1 00:00:00,280 --> 00:00:02,520 Speaker 1: The information provided in this program is of a general 2 00:00:02,600 --> 00:00:05,320 Speaker 1: nature and is not intended to be personalized financial advice. 3 00:00:05,400 --> 00:00:07,760 Speaker 1: We encourage you to seek appropriate advice from a qualified 4 00:00:07,760 --> 00:00:11,680 Speaker 1: professional to suit your individual circumstances. The market's forced many 5 00:00:11,720 --> 00:00:16,160 Speaker 1: retirement village companies to pull back on once bullish growth plans, 6 00:00:16,520 --> 00:00:20,880 Speaker 1: but Midlife Care has been secretly expanding. The company went 7 00:00:20,920 --> 00:00:23,759 Speaker 1: private in a one billion dollar deal in twenty twenty. 8 00:00:24,160 --> 00:00:25,759 Speaker 1: Now it's letting us back in. 9 00:00:26,200 --> 00:00:28,920 Speaker 2: Yeah, it's been a tremendous opportunity to take a company 10 00:00:28,560 --> 00:00:30,880 Speaker 2: that's a household game in New Zealand, is one of 11 00:00:30,880 --> 00:00:33,760 Speaker 2: the pioneers in the industry and give it a significant transformation. 12 00:00:34,520 --> 00:00:37,320 Speaker 2: And we really have gone through the boldest sort of 13 00:00:37,400 --> 00:00:44,479 Speaker 2: changes that you'd expect a company of our scale. 14 00:00:58,840 --> 00:01:03,080 Speaker 1: Investors of discount retirement village companies in this economic cycle, 15 00:01:03,680 --> 00:01:06,280 Speaker 1: some of the stocks are now trading below their net 16 00:01:06,319 --> 00:01:11,240 Speaker 1: asset value. It's due to dampened property valuations and increased 17 00:01:11,240 --> 00:01:15,280 Speaker 1: interest costs making the sector's debt more expensive, and the 18 00:01:15,319 --> 00:01:19,119 Speaker 1: inflated cost of building new villagers catching some of them out. 19 00:01:19,760 --> 00:01:24,919 Speaker 1: Riemann Oceania and Arvida have all suspended dividends, while Ryman 20 00:01:25,040 --> 00:01:29,919 Speaker 1: is selling sites and Oceania is selling older villagers. Avida's 21 00:01:29,920 --> 00:01:34,080 Speaker 1: boarder is now recommending shareholders accept a takeover offer, a 22 00:01:34,120 --> 00:01:37,880 Speaker 1: deal worth two billion dollars. About a quarter of all 23 00:01:37,920 --> 00:01:41,720 Speaker 1: operators in the industry have scaled back their development plans 24 00:01:42,040 --> 00:01:46,200 Speaker 1: according to anz's Retirement Villager's survey, with about ten percent 25 00:01:46,319 --> 00:01:49,920 Speaker 1: cutting back their capital expenditure two but more than half 26 00:01:49,960 --> 00:01:53,480 Speaker 1: of all operators are still bullish, saying they plan to 27 00:01:53,640 --> 00:01:57,680 Speaker 1: increase their build programs from here. Somerset is among them, 28 00:01:57,880 --> 00:02:01,600 Speaker 1: boasting the biggest land bank of all. MetLife Care is 29 00:02:01,680 --> 00:02:04,680 Speaker 1: also in the growth camp, but its plans have been 30 00:02:04,760 --> 00:02:08,000 Speaker 1: kept quiet over the past few years while it's been 31 00:02:08,120 --> 00:02:12,000 Speaker 1: in private equity hands. MetLife left the New Zealand Stock 32 00:02:12,040 --> 00:02:15,560 Speaker 1: Exchange in twenty twenty and a one point three billion 33 00:02:15,600 --> 00:02:20,079 Speaker 1: dollar takeover deal backed by the Swedish private equity firm EQT. 34 00:02:21,000 --> 00:02:24,440 Speaker 1: Now the CEO, El Gasparich is sharing how the company 35 00:02:24,480 --> 00:02:29,120 Speaker 1: has increased value behind closed doors. MetLife now has thirty 36 00:02:29,120 --> 00:02:32,560 Speaker 1: six villages compared to twenty five at the time it 37 00:02:32,600 --> 00:02:36,760 Speaker 1: went private, and has expanded into the South Island. This 38 00:02:36,880 --> 00:02:40,280 Speaker 1: could all paint a positive story for private equity because 39 00:02:40,280 --> 00:02:43,440 Speaker 1: it shows how much MetLife has improved under its care, 40 00:02:44,080 --> 00:02:47,600 Speaker 1: but it also means retail investors have missed out on 41 00:02:47,680 --> 00:02:53,040 Speaker 1: all of those gains. Earl previously led listed retirement operator Oceania. 42 00:02:53,560 --> 00:02:56,960 Speaker 1: He says this kind of transformation at MetLife wouldn't have 43 00:02:57,040 --> 00:03:03,679 Speaker 1: been possible in the public spotlight. Oh nice to me you, 44 00:03:03,680 --> 00:03:04,480 Speaker 1: thanks Aunt for having us. 45 00:03:04,480 --> 00:03:05,920 Speaker 3: I really appreciate it. Thank you. 46 00:03:05,919 --> 00:03:08,000 Speaker 1: You're a private operator now you don't actually have to 47 00:03:08,040 --> 00:03:10,360 Speaker 1: talk to me, but here you are, so thank you. 48 00:03:10,520 --> 00:03:12,640 Speaker 1: But why why are you letting us in and sharing your. 49 00:03:12,520 --> 00:03:15,440 Speaker 3: Story out of invitation? I guess so. 50 00:03:16,160 --> 00:03:18,600 Speaker 2: Look, it's been a great journey in me Life Care. 51 00:03:18,880 --> 00:03:21,200 Speaker 2: It's a household name. It's been around for forty years, 52 00:03:21,240 --> 00:03:25,240 Speaker 2: one of the pioneers in the retirement village industry, and 53 00:03:24,720 --> 00:03:28,040 Speaker 2: I had some rocky times in the past and was 54 00:03:28,080 --> 00:03:31,959 Speaker 2: acquired by a large Swedish fund manager EQT in twenty twenty, 55 00:03:32,000 --> 00:03:35,200 Speaker 2: taken off the New Zealand Exchange. And it's been a 56 00:03:35,240 --> 00:03:38,360 Speaker 2: sort of quiet period of rapid transformation. It's over those 57 00:03:38,440 --> 00:03:41,120 Speaker 2: last sort of four years since that time. So you know, 58 00:03:41,120 --> 00:03:42,720 Speaker 2: it's good to share what's been going on. 59 00:03:43,000 --> 00:03:44,560 Speaker 1: We are definitely going to talk about what you've been 60 00:03:44,600 --> 00:03:46,600 Speaker 1: doing behind closed doors. Very keen to go into that. 61 00:03:46,680 --> 00:03:49,640 Speaker 1: But if you look at the industry, including the big 62 00:03:49,640 --> 00:03:51,800 Speaker 1: listed operators, what they've been up to and how they've 63 00:03:51,800 --> 00:03:55,560 Speaker 1: been struggling with this economic environment has been public How 64 00:03:55,880 --> 00:03:57,520 Speaker 1: if you can sum it up for me, how has 65 00:03:57,520 --> 00:04:00,920 Speaker 1: this economic environment higher interest rates now, slower growth in 66 00:04:00,960 --> 00:04:03,560 Speaker 1: house prices, How does that impact this type of business? 