The Australian is reporting our largest village operator is sounding out partners to buy into its $1.5B retirement village portfolio with the help of investment bank Morgan Stanley.
Local super funds and overseas investors are predicted to be among those on the list as the operator hopes to expand into new markets in Asia and Europe.
Lendlease chief executive Steve McCann announced last October the company would partially recycle capital out of its retirement business.
Lendlease’s chief financial officer Tarun Gupta (pictured) told the paper the group’s exposure of about $1.5bn to retirement made up nearly half Lendlease’s capital tied up in its investments. He wants to get that down to 30-40%. This means he would like a capital partner to invest say $150M to $300M in the retirement village business.
“There is also a continuum of care that’s coming through the market, which again opens up growth opportunities and repositioning opportunities,’’ he said.
Lendlease owns 71 villages across Australia.
At this time last year, Lendlease quietly revealed its average annual EBITDA in its Retirement business had been around $150M per annum over the last three years (FY13-FY15), close to double its biggest rival, Aveo. This can’t be sustained.
As a group, they have a proven track record of making 15% in returns from new ‘entrepreneurial’ development, compared to the usual return of just 7 to 8% in retirement.
