Brookfield Asset Management hailed the sale of Aveo as the largest direct real estate transaction in Australian history, quoting a price tag of $3.85 billion.
But Scape Australia Co-Founder and Joint CEO Craig Carracher has revealed the true cost was significantly higher.
“I’d be pretty happy if it was that number,” Craig told the Financial Review Property Summit. “It’s closer to four-and-a-half [billion dollars]. And you can thank every layer of government for taxing us to death – in particular the Victorian government, who really are going to have major problems.”
Victoria imposes hefty land tax, stamp duty, a Foreign Purchaser Additional Duty (FPAD) and a windfall gains tax charges on buyers, far higher than in other states in Australia.
The sale marked a remarkable turnaround for Aveo. DCM Group CEO Chris Baynes noted earlier this year that Brookfield had transformed the operator from a $1.27 billion business into a $3.85 billion one in just 55 months. Joe Williams, Senior Vice President – Real Estate Private Equity at Brookfield, described the effort as “no mean feat,” turning “a struggling business with a broken reputation” into the market leader in under five years.
The acquisition was completed by The Living Co, the newly created parent company of Scape – Australia’s largest purpose-built student accommodation provider. Backed by South Korea’s National Pension Service, the group now holds assets worth $17 billion and has set a target of $70 billion.
Craig said Scape plans to more than double its combined portfolio of student accommodation and retirement living units to 100,000 over the next five years. To achieve that, he is eyeing major investment from domestic institutions.
“We would like to get $20 billion from Australian super funds,” he said. “That’s about $12 billion in equity and $8 billion in debt.”
Australian super funds are already active in the retirement living market: Aware Super owns Oak Tree Group, while AustralianSuper is the largest shareholder in Lifestyle Communities.
