Regis Healthcare has purchased two Melbourne-based premium residential aged care homes from Ti Tree Operations for $35.5 million, expanding its footprint by a combined 262 beds.
The homes in Capel Sound and Mornington will continue to operate under the Village Glen trading name.
Key points
- Village Glen Mornington opened in 2018, while Village Glen Capel Sound opened in 2014, and is located next to the largest retirement village in Victoria with over 600 villas and apartments
- Both homes are fully accredited and have a strong reputation in the market with average occupancy of 96% in Q4 of the 2024 financial year
- The acquisition increases Regis’ aged care portfolio to 68 homes and approximately 7,660 beds
Regis said the purchase is consistent with its strategy to broaden its residential aged care footprint through the acquisition of premium homes. There is a strong accreditation history with an average 4.5-star rating for compliance.
“We are excited to add these quality homes to our portfolio and broaden our footprint in Melbourne. We look forward to welcoming the residents, families, employees and communities to Regis and ensuring a seamless transition of services,” Regis CEO Dr Linda Mellors said.
The acquisition is expected to be EPS (earnings per share) accretive in the financial year 2025. Meanwhile, the RAD liability assumed at settlement is expected to be approximately $68 million.
The net consideration represents a high single-digit multiple of pro-forma annualised EBITDA (earnings before interest, taxes, depreciation and amortisation) or approximately $135,000 per bed.
While still subject to regulatory approvals, the purchase is expected to settle on December 2, 2024.
ASX-listed Regis Healthcare used existing cash to fund the purchase, with its shares rising after the Federal Government introduced the new Aged Care Bill to parliament. This may be due to announcements such as the ability for providers to retain 2% of a resident’s RAD for up to five years.
Jarden analysts said this reform measure could help Regis bring in around $27.5 million of additional income within three years, or an anticipated 18% increase in EBITDA in FY28/29.
“After many years of chronic underfunding with a significant portion of the sector operating at a loss, we are now expecting more predictable and sustainable funding to invest in high-quality services and aged care homes that Australians expect,” Dr Mellors added.
“Regis is pleased that the Government and Opposition have cooperated to progress critical aged care reforms. As a result, Regis will now commence three greenfield developments in FY25, which will add 323 high-quality beds to the portfolio.”
These developments will be in Toowong, Queensland and Belrose and Carlingford, New South Wales. A new 112-bed greenfield residential aged care home in Camberwell, Victoria will open to new residents by late 2024.
As for the two Village Glen homes, there will be no change to services, but there will be reduced corporate costs.
“We are delighted that Regis will be the new owner and custodian of the Capel Sound and Mornington facilities. We look forward to an ongoing and productive relationship between the parties into the future via our co-located retirement village,” Village Glen Founder and Managing Director Chas Jacobsen said.
Village Glen’s Mornington Peninsula Retirement Village was voted the People’s Choice National Award for Best Retirement Community in 2024.
