Regis, Estia and Japara all put their development pipelines on hold last year when COVID hit – now it appears it could be years before they can launch new greenfield developments, according to StewartBrown’s latest financial performance analysis of the listed aged care providers.
The 44-page report looked at the financial results of the three providers for the six months ending 31 December 2020 and the findings reflect the usual sector-wide trends: occupancy challenges, operating expenses exceeding revenue, and COVID outbreak costs running into the millions.
What is interesting is the slowdown in new developments.
StewartBrown notes that the growth in the number of operational places had already slowed in its previous FY20 listed providers report, and this trend appears set to continue over the coming years with development pipelines being placed on hold.
“Given the ACAR eligibility criteria, the Listed Operators are unlikely to receive any new places during the current ACAR due to compliance issues,” the report states.
Provisionally allocated places likely to expire before development
Regis also saw a decrease of 97 beds in 1H FY21 due to the closure of its 86-bed Milpara Lodge home in Victoria with another 11 operational places taken offline.
“The existing development pipeline remains on hold with recommencement contingent on outcomes of the Royal Commission and a more certain funding environment,” StewartBrown writes.
“Most provisionally allocated places are likely to expire before they can be developed even if development recommenced immediately.”
Estia’s bed numbers have remained largely unchanged since 30 June 2020, apart from the opening of their 105-bed Blakehurst home in February this year after the reporting period.
Japara’s overall beds are down by 17 places during the same time.
While the listed providers are larger than the majority of residential care operators, they are generally taken as a reading for how the whole sector is performing.
Is this a sign that overall development activity will remain sluggish for the foreseeable future?