A match made in heaven

One of the retirement village industry’s early adopters of ageing in place has just joined forces with a $1 billion fund manager.

By Stephen Easton

Queensland retirement village operator Tall Trees has a well-honed model for delivering care services to residents of its supported living communities and thanks to a new alliance with a large fund manager, its operations are set to expand significantly in a very short timeframe.

The deal with LM Investment Management puts the Tall Trees brand on two northern NSW villages controlled by the fund manager, Ocean View Banora Point and Pinevale Villas, as well as one still under construction in the Brisbane suburb of Redland Bay.

LM, via different investment funds, will also provide Tall Trees with the finance to develop three new “supported living neighbourhoods” in Mandurah (in WA), Cairns and Oxenford (both in QLD).

Tall Trees director Phil Usher said the alliance with LM would allow the company to replicate its successful model on a much larger scale, increasing each village’s efficiency and attracting a large number of residents, from a broad cross-section of the market, in a short space of time.

“I think people are going to flock to us when they realise what we’re offering,” he said.

“We would have more than doubled in size through this venture, and when you get economies of scale there are two ways you can go. You can be big and bombastic and demand this and that, or you can take that scale and ask what the customer wants, invest in that and try to provide what they want, and watch your villages fill up really quickly.”

The Tall Trees director said the company’s model of supported living had undergone a number of adjustments over the past seven years, most recently to make its offerings affordable for a wider range of people, after the effects of the global financial crisis (GFC) led many older people to reconsider their retirement options.

“I think the actual model that we have built is kind of special,” Mr Usher said. “We’ve realised, since the GFC, that what people want is actually quite different than before the GFC. 

“Some of our residents lost up to 60 per cent of their wealth – and it gets a little bit scary [for those people] as to whether they can continue to afford care in a hospitality environment. So we decided we needed to find a way that it could work for most older Australians, who don’t want to go into a nursing home. We have achieved this.”

The company also has a new pricing scheme for weekly ongoing charges, starting at approximately 30 per cent of the pension. This covers the provision of aged care along with a range of hospitality and retirement village services including grounds keeping, property maintenance, breakfasts, discounted lunches and dinners and a concierge service.

Like the vast majority of Australian retirement village operators, Tall Trees offers its units through a deferred management fee model. Upfront ingoing contributions for a unit start from below $300,000, with any capital gains going to the resident, who registers their interest on the title via a 99-year lease.

The supported living neighbourhoods offer low care, high care and palliative care services and are, according to Phil Usher, “cheaper than a nursing home for low care, and about the same if you’re on high care, with the extra bonus that you are living in a hospitality environment rather than a hospital environment”.

Mr Usher’s confidence in the Tall Trees business model is shared by LM’s executive director, Simon Tickner, who described the operator as “the perfect vehicle” for the fund to deliver strong returns to its investors.

“The provision of aged care services is a very sensitive and specialist area, and it is crucial to LM and our investors that we align ourselves with the best in the business,” Mr Tickner said.

“This is the ideal solution to be able to manage the aged care assets we currently have involvement with in the first instance, with the ongoing intention of expanding our presence in this important growth industry through the provision of funding for future developments.”

Tags: ageing-in-place, dmf, retirees, retirement-community, retirement-village, supported-living, tall-trees,

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