We are hearing reports of very healthy increases in village valuations on the back of both private and not-for-profit operators proving to be willing buyers.
Discount rates are moving down from 13.5/14.5% to 12.5/13.5% for individual properties and portfolios are tighter. Six months ago villages were marketed at 15% discount but today one operator commented to us that they would be an enthusiastic buyer if they could find a village at 14% discount.
Paul Moschione, National Director - Retirement and Healthcare Valuations at CBRE, pointed out to us that the three factors of interest rates coming down, more buyers of villages in the market and the improved risk profile of villages (given the strength and residential housing market) have all supported the improved discount rates.
Indicating what this trend is delivering to operator balance sheets, Ingenia has just announced an increase in its portfolio valuation of $20.3 million after taking into account its aggressive acquisition costs which totalled $7.1 million in the last six months alone. They have 60 properties across retirement villages, rental villages and manufactured home estates.
