Developer Stockland (ASX: SGP) has today made its first major announcement with new CEO Tarun Gupta at the helm, securing a deal to acquire Queensland-based Halcyon Group and its land lease communities for $620 million.
The agreement includes the purchase of 3,800 sites across 13 land lease communities, made up of six established land lease communities, four communities in development and three projects in planning.
The new acquisition will bring more than 2,500 new customers to Stockland's portfolio, in addition to a team of more than 100 people.
"This acquisition is in line with our stated strategy to grow our land lease communities and will increase the size of our portfolio to 7,800 sites," says Gupta, who succeeded Mark Steinert in June of this year.
"Land lease communities deliver attractive returns as the demand for high quality, affordable housing solutions grows. This demand is driven by Australia's ageing population and baby boomers reaching retirement age," he says.
"We see the land lease communities business as complementary to our masterplanned communities land bank and believe there are synergies we can leverage to grow the business at scale nationally and achieve our ambition of becoming a leading operator in this space."
The founders of Halcyon remain involved in the process, agreeing to provide consulting services for a minimum of 12 months.
Halcyon Group managing director Dr Bevan Geissmann says Stockland's diversified property experience, balance sheet, landbank and cultural fit make it a perfect business to lead Halcyon on its next phase of growth.
"We're really delighted that Stockland recognises the strengths in Halcyon's brand and capability and we welcome its commitment to our people and customers," Geissman says.
Stockland will fund 100 per cent of the acquisition price and associated costs from existing liquidity.
The takeover will be paid in two tranches, with the first tranche to be paid upon the completion of the transaction in mid-August 2021. The remaining balance of $310 million will be deferred until July 2022.
"This acquisition enables us to offer more customers access to this alternative over 50s lifestyle offering, brings forward our land lease growth plans and enhances our ability to leverage our competitive strengths in masterplanned communities to generate quality recurring income," says group executive and CEO Stockland Communities Andrew Whitson.
Stockland anticipates the transaction will be completed on 16 August 2021.
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