67 00:04:03,640 --> 00:04:04,040 Speaker 3: Look at it. 68 00:04:04,320 --> 00:04:09,360 Speaker 2: Really, it only impacts our incoming residents' ability to sell 69 00:04:09,400 --> 00:04:12,560 Speaker 2: their houses to come into our villages. So throughout this cycle, 70 00:04:12,640 --> 00:04:15,760 Speaker 2: and it's been the same through the listed operators as well. 71 00:04:16,880 --> 00:04:20,560 Speaker 2: Demand for retirement village of living is unaffected. So we 72 00:04:20,640 --> 00:04:23,440 Speaker 2: are dealing with over seventy year olds. It's our minimum 73 00:04:23,440 --> 00:04:26,360 Speaker 2: age of entry, as are the other operators, and there's 74 00:04:26,360 --> 00:04:29,640 Speaker 2: no lack of demand for moving into villages. Where the 75 00:04:29,760 --> 00:04:32,520 Speaker 2: challenge comes in an economic cycle that we've been that 76 00:04:32,560 --> 00:04:35,599 Speaker 2: we've faced, is that those residents when they come and 77 00:04:35,600 --> 00:04:37,920 Speaker 2: look at a village and they love the idea and 78 00:04:38,600 --> 00:04:41,159 Speaker 2: they've gone through the process of why they would want 79 00:04:41,160 --> 00:04:42,960 Speaker 2: to move in, they then have to go and sell 80 00:04:43,000 --> 00:04:46,880 Speaker 2: their residential their own residential property, and sometimes the value 81 00:04:46,880 --> 00:04:48,440 Speaker 2: of that a couple of years ago may have been 82 00:04:48,480 --> 00:04:51,000 Speaker 2: higher than what it is now, so you know that 83 00:04:51,040 --> 00:04:54,599 Speaker 2: they're presented with the less affordability. But most of the 84 00:04:54,640 --> 00:04:56,880 Speaker 2: time it's just the length of time it takes to sell. 85 00:04:57,000 --> 00:05:01,320 Speaker 2: So over the last three years, our our application rate, 86 00:05:01,920 --> 00:05:04,520 Speaker 2: the demand for our villages has increased. Yere on here 87 00:05:04,520 --> 00:05:07,160 Speaker 2: we were over target in the last twelve months. Our 88 00:05:07,200 --> 00:05:10,320 Speaker 2: price has increased through that time, and it just demonstrates 89 00:05:10,360 --> 00:05:14,520 Speaker 2: the resilience of this industry to economic cycles. The challenge comes, 90 00:05:14,560 --> 00:05:17,440 Speaker 2: as I say, is in how long it takes for 91 00:05:17,480 --> 00:05:20,200 Speaker 2: a resident to then sell their property. And one thing 92 00:05:20,200 --> 00:05:22,560 Speaker 2: I've learned about elderly people over the last sort of 93 00:05:22,560 --> 00:05:26,200 Speaker 2: twenty years in this industry is that they don't like uncertainty. 94 00:05:26,400 --> 00:05:29,640 Speaker 2: And so as soon as they think that you know, 95 00:05:29,680 --> 00:05:31,520 Speaker 2: there's going to be I'm going to move into this 96 00:05:31,600 --> 00:05:33,800 Speaker 2: village and we're going to sell our house for whatever, 97 00:05:33,960 --> 00:05:36,840 Speaker 2: and therefore I put an application on this unit and 98 00:05:36,880 --> 00:05:40,000 Speaker 2: that doesn't happen, then they tend to sort of get 99 00:05:40,040 --> 00:05:42,200 Speaker 2: concerned maybe it's not the right time to move in 100 00:05:42,240 --> 00:05:44,240 Speaker 2: those sort of things. So one of the things we've 101 00:05:44,240 --> 00:05:46,320 Speaker 2: been fortunate about at Meatlife Care is that we've had 102 00:05:46,320 --> 00:05:50,719 Speaker 2: the ability to be quite innovative in that transaction. So 103 00:05:50,760 --> 00:05:54,360 Speaker 2: we've allowed residents to extend contracts, we've offered them sort 104 00:05:54,400 --> 00:05:58,159 Speaker 2: of incentives to move in, we've deferred some payments, those 105 00:05:58,200 --> 00:06:00,200 Speaker 2: sort of things, and those sort of things are hard 106 00:06:00,240 --> 00:06:02,320 Speaker 2: to do when you're in the public profile. You know, 107 00:06:02,880 --> 00:06:05,279 Speaker 2: our owner, our board have been comfortable with us using 108 00:06:05,279 --> 00:06:06,279 Speaker 2: those sort of instruments. 109 00:06:06,600 --> 00:06:09,919 Speaker 1: Investors also very much do not like uncertainty earl. And 110 00:06:09,960 --> 00:06:13,240 Speaker 1: if you look at the public listed retirement village sector, 111 00:06:13,440 --> 00:06:17,000 Speaker 1: they've been repriced pretty heavily. It's interesting the difference in 112 00:06:17,040 --> 00:06:20,119 Speaker 1: the variance in how some of those companies are going because, 113 00:06:20,160 --> 00:06:22,039 Speaker 1: as you mentioned, you all really in this industry have 114 00:06:22,080 --> 00:06:24,880 Speaker 1: the same business model. You build developments, you get debt 115 00:06:24,880 --> 00:06:26,719 Speaker 1: to do it, then you sell the right to occupy, 116 00:06:27,120 --> 00:06:30,120 Speaker 1: then you resell those when the occupier moves on, you 117 00:06:30,160 --> 00:06:32,840 Speaker 1: then recycle that capital that you earn from the capital 118 00:06:32,880 --> 00:06:36,000 Speaker 1: gain to put into more villages. So why do you 119 00:06:36,000 --> 00:06:38,280 Speaker 1: think there's such a variance in the way that some 120 00:06:38,320 --> 00:06:40,120 Speaker 1: of these operators are going well. 121 00:06:40,000 --> 00:06:40,560 Speaker 3: For its start? 122 00:06:40,720 --> 00:06:43,920 Speaker 2: I mean, the sector itself has been oversold because of 123 00:06:44,000 --> 00:06:46,080 Speaker 2: the perception from a lot of investors is that it 124 00:06:47,120 --> 00:06:50,080 Speaker 2: is directly correlated to the residential property market, which is 125 00:06:50,120 --> 00:06:52,760 Speaker 2: I've just said is not correct. You know, the business 126 00:06:52,600 --> 00:06:55,600 Speaker 2: has considerable resilience against economic cycles. 127 00:06:55,640 --> 00:06:58,880 Speaker 3: We're dealing with a cohort of our population that have. 128 00:06:59,800 --> 00:07:03,560 Speaker 2: An enjoyed significant capital growth over the last decade, right, 129 00:07:03,600 --> 00:07:07,200 Speaker 2: so they've bought properties that have double tripled in value 130 00:07:07,520 --> 00:07:10,040 Speaker 2: over that time. They get to a stage in life 131 00:07:10,160 --> 00:07:13,120 Speaker 2: and they're looking for either a lifestyle option or they're 132 00:07:13,120 --> 00:07:17,200 Speaker 2: looking to take uncertainty out of their future. They go 133 00:07:17,280 --> 00:07:21,400 Speaker 2: out and they look at retirement village environments, they see 134 00:07:21,400 --> 00:07:24,400 Speaker 2: the benefits of it, they want to move in. It's 135 00:07:24,480 --> 00:07:27,320 Speaker 2: the ability of a company then to what i'd call 136 00:07:27,760 --> 00:07:28,720 Speaker 2: take the friction. 137 00:07:28,520 --> 00:07:29,480 Speaker 3: Out of that transaction. 138 00:07:29,680 --> 00:07:31,960 Speaker 2: So how do you when you've got a reason? I mean, 139 00:07:31,960 --> 00:07:34,520 Speaker 2: it's just like you mentioned having a shop and selling 140 00:07:34,560 --> 00:07:36,320 Speaker 2: a product and people are queuing of the door to 141 00:07:36,400 --> 00:07:38,080 Speaker 2: come in, and they really want to buy the product, 142 00:07:39,000 --> 00:07:41,200 Speaker 2: and they've got the money to do it, they just 143 00:07:41,240 --> 00:07:43,520 Speaker 2: can't go and access that money, so to speak. So 144 00:07:44,000 --> 00:07:44,760 Speaker 2: it's that sort of thing. 