Lend Lease sells out of its aged care business – $270 million for 30 facilities

As regularly discussed for the last 18 months Lend Lease has been open to the sale of its aged care facilities for a rumoured $200+ million. They found a buyer in the Australian private equity group Archer Capital at $200 million cash plus a promissory note for $70 million. This delivers 2,338 beds with an average occupancy of 96% [$115,500 per bed]. This transaction compares to Bupa acquiring 10 aged care facilities from Graeme Croft’s Innovative Care [1,114 beds] for $225 million on Christmas Eve [$200,000 per bed]. Innovative Care’s portfolio was modern with all being built post 2005. Lend Lease acquired its aged care portfolio in December 2009 when it finalized its outright purchase of Babcock & Brown Communities [the old Primelife portfolio]. Lend Lease paid approximately $300 million for the entire Babcock & Brown Communities, so in effect this transaction pays out that original purchase and leaves them their 72 retirement villages with 12,747 ILU’s [give or take the purchase/sale of one or two villages since 2009] for free.
The 30 Lend Lease aged care facilities will go into a new business called Australian Aged Care Partners, owned by Archer Capital, who specialize in reshaping and then on-selling their acquisitions. For instance they purchased MYOB in 2009 for $500 million and sold it in 2011 $1.2 billion after stripping costs, increasing prices and aggressively marketing to new customers.