Strong resales in solid fourth quarter for Summerset

Julian Cook
Julian Cook
Strong resales were the highlight of Summerset Group's fourth-quarter statistics, released yesterday, Forsyth Barr broker Suzanne Kinnaird said.

With new sales of 106 units and resales of 98 units, Summerset had a solid fourth quarter. New sales for the year were 382 units compared with 414 in the previous corresponding period.

Although below Forsyth Barr's forecast of 441 units, it was viewed as a timing issue, given Summerset was expected to have built near its target of 450 units in the calendar year, she said.

The lower new sales for the year were offset by stronger resales than expected of 300 units, compared with 244 in the pcp and against Forsyth Barr's forecast of 275 units.

``Summerset has a strengthening development and sales track record and a land bank of about six years. There remains significant long-term growth potential from demographic trends and Summerset has the development expertise to capitalise on these themes.''

Execution risk was increasing as the group tackled large and intensive Auckland developments late in the cycle, Ms Kinnaird said.

Summerset chief executive Julian Cook said the company was pleased with the strong sales results achieved in the final quarter of 2017.

``We continue to see good demand for our retirement units and pre-sales and waiting-list levels both continue to track positively.''

Ms Kinnaird said commentary from Summerset late last year suggested it remained on target to deliver 450 new units in 2017, in line with guidance and her latest estimate. It would be a significant lift on the 409 units built in 2016.

Summerset was always going to have settlement risk late in the 2017 financial year, given the fourth-quarter delivery of new stock, the impact of the festive season on settlements and Summerset's conservative approach to sales recognition - which was not until the actual cash settlement was completed, she said.

Accordingly, Summerset should have strong new sales in the first quarter of 2018.

Resales volumes had been volatile from period to period. However, the strong resales finish to the year was indicative of the ongoing demand for quality retirement village products. Pricing was expected to have remained strong, which was positive for the outlook for the sector, Ms Kinnaird said.

 

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