Arvida to buy three Auckland facilities for $62 mln, raising new capital

Wednesday 24th June 2015

Arvida Group, which operates 17 retirement villages across the country, will buy three facilities in Auckland for $62 million in cash and shares, and will raise new capital to help pay for the acquisition.

The company will buy the Aria Bay, Aria Park and Aria Gardens villages in Auckland at a multiple of 8.4 times underlying earnings. It estimates the new villages will lift earnings per share by 12 percent in the 2016 financial year. Arvida will pay $29.7 million in cash and $6 million in shares at 89 cents apiece, and will repay $26.7 million of Aria's debt. The deal will be funded through an underwritten $30 million placement at 84 cents a share, a $5 million share purchase plan at the same price, and from existing debt facilities, it said.

"The acquisition broadens Arvida's North Island presence into the Auckland market and was a compelling opportunity for Arvida," chief executive Bill McDonald said in a statement. "The acquisition is expected to be value and dividend enhancing to shareholders and provide opportunities for further growth."

The company raised $80 million in December, selling shares at 95 cents apiece, to repay debt after bringing together a group of villages, and last month affirmed earnings guidance for the 2016 year.

A trading halt put on the company's shares, which last traded at 85 cents, was lifted after today's announcement.

The three new villages have a 97 percent occupancy rate, and have development opportunities. Once the acquisition is completed, Arvida's portfolio will have 516 serviced apartments and 380 apartments/villages in Auckland alone.

The placement is underwritten by lead manager Forsyth Barr and is expected to settle on June 30. The share purchase plan opens on July 6, closing on July on July23

The acquisition is expected to be settled next month, and is contingent on obtaining statutory supervisor consents and District Health Board and Ministry of Health approvals. The transaction is expected to have associated costs of some $1.5 million.

BusinessDesk.co.nz

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