Lendlease today announced that Aware Super is acquiring a 25% interest in the Group’s Retirement Living business, made up of 75 villages with 16,000 residents.
Lendlease is Australia’s largest village operator.
The sale is at book value, expected to be around $460M based on the $450M the Dutch pension fund APG also paid for its 25% of Lendlease Retirement in 2017.
This leaves Lendlease with 50% ownership plus the ongoing management income of the group.
As we covered here, Aware took a 70% majority share in Oak Tree Villages in 2017 – which was founded by Mark Bindon, Franco De Pasquale and Marco De Pasquale in 2004 – promising to invest up to $400 million in the village operator’s 15-village development pipeline. They now have 31 villages
Aware Super Chief Investment Officer, Damian Graham says: “We’re excited to be investing in the Lendlease Retirement Living business alongside experienced partners in this growing sector of the property market.
“Following the impacts of bushfires, drought and COVID-19, we have seen a strong uplift in Australians considering the safety, security and affordability of retirement living.”
The transaction may be troubling for Stockland, who have been searching for such an investor in its villages since 2015. But Aware Super’s investment in Lendlease extends an already strong relationship between the two organisations including the Lendlease Americas Residential Partnership that invests in urbanisation projects across Chicago, Boston, New York and Los Angeles.
The Dutch pension fund APG also has a long relationship with Lendlease.
The super fund’s head of income and real assets, Damien Webb (pictured), said housing affordability is a key issue for members of the super fund. He wants to grow its $8 billion real estate portfolio, targeting a rate of return of inflation plus 5%. They will have a focus on “key worker affordable housing” and retirement villages.
With 70% of Oak Tree with 31 villages and 25% of Lendlease with 75 villages, Aware are now amongst the largest investors in the sector. They are also the first major super fund to return to the sector since the debacle of the Retirement Village Group of super funds that experienced a blood bath following the GFC. Created by Macquarie Bank and with a cash chest of $850M, they bought up big with highly inflated valuations, only to sell down mainly to Aveo for heavily discounted prices across 2008 to 2013.
An interesting sidenote is that long-time village and care CEO and past president of ACSA, Glenn Bunney, is a Non-Executive Director of Aware Super.