Ingenia Communities Group · ASX:INA
Ingenia Communities — Citigroup Global CEO Conference 2020
45 slides from Ingenia Communities's conference presentation, March 2020
Slide 1: Citigroup Global CEO Conference
Presented by CEO, Simon Owen March 2020 Ingenia Communities Group Citigroup Global CEO Conference 1
Slide 2: Contents
Contents Business overview 3 Recent results 5 Performance and capital management 7 Operations 12 Development 18 Strategy & Outlook 24 MH & RV: US vs Australia 30 Appendices 39 Contact Information 40 Note: All figures are in USD unless otherwise stated (exchange rate AUD:USD 0.67). COMMUNITY CLUBHOUS
Slide 3: Ingenia Communities Group Overview
Ingenia Communities Group Overview > ASX Code: INA > Attractive organic growth enhanced by roll-up of fragmented industry sector > Market Cap: $1.4 billion (US $1 billion) > Experienced team with scalable platform in place driving margin expansion and growing cash flows > Leading provider of manufac
Slide 4: Business Overview
Business Overview Rental base growing through acquisition and development $ Stable rent base $1.1B $2.1 million/pw Over 9,800 Income producing sites Property Portfolio 4,260 75 Development sites 9 communities under development Communities 37 Lifestyle and Holiday Communities >1.1 million ‘room night
Slide 5: Recent Results
Recent Results INGENIA LIFESTYLE LAKE CONJOLA, NSW 5
Slide 6: Highlights
Highlights • Revenue of $116.9 million – up 25% on 1H19 FINANCIAL • EBIT $32.2 million – up 40% on 1H19 • Underlying EPS 10.7 cents – up 32% on 1H19 • Rental revenue continuing to grow – up 13% on 1H19 to $49.8 million OPERATIONS • Continuing Ingenia Lifestyle margin expansion – up 110 basis points
Slide 7: Performance and Capital Management
Performance and Capital Management INGENIA GARDENS SWAN VIEW, WA 7
Slide 8: Key financials
Key financials Successful integration of new communities delivering increased earnings KEY FINANCIAL METRICS 1H20 1H19 Revenue $116.9m $93.4m 25% Revenue and EBIT growth driven by increasing rents, recent acquisitions and settlements growth EBIT1 $32.2m $22.9m 40% Underlying EPS growth driven by str
Slide 9: Underlying earnings growing as business expands
Underlying earnings growing as business expands EBIT 1H20 1H19 Lifestyle and Holidays Operations $16.1m $13.5m 19% Expanding rental base – driven by growth in rental rates, recent acquisitions, additional rental cabins and new home settlements Lifestyle Development $15.1m $8.8m 72% Ingenia Gardens $
Slide 10: Capital management
Capital management Capital position enhanced DEBT METRICS 31 DEC 19 30 JUN 19 Loan to value ratio (covenant <50%) 24.9% 29.8% $225m 3.2% 3.8YRS 24.9% Gearing ratio1 19.3% 23.7% COST OF Interest cover ratio (total) DEBT WT AV DEBT 7.6x 6.4x DRAWN LVR (covenant >2x) CAPACITY4 MATURITY4 DEBT3 Total deb
Slide 11: Growth in value across core portfolios
Growth in value across core portfolios Lifestyle cap rates continue to compress • Independent valuation of 22 assets in 1H20 Av. Cap Rate Av. Cap Rate Dec 19 Portfolio Dec 191 Dec 181 Book Value • Ingenia Gardens and Lifestyle and Holidays portfolio value up 4.9% Lifestyle and Holidays 7.44% 7.68% $
Slide 12: Operations
Operations Core Rental business delivering growth INGENIA HOLIDAYS WHITE ALBATROSS, NSW 12
Slide 13: Ingenia Lifestyle and Holidays
Ingenia Lifestyle and Holidays Expanding rental base in capital city and coastal markets • Over 30% increase in permanent sites over the past 12 months KEY DATA 31 DEC 19 31 DEC 18 • Portfolio enhanced as development continues to accelerate and new Total properties1 37 36 communities acquired Perman
Slide 14: Ingenia Lifestyle and Holidays
Ingenia Lifestyle and Holidays Rental income growing KEY DATA 1H20 1H19 Lifestyle and Holiday rental income up 17% Permanent rental income $14.7m $11.9m 24% Further margin expansion Annuals rental income $2.3m $2.5m 8% • Margin positively impacted by growing rents and scale leverage Tourism rental i
Slide 15: Ingenia Holidays
Ingenia Holidays Strong first half as new assets contribute Holidays revenue up 14% on prior corresponding period • Revenue Per Available Room (RevPAR) up 4% (like for like) • Occupancy up 8% (like for like) Strong forward bookings in place - April bookings up more than 15% on prior year • Growing m
Slide 16: Ingenia Gardens (seniors rental)
