Lendlease orders fresh bids at $3b retirement villages biz Keyton
Buy-side mandates are flying like confetti as Lendlease’s sale of a 25 per cent stake in Keyton, the country’s biggest retirement village operator, switches into overdrive.
Street Talk understands the $365 billion AustralianSuper is working with MA Financial’s bankers to prepare a binding bid for the Keyton stake after being selected to participate in the auction’s final round by sell-side adviser Gresham Partners.
Of note, this would be the third set of bids solicited by Lendlease for Keyton, which at a $3 billion-plus price tag is seen by shareholders as an antidote to the ASX-listed property player’s lacklustre share price performance.
In an ideal world, the process should have anointed an exclusive bidder by now. However, updated data has made it impossible for bidders to take a firm view on value and necessitated a so-called “round 2B” for bids.
The superannuation fund is up against three other parties, including Singapore’s $1.2 trillion sovereign wealth fund GIC, which has mandated Rothschild & Co for advice; Scape Australia, where Stephen Gaitanos and Craig Carracher in June acquired Brookfield’s Aveo for $3.85 billion and have re-hired Deutsche Bank and Macquarie Capital for their Keyton tilt; and Nippon Steel Kowa Real Estate, whose dealmakers are self-advised. Of note, Canada’s CPPIB is understood to be keeping an eye on the deal, after last year joining Blackstone in a $24 billion purchase of AirTrunk.
The Aveo effect
The sale negations have been full of comparisons with Aveo, which was sold for a record-making $3.85 billion to Scape and South Korea’s National Pension Service in the biggest direct real estate deal in Australian history.
The sell-side pitch has positioned Keyton as bigger than Aveo, thanks to its 13,300 units and 5 million square metres of land compared to the latter’s 10,000 units and 3.5 million square metres. Potential bidders were told Keyton’s advantages over Aveo included a book value of $230,000 per established unit compared to Aveo’s $385,000 in what leaves room for property growth. Keyton is also in the midst of updating its contract offering, and has a ready-to-go development pipeline of 1200 units, with further additions being identified to hit a target of adding 400 to 500 units per year.
In tandem with Lendlease’s sale of its 25 per cent, Keyton has been divesting its West Australian business to focus on NSW and Victoria, where it has a strong market position.
Bidders are yet to be advised of a deadline for the round 2B binding bids. Lendlease boss Tony Lombardo would no doubt be seeking clarity before full-year results on August 18.
