Diversified property development company Stockland (ASX: SGP) has today entered into a sale agreement with EQT Infrastructure (EQT) to divest its Retirement Living business for $987 million.
In parallel, the company released its December half trading results where it more than doubled net profit after tax as well as a new capital partnership with Ivanhoé Cambridge to develop the $2 billion life sciences and technology precinct at M_Park in Sydney.
Under the sale agreement, global investment firm EQT will acquire Stockland’s portfolio of 58 established retirement living villages, 10 development projects which are underway and in planning, and the associated management platform.
As part of the transaction, more than 300 employees will be transferred to EQT with the business.
Stockland will continue to provide administration support for a period after the transaction is completed in areas such as finance and technology to help with the effective transfer of the business and its people.
The disposal price represents a 1.9 per cent discount to the division's December 2021 book value of $1.006 billion.
“I am delighted that we have found a strong Retirement Living owner and operator to acquire Stockland's Retirement Living platform,” Stockland CEO and managing director Tarun Gupta said.
“EQT is a purpose-led organisation with a well-established track record in healthcare, aged care and retirement living. We are confident that EQT will be the right custodian for the residents and employees, and are well placed to support the continued growth of the high quality Retirement Living platform.
“We have an accomplished and dedicated team in our Retirement Living business, who will transfer to EQT at completion of the transaction. They continue to be focused on providing the best possible care and resident experience across the portfolio.”
EQT partner and head of Asia Pacific Ken Wong said the company had been impressed from the outset with the team and portfolio built by Stockland.
“Stockland Retirement Living is a clear leader in the Australian retirement living space and we are excited about working together as we transition the business toward a standalone platform that continues to develop and operate high-quality retirement villages,” Wong said.
“With an ageing Australian population and increased need for specialised care, we are excited to have the opportunity to use our significant global experience in the sector to enhance the range of services provided to current and future residents of Stockland’s villages.”
Completion of the transaction is subject to approval by the Foreign Investment Review Board, and is expected to settle in late-FY22.
Stockland profits more than double, new capital partnership struck for M_Park development
News of Stockland’s latest divestment comes alongside the release of its 1H22 results, with the company’s profits rising 149.1 per cent to $837 million.
The profit includes $543 million of net commercial property revaluation gains, reflecting improved investor demand for high quality, essentials-based retail assets according to Stockland, alongside strong transaction evidence for high-quality logistics assets and a stable asset pricing environment for workplace properties.
Funds from operations of $350 million was down by 9.3 per cent, and a distribution of 12 cents per security was declared.
“We delivered a solid operational and financial result in 1H22, and have tightened our full year FFO per security guidance range,” Gupta said.
“While maintaining our focus on operational excellence across our core business, we have also made significant progress toward implementing the strategy that we outlined in November of last year.”
It comes as Stockland announces a new capital partnership with Canadian real estate company Ivanhoé Cambridge to develop the $2 billion M_Park life sciences and technology precinct in Macquarie Park, Sydney.
Under the agreement, Ivanhoé Cambridge will acquire a 49 per cent interest in the M_Park Trust (TMPT), and will initially invest on a fund-through basis.
Stage one of the M_Park project is currently under construction, with practical completion of the 62.500sqm site expected in FY24. It comprises three commercial buildings and a 25,487sqm data centre.
This initial stage is currently 62 per cent pre-leased to tenants including Johnson & Johnson, WiSE Medical and a multinational data centre operator, according to Stockland.
Under the agreement, Ivanhoé Cambridge will have the opportunity to invest in future stages of TMPT alongside Stockland.
“The formation of the capital partnership at M_Park delivers on our strategy to expand our third party capital platform and accelerate the delivery of our $9.1b billion Commercial Property development pipeline.
“We are pleased to welcome Ivanhoé Cambridge to out platform and look forward to working with them to create one of Australia’s leading life sciences and technology precincts.”
Ivanhoé Cambridge co-head of Asia Pacific George Agethen said TMPT provides the company’s portfolio with “meaningful exposure and diversification to both knowledge-based workplaces and data centres”.
“Backed by high-credit tenants, the investment offers a resilient income profile with promising growth potential,” Agethen said.
“M_Park’s net carbon zero aspirations are closely aligned with Ivanhoé Cambridge’s sustainability goals. We look forward to the new strategic partnership with Stockland and to the success of M_Park.”
Shares in SGP are up 1.99 per cent to $4.10 per share at 10.21am AEDT.
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