Ingenia Gardens (seniors rental) Strong, stable, government supported rent KEY DATA 1H20 1H19 Total revenue $12.4m $12.5m EBIT $5.2m $5.1m EBIT margin 41.5% 41.0% 31 DEC 19 31 DEC 18 Total properties 26 26 Total units 1,376 1,375 Av. weekly rent $342 $343 Occupancy 91.6% 90.8% 31 DEC 19 30 JUN 19 IN
Slide 17: Funds Management Platform
Funds Management Platform Generating new revenue streams and capital efficiency Acquisition of Eighth Gate platform complete August 2019 Funds Management is a key growth platform • Six funds with $140 million in assets under management • Strong appetite from investor base • Includes 1,600 income pro
Slide 18: Development
Development Consolidating market leadership INGENIA LIFESTYLE PLANTATIONS, NSW 18
Slide 19: Development
Development Sales volumes continue to grow KEY DATA 1H20 1H19 New home settlements up 22% on prior year New home settlements 140 115 22% • Average above ground margin per new home >45% (43% 1H19) Av. new home sales price1 420 363 16% EBIT margin up 490 basis points as scale benefits emerge ($’000) D
Slide 20: Development Joint Venture with Sun Communities
Development Joint Venture with Sun Communities Generating new revenue streams and capital efficiency Joint Venture progressing well • Initial acquisitions complete • Terms agreed for third party debt finance First settlements at Freshwater (Burpengary, QLD) from April 2020 • Construction program wel
Slide 21: Pipeline supporting ongoing development returns
Pipeline supporting ongoing development returns VACANT DEVELOPMENT COMMENCEMENT TO COMPLETION SITES REMAINING* KEY PROJECTS Current Dec 20 Dec 21 Dec 22 Latitude One 272 Strong sales rate – 111 approved sites remaining Potential 161 additional sites (STA) Greenfield projects Plantations 129 Second g
Slide 22: Development progress (Latitude One)
Development progress (Latitude One) AUGUST 2017 AUGUST 2018 FEBRUARY 2020 Capitalisation rate 6.02% AUGUST 2019 22
Slide 23: Sustainability
Sustainability As one of Australia’s largest providers of affordable seniors and holiday accommodation, Ingenia is uniquely positioned to deliver on broader social and environmental outcomes ESG initiatives and reporting are a key focus for Board and Management • Audit and Risk Committee will overse
Slide 24: Strategy & Outlook
Strategy & Outlook INGENIA LIFESTYLE LATITUDE ONE, NSW 24
Slide 25: Strategic initiatives driving growth
Strategic initiatives driving growth Building rental base and enhancing capital efficiency Acquisition of Colonial Village and Bevington Shores adds 347 yielding On balance sheet acquisitions – sites to the portfolio 1 two communities settled with more to follow Lake Munmorah Residential Resort
Slide 26: An ageing population underpins demand growth
An ageing population underpins demand growth Our target market is deep, growing and has limited alternatives • Australians aged 65 or over represent 27% of the population • Some 40% of seniors aged 65-74 have <$500k net wealth – represents over (7 million people) and will increase to 32% by 2050 (11
Slide 27: Despite growing demand, supply growth remains constrained
Despite growing demand, supply growth remains constrained Ingenia’s sector leading development pipeline provides a significant competitive advantage Forecast demand in 2026 The population aged 65 plus is forecast to grow to 7,000+ 5 million persons by 2026 homes p.a. • This represents an average inc
Slide 28: Sector remains immature, but interest is building
Sector remains immature, but interest is building Larger corporations and private equity groups emerging Competitive Landscape (Total Sites) • There is growing interest from domestic and offshore corporates, however Ingenia maintains a strong Long Term Tourism Development Pipeline competitive positi
Slide 29: FY20 focus
FY20 focus Improve performance of existing assets to drive growth in rental revenue Expand in key markets through acquisition and development – move to clear sector leadership Continue focus on sales and marketing to successfully launch new projects and deliver new rental contracts Capitalise on opp
Slide 30: MH & RV: United States vs Australia
MH & RV: United States vs Australia INGENIA HOLIDAYS BROULEE, NSW 30
Slide 31: Rapidly ageing population
Rapidly ageing population United States Australia 15.9% Over 65 (52 million persons) 15.8% Over 65 (3.9 million persons) 329 Million people 25 Million people Average annual income for a senior through social $18,276 USD security $16,259 USD Annual income for a senior through social security US Popul
