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Stockland's (ASX: SGP) rapidly-growing residential development portfolio has been turbo-charged today after striking a deal to buy 12 actively trading master-planned communities (MPC) from Lendlease (ASX: LLC) for more than $1 billion, in conjunction with Thai multinational Supalai.
The projects - comprising around 27,600 lots across four states - will be acquired by the Stockland Residential Communities Partnership (SRCP), which is 50.1 per cent owned by Stockland with 49.9 per cent held by Supalai.
If the deal gets the relevant approvals, including from the Foreign Investment Review Board (FIRB) which is expected in early 2024, it will take Stockland's landbank to approximately 95,600 lots, representing a potential increase in settlement volumes of around 2,500 lots annually.
The Thai group has been in a strategic partnership with its Australian counterpart since mid-2020 when it committed $52.5 million for half ownership of master-planned community Katalia in Melbourne's north.
The latest portfolio to be acquired from Lendlease is heavily skewed towards Queensland, constituting 60 per cent of lots, followed by Victoria (21 per cent), NSW (15 per cent) and WA (4 per cent).
Under the agreement, SRCP also has an option to buy additional parcels of land for up to $239 million with settlement in the first quarter of FY25, which if executed would take the total value of the transaction to more than $1.3 billion.
"The acquisition represents a step change in the reshaping of our portfolio, and accelerates the execution of our strategy by increasing our capital allocation towards residential sectors while scaling our capital partnership platform and generating new sources of recurring income," says Stockland managing director and chief executive officer Tarun Gupta.
"SRCP achieves immediate scale with this acquisition, and we are excited to further develop the partnership alongside Supalai."
Supalai Public Company chairman and CEO, Dr Prateep Tangmatitham, notes the group has been actively investing in the Australian residential sector since 2014.
"This investment further demonstrates our confidence in the underlying drivers of the market and provides us with exposure to a high quality, well-located portfolio of communities in partnership with one of Australia’s leading residential developers."
The partnership is not however acquiring the Lendlease Communities platform itself, which will retain four projects with a book value of approximately $200 million that are nearing completion or are expected to achieve greater future value through additional development activities.
Lendlease reports the transaction is expected to realise more than a 20 per cent premium to pre-tax book value for the 12 projects, contributing $130-$160 million to FY24 core operating profit after tax.
"The $1.3 billion sale of 12 master-planned communities provides Lendlease an opportunity to crystalise the value we have created in these projects," says Lombardo, taking into account SRCP's options for further acquisitions.
"We remain focussed on recycling capital to accelerate our investments-led strategy and to maintain balance sheet flexibility to pursue future opportunities."
Lendlease notes further divestments could be in the pipeline for its China Senior Living and Australian Retirement Living divisions.
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