INGENIA COMMUNITIES GROUP — Capital/Financing Update 2015

Oct 22, 2015

ASX / Media Release

23 October 2015

Ingenia provides manufactured home sales and acquisitions update

• Year to date new sales of 49 homes (and 28 settlements) achieved at 21 October, on track to meet target of 120 sales for FY16

• Unconditional acquisition of expansion land at Bethania to add further ~110 development sites from the Group’s established community at Bethania, Brisbane

Ingenia Communities Group (ASX: INA) today provided an update on sales momentum across the Group’s Lifestyle Parks portfolio, with the announcement that the Group was on track to achieve targeted sales of 120 for the 2016 financial year, having delivered 49 new home sales and 28 settlements across the Group’s lifestyle parks to 21 October 2015. This shows significant growth on the prior year (3 settlements year to date to 31 October 2014).

The Group also announced that, following the completion of due diligence, Ingenia has entered into an unconditional contract to acquire a 7.1 hectare parcel of land at Bethania in Brisbane, to be settled in April 2016.

The land, at 33 Radke Road, is adjacent to Ingenia’s existing partially developed community at Bethania, and has been purchased for $3.3 million. Ingenia plans to deliver a further 110 plus homes on the land (subject to approvals). This will further extend the Group’s established Bethania community (of 54 completed homes and 76 approved home sites). With the ability to leverage already established facilities at Bethania and to maximise the site yield at both communities through consolidation, the land provides attractive development returns. On completion of the current development at Bethania and the development of this land parcel, Ingenia’s Bethania community is expected to comprise approximately 240 homes with quality community facilities approximately 40 kilometres from the Brisbane CBD.

Level 5, 151 Castlereagh St, Sydney NSW 2000, Australia

T 1300 132 946 E investor@ingeniacommunities.com.au

www.ingeniacommunities.com.au

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Further information on the Group’s recent acquisitions and sales is contained in the attached presentation, to be given at the Morgan’s Investor Conference on the Gold Coast on 23 October.

ENDS

For further information please contact
Simon Owen	Donna Byrne
Chief Executive Officer	Group Investor Relations Manager
P 02 8263 0501	P 02 8263 0507
M 0412 389 339	M 0401 711 542
sowen@ingeniacommunities.com.au	dbyrne@ingeniacommunities.com.au

Ingenia Communities Holdings Limited (ACN 154 444 925), Ingenia Communities Fund (ASRN 107 459 576) and Ingenia Communities Management Trust (ARSN 122 928 410). The Responsible Entity for each scheme is Ingenia Communities RE Limited (ACN 154 464 990) (AFSL415862).

Level 5, 151 Castlereagh St, T 1300 132 946 Sydney NSW 2000, Australia E investor@ingeniacommunities.com.au

www.ingeniacommunities.com.au

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INGENIA COMMUNITIES GROUP Ingenia Communities Group Morgan’s Investor Conference Morgan’s Queensland Conference 23 October 2015

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Lakeside Lara, Lara, VIC

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OUR BUSINESS
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Ingenia is a leading owner, operator and developer of affordable Retirement, Lifestyle and Leisure Communities

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INGENIA COMMUNITIES GROUP
Overview
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Diversified earnings base of 63 assets
Proforma asset value (post
Retirement announced acquisitions)
Villages
(DMF) 13%
Seniors Rental
Villages
28%
$455.0m
Lifestyle
Parks 59%
Industry Experienced Board of Directors
Jim Hazel – Chairman
Amanda Heyworth – Non-Executive Director
Philip Clark AM – Non-Executive Director
Robert Morrison – Non-Executive Director
Norah Barlow ONZM – Non-Executive Director
Simon Owen – Managing Director and CEO
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• ASX Code: INA

• Market Cap: $380m

• Leading provider of rental based independent living for Australian seniors

• Established in 2004 – internalised as Ingenia in 2012

• Industry growth fuelled by ageing population, national shortage of affordable housing and opportunity to monetise equity in family home

• Over 2,700 residents paying fortnightly rent complemented by capital light low risk development and co-located tourism

• Attractive organic growth opportunity supported by roll-up of fragmented industry sector

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CONVERGENCE OF AGEING POPULATION
AND HOUSING AFFORDABILITY CRISIS
Australia's Over 50's Population Projections
25.0m Australia’s population is rapidly ageing
44%
42% 20.0m
• ABS and 2011 Census figures indicate that 77% of single people
40%
15.0m over 65 rely on the pension as their primary source of income
38% (ABS, 2011 Census)
36% 10.0m
• Australia’s growing pool of retirees is living longer - many have
34%
5.0m limited superannuation savings and expect to rely on government
32% payments in retirement
30% 0.0m
2011 2016 2021 2026 2031 2036 2041 2046 2051 • The need to provide housing options funded by government
% of Pop Population >50 payments will increase
No. Persons
Portion of Population
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Source: ABS, Catalogue Number 3222.0 - Population Projections, Australia, 2012 (base) to 2101. ABS Census 2011 for 2011 population.

