Property developer Stockland continued to go fishing amid the volatile market conditions, grabbing its second stake in three days in a listed retirement operator.
The company yesterday said it had bought a 5% stake in retirement home operator FKP Property Group through a share placement.
The Sydney-based Stockland said in a statement to the ASX that it plans to increase its ownership up to 13% by partially underwriting a share sale,
Shares in Stockland gained 19c to $4.90. FKP stapled securities were suspended from trading before the market opened on Wednesday.
The securities closed at $1.50 on Tuesday and yesterday they crashed after being relisted, closing down 16.3% at $1.255 each as the chances of a takeover at a higher price evaporated.
Stockland paid $2 per security for its initial 5% stake in FKP, a 50c, or 33%, premium on Tuesday’s closing price.
Stockland will take its full entitlement in FKP’s rights issue at a price of $1.50, which will take its total stake to a minimum of 10% and up to 13%, costing a total of about $80 million. So Stockland is down on its entry price.
FKP will also commence a review of its retirement assets which may lead to their separation.
Lend lease had approached FKP a couple of months ago about a merger with the price of FKP shares around $5.
Stockland has been given a two-month exclusive dealing period while the review occurs and has first right of refusal.
Taking a stake in Brisbane-based FKP was part of Stockland’s strategy of increasing its retirement living business, chief executive Matthew Quinn said.
"As one of the largest participants in the Australian retirement living industry, FKP has built a quality portfolio of assets and has a strong development pipeline," Mr Quinn said.
Stockland said it had funded the acquisition with existing debt facilities, and the gearing ratio had risen by 0.4 percentage points.
The addition of the FKP stake comes after Stockland bought this week a 14.4% stake in Aevum, the largest for-profit retirement living company in NSW.
Stockland already operates 20 retirement villages with 3,445 units in Victoria and Queensland.
Stockland said on Sunday that it would use the $300 million it raised in an equity placement last week to pay debts and expand its retirement business.
In a statement, Stockland said it had "acquired a strategic 14.4% stake in listed retirement living operator Aevum Limited from Babcock & Brown for $1.50 per share, or $26.9 million.
"Stockland Managing Director Matthew Quinn said the acquisition of the Aevum stake was consistent with the company’s strategy to increase its presence in the retirement living sector.
"Aevum is a conservatively managed company with a sound balance sheet," Mr Quinn said.
"We look forward to having a constructive dialogue with the Board as the company’s largest shareholder."
"The acquisition will be funded via debt and will be EPS neutral in FY09. The $1.50 acquisition price represents a 31% discount to Aevum’s NTA as at 30 June 2008."
