Aveo’s owner The Living Company reportedly goes cold on Lendlease’s share of Keyton

With Scape Australia having grown into a national portfolio spanning student accommodation, Build to Rent, affordable housing and retirement living, its bid to buy into another village operator now appears dead.

The Australian reported on Monday (9 February) that The Living Company “is believed to have walked away from a deal” to buy Keyton after carrying out deep due diligence on the business before Christmas.

The Living Company was in negotiations to buy Lendlease's 25.1% stake in Keyton. The masthead had previously reported that majority shareholder Aware Super, which has 49.9% ownership of Keyton, would oppose the deal proposed by the would-be buyer.

The Living Company wanted to manage Keyton and charge fees, thought to be around 0.5%, to run the village operator.

Scape, as The Living Company was known, and South Korea’s National Pension Service acquired retirement village operator Aveo from Brookfield Asset Management in June last year for a record $3.85 billion. There would have been synergies from running both operators as one business.

Lendlease’s share of Keyton for sale for 2.5 years

For more than 30 years, Lendlease had been at the forefront of the Australian retirement living sector, owning and operating 75 villages with more than 13,000 homes.

In 2017, the group sold 25% of Lendlease Retirement to Dutch pension fund APG for $450 million. Four years later, Lendlease sold another 25% to Sydney-based Aware Super for around $420 million, and a further 24.9% for $490 million to Aware Super in April 2022.

The group has had its remaining 25% of Keyton for sale through Gresham since June 2023.

Lincoln Place in The Living Company’s sights?

Speculation has now turned to whether The Living Company will bid for land lease operator Lincoln Place, which will kick off a formal sales process next month, with a sale worth up to $1 billion to an existing operator or investor increasingly now reportedly more likely than a public share market listing.

Lincoln Place, backed by New York-based investment firm Cerberus Capital, focuses on what it described as an underserved mid-market of downsizing Baby Boomers – about 80% of its customers qualify for means-tested Commonwealth Rent Assistance.

Chief Executive Officer Paul Yeo said Lincoln Place’s focus on what he described as the fastest-growing mid-market segment of the over-55s market set it up well for expansion.

“A business-as-usual growth target and a simple organic growth target of achieving 6,000 to 10,000 sites in the next three to five years is a very achievable target for us,” he said.