Australian house price index versus wage price index

As house prices rise, affordability is decreasing

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400
350 House Price Index Wage price index
300
250 CAGR 7.89%
200
150
100
CAGR 3.41%
50
0
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• The rate of wage growth has been far outstripped by growth in house prices with dwelling price to income ratio at the highest level in more than 15 years

• For retirees whose sole source of wealth accumulation is through home ownership, releasing equity to fund a comfortable retirement while owning their own home and retaining access to the pension and rent assistance is attractive

Source: Colliers Edge and ABS (as at June 2015), INA Analysis.

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INGENIA MEETS THIS CONVERGENCE
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MARKET DRIVERS

OPPORTUNITY

INGENIA

1. Australia’s population is rapidly ageing – more than 700 people are estimated to be entering the 60+ age bracket every day[1]

2. There is a housing affordability crisis in Australia – house price growth has consistently outstripped wage growth over the past 15 years[2]

3. The typical retiree only has ~$140,000 in superannuation – primary source of wealth is the family home (if they have one)[3]

4. There is a supportive Government funding framework for rent based seniors accommodation

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Industry experienced Board and Management team combined with significant sector roll-up opportunity

Scalable operating platform delivering returns from long and short-term rental assets

Business dominated by stable rental cashflows underpinned by government payments

Significant organic growth and development pipeline in place supplemented by substantial deal flow

1. ABS, Catalogue Number 3222.0 – Population Projections, Australia, 2012 (base) to 2101. Ingenia analysis. 2. Colliers Edge and ABS.

2. Household Savings and Retirement, October 2012, CPA Australia. Ingenia analysis.

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PORTFOLIO OVERVIEW
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Conjola Lakeside, Lake Conjola, NSW

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GROWING PORTFOLIO OF
SENIORS RENTAL COMMUNITIES
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Ingenia has 63 Australian communities and growing

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24 LIFESTYLE PARKS

• 1,620 permanent sites

• 593 annual sites

• 1,300 short term sites

• 1,637 development sites

Largest owner/operator of seniors rental villages in Australia

A leading owner, operator and developer of Lifestyle Parks in NSW and QLD

Growing presence in NSW and SE QLD Further parks under assessment

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31 RENTAL VILLAGES

• 1,629 units

• Across Australia

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Portfolio now $455 million

Note: Includes Parks owned at June 2015, plus Bethania (acquired July 2015), Conjola Lakeside (acquired September 2015), Soldiers Point (to settle October 2015) and Lakeside Lara (to settle October 2015). Development sites include some conversion of existing sites.

8 DMF VILLAGES

• 838 units

• 100+ development sites

• Non core

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GARDEN VILLAGES
31 seniors rental villages
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• Ingenia is the largest owner/operator of seniors rental accommodation in Australia

• Over 1,600 units across Australia

• Affordable rental accommodation with modest facilities coupled with services and activities

Significant organic growth opportunities

Taree Gardens, Taree, NSW

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GARDEN VILLAGES (SENIORS RENTAL)
Organic growth opportunity
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• Existing portfolio of 31 villages (book value: $125.7 million) is core

• Generates over $24 million in rental income annually from stable, recurring cash flows underpinned by Government payments (pension and rent assistance)

• Strong demand for affordable accommodation – no new supply

• Portfolio value increasing – operating performance and growing market recognition

• Ingenia portfolio valued at 10.2% cap rate and $77k per unit. Victorian rental village recently transacted at ~9.2% cap rate and $138k per unit.

Typical Single unit

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Brooklyn Gardens, Brookfield VIC p9

► High yielding assets with low risk, capital light development

► Fragmented ownership offering considerable consolidation opportunities

► Delivers quality seniors housing significantly more affordable than other models

Conjola Lakeside South Coast, NSW

Premier 21 hectare park on the NSW South Coast with significant development upside

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INGENIA’S ACTIVE LIFESTYLE ESTATES PORTFOLIO
Mixed use assets maximise performance
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Permanent Residents
Portfolio Core
•
Stable rents with CPI + growth
•
Government supported income
streams
•
Repositioning through recycling of
older style product
•
Expansion through acquisition and
development
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• •

• •

•

Diversifies and increases cash flow

Mix of location | product reduces volatility Seasonal, not cyclical

Cross-selling opportunities + resident benefits Preserves long-term land optionality

Significant leverage to ageing of population and growth in caravan registrations

Capital light low risk development

Drives repositioning and transition to highest and best use

• Maximises return on low-yielding sites

• Evolves assets to represent ‘brand vision’ Grows rent roll

Recycles capital to fund further acquisitions

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ACQUISITION UPDATE
Expansion land at Bethania, QLD
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7.1 hectare site
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$3.3 million
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Secures further expansion of Bethania, recently acquired partially developed MHE community

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CASE STUDY: LAKESIDE LARA
Acquisition overview
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Lakeside Lara – to settle 26 October 2015

• Pure manufactured home community located 60km South West of Melbourne

• First Lifestyle Park acquisition in Victoria - situated within an established Cluster

