The country's second largest residential builder, Stockland, announced on Wednesday sweeping changes to its organization. It is separating out its Retirement Living to become a stand alone business unit, based on its 3,600 ILUs plus existing land for another 3,700.
On the same day Stockland announced its Residential CEO, Denis Hickey, is leaving the company after nine years (and aged just 44). He also resigned from the FKP board on that day and Stockland say they will not replace him on the FKP board. Stockland have owned 15% of FKP since mid last year and have indicated they want the aveo retirement village business. Now that they have no board representation (but a thorough understanding of FKP/aveo's business position) they can move forward to take out aveo with no conflict of interest.
Aveo has 10,200 ILUs plus land for 2,200 more. The combined size of a successful merger/acquisition would be 13,800 ILUs plus land to nearly 6,000 additional ILUs. The separate business of this size will make it easier to win institutional investor support. Interestingly Stockland had stated that do not wish to be in the aged care business, which many believe is essential going forward.
Lend Lease Primelife, the current largest operator, has 11,200 ILUs plus land for an additional 1,200. It claims to be the largest pure play retirement operator listed on the Australian Stock Exchange. (It is understood LLP is currently selling several villages regarded as non-core). Stockland will most likely Change that.
The new CEO of Retirement Living will be David Pitman. He has run Stockland's corporate strategy for the past two years (and will continue to do so). Previously he was with Boston consulting to 12 years.
Stockland's operating net profit fell 61% to $128 million for the six months July to December.
