Ingenia Communities Group (ASX:INA) 1H19 results & outlook


by Jessica Amir

Ingenia Communities Group Limited (ASX:INA), CEO & Managing Director, Simon Owen discusses 1H19 results, the company's strategic partnership with US Sun Communities and the development of senior’s accommodation.

Jessica Amir: Hi I’m Jessica Amir for the Finance News Network. With me today from Ingenia Communities Group Limited (ASX:INA) is Managing Director, Simon Owen. Hi Simon and welcome back.

Simon Owen: Hi Jess, it’s great to be here.

Jessica Amir: For those who don’t know, you own and develop affordable seniors’ accommodation and lifestyle parks. Just tell us where the business is at today?

Simon Owen: Ingenia operates across three distinct segments. Firstly, we’re the largest owner and operator of seniors’ rental accommodation in Australia. So that’s where we just rent out a single bedroom home to seniors. Secondly, we’re one of the largest owners operators and developers of lifestyle communities. That’s where the senior owns the home and we rent them the land. And then lastly, we own some of the most iconic holiday parks on the New South Wales and Queensland coast. And that’s really targeting grey nomads and young families.

Jessica Amir: You’ve just handed down your first half 2019 results, a good set of numbers well done. Just tell us the highlights?

Simon Owen: I think we’re operating in pretty challenging markets, but we were very pleased with the numbers that we reported yesterday. Our revenue was up 21 per cent to $91.3 million; our earnings per share was up 14 per cent to 8.1 cents. Our operating cash flow was up over 50 per cent. And new home settlements were an all time record for us in the first half.

Jessica Amir: Now let’s dive into the portfolio in a little more detail. Just tell us about the lifestyle communities?

Simon Owen: In the lifestyle communities, we own one of the largest portfolios across the east coast of Australia. We also have the largest development pipeline, which is just under 4,000 home sites, which is larger than our two biggest competitors combined. We see this as a key growth segment. We’re really targeting for the senior, who’s sort of in the mid to late sixties, who’s looking to downsize out of the family home.

They’re typically selling their home for $400,000 or $500,000; they’re spending about 70 per cent of that moving into one of our gated communities.

And then they’re spending the balance of the proceeds from selling their home, to fund a much more comfortable retirement. That could be buying a caravan and ticking off a few items on the bucket list. It could be helping their kids get into the property market. Or like my parents, going on what seems to be an endless year of cruises overseas.

Jessica Amir: Could you tell us about your holiday parks?

Simon Owen: In our holiday parks, we now own 22 holiday parks. So yesterday we announced a brand new, the acquisition of a brand new holiday park, up in the Byron region of northern New South Wales. We entered into this segment because we felt it was great opportunities for consolidation, a rollup I guess you could say, typically targeting two key markets. Firstly grey nomads, which is very much aligned with our seniors’ business and then secondly, young families with kids. We find the holiday business is quite seasonal, but over the year delivers us highly predictable cash flow and really supports our development business.

Jessica Amir: What can you tell us about Ingenia Gardens senior villages?

Simon Owen: This is a core part of our platform; we own 26 seniors’ rental villages. And we’re looking after around 1,600 seniors, predominantly single women moving in, in their mid to late seventies. We charge them a weekly rent and we also have a chef onsite, who prepares some great meals and I’ve eaten there many times myself. We see that as a great cash flow business. And no new seniors’ rental villages have been developed in Australia, for now around 10 years. And we’re really just finalising the feasibility on creating a new one up in Brisbane, which we’re pretty excited about.

Jessica Amir: Now can you give us a comment about your strategy and your appointment of Gary Shiffman?

Simon Owen: Over the last couple of years, we’ve identified probably our biggest challenge has been accessing more capital. So in November last year, we entered into a strategic partnership with Sun Communities (NYSE:SUI), which is an $11 billion REIT based in the US. They’re one of the largest owners operators and developers of manufactured housing. So we entered into a strategic partnership with them; they bought a 10 per cent stake in Ingenia.

And their Managing Director and Chairman, Gary Shiffman, joined the Board of Ingenia back in December and that’s really exciting. Not only do we have a really strategic partner, who can help us fund the acceleration of our rollout of new communities in Australia, but actually they’ve been in the market for over 40 years. And there’s incredible intellectual property that the Ingenia team now has access to. So we’re really excited.

Jessica Amir: Now can you tell us about your share price over the last 12 months?

Simon Owen: The share price is up over 20 per cent, in the last 12 months and I think in the property space, that’s pretty unique. We’re pleased with that, but we don’t try and get too focused on what the share price is doing, day by day. We’ve got our strategy clearly mapped out and we do think that over the next three to five years, if we can execute on that well, then our shareholders should do very well.

Jessica Amir: Now speaking about the long-term horizon or even shorter, the second half of this financial year. What’s the outlook?

Simon Owen: The outlook is - the absolute number one priority for us is making sure we hit our guidance. And that is 350 plus settlements, its EBIT growth upwards of 15 per cent and earnings per share growth, of five to 10 per cent. That’s really our absolute key focus. Beyond that, we’re due to start the launch of a new community up in Hervey Bay in Queensland, in the next couple of months. And we also have six properties under due diligence, that we’ll fold into our new strategic partnership with Sun Communities.

On top of that, we are looking at quite a number of acquisitions of existing communities at the moment. So we do have a lot in front of us for the next six to 12 months.

Jessica Amir: Thank you so much for your time; it’s been a pleasure Simon Owen, thank you.

Simon Owen: Thanks Jess, it’s great to be here again.


Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.