Ingenia Communities Group · ASX:INA
Ingenia Communities — ING Real Estate Community Living Group — H1 FY2012 Earnings Presentation
41 slides from Ingenia Communities's earnings presentation, Feb 23, 2012
Slide 1: Half Year Results Presentation 31 December 2011
ING Real Estate Simon Owen Chief Executive Officer Community Living Group Half Year Results Presentation 31 December 2011 23 February 2012 11
Slide 2: Agenda
Agenda Highlights Strategic Review Fund Overview Key Financials Capital Management Portfolio Update Strategy and Outlook Appendices 2
Slide 3: Highlights
Highlights > Garden Villages Rental occupancy rising to 80.1% as at 31 December 2011 and on Improving track to achieve long term target of 89.0% operational performance > Strong sales momentum of the DMF Conversion assets continues with 48 settlements achieved and 16 units contracted and reserved
Slide 4: Strategic review
Strategic review The Board has endorsed internalisation as the preferred go-forward strategy for the Fund > Thorough process undertaken with careful consideration given to multiple alternatives > Strong unitholder support for a focused, growth oriented Australian Seniors Living Fund > Well respected
Slide 5: Strategic review
Strategic review The Board and management finalising details of the internalisation proposal > Internalisation would see a rebranded ILF remain as an ASX listed fund > Key executives will continue with internalised fund and will maintain focus on building a profitable, leading Australian seniors liv
Slide 6: Fund overview
Fund overview ING Real Estate Community Living Group (ILF) Our focus is to build and operate a profitable growth oriented Australian Seniors Living Fund AUSTRALIAN PORTFOLIO OVERSEAS PORTFOLIO1 Garden Villages Portfolio (A$88.3m) US Seniors New York Portfolio (US$163.7m)2 Australian Rental portfol
Slide 7: Key financials
Key financials Settlers Gladstone Conversion Village, QLD 7
Slide 8: Key financials
Key financials Results reflect transition to core Australian business Key Financial Metrics 6 months to 31 Dec 2011 6 months to 31 Dec 2010 Net profit / (loss) $m 29.1 10.3 Operating income – continuing operations 1 $m 1.7 1.6 Operating income – discontinuing operations 1 $m 2.4 3.0 Operating income
Slide 9: Operating result versus net result
Key financials Operating result versus net result Net profit driven by increase in valuation of New York portfolio 40.0 35.0 2.3 (3.1) 27.1 (0.2) (0.7) (0.3) (0.1) 29.1 30.0 25.0 20.0 15.0 10.0 5.0 4.1 0.0 Operating Discontinued Change in fair Gain on Deferred Change in fair Unrealised net Other Net
Slide 10: Movement in NAV uplift driven by firming US values
Key financials Movement in NAV uplift driven by firming US values A$ cents per unit 33.2 35.0 7.3 33.2 33.0 31.0 29.0 0.7 (1.6) 27.0 25.9 0.9 25.0 23.0 1.3 NZ and US Students (4%) 21.0 2.9 AU Conversion (9%) 6.1 AU Settlers (18%) 19.0 13.2 AU Garden Villages (40%) 9.7 US Seniors (29%) 17.0 15.0 30/0
Slide 11: Capital management
Capital management Settlers Lakeside, WA 11
Slide 12: Capital management
Capital management Recent sale proceeds and improving operations have reduced gearing and enable fund growth > NZ$20.8m students debt facility extended to August 2012 > Remaining New York portfolio is highly geared at 72% but is non-recourse, fixed rate, long term and covenant light > Debt and geari
Slide 13: Continuing disciplined approach to capital allocation
Capital management Continuing disciplined approach to capital allocation > Australian debt position supported by performing rental business, sell down of conversion units and increasing exposure to village expansion and development activities > Target Australian LVR of 30 – 40% sustained by strong i
Slide 14: Portfolio update
Portfolio update Residents at Settlers Rockhampton Conversion Village, QLD 14
Slide 15: Market conditions stable or improving in all portfolios
Portfolio update Market conditions stable or improving in all portfolios 31 December Australian Australian Australian US Rental1 NZ Portfolio Portfolio 2011 Rental DMF DMF Students1 31 Dec 30 Jun Conversion 2011 2011 Properties 26 4 3 6 3 42 42 Units 1,388 677 216 916 359 3,556 3,537 Book Value A$88
Slide 16: ILF's Australia-wide reach in the seniors accommodation market
