Aware Super Expands Holdings in Retirement Living Boom

Aware Super has spent an undisclosed sum to acquire the remaining 30 per cent of Oak Tree Group and is now one of Australia’s largest retirement living asset owners. 

The superannuation fund bought a 70 per cent stake in the business in 2017 while the founders retained 30 per cent. 

But Aware Super has now expanded its stake to take full ownership of Oak Tree Group and its 2500 independent living units across Australia’s east coast. 

Aware Super head of property Alek Misev said the latest acquisition expanded the group’s exposure to residential living assets to $5 billion globally. 

Misev said the acquisition acknowledged the quality of the operational villages and the development pipeline, underpinned by strong demographic tailwinds, including the ageing population and expanding middle-class wealth.

The acquisition includes a development pipeline of more than 1000 independent living units in well-located areas across Queensland, NSW, Victoria and Tasmania in addition to the 1500 that are now operational.  

“We have multiple villages experiencing waitlists, which confirms an undersupply in quality units catering for the 55-plus cohort who will represent about 31 per cent of our national population by 2030,” he said.  

“Australia’s Baby Boomer generation is wealthier than previous generations and combined with the strong  demographic tailwinds, makes the retirement-living space a high conviction sub-sector within our $5-billion living portfolio.” 

▲ Oak Tree has retirement villages predominantly in Queensland and New South Wales in metro and regional areas including Pelican Waters (pictured).

Aware Super acquired a 25 per cent stake in Lendlease’s retirement living portfolio in early 2021, which comprised a portfolio of 75 retirement villages. It was a move that chief investment officer Damian Graham said at the time was a “prudent investment”.

It’s an asset class that is increasingly coming into focus with vertical villages and integrated living driving new models of retirement living and aged care. 

Revenue in the sector has grown at an annualised 3 per cent through the end of 2022-23, including growth of 3.2 per cent in 2022-23 alone, to total $5.1 billion, while profit margins have dropped to 3.2 per cent. 

About 184,000 Australians over the age of 65 live in retirement villages. That’s a 5.7 per cent penetration rate, which is projected to increase to 7.5 per cent in 2025.

Two of New Zealand’s biggest operators have crossed the ditch to claim territory in the sector. 

Ryman Healthcare came across the Tasman Sea in 2014, bringing its retirement and aged-care model to Australia. Today, it counts 14 locations in Australia—all of them in Victoria. Five of those are completed and open for business, three are open but still partly under construction, two more are still being built and another four are in the planning stages.

And in 2019, New Zealand’s second biggest aged-care and retirement operator—Summerset Group—made that same journey to Australia, also to Victoria, and immediately went on a buying spree.