Retirement village investors face haircut after major loan impairments
MELBOURNE: A specialist lender to retirement village developers is facing a severe haircut after a raft of major loan impairments.
A finance company specialising in making loans to retirement home developers, and subject to an investigation by the Financial Markets Authority, has written off nearly a quarter of its loan book.
Accounts to March 2026 for Senior Trust Capital (STC), which had raised about $66 million from investors who bought shares on the advertised promise of reliable 7% returns, were filed to the Companies Office this morning.
STC reported a loss of $9.3m for the year, down from a profit of $4.8m the year prior.
The loss was almost entirely due to a provision for $15.2m in impairments – a write-down equivalent to 23% of its reported loan book.
A note to investors sent by STC director Joseph van Wijk conceded the result “will raise questions for shareholders”.
Van Wijk said the impairments were largely down to the performance of the company’s two largest loans, Ascension Villages LP (subject to a $4.1m impairment) and Forest Glen LP ($7.7m).
The former had struggled to generate cashflow through unit sales, van Wijk said: “The retirement village underpinning the loan (The Grove Orewa) has not sold the retirement apartments as quickly as expected due to the ongoing downturn in the residential housing market.”
The latter loan, was said by van Wijk to have experienced construction delays because of a failure by the developer to raise anticipated capital.
Loans to The Grove, and nearby retirement village Orewa Sands, represent 92% of STC’s loan book.
“Despite the impairment, STC remains solvent,” van Wijk said in his email to investors. He said the large loss would see investors receive around 5c a share through a distribution of PIE tax refunds.
But those seeking repayments would need to both be prepared to wait, and to brace for less capital returned than they had put in.
Investors, who had bought in at $1 a share, were told net asset levels post-impairment were now 83.9c a share – representing a 16% haircut.
Maturity analysis suggests the bulk of capital repayments would take at least six years to work out and possibly take more than a decade with 75% of expected future cashflows flagged as arriving between six and 20 years from balance date.
The FMA began investigating the company in late 2024, and the following year STC elected to suspend new loans and investments and wind down operations in order to return capital to shareholders.
In June 2025 the FMA required STC to issue a communication to shareholders saying the regulator was concerned dividend payments made in the 2023 and 2024 financial years may have been made out of capital.
The dividends “considerably exceeded the interest payments that STC received that were attributable to the borrowers’ operating activities (ie from trading revenue rather than from additional borrowing)”, the communication said.
Earlier this year the company advised investors that distributions would be suspended and a significant loan impairment was expected to be reported.