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Lifestyle Communities Limited advises new home settlements for FY23 are expected to be in the range of 355 to 365 and the company maintains its previous guidance of delivering between 1,100 to 1,300 and 1,400 to 1,700 new home settlements between FY22 and FY24 and FY23 and FY25 respectively.
Managing Director, Mr James Kelly, said “FY23 settlement bookings are lower than we originally anticipated at our projects at Wollert and Deanside. While both projects’ settlement run rates are performing in line with our historical averages, we had expected slightly higher run rates during the post covid recovery period in the Northwest of Melbourne. Settlements at Meridian, Bellarine and St Leonards remain above expectations. Despite the higher interest rate and inflation environment, we have not experienced any change in demand for the sale of our customers’ homes and we continue to experience strong enquiry for both new homes and resales. We also continue to see a short turnaround time for our customer’s homes on market. We welcome our 5,000th homeowner in June and this marks another milestone in our 20th year of operation”.
Underlying profit for the full year is expected to be in line with FY22 due to increased annuity income driven by a higher number of homes under management.
Valuations of the company’s investment properties have been completed but remain subject to final settlement outcomes and completion of the full year audit process. Lifestyle Communities® anticipates the full year underlying fair value adjustment to be approximately $70 million pre-tax underpinned by new home settlements and rental growth. Valuation assumptions remained consistent with average cap rates of 5.14% (FY22: 5.18%) and average DMF values of $61k per home (FY22: $59k per home). Balance sheet valuation of the investment property portfolio is expected to be in the range of $955 million to $965 million (FY22: $850 million).
Mr Kelly said, “Demand for high quality land lease assets remains strong as the sector continues to mature and institutionalise. We are pleased to see high quality players enter the sector and expect there will be a continued consolidation of brownfield assets and expansion of greenfield developments. The penetration rate for land lease communities has declined as new supply has not kept pace with the ageing population and increasing demand from the emerging cohort of Gen X entering the 50 plus age bracket.”
Mr Kelly continued, “The scale of new projects under development is unprecedented for our business, and it’s been an exciting time as we complete the launch of seven new projects in FY23. These new projects are a key catalyst for a planned step up in settlements in the second half of FY24 and into FY25 and underpin delivery of our 3-year settlement target ranges. By the end of June, we will have eleven projects under development and in various stages of completion, providing a total pipeline of 5,599 homes with 3,550 completed and settled across 28 communities. With cost of living still a pressure point for many of our target customers, demand for high quality affordable housing remains strong.”
The expected settlement profile of communities in development updated from the half year is shown below:
St Leonards – The Shores and Merrifield are anticipated to commence settlements in Q1 FY25.
