Brookfield Selling Aussie Senior Housing to The Living Company for $2.5B in Record Deal

Brookfield Asset Management has 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 for A$3.85 billion ($2.5 billion), according to a statement by the New York-based unit of Canada’s Brookfield Corp.

The transaction sees Brookfield selling 65 retirement villages across Queensland, New South Wales, Victoria and Tasmania to The Living Company, edging Blackstone’s A$3.8 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 A$1.3 billion, before investing another A$500 million on improvements, with the fund manager positioning the sale as a successful turnaround of a management-intensive real estate business.

“Aveo is a prime example of the operations-led turnaround investing that we excel at,” Brookfield real estate CEO Lowell Baron said in the statement. “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.”

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.

“We identified a challenged platform that owned great real estate and this allowed us to execute an operations-driven turnaround, said Brookfield co-head of Australia real estate Ruban Kaneshamoorthy. “During the past five years, in partnership with the Aveo management team, we invested heavily in the business and executed a business plan that moved Aveo from a platform with a lack of focus and direction to a high-performance, resident-first organisation that is well placed to take advantage of the strong demographic and structural tailwinds underpinning the growth of retirement living.”

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 square metre (36.6 million square foot) portfolio spans more than 10,000 units with another 3,000-plus slated for development, according to Brookfield.

That scale ranked Aveo second last year among Australian retirement village operators with a 4 percent market share, according to a sales flyer for a marketing campaign which Brookfield kicked off in mid-2024. Lendlease’s Keyton led Australia’s retirement village sector with a 6 percent market share at the time that campaign began.

Homes in Aveo’s projects sell for a median price of A$1.6 million nationwide, placing it in the high end of the sector, with the communities 94 percent occupied per the 2024 marketing materials. 

With Aveo having first been established in 1970, Brookfield had trimmed the company’s portfolio from 87 villages through deals including a sale of 13 South Australian properties to a pair of non-profits late last year. 

Brookfield won approval of its bid for Aveo in 2019 after media reports of mismanagement had helped drive the company to an A$213.4 million loss in its fiscal year ending 30 June 2019. 

Senior Strategy

With Gaitanos and his team having set a target of growing their portfolio to 100,000 housing units by 2030, The Living Company sees senior living as a third pillar in its strategy for the sector alongside its existing student housing and rental apartment strategies.

In an interview at the Mingtiandi Singapore Forum last month, while declining to comment on any potential transaction, Gaitanos praised Aveo’s accomplishments and leadership, while pointing to his team’s ambition in the segment. “Certainly Aveo is a fantastic business, run by a fantastic management team, and we certainly harbor the ambition to grow into that sector,” Gaitanos told Mingtiandi founder Michael Cole. 

Scape will continue to serve as The Living Company’s student housing brand, after the team assembled a student portfolio of more than 16,300 apartments with another 10,000 units in the pipeline. Scape’s principals, Gaitanos and partner Craig Carracher, branched out into mainstream rental apartments in 2023 with backing from existing capital partners APG Asset Management and Bouwinvest.  

Joining the Aveo deal is The Living Company’s long-term partner, South Korea’s National Pension Service (NPS), according to a report in the Australian Financial Review, with the north Asian giant managing assets of around $842 billion globally.

Malaysian investment firm Mulpha International is retaining a 15 percent stake in Aveo after joining Brookfield’s acquisition of the business in 2019, according to Brookfield’s statement.

Scape is understood to be retaining chief executive Tony Randello to lead Aveo’s team with Gaitanos in his Mingtiandi interview last month having pointed to management expertise as key to achieving attractive returns in Australia’s living sector. 

“When we go into a new market, we want to buy the best team with the best assets,” Gaitanos said in the Mingtiandi interview last month.

Extending an Acquisition String

Reports of 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 A$2 billion to purchase student housing competitor Urbanest in 2020. In 2019 the company paid A$700 million to buy the Atira Student Living platform, pushing it to the top of the list of Australia’s largest players in the sector. 

In its statement Brookfield pointed to the potential for further investments in Asia Pacific which would align with the social and economic changes which helped underpin the Aveo turnaround. 

“The living sector is and has been a top segment for our global real estate strategy for more than a decade,” Baron said. “Given the favourable market dynamics that underpin the continued growth of the living sector, we will look to invest further capital in living across Asia Pacific.”