Retirement living provider Australian Unity has been operating in the industry since 1948. The group executive for this sector, Derek McMillan, says Marinchek’s comments are naïve. “Unfortunately he doesn’t understand retirement incomes and funding capability in the sector to say he would do away with [deferred management fees],” McMillan says. McMillan argues that a normal residential apartment block can charge thousands a year for body corporate fees to go towards day to day maintenance and contingency funding.  However, you can’t charge retirees such fees as “they just don’t have that kind of money”.

“So what the industry does, in general, is charge these deferred fees so instead of taking this money every year the industry takes the money from the resident when they leave. So they defer the cost of these capital works and so forth,” he says. Whether Marinchek is successful in convincing investors that the better product is one with a more “appropriate” underlying ownership structure remains to be seen. But in the end, probably the clincher – as with any investment – will be the performance profile.