Lend Lease joins with BBC to create long term market leader

The inherent strength of the Babcock & Brown Communities (BBC) business has been acknowledged this week by Lend Lease committing $236 million in cash into BBC via a number of complex transactions, which will deliver Lend Lease a 41 percent interest in BBC and its management.

Lend Lease has 15 villages under the Retirement By Design brand, while BBC has 56 villages and 29 aged care facilities. This will catapult Lend Lease into the top two position in the village sector, with FKP / Aveo.

Lend Lease is selling into BBC seven of its villages – and an aged care facility – plus acquiring BBC securities and redeemable convertible notes; the total effect will be a net cash payment of $103 million over five years.

BBC CEO John Martin told The Village Manager today that the deal recognises the core BBC business is a good one, and the structure of the two coming together ‘de-risks and de-leverages’ the platform for the medium to long term so that the business can grow. He furthered: “They have put real equity in and paid a generous price.” Lend Lease is paying an average of $0.58 per security compared to an average of $0.41 this week, a premium of 41 percent. He went on to say that Lend Lease brings strong development skills, while BBC has strong operational and sales skills. “Last year we delivered 250 first time sales and 425 resales, which is significant,” he said. Lend Lease can in turn maximise the development of the spare land BBC has across its villages.

Apart from announcing the group will eventually change its name to move away from the Babcock & Brown legacy, Mr. Martin says no discussions had been held on staffing – including himself – and where head office will be located. The deal must also pass the regulators and investors by December 12; they have to be convinced that their shrinking investment will rebound in the medium term.