Stockland has announced that it has established a new Stockland Residential Rental Partnership (SRRP) with Japanese real estate investor Mitsubishi Estate Asia to drive the growth of its land lease business and expand its third-party capital platform.
The ASX-listed operator had signalled it was looking for third capital partners to expand its land lease business in November last year.
$4B / 5 years
CEO and Managing Director of Stockland, Tarun Gupta, said: “This partnership will enable us to improve our market position by creating opportunities to scale up our Land Lease Communities business with a high-quality capital partner via the delivery of the $4 billion secured development pipeline.”
“The establishment of the Stockland Residential Rental Partnership will generate new, high-quality recurring management and rental income and opportunities to deliver ongoing development margins from our substantial land bank, leveraging our demonstrated leadership in master planned communities.”
The initial portfolio of the SRRP will comprise six land lease communities currently in development, being four communities in QLD acquired as part of the Halcyon acquisition (Greens, B by Halcyon, Rise and Promenade) and two existing Stockland communities (Nirimba, QLD and Berwick, VIC).
The sites are currently valued at $500 million with the six communities expected to yield around 2,000 home sites when complete.
During its first five years, the SRRP will also have a first right to acquire a pipeline of Stockland sites that are currently in planning with Stockland and MEA to also look at the acquisition of additional sites.
Subject to approval by the Foreign Investment Review Board, Stockland will take a 50.1% stake in the partnership, with MEA holding a 49.9% interest.
Stockland will maintain full ownership of 1,200 home sites within established communities that it acquired as part of its Halcyon transaction in August 2021.
$300M cashback to Stockland
The formation of the SRPP and initial six-community deal will net Stockland around $330 million prior to transaction costs. Stockland paid $620 million for Halcyon late last year.
Proceeds are also expected to be increased by the introduction of debt financing within the SRRP structure. While gearing will initially be set at 34%, the targeted gearing range for the partnership is expected to grow to 50-60%, a big number.
Stockland will also earn ongoing fees for investment management, development management, property management and ancillary services.
Settlement of the four Halcyon communities is now expected to be completed by late FY22 with the transfer of Nirimba and Berwick to take place in July 2022.
Sale of retirement villages today
Rounding off a big day, Stockland also today announced it has sold its full retirement village portfolio today for close to $1 billion to Sweden’s EQT (see previous story).