INGENIA COMMUNITIES GROUP — Investor Presentation 2017

Jun 19, 2017

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ASX / Media Release
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20 June 2017

Ingenia sales momentum points to strong FY18

Highlights

• Target of 190 new home settlements for FY17 now achieved

• On track to deliver EBIT guidance of $30 million for FY17

• Expect FY18 settlements in the range of 260-280 new homes

• EBIT guidance of $42 - $46 million for FY18, subject to no material change in market conditions

Ingenia Communities Group (ASX:INA) today announced that as at 15 June the Group had achieved its FY17 target of 190 new home settlements across the Group’s Lifestyle Communities business, with 191 settlements completed and a further 19 contracted sales due to settle in June or early July. This result underpins delivery of the Group’s FY17 EBIT guidance, of $30 million.

Ingenia’s CEO, Simon Owen, said the Group was well positioned to continue to deliver strong growth in settlements in FY18, with 136 homes contracted or deposited at 15 June.

“It is pleasing to report that we are continuing to see strong interest in our projects and that our development business is continuing to build momentum. May 2017 represented our strongest month for new home sales on record with 34 settlements achieved for the month.”

With an average sale price for settled homes of over $300,000 year to date the Group expects to deliver an average gross profit per home of approximately $100,000 (subject to final sales mix).

“As we move into FY18 we will launch four new key greenfield and large scale expansion projects, further diversifying our sales base and contributing to a target of 260-280 settlements for the year. The expected increase in sales and the addition of new assets and rental contracts to our operating business support our target for increased EBIT (in the range of $42-46 million) for FY18.”

Level 9, 115 Pitt St, Sydney NSW 2000, Australia

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

www.ingeniacommunities.com.au

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Mr Owen said the Group had assembled a valuable capital city and coastal land bank to support ongoing sales growth into FY19 and was continuing to invest in its development and sales platform to position the Group for a multi-year growth strategy.

Ingenia will provide the final full year FY17 settlements and an update on the Group’s outlook and guidance with the release of Ingenia’s full year results on 22 August 2017.

Further information on the Group’s outlook and Ingenia’s growth strategy in Western Sydney is found in the Investor Tour information released to the market today.

ENDS

For further information please contact: Donna Byrne Group Investor Relations Manager P 02 8263 0507 M 0401 711 542

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 9, 115 Pitt St, Sydney T 1300 132 946 NSW 2000, Australia E investor@ingeniacommunities.com.au

www.ingeniacommunities.com.au

2

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Ingenia Lifestyle Lara
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INGENIA COMMUNITIES GROUP 2017 Investor Tour

20 June 2017

1

Table of Contents

Simon Owen, CEO

• Business Overview

• Strategy

• Guidance Update

• Development Overview

Owen Burnie, Senior Development Manager

• Structure and Process

• Supply Chain

• Evolution of Development

• Project Updates

• Avina

Kate Melrose, General Manager Project Sales

• Increasing Momentum

• The Foundation of Growth

• Case Studies

2

Business Update Simon Owen, CEO

Amanda make this a usual Divider style slide

Ingenia Albury, NSW

3

Our Business Drivers

Ingenia operates in two complementary sectors with strong growth prospects

Demand Drivers

Opportunity

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Affordable rent-driven
01.
seniors housing
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• Over 65’s fastest growing demographic

• More than 70% of seniors own home outright

• Grow market awareness and penetration

• Convert home equity into comfortable retirement

• Limited savings beyond family home

• Home design affordability and site yield

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Experience based
02.
tourism
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• Rapidly growing caravan and campervan registrations as population ages

• Drive revenue growth through product innovation and investment in digital

• Diminishing caravan parks – many being redeveloped

• Conversion of land to highest and best use

• Increase land utilisation – drive new revenue streams

4

Business Overview

Creating Australia’s best lifestyle communities

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Over 4,500 Residents

Ingenia has

66 Australiancommunities & growing

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3,600 Occupied permanent homes

Portfolio now over

$700

million

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790,000+ room nights p.a Villas and sites

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$
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Annual revenue >$160 million Stable rent base >$1.2 million/pw

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2,650 Potential development Sites

35 LIFESTYLE AND HOLIDAY PARKS 31 RENTAL VILLAGES

Note: Includes announced acquisitions yet to settle.

