Boom time: consolidation in the land lease sector reaches its peak as operators cash in on demand

Published on

Operators and advisers say now is the prime time to sell as the larger players look to consolidate their position and meet growing demand for the model.

The sector has seen a swathe of mergers and acquisitions in the past 12 months as operators look to cash in and exit or build their footprints including Stockland’s $620 million acquisition of Halcyon Group, Ingenia’s $270 million acquisition of Seachange Lifestyle Resorts and the imminent merger of Queensland-based land lease operators GemLife and Living Gems.

Land lease operators say that the level of activity reflects the maturing of the sector into a genuine asset class and a trusted consumer product.

“Institutional investment has certainly found its way to this sector and it has gone from being a niche sector to a bonafide investment asset class,” said Serenitas Director of Business Development, John Wood (pictured above), who founded National Lifestyle Villages in 1999 before selling its eight communities and two in development to GIC and Tasman Capital-backed Serenitas in 2018.

Serenitas now has 22 communities across Australia including under NLV and the Thyme Lifestyle Resort brands.

“Many of the major players are wanting to build brand and deliver a consistent model that is scalable. Every time they build a new community, they are continuing to add value to their portfolio, and that comes from having consistent management styles, consistent processes, even consistent products so that people trust you and know what it is they can expect.”

GemLife Director and CEO Adrian Puljich (pictured right) says there is no question that the land lease sector is the “industry flavour of the month”.

“In terms of selling an asset, I think there has never been a better time for any operator to be able to sell any type of quality land lease community, whether it be your A class or your caravan parks,” he said.

The good growth in the sector will see some existing owners hold onto their businesses in the near-term, according to Duncan Wilmer (pictured right), Managing Director at Rothschild & Co. Australia, who heads its real estate advisory business in Australia and led the transaction of Halcyon to Stockland.

However, in the longer-term, the MD expects to see more opportunities emerge.

“There are other operators who have capital behind them who may stick to greenfield development as a driver of growth before they consider M&A, but inevitably in the medium-term, there will be opportunities.”

Read the full story in the latest issue of SATURDAY here. SATURDAY is moving to a subscription model from Saturday, 2 April – subscribe here for access.