Ryman eyes Victorian expansion

Relevant offers

Industries

AMP NZ annual profit boosted by merger Govt says asset sales will cut debt Riccarton mall Westfield's top Kiwi performer Michael Hill's interim profit up 11.5 per cent Govt may sell smaller slice of SOEs SkyCity seeks quick progress on hotel Residents hail Exide closure Bathurst sticks to mine start goal Shareholders Association favours option plan Importers, exporters brace for more strikes

Ryman Healthcare is scouring Melbourne and Victoria for a site to build a A$100 million (NZ$124m) retirement village and prove it can successfully enter the Australian market.

Managing director Simon Challies said shareholders at Ryman's annual meeting yesterday in Orewa, north of Auckland, had been told of the retirement village operator's plans to move across the Tasman.

Ryman had engaged real-estate agents to find a site within the next 12-18 months though it was unlikely that building would start in the next 24 months.

The A$100m estimated figure included the building and site cost for a completed village.

"We're looking for a site and we've got to execute right on the first site and prove to everyone we can do it, and then you might see more," Challies said.

A site could be 1 hectare in a Melbourne metropolitan location or 4 hectares (or of similar size to Ryman's Anthony Wilding or Ngaio Marsh villages) in a regional Victorian situation.

Grant Williamson, a director of brokerage Hamilton Hindin Greene, said Ryman was taking a softly, softly approach of entering a new market which had been tough for other Kiwi companies.

While there was a small risk – considering Ryman's New Zealand $1 billion capitalisation – it was not enough for Ryman not to try a greenfields site. "These guys have a huge amount of experience and success in the New Zealand market."

Ryman's shares rose from an intraday low after the news but closed steady at $2.04 within a 12-month range of $1.74 to $2.17.

Chairman David Kerr said Ryman had carefully studied the Australian market for years, as the next logical step in growth for the company.

Challies added the move into Australia's aged-care-facility market would be "one step at a time".

The company had looked at the eastern seaboard but Victoria offered better opportunities for securing land, and "there's more qualified buyers who can afford to buy retirement village units in Melbourne than there is in the whole of the New Zealand market".

While the company normally spent in the order of $100m-$120m a year on village development in New Zealand, any extra development cost in Australia would largely be funded by mostly operating cashflows and bank facilities.

Ryman's growth plans in New Zealand remain intact, with plans to open at least 450 new units and rooms a year.

Ryman was targeting a 15 per cent improvement in its record realised profit of $61.4m in the year to March 31, 2010 which would take that to $70.6m.

Ryman operates 21 villages nationwide.

- © Fairfax NZ News