• ‘Build ready’ partially developed community comprising 56 occupied homes, 13 completed stock units and 164 development sites with all approvals in place

• Acquired for $16.3 million

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CASE STUDY: LAKESIDE LARA
Delivering value: growth in rental returns
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On completion of the development Lakeside Lara will comprise 233 homes, generating stable rental cashflows

• Current average rent of $140 per week from 56 sold and occupied homes

• With new $3.5 million clubhouse now complete, rent for new homes is from $155 per week

• On completion of the development forecast rent roll is expected to be circa $2.1 million per annum, plus a DMF component of up to 15%

• Value on completion anticipated to significantly exceed Ingenia’s acquisition cost (circa $18.6 million based on 8.5% capitalisation rate)

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CASE STUDY: LAKESIDE LARA
Acquisition analysis
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Acquisition price - $16.3 million Development Returns End Value

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$20.0m
$18.0m
$16.0m
$14.0m
$12.0m
$11.0m
$10.0m $13.7m
$18.6m
$8.0m
$6.0m
$4.0m
$3.4m
$2.0m
$3.1m
$2.0m
$0.0m
13 completed 56 occupied 164 DA approved Sale of 13 Developme ntnt Village value upon
homes (inventory) homes sites completed homes profits onprofits on 164 completion
approved sites164 DA sites
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Note: End value assumes completion of development and a capitalisation rate of 8.5% (no cap rate compression assumed)

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CASE STUDY: BIG4 SOLDIERS POINT
Generating returns from mixed use assets
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BIG4 Soldiers Point – to be settled October 2015

• Mixed use community comprising tourism and permanent home sites

• Located in a prime tourism location within well established Hunter/Newcastle Cluster

• Licensed for 136 sites with (23 permanent, 113 tourism) 113 currently utilised

• Acquired for $10.5 million - initial yield of over 8% with quick pathway to stabilised yield of at least 9.5% via nine vacant approved sites

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CASE STUDY: BIG4 SOLDIERS POINT
Acquisition analysis
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Acquisition price - $10.5 million End Value
$14.0m
$1.5m
$12.0m
$13.1m
$2.6m
$10.0m
$1.5m
$8.0m
$6.0m
$9.0m $9.0m
$4.0m
$2.0m
$0.0m
Existing NOI at 9.5% Vacant sites Existing NOI at 9.5% NOI from new NOI from additional End value
cap cap cabins at 9.5% cap sites (from
reconfiguration) at
9.5% cap
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Note: The end value assumes completion of development sites and a capitalisation rate of 9.5% (no cap rate compression assumed)

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ACTIVE LIFESTYLE ESTATES
Highest and best use drives mix
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In select iconic coastal parks, tourism generates significantly higher returns than permanent sites

Tourist cabin – 72 m[2] Average rent $127 p/n @ 68% occupancy = $31,500 per year

Permanent site - 135 m[2] Rent from senior $133 p/w = $6,900 per year

Active Lifestyle Estates, White Albatross, Nambucca Heads, NSW Acquired December 2014. Includes 135 permanent sites and 165 tourism sites

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DEVELOPMENT AND SALES UPDATE
Development pipeline now 1,637 potential sites
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► Growing development pipeline in key coastal and metro locations

► New projects secured in Queensland and Victoria

**STATE **	CLASSIFICATION	APPROVED	DA LODGED	FUTURE	TOTAL POTENTIAL DEV. SITES
NSW	METRO	112	0	142	254
	COASTAL	184	0	172	356
	REGIONAL	291	72	24	387
QLD	METRO	97	256	110	463
VIC	METRO	177	0	0	177
		861	328	448	1,637

• Development pipeline with a forecast end sales value exceeding $440 million and attractive embedded margins

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DEVELOPMENT AND SALES UPDATE
On track to deliver 120 sales FY16
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Targeting 120 sales FY16

► Achieved 49 sales (and 28 settlements) to 21 October 2015

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Rolling 12 month sales and settlements
25 FY16
Homes Contracted & Reserved Homes Settled
21
20
20 19
16 At 21
October
15
13 13
11
10 10
10 9 9 9 9
8
6 6
5 5 5
5 4
2 2 2
0
0
Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
(as at
21/10)
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OUTLOOK
Strong outlook as Lifestyle Parks rental income
and development ramps up
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• Lifestyle Parks market competition increasing but Ingenia remains well positioned to lead sector consolidation

• Ageing population driving demand for affordable seniors accommodation

• Continuing earnings growth in tourism driven by impact of marketing initiatives and modest reinvestment

► Growing rental income and increased contribution from development to drive earnings, cashflow and distribution growth

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CONTACT INFORMATION
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SIMON OWEN

CEO & Managing Director Tel: +61 2 8263 0501 Mob: +61 412 389 339 Email: sowen@ingeniacommunities.com.au

INGENIA COMMUNITIES GROUP Level 5, 151 Castlereagh Street Sydney NSW 2000 www.ingeniacommunities.com.au

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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 154 464 990) 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 October 2015 unless otherwise stated.

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.

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.

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.

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