30 April 2018

Investing in Australia's Growing Retirement Communities

Australia’s ageing population continues to grow due to increasing life expectancy. As the majority of companies operating in the retirement space focus on the higher end of the market, Lifestyle Communities offers a luxury product for those who sit in the lower end. Headed by founder and CEO James Kelly, who also owns 14% of the company, the management team are known for consistent and conservative growth strategies. It’s these strategies that have led to 20% growth per annum, without raising new capital but instead recycling capital to fund further growth.

Located in Victoria’s semi-regional areas, Lifestyle Communities is able to keep costs low whilst, due to easy access to additional land, explore further development opportunities as demand increases. Currently they’ve built 1,600 homes across thirteen communities throughout Victoria with 2,600 recorded homeowners. The homes themselves are sold, on average, for 60% of the median house price, enabling residents to pocket 40% of the proceeds on sale.

We believe Lifestyle Communities is a sound long-term investment and have chosen to invest in this stock for three main reasons:

  1. The high quality and growing popularity of this product can be seen in their lead generation, with 52% of new residents coming from referrals.
  2. They are the largest provider of this type of community in Victoria with no direct competition. They also target the 50+ demographic whereas most alternative companies are only available to the 60 – 65+ audiences.
  3. Their semi-regional location, in addition to their expertise in lower cost construction and management systems, provides them with the ability to easily expand to meet demand for a product that offers both affordability and luxury.

This stock is currently held by our Emerging Companies Fund.

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This report has been prepared by Pengana Capital Ltd (ABN 30 103 800 568, Australian Financial Services Licence No. 226566) (“Pengana”).  This report does not contain any investment recommendation or investment advice and has been prepared without taking account of any person’s objectives, financial situation or needs.  Therefore, before acting on the information in this report a person should consider the appropriateness of the information, having regard to their objectives, financial situation and needs.
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