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One of Australia's leading land lease community operators Serenitas is set for an ownership reshuffle as Mirvac Group (ASX: MGR) and Pacific Equity Partners Secure Assets (PEP) team up with existing investor Tasman Capital Partners for a $1 billion-plus buyout of the group.
With a portfolio of 27 over 50's communities comprising 6,200 sites in WA, QLD, NSW and VIC, Serenitas was established in 2017 as a joint venture between Tasman and GIC, Singapore’s sovereign wealth fund. Almost a third of its sites are yet to be developed, 98 per cent of which are development approved.
Mirvac announced today that binding agreements had been made with its partners to acquire the company, also with a joint venture structure in which Mirvac and PEP would hold 47.5 per cent each while Tasman keeps the remaining 5 per cent.
Mirvac reports the acquisition will be for a total consideration of $1.01 billion, although this is after transaction costs and completion adjustments. The ASX-listed company plans to pump $600 million into the joint venture, comprising a $300 million initial investment, $240 million funded on settlement and $60 million deferred for 12 months.
The parties expect settlement of the deal in the third quarter of FY24.
After the change in ownership, Serenitas will still be managed by its team of more than 100 staff led by CEO Rob Nichols.
"We are excited at the opportunity to join with Mirvac and PEP, and we are thrilled to be able to grow and elevate the Serenitas portfolio of brands and lifestyle experiences for our customers," says Nichols.
"There is certainly a growing awareness of modern land lease communities across Australia and the benefits available to customers, which will no doubt drive future demand."
Mirvac’s Group CEO and managing director Campbell Hanan says the acquisition expands the company's residential offering, "propelling Mirvac to become one of the largest owners in the attractive land lease community sector".
"We are delighted to be partnering with PEP and Tasman, both having a strong track record in building and institutionalising portfolio companies and are highly experienced in executing business acquisitions," he says.
"This transaction immediately scales our exposure to the land lease communities sector across Australia and reinforces our position as the only residential developer in Australia delivering across the spectrum of housing typologies from rental housing, build to rent, land lease, house and land, medium density and high density living.
"This depth of capability leaves Mirvac well placed to benefit from the structural tailwinds supporting the broader living sector in Australia."
Hanan says the move has been made against a backdrop of critical housing undersupply, and tailwinds including rising population growth, record low rental vacancy levels and affordability challenges.
"Our existing apartment and masterplanned communities product are beneficiaries of these fundamentals, and our build to rent portfolio and expansion into land lease are natural adjacencies to our residential capabilities," he says.
"There are an estimated 7.5 million people over 55 years old in Australia in 2023, with strong forecast growth in this population, projected to almost double over the next 40 years.
"This affordable housing solution, offering a community driven, secure, low maintenance lifestyle for over 55s, is expected to see the current 2 per cent market penetration rate increase over time."
Mirvac will fund the transaction from existing liquidity sources, and recent asset disposals.
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