Summerset Group completes $600 million syndicated loan facility refinace
Summerset Group expands funding lines with a new $600 million syndicated loan facility refinance to pay for development projects in existing and future retirement villages as a housing boom continues and an ageing population grows.
The facility is an increase from $450 million syndicated loan facility that was previously in place. According to Summerset, it currently has $283 million of debt, or 47 percent of the $600 million, "leaving substantive headroom for future development or unexpected economic cycle events."
New Zealand retirement village operators are acquiring land and preparing for a record building spree in anticipation of increased demand as people born in the country's post-war era reach the target age for operators. The village owners do not buy and sell the units but sell the right to occupy. When a resident vacates the unit they receive their original investment back less a management fee. The owner can then resell the unit for the current market value, effectively receiving all of the capital gain and the management fee.
Chief executive Julian Cook said Summerset continues to receive strong support from financial institutions. "We adopt a prudent approach to debt levels and having conservative levels of headroom puts us in good shape for continued development, and also in the event of a property downturn," he said.
The loan facility syndicate comprises ANZ Bank New Zealand, Bank of New Zealand and ASB Bank and the syndicated loan facility comprises tranches which are a mix of 3.4 and five years, with 37.5 percent maturing in August 2020 and 62.5 percent maturing in March 2022. The facility is intended to be used for funding development projects.
The gearing ratio for the group at its balance date on Dec. 31, 2016 was 32.7 percent, down from 37.1 percent a year earlier.
The shares slipped 0.4 percent to $5.20.