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Minter Ellison acts on retirement village spree
A complex due diligence of several properties and the legislation and tax issues surrounding them defined the role of Minter Ellison on the FKP Property Group’s acquisition of a portfolio of 14…
Lawyers Weekly
A complex due diligence of several properties and the legislation and tax issues surrounding them defined the role of Minter Ellison on the FKP Property Group’s acquisition of a portfolio of 14 mature retirement villages.
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The firm acted for FKP on the deal, which saw it pay approximately $52 million plus a stock settlement expected to occur in December for the properties — five in Queensland and nine in South Australia. The villages were bought from a syndicate of private investors known as National Retirement Company, and comprised almost 1,300 individual units.
The acquisition takes FKP’s portfolio to approximately 5,300 units across 42 separate villages, with the estimated market value expected to exceed $1 billion once this acquisition is completed. Brisbane partner Robin Lyons, who led the Minter Ellison team, said the legal and town planning due diligence was complex because of its size.
“We had to do due diligence on each village. There were planning, environmental and heritage issues which we focused on.” He said a critical aspect of any due diligence involving retirement villages was that their value was dependent on the residents’ contracts.
“It is quite important that the integrity of the exit fee is secured, so it is important to focus on those contracts and of course they have to comply with the retirement villages legislation in each state,” Lyons said. “There are often different variations of contracts from different times so you have to identify them and make sure they all work.”
There are also some “pretty unique” GST issues associated with retirement villages, which had to be dealt with, as well as a tax ruling that is specific to retirement villages. Lyons said the deal had all the normal transactional features, with added complexities that had to be taken into account at each stage of the process.
“Because of the particular uses associated with retirement villages you have to make sure that the planning approvals that are issued are appropriate for the current use and that the activities of running retirement villages are lawful within the localities and context of the planning schemes.”
Minter Ellison has been involved with FKP for 10 years, and worked on most of their acquisitions in that time.
