Aveo has acquired 100% of private aged care village operator Freedom Aged Care for $215.5M
The acquisition by a top tier village operator takes supported living/private aged care from the fringes into the mainstream of retirement living and care product offerings.
Freedom operates 15 villages under the Retirement Village Act in QLD, NSW, VIC and TAS. The deal delivers Aveo 1,000 units plus a development pipeline of 533 units.
The business model is to provide supported care up to palliative care level. Their average resident age is 85 and average occupancy is 4 to 5 years with a 40%/4 year DMF and 50% share of capital gain.
Freedom has a unique ‘user pays’ aged care instalment program to top up the DMF structure as well.
Aveo states the acquisition of Freedom is a key component of their strategy to increase the levels of care and support services to their residents.
CEO Geoff Grady said: “This is a significant, long-term investment in building our care offering and is underpinned by our commitment to grow with older Australians by inspiring greater living choice. The acquisition of Freedom deepens our capability across our businesses”.
The Freedom purchase takes the number of Aveo owned villages to 7,400 units plus the RVG portfolio of 3414 units, a total of 10,814 under the Aveo banner. They have a land bank for a further 5,500 units to be developed.
The purchase price was made up of:
· the issue of $83.5M of Aveo script at $2.98
· a cash payment of $10M
· assumption of $88M in debt
· deferred payment of $34M over four years based on performance conditions being met
The inspiration behind Freedom is Paul Browne. Over 10 years he was instrumental in the creation of private aged care operators Tall Trees, Seasons and Fairways (without ownership).
His latest venture, Freedom, only kicked off in 2011 when he attracted Patrick Smith into the sector as an investor and co-owner of Freedom.
Patrick fine-tuned the private aged care model and Paul then attracted Peggy and Brian Flannery, mining and development magnates that had received $530 million for their half-stake in Felix Resources in 2009.
They bought out Patrick Smith in 2014 and together with Paul Browne commenced acquiring villages.
In quick succession they purchased the Sunrise Supported Living portfolio, Tall Trees and Fairways.
Two years later and now they have sold to Aveo - with a four year performance clause.
Aveo’s commitment over the past 12 months to expand care services to clients has also included the 50% purchase of two allied health (physio) businesses to deliver services into Aveo villages.
Grady also released Aveo’s Half Year results yesterday, which delivered a 12% increase in Retirement EBITDA profit to $29.1M. He stated they achieved a significant increase in the pricing of retirement units over the six months.
