Ingenia Communities Group · ASX:INA
Ingenia Communities — ING Real Estate Community Living Group — H1 FY2011 Earnings Presentation
38 slides from Ingenia Communities's earnings presentation, Feb 28, 2011
Slide 1: Half Year Results Presentation 31 December 2010
ING Real Estate AUSTRALIA Community Living Group Half Year Results Presentation 31 December 2010 28 February 2011
Slide 2: Agenda
Agenda Highlights and Overview Key Financials Capital Management Portfolio Update Strategy and Outlook Appendices 2
Slide 3: Highlights
Highlights Progress driven by increased management capability and improved operational performance Performance benefitted from renewed management focus Occupancy rates higher than 12 months ago as management initiatives take effect Operational Organic growth projects progressed to assist replace
Slide 4: Overview
Overview ING Real Estate Community Living Group (ILF) AUSTRALIAN PORTFOLIO OVERSEAS PORTFOLIO Garden Villages Portfolio (A$93m) US Seniors Portfolio (US$305m)1 ¾ Australian Rental portfolio ¾ Rental portfolio, JV with a leading seniors housing REIT ¾ 100% ILF ownership ¾ 50% ILF ownership of 20 asse
Slide 5: Key Financials
Key Financials Residents at Settlers Meadow Springs, WA 5
Slide 6: Key Financials
Key Financials Results reflect the shift in focus from passive landlord to active asset manager to drive value 6 months to 6 months to Key Financial Metrics 31 December 2010 31 December 2009 Statutory profit/(loss) $m 10.3 (51.6) Operating income1 $m 4.6 10.7 Operating income per unit cents 1.0 2.4
Slide 7: Operating result versus statutory result
Key Financials Operating result versus statutory result $m 12.0 0.5 10.3 0.7 10.0 7.0 8.0 6.0 4.6 (1.7) 4.0 (0.8) 2.0 - Operating Incom e Mark-to-m arket Loss on Property Fair Gain on disposal Other Statutory Profit derivatives revaluation of Value Movem ents of investm ent new property construction
Slide 8: NTA per unit firming as US Seniors revaluation offsets Garden Villages decline
Key Financials NTA per unit firming as US Seniors revaluation offsets Garden Villages decline A$ cents per unit 27.0 24.9 1.7 25.7 25.7 (1.6) 25.0 1.0 (0.3) 23.0 21.0 1.5 NZ and US Students (6%) 19.0 1.6 AU Conversion (6%) 3.8 AU Settlers (15%) 8.2 AU Garden Villages (32%) 17.0 10.6 US Seniors (41%)
Slide 9: Capital Management
Capital Management Residents at Settlers Rockhampton, QLD 9
Slide 10: Capital position ongoing management focus
Capital Management Capital position ongoing management focus • Long dated debt profile with average debt duration of 6.8 years • Australian gearing increased to 51% following $16m termination payment for remaining capital hedges • A$8m prepayment to Australian facility due to devaluation of Garden V
Slide 11: Liquidity and access to capital remains a challenge
Capital Management Liquidity and access to capital remains a challenge Progress made over previous six months towards releasing free cash • Conversion of three rental villages to DMF model • Divestment of non-performing assets to repay debt • Sell down of Settlers Stage 8 Ridgewood Rise development
Slide 12: Portfolio Update
Portfolio Update Settlers Gladstone, QLD 12
Slide 13: Focused on core Australian and US seniors markets
Portfolio Update Portfolio focused on core Australian and US seniors markets Australian Australian Australian US Seniors NZ Portfolio Portfolio 31 December Garden Conversion Settlers (Rental) Students 31 Dec 20101 30 Jun 20101 2010 Villages Properties (DMF) (Rental) Properties 30 3 4 21 3 61 62 Unit
Slide 14: Snapshot of Australian Seniors portfolio
Portfolio Update – Australian Seniors Snapshot of Australian Seniors portfolio ILF owns and operates a large and diverse portfolio of Seniors communities QUEENSLAND Garden Villages No of properties: 6 WESTERN AUSTRALIA Total value: A$18.0m Garden Villages Total units: 349 No of properties: 5 Convers
