Stockland’s new CEO puts faith in land lease sector with $620M Halcyon purchase

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Stockland’s new CEO Tarun Gupta has staked his name on the land lease sector with his first purchase – $620 million plus purchase on Queensland-based Halcyon Group.

Mr Gupta, who was formerly Chief Financial Officer at Lendlease, wants Stockland to be a leading operator “in the fastest growing lifestyle segment – the over 50s market.” The $620 million plus offer smashed offers from rivals Ingenia Communities and Serenitas.

The Halcyon Group transaction, as predicted two weeks ago, includes the acquisition of 3,800 sites across 13 land lease communities, made up of Halcyon Group’s six established land lease communities, four communities in development and three projects in planning. The final release of B by Halcyon in Buderim on Queensland’s Sunshine Coast is imminent.

Stockland takes Halcyon’s over 2,500 clients, which Halcyon’s Joint Managing Directors Dr Bevan Geissman (pictured right on right) and Paul Melville (pictured right on left) built from their inception in 2004. Dr Geissman and Mr Melville will stay on for the next 12 months.

“This acquisition is in line with our stated strategy to grow our land lease communities and will increase the size of our portfolio to 7,800 sites,” said Mr Gupta. “Land lease communities deliver attractive returns as the demand for high quality, affordable housing solutions grows. This demand is driven by Australia’s ageing population and baby boomers reaching retirement age.”
“The deal is accretive to funds from operations per security and Stockland will debt fund the deal. The acquisition price will be paid in two tranches – the first next month and the balance of $310m in July 2022.”

Mr Gupta said Stockland see the land lease communities business as complementary to the company’s masterplanned communities land bank and believe there are synergies the company can leverage to grow the business at scale nationally.

The company announced it was diversifying its retirement business into land lease communities in 2019, with plans for eight ready to go and 3,000 sites, to be marketed under the Thrive Communities brand.

“As our land lease communities portfolio grows, we will explore opportunities to introduce aligned third party capital into this business to increase growth and build further scale and diversity in the portfolio,” added Mr Gupta.