Ingenia Communities will benefit from the rise in grey nomads selling the family home and setting off around the county, before settling into low maintenance and affordable accommodation.
Having built up its development pipeline with caravan parks and community villages, Ingenia now has 12 projects under way and can create a further 2473 new homes. It has further increased its settlements target to 260-280 in 2018 and 350-plus in 2019.
The group warned of likely increased regulatory requirement for retirement villages, but expected this to have limited impact on lifestyle communities.
For the year, the group reported an underlying profit of $23.5 million, an increase of 16.3 per cent on the previous financial year.
The statutory profit of $26.4 million was up 8.6 per cent on the year before, but that was affected by the $7.6 million loss recorded on the sale of most of the group’s deferred management fund (DMF) retirement assets in October 2016. The interim dividend of 5.1?? will be paid on September 13.
Ingenia operates in the holiday and seniors living sector and says housing affordability and ageing population will drive long-term core demand. A key risk would be a slowdown in residential housing but not apartments. It previously was the ING Real Estate Community Living Group.
Ingenia chief executive Simon Owen said the group was positioned to benefit from demand from “travelling seniors and families for quality holiday accommodation with our portfolio now offering over 790,000 ‘room nights’ per annum along Australia’s east coast”.
He said tourism and mixed-use communities continued to be an important part of Ingenia’s portfolio, with more than $200 million committed to expanding the portfolio over the past year.
“As the competition for lifestyle communities intensifies, buoyed by interest from offshore players, and capitalisation rates compress, we see a competitive advantage in having a business model that spans both holiday and lifestyle communities, with significant embedded growth through our development pipeline.”
Brokers were mixed on the result, with Petra Securities’ Jonathan Kriska saying the positive was the Garden Villages division, which continues to be a solid performer, but the Settlers DMF division profit fell on the disposal of assets.
“Overall, the 3 per cent earnings per security growth and minimal net tangible asset growth is just not good enough for a company which has had the tailwinds of cheap debt, attractive acquisition spreads, growing development profits, and an in-favour sector,” Mr Kriska said.
Over the next 14 months, Mr Owen said, the group was set to launch eight new or expansion development projects, which supports its aspiration to become the clear lifestyle community market leader.
The expected increase in sales and addition of new assets and rental contracts will underpin earnings before interest and tax guidance, being in the range of $42-46 million for the 2018 year,” Mr Owen said.
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