UPDATE 1-Australia's Stockland builds stake in FKP

(Adds FKP comments, details)

MELBOURNE, Oct 15 (Reuters) - Australian property developer Stockland Group (SGP.AX) is set to own up to 13 percent of FKP Properties (FKP.AX) and get first rights on a takeover of FKP's retirement villages, aiming to expand in the fast growing sector.

Stockland said on Wednesday it had bought a 5 percent stake in FKP through a share placement at A$2.00, one-third above FKP's last trade, and would raise that to between 10 percent and 13 percent after a rights issue at A$1.50 a share, in line with FKP's last trade, for a maximum of about A$80 million ($56 million).

The move intensifies the race between Stockland and Lend Lease Corp Ltd (LLC.AX), Australia's top two residential developers, to expand in retirement villages, an attractive sector in a country with a rapidly ageing population.

Based on Stockland's expected maximum outlay for the stake in in FKP, FKP would be worth A$615 million ($430 million), less than half the A$1.3 billion takeover offer it rebuffed from Lend Lease in June.

Stockland shares rose 6.4 percent to A$5.01 in a falling market, outpacing a 4.2 percent rise in the A-REIT index .AXPJ. FKP was poised to come off a voluntary trading halt.

FKP said it was going to consider selling its retirement living assets and had given Stockland a two-month exclusive period to review them, with the first right to buy them.

Lend Lease last week agreed to buy a 41 percent stake and the right to manage retirement village owner Babcock & Brown Communities Group BBC.AX for A$237 million, while Stockland this week bought a 14.4 percent stake in smaller Aevum Ltd (AVE.AX) for A$27 million.

Stockland, which last week raised A$300 million through a share sale, said it would fund its FKP stake from existing bank debt.

FKP said it would use the funds raised to help trim debt.

Its biggest stakeholder, Malaysian group Mulpha International (MITC.KL), which owns 16.6 percent of FKP, has committed to buy 35 million shares in the rights issue. ($1=A$1.43) (Reporting by Sonali Paul)