Ingenia and Aspen look to development for growth

Manufactured home and seniors' lifestyle letting operators Ingenia and Aspen groups are confident of weathering the weaker residential market with new developments, joint ventures and a wider range of product offerings.

Ingenia, the larger of the two groups, reported a statutory profit of $29.3 million, down 14 per cent on the prior year and was impacted by several factors, including writing off transaction costs on $72.6 million of acquisitions and the loss on divestment of non-core assets.

Ingenia declared a final distribution of 5.80¢, with payment to be made on September 26. The full-year distribution was 11.2¢ per security.

Ingenia Communities' Latitude One development in Port Stephens, NSW.

Aspen was harder hit, posting a statutory loss of $7.92 million for the 2019 full year. But after adjusting for asset devaluations, transaction costs and other non-underlying items, the group achieved an underlying profit of $4.96 million, an increase of 4 per cent on the previous corresponding period. Aspen final distribution was 2.7¢, payable on August 30.

Both companies highlighted the residential sector as impacting the results, but said the tourism market and increased demand for affordable seniors living had offset some declines. Development potential was showing positive signs in the coming year.

Ingenia's chief executive Simon Owen described the strong profit result as encouraging, particularly
given the backdrop of a soft residential property market.

"Demand drivers remain strong across the industry with an ageing population and housing affordability underpinning earnings growth. Whilst we saw some slowing of the residential market, our investment proposition for seniors is gaining widespread traction and remains compelling," Mr Owen said.

Ingenia expects to deliver EBIT growth of 10-15 per cent, and underlying EPS growth of 5-10 per cent for the 2020 financial year.

"We've seen a general weakening of conditions in the markets in which Aspen operates over the past year. There is good growth in tourism demand, however total accommodation supply has increased materially, leading to a decline in both occupancy and room rates," Aspen group joint chief executive David Dixon said.

"There are ample opportunities to increase returns from Aspen’s properties through more intensive management and by deploying capital across cost-saving initiatives, refurbishment and development."