Transcription of Finance News Network Interview with Ingenia Communities Group (ASX:INA) Managing Director and CEO, Simon OwenCarolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Ingenia Communities Group
(ASX:INA), to discuss its seniors’ accommodation portfolio is Managing Director and CEO, Simon Owen. Simon, welcome back.
Simon Owen: Thanks very much Carolyn.
Carolyn Herbert: For investors who need a refresher, can you start by giving us an introduction to the company?
Simon Owen: Ingenia is a seniors’ living business across Australia. We own and operate 60 rent-based seniors’ living communities, as well as some of the largest caravan parks or tourism parks on the east coast of Australia.
Carolyn Herbert: You’ve just concluded your AGM. So what were some of the key messages that were communicated?
Simon Owen: I think there were three key messages we communicated at the meeting. Firstly, we went through some of the strong financial performance that the Group reported, to 30 June 2016. Cash flow up 130 per cent, profit up over 20 per cent. Secondly, we upgraded our sales targets. So we increased our new home sales target from 150 to 170 sales for the current financial year and for the first time, we gave guidance for next year of 260 plus settlements. And then thirdly, we announced three acquisitions. So overall, a lot of new news in the AGM and I think our shareholders were very happy.
Carolyn Herbert: You’ve recently completed the sell down of your DMF portfolio. What was behind this move?
Simon Owen: I think we’ve identified that the largest, fastest growing and least competitive part of the seniors’ living market, is affordable seniors’ housing. DMF is a great business, but really targets the middle and upper market. And so we made a decision a couple of years ago to exit deferred management fee, DMF, and redeploy that capital into more affordable seniors’ housing. And that was really what was behind the decision.
Carolyn Herbert: Tell us a bit more about your recent acquisitions?
Simon Owen: Since our results at 30 June, we’ve acquired the last A-grade freehold caravan park in western Sydney in Avina, which is near Vineyard. It’s a $33 million acquisition, 180 existing sites and vacant land for another 150 new homes. Today we announced the acquisition of an existing lifestyle community, about 14 kilometres out of the Brisbane CBD. The acquisition of a 25-hectare site in Hervey Bay on the Queensland Fraser Coast. And lastly, that we’ve gone unconditional on Latitude One, which is a DA approved site, just north of Newcastle.
Carolyn Herbert: Turning to your portfolio now. How has it performed starting with your lifestyle and holiday parks?
Simon Owen: Our lifestyle and holiday parks are performing very strongly, two components to that. Firstly our permanent homes, we’ve got record sales coming through the business at the moment. We’re I think, benefitting from what we call a seniors tsunami, the number of people who are retiring. And also our business model really meets one of the big crises facing Australia today, which is housing affordability. So we’re in a sweet spot of the market there. And then in our growing holidays portfolio, with a lower Australian dollar more people are choosing to holiday at home, rather than go overseas. And again, we’re a great beneficiary of that. So we couldn’t be happier with the way the business is performing at the moment.
Carolyn Herbert: And how have garden villages performed?
Simon Owen: Garden villages, we’re the largest owner and operator of seniors’ rental villages in Australia. That’s a great business; we provide quality accommodation in a gated community for seniors. That business is tracking very well, occupancy at the moment it costs that business around 91 per cent. And we expect to grow that to probably 92 or 93 per cent, over the next 12 to 18 months.
Carolyn Herbert: Now to a more general question Simon. What do your properties offer seniors that say, a normal house or apartment wouldn’t?
Simon Owen: I think there’re three things that our properties offer. Firstly, we provide great social interaction, so there’s always plenty going on in our communities. Plenty of social events and a lot of people, particularly women are looking for things to do. Events, whether it’s going out to art and craft shows and the like, restaurants. Secondly, we offer great security. So our communities are typically gated, we have onsite management, so there’s a real sense of safety and security.
And lastly, we have our Ingenia Care Assist program where we provide - we facilitate the delivery of Government funded, either free or heavily subsidised, homecare. So that the residents can stay longer in their home, as opposed to having to move into a nursing home or similar. So I think we have a pretty unique product offering, which is really finding a lot of take-up from Australia’s aging population.
Carolyn Herbert: Finally Simon, what is your outlook for the remainder of FY17?
Simon Owen: I think in terms of outlook, we’ve got a growing asset base, which we’re looking to integrate. We’re pushing really hard to hit our 170 sales for the year, and also have a strong opening moving into the next year. We’re assessing around 20 acquisition opportunities at the moment, and that’s on top of the six that we currently have under option or conditional contracts. And we’ve got a few new products that we’re looking to launch into the market, in the next six to 12 months. So all in all, I think it’s going to be a very busy year for us.
Carolyn Herbert: Simon Owen, thanks for the update.
Simon Owen: Thanks very much for having me.
ENDS
