Summerset, New Zealand's third-largest retirement village operator, is becoming a market favourite, and Craigs Investment Partners brokers has recommended investors increase their holdings.
Craigs broker Chris Timms said Summerset had delivered its first result, delivering on its IPO (initial public offering targets for 2011 and significantly reducing the risk of missing its full-year 2012 IPO targets.
The company appeared to have acquired a very good site in the Auckland region, where it would develop a retirement village.
The site in Hobsonville had all the key attributes for a successful village.
No purchase price details were disclosed but the site acquisition progressed Summerset's growth strategy, making its 250-unit annual build rate over five years more plausible.
The acquisition also showed Summerset's ongoing urbanisation, which was positive, given the higher population growth in Auckland and other main areas.
Summerset had 1486 retirement units and 327 care beds spread over 14 villages across New Zealand.
The company designed, developed and operated retirement villages that offered specialised long-term care for the elderly.
The company offered early stage exposure to a proven business model in a highly attractive sector, Mr Timms said.
Like its more established competitor, Ryman Healthcare, Summerset was able to recycle capital and fund further development from interest-free loans from residents.
"While Ryman is the industry leader, with a better operational track record, Summerset has made rapid progress since it emerged from AMP ownership in 2009 and the inaugural result provided more reassurance of the company's strategy and capability."
Summerset plans to build a village in Dunedin.
