INGENIA COMMUNITIES GROUP — AGM Information 2013

Nov 18, 2013

Ingenia Communities Group Annual General Meeting 2013

19 November 2013

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Jim Hazel Chairman

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Agenda
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Chairman’s welcome

Year in review

CEO update

Formal business of the meeting

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Chairman’s welcome
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Non-Executive Executives Directors Jim Hazel Simon Owen Chairman Mana in Director and Chief Executive Officer g g Philip Clark Tania Betts Director Chief Financial Officer Amanda Heyworth Nikki Fisher Director Chief O erations Officer p Rob Morrison Leanne Ralph Director Company Secretary

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Jim Hazel Chairman

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Strong security price growth of 87% in the last year has seen INA now trading at a premium to Net Asset Value, and outperforming the ASX 300

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Current: 50¢
INA.ASX XPK.ASX
Mkt cap:$331m
200% Sept $62m
Rights Issue
180% Launch MHE strategy
Jun $21m
160% Placement
2012 AGM: 26¢
140% Mkt cap: $115m
120%
100%
Awarded BDO Australia’s best AREIT in FY2012 for total
securityholder returns (TSR) of over 70%
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Indexation
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Funds from two successful raisings deployed on accretive MHE acquisitions

$30 million June institutional placement and Group debt and cash to fund 6 acquisitions

$93.0 million Sept Non-Renounceable Rights Issue and increased Group debt facility to fund 8 acquisitions

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 • Nepean • Albury Citygate • Mudgee Valley • Mudgee Tourist • Lake Macquarie • Macquarie Lakeside Price: $2m - $10m Min. unlevered IRR: 15% Avg. trailing yield: 10%

  • Drifters Identified 6 • Big4 Valley accretive Vineyard and acquisitions, Wine Country in various Holiday Park stages of DD. Anticipate progressive Drifters: settled 18 Nov acquisition by 1Q 2014

Drifters: settled 18 Nov Big4 and Wine Country: option to purchase

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CEO update
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Simon Owen Chief Executive Officer and Mana in Director g g

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FY13 Highlights
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 Improved Garden Villages Rental portfolio trending well towards long term target of operational 92%  results Settlers DMF Conversion sales of 53 homes, grossing $9.1m

 Stabilised capital position with Australian and New Zealand debts refinanced Prudent capital  An oversubscribed $21.2m Institutional Placement in FY13 and a $61.7m management Rights Issue post the year end to fund Manufactured Home Estates (MHE) growth

 Entered MHE market in February after two years analysis – have now Entered high established a market leading position in NSW  growth market Significant deal flow pipeline in place to support further acquisitions

 Development now underway at Ridge Estate and Cessnock Gardens Development underpinned by strong pre-commitments in place  pipeline Capital light, low risk MHE development model supports medium term strategy to add 240 new homes per annum

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Ingenia has significantly outperformed the benchmark indices over 1, 3 and 5 years

- Total returns over 1, 3 and 5 years to 31 October 2013[1 ] % per annum

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30.7%
5 Years 7.3%
11.1%
89.3%
3 Years 13.1%
9.3%
94.6%
1 Year 13.4%
24.7%
0 10 20 30 40 50 60 70 80 90 100
Ingenia ASX 300 Prop All Ords
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1. UBS and S&P/ASX

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Our operating environment
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Demand improving as most residential property markets firm

Demand

Affordable segment of market strong – seniors selling homes to first home buyers who are sensitive to falling interest rates

Few new villages being built due to funding constraints – significant undersupply

Supply > Net decrease in MHE and tourist parks over the last five years as sites are converted to residential

Opportunities

Significant acquisition opportunities in the fragmented MHE segment, where Ingenia has considerable first mover advantage and access to capital

Greenfield sites remain attractively priced but with development risks

Valuations

Improved residential markets and recent corporate activity suggests some improvement in valuation outlook for DMF villages

MHE valuations showing some early signs of firming as competition for quality assets increases

