Ingenia Communities Group · ASX:INA
Ingenia Communities — H1 FY2013 Earnings Presentation
43 slides from Ingenia Communities's earnings presentation, Feb 20, 2013
Slide 1: 2013 Half Year Results Presentation
Ingenia Communities Group For personal use only 2013 Half Year Results Presentation 20 February 2013
Slide 2: Agenda
Agenda For personal use only Highlights Our operating environment Group overview Key financials Capital management Portfolio update Strategy and outlook Appendices p2
Slide 3: Highlights
Highlights For personal use only > Garden Villages Rental occupancy continues to improve and closed at 84% as at 31 Dec 2012. Cash OPERATIONS earnings up $0.2m from prior comparative period > Settlers occupancy remains steady at 96% > New York portfolio sale closed in Feb 2013, with net proceeds on
Slide 4: Our operating environment
Our operating environment For personal use only > Gradual increase in sales enquiries in key Ingenia markets of WA and Central QLD although lead time from reservation to settlement has lengthened to ~160 days DEMAND > Continuing poor sales performance at Brisbane Forest Lake and Noyea village direct
Slide 5: Group overview
Group overview For personal use only EXISTING OPERATIONS (AS AT 31 DEC 2012) Garden Villages Rental NZ Students (discontinued operations) > 25 properties across Australia > 3 student accommodation buildings in > A$83.2 million book value Wellington > A$25.8 million book value Settlers DMF Conversion
Slide 6: Key financials
Key financials For personal use only Residents enjoying their morning walk at Settlers Meadow Springs, WA p6
Slide 7: Key financials
Key financials For personal use only Key financial metrics 6 months to 31 Dec 2012 6 months to 31 Dec 2011 Includes $25.9m 1H12 Net profit / (loss) $m 2.4 92% 29.1 valuation uplift to NY portfolio Operating income – continuing $m 1.3 24% 1.7 operations1 Operating income - total1 $m 3.6 12% 4.1 Opera
Slide 8: Operating income to net profit reconciliation
Key financials For personal use only Operating income to net profit reconciliation 8.0 0.5 (4.7) 0.6 7.0 2.9 6.0 5.0 4.0 3.6 (0.5) 3.0 2.4 2.0 1.0 0.0 Operating income Discontinued Derivatives Deferred income Change Changeininfair Amortisation of Net profit operations tax fair valueofof value intang
Slide 9: NAV composition
Key financials For personal use only NAV composition Cents per security 34.4¢ 40.0 0.7 0.1 (0.5) 34.3 (0.2) 34.4 35.0 30.0 1.4 RE Assets (4%) 25.0 2.4 NZ Students (7%) 3.2 DMF Conversion (9%) 5.8 Settlers (17%) 11.5 Garden Villages (34%) 20.0 10.1 US Seniors (29%) 15.0 30/06/2009 30-Jun-12 Operating
Slide 10: Earnings reconciliation – 1H13
Key financials For personal use only Earnings reconciliation – 1H13 7.0 1.3 (1.8) 6.0 0.7 5.0 (0.8) A$m 0.2 4.1 4.0 (0.1) 3.6 3.0 2.0 1.0 0.0 1H12 Operating Garden Villages Settlers Finance Costs DMF Conversion Fund Expenses Foreign Assets 1H13 Operating income income > Softer DMF Conversion sales p
Slide 11: Capital management
Capital management For personal use only Residents at Settlers Rockhampton Village (QLD) taking their pet Archer for a walk www.facebook.com/ArcherRockhamptonSettlersAssistancePuppy p11
Slide 12: 22% gearing provides further acquisition and development capacity
Capital management For personal use only 22% gearing provides further acquisition and development capacity > Additional headroom of circa A$16m to fund acquisitions and development whilst maintaining target LVR of 30-35% > Forecast all in cost of debt now reduced to circa 5.3% > NZ debt facilities i
Slide 13: Increasing focus on distributions
Capital management For personal use only Increasing focus on distributions > Directors declare a 0.5¢ per stapled security interim distribution payable 14 March 2013 based on current financial performance > Interim distribution will be 100% tax deferred, with future distributions over the medium ter
Slide 14: Stringent approach to capital allocation remains a key focus
Capital management For personal use only Stringent approach to capital allocation remains a key focus Balancing growth funding and capital return to securityholders Reinvestment in Ingenia’s growth Capital return to securityholders > Valuable development pipeline within > Continuing distributions fu
Slide 15: Portfolio update
Portfolio update For personal use only Settlers Forest Lake Village, Brisbane QLD p15
Slide 16: Today, Ingenia has Australian communities
