Ingenia Communities Group · ASX:INA
Ingenia Communities — FY2012 Earnings Presentation
50 slides from Ingenia Communities's earnings presentation, Aug 29, 2012
Slide 1: 2012 Annual Results Presentation
Ingenia Communities Group 2012 Annual Results Presentation For personal use only 29 August 2012
Slide 2: Agenda
Agenda For personal use only Highlights Market overview Group overview Key financials Capital management Portfolio update Strategy and outlook Appendices p2
Slide 3: Highlights
Highlights For personal use only Operations > Garden Villages Rental occupancy at record high of 83.4% > DMF Conversion villages recorded 51 settlements grossing $9.7 million in FY12 Change of > Successful management internalisation completed in June 2012, with $4.1m support package from ING managem
Slide 4: Market overview
Market overview For personal use only Our operating environment Demand from residents remains steady particularly at the affordable end of the market > Noticeable pick-up in enquiries and sales in key WA and QLD markets Supply remains well below long term requirements > Few new villages being built
Slide 5: Group overview
Group overview For personal use only Transitioning to a leading Australian Seniors living business Garden Villages Portfolio Australia 26 rental properties across Australia A$87.1 million book value Settlers Lifestyle Portfolio 4 DMF properties in WA & QLD A$54.0 million 3 DMF Conversion prope
Slide 6: Group snapshot
Group snapshot as at 20 August 2012 For personal use only Security price / NAV 5-year operating income and net profit 36 NAV x 50 50 33 x FY12 NAV: 34.3¢ 45 0 30 20 Aug price: 25¢ 40 Operating income $m (50) Security price (¢) 27 x 1H12 NAV: 33.2¢ 35 Net Profit $m 3 Jan price: 15¢ 30 (100) 24 FY11 N
Slide 7: Key financials
Key financials For personal use only Enjoying the Common Room at Marsden Gardens, Marsden , QLD p7
Slide 8: Key financial metrics
Key financials For personal use only Key financial metrics 30 June 2012 30 June 2011 Net profit / (loss) $m 33.6 158% 13.1 Operating income – continuing operations1,2 $m 2.1 NA (1.8) Operating income - total1 $m 7.4 8% 6.9 Operating income per security cents 1.7 8% 1.6 Net cashflow from operations $
Slide 9: Operating income versus net profit
Key financials For personal use only Operating income versus net profit Net profit driven by $29.6m increase in valuations of US Seniors New York portfolio 39.0 2.8 (2.7) 36.0 26.7 (0.6) 33.6 33.0 30.0 27.0 24.0 A$m 21.0 18.0 15.0 12.0 9.0 7.4 6.0 3.0 0.0 Operating income Discontinued operations Gai
Slide 10: NAV composition – upside potential remains
Key financials For personal use only NAV composition –upside potential remains Cents per security 34.3¢ 40.0 35.0 0.6 34.3 5.3 30.0 1.7 0.7 0.1 25.9 25.0 1.4 NZ Students (4%) 3.2 DMF Conversion (9%) 7.9 Settlers (23%) 12.7 Garden Villages (37%) 20.0 9.1 US Seniors (27%) 15.0 30/06/2009 30-Jun-11 For
Slide 11: Earnings reconciliation – FY 2012
Key financials For personal use only Earnings reconciliation – FY 2012 14 (0.1) 1.2 (2.5) 12 0.5 0.3 3.4 (1.1) 10 (1.2) 8 6.9 7.4 A$m 6 4 2 0 FY11 DMF Garden US Students Finance Fund Derivatives US Seniors Settlers FY12 Operating Conversion Villages Costs Expense Income Operating Income Income > Str
Slide 12: Capital management
Capital management For personal use only Enjoying the Clubhouse at Settlers Meadow Springs, Mandurah, WA p12
Slide 13: Capital management overview
Capital management For personal use only Overview > NZ$20.8m non-recourse debt facility has been extended for seven months to March 2013 > A$82.0m Australian debt facility refinanced for three years to September 20151 Debt maturity profile – at 30 June 2012 and Post Look through gearing (%) – 30 Jun
Slide 14: Long term funding secured with refinance of Australian debt facility
