Stockland in site sale talks to win ACCC approval for $1.3bn housing deal

Stockland has confirmed it is in talks with the ACCC over plans to sell an Illawarra housing project as it seeks approval for its $1.3bn purchase of Lendlease’s housing estates business.

Stockland development precinct Altrove in Schofields in Sydney's west where townhouses are being built. Picture: Britta Campion

Property developer Stockland has confirmed that it is in talks with the competition watchdog over plans to sell off a housing project in NSW’s Illawarra region, as it seeks to win approval for its $1.3bn purchase of Lendlease’s local housing estates business.

The Weekend Australian reported that Stockland should finally get its hands on Lendlease’s unwanted residential properties, with the Australian Competition & Consumer Commission expected to clear the $1.3bn deal this week with a minor undertaking.

Stockland is already the country’s largest listed residential developer, and buying the bulk of the Lendlease business in a joint venture with Thai company Supalai would bolster its position.

The Australian’s columnist John Durie revealed that Stockland was expected to sell its Forest Reach development near Wollongong, which would ease ACCC concerns that it would own too much development property in the Illawarra when combined with Lendlease’s neighbouring Calderwood Valley community estate.

The potential for one group to control both projects – as would occur if a venture between Stockland and Supalai bought Lendlease’s 12 housing estates – had sparked concerns from the ACCC.

Once complete, Forest Reach will have more than 650 homes in three neighbourhoods, two parks and 4.7ha of open space. The Calderwood Valley estate by Lendlease is intended to be one of the top housing estates in the Illawarra. The 609ha site will have about 5000 homes and a town centre.

Given the Calderwood site is much larger than Forest Reach, and not as close to completion, Stockland would agree to sell the smaller project, and an undertaking to do so would see the deal cleared without more formal market tests, the report said.

The ACCC has effectively narrowed its concerns about Stockland, which is Australia’s largest listed residential land developer, to it gaining too much land in the Illawarra, which would give it more pricing power.

In July, the competition watchdog also raised concerns about parts of Queensland and Western Australia being affected by the planned combination of the development units. It pointed to the potential for reduced competition in northwest Perth, Ipswich and Moreton Bay.

Stockland has previously said it considered “that there are compelling reasons why the proposed acquisition will not lessen competition”.

On Monday, it confirmed in response to the report that it is “progressing discussions with the ACCC over the proposal by Stockland to divest its sell its interest in the residential community development at Forest Reach in the Illawarra region of NSW”.

It said this was to address the concerns raised regarding the proposed acquisition of Lendlease’s 12 housing estates by the Stockland Supalai Residential Communities Partnership. 

The developer said that the ACCC “has not confirmed whether it will accept the proposal” and the official ACCC decision on the proposed acquisition was expected on Thursday.

The transaction remains subject to Foreign Investment Review Board and relevant landowner approvals, and Stockland said it would provide an update on its fiscal 2025 guidance once all approvals had been obtained.

Lendlease said that it “continues to support Stockland in its engagement with the ACCC to resolve the issues raised by the regulator and to work with Stockland to satisfy all conditions precedent to enable the completion of the transaction as soon as ­possible”.

Lendlease has 16 projects in NSW, Queensland, Victoria and Western Australia, 12 of which would be sold under the proposed deal. Selling the housing estates is crucial in order to get its balance sheet in shape ahead of the planned return of about $4.5bn of capital from the sale of the bulk of its international operations.

Stockland shares lifted by 14c to $5.24 and Lendlease shares lost 4c to $6.95 on Monday.

The Weekend Australian reported that Stockland should finally get its hands on Lendlease’s unwanted residential properties, with the Australian Competition & Consumer Commission expected to clear the $1.3bn deal this week with this minor undertaking.

Stockland is already the country’s largest listed residential developer, and buying the bulk of the Lendlease business in a joint venture with Thai company Supalai would bolster its position.

The paper’s columnist John Durie revealed that Stockland was expected to sell its Forest Reach development near Wollongong, which would ease ACCC concerns that it would own too much development property in the Illawarra when combined with Lendlease’s neighbouring Calderwood Valley community estate.

The potential for one group to control both projects – as would occur if a venture between Stockland and Supalai bought Lendlease’s 12 housing estates – had sparked concerns from the ACCC.

Once complete, Forest Reach will have more than 650 homes and will three neighbourhoods, two proposed parks, and a 4.7ha of open space. The Calderwood Valley estate by Lendlease is planned to be one of the top housing estates in the Illawarra. When finished, the 609ha site will have about 5,000 homes and a town centre.

Given the Calderwood site is so much larger than Forest Reach, and not as close to completion, Stockland would agree to sell the small, more developed project, and an undertaking to do so would see the deal cleared without more formal market tests, the report said.

The ACCC has effectively narrowed its concerns about Stockland, which is Australia’s largest listed residential land developer, to it gaining too much land in the Illawarra, which would give it more pricing power.

In July, the competition watchdog had also raised concerns about parts of Queensland and WA being affected by the planned combination of the development units. It pointed to the potential for reduced competition in northwest Perth, Ipswich and Moreton Bay.

Stockland has previously said it considered “that there are compelling reasons why the proposed acquisition will not lessen competition”.

On Monday, it confirmed in response to the report that it is “progressing discussions with the ACCC over the proposal by Stockland to divest its sell its interest in the residential community development at Forest Reach in the Illawarra region of NSW.

It said this was to address the concerns raised regarding the proposed acquisition of Lendlease’s 12 housing estates by the Stockland Supalai Residential Communities Partnership. 

The developer said that the ACCC “has not confirmed whether it will accept the proposal” and there will the official ACCC decision on the proposed acquisition is expected on Thursday.

The transaction remains subject to Foreign Investment Review Board and relevant landowner approvals, and Stockland said it will provide an update on its fiscal 2025 guidance once all approvals have been obtained.

Lendlease said that it “continues to support Stockland in its engagement with the ACCC to resolve the issues raised by the regulator and to work with Stockland to satisfy all conditions precedent to enable the completion of the transaction as soon as possible”.

Lendlease has 16 projects in NSW, Queensland, Victoria, and Western Australia, 12 of which would be sold under the proposed deal. Selling the housing estates is crucial in order to get its balance sheet back in shape ahead of the planned return of about $4.5bn of capital from the sale of the bulk of its international operations over coming years.

Stockland shares lifted by 14c to $5.23 and Lendlease shares lost 1.5c to $6.90 in afternoon trade.

Originally published as Stockland in site sale talks to win ACCC approval for $1.3bn housing deal