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Financial overview
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Key financial metrics		FY13		FY12
Net profit / (loss)	$m	(10.3)	131%	33.6
Profit from continuing operations	$m	2.8	95%	1.4
Operating income – continuing operations	$m	3.3	63%	2.1
Operating income - total	$m	5.9	21%	7.4
Operating income per security	cents	1.3	24%	1.7
Net cashflow from operations	$m	11.2	118%	5.1
Loan to value ratio (LVR)	%	38	21%	48
Net asset value (NAV) per security	cents	34.4	0.3%	34.3

Net profit impacted by $17.5m non-cash US foreign currency translation reserve reclassification and $6.6m gain from US Seniors divestment

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Capital Management
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Strong balance sheet underpins growth strategy

Debt

Assessing credit approved term sheet to extend debt facility to $129.5m (up $47.5m) on improved terms and margins

LVR target of 25-35%

Oversubscribed Placement (June) and Rights Issue (September) to acquire ~ 15

MHEs in NSW Equity

Target increasing distributions over next 12 months

Stringent return thresholds in place on new acquisitions and development

Capital > Target minimum 15% forecast unlevered IRR allocation > Focus on deploying and efficiently recycling capital from lower yielding assets into higher yielding MHE and development opportunities

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Portfolio update

49 Australian Today, Ingenia has communities and growing

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Rental Deferred
Management Fee
29 villages
9 villages
> 1,520 units
> 950 units
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Growing a NSW market leading position in Manufactured Home Estates

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Manufactured Home
Estates 6 more MHE
11 Estates acquisitions by
1Q 2014
>
668 permanent sites
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624 tourist sites
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528+ development sites
(includes some tourism
conversions)
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Note: Portfolio position as at 19 November 2013. See Appendix for more details

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Portfolio update – Garden Villages (Rental)
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100
92%
90
85%
83%
81%
80
70
60
Jun-11 Jun-12 Jun-13 LT target
Occupancy %
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Occupancy on track for further growth

• Occupancy at 83.3% as at 31 October 2013 (seasonally impacted by winter months)

• Portfolio occupancy continues to trend upwards to long term target of 92%

• Ingenia Care Assist initiative starting to yield results – 2 potential move-ins and 14 move-outs saved

• Resident engagement continues to be a key lever in growing resident satisfaction and brand awareness

• Five acquisitions delivered during FY13 have smoothly integrated into existing market clusters

Image: Devonport Gardens residents at an ‘Activate 2013’ Xbox competition

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Ingenia Care Assist initiative aims to facilitate the delivery of government funded home care packages into our villages by working with approved external care providers

- % of GV resident move outs in FY13 Initiative Benefits

to nursing home (38%) to family home for care or financial reasons (13%)

Reducing move-outs will drive occupancy increases and sustainable earnings > Increase the Garden Villages value proposition to residents and their families > Minimal implementation cost to Ingenia

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Initiative Roll-out Progress to date
•
Stage 1 (now) 2 potential move-ins
In first two
Trial in select villages from 1 November Underway •
14 move-outs saved weeks
Stage 2 (2014)
Refine execution and roll-out across all 29
Garden Villages rental villages Planning
Stage 3 (2015)
Extend to Active Lifestyle Estates portfolio
Planning
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Portfolio update – Settlers (DMF)
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Commitment to new development remains strong

14 new sales and 13 resales settled YTD to 31 Oct 2013, grossing $3.2m (pcp Oct 2012 16 new sales and six resales)

• Demand increasing for refurbished resale homes in WA

• Development continues with solid demand:

• Deposits received for 10 of the 17 Ridge Estate Stage Two development

• Three EOI’s received on the five units being converted in a next stage for Cessnock, with expected completion in Feb 2014

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• DA process underway for 20-unit expansion at Rockhampton

• Future strategy will focus on expansion of existing communities where Ingenia owns adjacent land

Top image: Refurbished unit at Settlers Cessnock

Bottom image: Settlers Ridge Estate Stage 2 Sod Turning Ceremony, CEO Simon Owen with Maitland Mayor, Cr. Peter Blackmore

