Stockland is delivering on its strategy to grow returns in its Retirement Living business with the exchange of contracts to acquire a portfolio of eight retirement villages in South Australia.
The portfolio provides strong development opportunities, both in terms of greenfield and brownfield projects, and is accretive to earnings.
Managing Director and CEO at Stockland Mark Steinert said, "South Australia is an excellent retirement living market with the highest penetration of over 65s living in retirement villages in the country at around 8.5 per cent. We look forward to welcoming the residents and staff of these eight villages into the Stockland business."
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The portfolio, comprising 980 homes and a development pipeline of at least 130 additional dwellings, will be acquired from Masonic Homes for $75.8 million, subject to satisfaction of conditions precedent. The acquisition forms part of Stockland's capital recycling program to exit non-core villages and reinvest the funds into higher returning assets and development opportunities.
Stockland Group Executive and CEO Retirement Living Stephen Bull said the acquisition is expected to deliver above hurdle returns and will positively contribute to achieving Stockland's Retirement Living ROA target of 7.0 - 7.5 per cent by FY19. The acquired portfolio has an average forecast cash ROA above this range. There is no inclusion of goodwill in the acquisition price.
"Our growth strategy over the last two years has focused on development and actively managing our portfolio to drive returns. This transaction further supports our growth strategy with the addition of high quality villages that are accretive to earnings, well located and offer good potential for future development and growth. The transaction will be partially funded by our previous sale of three villages during FY15."
