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Property group Stockland (ASX: SGP) is stoking ambitions to grow its land-lease portfolio through a partnership with US-based funds manager Invesco Real Estate that will initially develop almost 1,200 homes in the over-50s market and generate about $1.1 billion in gross development revenue.
Stockland, which made a decisive move into the sector in 2021 through the acquisition of the Queensland-based Halcyon Group for $620 million, is currently on track to launch up to 12 new land-lease projects in FY24.
Under the joint-venture agreement with Invesco, to be known as the Stockland Land Lease Partnership (SLLP1), three new communities comprising about 1,190 homes are planned to be developed at Stockland’s master-planned residential communities - The Gables in NSW and Aura on the Sunshine Coast as well as a project at Redland Bay on Brisbane’s bayside.
The partnership will also have the opportunity to acquire the land-lease community at Stockland’s Providence development in Ipswich, QLD.
Stockland will have a majority interest in the open-ended partnership with a 50.1 per cent stake in SLLP1.
The property group’s chief investment officer Justin Louis says Stockland will bring its “demonstrated leadership and proven expertise in asset management and development” to the partnership with Invesco.
“With the execution of SLLP1, we are pleased to welcome another globally recognised institutional partner to our 8,800-home Land Lease Communities (LLC) pipeline,” says Louis.
“Our land-lease business offers high-quality, commercially attractive investment prospects for third-party investor partners, such as Invesco.
“The SLLP1 partnership will enable us to continue to scale our development pipeline and grow our LLC operating platform to enhance long-term sustainable business growth.”
Stockland says its strategy for the over-50s land-lease market is supported by Australia’s ageing population and demand from retirees for resort-style communities where social interaction is enhanced.
“This partnership with Stockland, one of the most established players in the segment, is an ideal platform to expand exposure to this attractive and growing real estate sector,” says Ian Schilling, Invesco Real Estate’s head of Asia Pacific core funds.
“Land-lease communities are a high-conviction investment theme for us given the housing shortage and ageing population in Australia.
“This partnership is a key component in us continuing to grow our diversified portfolio of high-quality assets that are underpinned by robust market fundamentals and strong income and capital growth.”
Stockland reported the settlement of 242 homes in its Land Lease Communities division in the first half of FY24, up from 127 a year earlier as more projects were completed. The increase was accompanied by growth in the average sale price.
The development group is targeting between 400 and 450 settlements from its LLC division in FY24.
The Invesco land-lease partnership builds on Stockland’s partnership model to scale its interests in the sector after the property group teamed up with Mitsubishi Estate Asia in 2022 to focus on the development and long-term ownership of land-lease communities.
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