Portfolio update For personal use only Today, Ingenia has 38 Australian communities Cessnock Village Ridge Estate Village The Grange Village Ettalong Village Asset clusters in familiar markets will drive 27 Garden Villages (Rental) 5 Settlers (DMF) capital allocation 4 Settlers (DMF Conversion) 2 Ma
Slide 17: Portfolio update – Garden Villages (Rental)
Portfolio update – Garden Villages (Rental) For personal use only KEY DATA KEY ACTIVITIES OVER 6 MONTHS 1H13 1H12 > Occupancy closed at 84% at 31 Dec 2012, portfolio trending well Occupancy: 84% 80% towards long term target of 90% Net property income: $4.1m $3.9m > The roll-out of events based resid
Slide 18: Portfolio update – Garden Villages (Rental)
Portfolio update – Garden Villages (Rental) For personal use only New Mandurah acquisition New Tamworth Acquisition • 53% average 14 villages presently trading at margin occupancy 85% and above. These • $8.6k average are our Star performers where High profit per unit focus is on maintaining occupanc
Slide 19: Portfolio update – DMF Conversion
Portfolio update – DMF Conversion For personal use only KEY DATA KEY ACTIVITY OVER 6 MONTHS 1H13 1H12 Total properties 4 3 > In the first six months, softer sales resulted in 21 settlements achieving $3.6 million, with an additional 27 contracts now in place Net property income: $0.9m $2.7m worth $5
Slide 20: Portfolio update – Settlers Lifestyle (DMF)
Portfolio update – Settlers Lifestyle (DMF) For personal use only KEY DATA KEY ACTIVITY OVER 6 MONTHS 1H13 1H12 Occupancy: 96% 96% > Challenging residential market in Brisbane significantly impacted sell down of vacant units at Noyea village. DMF income: $1.0m $0.5m > Gradual recovery underway in WA
Slide 21: Portfolio update – Overseas portfolios
Portfolio update – Overseas portfolios For personal use only US Seniors (Long Island, NY) > The New York portfolio sale settled in Feb 2013. Net proceeds on settlement are A$46.7m, of which A$41.7m has been repatriated, and A$5m will remain in the US under standard transaction related escrows. This
Slide 22: Strategy & outlook
Strategy & outlook For personal use only Ingenia is committed to operating and building a highly profitable Australian Seniors living portfolio Settlers Ridgewood Rise, Ridgewood WA p22
Slide 23: Strategy
Strategy For personal use only ACQUIRE DEVELOP OPERATE with competently efficiently excellence > Create asset clusters in favorable > Focus on ‘build ready’ developments > Leverage management and markets with: – seek to minimise holding costs operational efficiencies across portfolios – extract full
Slide 24: Strategy – Development forecast within existing portfolios
Strategy For personal use only Development forecast within existing portfolios as at February 2013 Completion Value ($m) # of Units FY13 FY14 FY15 FY16+ Medium Active Development term target Settlers DMF Ridge Estate, NSW $9.2 31 Stage 1 Stage 2 Gladstone, QLD $17.3 69 Stage1 Stage 2 Rockhampton, QL
Slide 25: Strategy – Manufactured home estates
Strategy – Manufactured home estates For personal use only MHEs represent an on-strategy fit to Ingenia’s growth > A cash yielding affordable accommodation segment within the Australian seniors living sector > MHEs are lifestyle communities for over 50s residents where they purchase a home and own t
Slide 26: Acquisition of first two MHEs in the Hunter growth corridor
Strategy – Manufactured home estates For personal use only Acquisition of first two MHEs in the Hunter growth corridor The Grange Ettalong Beach Village Holiday Village1 Location Morriset, NSW Ettalong Beach, NSW Total units 145 existing 85 existing ~ 34 to be built ~28 to be built Purchase price $1
Slide 27: Focus to increase recurrent cash earnings
Strategy For personal use only Focus to increase recurrent cash earnings Geographical allocation by value Geographical allocation by value as at 31 Dec 2012 Proforma position1 NZ Students, Aus Rental 12% 24% Manufactured Aus DMF Home Estates, Conversion, 6% 12% US Seniors 46% Aus DMF 15% Aus DMF, 26
Slide 28: Outlook
Outlook For personal use only > FY13 will continue to be challenging – particularly until we see improvement in core South East Queensland residential property market > Business remains in final stages of transition as we exit US Seniors market, grow our Australian operations and assess options with
Slide 29: Appendices
Appendices For personal use only Settlers Noyea Park, Mt. Warren Park, QLD p29
Slide 30: Appendix – Operating income
