Queensland buy back rules behind retirement village group collapse
The collapse of retirement village operator Settlers Lifestyle was due to new mandatory buy-back rules in Queensland, according to its administrator.
The group, which operates two of its five retirement villages in Queensland, was placed in receivership this week, after being unable to fund the buy back of retirement units and defaulting on its security agreements with Investec Australia, which holds mortgages over all its assets.
Administrator Damien Hodgkinson of DEM Asia Group said recent changes to Queensland legislation, which require retirement village operators to buy back units from residents if they remain unsold for 18 months, had triggered an “insolvency event” at Lifestyle’s Rockhampton village.
Mr Hodgkinson said these changes would likely trigger similar outcomes for other operators, with smaller villages in regional areas, where there is less demand for retirement housing, most at risk.
Settlers Lifestyle was owned by a Singapore-domiciled offshore investment fund managed by global fund manager Forum Partners.
Forum Partners acquired the five retirement communities from listed retirement village operator Ingenia in September 2016 in a $55 million deal.
Forum managing director Andrew Faulk also pointed the finger at the Queensland buy-back rules.
Joseph Hansell, Ian Frances and John Park of FTI Consulting were appointed receivers and managers of Settlers Company and the associated Settlers Property Trust, Settlers Operations and Forum Settlers, and the associated Forum Settlers Trust on August 28.
Mr Hodgkinson was appointed voluntary administrator on August 26.
In a statement, FTI Consulting said it had taken control of the Settlers Group and intended to “conduct the operations of the facilities on a business as usual basis, while a sale campaign for the whole group is conducted on a going concern basis”.
“The receivers and managers intend to work with all stakeholders and Settlers Group service providers to ensure that there is no interruption in the delivery of services to the facilities operated by the Settlers Group or the residents.”
A timeline has not been provided as the receivers and managers would have to first work out how and when to put the villages on the market.
It is understood that the voluntary administration came as a surprise to some of Settlers’ creditors as there were no signs of solvency issues.