Slide 32: Housing market
Housing market United States Australia $274,500 USD Median house price $542,260 USD Median house price 63% Detached dwellings 71% Detached dwellings 64% Home Ownership 65% Home Ownership Wholesale price for a quality new manufactured home Housing affordability crisis – $63,500 USD Housing affordabil
Slide 33: Market for manufactured homes
Market for manufactured homes United States Australia >65,000 MH and RV communities >2,500 MH and RV communities ~6% Population living in MH community <1% Population living in MH community • MHE population a mix of individuals, families and retirees • MHE population predominantly retirees • Homes co
Slide 34: MHE landscape
MHE landscape United States Australia >$30.0b USD REIT market cap <$1.6b USD REIT market cap Multi family asset class significant park of market No multi family asset class • Rent based market • Cashflows driven by stable, government supported rents • Providing finance to residents a key part of the
Slide 35: Similarities
Similarities > Many MH communities are converted RV communities > Rapidly consolidating market driven by large REITs, sovereign wealth/pension funds and private equity – cap rates continue to firm > Significant lack of affordable accommodation with limited new supply coming online > Due to very tigh
Slide 36: Differences
Differences Australia > Brownfield (expansion/conversion) development most > No purchaser credit….AT ALL profitable and highly sought part of value chain > In RV parks premium cabins for ‘time poor, outdoor aspirational > Many Greenfield (new communities) under construction families’ fastest growing
Slide 37: Valuations
Valuations United States Australia Bevington Shores – Hacienda del Rio – Community Community transacted December 2019 for $16.8 million transacted January 2019 for $115.3 million USD USD Location Edgewater, FL Location NSW Central Coast Established 730 sites MH community 186 sites community Cap rate
Slide 38: Differences
Differences Australia > Only one National manufactured home builder (4 sites) – > No MHE resellers – park owners contract directly with builder everyone else single factory, family owned business > Economics of developing a new MH community compelling > Takes 6-8 weeks to build home, plus 2-3 weeks
Slide 39: Appendices
Appendices INGENIA HOLIDAYS WHITE ALBATROSS, NSW 39
Slide 40: Underlying profit
Appendix 1 Underlying profit 1H20 1H19 ($M) ($M) Lifestyle and Holidays – Operations 16.1 13.5 Lifestyle Development 15.1 8.8 Ingenia Gardens 5.2 5.1 Fuel, food & beverage 0.5 0.4 Other 0.3 (0.3) Portfolio EBIT 37.2 27.5 Corporate costs (5.0) (4.6) EBIT 32.2 22.9 Share of loss of a Joint Venture (0.
Slide 41: EBIT and underlying profit by segment
Appendix 2 EBIT and underlying profit by segment LIFESTYLE LIFESTYLE INGENIA FUEL, FOOD CORPORATE ($M) TOTAL OPERATIONS DEVELOPMENT GARDENS AND BEVERAGE AND OTHER1 Rental income 38.8 - 11.0 - - 49.8 Lifestyle home sales - 55.4 - - - 55.4 Catering income - - 1.3 - - 1.3 Fuel, food and beverage income
Slide 42: Cash flow
Appendix 3 Cash flow 1H20 1H19 ($M) ($M) Opening cash at 1 July 20.2 14.5 Rental and other property income 63.0 54.1 Property and other expenses (52.5) (45.3) Net cash flow associated with lifestyle home development 21.7 12.9 Net borrowing costs paid (5.4) (4.7) All other operating cash flows 0.4 0.
Slide 43: Joint Venture with Sun Communities
Appendix 4: Joint Venture with Sun Communities Overview • A 50:50 Joint Venture, managed by Ingenia, has been established to invest in greenfield lifestyle communities STRUCTURE • Funding will be a mix of equity and bank debt • Ingenia will earn origination, development and asset management fees FEE
Slide 44: Contact Information
Contact Information Simon Owen Donna Byrne Chief Executive Officer and General Manager Investor Relations Managing Director Tel: +61 2 8263 0507 Tel: +61 2 8263 0501 dbyrne@ingeniacommunities.com.au sowen@ingeniacommunities.com.au Ingenia Communities Group Level 9, 115 Pitt Street Sydney NSW 2000 44
Slide 45: Disclaimer
Disclaimer This presentation was prepared by Ingenia Communities Holdings Limited (ACN 154 444 925) anything contained in or omitted from this presentation. and Ingenia Communities RE Limited (ACN 154 464 990) as responsible entity for Ingenia The forward looking statements included in this presenta
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