Mirvac inks $600m deal aimed at downsizing Baby Boomers

Property giant Mirvac has made a move into the growing affordable housing market for downsizing Baby Boomers and retirees with a $600 million deal to buy 27 land lease communities owned by a large operator, Serenitas.

The deal is a joint venture with Pacific Equity Partners Secure Assets and Tasman Capital Partners and totals $1.01 billion, in what will be one of the largest real estate merger deals of 2023. Serenitas will remain as the operator.

Mirvac and Pacific Equity Partners will hold 47.5 per cent ownership each, with the remaining minority interest held by Tasman, an existing co-owner.

Campbell Hanan is the chief executive of Mirvac.Credit: Peter Rae

Land lease, where the home is owned but the land is rented, is one of the fastest-moving sectors in the housing market. In the past, the sector was known as Manufactured Home Estates and was focused on long-term caravan parks.

The homes, on average, can cost about 20 per cent less than traditional house-and-land packages. Some of the homes are built in situ while others are made offsite as modular homes.

ASX-listed Mirvac is a diversified property developer, owner and manager of office, retail and industrial properties with a market value of $8.16 billion. It is also the country’s largest developer of medium-density homes in what it calls master-planned communities, and was a pioneer in Australia’s build-to-rent market.

Its latest development is Nine at Willoughby, where it is building 442 apartments across 10 buildings on the 3.2-hectare site of the former Channel Nine television studios on Sydney’s north shore.

Mirvac chief executive Campbell Hanan said he expected to see the current 2 per cent market penetration rate of the land lease concept increase over time.

He said the sector had moved ahead swiftly given the new “topology of the housing market which is pressured from rising costs, undersupply and increasing demand from immigration, renters and Baby Boomers looking to downsize”.

“Our expansion into the living sectors comes against a backdrop of critical housing undersupply, and tailwinds including rising population growth, record-low rental vacancy levels and affordability challenges,” Hanan said.

Land lease is gaining traction from large property developers as a way to offer more affordable dwellings, particularly for the retirement sector. Other players include the ASX-listed Ingenia Communities and Stockland, together with private group Lincoln Partners, fun by former Mirvac chief executive Nick Collishaw, among others.

Serenitas chief Rob Nichols said he was “excited at the opportunity to join with Mirvac and PEP, and we are thrilled to be able to grow and elevate the Serenitas portfolio of brands and lifestyle experiences for our customers”.

“There is certainly a growing awareness of modern land lease communities across Australia and the benefits available to customers, which will no doubt drive future demand,” Nichols said.

Serenitas has one of the largest operational land lease platforms with a national presence across Queensland, NSW, Victoria and Western Australia. Over the 27 communities there are 6200 sites including 4200 operational sites and more than 2000 development sites.

Nichols said its average sale price for a home was $460,000, about a 20 per cent discount to local median house prices.

Rothschild & Co acted as sole adviser to Mirvac and Pacific Equity Partners and is its second transaction in the land lease and lifestyle real estate segment after the Halcyon sale to Stockland in 2021, worth $625 million.

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