For the six months July to Dec 13 Aveo Retirement delivered $21M EBITDA, up 30% from $16M. They increased resales of existing ILUs by 113%, moving from 135 sales in the Dec 2012 Half to 287 in the Dec 13 Half. This represents an 11% annual turnover of their portfolio. (Aveo owns or manages 12,594 ILUs and 209 beds across 75 locations).
The average value of an ILU sold is a relatively low $267K from which they are receiving an average 27% DMF/capital gain share. They also have a higher level of residents that exit after a few years. They wish to rework their contracts to increase the revenue from early departures.
$20.9M represents a 4% Return On Assets. Their stated objective is to build to an 8% ROA by 2018. They will do this by increasing unit prices, by delivering 200 new homes p.a. to 2016, expanding to 500 p.a. by 2018, plus build revenue through care and support services for 100% of the villages.
Geoff Grady and Alison Quinn have moved rapidly to reposition Aveo as a pure play retirement business. They have revealed their corporate positioning as:
We will grow with older Australians by inspiring greater living choice.
Their shares (securities) have increased from $1.00 last August to $2.06 this morning (with a bid of $2.26!). The net Tangible Asset value is $2.78.
They place a major emphasis on building care into villages, increasing their target from 75% to 90% of Aveo owned villages to have domestic and care services available by this June (four months from now). They have trials with third-party care providers under way in QLD, VIC and SA. They have also engaged consultants to develop a national approach to nutrition, food preparation and delivery of meals into their villages.
Geoff Grady will review Aveos strategy for growth as a speaker at the LEADERS SUMMIT.
