The Whole Industry Should Be Barracking for SCV This Week

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All eyes should be on rental village manager SCV this week. Their management has laboured through Christmas to develop a rescue business plan that, if it fails, will possibly see the 51 villages it manages splashed across the 6 o’clock news as SCV runs out of cash and is forced to walk away from them. There is no immediate replacement manager because most of the villages are losing money. This could be a huge industry PR disaster in an already tough market.
The new SCV senior management, led by Andrea Slingsby, has inherited this challenge. Slingsby was only recruited mid last year by new Melbourne investors (including the Smorgan Family), but was broadsided in October when the world financial crisis forced the investors to retract their support. This created an instant cash hole for SCV.
The core problem is that the villages are in many cases owned by Managed Investment Syndicates, groups of Mum and Dad investors pooled together to fund the building of a single village. SCV was contracted to manager the villages for them for a fixed payment – which now does not cover SCV’s costs. So SCV needs to change the contracts or walk. To change the contracts requires 75% approval of the investors – not easy, asking people to agree to an increase in costs.
Slingsby has pulled in the Navigator Group, a boutique firm that advises property owners, plus 333 Capital, part of the Korda Mentha insolvency practice, to create a viable future for the investors. Last week they put their vision to the test, staging 17 meetings in three cities with over 500 investors attending, representing 17 separate schemes and covering 21 villages. They also spoke to another 400 investors by phone. A marathon effort. The plan is to make each village a true rental property where a market rental rate can be charged for each ILU, not a fixed percentage of the pension (85%). As Slingsby says, why charge the same for a village in a B grade location as a village in a prime location in Caboulture? She reports they have “made phenomenal progress” with the investors who understand SCV can’t keep losing money.
The fact that Slingsby and her team have hung around and 333 (who have seen the figures) have invested their time and effort in re-engineering the business suggest that it has a future. The meetings next week will decide.
While these are not legally retirement villages under the act, the media wont explain this distinction. And consider this; their Cleveland (QLD) village has an average resident age of 84 – not good on TV if the village is forced to close, evicting pensioner residents.
Networking Drinks Invitation – Start a Conversation
The organisers of Retirement Communities World 2009 extend an invitation to TVS readers to attend an afternoon of networking drinks, courtesy of Retirement Communities World and their event sponsors. Details: http://www.terrapinn.com/2009/rcw_au/C8935.stm RSVP: john.burgher@terrapinn.com or Andrew.worner@terrapinn.com

When and where?
4 February 2009 ~ 15:00 – 17:50
Roof Bar
Level 4, Skygarden Shopping Centre,
77 Castlereagh Street, SYDNEY, NSW 2000
www.roofbar.com.au

Networking Invitation to Drinks in Sydney

In the lead up to Retirement Communities World we’re hosting an afternoon drinks and networking at the Roof Bar in Sydney. 4 February 2009 ~ 15:00pm – 15:50pm
Roof Bar
Level 4, Skygarden Shopping Centre,
77 Castlereagh Street, SYDNEY, NSW 2000
www.roofbar.com.au

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