Haley Van Leeuwen
More than $270 million is being outlaid by the NZ Super
Fund and Infratil to buy most of the 37.7% stake in listed
retirement village operator Metlifecare, held by Retirement
Villages New Zealand.
Earlier this week, Retirement Villages New Zealand signalled
plans to sell its 37.7%, with Infratil confirming it had a
conditional agreement to buy a 19.9% stake for $147.9
million. Then, separately, the NZ Super Fund confirmed its
conditional agreement, buying 17% for $126 million. Both were
based on a $3.53 share price.
Metlifecare listed on the Australian stock exchange on Monday
and saw its share price rally this week by 12.6%, or 42
cents, to $3.78. Yesterday, its shares gained another almost
9% to trade around $4.15.
Metlifecare's expanding assets are at present 3836
independent units and apartments and 359 rest-home/hospital
beds, with development plans under way in Auckland, the Bay
of Plenty and Hamilton.
Elderly care companies have been a stock exchange success
story during the past year.
Ryman Healthcare was up 82.6%, from $3.99 to $7.43, Summerset
up 61.6%, from $2.04 to $3.21, and Metlifecare up 31.7%, from
$3.01 to its year-high of $4.15 yesterday.
Craigs Investment Partners broker Peter McIntyre said while
Infratil had signalled a share buy-back programme from its
partial sale of Z Energy, it subsequently decided to instead
invest in Metlifecare, which was well outside its usual
target investment types.
''Infratil obviously saw better, long-term value for its
shareholders in Metlifecare than [giving them] cash back,''
Mr McIntyre said.
Forsyth Barr broker Haley Van Leeuwen said while Infratil's
$147.9 million purchase appeared to be a different Infratil
investment scenario, its past investment strategy had been to
buy assets with the ability for value accretion; as in its Z
Energy purchase and partial sale.
''Infratil have quite a large property division. They do have
expertise in the area of property development, and given
Metlifecare's development pipeline, it will be a favourable
partnership arrangement,'' Ms Van Leeuwen said.
Mr McIntyre said all three care companies had similar
positive ''fundamentals'' - identifying areas with growth in
the older demographic, making the most of village
construction during a low-interest period, and taking up
land-banking opportunities. Mr McIntyre said Metlifecare had
described a ''golden triangle'' for development where there
was an expanding elderly demographic - within Auckland, the
Bay of Plenty and Hamilton.
Earlier this week Metlifecare announced it had been granted
resource consent for a North Shore, Auckland, village which
would be its 14th Auckland village and fourth on the North
Metlifecare posted a profit of $120.3 million for the year
ended June, turning around a $141.7 million loss in 2012.
Ms Van Leeuwen said given Infratil's large 19.9% stake, it
showed that when Infratil invested it preferred a controlling
stake, in order to be part of the driving success behind its
She noted traditional infrastructure investments included
schools and hospitals, but that view had changed and it could
now be argued that providing medical and aged care for the
elderly was now seen as ''definitely part of the community