Ingenia Communities Makes a Steady Comeback | KOSEC

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Ingenia Communities Makes a Steady Comeback

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Lifestyle community owner, Ingenia Communities Group, is on its way to making a swift recovery. In its latest trading update, the group revealed that it had received overwhelming bookings within its holiday communities at New South Wales (NSW) and Queensland (QLD), both of which are due to reopen in June. Specifically, recent announcements by both states highlighted that holiday parks could resume operations from 1 June in NSW and 12 June in QLD.

These sites were previously closed as part of lockdown restrictions. For Ingenia, this announcement emerged at an excellent time as it can welcome guests over the upcoming long weekend and school holidays. As opposed to NSW, QLD’s decision to close its borders has had an adverse impact on its operations. Nevertheless, the announcement has led to a steady stream of phone calls, website enquiries and reservations.

Yet, the good news did not emerge as a surprise to the group’s CEO, Simon Owen. Mr Owen had previously expected a surge in demand for domestic travel when restrictions are eased. Thus, Ingenia has been working a step ahead to prepare the reopening of its holiday parks. More broadly speaking, Ingenia operates across several diversified industries. Therefore, while Ingenia Holidays may suffer as a result of the COVID-19 pandemic, other divisions continue to perform.

This is evident through Ingenia’s Lifestyle communities whose cash flows were undisrupted during this time. Additionally, the company’s seniors rental accommodation, Ingenia Gardens reached an all-time high occupancy, exceeding 93.5 per cent. Collectively, this has allowed Ingenia to continue generating a steady source of income arising from four thousand sites.

Within the real estate sector, Ingenia expects to benefit from the removal of restrictions on auctions and open homes. This is because buyers’ appetite is likely to increase despite requiring additional time to sell their present homes. Thus, home settlement continues to progress, with 266 settlements recorded year to date. More notably, 37 homes are expected to be settled before the end of June 2020.

Not too long ago, the firm had announced that they had successfully raised $150 million through its capital raising. While its share purchase plan remains to be available till 29 May, current funds raised have already been put into good use. Specifically, the firm has already exchanged contracts for two acquisitions, amounting to $33 million. Ingenia has acquired an established lifestyle community in NSW which comprises of completed homes and development sites. Thus, when the acquisition settles by June 2020, the group will be ready to receive an additional source of rental income.

The second acquisition relates to a greenfield development site in Melbourne, Victoria. While the settlement is subject to approval in the second half of the year, the community is expected to house 230 new homes. Moving forward, the firm finds itself in an excellent position backed by a pipeline of upcoming opportunities and a robust balance sheet with $352 million of undrawn available debt and cash.

By Caroline Wong 

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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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