B&B sells Aevum stake to Stockland

It places Stockland at the top of the share register of the Sydney-based company, which has a growing network of 21 villages with 2123 units in NSW - where it is the biggest provider - and Western Australia.

The aged-care industry, taking in retirement villages and nursing homes, is moving towards consolidation as investors and companies scramble for a model that is sustainable and profitable.

Earlier this month, Lend Lease launched a $236.8 million bid for 41% control of Babcock & Brown Communities (BBC), the largest "pure play" owner, operator and developer of senior living communities. Rival operator Prime Trust has launched its own 40% proportional takeover bid for BBC.

Many property trusts and developers have targeted retirement living as a key driver of growth in the wake of spiralling valuations in other sectors of the property market and tough times in funds management.

Aevum chairman Graham Lenzner said yesterday he had spoken briefly to Stockland managing director Matthew Quinn and that he believed a meeting between executives would be held soon.

Stockland announced yesterday that it had acquired the stake in Aevum from Babcock & Brown for $1.50 a share, or $26.9million.

Mr Quinn said the acquisition was consistent with Stockland's strategy to increase its presence in the retirement living sector.

"Aevum is a conservatively managed company with a sound balance sheet," he said.

"We look forward to having a constructive dialogue with the board as the company's largest shareholder."

Stockland has not asked for a seat on the board.

It said the acquisition would be funded by debt, and would be earnings per share neutral this financial year.

The $1.50 price represents a 31% discount to Aevum's net tangible assets as at June 30. Shares in Aevum ended yesterday up 10.3% to $1.50.

Mr Lenzner said: "I think they are buying the shares because the shares are very cheap at that price."

He said Mr Quinn told him Stockland was taking advantage of the depressed sharemarket and Babcock & Brown's eagerness to sell.

BBC, a satellite of Babcock & Brown, had first right of refusal on the 14.4% stake in Aevum.

Aevum recently appointed Steve Mann as its managing director. He was previously in charge of Stockland's commercial and industrial businesses.

Aevum posted a 24% rise in full-year net profit to $28.5 million last financial year.