Bay of Plenty Business News April/May 2017

BAY OF PLENTY BUSINESS NEWS April/May 2017 7
The aged care sector as an investment
Much has been written about the babyboomer
generation, and the population
bulge that is entering retirement.
Through improved
healthcare and lifestyle
choices, people are living
longer. Retirement villages
have gained in popularity due
to benefits such as security,
easy care homes, a pathway
from independent living to
long-term care, and lifestyle
benefits from a range of social
activities that are offered in
many of the larger villages.
Investors can access the
sector currently through
four listed companies on the
sharemarket, namely Ryman
Healthcare, Summerset Group,
Metlifecare, and Arvida Group.
A fifth company, Oceania, is
in the process of listing. Is the
sector an attractive sector to
invest in?
The current population
aged 75 plus totals just over
300,000. Of this, an estimated
13 percent reside in retirement
villages (up from 10 percent
in 2008), and a further 10.5
percent occupy aged care beds.
Over the next 10 years, the population
aged over 75 is estimated
to grow to 462,000. Based
on the existing stock of units
and care beds, over 2,100 units
and 1,200 beds will be required
to be built every year for the
next 10 years to meet demand
(figures supplied by District
Health Board forecasts.) The
four companies listed above
are projected to deliver 1,350
units and 480 beds per year,
based on their current plans,
leaving a significant shortfall.
The shortfall is not going
to be met by smaller private
operators. In fact, many of the
private operators are experiencing
an ageing of their facilities,
particularly in the aged
care bed sector. Due to lack of
scale, under capitalisation, and
a trend by district health boards
to try and keep the aged in
their own homes longer, many
of these smaller older facilities
will not be renewed or
upgraded.
Retirement village operators
receive income from provision
of ongoing services to
residents in the aged care bed
sector, and property management
for the villages of independent
living units. They also
receive development margins
on sale of newly constructed
units, and resale margins on
units that change hands. Most
WHAT TO DO WITH YOUR MONEY
> BY BRETT BELL-BOOTH
Investment Advisor with Forsyth Barr Limited in Tauranga.
Phone: (07) 577 5725 or email brett.bell-booth@forsythbarr.co.nz
of the units are not sold as freehold,
but as licences to occupy.
Residents buying into a village
effectively give up any capital
gain from property ownership,
in exchange for the benefits of
village life and a lower capital
cost than a similar freehold
purchase, in the current property
market.
Over the last few years the
listed operators have grown
their businesses on the back of
increased demand, and delivered
good returns for investors.
The three largest operators in
the market, Ryman, Summerset
and Metlifecare, have seen their
share prices grow between 149
percent to 234 percent over
the last five years, plus deliver
some dividend income on top.
A buoyant property market has
encouraged potential residents
to sell up their family home,
buy a unit in a village, and
bank the difference, with the
added benefits outlined earlier.
However, the rampant property
market is a double edged sword
because it has also increased
development costs, both of
land for new village sites, and
construction costs due to shortages
of skilled trades and materials.
There lies the risk – if
units become too expensive,
demand for units may reduce,
and profitability of the operators
will be affected.
So far these risks, although
increasing, have not resulted in
a lessening of demand. Those
operators who provide a pathway
from independent units to
aged care beds are in a better
position to weather a property
market downturn, whenever
that may happen. The listed
companies in the aged care sector
are not seen to be slowing
down, and demand continues
to be strong for quality offerings.
Whether an investment in
this sector should form part of
an investment portfolio will be
a matter for individual investors
to consider, based on their
own set of circumstances.
This column is general in
nature and is not personalised
investment advice. Disclosure
Statements for Forsyth Barr
Authorised Financial Advisers
are available on request and
free of charge.
The art of the interview
HUMAN RESOURCES
What companies often
overlook is that interviewing
is as much
a chance for the company to
sell the merits of joining their
team as it is about finding
the best person for the role.
An interview is a one off
company’s first chance to
demonstrate the culture that
the new employee should
expect to see in the workplace
which will help the candidate
to decide whether or not the
role or company is for them.
An interview that misses this
chance can mean the best
candidates slip through your
fingers.
A poor interview, with
unprepared interviewers,
badly worded questions or
questions that are irrelevant
to the role are mistakes that
are commonly seen and lead
to frustrations for both parties.
Here is some advice drawn
from the thousands of interviews
Talent ID has participated
in:
Make sure your questions
have meaning
Creating a two-way
exchange that draws out real
experience from the candidate
will help you to evaluate the
value the candidate can add.
An interview is not a chance
to trip people up or find fault
but the opportunity to receive
information that will help you
make the best decision for
your company.
Understand what is
important and what is
superficial
An interview calls for
in-depth questions which
allow the candidate to clearly
demonstrate the skills and
experience they have that will
add value to the role. While
the interview is also a chance
to see how the candidate
prepares and presents themselves,
these more superficial
aspects should play a smaller
part in the final decision making
process.
Give candidates a chance
to succeed
It is beneficial for both
parties if candidates are given
a chance to prepare by telling
them beforehand what the
interview format will be and
who will be at the interview
including their roles within
the company. There is nothing
more disappointing than
a candidate who you know
could excel at the role, but
is so nervous that they don’t
succeed at the interview. The
role of the interviewer is to
also put the candidate at ease.
A skilled interviewer can
coach the interviewee through
nerves and mind-blocks enabling
them to portray their
skills in the best way possible.
Let the interview evolve
It’s okay to go off script.
You’ll have your set questions
and format to follow, but as
the interview evolves and discussion
ensues there will be
other questions that pop up.
These ad-hoc questions can
be the best as you’ll often get
more from these answers than
your original questions. By
being inquisitive you’ll learn
something extra about the
candidate and get past their
pre-prepared answers. You
really want to get to the point
where the candidate is relaxed
enough that their personality
is starting to shine through.
You must be prepared to
Interviewing is just one
part of the recruitment process,
but it is often overlooked.
It is such an important
part of the process and
the first real opportunity for
both parties to verbally sell
their attributes. So often the
HR department does its job
by screening applicants and
pass on to line managers to
interview. They may have
received little training on how
to conduct an interview, or
the interview process may be
left to the boss where in a
small business environment,
it could be a completely foreign
process to them – this is
where we often see poor and
costly recruitment decisions
> BY KELLIE HAMLETT
Director, Recruitment & HR Specialist, Talent ID Recruitment Ltd
made.
Interviewing really is an
art – a combination of preparation
and intuition, conducted
in the right manner
provides rewarding outcomes
for both parties. Talent ID
is trained and experienced in
If you are considering your current
investment arrangements, perhaps
it’s time to get a complimentary review
Forsyth Barr is a New Zealand owned firm with 21 offices nationwide
including three offices in the Bay of Plenty and Waikato regions.
Supported by Forsyth Barr’s research and investment expertise, our Authorised
Financial Advisers can work with you to deliver a personalised approach taking
into account your investment objectives, preferences and your tolerance for risk.
To make an obligation free appointment to discuss your investment
arrangements, contact your local Forsyth Barr office by calling 0800 367 227.
We look forward to discussing how our investment advice can work for you.
Disclosure Statements are available on request and free of charge.
Fees and charges will apply if you elect to have a continuing relationship with Forsyth Barr.
conducting interviews and
can support you by providing
training, sitting in on the
interview or conducting it for
you. Please feel free to talk to
us about this by calling 0800
850080 or emailing kellie@
talentid.co.nz
TAU5162-01 – © Forsyth Barr Limited August 2016
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