Ingenia Communities Group Reports Exceptional FY21 Results

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Ingenia Communities Group Reports Exceptional FY21 Results

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  • Revenue up 21 percent to $295 million, 48 percent from home sales and 41 percent from rental revenue
  • Strong operating cash flow $137.6 million, conservative balance sheet with LVR 22.2 percent, interest coverage ratio 16 times
  • Buoyant underlying demand for affordable seniors lifestyle housing product and strong development pipeline

Ingenia Communities Group (the ‘Group‘ or ‘Ingenia‘) is an owner, manager and developer of a portfolio of retirement and holiday communities across Australia.

FY21 at a glance

Revenue of $295 million is up 21 percent on the previous financial year, with $143 million or 48 percent of revenue derived from Lifestyle home sales and $122.5 million, being 41 percent, sourced from rental revenue.

Underlying profit of $77.2 million (excludes non-operating items like fair value gains/losses and gains/losses on asset sales) came in at 31 percent above the FY21 result. This is equivalent to underlying earnings per stapled security of 23.6 cents, up 7 percent from 22.1 cents in the previous financial year. The FY20 statutory profit was $72.8 million.

A final distribution, payable on 23 September, has been declared for 5.5 cents per stapled security, unfranked. The interim FY21 distribution was 5 cents. The 10.5 cents full year unfranked distribution compares to 10 cents, paid in FY20.Operating cash flow was $137.6 million for the year, up 105 percent.

Ingenia has drawn debt of $250 million from a total debt facility of $525 million, with no debt expiry until December 2025. The Group closed the year with a Loan-to-Valuation Ratio (‘LVR’) of 22.2 percent, although management are targeting a higher LVR of 30 to 40 percent, given strong underlying demand for residential communities across Australia. A conservative 17.5 percent gearing ratio, interest coverage ratio of 16 times, 5.3 years weighted average debt maturity, at a cost of drawn debt at 2.1 percent per annum, leaves Ingenia well positioned to fund the growing demand for its residential development pipeline.

Ingenia has portfolio scale, owning 90 communities, housing 8800 residents, within a portfolio of managed or owned properties, worth $1.5 billion.

Looking Ahead

Ingenia looks set to continue growing its asset base given the future development pipeline and current accelerating demand for the Group’s residential community product. This demand is complemented by stable rental revenue generated from the Group‘s residential communities and longer-term demographic demand fundamentals for affordable seniors housing.

International borders remain closed and as a result, interstate and intrastate travel is buoyant. The Group is experiencing increasing rental demand for holiday park residences across its 29 coastal parks, from Torquay, on the Victorian Coast, to the tropical north, in Cairns. This is occurring at a time when there are now 741,000 caravans and campervans registered in Australia - the highest ever on record.

New home sales are equally strong, with 380 new homes settled in FY21 and 317 homes already contracted for sale or deposited, at year-end. The Group’s development pipeline continues to grow with 4220 potential homesites owned or secured and over $200 million in additional communities under contract. Strong underlying demand for Ingenia’s lifestyle housing product and the defensive nature of its revenues and its business model driven by ageing demographics, point to a positive future for Group.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

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