Lendlease and pension fund backers eye RetireAustralia

RetireAustralia is the fifth-largest Australian retirement village service provider behind Lendlease, Stockland, Aveo and Retirement Villages Group.

Lendlease and its pension fund backers are believed to be lining up to buy RetireAustralia, which is up for sale by its owners Morrison & Co and NZ Super.

The understanding is that the Lendlease retirement business is considering the purchase of the group, but it will be others funding the deal, including Aware Super and perhaps also APG.

Aware Super is one of the largest super funds in Australia with at least $148bn under management serving 1.1 million Australian members.

APG is one of the world’s largest pension fund investors, with $627bn of assets under management.

It purchased a 25 per cent stake in Lendlease’s retirement business in 2017, paying $425m, while Aware Super purchased a 25 per cent interest last year for $460m.

In March, Aware Super purchased an additional 24.9 per cent interest in the Lendlease retirement business for $490m.

The deal takes Lendlease to be a 25.1 per cent owner, with Aware Super owning 49.9 per cent and APG the remainder.

Bids for RetireAustralia are due towards the end of this month.

Working on the sale process are E&P Corporate Advisory and Jarden Australia

On the table is believed to be a sale of either part or all of the business.

At the start of the year, the price expectations for RetireAustralia were around the $1bn mark and private equity firms were considered logical acquirers, with Blackstone, Brookfield, KKR and EQT the four most obvious.

But now sources question how strongly EQT will compete for the business after buying Stockland’s retirement business for $987m in the past year.

Brookfield owns existing Australian retirement business Aveo, which it purchased in 2019 for $1.9bn.

Interest rates are now on the rise and housing market conditions are softening.

Still, private equity buyers are cashed-up after funds raised hit record levels last year, and they still need to put the money to work.

RetireAustralia is the fifth-largest Australian retirement village service provider behind Lendlease, Stockland, Aveo and Retirement Villages Group.

It owns and operates 28 retirement villages across Australia along with a development pipeline.

The sale comes as Goldman Sachs tests buyer interest for lifestyle communities business Serenitas.

GIC is looking to sell its half share of the business for at least $800m, which some market observers believe is a high price, taking the whole company’s valuation to more than $1.6bn.

The understanding is that the plan for Goldman Sachs is to sound out interested parties to determine whether there is buyer interest at that level.

Serenitas was formed when GIC and Tasman Capital Partners purchased Western Australia-based National Lifestyle Villages in 2018 from Navis Capital and Blackstone and the business is jointly owned by the parties.

The founder and chief executive of Serenitas is Rob Nichols, who was the former chief operating officer of the listed modulated housing provider Gateway Lifestyle.

It owns various land lease communities and its portfolio is skewed towards Western Australia.

Manufactured housing estates work where an operator owns the land and rents the site to residents, who buy the relocatable home for the site.

Recently, retirement village provider GemLife had tested buyer interest from groups such as Aware Super and AustralianSuper, but it is understood that the company, that was believed to be for sale for about $2bn, is now on hold.