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WA [6]
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36
NSW
10
VIC
TAS [5]
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5

Key Drivers Remain Strong

Ingenia Lifestyle Bethania, QLD

6

Strategy Supported by key growth drivers: Seniors Rental

Property ownership without a mortgage (by age group)

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100%
80%
60%
40%
20%
0%
55–64 65–74 75 and
over
Source: ABS.
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Superannuation account balances (by age group) Superannuation account balances (by age group)

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100%
6%
14% 13% 4%
90% 22% 24% 20%
7% 10%
80% 14%
70% 14% 10% 10% 15%
60% 19%
50% 34%
54% 43%
40% 81%
66%
30%
51%
20% Super
32% balance
10% 17% 22% <$100k
0%
50-54 years 55-59 years 60-64 years 65-69 years 70-74 years 75 years +
Nil $1-99k $100-199k $200k+
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Source: ASFA Research and Resource Centre.

• The maximum pension for singles is $439 per week which is insufficient to fund a comfortable retirement

• Australia’s growing pool of retirees is living longer – for people aged 65–69 some 70% have <$100k in accumulated superannuation

• For many retirees, the sole source of accumulated wealth is ownership of the family home – releasing equity whilst retaining Government payments is increasingly attractive

7

Strategy Supported by key growth drivers: Holidays

Tourism GDP Establishments vs. Revenue

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60 Up 7.4% 1,700 1,600
50 1,650 1,400
Up 9%
1,200
40 1,600
1,000
30 1,550 800
600
20 1,500
400
10 1,450
200
0 1,400 0
Financial Year Establishments (LHS) Revenue ($m) (RHS)
Source: ABS, Tourism Satellite Accounts. Source: IBISWorld: Caravan Parks and Camping Grounds in Australia (September 2016).
Tourism GDP ($B)
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• Tourism is a growing industry in Australia, delivering GDP of $53 billion in nominal terms (up 7.4%) in FY16[1]

• Caravan and RV registrations are growing at 2.5x car registrations and are highly leveraged to ageing population

• Travelling seniors and families represent the largest market segments for holiday parks

• Growing demand for holiday parks as supply declines, providing opportunity to build market share, grow revenue and expand margins

• ABS, Tourism Satellite Accounts.

8

Guidance Update

Ingenia Lifestyle Bethania, QLD

9

On Track to Deliver Strong FY17 Result Target of 190 new home settlements achieved

New Home Settlements*

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400 Target
350+
350
Target
300 260 - 280
250
200 Target 191
190
150
107
100
52
50
14
0
FY 14 FY 15 FY 16 FY 17 (YTD) FY 18 FY 19
Target Target
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Av. Price $251,900 $302,960 $301,400 $310,500

EBIT (Continuing Operations)

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Target
50 $42-46m
45
40 Target
35 $30m
30 $24.2
25
$18.1
20
15
10
5
0
FY15 FY16 FY17 (Target) FY18 (Target)
($m)
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Settlement of 191 new homes to 15 June – target of 190 exceeded

• Further 19 settlements contracted that could fall into either FY17 or FY18 - anticipate settling ~200 new homes FY17

• Stoney Creek sold out

On track to deliver ~$100,000* new home gross development profit FY17

• 2H17 margins impacted by asset mix – no discounting

At 15 June 2017 a further 136 homes deposited or contracted

Remain on track to achieve $30 million EBIT guidance

• Excludes homes acquired as inventory and refurbishments.

10

Strong Growth Anticipated FY18

New projects and recent acquisitions growing revenue earnings

Metric	FY18 Guidance	Comment
Settlements	260-280 homes	Will depend on launch timing of new projects (Latitude One, Conjola, Glenwood and Grange)
EBIT	$42-46m	Dependant on settlement volumes and margins, timing of asset sales (earnings forgone) and contribution from recent acquisitions Continuing investment in development team including entry into Victorian market
Gross Sales Margin	~$110,000	Dependent on contribution from high margin new projects (Latitude One, Glenwood and Grange)

Growth in development and operating profit leading to forecast increase in tax expense

Effective tax rate of 8 – 12% expected for FY18

No cash tax payable in FY18

LVR to be maintained within 30-40% range

• Recent capital raise, existing debt capacity and strategic asset sales to fund accelerating development

Guidance subject to no material change in market conditions

11

Development

Large scale metro and coastal projects underpin growth

Development Portfolio*	Development Portfolio*	Development Portfolio*	Development Portfolio*
	Approved	Subject To Approval	Total
Metro (49%)	463	833	1,296
Coastal (38%)	594	408	1,002
Regional (13%)	280	72	352
TOTAL	1,337	1,313	2,650

Potential pipeline now 2,650 sites

• Over 1,300 sites available for immediate development

• Development underway in key metro and coastal assets with three projects soon to launch