Portfolio update ILF’s Australia-wide reach in the seniors accommodation market QUEENSLAND Settlers Lifestyle DMF Conversion Garden Villages No of properties: 1 3 2 Total value: A$6.6m A$23.7m A$11.4 m Total units: 149 216 146 WESTERN AUSTRALIA Settlers Lifestyle Garden Villages No of properties: 3
Slide 17: Portfolio update – Garden Villages (Rental)
Portfolio update – Garden Villages (Rental) KEY DATA KEY ACTIVITY OVER 6 MONTHS 31 Dec 2011 31 Dec 2010 December 2011 occupancy closed at 80.1%, on Occupancy: 80.1% 78.0% track to reach long term target of 89.0% Net property income: $3.9m $3.6m Continued improvement in asset presentation, Total
Slide 18: Portfolio update – Garden Villages (Rental)
Portfolio update – Garden Villages (Rental) KEY INITIATIVES FOR GROWTH Average length of resident tenancy for the past 3 years Resident care packages to be offered at select villages which would allow for continuum of care 31 without the relocation from our villages 29 A portfolio wide program d
Slide 19: Portfolio update – Settlers (DMF)
Portfolio update – Settlers (DMF) KEY DATA KEY ACTIVITY OVER 6 MONTHS 31 Dec 2011 31 Dec 2010 Occupancy as at 31 December 2011 is 95.8% Occupancy: 95.8% 96.9% Continued slow down in Perth and Brisbane Net property income: $0.9m $1.6m residential markets has lengthened sales lead time Total prope
Slide 20: Portfolio update – DMF Conversion
Portfolio update – DMF Conversion KEY DATA KEY ACTIVITY OVER 6 MONTHS 31 Dec 2011 31 Dec 2010 Since project launch to 31 December 2011, 48 Total properties: 3 3 settlements were achieved totalling gross sales of $8.7m, and 16 contracted and reserved units worth Net property income: $2.7m NA $3.2m
Slide 21: Gladstone Village, Queensland, Stage 2 Development
Portfolio update – DMF Conversion IN FOCUS - Gladstone Village, Queensland, Stage 2 Development • The Gladstone conversion village has been a beneficiary of the energy driven boom in the region, assisted by a tight housing market and limited competition • Increased residential demand in the area boo
Slide 22: Portfolio update – US Seniors
Discontinued operations Portfolio update – US Seniors KEY DATA KEY ACTIVITY OVER 6 MONTHS 31 Dec 2011 31 Dec 2010 Settled sale of 15 seniors communities across nine Occupancy: 92.8% 88.0% States in November 2011 Net property income: A$9.5m A$10.9m Remaining New York portfolio continues to perfor
Slide 23: Portfolio update – NZ Students
Discontinued operations Portfolio update – NZ Students KEY DATA KEY ACTIVITY OVER 6 MONTHS 31 Dec 2011 31 Dec 2010 The 2011 student calendar year was challenging for Occupancy1: 90.0% 97.0% the portfolio due to changes in tertiary funding, Net property income: A$0.5m A$1.1m economic uncertainty an
Slide 24: Strategy and outlook
Strategy and outlook Residents at Settlers Meadow Springs, WA 24
Slide 25: Strong organic growth opportunities embedded within existing assets
Strategy Strong organic growth opportunities embedded within existing assets Development forecast within existing portfolios as at 31 December 2011 Completion # of Value ($m) Units1 FY12 FY13 FY14 FY15 FY16+ Medium Active Development term target Settlers DMF Ridgewood, WA $3.1 7 Gladstone, QLD $16.4
Slide 26: Opportunities to drive unitholder value in Australia
Strategy Management assessing a range of opportunities to drive unitholder value in Australia Explore new market niches Develop, acquire and seed Seed new business models eg, lifestyle villages, care High Acquire Greenfields opportunities in new markets Acquire partially built villages in new market
Slide 27: Outlook
Outlook Conversion of additional rental villages and Gladstone Stage 2 expansion well advanced Operating conditions in key markets of Brisbane and Perth remain challenging but forecasting improving operating cashflow Sale of remaining six US communities at premium to December 2011 book value under c
Slide 28: Appendices
Appendices Residents at Marsden Gardens, QLD 28
Slide 29: Operating income
Appendix 1 Operating income1 H1 FY12 H1 FY11 (A$m) (A$m) Continuing operations Australian Seniors - Garden Villages 3.9 3.6 - DMF Conversion Properties 2.7 (0.8) - Settlers Lifestyle 0.9 1.6 Net finance costs (4.3) (4.4) Management fee (0.9) (0.7) Fund administration (0.6) (0.5) Derivatives income -
