Lifestyle Communities Valuation gains from sharper cap rates on Communities

21 July 2022

Lifestyle Communities has finalised the year-end valuation process for its portfolio of 26 communities showing a $92.6m increase on the prior year.

The Group confirmed that the increase was due to the combination of new home settlements in FY22, a continued compression in capitalisation rates for land lease assets, and movements in the residential property market. As the increase in value was less than the previous year, there will be an impact to the statutory profit result for FY22.

Lifestyle Communities reported that capitalisation rates on the annuity rental stream have compressed from a range of 5.5% – 5.75%, to a range of 4.87% – 5.25% across the portfolio. The weighted average capitalisation rate is 5.18% (FY21: 5.57%).

Subject to the finalisation of the year-end audit, the Company expects to report net profit after tax attributable to shareholders of $88.4m – $89.4m (FY21: $91.1m). Excluding the impact of the changes in property valuation assumptions, the underlying profit after tax is expected to increase from $36.4m in FY21 to a range of $60.5m – $61.5m in FY22.

New home settlements for FY22 were 401 (FY21: 255) and resale settlements attracting a deferred management fee were 143 (FY21: 105), increasing annuity income by 25% to $40.6m (FY21: $32.4m).

With the land already in the pipeline, the Company is planning to deliver 1,400 to 1,700 new home settlements between FY23 and FY25. FY23 settlements are expected to be consistent with FY22 before a step up in FY24 and FY25 as new projects come online at Woodlea, Phillip Island, St Leonards, Clyde, Leopold, Pakenham, Merrifield and Ocean Grove. Resale settlements attracting a deferred management fee are anticipated to be in the range of 550 to 750 over the next 3 years.