145 00:07:44,840 --> 00:07:47,360 Speaker 3: So we've been able to be innovative in terms of 146 00:07:47,360 --> 00:07:49,240 Speaker 3: how we've done that. But you know, I can tell 147 00:07:49,280 --> 00:07:50,480 Speaker 3: you we obviously look. 148 00:07:50,320 --> 00:07:53,920 Speaker 2: At all the results of the listed operators, and you 149 00:07:53,960 --> 00:07:56,040 Speaker 2: know that they're almost a copy book about how we've 150 00:07:56,080 --> 00:07:58,080 Speaker 2: tracked over this time as well. You know, it has 151 00:07:58,120 --> 00:08:01,679 Speaker 2: been a challenging time for that clelling out those sentiment 152 00:08:01,720 --> 00:08:02,760 Speaker 2: time frames. 153 00:08:02,840 --> 00:08:04,040 Speaker 3: Which impacts cash flow. 154 00:08:05,040 --> 00:08:06,720 Speaker 2: But you know, as I say, in terms of demand, 155 00:08:06,800 --> 00:08:10,200 Speaker 2: in terms of absolute sales, Look, the difference with met 156 00:08:10,200 --> 00:08:11,520 Speaker 2: at the moment is that we've got a great owner. 157 00:08:11,560 --> 00:08:14,400 Speaker 2: We've got a fantastic, very robust balance sheet. You know, 158 00:08:14,400 --> 00:08:17,320 Speaker 2: we've got the ability ability to expand and grow. You 159 00:08:17,360 --> 00:08:19,000 Speaker 2: know that perhaps the company didn't have before. 160 00:08:19,400 --> 00:08:21,640 Speaker 1: Tell me about your expansion. Just how much have you 161 00:08:21,680 --> 00:08:24,960 Speaker 1: increased revenue and profitability and private hands and how have 162 00:08:25,000 --> 00:08:25,440 Speaker 1: you done it? 163 00:08:25,680 --> 00:08:26,000 Speaker 3: Well? 164 00:08:26,040 --> 00:08:28,160 Speaker 2: Our net tangible assets is one of our key you 165 00:08:28,160 --> 00:08:30,760 Speaker 2: sort of measures, has increased by nine percent CAGO over 166 00:08:30,800 --> 00:08:33,120 Speaker 2: the last of four years, which compares to a negative 167 00:08:33,120 --> 00:08:33,640 Speaker 2: one before. 168 00:08:33,679 --> 00:08:36,320 Speaker 3: Then, as I say, we've had we've. 169 00:08:36,200 --> 00:08:39,800 Speaker 2: Got an owner that that is reinvesting every dollar of 170 00:08:39,880 --> 00:08:42,680 Speaker 2: return back into the portfolio. So yeah, it's been a 171 00:08:42,679 --> 00:08:45,199 Speaker 2: tremendous opportunity to take a company that's a that's a 172 00:08:45,240 --> 00:08:47,320 Speaker 2: healthshold name in New Zealand, one of the pioneers in 173 00:08:47,320 --> 00:08:50,880 Speaker 2: the industry, and give it a significant transformation and we 174 00:08:50,960 --> 00:08:54,720 Speaker 2: really have gone through the boldest sort of changes that 175 00:08:54,760 --> 00:08:56,600 Speaker 2: you'd expected for a company of our scale in New 176 00:08:56,720 --> 00:08:58,480 Speaker 2: Zealand probably over the last few years, and it's been 177 00:08:58,520 --> 00:09:01,880 Speaker 2: executed at considerable pace. It's taken a lot of resource, 178 00:09:01,880 --> 00:09:04,040 Speaker 2: it's taken a heck of a lot of capital. But 179 00:09:04,200 --> 00:09:06,920 Speaker 2: you know, our village is and obviously we're sitting in 180 00:09:06,920 --> 00:09:10,199 Speaker 2: a brand new one now and that's part of a 181 00:09:10,480 --> 00:09:13,800 Speaker 2: normal growth cycle that any retirement village operator would have 182 00:09:13,880 --> 00:09:16,600 Speaker 2: to buy land, build village, sell it down, et cetera, 183 00:09:16,640 --> 00:09:19,400 Speaker 2: open new villages. But we've reinvested in our existing portfolio 184 00:09:19,400 --> 00:09:21,600 Speaker 2: as well. So you know, one of the points you 185 00:09:21,640 --> 00:09:26,040 Speaker 2: made before around one of the benefits MetLife Care has 186 00:09:26,080 --> 00:09:28,760 Speaker 2: and that cycle of build village, sell it down. There's 187 00:09:28,760 --> 00:09:31,800 Speaker 2: a long period of time where you're operating a village 188 00:09:32,000 --> 00:09:36,120 Speaker 2: before a resale opportunity comes up. And obviously, in this industry, 189 00:09:36,559 --> 00:09:41,240 Speaker 2: the capital growth, the realization of your deferred management fee, 190 00:09:41,440 --> 00:09:45,280 Speaker 2: only comes with a resale, so you can return your 191 00:09:45,280 --> 00:09:49,640 Speaker 2: capital through a development process. You can operate your village 192 00:09:49,720 --> 00:09:52,319 Speaker 2: and you can recover your cost of operating, but you're 193 00:09:52,360 --> 00:09:54,840 Speaker 2: only really making your returns when you resell. 194 00:09:55,040 --> 00:09:56,120 Speaker 3: So it's a long game. 195 00:09:56,640 --> 00:09:59,040 Speaker 2: If you're a mature portfolio like MetLife Care and you've 196 00:09:59,040 --> 00:10:02,040 Speaker 2: got villages that are forty you're forty years old, those 197 00:10:02,080 --> 00:10:06,480 Speaker 2: gains come regularly because individual units come up for resale 198 00:10:07,000 --> 00:10:09,480 Speaker 2: regularly through the year. If you're a new operator or 199 00:10:09,480 --> 00:10:13,760 Speaker 2: a smaller operator, you're far more exposed to quite lumpy 200 00:10:13,840 --> 00:10:16,760 Speaker 2: sort of cash flows, right, You're far more exposed to 201 00:10:17,440 --> 00:10:20,000 Speaker 2: different time frames of when those resales are going to 202 00:10:20,000 --> 00:10:21,640 Speaker 2: come up. And that's when a lot of you know, 203 00:10:21,679 --> 00:10:24,760 Speaker 2: even developers that have got into retirement villages and it 204 00:10:24,800 --> 00:10:25,560 Speaker 2: looks great. 205 00:10:25,360 --> 00:10:25,760 Speaker 3: Doesn't it. 206 00:10:25,800 --> 00:10:28,000 Speaker 2: You know, you build, you build what looks like a 207 00:10:28,040 --> 00:10:30,760 Speaker 2: residential property development, you sell it down and gosh, you 208 00:10:30,800 --> 00:10:33,000 Speaker 2: get a chance to resell it again. But you've got 209 00:10:33,000 --> 00:10:35,240 Speaker 2: to operate it in the meantime and you've got to 210 00:10:35,280 --> 00:10:39,480 Speaker 2: incur you know, the challenges of operating a village until 211 00:10:39,480 --> 00:10:40,679 Speaker 2: that resale time comes out. 212 00:10:40,920 --> 00:10:42,679 Speaker 3: And you know what if you're a tempted to. 213 00:10:42,720 --> 00:10:46,920 Speaker 2: Reselve for your initial sales to be you know, to 214 00:10:46,920 --> 00:10:49,600 Speaker 2: get the sales away to sort of lengthen your population 215 00:10:49,679 --> 00:10:51,600 Speaker 2: base and maybe drop it down to fifty five, which 216 00:10:51,600 --> 00:10:53,720 Speaker 2: is what happened in historically and retirement villages, and it 217 00:10:53,720 --> 00:10:55,400 Speaker 2: did happen with some of the assets that meant life 218 00:10:55,480 --> 00:10:58,880 Speaker 2: care acquired in the past. You know, those resales don't 219 00:10:58,880 --> 00:11:00,800 Speaker 2: come for twenty thirty years. 