ACCC concerned with Lendlease communities sale to Stockland, Supalai
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The news: The competition regulator has outlined preliminary concerns with Lendlease's proposed sale of 12 residential communities to property group Stockland Corporation and its capital partner Supalai Residential Communities Partnership.
The numbers: Real estate business Lendlease agreed to sell the communities for $1.3 billion in December 2023, but the sale is contingent on approval by the Australian Competition and Consumer Commission (ACCC).
Lendlease estimated that if completion of the sale does not occur in FY24, it would have a 2% impact on return to equity, with core operation profit after tax reducing to about $305 million from $450 million. This would push an estimated $130 million to $160 million in sales profits into the next financial year.
Lendlease has 16 masterplanned community projects — residential property developments on undeveloped land, which are typically delivered in phases over multiple years — in NSW, Queensland, Victoria and Western Australia, 12 of which would be sold under the proposed acquisition.
The context: The ACCC said it was concerned the proposed acquisition would remove one of Stockland's closest and largest competitors in the supply of residential masterplanned community housing lots in Illawarra, North West Perth, Ipswich and Moreton Bay.
The regulator said it was also concerned the deal might increase Stockland's incentive to raise the price, delay the supply, or reduce the quality of housing lots in these regions "to the detriment of prospective homeowners".
The ACCC also said that other developers of masterplanned community projects may not be able to compete sufficiently with Stockland, one of Australia’s largest residential developers, in some regions after the acquisition.
Meanwhile, the regulator is considering whether the proposed acquisition may increase the risk of anti-competitive coordination by developers in relation to the pricing, supply and/or quality of masterplanned community projects.
In a response to the ACCC, Stockland and Supalai said that there were "compelling reasons" why the proposed acquisition would not lessen competition, and the companies would continue to engage with the regulator to address its preliminary views.
Lendlease said it would support Stockland in relation to its engagement with the ACCC to resolve the issues raised, and would work with Stockland to complete the proposed transaction "as soon as possible".
The ACCC expects to make a final decision on 12 September.
The sources: ASX announcement, ASX announcement, ASX announcement
