‘Breakout year’ for retirement communities

‘Breakout year’ for retirement communities

24 August 2018

ASX-listed retirement community providers Ingenia and Lifestyle Communities are enjoying unprecedented sales and profitability as retirees flock to the growing number of land lease communities (LLC’s) throughout Australia.

Land-lease communities, also known as lifestyle or resort-style communities, allow residents to own their homes while leasing the land from a community operator.

The concept has grown out of the caravan park industry which has always had a mix of temporary and permanent residents.

New residents are typically budget-conscious retirees selling out of their family home, says the AFR.

Ingenia posted a 30 per cent lift in its net profit for the 2018 financial year to $34.2 million. Meanwhile, revenue rose 26 per cent from $149.9 million to $189.5 million, with chief executive Simon Owen describing it as a “breakout year.”

“Our rental base is expanding via a strategy of acquisitions, additional tourism and rental cabins and new home sales,” he added.

“Demand drivers remain strong across the industry with an ageing population and housing affordability underpinning earnings growth.

“While we are seeing some slowing of the residential market, our investment proposition for retirees remains compelling.”

This year, Ingenia is on track for 350 or more new home settlements with growth in earnings before interest and tax of 10 to 15 per cent and growth in underlying profit earnings per share growth of 5 to 10 per cent, reports The Australian.

Ingenia is now talking to major institutional investors over the prospect of partnering on new managed funds to invest into prefab housing estates, Mr Owen revealed.

“We’ve had quite a few people coming to us and saying they’d like to work with us on ramping up our development,” Mr Owen said.

Global heavyweights wanting to enter the Australian LLC market include America’s Blackstone and Hometown, Canada’s Brookfield and Singapore’s GIC

Australia’s largest LLC operator, Gateway Lifestyle, this week recommended its shareholders accept a $683 million takeover offer from US giant Hometown, the AFR reports.

Gateway’s recommendation follows a drawn-out bidding battle between Hometown America and Canada’s Brookfield.

Meanwhile, Hometown Australia Communities, the local arm of US budget housing operator Hometown America, has about 950 sites under its control after outlaying $57 million for three acquisitions.

The three estates will add 578 sites to Hometown’s portfolio, which has expanded to five assets as it delivers on its ambitious growth plan in this market.

Hometown began building its portfolio last year with the $19.325 million purchase of Newport Village and then bought Sunrise Park, a 10.5-hectare property with development approval for 188 sites in Port Stephens for $9.4 million.