Retirement giant Summerset on watch over $NZ1.8bn debt pile

Summerset Group operates in the area of retirement living and aged care.

The Australian-listed Summerset Group, which operates in the New Zealand retirement market, is on watch by investors for a potential equity raising as it comes under pressure with $NZ1.8bn of net debt.

The company, which is listed on both sides of the Tasman, has a $2.6bn market value.

However, Summerset has denied a potential equity raising could be on the cards.

The business operates in the area of retirement living and aged care, and has more than 35 villages across New Zealand with 8000 residents.

The company said in its latest results that its net debt growth was to significantly reduce from the second half of the year based on current sale rates, and spend to date on key commercial projects that are delivered across the second half of 2025 and the first half of 2026.

For the first six months of the year, its net profit was up 26 per cent to $NZ127.2m.

Its New Zealand rival, Ryman, which is also now listed on the ASX, raised $900m of equity in February though Jarden, Craig’s and Forsyth Barr as it downgraded earnings guidance, with the raise reducing its net debt level to $NZ1.59bn from $NZ2.56bn.

The $2.6bn group came under pressure from its lenders, which have waived its debt covenants for the next three testing periods.

It asked its equity investors for almost $1bn only two years earlier as it then, too, had to reduce its debt load.

Talk surfaced about New Zealand retirement groups needing to raise equity as the retirement living sector remains in strong demand in Australia, with pension funds looking to deploy capital increasingly turning to the sector for opportunities to gain exposure to the ageing population.

Scape and Korea’s NPS recently purchased Brookfield’s Aveo for $3.85bn, while Investco, backed by GIC bought RetireAustralia for $845m and Scape also appears to be in pole position to buy a 25 per cent interest in rival Keyton from Lendlease.