This article is from the Australian Property Journal archive
THE consumer watchdog will allow Stockland and Supalai’s $1.3 billion acquisition of 12 master-planned communities across the country from Lendlease, after Stockland agreed to offload one of its existing communities, avoiding saturation of the Illawarra market.
Stockland, its investment partner Thai group Supalai, and Lendlease were told by the Australian Competition and Consumer Commission (ACCC) to reshape their agreement over concerns the deal would remove one of Stockland’s closest and largest competitors in the supply of residential master-planned community housing lots in four regions – namely, the Illawarra, North West Perth, Ipswich, and Moreton Bay.
The ACCC had previously advised the parties would need to take out five communities located in those four regions from the deal, or to convince it otherwise that the deal should go ahead.
It has now given the green light for the deal after Stockland offered to alternatively divest its Forest Reach master-planned community project at Dapto, in Wollongong.
“Without the divestment, the proposed acquisition would bring together the two largest master-planned community projects in the already concentrated Illawarra market,” ACCC commissioner Philip Williams said.
“This could have resulted in increased prices, delayed supply, or reduced quality of housing lots in the Illawarra region, to the detriment of prospective homeowners.”
The ACCC said its investigation found that there were few alternative master-planned community projects to constrain Stockland in the Illawarra and that prospective entrants faced challenges, including delays in the availability of essential infrastructure such as sewer and water services.
The ACCC considers that the divestiture undertaking given by Stockland “addresses the competition issues that would arise” from Stockland owning both Forest Reach and having an interest in Lendlease’s nearby Calderwood Valley project.
The ACCC is also satisfied that the proposed acquisition is unlikely to cause serious competition concerns in other areas, including markets for the supply of residential master-planned community housing in north-west Perth, Ipswich, and Moreton Bay, where the ACCC has decided there are “sufficient alternative developments available to constrain Stockland and/or the joint venture”.
The 12 master-planned communities are located in NSW, Queensland, Victoria and Western Australia and comprise a total of 27,600 housing lots.
Both Lendlease and Stockland released short statements noting the ACCC’s decision.
The green light allows for Lendlease to move ahead with its $4.5 billion restructuring plans, which have seen the property giant selling off its international projects and switch focus to its local operations. The ACCC’s pushing back earlier this year of the decision on whether to allow the deal to proceed prompted Lendlease to slash its core operating profit projections for FY24 by nearly a third.
The Stockland and Supalai deal was announced at the end of last year. At the time, Lendlease said the sale “provides Lendlease an opportunity to crystalise the value we have created in these projects”.
On the buy-side, Stockland said 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”.
