Hometown America stalks Gateway Lifestyle and Ingenia

http://www.theaustralian.com.au/bus...a/news-story/72293231872324709b446ff46225ed4e

A major US-based trailer park operator is believed to be poised to put the country’s modular housing industry into play, with Hometown America tipped to be planning a takeover bid for Gateway Lifestyle and Ingenia Communities in an upcoming deal that could create a $1 billion-plus Australian behemoth.

Some have suggested that Bank of America Merrill Lynch could be involved in a prospective transaction, although it is unclear what banks are working with the parties as advisers.

It is also uncertain whether the group is looking at buying both targets and merging them or owning only one, although many believe bringing the $463 million Ingenia and $643.7m Gateway together makes sense due to the synergistic benefits.

The modular housing sector in Australia remains highly attractive to American groups that have the expertise running trailer parks and are eager to consolidate the Australian market.

Already, Blackstone and Kohlberg Roberts have circled Gateway Lifestyle before it listed around the middle of last year, as did Hometown America at the time.

The $US1.5 billion ($2.03bn) Hometown America owns a portfolio of about 60 estates in the US and is funded by the Washington State Pension fund, which already owns interests in Australian student accommodation provider Urbanest.

Hometown’s Australian subsidiary — Hometown Australia — established an operation here several months ago headed by former Colliers International executive Stuart Strong, with the group targeting assets to buy in NSW, although no investments have yet been made.

Previously, the group was thought to have also explored a potential acquisition of National Lifestyle Villages in Western Australia, owned by Navis Capital and a portfolio of eight Hampshire Properties run out of Singapore by reclusive Australian investment banker Andrew Hoffman.

Blackstone is also said to be an investor in NLV through its special situations fund but is not thought to be interested in securing the entire asset.

Gateway controls at least 50 parks throughout Australia, where residents buy the housing and lease the sites from the listed group.

It is headed by Trent Ottawa. Rob Nichols, former head of Gateway’s takeover target Tasman Lifestyle Villages, was made chief operating officer at the time of the listing last year but has since left.

Mr Nichols holds shares worth up to about 2 per cent
in the business after being
paid partly in shares for the company, currently worth about $643.7m.

The shares were only recently released from escrow.

Gateway received much support when it floated at $2 a share, with investors attracted to its defensive nature, where many viewed the group as one where the tenant was effectively Centrelink. This was given that the modular houses on the sites were predominantly occupied by retirees.

However, the shares have since crashed from a midyear high of about $3 to about $2.16 after a profit downgrade was issued, although the group did meet its prospectus forecasts, with much of the crash said to be linked to an overestimation by investors of the company’s prospects.

Ingenia, meanwhile, is run by Simon Owen and has been moving to transform itself from a traditional retirement park operator to a modular park owner, with 60 communities under its control.