Ingenia Communities Group · ASX:INA
Ingenia Communities — H1 FY2014 Earnings Presentation
45 slides from Ingenia Communities's earnings presentation, Feb 25, 2014
Slide 1: 2014 Half Year Results Presentation
Ingenia Communities Group For personal use only 2014 Half Year Results Presentation 25 February 2014 ASSEMBLING THE LEADING MANUFACTURED HOMES ESTATE PORTFOLIO
Slide 2: Agenda
Agenda For personal use only Group overview p3 Announced acquisitions p4 Key highlights p5 Key financials p6 Capital management p8 Portfolio update p11 Strategy and development p23 Outlook p27 Appendices p28 p2
Slide 3: Group overview
Group overview as at 25 February 2014 For personal use only Diversified earnings base of 57 assets Highest Performing S&P/ASX 300 AREIT over 1, 3 & 5 years Proforma asset value (post announced acquisitions) 120 INA vs. Benchmark indices to 31 Dec 2013 (% p.a.)1 Australian 97.5% DMF, Australian 100 2
Slide 4: Building market leading NSW portfolio
Building market leading NSW portfolio Contracts exchanged on further three communities For personal use only Town and Country, Sydney Key Metrics Town & Country Estate Sun Country Holiday Marsden Park (Sydney) Village Mulwala (SW NSW) Within North West growth A unique and highly popular corridor – o
Slide 5: Key highlights
Key highlights For personal use only > Accelerated acquisitions and development platform • Largest park owner in NSW – acquired 14 Manufactured Home Estates (MHEs) since Feb 2013 • Growing development pipeline of 1,111 units with $277 million end value > Improving operations with significantly stron
Slide 6: Key financials
Key financials For personal use only Outdoor pool at Drifters Village, Kingscliff NSW p6
Slide 7: Key financials
Key financials For personal use only 6 months to 6 months to > Results reflective of Group strategy to exit overseas Key financial metrics 31 Dec 2013 31 Dec 2012 Change operations and invest recycled and new capital into MHE acquisitions pipeline. Net profit / (loss) $4.3m $2.4m 80% EBIT– continuin
Slide 8: Capital management
Capital management For personal use only Open Day – showcasing Stage 2 development at Ridge Estate Village, Maitland NSW p8
Slide 9: Capital management: capital recycling a key priority
Capital management Capital recycling is a key near term priority For personal use only Australian debt facility increased and repriced Debt headroom – 31 Dec 2013 > Existing facility refinanced to assist fund the Group’s A$m acquisition and development strategy 140 • Facility increased by $47.5m to
Slide 10: Steady deployment into immediately accretive acquisitions
Capital management Steady deployment into immediately accretive acquisitions For personal use only 12 on-strategy MHE acquisitions funded by two successful Capital deployment for MHE acquisitions capital raisings with more to be announced Capital for Position at $123 million investment 25 Feb 2014 T
Slide 11: Portfolio update
Portfolio update For personal use only High quality tourist cabins at Nepean River Holiday Village, Penrith NSW p11
Slide 12: Diversified Australian portfolio dominated by cash yielding assets
Portfolio update Diversified Australian portfolio dominated by cash yielding assets For personal use only Today, Ingenia has Australian 57 communities and growing Rental Deferred 34 villages Management Fee > 1,796 units 9 villages > In all States except SA > 961 units > WA, QLD and NSW > Five villag
Slide 13: Increasing emphasis on cash yielding assets
Portfolio update Increasing emphasis on cash yielding assets For personal use only 30 June 2013 asset value Proforma asset value (post announced acquisitions)1 Australian Australian Australian Australian Rental, 32% DMF, DMF, 35% Rental, 44% 23% $119.1m $227.5m ► x NZ Students, 13% $346.6m NZ Studen
Slide 14: Active Lifestyle Estates (MHE): An emerging asset class
Active Lifestyle Estates (MHE) An emerging asset class For personal use only > Manufactured homes are a long established property class in the US with multiple US$1b+ Listed REITs > Significant potential for MHE cap-rate compression over next five years Prime Office1 Industrial1 7.5% 5.7% 7.9% 6.3%
Slide 15: Active Lifestyle Estates (MHE): Key driver of earnings growth
Active Lifestyle Estates (MHE) Key driver of earnings growth in future periods For personal use only KEY DATA 1H14 OVER THE SIX MONTHS to 31 DEC 2013 Total properties: 10 > Transitioned eight new assets into the ALE portfolio. Total permanent sites: 693 > Transitional period typically takes 3 – 6 mo
Slide 16: Active Lifestyle Estates (MHE): FY14 sales performance to date
Active Lifestyle Estates (MHE) FY14 Sales performance to date For personal use only Village New Sales Refurbished Contracted and Available Homes under (6 mths to 31 Dec 2013) Sales Reserved Stock construction The Grange (Morisset) 2 2 2 2 - Nepean (Penrith) 1 - 2 1 5 Drifters (Kingscliff) - - - - 1
