Stockland is forking out $620 million to grow its retirement business. Here’s the rundown.
The post Stockland (ASX:SGP) share price on watch after acquisition appeared first on The Motley Fool Australia. –
The Stockland Corp Ltd (ASX: SGP) share price could be a mover on Monday after the company announced an acquisition to expand its land lease communities business.
What might drive the Stockland share price today
Stockland’s retirement living portfolio might receive a boost after entering a binding agreement to acquire Queensland based Halcyon Group’s land lease communities business.
Many retirement and over-50s communities operate under land lease structures where people own their own homes but not the land they are built on.
The acquisition will include 3,800 sites across 13 land lease communities, six of which are established land lease communities with four in development and three projects in planning.
The Halcyon acquisition will bring onboard over 2,500 new customers in addition to a Halcyon team of more than 100 people.
Stockland will be forking out $620 million plus transaction costs for the acquisition.
According to the announcement, 100% of the acquisition price and associated costs will be funded from existing liquidity.
In addition, the acquisition price will be paid in two equal tranches. The first $310 million will be paid upon completion of the transaction in mid-August 2021. While the second tranche will be deferred until July 2022.
What did management say?
Stockland Managing Director and CEO Tarun Gupta commented:
This acquisition is in line with our stated strategy to grow our land lease communities and will increase the size of our portfolio to 7,800 sites. Land lease communities deliver attractive returns as the demand for high quality, affordable housing solutions grows. This demand is driven by Australia’s aging population and baby boomers reaching retirement age.
About the Stockland share price
The Stockland share price has been a slow mover in 2021, nudging just 2.57% higher year-to-date compared to the S&P/ASX 200 Index (ASX: XJO) which has rallied 9.93%.
On a more positive note, on 23 June, Stockland announced a lift in final dividend to 13.3 cents compared to 10.6 cents in 2020.
With a FY21 full-year distribution of 24.6 cents, this represents a dividend yield of approximately 5.6% at current prices.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.