Slide 15: Australian economic fundamentals forecast
Portfolio Update – Australian Seniors Australian economic fundamentals forecast Garden Villages Settlers Market Outlook for next 12 months Market Outlook for next 12 months Direction Direction Occupancy Improved product presentation, Increasing demand offset by housing marketing and service delivery
Slide 16: Portfolio Update – Garden Villages
Portfolio Update – Garden Villages KEY DATA KEY ACTIVITY OVER 6 MONTHS 31 Dec 2010 31 Dec 20091 Occupancy: 78% 70% Increased occupancy to 78% supported by superior presentation and service delivery Net property income: A$3.6m A$2.6m Total properties: 30 34 Doubled sales lead conversion rate from
Slide 17: Garden Villages valuations impacted by external factors
Portfolio Update – Garden Villages Valuations impacted by external factors despite improvements in portfolio performance VALUATION METRICS • Significant performance enhancement 31 Dec 20101 30 Jun 2010 and value driving initiatives successfully Total properties: 33 34 executed in 2010 Portfolio valu
Slide 18: Garden Villages Portfolio – Value Enhancement Strategy
Portfolio Update – Garden Villages Garden Villages Portfolio – Value Enhancement Strategy Intense management Occupancy now at all time high since Increase NOI to Drive Value in focus to lift internalisation of ~$7.5m pa with Core Assets occupancy rate to management target 8 to 10% yield 85% Phased c
Slide 19: Portfolio Update – Conversion Properties
Portfolio Update – Conversion Properties KEY DATA KEY ACTIVITY OVER 6 MONTHS KEY DATA as at 30 Jun 2010 31 Dec 20101 Total properties: 3 Capital upgrade and refurbishment of three DMF conversion villages completed September 2010 (Stage Total units: 216 1) with expenditure to date of $1.6m Conditio
Slide 20: Portfolio Update – Settlers Lifestyle
Portfolio Update – Settlers Lifestyle KEY DATA KEY ACTIVITY OVER 6 MONTHS KEY DATA as at 30 Jun 2010 31 Dec 2010 31 Dec 2009 Continued focus on product presentation and unit Occupancy: 96.9% 95.8% upgrades across all villages to drive sales Net property income: $1.6m $2.2m Improved sales and mar
Slide 21: US Seniors geographically diverse portfolio
Portfolio Update – US Seniors Geographically diverse portfolio with clusters in key markets of New York and Florida TENNESSEE MICHIGAN OHIO NEW YORK (LONG ISLAND) No of properties: 1 No of properties: 2 No of properties: 3 No of properties: 6 Total value: US$33.9m Total value: US$51.7m Total value:
Slide 22: US Seniors Market Outlook
Portfolio Update – US Seniors Market Outlook for next 12 months Direction Occupancy Driven by pent-up demand although conditional on continued US economic recovery Supply Limited new supply due to tight access of finance, however expect steady increase as projects postponed during GFC come back on l
Slide 23: Portfolio Update – US Seniors
Portfolio Update – US Seniors KEY DATA1 KEY ACTIVITY OVER 6 MONTHS 31 Dec 2010 31 Dec 2009 Unit refurbishment programs underway to improve Occupancy: 88.0% 87.3% occupancies and increase average rental price Net property income: US$11.2m US$10.9m Units reconfigured to meet market demand Total pr
Slide 24: Portfolio Update – NZ Students
Portfolio Update – NZ Students KEY DATA KEY ACTIVITY OVER 6 MONTHS 31 Dec 2010 31 Dec 2009 Three assets in Wellington to be retained in portfolio to Occupancy: 97%1 98% extract full value for unitholders Net property income: NZ$1.4m NZ$1.1m Negotiations underway with University for a new long- T
Slide 25: Renegotiation of long term university contract key to portfolio value
