Stockland to grow retirement living portfolio

Seven of the villages are located within 20 kilometres of the Adelaide CBD and one property, Bay Village, is located in the picturesque town of Victor Harbor, about 80 kilometres south east of the city.

The villages are all located in well established areas close to transport, retail and medical facilities and feature either onsite or nearby aged care facilities.

The eight villages have a combined occupancy rate of 90% and offer average home prices that compare favourably to the median house price in their respective surrounding areas.

The villages will enable improved economies of scale for Stockland’s Retirement Living business in South Australia, which previously comprised 261 homes and apartments across three villages.

Mark Steinert, managing director and chief executive at Stockland, says: “South Australia is an excellent retirement living market with the highest penetration of over 65s living in retirement villages in the country at about 8.5%.”

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.

Stephen Bull, Stockland group executive and chief executive of retirement living, claims the acquisition is expected to deliver above hurdle returns.

“Our growth strategy over the past 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 Stockland's previous sale of three villages during the 2015 Financial Year.

Stockland was founded in 1952 and has grown to become a diversified property group – owning, developing and managing a large portfolio of shopping centres, residential communities, logistic centres, business parks, office assets and retirement living villages. 

Masonic Homes chair, Mark Butcher, says: “The decision to accept Stockland’s offer had been made after due consideration of a number of proposals and in light of Stockland’s proven track record of creating vibrant communities focused on fulfilling the needs of older Australians. Stockland also has the financial capacity to realise plans for the future development and growth of the Somerton and Northgate communities.”

The acquisition takes Stockland’s total Retirement Living business to more than 9,500 homes and apartments across 69 villages in five states, with a value in excess of $1.1 billion.

Ownership and management of the eight South Australian villages is anticipated to pass to Stockland on 30 June 2015.