After announcing its rebrand as Keyton last week, Lendlease’s former Retirement Living Business has a new identity – and a new agenda: reaching 20,000 independent living units through new developments and acquisitions – and even land lease.

WORDS BY LAUREN BROOMHAM

Australia’s second largest retirement village operator is targeting another 7,000 homes as it looks to capitalise on the challenges facing the residential building sector and growing demand for seniors’ housing – including the potential to expand into land lease communities.

With 75 retirement villages and over 13,000 homes across Australia, Keyton is jointly owned and operated under a trust structure by Aware Super (49.9%), APG Asset Management (25%) and Lendlease (25.1%) (see breakout box).

The new name and brand – coming from its vision of ‘leading with heart’ – reflects the group’s “100%” focus on retirement living, said Chief Executive Officer Nathan Cockerill.

Keyton is now looking to build its development pipeline, which currently includes its Ardency Kennedy Place development in Melbourne and the second stage of its Bernborough Ascot village next to the Doomben Racecourse in Brisbane – as well as potential acquisitions.

The group would like to put around 400 new units on the ground every year.

“We’d like to over the medium to longer term get to about 20,000 units,” Nathan said.

“We’re looking for new land parcels to add to our development pipeline to continue to develop new retirement villages. We’re open to anything comes on the market that meets our criteria and is complementary to our business.”

LAND LEASE AN OPPORTUNITY FOR GROWTH

The group is also looking closely at the land lease sector, which is growing exponentially and delivers a more consistent revenue stream than traditional retirement villages which depend on resident turnover.

“We see the product is now very similar to retirement living,” said Nathan.

“We know a lot of our customers are comparing both retirement living and land lease before deciding which product to buy into. So, we are absolutely looking at land lease and the opportunity to grow this portfolio most likely through development of finding the right land and then building from there.”

Finding the right sites should be helped in part by the challenges currently facing the residential housing market which is seeing some developers investigate opportunities to sell down some of their land holdings.

Keyton has had several approaches in the last six months from residential builders looking to offload assets from their land banks.

The group is also looking at acquiring established portfolios that sit within its ‘sweet spot’ on the East Coast of Australia.

PREMIUM PRODUCT SELLING WELL

Another focus for Keyton moving forward is its premium Ardency brand, which will be maintained as a separate brand and is seeing heightened demand.

Targeting the higher end of the market, the villages have a higher price point and service offering than other Keyton villages with a 24/7 concierge.

The operator now has three villages in NSW under the brand – in the prestigious Sydney suburbs of Greenwich, Elizabeth Bay and Yowie Bay – as well as Kennedy Place, which is being constructed on the site of the old Channel Nine studios in Richmond, 3km east of the Melbourne CBD.

The Sydney villages all have waitlists – while the Victorian site is over 50% sold out without a single building completed.

“Once we can get people through the site, I think we’ll be able to sell the rest of the units quite quickly at Ardency Kennedy Place because people will be able to see the space and everything it provides,” said Nathan. “We’ll have a rooftop bar on the ninth floor overlooking the Melbourne City – it’s phenomenal.”

The question is however: will Lendlease maintain its share in Keyton? 

LENDLEASE UNDER PRESSURE TO SELL 25% STAKE

In September 2020, the property group had flagged that it would sell off $1 billion-plus in assets – including 50% of its retirement living portfolio – as it moved to focus on expanding its development pipeline including into Build to Rent and mixed-use developments.

At the time, the group indicated that it planned to maintain a “long-term holding of 25 per cent”.

Almost three years on, the group has been under pressure from some shareholders to reduce its exposure to non-core sectors such as communities and retirement living.

On the other hand, Lendlease has one of the largest land banks in the country as Australia’s demographics continue to shift in favour of seniors’ housing.

There is huge opportunity for the retirement village sector to deepen its penetration rate among older Australians – will Lendlease stay the course?