With 89 villages and 10,968 retirement living units, Aveo delivered an EBITDA profit of $79.9 million in FY16, an increase of 62% over FY15.
CEO Geoff Grady points to strong sales (799 units), a healthy pipeline of new developments (63 sold out of 182 delivered with margins exceeding 20%) and an increased focus on ‘care’ (including the purchase of Freedom Aged Care with 16 villages).
They achieved price growth of 7% on each established unit sale.
Expanding development of new village units and aged care will drive further growth. They expect to deliver 301 new village units over the next 12 months plus 100 aged care beds every year for the next ten years from next July.
While the average price point for existing units increased by 7% (from $267K to $287K) the average for new units increased 27% (from $444K to $566K).
Marketing expenses grew from $7.8 million to $11.7 million – mindful though of the increased marketing cost of Freedom villages and new developments.
Expansion of the Freedom business model of delivering direct care into retirement villages – especially serviced apartments – will be done on a not-for-profit basis. However they will receive a higher DMF. They look to expand services such as food and allied health – they have invested in physiotherapy services for instance.
They achieved a return on assets of 6.3%, up from 4% three years ago, and are targeting 7.5% to 8.0% within two years.
Another interesting fact. Aveo states it requires $500 million in capital to develop and sell 500 new retirement village units.
Also this week they raised $125 million from institutional investors to buy out the last 27% of the 28 village/3,415 unit RVG portfolio they did not own – cost $100M.
