Brookfield to Sell Aussie Senior Housing for $2.5 Billion

The US-based leading global alternative asset manager Brookfield Asset Management on Thursday signed Australia’s biggest direct real estate deal ever, agreeing to sell senior living operator Aveo to the parent company of student housing specialist Scape Australia for $2.5 billion.

The transaction sees Brookfield selling 65 retirement villages across Queensland, New South Wales, Victoria and Tasmania to The Living Company, edging Blackstone’s $2.48 billion sale of the Milestone Logistics portfolio to ESR and GIC in 2021, as the owner of Australia’s largest student housing business expands into a new segment of the housing market.

Brookfield had taken then ASX-listed Aveo private in 2019 in a deal which valued the company at $850 million, before investing another $326.78 million on improvements, with the fund manager positioning the sale as a successful turnaround of a management-intensive real estate business.

Brookfield real estate CEO Lowell Baron said that Aveo is a prime example of the operations-led turnaround investing that they excel at.

“Working with the Aveo team we leveraged our operating expertise to significantly transform the business, improving the resident experience and creating vibrant communities, all of which have led to record sales and occupancy levels,” he said.

Optimised Portfolio

Brookfield pointed to initiatives such as simplifying customer contracts and working with the country’s Retirement Living Council to advocate for higher standards and consumer protection as part of its turnaround of a company which had been facing financial distress before the acquisition.

Brookfield co-head of Australia real estate Ruban Kaneshamoorthy said that they have identified a challenged platform that owned great real estate and this allowed them to execute an operations-driven turnaround.

For The Living Company, buying Aveo is in line with the group’s expansion beyond its roots as the parent company of Scape, Australia’s largest student housing provider, as chief executive Stephen Gaitanos and his team aim to cover a broader spectrum of rental housing as part of a regional residential strategy.

The deal gives The Living Company, which was known as Scape until last month, 23 retirement villages around Melbourne, 11 in the Greater Sydney area and 29 in Brisbane, along with other locations. The 3.4 million sq. m. portfolio spans more than 10,000 units with another 3,000-plus slated for development, Brookfield said.

Extending an Acquisition String

According to a report in Mingtiandi, Brookfield’s potential sale of Aveo first surfaced in June of last year with Morgan Stanley and Sydney-based investment bank Barrenjoey appointed to advise on the deal.

During March, Singapore’s GIC was said to be discussing a potential bid for Aveo, with Australia’s largest real estate fund manager, Charter Hall also in the running. The Australian Financial Review reported in mid-April that Scape was in exclusive discussions with Brookfield regarding Aveo.

The Aveo deal underlines Scape’s ability to grow via acquisition, with the company having paid $1.31 billion to purchase student housing competitor Urbanest in 2020. In 2019 the company paid $457.50 million to buy the Atira Student Living platform, pushing it to the top of the list of Australia’s largest players in the sector.