Listed providers only planning to refurbish facilities every 20 to 30 years: StewartBrown analysis

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The depreciation policies of Estia, Regis and Japara do not appear to match their refurbishment programs – raising concerns about whether the listed providers are conserving enough cash to fund future refurbishment, the aged care accountants’ latest report reveals.

Check out the graph above.

As you can see, Estia and Japara have both updated the useful life of a building in their respective depreciation policies from 50 years to four to 50 years and 25 to 50 years respectively.

Regis has maintained its depreciation policy for buildings at 55 years.

StewartBrown argues facilities need a major refurbishment every 12 years in order to remain attractive to consumers and competitive – but the listed providers’ depreciation policies only allow for this to happen every 20 to 30 years.

I talked to StewartBrown’s Senior Partner Grant Corderoy. He says while he is not critical of providers keeping their deprecation policies high in the short-term because of the current sustainability issues affecting the sector, in the medium- and long-term providers need to consider the need to plan for future refurbishments.

Without cash in the bank, providers will need to rely on new Refundable Accommodation Deposits (RADs) coming in or lines of credit – both of which are in increasingly short supply.

You can read the full analysis HERE.