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NBR - Arvida Update Gives Shareholders Heart

 

Shareholders gave Arvida [NZX: ARV] a tick of approval this week after a development update.

Grant Davies of sharebrokers Hamilton Hindin Greene says the update from the NZX-listed retirement company was viewed positively by shareholders who have seen the share price trade at a discount to asset backing for a year or so now.

Shares rose from 89c to 91c, shy of earlier levels in January of 93c a share, which compares with its December 2014 listing debut at 95c a share. For a brief period after listing they reached 97c.

Although Arvida boasts a higher gross dividend yield (4.4%) this is more because the shares have been trading at a discount to asset backing, Mr Davies says.

By comparison, Ryman shares trade at about three times asset backing, Mr Davies says. (Ryman’s gross dividend yield is 1.8%).

Arvida focuses more on aged care facilities than the property development villages of rivals like Ryman Healthcare.

As a result, Arvida does not have the same development “pipeline” as rivals Summerset, Ryman and Metlifecare.

It is more a “clipping the ticket” type of company, with cash generated from care fees and some government subsidies.

But Mr Davies says this week’s update would have bolstered confidence among some shareholders.

“Since raising cash a year ago, it is looking more at development options.”

Arvida consolidated 17 South Island retirement care outlets when it listed and in July last year acquired three villages in Epsom, Brown’s Bay and Albany from the Aria Retirement Villages group for $62 million.

This week’s development update includes -

  • completion of the rebuild of a 20-bed dementia wing at Aria Gardens, Albany, with residents occupying all of the beds. Residents for the new 16-bed hospital wing will move in next week. The facility now comprises of 43 rest home, 91 hospital and 20 dementia beds.

  • construction of 11 serviced apartments at the Glenbrae Village, Rotorua is on track, with completion scheduled for March. Refurbishment of the care facility was completed in January. Post-completion, the facility will comprise 78 villas, 27 serviced apartments and 41 care beds.

  • resource consent approval to construct a further 73 apartments and a wellness centre at the Park Lane Retirement Village in Christchurch. Development plans include communal facilities, bowling green, gardens and park surrounds. “The wellness centre, a first in the New Zealand retirement sector, is intended to interact directly with the local community.” It will comprise of café, crèche, medical and fitness facilities that residents and the public can use. Post-completion, the facility will comprise eight villas, 73 apartments, 45 serviced apartments and 42 care beds.

  • resource consent application in progress for 24 new apartments at Aria Bay in Browns Bay, with a hearing date next month. Earthworks will begin in the next few weeks. Post completion, the facility will comprise 33 independent apartments, 24 serviced apartments and 57 rest home beds.

  • a hearing date has been set for March for a resource consent application for construction of 31 new apartments and 40 care beds at Rhodes on Cashmere in Christchurch. Post completion, the facility will comprise 47 apartments and 40 care beds.

  • earthquake remediation and general refurbishment works at the St Allisa Rest Home, Christchurch are tracking to plan and should be fully complete by the end of 2016.

c.hutch@clear.net.nz

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Filed under Grant Davies \ NBR

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