Capital management For personal use only Long term funding secured with the refinance of Australian debt facility > A$82.0 million Australian debt facility refinanced for a further three years to September 20151 > Enables the Group greater flexibility to pursue a disciplined capital management strat
Slide 15: Distributions update
Capital management For personal use only Distributions update > Recommencement of distributions to securityholders since suspension in September 2008 > 0.5¢ per stapled security final distribution declared which is expected to be 100% tax deferred for resident investors > Directors anticipate 0.5¢ i
Slide 16: A disciplined approach to capital allocation
Capital management For personal use only A disciplined approach to capital allocation remains at the forefront of group strategy Recurrent earnings Balancing growth funding and capital return to securityholders Exploring alternate capital Recommencement of distribution Funding growth management init
Slide 17: Portfolio update
Portfolio update For personal use only A display suite at Settlers Ridge Estate, Hunter Valley, NSW p17
Slide 18: Diversified portfolio of seniors business models
Portfolio update For personal use only The Group has a diversified portfolio of seniors business models 30 June 2012 Australian Australian Australian NZ US Rental Portfolio Rental DMF DMF Students (New York) 30 June Conversion 2012 Properties 26 4 3 3 6 42 Units 1,372 677 216 359 917 3,541 Book Valu
Slide 19: Transition to an Australian only seniors platform
Portfolio update For personal use only Transition to an Australian only seniors platform is largely complete Geographical allocation by value Geographical allocation by value as at 30 June 2012 Proforma position1 NZ NZ Students Students 5% 10% Australian Rental 26% Australian DMF Conversion Australi
Slide 20: National portfolio with considerable scale benefits
Portfolio update For personal use only National portfolio with considerable scale benefits QUEENSLAND Settlers Lifestyle DMF Conversion Garden Villages No of properties: 1 3 2 Total value: A$6.6m A$22.0m A$10.4 m Total units: 149 216 146 WESTERN AUSTRALIA Settlers Lifestyle Garden Villages No of pro
Slide 21: Portfolio update – Garden Villages (Rental)
Portfolio update – Garden Villages (Rental) For personal use only KEY DATA KEY ACTIVITY OVER 12 MONTHS FY 2012 FY 2011 Occupancy: 83% 81% > Achieved occupancy of 83.4% as at 30 Jun 2012, portfolio trending well towards long term target of 89% Net property income: $7.0m $6.5m > Events based resident
Slide 22: Garden Villages (Rental) performance segmentation
Portfolio update – Garden Villages (Rental) For personal use only • 50% average 14 villages presently trading at margin occupancy 85% and above. These • $7.3k average are our Star performers where High profit per unit focus is on maintaining occupancy • $69.6k average and improving margins value per
Slide 23: Portfolio update – DMF Conversion
Portfolio update – DMF Conversion For personal use only KEY DATA KEY ACTIVITY OVER 12 MONTHS FY 2012 FY 2011 Total properties 3 3 > In FY12, 51 settlements were achieved totaling gross sales of $9.7m, with an additional 14 contracts in place worth $2.5m Net property income: $3.9m $0.5m > 38% of tota
Slide 24: Portfolio update – Settlers Lifestyle (DMF)
Portfolio update – Settlers Lifestyle (DMF) For personal use only KEY DATA KEY ACTIVITY OVER 12 MONTHS FY 2012 FY 2011 Occupancy: 96% 95% > Gradual recovery in the WA residential market has resulted in a steady increase in enquiry levels and a reduction in sales lead DMF income: $0.9m $1.4m time Dev
Slide 25: Portfolio update – Overseas portfolios
Portfolio update – Overseas portfolios For personal use only US Seniors Portfolio NZ Students Portfolio > In May 2012, conditional contracts were exchanged to sell > Student accommodation occupancy for 2012 has improved the Group’s interest in the New York portfolio for to 95% for FY12 US$173.3m. >
Slide 26: Strategy & outlook
