First State Super has acquired a 70% stake in Oak Tree Group, marking its entry into Australia’s retirement living sector.

Damien Webb, First State Super’s head of income and real assets, told IPE Real Estate that the superannuation fund had also committed to provide “a substantial” facility to fund new developments by the retirement village specialist.

Over the next three to five years, Webb said, he expects the retirement platform to be worth “north of AUD400m [€267m]”.

Mark Bindon, who founded Oak Tree Group a decade ago, said the plan was to develop 15 to 18 new villages, principally in New South Wales and Queensland, over the next two to three years.

“We differentiate ourselves from the large corporate players by offering smaller villages,” he told IPE Real Estate. “Our villages offer between 55 and 80 units, compared with 200-300 in a typical large village.”

Oak Tree currently has 28 villages, mostly in regional cities in Queensland, and some in New South Wales.

Webb said the plan was to expand in regional and metropolitan areas.

Bindon said Oak Tree had had been approached in the past by offshore investors and domestic high-net-worth individuals seeking to tie up with his company, but none of these groups had shared “our long–term vision”.

First State Super CEO, Michael Dwyer, said: “This is our first investment in the retirement village sector, and with Australia’s ageing population likely to fuel demand for quality retirement housing solutions, we believe it will deliver sustainable returns for our members for many years to come.”

First State Super manages AUD85bn in assets. It expects a return of more than 5% plus inflation, net of fees, from the investment.

Dwyer said the investment decision was “about supporting Oak Tree’s mission to provide affordable independent retirement communities for Australia’s growing number of retirees”.

The investment forms part of First State Super’s income and real assets portfolio, which includes assets such as Sunshine Coast University Hospital in Queensland, rural Victoria’s new Bendigo Hospital, Sydney’s new International Convention Centre, and the suburban Bankstown and Camden Airports in Sydney .