Arvida Group Limited — Management Reports 2018

Sep 18, 2018

UPDATE FROM THE CEO BILL MCDONALD

Issue 7, September 2018.

LIVING WELL BUILDING WELL BUYING WELL ENGAGING WELL Our Vision Brownfield Acquisition Customer focused is to improve the lives development activity criteria are approach to health and wellbeing of our within existing villages. location, quality of service delivery in the residents by Greenfield assets and current broader community. transforming the development where management, ageing experience. we see value. opportunities for Our commitment development and is to challenge immediately earnings ourselves to make our accretive. residents’ lives better with everything we do.

We are nearing the half year and the business is performing significantly above last year.

With development projects currently in progress across nine sites, Arvida is undertaking the largest volume of development work to date. We are pleased to report projects are proceeding to time and budget. Notable achievements year to date:

• Strong sales and gains on sales recorded, at levels significantly above last year

• Acquired 18ha of land for future greenfield development in Kerikeri

• Village at the Park received the Stand-Out Individual Award and Community Connections Award at industry body NZACA’s 2018 annual conference

• Completed developments at Aria Bay and Park Lane, delivering 53 new premium apartments

• Maintained very high occupancy in our care facilities

• Received strong MOH certification results in latest audits.

Kerikeri and the surrounding area within the next decade.”

Arvida to build new village in Kerikeri

According to Statistics New Zealand, Kerikeri and the surrounding area has an older population relative to other areas in Northland and New Zealand. The aged population in Kerikeri is also projected to continue to grow over the next decade.

We announced in August that 18 hectares of land in Kerikeri had been acquired by Arvida. This represented Arvida’s second acquisition of a greenfield development site.

We confirmed a new $130 million retirement village is planned for the site that would “help provide for the expected 60% increase in people aged over 75 years in

Kerikeri is essential to nearby communities, with residents coming into Kerikeri for shopping, services, school and employment.

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A $130m retirement village is planned for Arvida’s new 18 hectare site in Kerikeri.

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Arvida. The attitude of living well.
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“We looked at the demographic and found there is room for a development of our scale. We believe there is an ongoing need for further aged care facilities in the region.

First stages of new developments completed

Bay in June and into Park Lane in August. ORAs for the new units are selling at an average price of $1 million at Aria Bay and $600,000 at Park Lane.

Arvida announced the first stages of developments at Aria Bay and Park Lane were recently completed delivering 25 and 28 apartments respectively. Residents commenced moving into new apartments at Aria

Construction planning for the next stages of development at both villages is well advanced.

“Kerikeri is becoming more popular for retirees and there’s a few things driving that including the level of house pricing in Auckland and also the fact so many people are holidaying in the north and gaining an understanding of its appealing aspects.”

The site is located close to Kerikeri’s town centre and local amenities. It has sufficient capacity for a village comprising of some 200 villas and serviced apartments, along with 80 care beds and community facilities. The orchard setting lends itself to green space.

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5 Acres Café now open at Living Well Park Lane
Village Units Status
Aria Bay 25 Apts Completed June 2018
115 Care & Apts Consented
Copper Crest 30 Villas Under construction, 6 now complete
79 Care & Apts Consented
Lauriston Park 12 Villas Under construction, due FY20
90 Care & Apts Master planning in progress
Mary Doyle 42 Villas Under construction, 1 now complete
Village at the Park 24 Apts Under construction, due FY20
16 Villas Consented
St Albans 21 Apts Under construction, due FY20
24 Care & Apts Consented
Park Lane 28 Apts Completed August 2018
51 Apts Consented
Rhodes on Cashmere 73 Care & Apts Under construction, 23 Apts due FY19
Richmond site 267 Villas, Care & Apts Consented
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Planning and obtaining consents would take 12-15 months with construction likely to commence in 2020.

An update on construction progress at key developments:

• The apartment block at Village at the Park is largely enclosed and construction continues to progress well.

• Bulk earthworks on the first stage at Richmond are complete and civil works have commenced. Villa construction will commence this month.

• Stage One at Rhodes on Cashmere is largely enclosed and fitout is well underway.

• Construction of the St Albans apartments has commenced with demolition of units on Durham St.

• Construction planning of the next stage of development at Aria Bay has commenced.

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Village at the Park
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Rhodes on Cashmere
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• A total of 111 new units are expected to be delivered in the current financial year. Completion of the planned developments over the next five to six years will deliver 1,299 new units or increase Arvida’s existing portfolio by more than one third.

Sales & Marketing Update

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With the completion of Stage 1 developments at Aria Bay and Park Lane, the key focus for our recent sales and marketing campaigns has been to present these new apartments to the market and build strong interest from prospective residents.

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Browns Bay luxury apartments, contemporary
design and spectacular elevated outlooks.
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The new apartment showhomes at Aria Bay were launched in September

Further lift in sales

At the end of August, Arvida had completed 136 ORA sales, a 70% lift on last year’s performance. This reflected more new stock coming available from completed developments as well as the regular turnover of units from a larger village base.

