REST claims victory in retirement village battle

Retirement village.

REST Super has succeeded in fighting off attempts by the listed Aveo Group to block it from attempting to dislodge the aged care outfit as manager of the Retirement Villages Group real estate trust.

The superannuation funds giant is the minority holder in RVG, which is 73%-owned by Aveo, and last year pushed to change the trust’s manager, citing dissatisfaction with the performance of the investment.

The unlisted RVG trust is a key part of Aveo’s transformation from a diversified property firm to a pure-play retirement and aged care operator, backed by Malaysian conglomerate Mulpha.

REST, which manages about $37 billion in funds, was successful in passing resolutions terminating Retirement Villages Group Management, controlled by Aveo, as manager.

Wiped off: Aged care giants take $250m hit

However, there has been a lengthy court process during which Aveo claimed REST was not entitled to call for the meetings held last year to remove RVGM.

The Federal Court on Friday dismissed those proceedings, ruling the meeting and the resolution to remove the Aveo-backed management were allowed.

RVGM has not yet been removed as manager of the trust.

RVG owns 29 retirement villages in Sydney and Melbourne, and was previously backed by Telstra Super and Macquarie — Aveo, chaired by Mulpha’s billionaire boss Seng Huang Lee, acquired those stakes in a $55.8 million deal.

The Geoff Grady-led company intends to replace some of the directors on the RVG board, and says the increased stake will allow it to have a “greater influence” on the direction of the trust

In April, Aveo outlaid another $101 million to increase its holding from 38.8%, entering talks with REST, the only other shareholder, to acquire its stake.

REST, which did not respond to requests for comment, has previously pointed to lower than expected benchmarks and RVGM’s failure to meet certain performance thresholds.

Sources close to the superannuation fund indicated earlier it would be prepared to sell its stake if it was able to get a good price, while others have suggested Aveo had made offers to investors at a significant discount to the net value of the assets. The 31% interest acquired earlier this year came at a 21% discount to RVG’s current security value, Aveo said at the time.

The Geoff Grady-led company intends to replace some of the directors on the RVG board, and says the increased stake will allow it to have a “greater influence” on the direction of the trust.

REST launched its own legal action to prevent RVGM calling a general meeting of securityholders in May, at which time changes to the board would be discussed.

That meeting has now been delayed until later this month.

The listed aged care and retirement village sector has recorded exponential growth in recent years, with Aveo acquiring Freedom Aged Care, with 15 facilities, in February for $215.5 million.

While the company owns dozens of retirement villages, several non-core assets including an industrial site remain on its books.

This article originally appeared on www.theaustralian.com.au/property.