Summerset on track for 2013 build target, Barlow tells AGM

Summerset Group, the retirement village operator and developer, is on track to meet its build target this year, and sees growth opportunities in aged-care services to complement its apartments and villas.

The Wellington-based company is on track to deliver more than 200 retirement units and 70 more care beds this year as it looks to reach an annual construction rate of 300 new units a year by 2015, chief executive Norah Barlow told shareholders in Wellington today.

Alongside the increasing pace of construction is a growing focus on providing aged-care services, with the company recently branching out into dementia care.

"There will be opportunities for more specialised care facilities to be provided, along with the co-location of ancillary services," chairman Rob Campbell says. "It is our intention to participate in these opportunities where the financial returns justify."

The annual meeting coincided with Health Minister Tony Ryall and his associate Jo Goodhew announcing an extra $70 million for aged-care and dementia services over the next four years will be included in next month's Budget and was brought to Summerset's attention by a shareholder.

"Funding is important. It's also important that private providers of the sector and state funders can work together to find the most efficient means of providing care that's needed," Mr Campbell says. "It's not simply a matter of throwing money at it."

When questioned about the profitability of aged-care services, Ms Barlow said as a standalone source of earnings it is challenging, but that it is a "very clear needs driver" when part of an integrated village.

Summerset increased its pace of occupation rights in the first quarter and Mr Campbell said trading in April continued to improve.

The shares rose 2.3 percent to $3.07, and have jumped by 34 percent this year.

Quadrant exit promise

Summerset shareholder Quadrant Private Equity has promised an orderly exit if and when it decides to sell its 37.2 percent stake.

Managing director Chris Hadley, who sits on the Summerset board, told shareholders that he could not spell out his firm's "intentions of the timing of the sell down or holding" in the company, but if they do sell down it will be done in a "very sensible fashion".

"In selling down, or an intention to sell down, our primary concern is to make sure we do that in an orderly fashion," he says. "I can't give you any confidence in how long we will hold our shareholding, and since we're out of escrow we're an ordinary shareholder and retain our flexibility."

Last month, Quadrant sold 40 million shares at $2.42 apiece for $96.8 million after the escrow period requiring it to keep its majority stake ended in February. That sale left Quadrant with 80.76 million shares, worth $247.9 million at today's share price of $3.07.

Mr Hadley says "the investment in Summerset has been a long-term one and a very successful one".

Quadrant floated Summerset on the NZX in 2011, raising $123.6 million, made up of a partial sell-down and a primary capital raising of $50 million.

The Australian private equity firm completed its full takeover of Summerset in 2010, buying the 50 percent it did not own from fund manager AMP Capital Investors New Zealand.

AMP Capital sold up after it failed to get the retirement village operator away in a public float in 2007. Quadrant came on board in 2008, investing $A90.5 million of a $A500 million private equity fund.

Quadrant successfully floated Kathmandu Holdings on the NZX and ASX in 2009, raising $A375 million for the first float on the New Zealand exchange after a 22-month drought.

(BusinessDesk)