220 00:11:00,920 --> 00:11:02,880 Speaker 3: It's a long time between cash flows. 221 00:11:03,320 --> 00:11:06,480 Speaker 1: What is your DMI just quickly, that's quite hot. 222 00:11:07,840 --> 00:11:10,080 Speaker 2: There are others at thirty percent, and you know, I 223 00:11:10,080 --> 00:11:11,920 Speaker 2: mean obviously a lot of singles in the market at 224 00:11:11,920 --> 00:11:14,360 Speaker 2: the moment that others will be moving towards that level. 225 00:11:14,800 --> 00:11:18,439 Speaker 3: Look in my experience, and I've been in the sector. 226 00:11:18,200 --> 00:11:21,680 Speaker 2: For twenty years, it's funny, I sort of I don't 227 00:11:21,679 --> 00:11:24,640 Speaker 2: feel that old, but people have said I'm the longest 228 00:11:24,640 --> 00:11:27,040 Speaker 2: serving CEO in the sector, which feels a bit now. 229 00:11:27,120 --> 00:11:29,000 Speaker 3: Just in the sector, not in the sector, not in 230 00:11:29,000 --> 00:11:30,040 Speaker 3: New Zealand, that goodness now. 231 00:11:31,480 --> 00:11:35,199 Speaker 2: But you know, and what I would call the old 232 00:11:35,320 --> 00:11:38,320 Speaker 2: days twenty years ago, you would as you said, you'd 233 00:11:38,360 --> 00:11:41,280 Speaker 2: buy it, you build a village, sell it down, recover 234 00:11:41,320 --> 00:11:42,480 Speaker 2: your costs entirely. 235 00:11:42,600 --> 00:11:43,160 Speaker 3: You'd operate. 236 00:11:43,200 --> 00:11:45,640 Speaker 2: You'd charge of residence their weekly fee to recover the 237 00:11:45,720 --> 00:11:48,760 Speaker 2: cost of operating the village. We'd literally have agms where 238 00:11:48,800 --> 00:11:51,240 Speaker 2: we'd give a budget for next year which would include 239 00:11:51,240 --> 00:11:54,400 Speaker 2: all of the costs of operating all of our rates, insurance. 240 00:11:53,880 --> 00:11:54,319 Speaker 3: Et cetera. 241 00:11:54,920 --> 00:11:56,960 Speaker 2: And then we would basically divide that by the number 242 00:11:57,000 --> 00:11:59,160 Speaker 2: of units and say here's the amount of weekly fee. 243 00:11:59,520 --> 00:12:02,200 Speaker 2: Sometimes it was unpopular because it might have gone up 244 00:12:02,200 --> 00:12:06,880 Speaker 2: a little bit, and then you would therefore be able 245 00:12:06,880 --> 00:12:09,120 Speaker 2: to operate your village on a full recovery basis. And 246 00:12:09,120 --> 00:12:12,360 Speaker 2: then as I say that, resale would come up. Times 247 00:12:12,360 --> 00:12:16,200 Speaker 2: have changed and we introduced to thing ten years ago 248 00:12:16,240 --> 00:12:18,800 Speaker 2: called a fixed weekly fee, as did other operators. 249 00:12:18,840 --> 00:12:19,840 Speaker 3: It's great for marketing. 250 00:12:19,920 --> 00:12:22,000 Speaker 2: It gives residence a gain a lot of certainty about 251 00:12:22,000 --> 00:12:22,800 Speaker 2: what the future will. 252 00:12:22,640 --> 00:12:25,319 Speaker 3: Bring, and it's fixed for their entire It's fixed. 253 00:12:25,120 --> 00:12:28,560 Speaker 2: The entire time of their tenure in the village. The 254 00:12:28,600 --> 00:12:31,360 Speaker 2: problem with it, and what operators have now discovered, is 255 00:12:31,400 --> 00:12:33,920 Speaker 2: that when you go through a very high inflationary period 256 00:12:34,000 --> 00:12:36,680 Speaker 2: and you know, we might say CPI is running at 257 00:12:36,880 --> 00:12:39,640 Speaker 2: whatever percent over the last few years, we all know 258 00:12:40,000 --> 00:12:43,160 Speaker 2: things like rates non tradeable inflation is going far higher 259 00:12:43,200 --> 00:12:46,360 Speaker 2: than that insurance costs, so the ability to recover the. 260 00:12:46,360 --> 00:12:49,479 Speaker 3: Cost of your village has become almost impossible. 261 00:12:49,679 --> 00:12:51,480 Speaker 1: This is what I wanted to ask you about specifically, 262 00:12:51,480 --> 00:12:53,600 Speaker 1: when it comes to care, you have what across your 263 00:12:53,679 --> 00:12:56,840 Speaker 1: portfolio now seventeen percent care. You've been building more care 264 00:12:56,880 --> 00:12:59,839 Speaker 1: amenities in some villages, which is interesting because others have 265 00:13:00,120 --> 00:13:03,640 Speaker 1: sortainly pulled back on care purely because the profitability of care, 266 00:13:03,679 --> 00:13:06,960 Speaker 1: because of the high operating expenses, wages and all of 267 00:13:07,000 --> 00:13:09,640 Speaker 1: that have increased so markedly. How are you handling the 268 00:13:09,640 --> 00:13:13,440 Speaker 1: profitability challenges in care? And given that's a challenge, why 269 00:13:13,440 --> 00:13:14,880 Speaker 1: are you still bothering with care? 270 00:13:15,000 --> 00:13:15,800 Speaker 3: So there's a lot in that. 271 00:13:15,880 --> 00:13:17,880 Speaker 2: So for a start, I would say the lack of 272 00:13:17,920 --> 00:13:21,240 Speaker 2: care that MetLife Care had in twenty twenty was a 273 00:13:21,280 --> 00:13:25,440 Speaker 2: strategic challenge for the business. Having age residential care on 274 00:13:25,480 --> 00:13:29,319 Speaker 2: a retirement village site is part of the fabric of. 275 00:13:29,240 --> 00:13:30,800 Speaker 3: New Zealand's retirement village industry. 276 00:13:30,960 --> 00:13:33,319 Speaker 2: The concept of a continuum of care has been well 277 00:13:33,440 --> 00:13:38,720 Speaker 2: established for for almost twenty years, and every retirement village 278 00:13:38,760 --> 00:13:43,160 Speaker 2: operator now will have plans to build an age care home. 279 00:13:43,679 --> 00:13:47,480 Speaker 2: It's a very very important value proposition for incoming residents. 280 00:13:47,559 --> 00:13:50,679 Speaker 2: Residents want to know what happens if I need living 281 00:13:50,679 --> 00:13:52,960 Speaker 2: assistance in the future. They don't really think about it 282 00:13:52,960 --> 00:13:55,440 Speaker 2: when they're young and active and maybe just over seventy, 283 00:13:55,559 --> 00:13:59,360 Speaker 2: but they certainly that they certainly want to know what 284 00:13:59,480 --> 00:14:01,840 Speaker 2: are the options for me if there are a couple, 285 00:14:02,240 --> 00:14:04,720 Speaker 2: what happens if one of us needs it, for example. 286 00:14:04,760 --> 00:14:06,520 Speaker 3: So the lack of care. 287 00:14:06,320 --> 00:14:09,120 Speaker 2: That MetLife Care have had was a real strategic handbrake 288 00:14:09,679 --> 00:14:12,280 Speaker 2: pre equt's ownership. So that was certainly part of our 289 00:14:12,280 --> 00:14:15,679 Speaker 2: full potential plan was to introduce significant more care. 290 00:14:16,640 --> 00:14:18,760 Speaker 1: Mescin. Did you of the portfolio was care when EQT 291 00:14:18,960 --> 00:14:20,120 Speaker 1: it was less than ten percent. 