Shares in retirement accommodation group Aveo fell hard following publication of a joint ABC Four Corners and Fairfax Media investigation.
A short time ago, the shares, were down 7.5% to $2.82.
The Fairfax Media report says retirement villages such as Aveo collect an exit fee when a resident dies or leaves, generally based on a percentage of the purchase price on a sliding basis over the number of years of occupancy.
“The fee can be extremely lucrative for Aveo,” says Fairfax Media.
“In the company’s most recent Freedom Aged Care contracts, the exit fee charged by Aveo after just two years is 40% of the value of the property. Some units are now selling for $600,000, which means that for each unit that changes hands every two years or so, Aveo pockets a cool $240,000.”
The ABC says: “Residents in the nation’s retirement villages are being left vulnerable to exploitation by a hotchpotch of legislation and underfunded consumer affairs bodies.”
Aveo owns and operates 89 retirement villages across Australia with a total of 11,014 units and more than 13,000 residents.
Today the company said it restructured its standard purchaser contract it 2015 following extensive consumer research.
“The Aveo Way contract provides customers with clarity on the costs of living in, and subsequently moving out of, an Aveo retirement community,” the company said.