Stockland sells Retirement Living business to EQT for close to $1B book value

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The ASX-listed operator has followed through on its promise to reduce its exposure to the retirement living sector, announcing this morning that it has entered into a binding Sale and Purchase Agreement with global investment firm EQT Infrastructure (EQT) to take full ownership of its Retirement Living business for $987 million – seven years after a sale was first flagged.

The disposal price represents a 1.9% discount to Stockland’s December 2021 book value of $1.006 billion.

Under the terms of the agreement, EQT will acquire Stockland’s portfolio of 58 retirement villages, 10 development projects underway and in planning, and its associated management platform, with over 300 employees to transfer to EQT. EQT was assisted by Ansell Strategic in the transaction.

CEO and Managing Director of Stockland, Tarun Gupta, said: “I am delighted that we have found a strong Retirement Living owner and operator to acquire Stockland’s Retirement Living platform. EQT is a purpose-led organisation with a well-established track record in healthcare, aged care and retirement living. We are confident that EQT will be the right custodian for the residents and employees, and are well placed to support the continued growth of the high-quality Retirement Living platform.”

The sale marks the end of an era for Stockland, one of Australia’s largest retirement village operators.

Those who have been in the sector for some time will recall that the group began investing in retirement living around 20 years ago under former Stockland strategist David Pitman’s strategy of ‘Residential, Retail and Retirement’. The strategy was quietly dropped in 2017.

By 2015, Stockland was looking for a buyer for its Retirement Living business under then-CEO Stephen Bull – none were forthcoming.

Stockland says that the sale delivers on its strategy to “release capital for deployment into higher growth opportunities and refocus the Communities business” announced in November 2021.

The sale proceeds will be geared towards Stockland’s $37 billion development pipeline which now includes its growing land lease portfolio (see the next story).

EQT also took ownership of New Zealand’s third largest village operator Metlifecare in a $1.3 billion takeover after a protracted bid process ended up in the High Court in 2020.

The deal is expected to be finalised in late FY22.