292 00:14:20,800 --> 00:14:22,880 Speaker 2: She've almost doubled it, really, Yeah, we have doubled it, 293 00:14:22,960 --> 00:14:27,880 Speaker 2: and more significantly, we've increased the amount of the number 294 00:14:27,920 --> 00:14:30,480 Speaker 2: of sites that have age care on them, and that's 295 00:14:30,520 --> 00:14:33,560 Speaker 2: really what's important. So it's a percentage is one thing, 296 00:14:33,600 --> 00:14:35,400 Speaker 2: but to say we had eleven age care homes and 297 00:14:35,400 --> 00:14:38,920 Speaker 2: now we've got twenty five as a far more meaningful statistic. 298 00:14:39,680 --> 00:14:43,200 Speaker 2: And we've taken villages like the Point an Aukland Stacopina 299 00:14:43,960 --> 00:14:47,560 Speaker 2: where that's been open for ten twelve years. Residents at 300 00:14:47,560 --> 00:14:49,880 Speaker 2: that village when they needed care, they would have to 301 00:14:49,920 --> 00:14:52,960 Speaker 2: go outside of the village to get that. If they 302 00:14:52,960 --> 00:14:54,400 Speaker 2: were a couple, one of them would have to move 303 00:14:54,440 --> 00:14:57,320 Speaker 2: out while the other one lived in the unit. And 304 00:14:57,360 --> 00:15:00,520 Speaker 2: we took the opportunity to convert an area that had 305 00:15:00,560 --> 00:15:03,600 Speaker 2: a number of service departments in it to fully certified 306 00:15:03,640 --> 00:15:06,800 Speaker 2: age residential care and so now that village has care 307 00:15:07,080 --> 00:15:08,960 Speaker 2: on site, and we've done that in other villages around 308 00:15:08,960 --> 00:15:12,960 Speaker 2: the country as well, so we have significant thing spad effect. 309 00:15:13,000 --> 00:15:13,760 Speaker 3: I think that's been one of. 310 00:15:13,720 --> 00:15:17,160 Speaker 2: The standout successes of our transformation journey over the last 311 00:15:17,200 --> 00:15:18,240 Speaker 2: four years is to. 312 00:15:18,240 --> 00:15:19,080 Speaker 3: Be able to do that. 313 00:15:19,160 --> 00:15:21,320 Speaker 2: And it's not easy, you know, to turn an area 314 00:15:21,360 --> 00:15:24,120 Speaker 2: of a building which has been built for residential purposes 315 00:15:24,120 --> 00:15:27,080 Speaker 2: into an operational care home has a number of implications 316 00:15:27,080 --> 00:15:28,640 Speaker 2: for fire regulations and things like that. 317 00:15:28,680 --> 00:15:30,320 Speaker 3: So we've spent a lot of money doing it. 318 00:15:30,400 --> 00:15:32,920 Speaker 2: But as I say that, the value in that to 319 00:15:33,000 --> 00:15:36,360 Speaker 2: that village and the residence in that village is extraordinary in. 320 00:15:36,360 --> 00:15:37,800 Speaker 3: Terms of profitability of care. 321 00:15:39,320 --> 00:15:42,000 Speaker 2: As I say, I think the point is that retirement 322 00:15:42,040 --> 00:15:44,440 Speaker 2: village operators need care, whether it's profitable or not. 323 00:15:44,440 --> 00:15:45,000 Speaker 3: They need it. 324 00:15:46,520 --> 00:15:48,400 Speaker 1: So but you're not making a loss on it, aren't you. 325 00:15:48,520 --> 00:15:49,600 Speaker 3: We're not making a loss. 326 00:15:49,720 --> 00:15:51,960 Speaker 2: And the reason why we're not making loss is that 327 00:15:52,000 --> 00:15:56,440 Speaker 2: we offer premium care, so we effectively take the care 328 00:15:56,560 --> 00:16:00,360 Speaker 2: room itself and we sell an occupation right over that 329 00:16:00,760 --> 00:16:02,520 Speaker 2: room and the same way that we would sell and 330 00:16:02,560 --> 00:16:05,160 Speaker 2: occupature over an independent living in it. 331 00:16:05,160 --> 00:16:07,240 Speaker 3: It's effectively a capital sum deposit. 332 00:16:08,160 --> 00:16:13,400 Speaker 2: The alternative would be a daily accommodation payment that operators charged, 333 00:16:13,440 --> 00:16:16,880 Speaker 2: So some other operators will charge a daily room premium 334 00:16:16,960 --> 00:16:20,160 Speaker 2: and it's for the accommodation component, just the accommodation component. 335 00:16:20,400 --> 00:16:24,320 Speaker 2: You're absolutely right that we charge the same fee that 336 00:16:24,440 --> 00:16:26,880 Speaker 2: any other agecre operator can around the country for the 337 00:16:26,920 --> 00:16:31,240 Speaker 2: service component of age care, so service all the daily 338 00:16:31,280 --> 00:16:33,760 Speaker 2: living costs that a resident may have in care. But 339 00:16:34,000 --> 00:16:36,400 Speaker 2: here is obviously a very different business model. It's a 340 00:16:36,520 --> 00:16:40,600 Speaker 2: very different operating concept to a retirement village. But as 341 00:16:40,600 --> 00:16:43,960 Speaker 2: I say, it's a very necessary part. And retirement villages 342 00:16:44,000 --> 00:16:46,880 Speaker 2: are the only developers of care homes in New Zealand 343 00:16:46,920 --> 00:16:50,440 Speaker 2: at the moment, and that's because of what is wrong. 344 00:16:50,200 --> 00:16:52,200 Speaker 3: With the age care funding model in New Zealand. 345 00:16:52,720 --> 00:16:54,800 Speaker 1: Are you comfortable with that max now seventeen percent of 346 00:16:54,800 --> 00:16:56,000 Speaker 1: care across your portfolio. 347 00:16:56,000 --> 00:16:58,160 Speaker 2: We've had the benefit of being a slow starter, to 348 00:16:58,160 --> 00:17:00,000 Speaker 2: be honest, so we have what i'd call it rights 349 00:17:00,320 --> 00:17:03,000 Speaker 2: care offering, and we've been able to build new care. 350 00:17:03,000 --> 00:17:04,919 Speaker 2: We've been able to convert as I say, areas of 351 00:17:04,920 --> 00:17:07,679 Speaker 2: our existing villages into care. But we've had the benefit 352 00:17:07,720 --> 00:17:10,520 Speaker 2: of knowing what was the appropriate scale of that as 353 00:17:10,600 --> 00:17:14,000 Speaker 2: opposed to you, right, other operators that were building very 354 00:17:14,080 --> 00:17:15,879 Speaker 2: large care homes, and the larger the care home, the 355 00:17:15,960 --> 00:17:19,880 Speaker 2: more efficient it is. Undoubtedly, you know, one manager, one chief, 356 00:17:20,080 --> 00:17:24,480 Speaker 2: one administrator, so it makes sense to build bigger care. 357 00:17:24,520 --> 00:17:28,400 Speaker 2: But you know, when the care funding is not adequate 358 00:17:28,400 --> 00:17:30,760 Speaker 2: to keep up with the operating costs of care, that 359 00:17:30,880 --> 00:17:33,000 Speaker 2: puts you in an unfortunate situation where you end up 360 00:17:33,000 --> 00:17:37,000 Speaker 2: being underwater. As I say, from our model where premium 361 00:17:37,400 --> 00:17:40,399 Speaker 2: we use that or a model over care that enables 362 00:17:40,440 --> 00:17:43,600 Speaker 2: us to extract far greater returns per bad than a 363 00:17:43,680 --> 00:17:44,719 Speaker 2: standard care offering. 