Ingenia poised to drop NZ hostels
AUSTRALIAN RETIREMENT village operator Ingenia Communities is on track to complete the divestment of its New Zealand student housing exposure within days.
The group has had three student dorms in Wellington listed for sale after a NZ$25 million refurbishment which had a book value of A$49.4m when Ingenia reported its results last week. A sale price of around NZ$55m was touted in media reports in March.
After acquiring two Manufactured Home Estates (MHE) in Mudgee, NSW, in August last year, 40 per cent of the company’s portfolio was retirement rental, 15 per cent is MHE and 31 per cent in traditional Deferred Management Fee villages. Fourteen per cent was in the three New Zealand properties.
The New Zealand portfolio was the one part that showed a decline in valuation due to the ‘‘earthquake strengthening-related cost variations and softening in cap rate’’.
‘‘Management is actively assessing options to recycle lowyield capital into the manufactured home estates,’’ chief executive Simon Owen said in February. The divestment, the first tranche of Ingenia’s property recycling, was due to settle in six months, he said. Tenders closed on April 3. The hostels are in the converted McKenzies, Cumberland House and Education House office buildings and are leased by Victoria University and the Wellington Institute of Technology. Fifteen-year leases delivered guaranteed rental growth.
The hostels, which reportedly were forecast to deliver NZ$4.33m over the year to January 2015, are less than 15 minutes walk from Victoria University’s main campus and Weltec’s School of Hospitality in Cuba St.
Ingenia, formerly the ING Real Estate Community Living Fund, bought the properties in 2006.
However, it is now transforming its revenue model to cash-yielding assets only as it accelerates the rollout of its MHEs and exits from the DMF model over the next 12 to 18 months. By then, 70 per cent of its portfolio will be allocated to developing the MHEs, while the remainder will flow from its rentcollecting villages.
Since February 2013, Ingenia has acquired 15 lifestyle parks. It now has a development pipeline of 917 home sites across its NSW portfolio. In 2014, it delivered 18 manufactured homes to its parks.
Owen has set a medium-term annual target of 240 new homes – two a month across at least 10 communities.
‘‘I do think we will be ordering, delivering, installing well in excess of 100 homes this financial year,’’ Owen said.