Slide 17: Trading updates: The Grange Village
Active Lifestyle Estates (MHE) Trading updates For personal use only The Grange Village, Morisset NSW 145 permanent homes / 50+ development upside Settled March 2013 Development and Sales progress to 18 Feb 2014 (from acquisition) New sales 4 Refurbished sales 4 Contracted and reserved 2 Available s
Slide 18: Trading updates: Nepean River
Active Lifestyle Estates (MHE) Trading updates For personal use only Nepean River, Penrith NSW 101 permanent homes / 67 Short term tourist sites / 25+ development upside Settled August 2013 Development and Sales progress to 18 Feb 2014 (from acquisition) New sales 2 Refurbished sales - Contracted an
Slide 19: Garden Villages (Rental)
Garden Villages (Rental) Occupancy growth and acquisitions drive earnings growth For personal use only OVER THE SIX MONTHS to 31 DEC 2013 KEY DATA 1H14 1H13 > Occupancy recovered from seasonal winter dip and closed at a high of 86% as at 31 Dec 2013. Total properties 29 25 > Portfolio trending well
Slide 20: Ingenia Care Assist (ICA)
Ingenia Care Assist (ICA) Supporting occupancy growth within GV portfolio For personal use only What is Ingenia Care Assist? > A virtual care facilitation that delivers government funded home care packages to our villages by accredited local care providers > ICA is a free service for our residents e
Slide 21: Settlers Lifestyle (DMF)
Settlers Lifestyle (DMF) Focus on low risk expansion of existing communities For personal use only KEY DATA OVER THE SIX MONTHS to 31 DEC 2013 1H14 1H13 > Softer sales resulted in 21 settlements achieving $4.0m, with an additional 30 contracts in place. Total properties: 9 9 > Challenging market acr
Slide 22: New Zealand Students portfolio
New Zealand Students portfolio Sale process underway For personal use only > Refurbishment program complete and tertiary institutions moved in and paying rent > Significant interest in assets due to 15-year lease covenant > NZ property market very buoyant due to strong economy, reinvestment out of C
Slide 23: Strategy and development
Strategy and development For personal use only One Mile Beach Holiday Village, Anna Bay NSW p23
Slide 24: MHE Strategy
MHE Strategy Abundance of opportunities for highly accretive growth For personal use only Two years of research invested in assembling a proprietary database of over 2,000 Caravan and Tourist Parks and MHEs across the East Coast and WA > Existing key participants own < 5% of the market – considerabl
Slide 25: MHE strategy: Acquire, reposition, develop
MHE strategy Acquire, reposition, develop For personal use only Well advanced Acquire and integrate MHE and In 12 months, we have established a market leading portfolio of 14 MHEs in 1 Tourist Parks with significant NSW comprising over 2,000 home and tourist sites and a development land bank and ups
Slide 26: Development pipeline
Development Significant low risk pipeline now in place to drive medium term growth For personal use only Development pipeline as at Completion Vacant Development Medium 21 February 2014 Value ($m) Stock (no.) Potential (no.) FY14 FY15 FY16 FY17+ term target The Grange NSW 12.5 - 50+ Ettalong Beach N
Slide 27: Outlook
Outlook For personal use only ► Continue to assess accretive MHE opportunities to capitalise on Ingenia’s first movers advantage ► Strong DMF sales and increasing MHE earnings will contribute toward stronger 2H results ► Expand Ingenia Care Assist across Garden Villages to support occupancy growth a
Slide 28: Appendices
Appendices For personal use only Big 4 Valley Vineyard, Cessnock NSW p28
Slide 29: Operating income
Appendix 1 Operating income For personal use only 1H14 1H13 Operating income (A$m) (A$m) Comments Continuing operations - Garden Villages 4.9 4.1 Higher occupancy & 6 month contribution from 5 new villages - Settlers Lifestyle 1.7 2.5 Lower conversion sales volumes - Active Lifestyle Estates 1.3 - O
Slide 30: EBIT to net profit reconciliation
Appendix 2 EBIT to net profit reconciliation For personal use only $m 7.0 0.8 6.0 5.2 0.2 5.0 1.0 4.3 4.0 3.6 (0.4) (0.1) 3.0 (2.4 ) 2.0 1.0 0.0 EBIT Income tax Net finance Operating Unrealised net Income tax Change in fair Other Net profit benefit costs income FX gain benefit related value of to st
Slide 31: Cashflow in detail
Appendix 3 Cashflow in detail For personal use only Cashflow Amount (A$m) Opening cash at 1 July 2013 37.6 Cashflow generated from operations: Continuing Operations 5.6 Discontinuing Operations 0.4 Net borrowing costs paid Continuing Operations (2.1) Discontinuing Operations (0.7) Income tax paid –
Slide 32: Balance sheet
