Tony Randello on what Aveo’s mega-deal says about retirement living’s future

Brookfield Asset Management’s sale of Aveo to Scape Australia marks the largest direct real estate transaction in Australian history. 

Speaking at the Property Council's NSW Annual Retirement Living Forum, Aveo CEO and Retirement Living Council President Tony Randello said capital now views retirement living as part of the broader “living sector” – and is increasingly seeking alternatives to the traditional Deferred Management Fee model. 

Aveo’s Now, Later and Bond contracts make up 35% of sales, offering more consistent positive cash flow over time. 

He added that investors are focused on cash yield, noting it can take 10 years before an operator sees any cash flow beyond development profit. 

“Aveo’s average age of villages across the board is 27 years and that starts to give you not only a development profit, but a cash yield on your established portfolio. It’s still modest – 5% to 6% – but 5% to 6% is enough to get capital interested because they’re taking a long-term view around capital growth. You do get a better total return. 

“So, as long as you can tick the box around scale, cash yield, I have a product that they can understand a little bit more than what we’ve had in the past. 

“There’s a lot of capital that is available around, not in Australia but around the world.”