Stockland chief Tarun Gupta says acquisitions are on its agenda

Stockland CEO Tarun Gupta said the business had capital for inorganic growth in logistics and residential, particularly land lease communities. Picture: Jane Dempster

Stockland, the country’s largest residential developer, has acquisitions on the agenda in the land lease community space.

But that’s not to say the $11bn listed company is about to buy Serenitas - it is understood that it has walked away from an opportunity for the time being.

This is despite exclusive talks between Pacific Equity Partners and Serenitas failing to result in a deal.

Serenitas is owned by the Singapore sovereign wealth fund GIC and has been on the market through investment bank Goldman Sachs.

Stockland was understood to have put forward an offer for the business last year, but the understanding around the market is that it was below the vendor’s price expectations.

The company that once saw merit in a diversification strategy is increasingly narrowing its focus to “beds and sheds” as evidenced by the comments from chief executive Tarun Gupta at the Macquarie Australia Conference in Sydney.

It’s a departure from Stockland’s “three R” strategy in the past where it concentrated on residential, retirement and retail under former leadership.

Speaking to a packed full room of conference participants, Mr Gupta said the business had capital for inorganic growth in logistics and residential, particularly land lease communities.

He would not elaborate on inorganic opportunities specifically within its sights.

But on the sideline, he said the focus for growth in logistics was more organic, adding that the company would not be vying for the $3bn Logos logistics portfolio on the market (through Jarden and Cushman and Wakefield) which The Australian revealed was for sale in March.

During his presentation, he said the group was overweight town centres, currently 39 per cent of the portfolio, and the target was for this to be below 30 per cent.

“We want to continue our leadership in housing,” he said, adding that Stockland would also sell apartments, but this would not be large amount of its business.

Amid the rising interest rate environment and economic slowdown, there were smaller developers coming to market for sale as going concerns, which was unusual, Mr Gupta said.

The understanding is that while the top four banks had been patient when it came to struggling developers until now, the non-bank lenders were taking a tougher approach because their funding costs were higher.

As a result, a number of non-listed, small developers were looking for a financial lifeline through a new acquirer.

While some market observers have questioned whether Stockland would purchase land lease rival Ingenia, sources close to the company said that this was not on Stockland’s agenda.