Market News – 19 October 2026

Edward Lee writes:

Summerset and Ryman Healthcare

Two of New Zealand’s largest retirement village operators, Summerset and Ryman Healthcare, released their quarterly sales updates last week, with both reporting stronger resale activity despite the continued weakness in the residential property market.

The results suggest that demand for retirement village accommodation remains healthy, although prospective residents are still having difficulty selling their existing homes.

This has been a recurring problem for the sector, particularly as many retirees need to sell their homes before purchasing an occupation right in a retirement village.

The latest residential property auction figures highlight just how difficult conditions remain. 

According to last weeks data, only 34% of properties offered at auction were sold, compared with 43% during the equivalent week last year. 

Over half of those sold fetched less than their rating valuations.

Although auction activity is increasing, buyers remain cautious and sellers are often having to adjust their price expectations. 

For retirement village operators, this creates a difficult situation. There may be plenty of people wanting to move into a village, but until they can sell their family home, many cannot proceed with their purchase.

Summerset reported 415 occupation right sales for the September quarter, comprising 175 new sales and 240 resales. Resales increased 36% compared with the September 2025 quarter, helping total sales for the first nine months of the year increase by 10%.

New sales were weaker than the same quarter last year, reflecting the difficulties prospective residents continue to face in the housing market. However, contracts signed for new units increased 20% compared with both the March and June quarters, suggesting sales activity may be improving.

Back in August, Summerset increased its deferred management fee to 30%. This is the fee deducted from the amount repaid to residents when they leave a village.

Management reported no material deterioration in contracting rates following the change, suggesting prospective residents have been relatively accepting of the higher fee.

This is encouraging for shareholders. Higher deferred management fees should improve profitability over time, although the full benefit will take years to emerge as existing contracts run their course.

Ryman Healthcare also reported improving resale activity, recording 379 sales for the September quarter, comprising 312 resales and 67 new sales.

Resales increased 14% compared to last year, reaching their highest quarterly level in two years. The company also reduced its inventory of completed but unsold new retirement living units by 67 during the quarter, leaving just 347 units of approximately 10,000 unsold.

Ryman has spent the past several years dealing with the financial consequences of its development programme, excessive debt and weaker than expected sales, so it is encouraging to see the number of unsold units continuing to fall.

Unlike Summerset, which has generally maintained a stronger financial position, Ryman has been forced to substantially restructure its balance sheet and reconsider its development strategy.

In saying this, I believe Summerset missed an opportunity approximately 12 months ago when its shares were trading near net tangible asset value (NTA). It could have raised capital at a relatively attractive price, reduced debt and strengthened its balance sheet, but chose not to.

It reminds me of Ryman, which also failed to take advantage of an opportunity to raise capital when its shares were trading around $13.

One of the principal reasons companies list on a sharemarket is to gain access to capital. Taking pride in never needing to approach shareholders for additional funding can create a false sense of security.

I have seen similar mistakes made by listed property trusts, several of which had opportunities to raise capital when their shares were trading at or above NTA.

Those were rare opportunities to raise capital at attractive valuations, reduce debt and position themselves for future growth. Instead, some are now having to recycle capital by selling properties, reducing their portfolios and limiting their growth ambitions.

There is nothing wrong with raising capital when the price is right. In fact, management should be willing to do so when it is in shareholders’ long-term interests.

Returning to Ryman, its overall aged care occupancy reached 94%, while its five aged care centres in Victoria achieving occupancy of 98%, suggesting demand for its Australian operations remains strong.

Our view is that both announcements are encouraging, although Summerset and Ryman remain quite different investment propositions.

Summerset continues to demonstrate that its established villages can generate recurring resale activity, and the increase in deferred management fees should support future profitability.

Meanwhile, Ryman offers potentially greater upside if management can successfully restore profitability, reduce inventory and improve cash generation.

The retirement village sector should benefit from New Zealand’s ageing population over the next decade. The immediate challenge, though, is the ability of prospective residents to sell their homes and complete settlements.

We would expect both companies to benefit when confidence eventually returns to the residential property market, although there is little evidence of that happening yet. 

