US Firm’s $365m Deal Ends AVJennings Bidding War

ASX-listed homebuilder AVJennings has agreed to a $365-million takeover from US real estate investment manager Proprium Capital Partners.

The agreement ends a months-long bidding contest that included Singapore-listed developer Ho Bee Land.

The Melbourne-based company, which has a 90-year history in Australian residential development, will be acquired for 65.5¢ a share through Proprium’s local arm, Avid Property Group.

The price is a 98.5 per cent premium to AVJennings’ share price before initial takeover discussions began in November.

Proprium’s successful bid comes after Ho Bee Land failed to follow through with a binding proposal on its earlier 70¢ a share offer, which would have valued the builder at $391 million.

Meanwhile, Avid cut its original 67¢ offer following a four-month due diligence process.

Simon Cheong, AVJennings’ chairman and majority shareholder through Singapore-based SC Global Developments, which holds a 54 per cent stake, supports the Avid offer.

The deal, which has been under due diligence since November, still requires court approval, shareholder endorsement, an independent expert report, and clearance from Australian and New Zealand foreign investment regulators.

According to Proprium Capital Partners partner and Avid chairman Anthony Kingsley, the announcement “marks a significant milestone in our efforts to enhance our portfolio with highly complementary assets, providing fresh momentum to our growth story”.

“We believe the offer represents attractive value for AVJennings shareholders,” Kingsley said.

The company was founded in 1932 when Albert Victor Jennings mortgaged his own home during the Great Depression to fund his first development.

▲ AVJennings founder Sir Albert Victor Jennings.

Jennings pioneered what became known as the Great Australian Dream based on a belief that people would buy quality homes at reasonable prices if they were made available.

He was knighted in 1969 for his services to Australian housing and, in 2009, was recognised by Good Weekend magazine as one of 25 people who changed the nation.

The acquisition comes at a pivotal moment for the Australian residential sector.

While builders continue to face challenges from high construction costs and tight financing conditions, expectations of the next housing boom are mounting due to significant undersupply compared to demand and anticipated interest rate easing.

Despite posting a modest interim profit of $3.6 million in its most recent results, AVJennings still controls a land bank of nearly 10,000 lots across Australia and New Zealand.

▲ AVJennings chairman Simon Cheong and Avid chairman Anthony Kingsley.

The company has operations in Victoria, NSW, Queensland, South Australia and New Zealand. It is led by chief executive—and former Wallabies player—Philip Kearns.

Avid, which develops house and land packages, manages about 6000 blocks with a revenue pipeline of around $3.9 billion and has recently expanded into the land lease market.

The acquisition significantly bolsters its position in the Australian residential sector.

Proprium, a Connecticut-based, privately held, real-estate-focused principal investing firm, was established in 2010 by former Morgan Stanley property bankers. It manages about $4 billion in global assets across 11 countries.

As of December, these assets included 30,000 residential and PBSA units, 1.2 million square metres of logistics space, 36,000 hotel and hospitality rooms, and 1400 pubs and bars.