Aveo Group CEO Tony Randello reveals they had $750M in unsold homes when acquired by Brookfield

Imagine having 1,700 unsold retirement homes on your books when you have a contract buyout clause requiring residents be paid out at six months.

This was the situation when Tony Randello accepted the offer to move from CEO of Lendlease Retirement over to just-acquired Aveo by Canadian investment fund Brookfield. In 2019, Aveo sales were still under the Four Corners TV exposé cloud.

Speaking at the RVA NZ conference in Fiji last week in his capacity as the President of the Retirement Living Council (RLC), he outlined a number of strategies to ignite sales.

They included a new range of contracts, ranging from no DMF to a 50% DMF. 

Tony also detailed how he increased purchase prices on serviced apartments that simply were not selling and then dropping the fixed fees to less than half, which Aveo would then subsidise from the increased sale price.

Aveo has moved from 1,000 units sold a year to 1,200 to 1,500 units, which he says they will now maintain.

At $450,000 a home, the additional 500 units equates to an extra $225 million in cash each year on top of normal sales.

Tony stated the $750 million in unsold stock has been reduced to $200 million. 

It is not surprising that Brookfield was able to convince a group of Australian banks last month to give them $1.25 billion to replace the cash that allowed them to buy Aveo in the first place.