FKP anoints Geoff Grady to build Aveo into Australia’s leading retirement operator

One can feel the optimism creeping into the retirement sector with each announcement by the major players, supported by the ongoing steady investment in new retirement villages by the not-for-profits.
This week all the balls being juggled by retirement village operator Aveo parent FKP began falling into place when its Chief Operating Officer, Geoff Grady, was appointed CEO of the group.
His mandate is to transform FKP into the Westfield of the retirement sector, based on best in class operations. His mandate is the expansion of a continuum of care model into Aveo villages based on FKP’s related Metlifecare of New Zealand.
Aveo has been perceived to be the poor sister amongst the top three village operators (Lend Lease, Stockland and Aveo) over the past five years because of its low profile, lack of new initiatives and to a degree staff turnover. For instance its well-regarded Executive General Manager, Justin Laboo, resigned September last year and was not formally replaced until two months ago by Alison Quinn – who incidentally has been long time work colleague of Geoff Grady at Sanctuary Cove. Grady has in fact been leading the Aveo village business behind the scenes while Chief Operating Officer of FKP.
The transformation of FKP is fascinating. Up until 2008 and the GFC the company was a significant commercial and retail property developer; retirement villages were a major but not significant component of the business. Post GFC, loaded with debt and a stagnant commercial property market, retirement villages emerged as the only real profit generator for the group. Last financial year Retirement generated $33 million in cash and an $80 million bonus in property revaluation, or $113 million profit for the group. Commercial development generated just $9 million and residential $19 million profit.
Pre 2008 FKP had also built an 86% ownership in the small the Australian Stock Exchange listed village operator Forest Place, with just five villages around Brisbane. Forest Place has just changed its name to Aveo Healthcare in preparation of new horizons. Alison Quinn has been made a director.
FKP also has 22% ownership of Retirement Villages Group (RVG) with Grady being the CEO. FKP has funds management and asset management rights of RVG. As part of getting their house in order the 29 villages controlled by RVG and managed by Aveo have recently been offered for Expressions of Interest with limited sales intended to generate up to $50 million in cash, given a debt maturity at the end of the year. Over 200 expressions of interest have been received.
The vote of confidence in Grady to lead FKP and Aveo to be the largest pure play retirement investment on the stock exchange is understandable. FKP’s biggest shareholder is Malaysia’s Mulpha group. In 2002 Grady left KPMG where he had been a Partner for nine years to become CEO of Mulpha Sanctuary Cove, a $1 billion master planned community in SE QLD that Mulpha had purchased from receivers. Grady kick started the development of 1,900 housing lots, generating $600 million in sales over six years. This completed, he moved from Sanctuary Cove to FKP in 2009.
Grady also sits on the board of RVG’s related Metlifecare in NZ, which has been highly successful operating a co-located village and care business model. He says he plans to follow Metlifecare and expand the care options on the existing Aveo sites rather than acquire new retirement villages.
What this all means is each of Lend Lease, Stockland and FKP (backed up by Ingenia) are now conditioning and educating the institutional investors like super funds that retirement and care a good long-term investments. This can only be good for residents, staff and existing investors.