With the Reserve Bank still expected to increase interest rates, a meaningful recovery in housing activity may remain some way off.

Tāiko Critical Minerals

Tāiko Critical Minerals released two important announcements last week, providing shareholders with greater clarity over both the size of its Barrytown mineral resource and the timetable for its fast-track consent application.

The company confirmed that its fast-track application remains on schedule, with a draft decision due next month and the Panel’s final decision expected in December.

Tāiko has responded to the submissions received, with management confirming that all deadlines have been met. This is encouraging, particularly given the delays experienced by several other mining projects seeking approval through New Zealand’s fast-track process.

Tāiko already has consent to mine part of the Barrytown project and operate a mineral separation plant at Rapahoe. Its fast-track application seeks approval to expand mining onto neighbouring land that it intends to purchase, allowing the project to operate on a much larger scale.

The second announcement confirmed that Tāiko’s Barrytown project contains approximately 35 million tonnes of mineral-rich material, with a world-leading heavy mineral grade of 21%.

The resource includes an estimated 2.2 million tonnes of ilmenite, used mainly in paints and titanium production, 3.1 million tonnes of garnet, used in industrial cutting and abrasives, and 48,000 tonnes of zircon, used in ceramics and advanced manufacturing.

The completion of the resource estimate is another step towards the company’s Definitive Feasibility Study, which should provide investors with a more detailed understanding of the project’s expected capital costs, operating expenses and potential profitability.

With a substantial mineral resource now established, existing consents in place for part of its operations and a fast-track decision expected in December, Tāiko is approaching an important stage of its development.

If the December decision is favourable and the feasibility study confirms the project’s economics, attention will turn towards financing, construction and eventually production.

We continue to regard Tāiko as a higher risk investment, but one with several important milestones over the coming months that could materially influence its share price.

Disclosure: Most of our staff hold shares in Tāiko, and a number also hold shares in both Summerset and Ryman.

Bonds

The outlook for interest rates has changed considerably over the past few months, with economists increasingly expecting the Reserve Bank to increase the Official Cash Rate further.

The OCR currently sits at 2.75%, having increased from 2.25% earlier this year, with the ANZ bank expecting one further increase of 0.25% this year.

The Reserve Bank faces a difficult decision. Annual inflation reached 4.1% in June, above its target range of 1% to 3%, yet parts of the domestic economy remain weak. 

The residential property market is a good example, with sales volumes falling and auction clearance rates remaining low.

There is a risk that further increases in interest rates will place additional pressure on households and businesses at a time when the economic recovery is still fragile.

For bond investors, however, rising interest rate expectations are not necessarily bad news and it is worth remembering that the overnight cash rate and longer-term bond yields do not move together. 

Bond markets look ahead, and if investors believe the Reserve Bank is approaching the end of its tightening cycle, longer-term yields could begin falling before the OCR reaches its peak.

Our preference remains to focus on financially sound issuers, attractive yields and a range of maturity dates, rather than trying to predict precisely where interest rates will peak.

We expect several new bond issues over the coming weeks, including Kiwi Property Group, Contact Energy and perhaps Infratil towards the end of the year. 

New Issues

Contact Energy is expected to issue a new subordinated capital bond on 2 November. We expect the bond to have a term of around 6 years, with a possible interest rate of around 6.00% per annum.

Kiwi Property Group has announced it is considering an offer of 7-year, fixed rate, senior, secured green bonds. We expect it will offer an interest rate of around 6.00% per annum. The offer is expected to open on Monday 19 October. 

Investors who are interested in either of these potential bonds are welcome to contact us with their CSN and an indication of the amount they may wish to invest. We will then contact them once further details are available.

Travel

Our advisors will be in the following cities next month:

17 November – Christchurch - Chris Lee

18 November (am) – Christchurch – Chris Lee

18 November (pm) – Ashburton – Chris Lee

19 November – Timaru – Chris Lee

Investors who would like an appointment to see us are welcome to contact us.

Edward Lee

Chris Lee & Partners Limited