Arvida to acquire three villages for $106 million

Transaction highlights: o $106m acquisition of three quality villages, Mary Doyle Lifecare (Havelock North), Strathallan Lifecare (Timaru) and 50% of Village at the Park Lifecare (Wellington) o Complementary to Arvida's existing portfolio with high needs-based component and meaningful brownfield development programme o Immediately accretive to underlying earnings with 8% lift in pro forma FY18 EPS o Purchase price at a 5% discount to CBRE 2017 valuation o Underwritten rights issue to raise $77m Arvida Group Limited (NZX:ARV) today announced it had entered into agreements to purchase Mary Doyle Lifecare, Strathallan Lifecare and 50% of Village at the Park Lifecare for approximately $106m(1). The acquisitions will increase the number of Arvida villages to 29 comprising a mix of 1,761 care beds and 1,752 retirement units. Based on Arvida's estimates of earnings, the acquisitions will add $9m of underlying profit(2) on a pro forma FY18 basis(3) and be 8% accretive to underlying earnings per share. Further earnings are expected beyond FY18 from future developments at Village at the Park and Mary Doyle. "Meaningful brownfield development at Village at the Park and Mary Doyle includes 110 consented new units in the pipeline" said Bill McDonald, CEO of Arvida. "The new units will be progressively developed over the next four years and include developments nearing completion". The villages are being acquired from Hurst Lifecare and associated parties which previously sold Rhodes on Cashmere to Arvida as part of the IPO. The vendors have elected to receive a significant portion of the purchase price in Arvida shares at market price. Interests related to Hurst Lifecare remain holders of shares issued at the IPO. Arvida Chairman Peter Wilson said "We are delighted to add another three quality villages to our portfolio. Hurst Lifecare's desire to receive Arvida shares is a strong endorsement of our strategy from a long-standing industry participant." The acquisitions and transaction costs are to be funded through a combination of new equity and debt: o $77m of new equity to be raised by way a 1-for-5 pro-rata renounceable rights issue ("Offer") at an issue price of $1.15 per share. The Offer has been fully underwritten by Forsyth Barr Group Limited; o $16m of shares issued to vendors escrowed for twelve months; and o $16m of bank debt comprising $10m of debt acquired in conjunction with Village at the Park and $6m from existing facilities leaving headroom for further acquisitions and brownfield development activity. Completion of the acquisitions is anticipated mid-October on receipt of customary third-party approvals. The rights issue Offer Document is expected to be available on the NZX website under the ticker code "ARV" on 19 September 2017 and will be sent to shareholders by 21 September 2017. Applications will be accepted online at www.arvidashareoffer.co.nz from 21 September or through completion of an acceptance form. The Offer will close at 7pm, 9 October 2017. - ENDS - Footnotes: (1) Enterprise value of $106m includes $10m of bank debt at Village at the Park (50% of Village at the Park's existing bank debt of $20m) and excludes estimated total transaction costs and working capital adjustments. (2) Underlying Profit is a non-GAAP (unaudited) measure and differs from NZ IFRS net profit after tax by replacing the unrealised fair value adjustment in property values with the Board's estimate of realised components of movements in investment property value and to eliminate deferred tax and one-off items. (3) Based on Arvida management expectations for the pro forma 12-month earnings contribution (i.e. assuming a full 12 months of ownership) from the acquired villages in FY18 that were prepared as part of Arvida's due diligence, there being no material change to the run rate performance or growth of those businesses during the period, and excludes costs related to the transaction and equity raising. For more information contact: Bill McDonald, Chief Executive Officer, Arvida Group Limited Telephone: 021-270-3669 or email: bill.mcdonald@arvida.co.nz Jeremy Nicoll, Chief Financial Officer, Arvida Group Limited Telephone: 021-403-665 or email: jeremy.nicoll@arvida.co.nz About Arvida: Arvida Group Limited (Arvida) is a retirement village group with an emphasis on providing a continuum of care from independent living through to high quality aged care services. Arvida has 26 villages across New Zealand comprising: Aria Bay, Aria Gardens and Aria Park, Auckland; Copper Crest and Views, Tauranga; Cascades, Hamilton; Lauriston Park, Cambridge; Glenbrae, Rotorua; Molly Ryan, New Plymouth; Lansdowne Park, Masterton; Olive Tree, Palmerston North; Waikanae Lodge, Waikanae; Oakwoods and The Wood, Nelson; Ashwood, Blenheim; Ilam, The Maples, Mayfair, Park Lane, Rhodes on Cashmere, St Albans, St Allisa and Wendover, Christchurch; and Bainlea House, Bainswood House and Bainswood on Victoria, Rangiora. Arvida's shares trade on the NZX Main Board under the code ARV. See www.arvida.co.nz End CA:00307041 For:ARV Type:OFFER Time:2017-09-12 08:30:45