This article is from the Australian Property Journal archive
THE battle for the aged care sector is well underway with Stockland buying a stake in Aevum Limited, now run by Steve Mann who Stockland retired this year after seven years.
Stockland has acquired a strategic 14.4% stake Aevum Limited from Babcock & Brown for $1.50 per share, or $26.9 million.
This makes Stockland one of the three largest shareholders in Aevum, along with Babcock & Brown Communities (14.4%) and AIT Investment, formerly managed by Babcock & Brown, which also owns 14.4%.
The group is looking for alternative asset classes to offset its battered United Kingdom business.
Earlier this month, Stockland revealed that it take a $50 million write-down to its UK development inventory and $60 million impairment to goodwill. In addition, it expects the UK business to breakeven in FY09, down from its original forecast of $20 million.
But analysts do not believe Stockland’s retirement division is strong enough.
“We do not believe it would be enough to counter the $50 million charge to earnings,” Citigroup’s Citi Investment Research said.
Stockland’s managing director Matthew Quinn said the purchase was consistent with the company’s strategy to increase its presence in the retirement living sector.
In July this year, Stockland bought private retirement village operators Rylands from the Buxton Group for $32.4 million. The group currently runs 20 villages containing 3,445 Independent Living Units across Victoria and Queensland and has a development pipeline of 3,630 units with an end of value of $1.5 billion.
Aevum operates around 2,100 ILUs and 200 aged care beds across 22 villages in New South Wales and Western Australia and has pipeline of around 550 ILUs with an end value of $239 million.
“Aevum is a conservatively managed company with a sound balance sheet.
“We look forward to having a constructive dialogue with the board as the company’s largest shareholder,” he added.
The acquisition will be funded via debt and will be EPS neutral in FY09. The $1.50 acquisition price represents a 31% discount to Aevum’s NTA as at June 30 2008.
Aevum shares rose 10.29% or 14 cents to close at $1.50 whilst Stockland shares rose 6% or 27 cents to close higher at $4.77.
Australian Property Journal