A report by PGIM, the investment management businesses of US–based Prudential Financial, emphasised the global investment appetite for independent living communities, assisted living communities and nursing homes and says that one reason for this appetite is that this trend is fairly impervious to the ups and downs of the economy:
“The decision to move into independent or assisted living is typically driven by lifestyle and health issues, and, as such, unrelated to the broader business cycle,” the report says.
The prefab sector of this market, Manufactured Housing Estates (MHEs), is attracting attention. MHEs or “residential land-lease communities” are seen as affordable retirement housing where the resident buys the prefab home and leases the land. The financial structure is simple compared to other retirement villages and caravan parks are seen as desirable sites to convert to MHE communities because appropriate zoning is in place.
Hometown Australia, the local arm of $US1.5 billion Hometown America, which owns and operates 60 MHE communities in 10 US states, has bought five sites in Queensland and New South Wales. Director Stuart Strong said in The Australian Financial Review that the prefab player “continues to actively pursue further acquisitions of existing residential land-lease communities and greenfield development sites and would like to grow its portfolio in Australia considerably.”
Hometown Australia has big ambitions to become one of the dominant players in prefab estates here, where the sector is rapidly expanding, the AFR said.
“Hometown continues to actively pursue further acquisitions of existing residential land-lease communities and greenfield development sites and would like to grow its portfolio in Australia considerably.”
Stuart Strong, Director, Hometown Australia.
Hometown Australia looks likely to acquire Gateway Lifestyle, after a battle with Canadian-listed company Brookfield Asset Management. Gateway Lifestyle controls about 50 of the prefab housing parks throughout Australia. In 2016, it seemed that Ingenia Communities, which has more than 5000 residents in a similar prefab land-lease model, was also in Hometown’s sights.
In June last year, modular construction designer and manufacturer, ASX-listed Fleetwood Australia, which has manufacturing facilities in four states and its own steel facility, entered into an agreement with Gateway to supply and install modular homes for an initial two years with an option for Gateway to extend by a further two to four years.
GIC, formerly known as Government of Singapore Investment Corporation, is also showing interest in the MHE sector and was rumoured to be contemplating a bid for Gateway. In May, GIC teamed up with Australia’s Tasman Capital Partners to buy National Lifestyle Villages’s 10 Western Australia communities from Malaysian private equity group Navis Capital and global investor Blackstone.
In 2016, there were 3.7 million (15%) Australians aged 65 and over; by 2056, it is projected there will be 8.7 million older Australians (22% of the population) according to the Australian Institute of Health and Welfare.■