Australian Aveo names Brookfield as preferred takeover partner

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Australian-listed senior living group Aveo has confirmed it is in takeover talks with Canada’s Brookfield Property Group, naming the major real estate investor as its preferred partner.

Aveo owns and manages 93 retirement villages comprising about 12,000 units across Australia, as of September 2018.

The negotiations follow the recent completion of Brookfield’s A$4.1bn acquisition of Healthscope, the second-largest private hospital operator in Australia and the largest pathology services provider in New Zealand.

Aveo said it continues to negotiate with Brookfield on an indicative proposal and would provide a further update on or after July 22.

The senior living group announced a strategic review process in late 2018 to respond to investor interest in the business and received a number of indicative, non-binding bids in January this year.

Aveo has been actively engaged with Brookfield since May and continues to negotiate on the indicative proposal.

The independent board committee leading the process has indicated that the sale will be cancelled if they cannot strike a deal by July 22.

The senior living group has been hit by the downturn in the Australian property market, with time frames on settlements taking longer than expected. 

The firm noted the weak market conditions were negatively impacting prospective buyers who were seeking to settle on their existing properties before moving into senior living accommodation.

Merrill Lynch is acting as financial advisor and Herbert Smith Freehills as legal advisor to Aveo.

Brookfield’s real estate business has about US$191bn of assets under management.