Focus on large-scale, multi-year metro and coastal development projects

Existing Large Scale Projects*

1. Lara – Outer Melbourne	125 sites
2. Bethania – Brisbane	261 sites
3. Chambers Pines – Brisbane	256 sites
4. Conjola – NSW South Coast	114 sites
5. Avina – Sydney	247 sites
6. Latitude One – NSW Coast	229 sites
Under Contract / Option
7. Glenwood – NSW Mid North Coast	196 sites
8. Upper Coomera – Bris/Gold Coast	235 sites
9. Hervey Bay – Qld, Fraser Coast	210 sites

• Target high sales velocity projects with attractive margins

• Supplemented by expansion and conversion of existing and targeted lifestyle and tourism parks

• Targeting IRR of 20% on new greenfields projects

Projects to launch FY18

• First greenfield development in strongly performing NSW Mid North Coast cluster (Latitude One)

• Expansion of The Grange now underway

• Approval in place at Conjola (NSW South Coast) and Glenwood (NSW Mid North Coast)

• Includes communities under contract or optioned. At 31 December, adjusted for acquisitions.

12

Development Owen Burnie, Senior Development Manager

New community centre installation at South West Rocks, NSW

13

Development – Structure and Process In house team in place covering key disciplines

NSW VIC QLD Accounting & Customer Risk & Design Team Development Development Development Finance Service Compliance Team Team Team

• In the past 12 months we have internalised the project management (site superintendent) capabilities to lower costs and significantly improve ‘speed to market’

• Further investment in development team will be made over the next 12 months to support further growth in new home sales over next 3 – 4 years

New community centre installation at The Grange, NSW

14

Supply Chain

Expanded supply chain

• Now using 7 builders

• Three on-site builders

• Four manufactured home builders

• Parkwood and Glendale remain key suppliers

• Strong relationship in place and collaborative process

• Provide approximately 45% of homes in FY17

• Supply chain expanding to larger on-site builders to manage capacity

• Resulting in supply chain certainty and pricing tension

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15

Evolution of Development Product innovation: on-site building

Avina – artists impression

16

Evolution of Development Process

Diversifying building methodologies

Manufactured / relocatable homes built offsite Product & Constrained to transport and installation Design requirements – steps required Cost Low cost housing including transport cost Timing 10 – 12 weeks Pricing Affordable price point

Relocatable homes built on-site

Able to meet market demand for level access homes and ‘bricks and mortar” style Additional cost in preliminaries and concrete slab – progress payments have a greater impact on working capital ~12-14 weeks allowing for wet weather contingency and concrete slab Higher prices achievable based on traditional residential style and level access

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Traditional manufactured home
Ingenia Lifestyle South West Rocks, NSW
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On-site built relocatable home
Ingenia Lifestyle Bethania, QLD
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17

Evolution of Development Ingenia Design Standards

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• Ingenia’s own ‘standard’ homes

• Twelve key home designs

• Standard specification with upgrade packages

• Finish and façade options

• External and internal colour options

• Customers able to ‘customise’ from limited set of choices

• Ability to tender to a range of builders

• Cost and time efficiencies for sales launch and delivery

• In-house expertise to design masterplan and lot sizes

18

Evolution of Development Product innovation: modern facades

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Ingenia Lifestyle The Grange, NSW
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19

Project Update Ingenia Lifestyle Lara, Melbourne / Geelong

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• Acquired October 2015

• Expansion of partially complete community

• New product launched

• Final stage of civil works underway

• Building on-site

• Display village complete

• At 15 June YTD, 29 new homes settled, 20 homes deposited or contracted

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Project Update Ingenia Lifestyle Bethania, Brisbane

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• Acquired July 2015

• Expansion of partially complete community (76 approved sites)

• Civil works completed for remaining 83 sites

• Using onsite builders (Ezi Build and MJH Multi)

• Two adjacent land parcels acquired (DA for 191 homes lodged December 2016)

• At 15 June YTD, 18 new homes settled, 15 homes deposited or contracted

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Project Update Ingenia Lifestyle Chambers Pines, Brisbane

• Acquired March 2015

• Council approval received for expansion of existing community on adjacent (golf course) land for 256 sites and community clubhouse

• Civil works for first stage of expansion and display home complete with community clubhouse under construction

• Using traditional offsite and onsite building (Glendale and MJH Multi)

• At 15 June YTD, 11 new homes settled, 8 homes deposited or contracted

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Project Update Ingenia South West Rocks, NSW Mid North Coast

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• Acquired February 2016

• Expansion of partially complete mixed-use community

• Community clubhouse and new entry complete

• All Stage 1 homes (24 sites) sold

• Stage 2 (27 homes) civil works underway for completion in July

• Using traditional offsite building

• At 15 June YTD, 14 new homes settled, 32 homes deposited or contracted

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Project Update Ingenia Lifestyle The Grange, Lake Macquarie NSW