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Settlers Ridge Estate expansion well underway
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Located in Gillieston Heights near Maitland

17 new homes being constructed on-site

Priced from $299,500 to $332,000 for two and three bedroom homes > Forecast all homes sold by 30 June 2014

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Portfolio update – MHEs (Active Lifestyle)
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Momentum building on Manufactured Home Estates

Acquisition of an additional four MHEs in Hunter/Newcastle region builds the Group’s presence in an attractive market

We will soon be the largest owner and operator of MHEs and tourist parks in NSW

• Seven settled acquisitions in 2013:

• The Grange Village, Morisset – settled in March

• Ettalong Beach Village, Ettalong Beach – settled April

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• Nepean Village, Penrith – settled in August

• Albury Citygate, Albury – settled in August

• Mudgee Valley and Mudgee Tourist, Mudgee – settled

• September and October respectively

• Drifters Village, Kingscliff – settled November

• New sales to be complemented by buyback and repositioning of older resale stock

Top image: Tourism cabins at Nepean River Holiday Village, Penrith Bottom image: A manufactured home at The Grange, Morisset

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Ingenia has acquired or contracted 11 parks with an embedded development pipeline of > 520 sites

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Six homes delivered and installed (The Grange 4, Nepean 2)

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Additional four homes under construction at Parkwood Homes for Nepean – will diversify manufacturer in coming months

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Five homes sold or under contract and further three homes reserved

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Soon to place first order of four homes for Mudgee Tourist and three homes for Albury Citygate

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Homes to be ordered early in 2014 for Drifters, Lake Macquarie Village, Macquarie Lakeside Village and Big4 Valley Vineyard – will have eight communities delivering new homes

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Acquired communities typically take six months for master-planning and infrastructure upgrades

Pipeline accelerating to mid-term target

10 parks x 2 new homes/month by 30 June 2015

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New Zealand Students portfolio
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Redevelopment nearing completion, sale process about to commence

A valuable cash yielding portfolio with 15-year anchor leases to quality government backed tenants

Refurbishment works on McKenzies building on track for completion in Jan 2014, upon which executed 15year lease agreement with Weltec will become operational

• Portfolio to be marketed for sale in early 2014 upon the completion of all redevelopment works

• Multiple unsolicited expressions of interest received in past six months

• Sale will release ~$15m for MHE growth strategy

Images: Refurbished apartments in McKenzie Building

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Strategy
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Mudgee Valley

Mudgee Tourist Park

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Group strategy
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D
O PERATE with D EVELOP isciplined A CQUIRE
excellence efficiently capital allocation competently
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> >	Increase sales and occupancies Leverage scale		> Low risk expansion of existing villages > Assessing greenfield		> Recycle capital to grow higher yielding MHE portfolio		> Focus on recurrent cash yielding assets (principally in the MHE market) –
	efficiencies from		opportunities in		> Selective		target >15%
	cluster strategy		attractive markets		divestment		unlevered IRR, in-
>	Maintain the profitable, cash yielding tourism component in select		> Focus on manufactured housing model – low risk, capital light		considered for assets with low cash yields or limited upside		situ yield of 10% > Clustering in familiar and favorable markets
	MHEs.		accelerated development cycle		> Seek to grow distributions in the near term		> Target ‘build ready’ communities with
							significant
							development upside

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MHE strategy
Significant pipeline of accretive opportunities
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Two years of research invested in assembling a proprietary database of over 2,000 Caravan and Tourist Parks and MHEs across the East Coast and WA

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Highly fragmented segment creating opportunities for consolidation

Existing key participants own < 5% of the market

Tightly held market with few onmarket transactions. Ingenia’s database delivers clear competitive advantage

