Arvida Group buying Arena Living's six villages from Blackstone for $345m 'transformative'

Arena Living's Peninsula Club at Whangaparaoa. Photo / supplied

Listed retirement company Arvida Group has made a surprise announcement that it plans to buy an unlisted six-village network from global operator Blackstone for $345 million in a move its chief says will be "transformative".

Jeremy Nicoll, Arvida chief executive, announced the deal to buy the portfolio of privately owned Arena Living's villages in Auckland and Tauranga.

"This is a transformative deal for Arvida, gives us greater exposure into Auckland and will see the total asset value exceed $3b," Nicoll said today.

Although Arvida will spend $345m, the assets are valued at $394m, he said.

The deal is not subject to Overseas Investment Office approval because Arvida is a more than 90 per cent New Zealand-owned company, he said.

Arvida owns three Auckland villages but this will take that number here to eight.

Arvida's assets pre-purchase are valued at $2.2b but those will rise more than $3b post-settlement, Nicoll said.

Market capitalisation is now $1.1b "and this will put our market cap to around $1.5b and move Arvida to number 25 on the NZX top 50".

Three villages are on the North Shore: Mayfair Village at Browns Bay, Knightsbridge Village at Mairangi Bay and Parklane Village in Forest Hill. The Peninsula Club is at Whangaparaoa.

Mt Eden Gardens is on Mt Eden Rd and Ocean Shores Village is in Mt Maunganui.

The six Arena villages have 648 villas, 340 apartments and 58 serviced apartments.
Nicoll said the villages were 20 to 30 years old, on large blocks of some hectares. All up, 48ha of land is being purchased.

Arvida now has 4325 units and beds at villages where about 5000 people live, cared for by 2600 staff.

After the deal, 39 per cent of Arvida's portfolio will be in Auckland and Tauranga which Nicoll said were prime locations.

Arena Living's Knightsbridge Village on the North Shore of Auckland. Photo / supplied

Arena is owned by funds management advisors and one of the world's largest alternative asset managers, Blackstone, which has head offices in New York. Nicholl said he had been dealing with Blackstone people in Sydney.

"We've been talking over the last few months. It came about via existing relationships. We got into an exclusive due diligence position," Nicoll said.

Jarden Partners and Forsyth Barr acted as investment bankers on the deal and they were involved in the capital raising for the purchase.

Asked why Arvida would buy during in a pandemic, he said: "These assets are in great locations. They will have a long future with Arvida. The pandemic doesn't really impact the demand for retirement village units. In fact, we've seen increases in levels of inquiry post-Covid lockdowns showing more demand.

"People perceive them as safe places to live, especially when communities are in lockdown. These villages have their own community and support and it helps people who might otherwise be isolated."

Arena says Blackstone was established in 1985 "and is one of the leading asset management firms in the world. Our CEO, Richard Davis, has more than 20 years' experience in the retirement village industry. We are also members of the Retirement Villages Association".

Arvida plans to raise $155m via placement at $1.96 a share, has $175m underwritten in a one for 6.57 pro-rata renounceable rights offer and will borrow $23m bank debt.

Nicoll said adding Arena would mean Arvida's portfolio expanded by 24 per cent.

"We have the ability to consider a range of future development and care options to enhance and improve resident and village amenity with the low-density spread-out nature of these sites."

Future development and intensification opportunities include advancing redevelopment of the Mt Eden Gardens into a boutique retirement residence, introducing care through retrofitting care suites and brownfield development on bare land or low-density sites over time.

Arvida might add more than 100 care suites and about 150 units via retrofitting and site development, it said today.