New Zealand Bank Inks $87 Million Reverse Mortgage Acquisition

A New Zealand regional lender last week finalized a deal to acquire several reverse mortgage interests in both its home nation and Australia for a purchase price of NZ$87 million.

Heartland New Zealand Limited (NZX: HNZ) announced in February that its subsidiary, Heartland Bank, would be acquiring the reverse mortgage businesses of Seniors Money International Limited, a company based in Auckland.

The deal closing this week included Heartland’s acquisition of Australian Seniors Finance, the largest non-bank reverse mortgage provider in Australia with approximately 20% market share, the company stated in a release.

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Additionally, Heartland also acquired Sentinel, a New Zealand-based reverse mortgage provider that owned approximately 80% market share under the deal. 

Of the NZ$87 million total acquisition price, Heartland paid NZ$48.3 million in cash and NZ$38.7 million through the issue of 43 million Heartland shares at $0.90 per share. 

Referring to reverse mortgages as “Home Equity Release” products, Heartland sees a growing opportunity given Australian demographics, which reports that approximately 83% of Australians age 65 and older own their homes, with 93% of these homes being owned mortgage free, the company stated in its initial announcement of the acquisition.

Additionally, Heartland notes that 70% of the wealth of this age cohort is held in property assets.

The company said its decision to invest in the reverse mortgage business is consistent with Heartland’s strategy to “participate in specialist niches where it is capable of achieving a leading position.”

“Heartland believes that the timing is right for Home Equity Release products and is confident that it will offer strong and sustainable growth potential in the future,” the company stated in its FY 2015 forecast.

Written by Jason Oliva

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