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SYDNEY, AUSTRALIA-Developer Lend Lease has adjusted its cash infusion to acquire a significant stake in Babcock & Brown Communities Group, an Australian retirement village security that is managed by struggling investment manager Babcock & Brown. With the parent company struggling under massive debt and looking to shed weight, the firm has agreed to give Lend Lease a 43.2% stake in BBC, with the developer taking over the management rights, in return for more than $195 million.

BBC currently owns and manages a portfolio of 56 Retirement Villages and 29 Aged Care facilities across Australia and New Zealand comprising 9,880 retirement living units and 2,256 residential aged care beds. Greg Clarke, CEO of Lend Lease, says his company looks forward to a security-holder vote on Dec. 30. “We believe the retirement sector provides a number of strategic benefits,” he said in a statement.

Lend Lease is paying 60 cents per security for more than 283 million securities for $170 million, and 29 cents per share to acquire Babcock & Brown’s 12.5% stake in the multifamily company. There will be a further cash injection by Lend Lease of $25 million through the issue of 100 million convertible notes of 25 cents each. The developer is also paying $17.5 million for the management rights to BBC.

Also, BBC has agreed to acquire Retirement by Design Villages from Lend Lease for $133.4 million. The portfolio includes seven existing villages and an aged care facility, all owned by Lend Lease. The acquisition will be funded through the issue to Lend Lease of five-year redeemable convertible notes with a total value of $120 million, and a cash payment to Lend Lease of $13.4 million.

Lend Lease had been offering almost double per share to acquire Babcock & Brown’s stake in BBC, but lowered its price after the main firm’s stock price dropped to an extremely low level. The revised proposal, however, “provides BBC with a cash injection which is required for future growth, it increases BBC’s exposure to the Australian retirement living sector, and allows BBC to benefit from the experience of Lend Lease’s management,” said members of the BBC independent directors.

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