Lendlease sells quarter stake in retirement living

Development giant Lendlease is stepping up its balance sheet clean-up, selling a 25% interest in its $1.8bn retirement living business to superannuation fund Aware Super.

While the terms were not disclosed, the disposal amounts to about $460m and will see local superannuation fund back the Lendlease platform, which is one of Australia’s largest owners, operators and developers of retirement villages, with a portfolio of 75 properties housing more than 16,000 residents.

Retirement has been a tough area for listed companies, despite lucrative demographic trends. Rival Stockland has also weighed selling down its business, while Brookfield took over the listed Aveo.
Lendlease’s move comes ahead of its first half results and an update on the unit’s performance, due later today.

Even during the depths of the coronavirus crisis last year Lendlease said the trading performance of the retirement living business was solid, with 874 resales across the established village portfolio, up 3.8% on the prior year.

It was hit by a small decline in average prices and delays in development activity because of COVID-19, which hit the carrying value of the entire portfolio and offset the underlying trading performance.

Aware Super chief investment officer, Damian Graham, said retirement was a growing sector of the property market.

“This investment aligns with our overall property strategy which has an increased focus on the residential – including affordable housing, multi-family and retirement living – and industrial sectors,” he said.

The business will continue to operate under the Lendlease brand and network of villages. Lendlease will keep a 50% interest in the retirement business, with Dutch pension asset manager, APG Asset Management, and Aware Super each holding a 25% interest.

Aware Super’s investment in the retirement unit extends the strong ties between the two companies including a residential partnership that invests in urbanisation projects across Chicago, Boston, New York and Los Angeles.

Aware Super will acquire the 25% interest in the retirement living business at book value.

Lendlease property chief executive Kylie Rampa said the company was a leader in the retirement sector and was committed to maintaining focus on supporting the needs of Australia’s ageing population.

Lendlease has vowed to accelerate the introduction of capital partners to its business and has also simplified its balance sheet with the sale of telco and solar assets in the US.

This article first appeared on www.theaustralian.com.au.