New development pipeline arrives just in time for Aveo

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Aveo has notified the investor market that it is maintaining its profit guidance for the full financial year (FY18) at a return on retirement assets of 7.5% – 8.0%.

From the chart above this means they have to bring home close to $70 million EBIT from new development sales between January and June.

To do this they have to sell 161 newly constructed homes across eight different villages, plus 105 ad hoc properties across the portfolio – a total of 266.

Good planning three to four years ago has allowed them to have these construction completions arrive in this precious time period. Not all of them have been fully completed. Their 19-storey Newstead development (Brisbane) will account for 199 of these sales but internal fitout is still in progress.

It is a big marketing and sales ask. Over the past six months Aveo has been investing around 5% of the new unit price on sales and marketing.

Aveo’s ongoing success is vital for the retirement village sector, being the only pure retirement village publicly-listed vehicle. If it stumbles the financial community will mark the sector down. If it performs all operators – private and Not For Profit – will benefit.

Aveo CEO Geoff Grady says they are on target to deliver.