As Australia’s only ASX200-listed company specialising in retirement and aged care, Aveo is the country’s leading provider of senior living communities. Aveo Group has been developing, operating and managing retirement communities for more than 30 years and currently has over 13,000 residents in 91 retirement communities across Australia.
This experience has enabled the company to gain a unique understanding of the changing lifestyle needs of its residents. Before 2013, the company was known as FKP – an integrated property company doing work in areas including retirement, residential product, land subdivision, commercial and industrial development and funds management.
Geoff Grady defines Aveo’s niche
Under the leadership of CEO Geoff Grady, in 2014, Aveo boldly announced it would channel its efforts into the retirement industry and concentrate solely on that sector. “We saw an opportunity to grow the retirement business – the single biggest business inside the group – it wasn’t receiving the focus we thought it deserved,” explains Geoff.
“Alongside this internal opportunity, there was a massive gap in the marketplace for an operator to concentrate exclusively on the retirement industry and to deliver a better offering to senior Australians.
“It was a risk for us. Aveo had about A$800 million invested in non-retirement assets, and we saw the opportunity to recycle that capital and substantially grow the » retirement business. There was no other company in the ASX200 at that time or since, that was devoted exclusively to retirement,” recalls Geoff.
“We announced this strategy in 2014 and immediately set about making the changes. We focused on improving our 75 existing villages and we committed to delivering 500-plus new retirement homes and apartments every year from FY18. We also started to incorporate a more consistent and comprehensive care offering for our customers wherever we saw the opportunity.”
Today, Aveo’s 91 communities include retirement living, residential aged care and private aged care under the Freedom Aged Care brand. As a potent symbol of its new direction Aveo launched its flagship community late last year; the 19-storey integrated retirement community at Newstead in Brisbane incorporating 199 apartments and 99 care beds.
Our Newstead facility is the retirement community of the future.
Overcoming challenges
However, this road to success was not without its bumps. Over the past 12 months, the operating structure and level of fees in the Australian retirement village sector has come under intense scrutiny by the media, prompting Aveo to redefine its offer. It now leads the market with consumer benefits.
“After looking into what consumers did and didn’t like about their stay, in 2015 we launched our new ‘Aveo Way’ contract and in mid 2017 we upgraded the buyer benefits significantly. Residents now receive the benefit of a money-back guarantee at any time in their first six months living in one of our retirement communities, allowing them to effectively try before they buy without having to pay any deferred management fees.
We also promise a guaranteed buyback if the unit isn’t sold within six months from the date of the residents’ departure. At the end of the day, our promises are all about listening to consumers and being consumer-focused. Every change we make is for the benefit of Australian seniors.
“In 2014, we promised our investors that by FY18 we would improve their returns to an investment-grade 7.5%–8%; we promised greater promotional and employment opportunities for our 2,000 staff; and we committed to improving our satisfaction rating with our residents by tailoring services to suit the specific needs of residents,” explains Geoff.
“Year after year, we continue to deliver on these promises. Our success is based on the happiness of our stakeholders – making sure we have fulfilled staff, happy residents and satisfied financial investors. Getting that culture right is important to us because our relationship with our residents in particular is there in perpetuity.
Monitoring client and employee satisfaction
We conduct annual staff and resident satisfaction surveys and work closely with primary care providers and allied health businesses to consistently improve our offering. It’s a matter of balancing the needs of the stakeholder groups and making sure they’re satisfied with their involvement in the company.
“Not many people understand that in Australia the need for retirement villages will grow by about 250% over the next 30 years and we’re simply not building product in this country fast enough. Even our goal of delivering 500 products each year will only keep us at our current market share of 10%.
“There’s a huge amount of investment, measured in the billions of dollars, required to meet the needs of consumers in this sector,” explains Geoff.
“The reality is, baby boomers largely won’t want the kind of product that is available now. They will want apartments finished to a high standard and they’ll be discerning about the level of care and other services they require.
“Built on top of a shopping centre, our state-of-the-art Newstead facility is the retirement community of the future. People can come into that community – typically in their late seventies – live independently, and as their care needs increase, we are able to deliver or assist in delivering every single one of the services they require. And at the time they most need care and support – they are supported by the same community they’ve been in for several years.”