A surging retirement village sector and a low yield interest environment
The combination of a surging retirement village sector and a low yield interest environment are behind the recent launch of a further investment offer from Senior Trust Management Limited – the Senior Trust Retirement Village Income Generator (“Income Generator’) -- aimed at meeting the ever-increasing demand from depositors who want a fair return to support their lifestyles.
The Income Generator -- the 6th in the firm's history (which includes management of a listed fund) -- comes at a time when, despite Covid-19, the retirement sector remains strong with more than 18,000 new retirement village units needed in less than 10 years for an ageing population (according to the JLL Retirement Village Market Forecast).
Executive Director John Jackson said that the Income Generator offers investors security over soundly located, well run retirement villages, giving investors an attractive, steady income return paid quarterly.
"The rationale behind the new offer is to provide investors the ability to take advantage of the opportunities that exist within the Retirement Village and Aged Care sector. While every investment carries risk, we can point to past performance and the stability of the retirement village industry, which is well regulated.”
Jackson said that the Income Generator makes loans to the retirement village sector, so investor funds are secured by way of a mortgage and returns are underpinned by interest earned on the loan portfolio.
"Returns have historically delivered one-and-a-half to two times the return of a bank deposit."
Jackson said that the retirement industry has unquestionably benefited from the go early go hard Covid-19 response and has come through relatively unscathed, with an upswing in inquiries.
“While we could see a softening in sales later this year, it is important to bear in mind that retirement villages are typically built in stages over an extended period. If demand slows, the construction rate will slow to match demand.
"In our experience, however, New Zealanders coming into retirement age have become far more accepting of retirement villages as a way of living. This, coupled to growing interest in well located villages that offer a premium product means we remain optimistic," Jackson said.