Ingenia Communities Group (INA)

BUY

Seachange

Acquisition splurge, capital raise

3 Nov 2021

Sector: Real Estate

Need to know:

$552m acquisition adds 20 communities and development sites
$475m equity raising at $6.12 per share (1 for 4.24 ratio)
INA targeting 475+ new home settlements in FY22f (380 in FY21) incl acqns
Pro forma portfolio value of ~$1.8bn post completion

Ingenia Communities has made a step change to its portfolio of affordable retirement homes and holiday sites with the acquisition of a collection of lifestyle communities and development properties.

The acquisitions are separated into two elements. The first is $404 million of contracted acquisitions including:

Seachange Group – 6 lifestyle communities and development sites in SE Queensland ($270m),
Caravan Parks of Australia – 7 lifestyle and holiday communities in VIC and NSW ($110m)
Greenfield lifestyle development site in Brisbane ($24m)

The second part consists of acquisitions under offer or in due diligence valued at approximately $148 million. This includes four lifestyle communities in VIC and SE Qld plus two holiday parks.

The contracted acquisitions will boost INA’s portfolio by 2,099 sites and 708 development sites. The second part of the transaction adds 856 existing sites and 148 development sites.

INA says the acquisitions will lift the total value of the portfolio from $1.2 billion (30 June 2021) to approximately $1.8 billion boosting income generating sites from ~13,000 to over 15,000 (residential homes, holiday cabins, annuals and holiday sites). In aggregate, INA will boast a development portfolio of more than 6,200 potential sites making it the largest developer ahead of Stockland Group.

Ingenia Communities

With the acquisitions being primarily funded from the equity capital raising ($475m), INA will tip in $133 million in debt which is supported by $200 million of new debt facilities. The balance sheet increases its gearing from 17.5% to 25.7% post transaction. INA will have committed undrawn debt facilities of $246 million.

The equity raising will add approximately 95 million shares to the count, an approximate 24% increase.

Investment view

The demand for lifestyle community properties remains undiminished with INA selling 82 new homes so far this year at an average price of $418k and a further 317 homes deposited or contracted. The existing residential communities are close to full occupancy with 100% rent collection throughout the pandemic period.

Key Properties

Forecasts

Share Price

Company Description

INA is a leading operator, owner and developer of communities offering affordable seniors accommodation. INA has 90 communities (>13k income generating sites) with a book value of $1.2bn producing EBIT of $108m in FY21.

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