Suitor courts Lendlease for $3bn Keyton retirement business

Keyton has over-55s living communities that focus on wellness, embracing physical and mental health.

Lendlease is believed to have received at least one inbound approach to buy its retirement living business Keyton, just weeks after a deal is set to be finalised for Keyton’s rival to sell for more than $3bn.

DataRoom understands that, following Scape’s agreement to enter exclusive talks to buy Brookfield’s retirement living business Aveo for more than $3bn, parties that missed out on the opportunity have been courting Lendlease, with at least one ­lucrative proposal received.

The $3.8bn listed group has been trying to sell its retirement living business for some time, but there were not interested parties at the right price.

Yet the Aveo sale process, run by Morgan Stanley and Barren­joey, appears to have revived interest, and Gresham is believed to be launching a sale process for the Lendlease business.

Student accommodation provider Scape is bringing in financial backers to fund its Aveo acquisition, and a deal is due to be finalised in about a fortnight.

Sources say Lendlease now has about four or five parties interested in buying its holding in Keyton and, should the price be right, it could result in a deal involving a sale of the entire retirement living company.

Keyton is estimated to be worth about $3bn.

Underbidders on the Aveo business were AustralianSuper, GIC, Oxford Properties (owned by Canadian pension fund OMERS) and Charter Hall.

Keyton is owned by Aware Super, APG and Lendlease, which has a 25 per cent holding after selling down the business.

It has 75 villages across Australia with 17,000 residents and more than 900 staff and is run by Nathan Cockerill.

Aveo has 4 per cent market share of the Australian retirement living market, ahead of Keyton with 1.9 per cent and Bolton Clarke with 1 per cent, according to IBISWorld.

Pension funds and infrastructure investors searching for stable earnings streams have shown ­interest in retirement assets over recent years.

The other retirement living business that had tested interest in the past two years has been Retire­Australia, but it was taken off the market when suitors would not offer enough.

Lendlease has flagged Keyton as being available for sale for some time as part of its quest to drive down its debt level by offloading non-core assets.

It faces pressure from investors in its funds management business and its share price is down almost 10 per cent this year despite delivering on its promises to sell down assets, including those offshore.

Lendlease has fallen out of favour because of losses, excessive debt and project writedowns.

The Tony Lombardo-run company has moved to cut costs by axing hundreds of jobs and is retreating from offshore markets.

It announced on Monday that it had sold six development projects in the UK into a joint venture with The Crown Estate in a transaction worth at least $300m.

Overseas, Lendlease developments have included major projects such as Stratford Cross in London and Milan Innovation District in Italy.

They are mainly owned by its fund investors.

It has $49.6bn worth of funds that own some of the nation’s best known shopping centres and buildings in funds such as the Australian Prime Property Fund Commercial, Australian Prime Property Fund Industrial and Australian Prime Property Fund Retail.