Encore Funds Management ProNet Natio ional Conference August 2017 Peppers, The Sands Resort, Torquay Tom Camp Director
In Introduction Encore Funds Management Encore Living Group Overview: Retirement Villages and Aged Care Population and Statistics Sector Investment Opportunities
Encore Living Group Encore Living Encore Encore • Trafalgar Encore Home Property Funds • Warragul Support Management Management • Paynesville
Encore Liv iving Group Who are we ? Three Principals – Mark Zeldenryk, Ken White & Tom Camp 29 local Gippsland people committed to the development of the region. Investment to date $25m Experience 20 years involvement in the Retirement Village industry Registered Domestic and Commercial builders Project & Property Management, Town Planning Accountancy, Funds Management, Financial Planning and Finance Broking Other Gippsland Projects Eastwood Retirement Bairnsdale - $65m + Regional Shopping Centre - $20m
Retirement Liv iving and Aged Care Living Options in Retirement – You have Choices Lifestyle Deliberations – people 70yrs+
Liv iving Choices Stay in your own home Residential or Aged Care Facilities Retirement Villages Lifestyle Villages
Stay in your own home Residential or Aged Care Facilities Home renovation to cater for declining Legislated requirements – Aged Care Act, health/accessibility Federal Commonwealth Care Services require an Aged Aged Care Assessment required Care Assessment (ACAT) RAD or DAP Personal care services Downsizing Event No retention monies Regulator - Aged Care Complaints Commissioner
Retirement Villages Lifestyle Villages Legislated requirements-Retirement Village Act, State Based Legislated requirements, State Based Ingoing contribution - Residential Tenancies Act - Caravan Parks and Movable Dwellings Monthly service fee Manufactured Housing Estate (MHE) Personal care services - Own dwelling outright/ground lease Exit fees/deferred management Fee Dwelling Rental -Monthly service fee Regulator - Consumer Affairs/VCAT -Exit fees Regulator - Consumer Affairs/VCAT
Lif ifestyle Deli liberations Safety & Security Community Connectivity Downsizing Health Affordability
Population Snapshot - Australia 2016 2056 Total $24 million $40 million 65yrs+ $3.6 million $9.9 million Percentage 15% 24.8% NB: 275% increase in number of people
Aged Care 2016 2056 Places 192,000 396,000 Percentage 8.1% 8.1% of 70yrs+ NB: 206% increase in the number of people
Retirement Vil illa lages 2016 2056 No. 184,000 504,900 Residents Percentage 5.1% 5.1% NB: 275% increase in numbers of people
Manufactured Housin ing Estate (MHE) (P (Prel elim imin inary ry Es Estim imates) 2016 2056 No. 40,000 108,900 Residents Percentage 1.1% 1.1% NB: 272% increase in number of people
Context xt Aged Care 972 providers 2,681 facilities 192,000 places Major players: Opal, Bupa, Regis, Estia, Japara & Allity Sector composition: For-Profit 38% and Not-for-Profit 62% By 2056 will require additional 2,833 new facilities Total investment $45 - $50 billion Post development yields for the industry in the 9% range
Context xt Retirement Villages 184,000 residents in RV’s 2014 Approximately 1,533 villages Major players: Lendlease, Stockland, Aveo & Retire Australia Sector composition: For-Profit 40%, Not-for-Profit 60% By 2056 will require additional 1,862 villages Total investment $131 billion NB: If market penetration rises to 7.5% of population then investment will be $190 billion Post development yields for the industry indicate a range of 12 – 14% dependent on location
Context xt MHE (approximate) 40,000 residents in MHE villages 200 estates Major players: Lifestyle Communities, Ingenia Communities, National Lifestyle Villages, Gateway Lifestyle Group & Palm Lakes Resort By 2056 the industry is expected to outgrow retirement village market penetration Estimated asset value currently is $2.6 billion across 200 estates By 2056, if market penetration is 5.1% of the 65yrs+ market, then require an additional 2,325 villages or investment of $30.2 billion
In Investment Opportunities Aged Care Now largely institutionalised and highly regulated. The current players have a substantial monopoly If you are a land owner in an area that the government allocates Aged Care Bed Licences then you may have an opportunity to joint venture Most retail investment is via listed companies and the yield returns function in defined parameters based on the number of bed licences issued
In Investment Opportunities Retirement Villages Still transitioning from a cottage industry. However institutional capital is beginning to flow as the industry has matured – particularly with the For-Profit sector There are still a lot of 1 – 5 village operators that develop and operate great businesses. These operators are looking for capital to continue to expand. By implication there is great opportunity for new entrants Market opportunities are as broad as the location, ethnic and demographic of people Development returns are typically achieving 21 – 35% returns
In Investment Opportunities Manufactured Home Estate (MHE) Relatively new development sector that has make huge inroads to the 55yrs+ market based on affordability Many new entrants coming into the market and there is good opportunity to invest in syndicates and formal development funds MHE’s are finding significant traction in regional locations, largely because of availability of land Development returns typically in the 20% range with the capital improved value in the land based on ground leases being the upside post development
Summary Providing purpose-built accommodation for our aging population provides major planning and infrastructure challenges particularly the time, process and cost when dealing with local and state governments Providing social and financial solutions to assist older Australians is the challenge of our industry and if we do not get it right it will have significant impacts on the government’s ability to provide a dignified lifestyle for the age group Your mission, should you choose to accept it, is to review investment opportunity in the sector and know that your investment will assist people as they face the challenges of growing old I am confident the sector can deliver excellent returns to assist you in your own life and wealth planning
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