The Fin Review has quoted the QLD-based LLC operator, which is a partnership between Living Gems Lifestyle Resorts and Singaporean company Thakral, as saying the 11% crash in Aveo’s share price last week is a direct result of the growing unpopularity of the deferred management fee model in retirement villages.

GemLife CEO Adrian Puljich told the paper that the group had experienced increased demand in NSW and VIC for its communities as “people wake up from the deferred management fee model”.

“The deferred management fee model has been around since the 1950s, it was the accepted norm, but we have asked is it fair and equitable?” he said.

Thakral Capital Australia’s managing director Greggory Piercy added that the land lease model allows owners “a much clearer path of ownership”, although he said some LLC operators could include a deferred fee.

“They say if it is not broke don’t fix it, but we think it is broken. With our model we have forgone some of our margin to allow the owner some chance of capital gain,” he said.

As we reported here, GemLife have released their first homes at Bribie Island and Highfields in QLD, with around 800 homes in the pipeline across the East Coast.