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• Ingenia’s first lifestyle community was acquired in March 2013

• Expansion of 56 sites on vacant land approved by Council and civil works underway

• New community centre in place – opening in conjunction with first display homes (anticipated July 2017)

• Using traditional offsite building

• Expected to be a key contributor to FY18 sales

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Project Update Ingenia Lifestyle Latitude One, Port Stephens NSW

• Acquired December 2016

• Approved Greenfield development

• Contract awarded for Stage 1 civil works – commencing mid 2017

• S82 approval for onsite building obtained by Ingenia subsequent to purchase

• Investigating options to improve yield

25

Project Update Ingenia Lifestyle Lake Conjola, NSW (coastal)

• Acquired September 2015

• Ingenia subsequently achieved DA approval on adjacent (golf course) land for 114 sites and community clubhouse

• Civil works to commence 2017

• Will utilise traditional offsite building

• Significant interest through pre-launch phase

• Targetting sales in late FY18

26

Avina Van Village

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27

Overview: Avina Van Village

Acquired October 2016

• Located on 5.1 hectares 50 kilometres from Sydney CBD (Hawkesbury LGA)

• Provides development opportunity in key Sydney market

Mixed-use community with existing tourism and permanent homes (5.1 hectares)

• 41 existing and occupied homes

• 56 tourism cabins

• 65 tourism sites

• Facilities include pool, restaurant, barbeque area, playground

Additional 14.4 hectares of surrounding land acquired or under option

• Potential to create new master planned seniors community in strong growth market

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Asset Strategy

Priority – development of new masterplanned community

• DA lodged September 2016 for 247 new homes and community facilities

• New development on vacant land, with separate entry

• Planning pathway through the Joint Regional Planning Panel (JRPP)

Continue to own and operate existing community (tourism and permanent sites)

• Over time invest in selected improvements including:

• New and upgraded cabin stock

• Expansion

• Additional amenities

29

Masterplan

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30

Homes

• 2 – 3 bedrooms

• Lot sizes average 250 sqm

• 1.5 – 2 bathrooms

• 1 – 2 car garages

31

Facilities

• Outdoor swimming pool

• Walking trail

• Lake

• Bowling green • Community clubhouse

• BBQ area

  • Dining and lounge areas

• Library

• •

• Landscaped gardens Workshop

32

Development Update

• DA Lodged September 2016 for 247 new homes and community facilities

• Council and Joint Regional Planning Panel process continuing

• JRPP conducted site visit in March 2017

• Request for information returned 5 June

• Current status: waiting on Council to submit report to JRPP meeting

33

Sales and Marketing Kate Melrose, General Manager, Sales

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34

Ingenia Lifestyle Land Lease Communities

Increasing Momentum

• Increasing awareness of the land lease model

• Momentum continues – sales guidance upgraded as market recognition grows and new records set

• Pension change impacts 2017

• Budget changes supportive

• Market conditions

The Foundations of Growth

• Maturing portfolio mix reduces risk

• Investment in systems and processes

• Marketing evolution

Case Studies

• Bronze – Stoney Creek

• Silver – Lara

• Gold – Avina and Latitude One

35

Growing Recognition of the Simplicity of the Model

Land Lease Communities are the “disruptor” of the retirement sector. A “fair go solution” for Aussies

“MHE/LLC’s will be bigger than the village sector” (Chris Baynes – Leaders Summit 2017 Five predictions of the retirement village sector)

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“Land Lease Communities are popping up at a rate that can’t keep up with demand” (ACA)

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36

Broader Exposure Increased Media Coverage

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37

Sector Maturing From caravan conversions to masterplanned communities

Increased diversity of product and price point will drive sales momentum into FY18 and beyond

Median House Price

Sydney Melbourne Brisbane $1.15m $843k $655k FY18 ⋅ Avina Gold ⋅ Latitude One FY17 ⋅ $400k - $1m+ Glenwood FY16 Silver ⋅ Lara ⋅ Bethania $250k - $390k ⋅ Chambers Pines ⋅ The Grange ⋅ South West Rocks Bronze ⋅ Hunter Valley ⋅ $150k - $250k Stoney Creek ⋅ Albury

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38

National Market Outlook

Key housing market indicators for Sydney/Melbourne and other capital cities, other than Perth, show a stable outlook

1. Price growth slowing

2. Rental growth stable

3. Discounts balanced or falling

4. Days on Market still ≤45 days

5. Stable construction pipeline

6. Our market perceive their homes are worth less than they are achieving. Shifting sales process to capture increase spending capacity.