364 00:17:45,200 --> 00:17:48,119 Speaker 1: So I've MetLife is positioning itself as a premium operator. 365 00:17:48,560 --> 00:17:50,639 Speaker 1: Before you would take it over, you were considered the third. 366 00:17:50,600 --> 00:17:52,160 Speaker 3: Largest retirement village operator. 367 00:17:52,200 --> 00:17:54,240 Speaker 1: Where are you in that positioning now and how do 368 00:17:54,280 --> 00:17:56,800 Speaker 1: you expect that to change given that you can afford 369 00:17:56,880 --> 00:17:59,600 Speaker 1: to expand in private hands while others are pulling back 370 00:17:59,600 --> 00:18:00,600 Speaker 1: and selling site. 371 00:18:01,000 --> 00:18:05,200 Speaker 2: We're still we're still third, so other operators in the sector. 372 00:18:05,240 --> 00:18:09,000 Speaker 2: We've grown as well, but it's fair to say we've 373 00:18:09,080 --> 00:18:12,080 Speaker 2: grown significantly over the last over the last four years, 374 00:18:12,160 --> 00:18:14,680 Speaker 2: so you know, and the key pillars that have been 375 00:18:15,000 --> 00:18:17,119 Speaker 2: again part of our full potential plan and things that 376 00:18:17,160 --> 00:18:19,600 Speaker 2: the company perhaps struggled with in the past being in 377 00:18:19,600 --> 00:18:22,399 Speaker 2: the public spotlight. So we've used our balance sheet to 378 00:18:22,440 --> 00:18:25,360 Speaker 2: acquire a significant land bank. We've got over twenty five 379 00:18:25,440 --> 00:18:27,639 Speaker 2: hundred beds and units in our land bank, so that 380 00:18:27,640 --> 00:18:30,639 Speaker 2: represents a very tangible pathway for future growth. 381 00:18:30,640 --> 00:18:32,160 Speaker 1: When do you expect all of those to come online? 382 00:18:32,200 --> 00:18:34,040 Speaker 2: That we're building it three to four hundred units a 383 00:18:34,119 --> 00:18:36,280 Speaker 2: year at the moment, so you can work out the maths. 384 00:18:36,320 --> 00:18:38,080 Speaker 2: You know, we've got about five to seven years ahead 385 00:18:38,080 --> 00:18:40,520 Speaker 2: of us, and we're constantly looking at new parcels of 386 00:18:40,560 --> 00:18:42,440 Speaker 2: land around the country and we will continue. 387 00:18:42,119 --> 00:18:42,879 Speaker 3: To do so. 388 00:18:42,920 --> 00:18:46,040 Speaker 2: The other key component of that is is the ability 389 00:18:46,080 --> 00:18:50,720 Speaker 2: to manage the build program, so identify not only identifying 390 00:18:50,720 --> 00:18:53,560 Speaker 2: the land and securing it, but also having the capability 391 00:18:53,600 --> 00:18:58,560 Speaker 2: internally to oversee the best design and the best construction 392 00:18:59,160 --> 00:19:02,679 Speaker 2: and having a internal development function that is capable of 393 00:19:02,800 --> 00:19:04,720 Speaker 2: delivering that amount of units and now gain that is 394 00:19:04,720 --> 00:19:07,640 Speaker 2: something that the company was challenged with historically. So we've 395 00:19:07,680 --> 00:19:10,359 Speaker 2: done a lot of work standing up an internal development function, 396 00:19:10,880 --> 00:19:13,480 Speaker 2: and we've delivered two years consistently of around three hundred 397 00:19:13,560 --> 00:19:16,280 Speaker 2: units and we're well untracted delivering another three hundred over 398 00:19:16,320 --> 00:19:17,760 Speaker 2: the next sort of five to ten years. That will 399 00:19:17,760 --> 00:19:20,760 Speaker 2: build towards four hundred beds and units. And you know 400 00:19:20,760 --> 00:19:22,679 Speaker 2: that's a key lever in the business in terms of 401 00:19:22,680 --> 00:19:23,880 Speaker 2: whether we speed it up, slow. 402 00:19:23,720 --> 00:19:25,360 Speaker 3: It down, go high, etc. 403 00:19:25,680 --> 00:19:27,720 Speaker 2: But you're right, we've had that balance sheet, we've had 404 00:19:28,200 --> 00:19:30,399 Speaker 2: the benefit of having a great owner that's enabled us 405 00:19:30,400 --> 00:19:30,840 Speaker 2: to do that. 406 00:19:31,320 --> 00:19:33,440 Speaker 1: How are you going to pay for the remaining year 407 00:19:33,480 --> 00:19:35,520 Speaker 1: and a half on the full potential plane? It was 408 00:19:35,520 --> 00:19:36,960 Speaker 1: a five year plan of three and a half years 409 00:19:37,000 --> 00:19:40,480 Speaker 1: into it. You have one point foury seven billion dollars 410 00:19:40,520 --> 00:19:43,200 Speaker 1: worth of debt. Not enormously high compared to some others. 411 00:19:43,240 --> 00:19:45,879 Speaker 1: That puts your net gearing it just shy of forty 412 00:19:45,880 --> 00:19:49,159 Speaker 1: percent and sounds extraordinary high, but for this business it's 413 00:19:49,400 --> 00:19:52,320 Speaker 1: surprisingly not. Your interest costs have gone from twenty million 414 00:19:52,440 --> 00:19:55,439 Speaker 1: up to thirty six million in the past year. How 415 00:19:55,480 --> 00:19:57,359 Speaker 1: from a balance sheet perspective, are you going to handle 416 00:19:57,400 --> 00:20:00,239 Speaker 1: fulfilling the rest of the expansion plans and building up 417 00:20:00,240 --> 00:20:01,760 Speaker 1: to four hundred units a year from here? 418 00:20:01,800 --> 00:20:04,320 Speaker 2: To your point, the development function is a is a 419 00:20:04,359 --> 00:20:06,920 Speaker 2: recycling of capital and that gain that's a very historical 420 00:20:06,920 --> 00:20:09,199 Speaker 2: feature of the retirement checktor. So we are seeking to 421 00:20:09,240 --> 00:20:12,879 Speaker 2: recycle the capital that we invest in our developments, so, 422 00:20:13,240 --> 00:20:16,800 Speaker 2: you know, and in the sector the benefit of of 423 00:20:17,400 --> 00:20:19,240 Speaker 2: you know that the way that our balance sheep works, 424 00:20:19,240 --> 00:20:20,919 Speaker 2: of course is that you can rely on debt to 425 00:20:20,960 --> 00:20:24,240 Speaker 2: do so. So we have a very supportive banking syndicate 426 00:20:24,320 --> 00:20:27,160 Speaker 2: that enables us to establish a development facility. And yes, 427 00:20:27,200 --> 00:20:29,760 Speaker 2: we have some core debt and that's really funded a 428 00:20:29,800 --> 00:20:33,159 Speaker 2: lot of the development of our age care homes we've built. 