New Zealand’s biggest listed retirement company, Ryman Healthcare, has downgraded its profit outlook from $300 million-$330m to $265m-$285m, citing slower sales and falling margins.

It gave the more optimistic guidance at its interim result in November, but said today key drivers of change were lower volumes on new sales and lower margins on those sales, citing phased development of some villages where main blocks were yet to be built.

Ryman had expected to sell 273 occupation rights agreements on its villas, apartments and hospital beds, but now says it will sell only 218 of those in the second half of the financial year.

By the afternoon, Ryman’s share price had fallen 58 cents, or 10.53 per cent, to $4.93.

Serviced apartments in particular are taking longer to sell than expected at villages where Ryman has not built its main buildings.

A Ryman spokeswoman told the Herald those four villages are:

• James Wattie Retirement Village in Havelock North;
• Keith Park Retirement Village at Hobsonville;
• Miriam Corban Retirement Village at Henderson; and
• Bert Newton Retirement Village in Highett, Victoria.

The Ryman statement says the mix of resales across villages and unit types is resulting in lower average margins per unit, but full-year resale volumes are expected to be up 7 per cent on the 2023 financial year.

“This projection of the full-year result is disappointing,” chief executive Richard Umbers said.

“Our current build programme is unusually weighted towards four main buildings which are nearing completion and form a key part of our resident value proposition. Although we have stock available to sell, a combination of market conditions and the expected phasing of main buildings will see sales deferred into FY25,” he said.

Available resale stock and level of payouts at the end of last month were consistent with September 30, he said, referring to the half-year result.

“In this environment, we continue to be very focused on our cost of doing business and on operating efficiencies,” Umbers said.

Ryman is expecting portfolio growth of units and aged care beds in FY24 to be at the lower end of the 650-750 guidance.

Net debt by next month is expected to be at similar levels by September 30.

The full-year result for the year to March 31, 2024, will be released on May 27.

Ryman is selling two sites and has deferred work on another three:

• Selling land at Kohimarama after abandoning a controversial $150m plan strongly opposed by neighbours;
• Selling land in Newton, Wellington, described as an extremely capital-intensive site;
• At Takapuna’s ex-fire station, site work has been deferred and site preparations are being completed;
• Development of Melbourne’s new Ringwood East village has been paused, although basement work had begun;
• Expansion of existing Murray Halberg Village in Lynfield, Auckland, has been paused.

No public advertising exists for the Kohimarama or Newton sites. Ryman is not marketing those blocks externally.

Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.