Strategy & outlook For personal use only Ingenia is committed to operating and building a highly profitable Australian Seniors living portfolio Settlers Ridgewood Rise, Ridgewood WA p26
Slide 27: Strong organic growth opportunities within existing assets
Strategy For personal use only Strong organic growth opportunities embedded within existing assets Development forecast within existing portfolios as at 30 June 2012 Completion # of Value ($m) Units1 FY12 FY13 FY14 FY15 FY16+ Medium Active Development term target Ridgewood, WA $1.3 3 Settlers DMF Ri
Slide 28: Strategy – FY12 Score card
Strategy – FY12 Score card For personal use only Acquire partially built villages in new markets Planning Develop, Seed new business models • Assessing several accretive opportunities acquire and market niches Underway • Exploring partnership with care service providers for existing rental villages
Slide 29: Outlook
Outlook For personal use only > Repatriation of US sale proceeds anticipated in late 2012 will likely be used to invest in accretive acquisitions and development, a buyback and debt reduction > Assess various accretive acquisitions and development opportunities to expand Ingenia’s operational and ea
Slide 30: Appendices
Appendices For personal use only Settlers Noyea Park, Mt. Warren Park, QLD p30
Slide 31: Operating income
Appendix 1 – Operating income For personal use only FY12 FY11 Operating income (A$m) (A$m) Comments Continuing operations Australian Seniors - Garden Villages 7.0 6.5 Improved occupancy - DMF Conversion Properties 3.9 0.5 First full year contribution - Settlers Lifestyle 1.6 2.8 Less development 12.
Slide 32: Look through balance sheet
Appendix 2 – Look through balance sheet For personal use only Australian US NZ Total Adjustments Total Look-through balance sheet Seniors Seniors Students Look through Statutory (A$m) Balance Sheet Balance Sheet Cash 29.6 2.8 2.5 34.9 (5.3) 29.6 Investment property and property under 327.6 159.5 19.
Slide 33: Cashflow in detail
Appendix 3 – Cashflow in detail For personal use only Cashflow Amount A$m Opening cash at 1 July 2011 15.0 Cashflow generated from operations: Australian Seniors 21.4 Overseas portfolios 3.1 RE fees (including backlog of $8.0m) (10.0) Net borrowing costs paid (9.3) Income tax expense (0.1) Net Cashf
Slide 34: Cashflow reconciliation
Appendix 4 – Cashflow reconciliation For personal use only Cashflow reconciliation – FY 2012 80 29.9 (17.9) 70 60 (10.0) 50 21.4 (9.3) 40 A$m (2.1) (1.1) (1.2) (0.7) 32.8 30 3.2 3.1 20 15.0 0.2 2.3 10 0 > $10m RE fees paid to ING, of which $8m represents accrued but previously unpaid RE fees > $1.2m
Slide 35: Internalisation impact
Appendix 5 – Internalisation impact For personal use only Financial impact of management internalisation > $4.1 million support package received from ING > Overall gain on internalisation of $2.8m reflected in FY12 results Support package Impact > Accrued but unpaid RE fees of > Positively impacts F
Slide 36: Ingenia operating cost base
Appendix 6 – Ingenia operating cost base For personal use only Operating cost base (FY13 - indicative) Overheads $m Corporate (Sydney) Business development 0.8 Costs associated with development and acquisition activities (staff, investigation costs) Corporate office 2.6 Executives remuneration, fina
Slide 37: Debt facilities
Appendix 7 – Debt facilities For personal use only Australian Seniors Refinanced Facility1 US Seniors NZ Students3 Limit ($m) Revolver A$82.0m US$126.9m4 NZ$20.8m Amount drawn ($m) A$80.2m2 US$126.9m4 NZ$20.8m Loan to value ratio (LVR) actual 50% N/A 59.6% LVR bank covenant 50% N/A 60% Interest cove
Slide 38: Valuations
Appendix 8 - Valuations For personal use only Reduction in values primarily due to asset sales and monetisation of inventory 30 Jun 30 Jun Movement Movement 30 Jun 2012 30 Jun 2011 Valuations 2012 2011 Cap rate/ Cap rate / Key drivers of valuation movement Valuation Valuation ($m) (%) Discount Disco