429 00:20:34,000 --> 00:20:36,800 Speaker 2: You know, we've had eight he care homes under construction 430 00:20:36,840 --> 00:20:40,760 Speaker 2: over recent years, so and that's been that's taken a 431 00:20:40,760 --> 00:20:42,480 Speaker 2: lot of capital and we have used our balance sheet 432 00:20:42,480 --> 00:20:44,479 Speaker 2: for that. But you know, the short answer is that 433 00:20:44,520 --> 00:20:48,240 Speaker 2: we've got a sufficient debt facility, a development debt facility 434 00:20:48,240 --> 00:20:51,600 Speaker 2: in place to be able to recycle you know that 435 00:20:51,600 --> 00:20:55,399 Speaker 2: that that capital and continue to build. You know, the 436 00:20:55,480 --> 00:20:58,439 Speaker 2: three to four hundred units a year, and the balance 437 00:20:58,480 --> 00:21:00,880 Speaker 2: of our full potential plan is a largely in place, 438 00:21:00,920 --> 00:21:02,800 Speaker 2: to be honest with you, where we're coming up four 439 00:21:02,880 --> 00:21:06,480 Speaker 2: years out of the five and we've knocked off most 440 00:21:06,480 --> 00:21:07,280 Speaker 2: of the pillars of. 441 00:21:07,359 --> 00:21:11,040 Speaker 1: That that begs the question then that your private equity 442 00:21:11,040 --> 00:21:13,040 Speaker 1: owned and may be looking to sell. I know you 443 00:21:13,040 --> 00:21:15,399 Speaker 1: can't talk about that, but it's known the private equity 444 00:21:15,440 --> 00:21:17,600 Speaker 1: is here for a good time, a profitable time, not 445 00:21:17,720 --> 00:21:20,800 Speaker 1: a long time. The concern when MetLife was taken over 446 00:21:20,960 --> 00:21:23,480 Speaker 1: from some quarters, not from all shareholders, was that the 447 00:21:23,600 --> 00:21:25,760 Speaker 1: value that was going to be created in this business 448 00:21:25,960 --> 00:21:29,000 Speaker 1: would happen behind closed doors, outside of the reach of 449 00:21:29,040 --> 00:21:32,719 Speaker 1: the public market and retail investors. It's clearly happened. How 450 00:21:32,760 --> 00:21:34,359 Speaker 1: do you feel about that? And would you like to 451 00:21:34,359 --> 00:21:36,960 Speaker 1: see this business back and the public market so you 452 00:21:37,000 --> 00:21:38,680 Speaker 1: could be a public listency again. 453 00:21:38,720 --> 00:21:42,680 Speaker 3: We've been a public company for a reason. The look. 454 00:21:43,359 --> 00:21:46,600 Speaker 2: You know, I worked with someone historically who had involved 455 00:21:46,600 --> 00:21:49,280 Speaker 2: in a MetLife care and he said that MetLife Care's 456 00:21:49,320 --> 00:21:51,520 Speaker 2: issues are best out with out of the public spotlight. 457 00:21:51,560 --> 00:21:53,479 Speaker 2: And I think that's really played out. 458 00:21:53,720 --> 00:21:54,359 Speaker 3: You know, the. 459 00:21:54,960 --> 00:21:58,720 Speaker 2: Company had a as I say, strategic issues that were 460 00:21:58,760 --> 00:22:04,600 Speaker 2: born from you know, trying to trying to deliver results 461 00:22:04,600 --> 00:22:07,760 Speaker 2: and deliver value in very short cycles. You know, six 462 00:22:07,800 --> 00:22:10,280 Speaker 2: months between results is a very short cycle to get 463 00:22:10,320 --> 00:22:13,280 Speaker 2: anything done, and you know, when you've got to reinvest 464 00:22:13,480 --> 00:22:15,560 Speaker 2: so much in the portfolio. I mean, it was and 465 00:22:15,600 --> 00:22:17,639 Speaker 2: it's still as we operate one of the oldest retirement 466 00:22:17,680 --> 00:22:21,160 Speaker 2: villages in New Zealand, and we're going through through a 467 00:22:21,320 --> 00:22:25,280 Speaker 2: significant regeneration program in that side of the moment, rebuilding 468 00:22:25,280 --> 00:22:28,960 Speaker 2: community centers, adding more units, adding age care to it. 469 00:22:29,000 --> 00:22:29,199 Speaker 1: You know. 470 00:22:29,240 --> 00:22:31,560 Speaker 2: So that's the benefit of being out of the public spotlight. 471 00:22:31,600 --> 00:22:33,720 Speaker 2: You would not have been able to justify that level 472 00:22:33,760 --> 00:22:37,240 Speaker 2: of reinvestment while investors are looking for a return, looking 473 00:22:37,240 --> 00:22:39,119 Speaker 2: for a dividend, et cetera. So we've had to go 474 00:22:39,200 --> 00:22:41,760 Speaker 2: through what I'd call a lot of surgery, a lot 475 00:22:41,760 --> 00:22:46,160 Speaker 2: of transformation to take what is a great business, as 476 00:22:46,160 --> 00:22:51,840 Speaker 2: I say, a fantastic household name, strong brand, very reliable 477 00:22:51,920 --> 00:22:56,439 Speaker 2: sort of residence, satisfaction levels, trusted, trusted provider and actually 478 00:22:56,440 --> 00:22:59,000 Speaker 2: give it the face you know that the transformation that 479 00:22:59,040 --> 00:22:59,600 Speaker 2: it's needed. 480 00:23:01,359 --> 00:23:04,560 Speaker 3: So you know that the we've we've been able to 481 00:23:04,600 --> 00:23:05,320 Speaker 3: do that things like. 482 00:23:05,280 --> 00:23:07,600 Speaker 2: I mean, even in the past, you know, there was 483 00:23:07,800 --> 00:23:10,639 Speaker 2: there was a question mark about where the titanness that 484 00:23:10,720 --> 00:23:11,359 Speaker 2: met life care. 485 00:23:11,760 --> 00:23:13,520 Speaker 3: So you know, we we tackled that front on. 486 00:23:13,800 --> 00:23:16,520 Speaker 2: We went in our second year, we undertook a significant 487 00:23:16,880 --> 00:23:19,560 Speaker 2: building condition review across all of the existing buildings. 488 00:23:19,600 --> 00:23:20,280 Speaker 1: What did you find. 489 00:23:20,920 --> 00:23:24,119 Speaker 2: There were a couple of buildings that needed reclouding, and 490 00:23:24,160 --> 00:23:26,640 Speaker 2: that they're they're sort of well known across the you know, 491 00:23:26,720 --> 00:23:32,440 Speaker 2: across the portfolio, where we went through a very detailed 492 00:23:32,480 --> 00:23:34,520 Speaker 2: design program as to how we're going to do that, 493 00:23:35,440 --> 00:23:37,400 Speaker 2: what it would cost. We had it all costed out, 494 00:23:38,000 --> 00:23:41,600 Speaker 2: confirmed by a QS, and that's now baked into our 495 00:23:41,640 --> 00:23:44,040 Speaker 2: net tangibles. So the value of the cost of that 496 00:23:44,160 --> 00:23:46,480 Speaker 2: is effectively a discount off our value right now. So 497 00:23:46,600 --> 00:23:49,440 Speaker 2: as we as we unwind that program and we undertake 498 00:23:49,480 --> 00:23:52,440 Speaker 2: that program of work, that discount, you know, we'll come 499 00:23:52,480 --> 00:23:54,399 Speaker 2: off and we'll we'll add value. But the gain that 500 00:23:54,640 --> 00:23:56,239 Speaker 2: was something that was just one of what I call 501 00:23:56,280 --> 00:23:59,119 Speaker 2: the overhangs when it was on the market, and you know, 502 00:23:59,400 --> 00:24:02,720 Speaker 2: again you know a Venice environment where it was every 503 00:24:02,720 --> 00:24:05,720 Speaker 2: six months you're sitting in front of investors and they're saying, 504 00:24:05,760 --> 00:24:07,359 Speaker 2: why are you spending so much money on the site, 505 00:24:07,400 --> 00:24:09,720 Speaker 2: and it's like, it's for longer term strategic value. 506 00:24:10,160 --> 00:24:12,840 Speaker 3: And unfortunately, when you've got you know, those short. 507 00:24:12,720 --> 00:24:16,639 Speaker 2: Term windows, you're very much driven by shorter term returns. 