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Arvida to raise $42 mln at 12% discount to help fund new village purchases

Tuesday 20th September 2016

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Arvida Group plans to raise $41.8 million selling shares at a 12 percent discount to help fund the acquisition of three new retirement villages in Tauranga and the Waikato. 

The Auckland-based retirement village operator will sell shares at $1.05 apiece in a one-for-seven renounceable rights issue fully underwritten by Forsyth Barr to help fund a $66 million purchase of two villages in Tauranga and one in Cambridge, it said in a statement. That's a discount to the $1.19 price the shares last traded at. 

The villages are expected to add an additional $4.4 million of underlying profit to Arvida's earnings, a 28 percent boost to its 2016 result which was better than the company forecast when listing in December 2014. 

"These acquisitions are on strategy and provide us with a presence in two key New Zealand regions experiencing high growth in aged care and retirement living," chairman Peter Wilson said. "We continue to actively consider opportunities that meet our strict criteria in terms of location, quality of assets and current management, potential for development earnings accretion." 

Arvida was created through the merger of 17 retirement villages and aged care facilities and has added to that with several acquisitions since listing. 

The latest purchases will increase Arvida's portfolio to 25 villages with 1,384 care beds and 1,248 units, and adds $11 million of land available for brownfields development. Arvida increased its banking facility with ANZ Bank New Zealand to $80 million to provide headroom for more acquisitions, and will have net debt of $42 million once the deal is settled. 

The rights will be tradable on the NZX from Sept. 27 until Oct. 12, and the offer closes on Oct. 18, with a shortfall bookbuild scheduled for Oct. 21.

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