Ryman Healthcare, which has more than $2 billion of retirement villages under development in Victoria, showed an impressive new sale margin of 24.3% and combined margin of new and resales of 25.8% when it released its annual report to the year to 31 March.
This compares to 16% for the major new village developers, such as Stockland.
Ryman Healthcare last week revealed a full year audited underlying profit of NZ$255 million, up from NZ$227 million 12 months before, crediting a “strong recovery in Victoria”.
“A strong real estate market in Victoria has allowed us to maintain solid price growth, which contributed to our strong margin on new sales. Pricing is set in accordance with the unique local factors in any given area, but a two-bedroom unit is typically around 70% of the median house price in the local market,” Ryman Australia CEO Cameron Holland (pictured) said.
“With a deferred management fee capped at 20%, weekly fees fixed for life, and high-quality care available on site, Australians are queuing up to get into a Ryman village. Our DMF is also calculated on entry and we guarantee buyback no later than six months after the unit is vacated, which further sets Ryman apart in the Australian industry.”
A deferred management fee is likely to be a percentage of either a resident’s purchase price or re-sale price, anything between 25% and 40% is common. The exit fee may also include a sharing of capital gain with the operator.
Ryman residents do not accrue any capital gains or capital losses.
He also revealed how Ryman Australia achieved such a high new sales margin.
“A whole range of factors allowed us to maintain a strong margin on new sales in the face of rising construction costs and supply chain challenges,” he said.
“Because we have our own experienced construction teams leading the development of all our villages, we’re able to effectively manage costs in real time.
“We’ve been in this business for almost 40 years, so we have strong, long-standing relationships with subcontractors and suppliers. As a large operator with a long pipeline of developments ahead of us, we’re able to negotiate bulk supply agreements to ensure we’re getting the best deal possible.
“It requires a lot of detailed forward planning but because we’re leading the construction process ourselves, we can effectively manage costs without ever having to compromise on quality,” Cameron added.
Ryman has seven operational villages and another eight in its development pipeline in Victoria after its first village Weary Dunlop opened eight years ago at Wheelers Hill.
Its latest acquisition – its biggest project in Australia - is a former industrial site in Coburg North. Stretching across 2.56ha, the site is next to Batman train station.