508 00:24:16,720 --> 00:24:18,280 Speaker 2: You know, what can I add year on year, what 509 00:24:18,320 --> 00:24:21,199 Speaker 2: can I add every six months, as opposed to what 510 00:24:21,320 --> 00:24:23,600 Speaker 2: strategic it needs to take place in this company to 511 00:24:23,640 --> 00:24:27,720 Speaker 2: position it for long term growth. So look, in short, 512 00:24:28,200 --> 00:24:31,080 Speaker 2: you know, I think all of this transformation needed to 513 00:24:31,119 --> 00:24:33,760 Speaker 2: take place outside of the public spotlight. 514 00:24:34,200 --> 00:24:37,040 Speaker 1: Was that more of a rather than a problem with 515 00:24:37,119 --> 00:24:40,399 Speaker 1: public markets? Was that more of a problem of Metlife's 516 00:24:40,440 --> 00:24:43,919 Speaker 1: mindset internally? It was focused on different things? 517 00:24:44,520 --> 00:24:49,320 Speaker 2: Okay, it's I don't think it did anything significantly wrong previously, 518 00:24:49,480 --> 00:24:52,199 Speaker 2: but the public market is unforgiving when it comes to 519 00:24:52,359 --> 00:24:55,280 Speaker 2: year on year returns. So if you've got an asset 520 00:24:55,320 --> 00:24:58,239 Speaker 2: that at for whatever reason, it's found itself with it 521 00:24:58,280 --> 00:25:01,320 Speaker 2: reason me significant strategic issue. Not a lot of land, 522 00:25:01,640 --> 00:25:05,600 Speaker 2: an inconsistent build rate, very centric around the sort of 523 00:25:05,600 --> 00:25:11,720 Speaker 2: golden triangle Auckland, Tartonga, Hamilton, no small amount of age care, 524 00:25:11,800 --> 00:25:14,480 Speaker 2: perceived to be very underweight and care compared to the 525 00:25:14,520 --> 00:25:17,879 Speaker 2: other listed operators. And you know, I would be in 526 00:25:17,960 --> 00:25:20,360 Speaker 2: investor presentations in my previous role, and you know the 527 00:25:20,400 --> 00:25:22,760 Speaker 2: investors will be saying, you know, why do you think 528 00:25:22,840 --> 00:25:23,960 Speaker 2: met Life Care has such. 529 00:25:23,840 --> 00:25:24,320 Speaker 3: A low care? 530 00:25:24,760 --> 00:25:28,520 Speaker 2: You know, and I don't know obviously, And this overhang 531 00:25:28,560 --> 00:25:31,800 Speaker 2: of assets that had with the Titus issues. So you know, 532 00:25:31,840 --> 00:25:35,040 Speaker 2: the full potential plan in this opportunity to transform this 533 00:25:35,160 --> 00:25:41,080 Speaker 2: business has basically you know, been created by coming out 534 00:25:41,080 --> 00:25:44,200 Speaker 2: of that spotlight, having an owner that's that's seen long 535 00:25:44,280 --> 00:25:46,240 Speaker 2: term growth as the key driver. 536 00:25:47,240 --> 00:25:48,720 Speaker 3: And we've addressed all those issues. 537 00:25:49,160 --> 00:25:50,679 Speaker 2: As I say, we've got a lamdback, we've got a 538 00:25:50,680 --> 00:25:54,280 Speaker 2: consistent build rate, we've got significantly more care, we've addressed 539 00:25:54,359 --> 00:25:57,520 Speaker 2: with the Titan's issues. We've now got a nationwide footprint. 540 00:25:57,600 --> 00:25:59,240 Speaker 2: You know, we've got three sites in the South Island 541 00:25:59,240 --> 00:26:01,480 Speaker 2: with a green field and wanted it to come. So 542 00:26:02,119 --> 00:26:04,720 Speaker 2: you know, it just has been a real repositioning and 543 00:26:04,760 --> 00:26:07,479 Speaker 2: it's been an exhilarating journey. Now I've only been there 544 00:26:07,520 --> 00:26:10,359 Speaker 2: three years, you know, EQTA coming up for four years ownership, 545 00:26:10,640 --> 00:26:13,040 Speaker 2: but it's been the most phenomenal journey. And you know, 546 00:26:13,080 --> 00:26:15,639 Speaker 2: we're a great team that we've been able to build 547 00:26:15,680 --> 00:26:18,600 Speaker 2: and I've never felt more empowered as a CEO to 548 00:26:18,640 --> 00:26:22,000 Speaker 2: do my job, you know, and to execute on the strategy. 549 00:26:21,720 --> 00:26:24,879 Speaker 1: And please the honor. You use the term repositioning and empowered. 550 00:26:24,960 --> 00:26:29,000 Speaker 1: But if you could sum up how MetLife looks and 551 00:26:29,040 --> 00:26:32,600 Speaker 1: its position now versus when it went private way back 552 00:26:32,600 --> 00:26:34,160 Speaker 1: in twenty twenty. What's the difference. 553 00:26:35,359 --> 00:26:39,000 Speaker 2: I think we're far more resilient, far more diversified, and 554 00:26:39,119 --> 00:26:42,840 Speaker 2: a far higher growth engine than what we've been in 555 00:26:42,880 --> 00:26:45,439 Speaker 2: the past. So we know with the land that we 556 00:26:45,480 --> 00:26:47,280 Speaker 2: have in place, with the build rate that we have, 557 00:26:47,480 --> 00:26:49,879 Speaker 2: with the villages that are coming on stream, you know 558 00:26:49,960 --> 00:26:52,000 Speaker 2: that we know what our future growth is going to 559 00:26:52,000 --> 00:26:52,280 Speaker 2: look like. 560 00:26:52,320 --> 00:26:53,040 Speaker 3: We know where it's going. 561 00:26:52,960 --> 00:26:55,760 Speaker 2: To come from, you know, and we've got a plan 562 00:26:55,880 --> 00:26:59,360 Speaker 2: now for another five years. So that that was challenging 563 00:26:59,400 --> 00:27:01,959 Speaker 2: in the past when you've got a whole lot of overhang, 564 00:27:02,600 --> 00:27:04,640 Speaker 2: you know, from other issues that are in the business. 565 00:27:04,840 --> 00:27:07,080 Speaker 1: So are we going to see you back and there's not, 566 00:27:08,040 --> 00:27:09,919 Speaker 1: that's not my call. 567 00:27:10,040 --> 00:27:12,399 Speaker 2: But you know, look, I mean it's interesting what's been 568 00:27:12,440 --> 00:27:14,679 Speaker 2: happening in the market recently. Obviously there's been a movement 569 00:27:14,720 --> 00:27:16,760 Speaker 2: and there will be one of the operators we'll come 570 00:27:16,800 --> 00:27:21,440 Speaker 2: off off the board again soon. But you know, look, 571 00:27:21,440 --> 00:27:25,880 Speaker 2: I think even that transaction shows that there's real interest 572 00:27:25,920 --> 00:27:28,399 Speaker 2: in New Zealand. There's a there's a confidence of the 573 00:27:28,400 --> 00:27:32,000 Speaker 2: New Zealand economy, the New Zealand government, there's confidence in 574 00:27:32,000 --> 00:27:35,960 Speaker 2: the regatory regime and this industry in particular. So you 575 00:27:36,000 --> 00:27:40,159 Speaker 2: know it's a real tick for for investors in the 576 00:27:40,200 --> 00:27:44,200 Speaker 2: retirement sector, and you know it's it's a place where 577 00:27:44,200 --> 00:27:46,520 Speaker 2: international investment can come to too, So who knows. 578 00:27:46,960 --> 00:27:48,480 Speaker 1: I'm just saying, if we lost one, it would be 579 00:27:48,520 --> 00:27:51,120 Speaker 1: nice to gain one. Thank you so much for your time, 580 00:27:51,440 --> 00:27:52,960 Speaker 1: so nice to see you from medicine. 581 00:27:53,000 --> 00:27:53,400 Speaker 3: Thank you.