Paul Browne can best be described as a force of nature, a man that sweeps up both retirement village residents and staff in his vision of what is good ageing. As he turns 60, he launches his 38th retirement village project with his trademark ‘love, decency, kindness’ ethos and immediately takes deposits on every available home.
Last year, his village group, LDK Seniors' Living, then consisting of just two villages, attracted Anglicare Sydney to purchase 50% for a rumoured $20 million, with the objective to use LDK as its learning ground for its 24 retirement villages around Sydney.
From cop to caring
As a young Queensland policeman, Paul visited aged care homes as part of coronial investigations. But the impetus to embark on a career in the retirement village sector was the death of his mother in an aged care home. As he tells it, he could not understand how these homes could be the best that the country could do for older Australians.
Retirement villages appeared the natural platform to deliver a better outcome, and working with others, he experimented in a range of models that matured into the first ‘private aged care’ where higher levels of care are delivered in village homes under the Retirement Village Act.
Across the journey, he trialled in Fairways village in the Tweed region, followed by the Seasons group, the Tall Trees group, the Freedom village group of 15 locations which he jointly sold to Aveo for $210 million, and finally LDK.
One Move Promise
A consummate marketer, Paul made several significant breaks from the traditional village model.
He conceived the One Move Promise (which he has trademarked as a term), being that if you move into an LDK village you will never have to move again, with care support provided in-house up to palliative care. Independent living is core to the lifestyle promise as well, but the legislated interpretation of ‘independent’ is not adhered to.
Not a property play
His is a service play, or as he would say a people play, not a property play.
The first impact is number of staff. His Greenway Views village has 201 staff for 404 residents, not the four to five that you would expect in a traditional village of this size.
As he says, you need to be brave to execute his model.
Simple membership with no DMF
Simplicity and certainty are the basis of the financial value proposition, Paul claims.
His preferred model is to ask for an upfront village membership fee equal to approximately 25% of the average unit price in the village. Then the customer pays the price for the unit and LDK promises they will repay that exact amount within six months of departure. 60% of residents pay for their membership upfront.
At the same time, the operator cap the weekly fees at the price at time of entry. There is no uncertainty.
LDK covers all costs such as refurbishment and sales; they also take all capital gain.
If a customer wants to defer the Membership fee, LDK charges a fee of 35% of the average unit price, deducted on departure, with 40% of their contracts taking this route which costs significantly more.
LDK subsidises operations
While nearly all retirement villages operate on a full cost recovery, LDK budgets 25% of its membership income and 25% of its capital gain income each year to subsidise the expenses of the village, which resemble a five-star hotel with cafes, bars and full al la carte restaurant, with commensurate professional hospitality staff drawn from that sector.
The dollar subsidy in 2024 equates to $15,000 per unit, split across care ($7-8,000), hospitality ($3-4,000) and fixed fee for life at $3-4,000.
Care at cost
At their first village, Greenway Views, 70% of residents receive care charged at cost in 15 minute increments. This amounts to 302 hours and 721 scheduled services every day, with LDK being an approved home care provider. Residents top up packages as required.
Be brave
LDK has been a seven-year overnight success. Paul points out his experience told him he had to invest heavily in people and systems well before his first property acquisition to create a village. He had a team of 40 on board before they commenced Greenway Views. He recruited from outside the village sector, with his CEO and COO being his corporate lawyer and his tax lawyer, both from separate leading firms. His Village General manager is ex-Hyatt Hotels.
The disrupter
Paul wants the rest of the village sector to engage in his model as he states it is now mature, a proven business and sales success, plus it delivers far better living outcomes for residents.
Importantly for the aged care sector, where less than 20% of the new beds that will be required in the future are being built, village residents will need to stay within the village and this stock could replace demand for perhaps 100,000 beds nationally.
The question is being asked, can you retro fit the LDK model into a traditional village with an established DMF contract? Paul’s answer is yes, and he points to his village The Landings in Sydney, with 296 residents and an average village unit price of $1.9 million; 97% of residents have amended their contracts to the Membership model and the One Move Promise.
And now with Anglicare as a 50% brave new owner, expect more villages to join in on the promise.