Appendix 1 – Operating income For personal use only H1 FY13 H1 FY12 Operating income (A$m) (A$m) Comments Continuing operations Australian Seniors - Garden Villages 4.1 3.9 Solid performance from a smaller portfolio as a result of divestments - DMF Conversion Properties 0.9 2.7 Impacted by lower tha
Slide 31: Appendix – Look through balance sheet
Appendix 2 – Look through balance sheet For personal use only Australian US NZ Total Adjustments1 Total Look-through balance sheet Seniors Seniors Students look through Statutory (A$m) Balance Sheet Balance Sheet Cash 18,570 1,561 1,542 21,673 (3,103) 18,570 Investment property and property under 33
Slide 32: Appendix – Cashflow in detail
Appendix 3 – Cashflow in detail For personal use only Cashflow Amount A$m Opening cash at 1 July 2012 32.8 Cashflow generated from operations: Australian Seniors 6.0 Overseas portfolios 1.1 Net borrowing costs paid (4.0) Income tax paid (0.3) Net Cashflows from Operations 2.8 Acquisitions of investm
Slide 33: Appendix – Ingenia operating cost base
Appendix 4 – Ingenia operating cost base For personal use only 1H13 operating cost base (excluding village costs) Operating costs 1H13 ($m) Corporate (Sydney) Business development 0.2 Costs associated with development and acquisition activities (staff, investigation costs) Corporate office 1.2 Execu
Slide 34: Appendix – Debt facilities
Appendix 5 – Debt facilities For personal use only Australian Seniors Commentary for Australian NZ Students1 Seniors Limit ($m) Revolver A$82.0m NZ$20.8m Amount drawn ($m) A$77.7m NZ$20.8m Loan to value ratio (LVR) Post US settlement, acquisitions 47.9% N/A2 actual and divestments LVR 28.9% LVR bank
Slide 35: Appendix - Valuations
Appendix 6 - Valuations For personal use only Reduction in values primarily due to asset sales and monetisation of inventory 31 Dec 12 30 Jun 12 Movement Movement 31 Dec 12 30 Jun 12 Valuations Valuation Valuation Cap rate/ Cap rate / Key drivers of valuation movement ($m) ($m) ($m) (%) Discount Dis
Slide 36: Portfolio statistics: Garden Villages (Rental)
Appendix 7 Portfolio statistics: Garden Villages (Rental) For personal use only Book Value 31 Dec 2012 Occupancy Occupancy Property Name Location (A$m) Cap Rate Total Units 31 Dec 2012 30 Jun 2012 Western Australia Swan View Gardens Swan View, WA 5.7 9.8% 71 97% 96% Yakamia Gardens Yakamia, WA 2.9 7
Slide 37: Portfolio statistics: Garden Villages (Rental)
Appendix 8 Portfolio statistics: Garden Villages (Rental) For personal use only Book Value 31 Dec Occupancy Occupancy Property Name Location 2012(A$m) Cap Rate Total Units 31 Dec 2012 30 Jun 2012 Victoria Grovedale Gardens Grovedale, VIC 3.6 9.8% 51 100% 88% St Albans Park St Albans Park, VIC 3.4 10
Slide 38: Portfolio statistics: Settlers (DMF)
Appendix 9 Portfolio statistics: Settlers (DMF) For personal use only Book Value Occupancy Property Name Location 31 Dec 2012(A$m) Discount Rate Total Units 31 Dec 2012 DMF Villages Lakeside Ravenswood, WA 22.9 13.5% 232 93% Ridgewood Rise Ridgewood, WA 18.4 13.0% 240 99% Meadow Springs Mandurah, WA
Slide 39: Appendix – Settlers (DMF) sales
Appendix 10 – Settlers (DMF) sales For personal use only WA QLD NSW Lakeside Meadow Ridgewood Noyea Ridge Estate Total Springs Rise (strata) 6 months to 31 Dec 2012 No. of new sales 1 1 3 - 2 7 Average new sales prices ($’000) 320 315 420 n/a 259 344 No. of resales 2 - 5 1 - 8 Average resale prices
Slide 40: Portfolio statistics: Offshore assets
Appendix 11 Portfolio statistics: Offshore assets For personal use only Book Value Book Value Book Value “as complete” 31 Dec 2012 31 Dec 2012 Cap Rate Occupancy Property Name Location (NZ$m) (NZ$m) (A$m)1 “as complete” Total Units 31 Dec 2012 NZ Students assets Cumberland House Wellington, NZ 17.7
Slide 41: Retirement living sector overview
Appendix 12 Retirement living sector overview For personal use only Australian Population Projections 2010 - 20501 Population over 65 – across the retirement living segments3 No interest to Ingenia 40 Over 65 Significant Aged Care 5.6% 35 untapped market Number of people (m) 30 DMF Villages 3.8% 25
Slide 42: Appendix – Recent acquisitions
Appendix 13 – Recent acquisitions For personal use only Ingenia expands its reach in growing markets with a cluster style strategy Village Location and Purchase Earnings contribution Comment size Price (p.a) on stabilised occupancy Ridge Estate Hunter Valley, $2.0m $0.3m plus development DA approval
Slide 43: 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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