Slide 39: Recent examples of Ingenia's capital allocation
Appendix 9 – Capital management For personal use only Recent examples of Ingenia’s capital allocation 1. Ridge Estate Village, Hunter Valley, NSW > Acquisition of a boutique retirement village comprising 11 occupied units, 5 completed but unsold units, and 26 serviced development sites > Purchase pr
Slide 40: Retirement living trends
Appendix 10 – Retirement living trends For personal use only Ingenia to focus on affordable segment of market Median Incomes By Age Median Net Worth By Age, 2010 2000 Weekly income ($) 1000 Net Worth ($’000) 1800 Quartile 4 $958k 1600 Quartile 4 800 1400 1200 600 1000 800 Quartile 3 400 Quartile 3 6
Slide 41: The Rental model
Appendix 11 – The Rental model For personal use only Ingenia Communities’ sizable rental portfolio provides clear differentiation from other A-REIT seniors living players DMF Income 5% Ingenia to focus on market segments where it Development Rental can increase or grow Profit 60% cash yields and low
Slide 42: Portfolio statistics: Garden Villages (Rental)
Appendix 12 Portfolio statistics: Garden Villages (Rental) For personal use only Book Value Property Name Location 30 Jun 2012 (A$m) Cap Rate Total Units Occupancy Western Australia Swan View Gardens Swan Valley, WA 5.5 10.6% 72 96% Yakamia Gardens Yakamia, WA 3.1 10.0% 57 70% Sea Scape Gardens Ersk
Slide 43: Portfolio statistics: Garden Villages (Rental)
Appendix 13 Portfolio statistics: Garden Villages (Rental) For personal use only Book Value Property Name Location 30 Jun 2012(A$m) Cap Rate Total Units Occupancy Victoria Lovely Banks Gardens1 Corio, VIC 2.8 9.8% 66 53% Grovedale Gardens Grovedale, VIC 3.3 10.3% 51 88% St Albans Park Gardens St Alb
Slide 44: Portfolio statistics: Settlers (DMF)
Appendix 14 Portfolio statistics: Settlers (DMF) For personal use only Property Name Location Book Value Discount Rate Total Units Occupancy 30 Jun 2012(A$m) DMF Villages Lakeside Ravenswood, WA 24.5 13.0% 232 93% Ridgewood Rise Ridgewood, WA 19.1 13.0% 240 98% Meadow Springs Mandurah, WA 3.8 14.0%
Slide 45: Settlers (DMF) sales
Appendix 15 – Settlers (DMF) sales For personal use only S.E. WA S.E. QLD Lakeside Meadow Ridgewood Noyea Total Springs Rise (strata) 12 months to 30 June 2012 No. of new sales 5 - 9 - 14 Average new sales prices ($’000) 296 - 451 - 396 No. of resales 5 2 8 9 24 Average resale prices ($’000) 321 288
Slide 46: Portfolio statistics: Offshore assets
Appendix 16 Portfolio statistics: Offshore assets For personal use only Book Value Book Value 30 Jun 2012 Property Name Location 30 Jun 2012 ILF Interest Cap Rate Total Units Occupancy (US$m) (A$m)1 New York assets (Bristal) East Meadow East Meadow, NY 25.3 24.9 7.0% 132 96% Lynbrook Lynbook, NY 26.
Slide 47: DMF accounting
Appendix 17 – DMF accounting For personal use only Deferred Management Fee (DMF) accounting – impact on P&L vs. cashflow Commentary / Assumptions Impact on P&L Accrued DMF income (incl. capital gain share) over 10 years • Diagrams are not to scale, only for illustrative purposes $14.0k $13.9k • Purc
Slide 48: DMF accounting
Appendix 18 – DMF accounting For personal use only De-mystifying DMF in financial statements Refer to Note 11, Annual Report 2012 • Rental Villages – valuations based on cap 2012 2011 rates ($’000) ($’000) • DMF Conversion and Settlers Lifestyle – Investment properties underlying value of the physic
Slide 49: DMF Conversion accounting
Appendix 19 – DMF Conversion accounting For personal use only De-mystifying the accounting for DMF Conversion projects Commentary / Assumptions Impact on P&L Stage 3 • Diagrams are not to scale, only for Stage 1 Stage 2 DMF income accrued yearly over 10 years illustrative purposes Rental unit Conver
Slide 50: 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
Ingenia Communities Group — FY2012 Earnings Presentation on 6ix