second New Plymouth village

Summerset Group Holdings Ltd has bought 8.1ha 7km from New Plymouth’s cbd for its second retirement village in the city.

The property in Pohutukawa Place, Waiwhakaiho, is near the Fitzroy & Ngamotu golf clubs & Fitzroy Beach.

Summerset chief executive Julian Cook said today the site had sea views & an outlook to Mt Taranaki: “We’ve had huge demand for homes at our existing New Plymouth village, and I expect this village with its great views will be just as popular with people who want to experience a coastal Summerset lifestyle.”

The village will offer a retirement community with about 300 homes, including 2- & 3-bedroom villas and serviced & memory care apartments. A care centre will provide resthome & hospital-level care.

The memory care apartments will be Summerset’s first in New Plymouth. They will offer people living with dementia their own one-bedroom apartment with living space & bathroom in a secure environment.

Summerset’s first New Plymouth village has over 200 residents in independent homes & a care centre.

“The new village will help to provide for the expected 37% increase in people aged over 75 in the New Plymouth area within the next decade,” Mr Cook said.

Amenities will include communal vegetable gardens, a bowling green, library & café. It’s also expected to provide up to 50 full-time-equivalent jobs.

Mr Cook said Summerset was on track to build 450 retirement units nationally this year. This purchase takes its greenfield sites to 8.

Attribution: Company release.

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Summerset new sales slip again, but strong profit growth forecast

Retirement village developer & operator Summerset Group Holding Ltd issued a forecast yesterday that its underlying profit for the 30 June half-year, just ended, would be between $43-45 million, reflecting growth of between 21-26% on the June 2017 half.

Chief executive Julian Cook said new sales volumes of occupancy rights were down, but development margins were strong on homes that had settled.

“We are also seeing good levels of sales contracts & presales on homes which will be completed & delivered over the remainder of the year.

Mr Cook said resales volumes remained strong across all villages “and are at levels consistent with 2017, with no sign of impacts from any changing property market conditions”.
He said the company hasn’t forecast NZ IFRS net profit after tax due to the inherent uncertainty in fair value movement of investment property, a key component of this profit measure.

Summerset will release its half-year financial results on Tuesday 14 August.

Sales figures

Comparing second quarters this year & last, new sales were down by 5 to 77 (82), resales were up by 9 to 79 (70), for totals of 156 (152).

That’s a distinct difference from the first quarter, when new sales were well down, to 68 (97), resales were 75 (74), and the totals were 143 (171).

Sales for the first half were: new 145 (179), resales 154 (144), total 299 (323).

Summerset has 23 villages completed or in development and 7 more sites for development.

Attribution: Company release.

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Summerset takes greenfield sites to 7

Summerset Group Holdings Ltd has bought a 9ha property at Eriksen Rd, Te Awa, for its second retirement village in Napier & fourth in Hawke’s Bay.

Chief executive Julian Cook said the village would have about 320 homes, including 2- & 3-bedroom villas and one-bedroom serviced apartments. There will also be rest-home and hospital level care as well as Summerset’s first memory care centre (for people with dementia) in Hawke’s Bay.

Mr Cook said Summerset was on track to build 450 retirement units this year. It now has 7 greenfield sites. The others are Richmond (Nelson), Avonhead (Christchurch), St Johns & Parnell (Auckland), Kenepuru (Wellington) & Boulcott (Lower Hutt).

Attribution: Company release.

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