MOTORING, travel and financial services operator RAC has taken full ownership of the St Ives Group retirement property business after writing down the value of its half share by $17.1 million, an impairment which drove the not for profit’s bottom line into the red.
RAC confirmed it had completed the deal to buy the remaining 50.1 per cent of St Ives for an undisclosed sum last week, following the exercise of an option that was included in the partial acquisition deal five years ago.
The details of the original September 2007 deal were not disclosed, but the 49.9 per cent stake was entered at more than $60 million into the 2008 annual report of the club’s holding company, RACWA Holdings Pty Ltd.
The value of that share had grown to $65.4 million in 2011, but this year the not for profit recorded a $17.1 million impairment against the asset, which was reduced to a carrying amount of $47.5 million.
The impairment contributed to the RAC club’s loss of $13.1 million for the year ending June 30, compared to a $32.6 million profit the previous corresponding period.
In its concise annual report, the club said the impairment followed an assessment of the value of the asset, based on prevailing market conditions and St Ives’ exposure to property.
More detailed financial statements for RACWA show the impairment decision came after RAC reviewed the St Ives business by breaking it down into three separate cash-gen-erating businesses - the villages, community and residential care facilities, and its corporate operations.
By contrast, the club revalued its own direct property holdings by $5.8 million based on positive property market conditions in the Perth central business district.
St Ives, which was formed in 1981 by Ray Fitzgerald and Russell Halpem, operates 10 retirement villages and has two residential care facilities in WA.
Mchael Heath was appointed CEO of St Ives earlier this year.
RAC has delved into many different property development opportunities, including other equity investments in property developers.
In its detailed financial statements for RACWA, it reveals a 17 per cent interest in Watermark Enterprises worth less than $1.3 million, down from almost $1.5 million the previous year, and a 14 per cent stake in St Leonards, formerly West Swan Estates, which is focused on development in the Swan Valley. St Leonards’ valuation was steady at more than $4.3 million.
