Wellington Scoop

Arvida buys 50 per cent of Village at the Park

Press Release – Arvida Group
Arvida Group Limited (NZX:ARV) today announced it had entered into agreements to purchase 50% of Village at the Park Lifecare in Wellington, as well as Mary Doyle Lifecare in Havelock North and Strathallan in Timaru, for approximately $106m1.

The acquisitions will increase the number of Arvida villages to 29 comprising a mix of 1,761 care beds and 1,752 retirement units.

Based on Arvida’s estimates of earnings, the acquisitions will add $9m of underlying profit2 on a pro forma FY18 basis3 and be 8% accretive to underlying earnings per share.

Further earnings are expected beyond FY18 from future developments at Village at the Park and Mary Doyle.

“Meaningful brownfield development at Village at the Park and Mary Doyle includes 110 consented new units in the pipeline” said Bill McDonald, CEO of Arvida.

“The new units will be progressively developed over the next four years and include developments nearing completion”.

The villages are being acquired from Hurst Lifecare and associated parties which previously sold Rhodes on Cashmere to Arvida as part of the IPO.

The vendors have elected to receive a significant portion of the purchase price in Arvida shares at market price. Interests related to Hurst Lifecare remain holders of shares issued at the IPO.

Arvida Chairman Peter Wilson said “We are delighted to add another three quality villages to our portfolio. Hurst Lifecare’s desire to receive Arvida shares is a strong endorsement of our strategy from a long-standing industry participant.”

The acquisitions and transaction costs are to be funded through a combination of new equity and debt:

• $77m of new equity to be raised by way a 1-for-5 pro-rata renounceable rights issue (“Offer”) at an issue price of $1.15 per share. The Offer has been fully underwritten by Forsyth Barr Group Limited;

• $16m of shares issued to vendors escrowed for twelve months; and

• $16m of bank debt comprising $10m of debt acquired in conjunction with Village at the Park and $6m from existing facilities leaving headroom for further acquisitions and brownfield development activity.

Completion of the acquisitions is anticipated mid-October on receipt of customary third-party approvals.

The rights issue Offer Document is expected to be available on the NZX website under the ticker code “ARV” on 19 September and will be sent to shareholders by 21 September.

Applications will be accepted online at www.arvidashareoffer.co.nz from 21 September or through completion of an acceptance form. The Offer will close at 7pm, 9 October 2017.

BusinessDesk: $77m rights issue