‘Mega-trends’ turn APG on to retirement homes

Australia’s ageing population “mega-trend” has fuelled APG Asset Management’s foray into the retirement home sector, according to the Dutch pension fund manager’s global head of real assets, Patrick Kanters.

APG has acquired a 25 percent stake, valued at around A$450 million ($354 million; €300 million), in Australian developer and investment manager Lendlease’s Retirement Living business.

“We believe this is an opportune time to enter the retirement living sector in Australia by acquiring a stake in a business with a portfolio of significant scale and a best-in-class operating team while being well placed for future growth.”

The number of Australians aged 65 or above is expected to more than double to 8.7 million in 2056, from 3.7 million in 2016, according to data from Australian Institute of Health and Welfare.

Retirement Living is the largest operator of retirement villages in Australia, with a portfolio of more than 12,500 units across 71 retirement villages that are home to 16,500 residents.

The transaction covers all components of the Retirement Living business, including ownership of the established retirement village portfolio, the operating platform which manages the portfolio, the business’s development capabilities and associated development pipeline.

Lendlease had originally looked to offload 50 percent of the platform for a figure of around A$1 billion, according to a source close to the transaction. Initial bidders reportedly included Blackstone, China Investment Corporation, Canada Pension Plan Investment Board and GIC.

Yet, it was APG, which is making its first large scale transaction in the senior housing sector, that came out as the preferred bidder, with Kanters saying that it is an “opportune time” to enter the retirement living sector in Australia.

The pair have worked together previously with APG taking an ownership stake in part of Lendlease’s A$7.9 billion Barangaroo South development project.