The interest-rate anomaly in Summerset's valuations

A retirement village's valuation is intrinsically linked to the value of houses surrounding it because residents usually need to sell their houses to raise the funds to buy into a village.

Jenny Ruth

Wed, 24 Feb 2021

Summerset's valuers reversed the covid-19-related property valuation loss booked in the first half in the retirement village operator's full-year accounts, but the assumptions behind the valuations highlight a major anomaly.The company booked a $221.1 million jump in the value of its total portfolio with completed villages gaining $122.6m after losing $21.5m at the half-year.Although interest rates have fallen dramatically in recent years, the discount rate, or Summerset's estimated cost of capital, has remained the same or changed...

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