Transcription of Finance News Network Interview with Ingenia Communities Group (ASX:INA) Managing Director and CEO, Simon Owen


Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Ingenia Communities Group (ASX:INA) is Managing Director and CEO, Simon Owen. Simon, welcome back.

Simon Owen: It’s great to be here.

Carolyn Herbert: Now for investors who aren’t familiar with the company, can you start by giving us an introduction to Ingenia?

Simon Owen: Ingenia is one of the largest owners and operators of seniors’ rental communities, across Australia. We own across three different businesses, we own 31 seniors’ rental villages. We own eight traditional deferred management fee villages. In the last three years we’ve expanded into the caravan park and manufactured housing segment. And earlier this week, we announced the acquisition of another four communities in that space.

Carolyn Herbert: So what are the different sorts of accommodation you have on offer?

Simon Owen: So across those three different elements, we own 1,600 rental villages. And that’s basically where a senior pays $315 a week rent, for a one-bedroom apartment in a gated community, with an on-site manager. The second aspect is the traditional deferred management fee villages, which operates under a loan lease arrangement. And then lastly, the newest part of the business, which is caravan parks and manufactured housing communities. That’s where the senior owns the home, we retain ownership of the land and we charge them a ground lease rent. So across those three different segments, we now have over 6,000 seniors living in our 65 communities.

Carolyn Herbert: As you say Ingenia has acquired some new properties recently. Can you tell us a little bit more about these?

Simon Owen: Earlier this week we announced the acquisition of another four communities, across New South Wales and Queensland. So firstly the largest acquisition, which is still subject to due diligence, is the last remaining freehold caravan park in Sydney. It’s a very large asset and also comes with 16 hectares of land for us to expand into. So that’s for us I guess, a ground-breaking transaction.

We also announced the acquisition of the Ocean Lake Caravan Park on the New South Wales south coast, which is quite a large community nestled in between a lake and the ocean. We announced a confidential acquisition on the New South Wales mid-north coast. And lastly, we’ve now expanded into the Fraser Coast in southeast Queensland with our first community in Hervey Bay, which is a real mecca for seniors.

Carolyn Herbert: How is Ingenia funding these acquisitions?

Simon Owen: So we announced at the same time as those acquisitions, a 15 per cent placement from existing security holders, which raised $60 million. That was very significantly oversubscribed, and every cent from that capital raising will be going into those four acquisitions. We’ve also announced for our existing retail shareholders that we are going to start a shareholder purchase plan, where our existing 4,000 retail shareholders can acquire up to $15,000 of shares at the same price as our institutional placement.

Carolyn Herbert: What’s your strategy for property acquisitions?

Simon Owen: Acquisition I think firstly, is a very important part of our business. But the main priority at the moment is the 1,800 development sites we have across the country; it’s building those up. In terms of acquisitions, we’ve got six people working full-time on M&A. And we’re basically just going out there and looking to acquire off-market individual properties, owned by traditional mum and dad owners. We have 19 opportunities that we’re currently running the ruler over at the moment. So certainly the guys on the team are very busy at the moment.

Carolyn Herbert: To financials now, so what were the highlights from the company’s first half results for FY2016?

Simon Owen: I think probably the two key highlights were firstly our revenue line. Revenue was up over 80 per cent on the prior comparative period, which shows that as we’ve made these acquisitions and integrated them into the business, there’s been very strong top line revenue growth. And I think equally pleasing was operating cash flow. So our cash flow through the business again, was up over 100 per cent and that’s a very pleasing result. Our shareholders are giving us very great feedback on those two key measures.

Carolyn Herbert: Finally Simon. What’s your focus for the next 12 months and your outlook for the aged care sector, going forward?

Simon Owen: I think in terms of the focus, it’s really - we’ve made a lot of acquisitions over the last few years, so it’s making sure we integrate those well. And it’s making sure we deliver on a great experience for our residents, and our customers. I think more broadly, the outlook for the sector is we’re all getting older, there’s a lot of capital out there, so chasing deals looking for yield.

So we just have to make sure that we maintain our discipline and don’t pay too much for these assets, but we’ve got a very significant pipeline of opportunities. People know that when they deal with Ingenia, we’ll be there on settlement day with the cheque and we don’t try and re-trade. So it’s really just executing on our strategy and continuing to build out our pipeline across the east coast.

Carolyn Herbert: Simon Owen, thanks for joining us.

Simon Owen: Thanks for having me.


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