Retirement village operator Arvida ramps up its building programme to $600 million and doubles its profit

Tuesday, 27 November 2018

Arvida has completed the stage one development of Park Lane apartments in Addington, Christchurch.

Arvida Group, one of the largest retirement village operators, is ramping up its building programme expected to cost up to $600 million in the next seven years.

The company has 29 villages now with about 4000 residents and has just reported a profit of $30.5m for six months of operation from April to the end of September.

This is just over double the profit it made in the six months from April to September 2017.

This year the company is on track to deliver 112 new retirement units.

The Park Lane apartment building was designed by leading architects Jazmax and includes cross laminated timber.

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Arvida chief executive Bill McDonald said the company had two 'greenfields' retirement villages planned for Richmond, near Nelson and Kerikeri in Northland.

It plans to deliver another 140 units and aged care beds in the year to March 2020 and in the two following years it has set a target of construction of 200 units a year and 250 the year after.

All up it plans to build almost 1400 units and care beds in the next five to seven years.

Chief financial officer Jeremy Nicoll said the building programme out to 2025 would cost between $500m and $600m.

Arvida now has 1909 retirement units and 1743 care beds.

Regarding constraints in the construction sector and its effects on the company's construction plans, chief executive Bill McDonald said the constraints were particularly in Auckland.

Several months ago Arvida had employed a team of about six people who used to work for Fletcher Construction in the Bay of Plenty.

They were a project management team running the Arvida building projects and included project managers, health and safety and quality assurance staff.

They managed the contracts with subcontractors rather than Arvida having to engage a head contractor to do that, McDonald said.

The cafe and dining area in the Park Lane apartments is very modern.

That was working very well, he said.

In August, Arvida bought an 18 hectare site in Kerikeri, Northland, which will enable it to develop 200 units and 80 care beds. It is preparing to lodge a resource consent application for a retirement village on the site.

The company was formed five years ago and brought 18 retirement villages under one ownership. Others have been purchased since.The company listed on the New Zealand sharemarket in late 2014.

McDonald said a milestone in the six months to the end of September was the completion of stage one of the Park Lane Apartments in Addington, Christchurch.

Arvida's retirement village development in Kerikeri will include about 200 units and 80 aged care beds.

It was the first of its major apartment projects, different from traditional retirement village developments, and was a 'blueprint' for how the company wanted to develop.

Instead of car parks a pod of electric vehicles were provided for residents.

The Park Lane development and others would include 'outwardly facing' community facilities like a gym and cafe, a pool and some might have a creche for the children of staff that members of the public could use as well.

The building was designed by leading architects Jazmax and incorporated new timber technology like cross laminated timber. The one to three bedroom apartments were very modern across four floors (including the ground floor).

Prices for licences to occupy were about $450,000 up to $850,000. Stage two of Park Lane would include another 50 apartments.

The company's initial strategy had been to develop and add to the existing retirement villages which it was doing.

It was now planning 'greenfield developments' in Richmond, near Nelson, and Kerikeri.

In Richmond, Arvida had completed earthworks for stage one of the development and construction was expected to start early in the New Year.

The retirement village would be developed in stages over three to four years and probably have about 200 units, a combination of independent living and serviced apartments or care suites, and 80 care beds.

The company was looking for more land for greenfield development, McDonald said.

Several years ago about 7 to 8 per cent of people over 75 years lived in retirement villages and rest homes and now that was about 13 per cent.

McDonald said Arvida used Statistics New Zealand demographic data and research by CBRE, specialists in the sector, to inform its development plans.