Aveo is the retirement arm of Queensland property developer FKP. Since Christmas the price of FKP shares have jumped 42% based on rumours that a large Chinese conglomerate has been negotiating for at least 4 months to buy Aveo. This puts a gun to Stockland’s head. Back in 2008 Stockland bought 14% of FKP at $2 per share to gain first right of refusal to buy Aveo if another offer came along. Friday’s price was 65 cents (up from 46 cents pre Christmas). Stockland will need $1billion or more to win all of Aveo. But this is still half the asset value of the Aveo villages.
In Stockland’s last Annual Report they stated they would not make any more acquisitions this year while they settled their Aevum and other village purchases. Making the price even higher for Stockland will be Aveo’s acquiring the sole management rights for villages held by the Retirement Villages Groups (RVG) – part of Macquarie Capital Group - over Christmas. FKP owns about 15% of RVG, whose Unit price has dropped by about 50% since RVG was launched in 2005. Its value peaked above $1 billion but is worth just half that now. The two biggest investors – and losers – are the super funds Retail Employees Superannuation and Hostplus.