Slide 30: Look through balance sheet
Appendix 2 Look through balance sheet As at 31 December 2011 (A$m) Australian US NZ & US Total Adjustments Total Seniors Seniors Students Look through Statutory Balance Sheet Balance Sheet Cash 33.9 1.3 1.9 37.1 (3.2) 33.9 Investment property and property 327.0 161.2 22.9 511.1 (184.1) 327.0 under d
Slide 31: Cashflow in detail
Appendix 3 Cashflow in detail Amount A$m Opening cash at 1 July 2011 15.0 Cashflow generated from operations: Australian Seniors 11.2 Includes backlog payment of $2.4m US Seniors 1.1 in RE fees accrued since 2009, and Admin costs and RE fee (4.1) RE fees $0.8m for the current period of Jul 2011 to D
Slide 32: Debt Facilities
Appendix 4 Debt Facilities Australian US Seniors NZ Students Seniors Core debt A$88.8m Limit ($m) Revolver A$15.0m US$127.5m1 NZ$18.7m1 Total A$103.8m2 Amount drawn ($m) A$83.7m US$127.5m1 NZ$18.7m1 Loan to value ratio (LVR) actual 49.4% N/A 59.6% LVR bank covenant 50% - 65%3,4 N/A 60% Interest cove
Slide 33: US portfolio revaluations improved following increased investment demand
Appendix 5 US portfolio revaluations improved following increased investment demand partially offset by downward valuations for Australian Seniors assets 31 Dec 11 31 Dec 11 30 Jun 11 Movement Movement Cap rate4 Valuations1 Valuation Valuation 3 ($m) (%) (%) Key drivers of valuation movement US Seni
Slide 34: Settlers (DMF) sales
Appendix 6 - Settlers (DMF) sales S.E. WA S.E. QLD Lakeside Meadow Ridgewood Noyea Total Springs Rise 6 months to 31 Dec 2011 No. of new sales NA NA 5 NA 5 Average new sales prices ($’000) NA NA 451.1 NA 451.1 No. of resales 5 1 2 5 13 Average resale prices ($’000) 307.2 280.0 389.0 213.3 281.6 As a
Slide 35: DMF portfolio sensitivities
Appendix 7 DMF portfolio sensitivities DMF assets DMF Conversion assets Impact on Impact on Key Variable Range Change Range Change NAV NAV $150k - $450k $110k - $270k Price of units (mean price 5.0% $3.1m (mean price 5.0% $1.3m $314k) $172k) Rate of sale - - - 1 – 2 per mth 1.0 per mth $1.6m Discoun
Slide 36: Portfolio statistics: Garden Villages (Rental)
Appendix 8 – Portfolio statistics: Garden Villages (Rental) Book Value Property Name Location 31 Dec 2011 (A$m) Cap Rate Total Units Occupancy Western Australia Swan View Gardens Swan Valley, WA 5.7 10.00% 72 83% Yakamia Gardens Yakamia, WA 3.4 10.00% 57 75% Sea Scape Gardens Erskine, WA 4.2 10.00%
Slide 37: Portfolio statistics: Garden Villages (Rental)
Appendix 9 – Portfolio statistics: Garden Villages (Rental) Book Value Property Name Location 31 Dec 2011 (A$m) Cap Rate Total Units Occupancy Victoria Lovely Banks Gardens Corio, VIC 2.9 10.00% 66 56% Grovedale Gardens Grovedale, VIC 3.0 10.25% 51 76% St Albans Park Gardens St Albans Park, VIC 3.7
Slide 38: Portfolio statistics: Settlers (DMF)
Appendix 10 – Portfolio statistics: Settlers (DMF) Property Name Location Book Value Discount Rate Total Units Occupancy 31 Dec 2011 (A$m) DMF Villages Lakeside Ravenswood, WA 25.4 13.0% 231 95% Ridgewood Rise Ridgewood, WA 20.2 13.0% 241 96% Meadow Springs Mandurah, WA 5.1 14.0% 56 87% Noyea Park M
Slide 39: Portfolio statistics: Offshore assets
Appendix 11 – Portfolio statistics: Offshore assets Book Value Book Value 31 Dec 2011 Property Name Location 31 Dec 2011 ILF Interest Cap Rate Total Units Occupancy (US$m) (A$m)1 New York assets (Bristal) East Meadow East Meadow, NY 25.3 25.0 7.00% 132 100.0% Lynbrook Lynbook, NY 27.6 27.2 7.50% 148
Slide 40: Glossary
Glossary Term Definition Deferred Management Fee (DMF) refers to the amount of money payable to the retirement village operator on the departure of a resident from the village. The amount is usually calculated on a DMF sliding scale basis, the longer the occupation the higher the percentage deducted
Slide 41: Disclaimer
Disclaimer A copy of this presentation will be made available on www.ingrealestate.com.au This presentation was prepared by ING Management Limited (ABN The forward looking statements included in this presentation involve 15 006 065 032) (the "Responsible Entity") in respect of ING Real subjective ju
ING Real Estate Community Living Group — H1 FY2012 Earnings Presentation on 6ix