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If you’re looking for independent living
in a brand new retirement apartment
you’re looking for.in Browns Bay, this could be just what
You’ll enjoy a friendly and welcoming
retirement community right in the
heart of the village and close to the sea.
These wonderful luxury homes offer all
property maintenance.the mod cons without the worries of
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Inventory remains low at less than 2% of existing units.

Gains from ORA sales in the first quarter were up 130% on last year at $5.9 million with a further $4.3 million delivered in July and August. Arvida said this resulted from a higher volume of ORA sales at improved margins. The average

resale

margin for the period to August was 23%, higher than experienced in 2018 with no sign of impacts from any changing property market conditions.

TOTAL NUMBER OF SALES

TOTAL GAINS ON SALES

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120 $10M
100 $8M
80
$6M
60
$4M
40
20 $2M
0 $0M
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
[2017 ] [2018 ] [2019] [2017 ] [2018 ] [2019]
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Key Metrics 1Q19 96[%] (95% 1Q18) 63 (41 1Q18) (2 1Q18) 16

Occupancy of care facilities (95% 1Q18)

1Q19 Resales (41 1Q18)

1Q19 New Sales (2 1Q18)

Since balance date, one more care facility has achieved four-year certification by the Ministry of Health. We now have 13 facilities, out of 26, holding this gold standard certification.

AGM roundup

The annual meeting for Arvida shareholders was held in Auckland this year with around 100 shareholders in attendance at the July event plus media representatives.

The level of discussion and engagement was good and welcomed by the Board and management alike. Bill McDonald said “the meeting provides an opportunity for shareholders to interact with our Board and management on a formal basis and informally after the meeting close.”

The next annual shareholders meeting is planned to be held in Christchurch in July 2019. Arvida shareholders are encouraged to attend the annual meeting.

In addition, annual resident meetings for all Arvida villages have been held over the last three weeks. These meetings are for residents and, although a legal requirement, are seen as a very important part of preserving resident advocacy. Bill McDonald or Jeremy Nicoll attended most of these meetings, along with other senior Arvida management.

ARVIDA GROUP

INVESTOR CENTRE

We look to publish an investor update twice yearly. Your feedback and suggestions are greatly welcomed. See contact details below.

* Expected dates, subject to confirmation.

Total Shareholder Returns Relative to NZ50 Index

SINCE IPO

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170
160 [ARV]
150 [NZ50G]
140
130
120
110
100
90
80
Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18
Source: IRESS as at August 2018.
Total shareholder return
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REPORTED UNDERLYING
EARNINGS (Cents per share)
[1H]
5.0c
[2H]
4.1c
3.8c
3.5c
3.1c
2.9c
FY 2016 FY 2017 FY 2018
TOTAL SHAREHOLDER RETURNS
RELATIVE TO NZ50 INDEX
- LAST 12 MONTHS
130 [ARV]
120 [NZ50G]
110
100
90
80
Jul-17 Oct-17 Jan-18 Apr-18 Jul-18
Total shareholder return
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Investor Tours

As part of the Arvida investor relations programme, Bill McDonald and Jeremy Nicoll presented the 2018 annual result to advisors of Forsyth Barr, FNZC, Craigs Investment Partners and Hobson Wealth in a series of presentations hosted by those sharebroking firms. A series of one-on-one meetings was also held with a range of both New Zealand and Australian institutional investors. The feedback in the meetings was positive with a high level of engagement from parties which included a number of new institutional investors.

In addition, Forsyth Barr hosted a group of institutional investors at Arvida villages in Christchurch in early August and earlier in the year at Tauranga. The response from the group was again positive with all expressing a very favourable view on the quality of Arvida villages.

Go Electronic

Many of our shareholders have elected to receive communications from us electronically. If you’d like to change the way you receive communications from us or receive other communications from us by email, please go to

www.investorcentre.com/NZ

If you are a new to this website, you will need to create a login. Once you have registered and obtained your user ID, you will be able to log on and select ‘My Profile’ , then click ‘Update’ from the ‘Communications Preferences’ tile.

You will need your CSN/ Shareholder number and FIN to use this online service. However, once setup, you will be able to access this service with your own User ID and Password.

Are your details correct?

To change your address, update your payment instructions and to view your registered details including transactions, please visit:

www.investorcentre.com/NZ

You will need to log in to register these changes.

Alternatively, you can contact Computershare at +64 9 488 8777 or

enquiry@computershare.co.nz

Contact Us

You can contact us at any of the addresses and numbers below with enquiries, feedback or suggestions:

Arvida Group Limited Level 1, 39 Market Place PO Box 90217, Victoria Street West AUCKLAND 1142

Phone: +64 9 972 1180 Email: info@arvida.co.nz

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Arvida. The attitude of living well.
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