Appendix 4 Balance sheet For personal use only Australian NZ Adjustments1 Total Balance sheet Operations Students Statutory (A$’000) Balance Sheet Cash 19,784 1,236 (1,236) 19,784 Inventory 998 - - 998 Investment property and property under development 437,162 45,269 (45,269) 437,162 Other assets 9,
Slide 33: Net Asset Value (NAV)
Appendix 5 Net Asset Value (NAV) For personal use only Security price 47.0¢ Cents per security Current security price is 34% 40.0 premium to NAV 0.8 0.1 0.3 (0.5) 34.4 (0.1) 35.0 35.0 30.0 2.5 NZ Students (7%) 1.0 US Escrows (3%) 25.0 1.0 RE Assets (3%) 9.1 Active Lifestyle Estates (26%) 8.8 Settler
Slide 34: Valuations summary
Appendix 6 Valuations summary For personal use only 31 Dec 13 30 Jun 13 Movement Movement 31 Dec 13 30 Jun 13 Valuation Valuation Cap rate/ Cap rate / Valuations Discount Discount rate1 rate1 ($m) ($m) ($m) (%) (%) (%) Key drivers of valuation movement Garden 101.5 99.7 1.8 1.9 10.0 9.6 • Net uplift
Slide 35: Australian debt facility
Appendix 7 Australian debt facility For personal use only Australian Debt1 Commentary for Australian Debt Increase of $47.5m. New facility includes a reduction in facility line fees and margin. Line fee Margin Total Limit ($m) Revolver A$129.5m LVR 40%-50% 1.05% 1.05% 2.10% LVR < 40% 0.925% 0.925% 1
Slide 36: Portfolio statistics: Active Lifestyle Estates (MHEs)
Appendix 8 Portfolio statistics: Active Lifestyle Estates (MHEs) For personal use only Book Value Development Property Name Location 31 Dec 2013 (A$m) Cap Rate Permanent Sites Short Term Sites1 Total Sites upside Manufactured Home Estates The Grange Morissett, NSW 10.8 9.1% 145 - 145 50+ Ettalong Be
Slide 37: Portfolio statistics: Garden Villages (Rental)
Appendix 9 Portfolio statistics: Garden Villages (Rental) For personal use only Book Value 31 Dec 2013 Occupancy Occupancy Property Name Location (A$m) Cap Rate Total Units 31 Dec 2013 30 Jun 2013 Western Australia Swan View Gardens Swan View 5.5 10.3% 72 100% 100% Yakamia Gardens Yakamia 2.5 10.5%
Slide 38: Portfolio statistics: Garden Villages (Rental) (continued)
Appendix 9 (continued) Portfolio statistics: Garden Villages (Rental) For personal use only Book Value Occupancy Occupancy Property Name Location 31 Dec 2013 (A$m) Cap Rate Total Units 31 Dec 2013 30 Jun 2013 Victoria Grovedale Gardens Grovedale 3.9 10.3% 51 94% 98% St Albans Park Gardens St Albans
Slide 39: Portfolio statistics: Settlers (DMF)
Appendix 10 Portfolio statistics: Settlers (DMF) For personal use only Book Value Occupancy Occupancy Property Name Location 31 Dec 2013 (A$m) Discount Rate Total Units 31 Dec 2013 30 Jun 2013 Traditional DMF Villages Lakeside Ravenswood, WA 23.1 13.5% 241 97% 96% Ridgewood Rise Ridgewood, WA 19.6 1
Slide 40: Settlers (DMF) sales
Appendix 11 Settlers (DMF) sales For personal use only Traditional DMF DMF Conversions WA QLD NSW QLD NSW Lakeside Meadow Ridgewood Noyea Ridge Rock- Forest Gladstone Cessnock Total Springs Rise (strata) Estate hampton Lake 6 months to 31 Dec 2013 No. of new sales 2 - - 1 - 9 5 2 2 21 Average new sa
Slide 41: Portfolio statistics: Offshore assets
Appendix 12 Portfolio statistics: Offshore assets For personal use only Book Value Book Value Book Value “as complete” 31 Dec 2013 31 Dec 2013 Cap Rate Property Name Location (NZ$m) (NZ$m) (A$m)1 “as complete” NZ Students assets Cumberland House Wellington, NZ 16.4 15.8 14.5 7.8% Education House Wel
Slide 42: Cluster strategy drives operational efficiencies
Appendix 13 Cluster strategy drives operational efficiencies For personal use only NORTH COAST NSW Garden Villages, Rental Efficiencies across sales and • Taloumbi Gardens, Coffs Harbour • Oxley Gardens, Port Macquarie marketing, management, • Taree Gardens, Taree Active Lifestyle Estates MHE develo
Slide 43: Ingenia operating model
Appendix 14 Ingenia operating model A scalable platform to enable quick and efficient growth For personal use only Function Key responsibilities Ingenia The Corporate office is responsible for strategy > Executive Management Corporate development and execution, capital management, > Group strategy O
Slide 44: MHE Competitive landscape
Appendix 15 MHE Competitive landscape For personal use only Major operators represent <5% of market opportunity Major Operators No. of parks Locations Strategy Discovery Holiday 3 in NSW Across Australia, Largest Parks portfolio recently acquired from Parks 28 Total mostly in QLD, private equity by
Slide 45: Disclaimer
Disclaimer For personal use only This presentation was prepared by Ingenia Communities Holdings Limited (ACN 154 444 925) and Ingenia Communities RE Limited (ACN 154 565 990) as responsible entity for Ingenia Communities Fund (ARSN 107 459 576) and Ingenia Communities Management Trust (ARSN 122 928
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