7. Ingenia’s portfolio mix in FY18 has a more balanced exposure to Brisbane, Sydney and Melbourne property markets.

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39

Two Budget Incentives Will Mobilise Our Target Market

1. Incentives to downsize with increased super contribution will appeal more to self-funded retirees

• Contribution of up to $300,000 into super from the proceeds of the sale of their home ($600k couple)

• Principal home must be owned for 10 years – disadvantage to second dip downsizers

• The work test will not be applied

• Over 75 will be able to contribute in excess of the concessional caps

• Likely to appeal to self-funded retirees and those who are currently deemed “to old” to contribute to superannuation

Pensioners are assessing the pros and cons of the income test, asset test and super contributions on their downsize decision

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40

Two Budget incentives will mobilise our target market

2. First home buyers (FHB) super savers scheme increase demand for the stock our market is selling

Mum and Dad trying to mobilise the adult kids out of the house so they can downsize see the FHB incentive plus the extra cash they will have as an opportunity help kids and have a fresh start

• FHB voluntary super contributions quarantined for a house deposit will boost FHB activity however it still makes affordability in Sydney a challenge

• Key driver to downsize amongst our market is to help kids out

• Key obstacle to downsizing is the adult child still living at home

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41

Ingenia provides customers with quality educational resources

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Ingenia e-news contains key topics and insights from our panel of experts:

• Downsizing tips

• Impact of Budget Changes

• Sector growth

• Home innovations

• Travel opportunities

Focus on customer education to support informed decisions and reduce lead time to sale

42

Pension Changes

Pro-actively educating the market to avoid ‘change paralysis’

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43

Ingenia Lifestyle – Increasing momentum

Diversified base of development projects to drive momentum

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No project expected to be more than 16% of FY18 settlements

44

The Foundations for Growth

A simplified brand, a clear product suite and improved customer insight plus improved systems and processes create a foundation for growth

Better Portfolio of Projects

Customer Insight

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Marketing & Brand clarity

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Evolved product suite

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45

The Foundations for Growth - Design

Old style home – The Grange

New product – Bethania

The future - new home facades

46

Active Lifestyle Estates to Ingenia Lifestyle Evolution into Ingenia Lifestyle

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47

New Marketing Initiatives

• Digital touchscreens

• Project Brochures

• Educational tools

• Digital Campaigns

• 360 degree virtual tours

• Virtual fly throughs

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48

FY17 Marketing Results

• FY17 marketing initiatives generated over 5,000 new leads

• Total database now over 8,000 leads

• 4,000 email subscribers

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• Average of 8 EDM’s (Electronic Direct Mail) every month

• 78% open rate – an engaged database seeking knowledge

• Cost per lead reducing

• Strong educational content

49

Stoney Creek’s Value Adding Transformation

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Before

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This image cannot currently be displayed.
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Physical Public Sales Community Displays and Sold out repositioning stage Launch Centre Off Plan Sales Jun-17 1 Mar-15 FY18

Contract to Settlement (3-12 weeks)

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After

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Case Study

Ingenia Lifestyle Stoney Creek – a bronze project

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$205,000
Initial refurbishment homes
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$385,000 Final stage new homes

Product and price diversity underpinned strong sales at Stoney Creek. Now sold out - final homes will settle early FY18

A physical repositioning of entry works, streetscape and community facilities plus the significant external works associated with the surrounding business park supported strong revenue uplift at Stoney Creek

Average Spend Ratio = 48% (27% to 80%)

• Settlements varied from 1 to 12 per month – average 4 over life of project

51

Ingenia Lifestyle Stoney Creek Strong local demand

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20 km radius 80% of purchasers of
homes in Stoney Creek
came from within 20
kilometres of Stoney
Creek
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52

Ingenia Lifestyle Lara, VIC – A Silver Project Product innovation driving sales volume and price escalation

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Lara median house price (realestate.com)

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New product released in March and the opening of the new Display Village in May has had a positive impact on sales volumes and revenues.

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Ingenia Lifestyle Lara, VIC Adding value through design efficiency

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Lara’s light open living space has improved perceived value

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New Gold Class Projects Avina, Latitude One, Glenwood

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Avina, Latitude One & Glenwood represent the first stand alone fully master planned communities for Ingenia

• Provide increased margins

• Require longer planning lead times

• Greater opportunity to engage and educate the market

• Build pent up demand

• A more strategic launch campaign

• Typical time from initial marketing launch to settlements is longer than park conversions - approx. 6 - 12 months

• Build database to sell down initial stages

• Align clients capacity to settle with delivery of homes

• Latitude 1 has built a database close to 500 leads in 5 weeks

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Questions

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Disclaimer

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 June 2017 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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