Portfolio Update – NZ Students Renegotiation of long term university contract key to portfolio value • Current contracts with VUW1 due to expire December 2012 and December 2013 • VUW hold an option to extend the student accommodation contracts for a further five years • Management working with VUW t
Slide 26: Strategy and Outlook
Strategy and Outlook Residents at Meadow Springs, WA 26
Slide 27: Close the NTA gap
Strategy and Outlook Close the NTA gap Market Factors > Issue: A-REIT Value Reinstate sector discount and Gap Distributions strategic review impact Asset Value > Issue: currently > Focus: Actively restricted due to pursue options for Uncertainty banking covenants NTA per unit new ownership and liqui
Slide 28: Strategy and Outlook
Strategy and Outlook To provide unitholders with exposure to a quality, high performing portfolio of Seniors communities in Australia and the United States Optimise Existing Extract Optimal Returns Identify External Operations From Existing Assets Growth Opportunities > Improve occupancy > Repositio
Slide 29: Strategy and Outlook
Strategy and Outlook ILF continues through rebuilding phase with capable and industry experienced management team focused on restoring unitholder value Key risk remains around Garden Villages and residential property markets Immediate focus is to successfully execute Garden Villages conversion strat
Slide 30: Appendices
Appendices Settlers Gladstone, QLD 30
Slide 31: Operating Income
Appendix 1 H1 FY11 H1 FY10 Operating Income1 (A$m) (A$m) Continuing Operations US Seniors 3.0 2.9 Australian Seniors - Garden Villages 3.6 2.6 - Conversion Properties (0.8) - - Settlers Lifestyle 1.6 2.2 NZ Students 0.6 0.3 Finance Costs (4.4) (2.5) Management Fee (0.7) (1.7) Fund Administration (0.
Slide 32: Look through balance sheet
Appendix 2 Look through balance sheet As at 31 December 2010 (A$m) US Australian NZ US1 Total Seniors Seniors Students Students Cash 2.3 11.3 1.5 15.1 Investment property and property under development 297.8 322.1 22.8 642.8 Derivatives - 0.1 - 0.1 Other assets 12.3 2.7 0.2 15.2 Total assets 312.4 3
Slide 33: Cashflow in detail
Appendix 3 Cashflow in detail Amount A$m Opening cash at 1 July 2010 20.2 Cashflow generated from operations: Australian Seniors 2.7 US Seniors 1.9 US Students 0.0 NZ Students 0.0 Borrowing costs paid (4.3) Interest rate swaps 3.9 Net Cashflows from Operations 4.2 Proceeds from sale of investment pr
Slide 34: US portfolio revaluations improved following increased investment demand
Appendix 4 US portfolio revaluations improved following increased investment demand offset by downward valuations for Australian Seniors assets 31 Dec 10 31 Dec 10 30 Jun 10 Movement Movement Cap rate3 Valuations1 Valuation Valuation 2 ($m) (%) (%) Key drivers of valuation movement US Seniors1 304.8
Slide 35: Debt Facilities
Appendix 5 Debt Facilities Australian US Seniors NZ Students Seniors Core debt A$95.9m Limit ($m) Revolver A$21.0m US$265.2m1 NZ$18.7m1 Total A$116.9m2 Amount drawn ($m) A$102.7m US$265.2m1 NZ$18.7m1 Loan to value ratio (LVR) actual 59.7% N/A 59.6% LVR bank covenant 50% - 65%3,4 N/A 60% Interest cov
Slide 36: NTA per Unit Sensitivity
Appendix 6 – NTA per Unit Sensitivity US Seniors business highly leveraged to upswing in US valuations Change in US Portfolio Capitalisation Rate NTA per Unit 8.7% 8.2% 7.7% 7.2% 6.7% ($A cents) (+1%) (+0.5%) (-0.5%) (-1%) 90.0% -5.8c -1.9c +2.5c +7.4c +13.1c Change in US Occupancy Portfolio 89.0% -
Slide 37: US Students
Appendix 7 – US Students Progress • Have sold all properties where value exceeded debt • Seven properties were handed back as at 31 December 2010 • We are engaged with lenders for all remaining properties Timing • Majority of the remaining assets are likely to be off the balance sheet by June 2011 •
Slide 38: 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 FY2011 Earnings Presentation on 6ix