Eco Investor November 2015

Core Securities

Ingenia to Consolidate Securities

Ingenia is looking to make itself more attractive to institutions and other investors through a share consolidation, while its active acquisitions strategy is continuing to add to its medium and long term investment profile.

Ingenia is to ask security holders to approve a one for six security consolidation. If approved, the number of stapled securities will fall from 900,973,630 to about 150,162,272.

Ingenia is hoping for a longish list of benefits. The price of its securities should rise six fold and this should reduce the volatility in their prices. The higher price is likely to appeal to more investors by increasing the securities' price efficiency, and may overcome mandate restrictions where some institutions cannot invest in securities with prices below $1. Further benefits should be improved market perception, a broader appeal of the securities for more investors, and a reduction in Ingenia's ASX listing fees.

Security holders will vote at the annual general meeting and if they give approval, post consolidation trading will commence on 19 November.

At the operational level, Ingenia has acquired the Lakeside Lara manufactured home community in Lara, which is about 60 kilometres south west of Melbourne and a little north of Geelong. Lakeside Lara is on 8.3 hectares and has 56 existing and occupied homes, 13 completed and unsold homes, and 164 development sites with approvals in place. A new $3.5 million club house completed in January this year and other community facilities are expected to assist further sales.

The acquisition price is $16.3 million, and the property is close to five Ingenia Garden Villages in south and western Victoria.

Chief executive Simon Owen said Lakeside Lara is a large, purpose built manufactured home community in one of the key growth corridors for Melbourne and with a significant build ready development pipeline in place he expects it to make a significant contribution to sales and earnings from the 2016 calendar year.

The sale of the 13 completed and unsold homes is expected to gross over $3.1 million. The current rent from the 56 homes is $0.4 million per year, and when the development is completed and has 233 homes this is forecast to rise to over $2.1 million per year.

Elsewhere in the Lifestyle Parks portfolio, sales of manufactured homes to 21 October were 49, with settlements at 28, putting sales on track to meet the 2015-16 target of 120 sales.

The acquisition of 7.1 hectares of expansion land at Bethania on the outskirts of Brisbane and adjacent to Ingenia's partially developed community at Bethania will add another 110 development sites to the community. The land was purchased for $3.3 million and the acquisition will settle in April 2016.

The Bethania land acquisition by Ingenia.

The Bethania community currently has 54 completed homes and 76 approved home sites. Subject to receiving DA approvals, the 110 or so new homes when built are expected to increase the community to 240 homes plus quality community facilities. Mr Owen said that with the ability to leverage the established facilities at Bethania and to maximize the site yield at both communities through consolidation, the land provides attractive development returns.

The latest properties are part of Ingenia's aggressive acquisition strategy that has now given it 1,637 potential development sites in New South Wales, Queensland and Victoria with a forecast end sales value of $440 million over coming years. 861 of the sites already have development approvals.

The anticipated increase in revenue from rising home sales and site rentals make Ingenia a medium to longer term investment. (ASX: INA)





Search Eco Investor