Ingenia Communities Group (Ingenia Communities, the Group, ASX: INA) is a property group that owns, operates, and develops a growing portfolio of lifestyle and holiday communities across urban and coastal markets.
Simple business model
Ingenia Communities adopts a simple business model comprising a rent collection business and a development business, predominantly targeting retirees and others seeking affordable residential accommodation. The Group also operates a holiday business.
Property Portfolio earnings are diversified across four income streams.
The Lifestyle Rental business comprises Land Lease communities that cater for residents who own their home but lease the land on which their home is situated. These residents do not incur council rates or maintenance costs, and the structure represents an affordable choice for downsizers. This business unit also comprises nine rental communities that provide short and long-term leases of affordable accommodation. The Lifestyle Rental business generated $45 million EBIT in FY24, representing 26 percent of Property Portfolio EBIT, and comprises 6,639 homes.
The Ingenia Holidays business offers accommodation in prime waterfront locations on major transit routes and includes caravan, camping and cabin accommodation. This business unit accounted for $57 million of FY24 Property Portfolio EBIT, equivalent to 32 percent of EBIT, and comprising 8,000 homes, cabins, and sites.
The Lifestyle Development business represents future income from development profits and subsequently rental income and includes a development pipeline of 5300 Land Lease homes, 108 rental homes and 400 cabins. In FY24 the Lifestyle Development business settled 462 new homes and generated EBIT of $59 million, or 33 percent of Property Portfolio EBIT.
Ingenia Gardens consists of 25 retirement communities providing retirement accommodation to seniors with varying levels of care from independent living to assisted care that includes meal plans and optional services if needed. This business segment delivered about 6 percent of Property Portfolio EBIT in FY24 and comprises 1020 retirement homes.
Primed for growth
Ingenia Communities appointed a new CEO in April 2024 with a deliberate focus on development activity to monetise the existing land portfolio.
Importantly the Group’s growth ambitions are aligned to customer demand driven by housing affordability and an ageing population. These trends are supported by Federal government policy where 31 percent of the average weekly rent payable to Ingenia Communities is sourced from pension and rent assistance payments by the Federal government.
Development activity is accelerating, and an in-house development team is building new communities focused on expanding Ingenia’s accommodation portfolio to generate additional ongoing fee streams.
Management has reported strong momentum across the business into FY25 marked by high occupancy across the residential communities with holidays forward bookings on 20 August that are 6 percent up on the previous corresponding period.
The prospect of lower interest rates in FY25 leading to potentially lower capitalisation rates should enhance Property Portfolio values and combined with dependable, recurrent cash flows from the Property Portfolio, should see positive shareholder returns in the medium-term.
