Stop Press: Ingenia to raise $21.2M from institutional investors to fund expanding manufactured home Park acquisitions

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Ingenia CEO Simon Owen has maintained his steady growth strategy by announcing this morning that the group negotiated the purchase of five more manufactured home estates. Importantly, announced today, their purchase is going to be funded by an equity raising of $21.2 million from institutional investors over the next two days.
This is significant for two reasons. It demonstrates that the top end of town – the institutional investors – is beginning to look at retirement accommodation as a viable investment sector again. (They haven’t really touched it since the hundreds of millions of dollars lost in the GFC).
The second is the respect that manufactured home parks are gaining as a serious Over 55’s accommodation option. (Remember home parks account for over 20% of the accommodation for over 55’s in America). Owen states they spent two years researching the sector before their first purchase in February.
Backed by his chairman Jim Hazel, Owen has been working hard in rebuilding the interest of institutional investors in the sector. For instance he hosted a bus tour of Ingenia’s existing NSW parks plus the factory that manufactures the homes, in February. He confirms that the lead managers of this placement (RBS Morgans and Petra Capital), plus institutional investors, were on board.
The placement is being offered at 32 cents per security, a 3.2% discount on the last five day trading average.
The five manufactured home estates are located in Sydney, Hunter/Newcastle and Central West NSW regions. The $21.2 million will allow the purchase to be completed by September. The cash yield will be 10% before the development upside profit from 280 vacant sites. Forecast unlevered Internal Rate of Return is forecast at greater than 15% – the Ingenia benchmark for return.
This will make Ingenia the largest operator of manufactured home parks in NSW. Habitat and Walter Elliot are not far behind. But Owen says he has 10 more deals in the pipeline – but does not expect they will require more capital raising. His target market the over 50s, with the average new resident being aged in the is low 60s to mid-60s.
Owen is at pains to point out that Ingenia remains a diversified retirement portfolio operator. Under their Garden Villages brand they operate 29 rental villages with 1,517 units and under their Settlers brand they operate nine DMF villages with 949 units. There recently launched brand for manufactured homes is Active Lifestyle Estates.
Interestingly he reaffirms that DMF villages are ‘loved’ by consumers and that institutional investors are warming to again to this category, assisted by the ‘aggressive’ presentations being made in Sydney and Melbourne over the past few months by New Zealand village operators Rymans and Sommerset, both of whom have stated they wish to list on the Australian Stock Exchange given they have become too big for the New Zealand Stock Exchange and the success they have enjoyed building their DMF village portfolios (always with co-located care).


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