Private equity firm Pacific Equity Partners is believed to be looking at the lifestyle communities business Serenitas.
It is understood that PEP is exploring an acquisition of the business through its Secure Asset Fund and sources believe that it is offering about $906m for the business.
PEP’s secure asset fund targets investments valued at between $50m and $1bn in various industries such transport and logistics, waste, utilities and renewables, data and telecommunications, social and agricultural infrastructure.
Serenitas is owned by the Singapore sovereign wealth fund GIC and has been on the market through investment bank Goldman Sachs.
Private equity has been drawn to the land lease community space given that it caters to the growing ageing population.
Existing investments in PEP’s secure asset fund include Agright, Zenith Energy and Intellihub.
Sydney-based PEP prides itself on providing long term average profit growth between 15 and 20 per cent and annual leveraged returns of between 25 and 30 per cent and has been out in the market of late scanning buying opportunities including $376m education software company Readytech Holdings that it made a play for before walking away.
Manufactured housing estates work where an operator owns the land and rents the site to residents, who buy the relocatable home for the site.
Owned by groups such as Ingenia and Serenitas, they are growing in popularity as they are seen as a way to address housing affordability challenges.
Recently, Serenita’s rival, Ingenia, experienced a major sell off in its shares after it downgraded earnings guidance after flagging delays to construction at the communities linked to industry workforce shortages and a softening residential housing market.
Ingenia outsources its construction work and is now expecting full year earnings growth before interest and tax of up to 10 per cent after signalling 30 per cent back in November.
However, rival land lease community provider Aspen upgraded its earnings guidance when it reported its results last week, citing extreme shortages of accommodation at the affordable end of the spectrum and a residential vacancy rate of about 1 per cent nationally.
It upgraded its earnings guidance by 17 per cent to 11.5c to 12c a share after earlier suggesting it would be between 9.75c and 10.25c, an increase of 33 to 39 per cent on the previous financial year.
It posted an 11.6 per cent fall in its half year net profit to $25.9m.
Parties that are said to have taken a look earlier at Serenitas included Mirvac Group, Macquarie, Brookfield, Hometown, Stockland and Warburg Pincus, but most were thought to have walked away.
GIC owns 95 per cent of Serenitas and founder Rob Nichols owns the remainder, and expectations earlier were that GIC was looking for a price of at least $800m.
The business was formed when GIC and Tasman Capital Partners bought Western Australia-based National Lifestyle Villages in 2018 from Navis Capital and Blackstone.
It owns various land lease communities, including Thyme Lifestyle Resorts, National Lifestyle Villages, which is the market leader in WA, The Vantage at Vasse, The Outlook at Albany, RV Homebase Fraser Coast and a pipeline of communities under development for over-50s land lease living.
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