After 20 years of trying, the third biggest retirement village operator, Stockland, sells out of the sector

Tarun Gupta, Stockland CEO (pictured), announced that its entire Retirement Living business, that’s 58 villages and 10 development projects underway, has been sold to Swedish investment firm EQT Infrastructure (EQT) for $987 million.

All 300 Stockland staff will transfer to EQT.

Not enough profit; want care

Stockland has had its village business for sale for seven years.

Mr Gupta has given two reasons for the sale – the village business was only making 3% cash profit, and the continued growth of village customers wanting care to be delivered.

He is quoted in the Financial Review newspaper: “They’re living longer, and average age in our retirement villages today is around 82 years,” he says.

“So, they need much more care. The sector’s moving into more what you would call healthcare with co-location of aged care capabilities.”

Year upon year Stockland has stated it was building the profit rate (Return on Investment) with a goal of 8%. They reached 6% in 2017 but then the famous Four Corners program went to air titled “Bleed Them Dry Until They Die”, referring to the DMF, and sales crashed – for three years – and Stockland sunk back to 3%.

The same occurred at Lendlease where Tarun Gupta was then a senior executive. He led the sale of 50% of Lendlease Retirement to investment funds there as well.

Good news for VMs

The Stockland sale is likely good news for village management and residents because the new owner understands the lower return and is seriously wealthy, with funds available to reinvest in villages to make them attractive to tomorrow’s customers.

And they understand that increased health support needs to be made available in villages, and has the time and patience to invest in providing it.

For village staff this means more upskilling and respect by management. The managers on the ground are the new owners’ biggest asset, protecting their $987 million investment.

A good place to be.