Large deal flow pipeline in place

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MHE strategy
Acquire, integrate, develop
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1. 2. 3. 4.	Strategy Progress
	Acquire and integrate MHEs and Tourist Parks with a significant land bank and upside potential Building a market leading portfolio of 15 MHEs in NSW by early 2014 including a land bank of over 970 home sites Well advanced
	Reposition and upgrade acquired sites to increase existing cash yields Well advanced at The Grange, and in progress at Ettalong, Nepean, Albury Citygate and Mudgee Valley Underway
	Develop vacant and under-utilised land embedded New homes being delivered to The Grange and Nepean, with Albury Citygate and Mudgee to follow shortly. Medium term target of 10 villages x two new homes/month Underway
	Assess greenfield opportunities that offer scale, returns and development pipeline Assessing several opportunities in existing clusters in NSW Underway

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Maintaining existing and complementary business line

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Short-term tourism and trade accommodation preserved where it delivers the highest and best use of land

• Significant tourism and hospitality experienced staff in senior management level

•  Upgrade existing facilities and implement new marketing strategies

•  Attracts grey nomads, drive-in-drive-out trades, families and school groups

•  Highly profitable

Image: High quality tourist cabins at Nepean River Holiday Village, Penrith NSW

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New acquisitions
Contracts exchanged
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	Purchase Price	Permanent homes	Tourist/Short term accomd.	Development upside sites	Combined Unlevered IRR Combined Stabilised yield >16% 9.2%	Combined Unlevered IRR	Combined Stabilised yield
Lake Macquarie Village (Morisset)	$7.0m	41	27	60+		>16%	9.2%
Macquarie Lakeside Village (Chain Valley Bay)	$3.7m	35	40	20+

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Lake Macquarie Village, Morisset NSW

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New acquisitions
Under option
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		Permanent homes	Tourist/Short term accomd.	Development upside sites
Big4 Valley Vineyard Tourist Park (Cessnock)	Option to purchase	6	114	60+
Wine Country Caravan Park (Cessnock)		-	60	35+

Combined Unlevered IRR	Combined Stabilised yield
>15%	11.4%

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Wine Country Caravan Park

Big4 Valley Vineyard Tourist Park

Building our Hunter/Newcastle market cluster

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Wine Country Caravan Settlers Ridge Estate
Park (Cessnock) (Maitland)
• Big4 Valley Vineyard Tourist Park
• Settlers Cessnock
(Cessnock)
• The Grange Village
• Lake Macquarie Village
(Morisset)
Macquarie Lakeside Village
(Chain Valley Bay)
Ettalong Beach Holiday
Village (Ettalong Beach)
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New Manufactured homes at The Grange
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New homes priced from $190,000 for a modest two bedroom home through to $300,000 for a three bedroom, two bathroom home

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Development pipeline within existing portfolios as at 31 October 2013

	Development pipeline within existing portfolios as at 31 October 201	Development pipeline within existing portfolios as at 31 October 201	Development pipeline within existing portfolios as at 31 October 201	Development pipeline within existing portfolios as at 31 October 201
	Completion Value ($m) No. of Units FY14 FY15 FY16 FY17+
Deferred Management Fee (DMF)	Ridge Estate, NSW 9.2 29
	Meadow Springs, WA 24.0 60
	Gladstone,QLD 15.3 56
	Rockhampton, QLD 8.9 41
	Forest Lake, QLD 10.8 60
	Cessnock, NSW 5.5 28
Manufactured Home Estates (MHEs)	The Grange,NSW 13.3 53
	EttalongBeach, NSW 6.3 25
	Nepean, NSW 7.0 28
	AlburyCitygate, NSW 26.0 130
	Mudgee Valley, NSW 12.3 50
	Mudgee Tourist, NSW 9.8 40
	Drifters, NSW 6.9 25
	Lake Macquarie, NSW 15.0 60
	Macquarie Lakeside, NSW 5.0 20

Medium term target

TARGET: 300 total units delivered pa.

$175.3m 705 units

Represents sell down and development periods

Note: Figures on the development pipeline slide include unsold new built stock and homes yet to be developed.

Please note the development units above are provisional. Upon taking ownership, further development/redevelopment work may be undertaken over time which will alter the number of units in the future. Such redevelopment can include some tourism conversions into permanent sites.

