Two S&P/ASX 200 Index (ASX: XJO) real estate shares are making headline news today.
The companies in the spotlight are Lendlease Group (ASX: LLC) and Stockland Corp Ltd (ASX: SGP)
Why are they making news?
Read on!
ACCC greenlights $1.3 billion deal for ASX 200 real estate shares
As you may be aware, Lendlease has been actively working to simplify its business structure and right-size its cost base. The company's plans entail focusing on its Australian business and international investments platform and raising approximately $4.5 billion from transactions.
Back in December, Lendlease announced that it had entered into an agreement to sell 12 of its Australian master-planned communities projects to ASX 200 real estate share Stockland and its capital partner, Supalai Australia Holdings for $1.3 billion.
Commenting on that transaction at the time, CEO Tony Lombardo said:
The $1.3 billion sale of 12 master-planned communities provides Lendlease an opportunity to crystalise the value we have created in these projects.
We remain focused on recycling capital to accelerate our investments-led strategy and to maintain balance sheet flexibility to pursue future opportunities.
However, the sale raised concerns about decreased competition in the region, in what the Australian Competition and Consumer Commission (ACCC) said was an already concentrated market.
Today, both ASX 200 real estate shares responded to the ACCC's announcement that it was not opposed to the transaction after Stockland agreed to divest some of its other assets in the region.
The court-enforceable undertaking requires Stockland to divest the Forest Reach master-planned community project in the Illawarra region of New South Wales.
Commenting on the decision, ACCC Commissioner Philip Williams said:
Without the divestment, the proposed acquisition would bring together the two largest master planned community projects in the already concentrated Illawarra market. This could have resulted in increased prices, delayed supply, or reduced quality of housing lots in the Illawarra region, to the detriment of prospective homeowners.
Williams added that, "The ACCC considers that the divestiture undertaking given by Stockland addresses the competition issues."
In its reply, Stockland maintained the proposed transaction would not lessen competition in any relevant market. But to progress transaction approvals the ASX 200 real estate share agreed to the ACCC's divestment demands.
Lendlease noted the sale remained subject to several conditions, including Foreign Investment Review Board approval. The company expects the transaction to be complete in the second quarter of FY 2025.
Lendlease and Stockland share price snapshot
Following on today's news, the Lendlease share price is down 0.57% at $7.01. That sees the ASX 200 real estate share just about flat over the past year.
The Stockland share price is up 1.4% on the news at $5.37, which brings Stockland's share price gains to 37% over 12 months.
