Last Wednesday’s sale of 25% of Lendlease’s retirement village business for around $450M to the Dutch pension fund APG is significant, says its CEO Tony Randello.
“We officially launched the process to secure an investor in March, and with these difficult times and obstacles, to come out with an investor of this first rate quality and above book value is a good news story for the industry,” he told us.
Getting the deal done in a short eight months he also believes is a win.
Reinforcing the point, he notes that Lendlease gets its portfolio revalued by external valuers regularly so the price was real and current.
The media has discussed that Lendlease only secured a 25% investor when they had stated that they were seeking a 50% takeout, and so missed their target. Randello says that is not the case.
To attract significant, quality global investors they had to make the offer big enough to be worth their time to investigate, he says. 50% did that but 25%, balanced with it being APG, is a win.
“A first-class investor – long term, not opportunistic, integrity, trusted. We can now move forward and grow”.
Also different to the media coverage is the fact that APG has invested in the full retirement business, not just the ‘property portfolio’.
“They have bought into everything. Property plus people plus software – it was always our intention”.
“With our experience with Primelife and Babcock & Brown Communities where you see operators with 60% owned and 40% managed portfolios, there are issues over operating expenditures versus capital expenditure. Owning villages is about people, not only property. We wanted to ensure residents did not miss out”.
Randello says they are now in a position to grow from the 200 new development units a year of the past five years to 500 a year – which they should get to in three years’ time.
“55 of our 71 villages don’t have co-located care but over time a lot more will”.
While Lendlease has been talking about expanding its retirement model to ‘Tier One’ cities around the world (Iskandar in Malaysia was announced in April, plus Shanghai), Randello says their immediate focus is here in Australia.