Retirement village operators
The retirement village industry is quite unique, in that operators are made up of corporations, not for profits, church groups and private individuals and families. This makes for a wide range of operational quality and expertise!
Retirement village operators are thought to be reasonably equally split between for-profits and not-for-profits (NFP).
For-profit corporations
At the top end of the scale are several large corporations that own and operate extensive retirement village portfolios around Australia:
- Aveo
- Keyton (formerly Lendlease)
- Levande (formerly Stockland)
The large operators have the backing of what is called “institutional capital”, ie, superannuation funds (Keyton) or sophisticated, large scale, global real estate investors (Levande and Aveo). The underlying thesis to their investment is the ageing population in Australia and their need for appropriate housing, under-pinned by strong, stable growth in property prices. Retirement villages are considered “alternative assets” in the property investment universe and accordingly should deliver higher total returns than say a shopping centre or office building. They are not an overly attractive investment due to the volatile nature of their cashflows and it takes a strong investing stomach to pin your returns on residents leaving the village!
There is significant daylight between the larger groups noted above and other for-profit operators.
Not-for-profit organisations
NFP’s own and operate more than half of the nation’s retirement villages. NFP retirement village operators are predominately religious groups, followed by special interest organisations such as Returned Services Leagues (RSL) and Freemasons.
Operator assessment
To be honest, the operator of your retirement village is largely a non-issue. You wouldn’t, for example, specifically choose an Aveo village over a Keyton village because it is operated by Aveo, in the same way that you would preference Hungry Jacks over McDonalds. When you choose a village, you are selecting for location, unit and “vibe”, pretty much in that order.
Some people think that because a retirement village operator is a not-for-profit or church group, there is a difference in the commerciality of the residence contract. Let me put that notion to rest and assure you there is very little difference in the financial arrangements, terms, and conditions of contracts between commercial and NFP operators.
Make no mistake, every operator is in the business of making money.