Ingenia adds $525m of assets

Ingenia Communities Group has completed a $475m capital raising to partially fund the acquisition of 20 high quality communities and development sites worth $525m.

The acquisitions include the contracted acquisitions of Seachange Group, Caravan Parks of Australia, and a lifestyle greenfield development site in metropolitan Brisbane.

A further six acquisitions are currently under exclusive offer or in advanced due diligence. The Acquisitions are summarised as follows:

Ingenia’s CEO, Simon Owen, said “The acquisitions announced today are transformative for Ingenia – building on our market leading position as an owner, operator and developer of lifestyle and holiday communities, while accelerating our strategic growth objectives via value accretive acquisition opportunities.”Seachange and Caravan Parks of Australia

Seachange’s portfolio of six lifestyle communities comprises two fully mature and income producing sites, two partially completed sites with development upside and two greenfield development sites. The acquisition will add 693 additional income producing sites and a further 548 potential development sites to Ingenia’s Lifestyle portfolio in addition to an established operating and development platform, significantly expanding the Group’s development pipeline and capacity.

Caravan Parks of Australia comprises seven mixed use assets in Victoria and on the border with New South Wales and will add more than 1,400 income producing sites to Ingenia’s portfolio. The acquisition is immediately accretive to earnings and provides a mix of rental income from permanent, annual and tourism sites. Moreover, the portfolio will continue to build the Group’s profile and presence in the Victoria market.

Mr Owen said, “Assets of the quality of Seachange rarely come to market. It provides Ingenia with a portfolio of six premium lifestyle communities with significant development upside to drive multi years of growth.

“Seachange represents a new premium brand for Ingenia in the growth corridor of South East Queensland, and integrates a highly-regarded, experienced management team, building development capacity in one of the Group’s key markets.

“We are also excited to significantly expand our platform and presence in Victoria via the acquisition of Caravan Parks of Australia. The portfolio is expected to provide stable permanent and annual rental income with upside from tourism operations,” Mr Owen said.

The capital raising program will partially fund the acquisitions through an underwritten 1 for 4.24 accelerated non-renounceable entitlement offer to existing eligible securityholders to raise approximately $475 million.

New securities issued under the Equity Raising will be issued at $6.12 per security (Issue Price). The Issue Price represents a:

• 6.0% discount to the last closing price of $6.51 per security on 29 October 2021
• 7.0% discount to the 5-day volume weighted average price (VWAP) of $6.58 per security on 29 October 2021
• 4.9% discount to the Theoretical Ex-Rights Price of $6.44 per security.

The Group’s largest securityholder, Sun Communities, has committed to fully participate in the Institutional Entitlement Offer. The participation of Sun Communities is not underwritten; however, the balance of the Equity Raising is fully underwritten.

“The Equity Raising provides partial funding for our near-term acquisition priorities which demonstrate Ingenia’s successful deal origination capability, as supported by our dedicated acquisitions team who continue to source high quality on- and off-market opportunities,” Mr Owen said.

Ingenia has continued to show resilience through 2021 with residential communities continuing to deliver stable cashflows via uninterrupted rent collection through COVID-19, with no deferrals or abatements. While government restrictions and supply chain challenges constrain near term ability to capitalise on demand, sales momentum for new homes remains strong, partially driven by heightened demand for sea change/tree change locations. Ingenia is targeting new home settlements of 425+ in FY22 (excluding the Seachange portfolio) and acceleration of development over the next three years.

Holiday Parks have been materially impacted by COVID-19 due to extended closures and restrictions resulting in the loss of peak school holiday periods in July and September. The impact on the Group’s Holidays earnings is estimated to be approximately $7 million (net of cost savings), or 2 cents per security in FY22.

Ingenia is positioned to benefit from strong underlying demand fundamentals for seniors housing and domestic travel combined with announced acquisitions and easing of travel restrictions.

Ingenia’s residential communities are located in attractive markets for downsizers and currently have contracts and deposits on hand to support 475+ settlements in FY22, including the Seachange portfolio. The Group remains cautious around construction and potential COVID-19 related disruptions.

Holiday Parks are poised to benefit from demand rebounding strongly with the easing of restrictions creating a unique opportunity for domestic travel in the medium term.

Balance sheet strength has been maintained with capacity to fund development and further growth including an additional $200 million of debt funding secured.

Ingenia is pleased to provide FY22 guidance of growth in EBIT of 20% to 25% and underlying EPS growth of 3% to 6% relative to FY21.

Simon Owen said: “With COVID-19 restrictions finally beginning to ease the outlook for the business is incredibly positive. The Transaction adds 20 communities and development sites to the portfolio, giving Ingenia significant reach in our key markets and enhancing our development capacity as we seek to deliver 1,800 – 2,000 new home settlements over the next three years.”