Private equity has been on a shopping spree for retirement living and aged-care assets in WA this year, but RAC’s surprise move in taking a 49.9 per cent stake in the St Ives Group this month has bucked the trend, and intensified the competition.
Private equity has been on a shopping spree for retirement living and aged-care assets in Western Australia this year, but RAC’s surprise move in taking a 49.9 per cent stake in the St Ives Group this month has bucked the trend, and intensified the competition.
For St Ives, one of WA’s largest private retirement village and aged-care groups, the RAC partnership signals the beginning of a significant expansion through diversification and development.
St Ives founder and director, Russell Halpern, said the involvement of RAC would allow the 26-year-old group to bring forward some initiatives, including the introduction of child care centres, greater sub-acute services and allied health as part of a wellness approach to seniors’ health, to its facilities.
Mr Halpern revealed he and fellow St Ives director and founder, Ray Fitzgerald, started thinking about inviting an investor into the business about 12 months ago and approached the RAC because of synergies between the parties and a desire to keep the business in WA.
“This is not a business you decide you want to be in overnight. It’s taken us 26 years to build this business and it’s a very healthy, rapidly expanding organisation,” he told WA Business News.
“We want to build a broader, multi-faceted product, where the community has a sense of ownership and where it can play a useful and meaningful role in the community on a long-term basis.”
While St Ives had been pondering its future, WA’s retirement village and aged-care sector experienced significant consolidation over the past 12 months, with several players either selling portfolios outright or inviting major investment partners.
The largest of those deals was spearheaded by banking giant Babcock & Brown and retirement village developer Primelife Corporation, involving the acquisition of the Fini Villages portfolio of seven villages for $180 million.
In the same month, Malaysian-based private equity fund Navis secured a stake in National Lifestyle Villages portfolio, comprising six properties in WA, for $40 million.
Fellow retirement village proprietor Settlers Lifestyle Villages also signed a major deal this year, receiving $47 million in April from the ING Real Estate Community Living Group for properties in Ridgewood, Meadow Springs and Ravenswood.
Mr Halpern said he could have sold the business to private equity many times over, but he and Mr Fitzgerald were very parochial and had a strong vision of how St Ives would evolve.
St Ives has a portfolio of more than 1,350 retirement units and residential care facilities worth more than $400 million across sites in Kallaroo, Leederville, City Beach, Cloverdale, Myaree, Murdoch, Mandurah and its flagship in Subiaco.
Apart from a large book of proposed projects, St Ives is about to start an expansion of its aged-care facility on the Murdoch University campus from 34 beds to 140 beds, as well as building additional retirement villas and apartments over the next few years.
In Busselton, St Ives will build a 95-bed aged care unit next to the proposed 75-bed Busselton Hospital, together with high-care and rehabilitation facilities.
“Right now our focus will be taking the various parts of our group into a broad arc from Perth to the Great Southern and adding the benefits of co-location of residential care, community care and retirement villages so that we’re affectively across all the needs of the senior community,” he said.
Part of the integration would be to create a childcare operation which Mr Halpern believed will aid recruitment and retention of staff.
“There is this wonderful intergenerational experience that can occur if it’s managed properly…we’re also keen to introduce a wellness approach to seniors’ health which would involve good case management and wellness as a focus, rather than dependency.”
Mr Halpern said the perception of the retirement village product was changing in the community, as was the demographic it served, and the challenge would be to create a new generation of stock that was enduring.
