Aveo is our only ‘pure play’ retirement operator listed on the stock exchange, and watched closely by all institutional investors and banks.
While Australia trails New Zealand significantly in valuations of ‘retirement villages’, Aveo is positively conditioning these investors to the sector with its latest results.
The successful acquisition and integration of the 15 Freedom Private Aged Care retirement villages and the 28 RVG villages with 3,400 homes has assisted Aveo in increasing revenue to $135 million for six months, generating an EBITDA return of $46M, up 57% on HY16 results.
The RVG portfolio enjoyed a higher metropolitan location footprint, supporting an average resale price increase over the 12 months from $278,000 per unit to $350,000, a change of $72,000 (26%). Aveo enjoyed a 28% DMF/capital gain margin per transaction at $97,800.
60 of the 89 villages are over 20 years old and the average age of residents is 82.8 years. The vacancy turnover is 10.3% per annum. This means they have to sell around 1,200 units each year or 23 a week.
Across their 11,000 units they now have 1,327 under their new Aveo Way contract, which is a conversion from mostly a 10 year/3% DMF model to a ‘no additional costs’ 3 year 35% DMF model (7%/14%/14%).
Verifying that retirement villages continue to offer exceptional affordable housing value, Aveo sold 108 new homes at an average of $352,000 each, with an average development margin of 24% (EBITDA – $84,480).
Aveo expects to build 266 new units across seven villages by June with 500 scheduled for next financial year and beyond. Development is currently taking place across seven villages but growing to 19 from FY19 onwards.