Ryman Healthcare implements a price hike, slowing down construction, and slashing senior jobs to restore its financial stability.
From the current 20%, the retirement village operator is raising its Deferred Management Fee (DMF) to 25% or 30% for residents leaving a village based on the initial entry price paid. Additionally, the weekly fixed charges for new residents will also see an increase, with options to link fees to New Zealand’s superannuation or Australia’s consumer price index.
“The general population is living longer, our residents are staying longer, and costs have increased across the board. As a result, we are increasing our DMF and weekly fees for new residents to ensure we can sustainably provide the facilities and services that underpin the great experience that our residents enjoy today,” executive chairman Dean Hamilton said.
Hamilton also noted that there will be no changes to contractual arrangements for current residents, or residents under contract, as well as their agreed DMF or fixed weekly fees.
Meanwhile, chief financial officer Rob Woodgate mentioned that the price increases would require time to produce a significant financial effect.
“Given our new pricing structure will only apply to new ORAs (occupation rights agreements), and deferred management fees are collected (in cash terms) when residents vacate, it will take time for the changes to fully mature into our portfolio,” he stated.
Construction slow down
Ryman Healthcare will also carry out a slowdown in construction, with ongoing work on ten villages continuing but no new projects set to commence before March 2026. The company said it had sufficient land to meet its needs through the end of the decade, allowing it to pause new developments.
“We believe it makes sense to pause and wait for construction costs and interest rates to weaken from recent high levels while releasing capital from current inflight developments as these are completed and sold down.”
“How both the New Zealand and Australian governments resolve the widely acknowledged insufficiency of aged care funding will also influence when and where we prioritise our future builds. We have been clear with both governments that we need to see change if they want us to build more beds, and we believe there are solutions,” said Hamilton.
Management restructure
Ryman is undergoing internal changes as it revamps its senior management, which led to the loss of its New Zealand and Australian chief executive roles and company secretary. The company said it has plans to outsource its design and development work.
Ryman Healthcare is one of the leading operators of retirement villages, handling 49 settlements across New Zealand and Australia. The company recently reported its full-year net profit from $257.8 million a year ago down to $4.8 million for the year ending March 31, 2024.