Investing in Australia’s Growing Retirement Communities

KEY TAKEAWAYS:

• Lifestyle Communities is a business that leases land to homeowners across Victoria for a leased site fee.
• This allows retirees or semi-retirees to maximise their living capital or pursue other investment opportunities without having to incur expensive stamp duties.
• Australia has a large ageing population looking to downsize, Lifestyle Communities provides a cost-effective option designed for ease of use and featuring luxury amenities.
• We are expecting demand to accelerate as housing affordability and an ageing population push more people into affordable independent living 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, exploring 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 the demand for a product that offers both affordability and luxury.

This stock is currently held by our Emerging Companies Fund.

You can view the Fund page here.

You can download the Fund profile here.

About the Pengana Emerging Companies Fund

The Pengana Emerging Companies Fund provides exposure to a diversified portfolio of Australian small cap industrial companies.

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