Transcription of Finance News Network with Ingenia Communities Group Limited (ASX:INA) Managing Director and CEO, Simon Owen
Lelde Smits: Ingenia Communities Group Limited (ASX:INA) is a real estate investment group focused on affordable seniors’ housing communities. The Company owns, manages and develops communities across Australia, including rental villages, traditional deferred management fee assets and more recently lifestyle park communities. I’m Lelde Smits and joining me at ASX Investor Series in Sydney is the Company’s Managing Director and CEO, Simon Owen. Simon welcome.
Simon Owen: Thank you.
Lelde Smits: What kind of housing and communities do you offer and where and how many people do you cater for?
Simon Owen: Across Australia we own and operate 61 seniors living communities and lifestyle parks. Across three different segments we’re the largest owner and operator of rental villages, which we call garden villages. That’s a one or two bedroom apartment where we charge about $310 a week rent. We also own eight traditional deferred management fee villages, worth about $70 million. But we are looking at opportunities to reduce our investment in that business.
And then, the latest part of our business where all new capital is being invested is our lifestyle parks business, where we currently own 19 communities. All up, we provide affordable seniors living to around 3,500 Australians. And we also employ about 350 staff and that’s growing it seems like every week.
Lelde Smits: How do you stroke the balance between providing affordable housing and also generating growth from earnings and distributions?
Simon Owen: The acquisitions that we’re typically targeting, we’re looking for an unlevied return on equity of at least 15 per cent. So we’re focusing on those assets where on day one, we’re getting existing cash flow from the existing residents who live there and the tourism business. And then balance that with some development upside. In terms of getting that right balance, for us as a business it’s very important that we look after our existing customers, because every senior that we have in our community, knows friends or family in the local community. And we really want them to be proud ambassadors for Ingenia.
Lelde Smits: Ingenia’s underlying profit grew almost 100 per cent over the last financial year. How do you expect to maintain this momentum over the year ahead?
Simon Owen: I would think in the current financial year, even though we’re not providing guidance to the market, that there would be a very strong level of growth again on top of that. And that’s for really three main reasons. Firstly, last year we made a number of acquisitions but those acquisitions we didn’t own for the full financial year. So even if we didn’t make another acquisition, you’re going to have a lot more capital put to work contributing for the full year.
Secondly, we’re ramping up our development quite significantly. Last year we developed 14 new homes, this year it’ll be I’d say, well in excess of 80 new homes. And then lastly, in September we did an $89 million capital raising. So that $89 million combined with another $40 million of debt, would more than double the lifestyle parks business. So those three elements combined together, I think will deliver another very strong year of profit growth for the business.
Lelde Smits: On an industry level, it is no secret that the population is ageing. What does research tell you about the living preferences of Australians and how does the Company plan to benefit from this?
Simon Owen: In terms of living preferences seniors like all of us I guess, like to live in their local community. So it’s trying to find the right seniors’ living community that’s not too far from where somebody lives. So that’s one of the key challenges, it’s about providing the lifestyle, security and companionship that a lot of seniors are looking for. Particularly in our rental village business, over two thirds of our customers are single women whose husbands have often passed away. So that sort of security and companionship is very important.
The new business that we entered into last year, which is our lifestyle parks business is really targeting a slightly younger demographic. So people who are probably retired mid-sixties and who are looking for the flexibility of not only taking some capital out of the family home, but also having a lock up and leave home, where they can go travelling overseas or caravanning around Australia. So there’re a lot of opportunities within that.
Lelde Smits: Finally Simon, what is Ingenia’s outlook for the year ahead and how are you positioning the Company in the real estate sector?
Simon Owen: In terms of the outlook, I think there’re two key focuses at the moment. Firstly we’re looking to really ramp up our development business. So of the 19 parks lifestyle and tourism parks that we own, we’ll have a development pipeline of around 1,000 new home sites. So we’re really trying to increase the number of new homes that we’re delivering. The second aspect is with the capital that we raised in September, the $89 million plus an increase in our debt facility. We’re looking to deploy that no later than March next year, so that we can get our capital to work as quickly as we can.
Lelde Smits: Simon Owen, thank you for the update from Ingenia Communities Group.
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