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Outlook
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• Acquisitions – Due Diligence well advanced on accretive MHE opportunities with Rights Issue capital expected to be fully deployed by 1Q 2014

• Integration of recent MHE acquisitions progressing well with new homes delivered at The Grange and Nepean, and Mudgee and Albury Citygate to follow shortly

• Invest in low risk expansion of DMF existing villages – Settlers Ridge Estate Stage 2 construction on track. DA preparation underway for Rockhampton Village expansion

• Rolling out Ingenia Care Assist to drive rental occupancy and improve resident tenure

• Focus on recycling capital including possible sale of passive income DMF communities

• NZ Students portfolio – Redevelopment works on track for completion in early 2014 with portfolio sale to be pursued upon completion

• The Group reaffirms its intention to increase distributions over the near term

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Appendix
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Additional information from this presentation

1. Slide 12 ‘Financial Overview’ - Operating income is a non-IFRS measure that presents, in the opinion of the Directors, the operating activities of INA in a way that reflects its underlying performance. Operating income excludes items such as unrealised foreign exchange losses, unrealised fair value gains / (losses), and includes the uplift in value of DMF units on first loan life leases.

2. Page 14 ‘Portfolio Overview’ - Slide represents portfolio positions as at 19 November 2013. The 11 Manufactured Home Estates (MHE) in this slide include transactions announced but not settled. It comprises:

• Seven MHE acquisitions settled to date (The Grange, Ettalong, Nepean, Albury Citygate, Mudgee Tourist and Van Resort, Mudgee Valley Tourist Park, Drifters Holiday Village)

• Lake Macquarie Village and Macquarie Lakeside Village (both to settle in late Nov 2013)

• An executed option to acquire Big4 Valley Vineyard Tourist Park and Wine Country Caravan Park(both to settle in Jan 2014)

Please note the site number composition above reflects the mix at acquisition date. Upon taking ownership, further development/redevelopment work may be undertaken over time which will alter the mix in the future. Such redevelopment can include some tourism conversions into permanent sites.

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Disclaimer
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This presentation was prepared by Ingenia Communities Holdings Limited (ACN 154 444 925) and Ingenia Communities RE Limited (ACN 154 565 990) as responsible entity for Ingenia Communities Fund (ARSN 107 459 576) and Ingenia Communities Management Trust (ARSN 122 928 410) (together Ingenia Communities Group , INA or the Group). Information contained in this presentation is current as at 19 November 2013. This presentation is provided for information purposes only and has been prepared without taking account of any particular reader's financial situation, objectives or needs. Nothing contained in this presentation constitutes investment, legal, tax or other advice. Accordingly, readers should, before acting on any information in this presentation, consider its appropriateness, having regard to their objectives, financial situation and needs, and seek the assistance of their financial or other licensed professional adviser before making any investment decision. This presentation does not constitute an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security, nor does it form the basis of any contract or commitment.

Except as required by law, no representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information, opinions and conclusions, or as to the reasonableness of any assumption, contained in this presentation. By reading this presentation and to the extent permitted by law, the reader releases each entity in the Group and its affiliates, and any of their respective directors, officers, employees, representatives or advisers from any liability (including, without limitation, in respect of direct, indirect or consequential loss or damage or loss or damage arising by negligence) arising in relation to any reader relying on anything contained in or omitted from this presentation.

The forward looking statements included in this presentation involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, the Group. In particular, they speak only as of the date of these materials, they assume the success of the Group’s business strategies, and they are subject to significant regulatory, business, competitive and economic uncertainties and risks. Actual future events may vary materially from forward looking statements and the assumptions on which those statements are based. Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking statements.

The Group, or persons associated with it, may have an interest in the securities mentioned in this presentation, and may earn fees as a result of transactions described in this presentation or transactions in securities in INA.

This document is not an offer to sell or a solicitation of an offer to subscribe or purchase or a recommendation of any securities.

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