China giant in the ring for Lendlease villages

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Funds giant China Investment Corporation has emerged as one of the candidates taking a closer look at Lendlease’s retirement villages portfolio.

The sovereign wealth behemoth is controlled by China’s State Council. With its privileged position investing state-owned capital, it so far remains unfettered by the government’s drive to rein in investment abroad by local entities.

CIC joins one or two other offshore heavy hitters in the ring for the $1.7 billion portfolio of villages that Lendlease owns and operates.

Morgan Stanley and Gresham are overseeing the process which could run for another six weeks.

Singapore’s sovereign wealth fund GIC, Blackstone’s real estate arm, Canada Pension Plan Investment Board and China’s Cindat Capital Management were all thought to show early interest in the 12,600-unit portfolio.

Lendlease has $1.7 billion invested across 71 villages and in its annual result on Monday said it was “exploring the potential introduction of capital partners”.

For its full year 2017 result, it posted a 9 per cent lift in after-tax profit to $758.6 million.

CIC’s zeal for offshore deals shows no signs of waning. In June, it struck a blockbuster $24 billion deal to acquire European warehouse firm Logicor from Blackstone.

And the Chinese investor is no stranger to this market. Two years ago it pulled off the biggest deal of the year in the commercial property market, taking out Investa Property Group’s portfolio of nine office towers with a knockout bid of more than $2.45 billion.

It then struck an agreement with Mirvac Group to manage the portfolio of Australian office towers it had bought.

CIC was also mooted to have been among the early parties looking over Blackstone’s portfolio of regional and sub-regional shopping centres for $3.5 billion.

Forming an alliance with the Chinese giant – it has more than under management – would be a nice move for Lendlease chief Steve McCann.

Lendlease runs a diversified property empire: building, developing, selling and managing other people’s funds. Its funds under management rose 11 per cent to $26.1 billion in the past year.

A new connection, with deep Chinese pockets would make a good friend indeed.

by Sarah Thompson, Anthony Macdonald and Joyce Moullakis
Financial Review

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