Ingenia Communities Group (ASX: INA) has been a silent achiever this year, with Ingenia shares surging more than 65% for the year and closing yesterday's trading session at all-time highs.
The company's share price has blossomed in the past 6 months and is up more than 56% since 1 July. Ingenia was also a recent addition to the quarterly rebalance of the S&P/ASX200 (INDEXASX: XJO), indicating a positive outlook for the company.
What does Ingenia do?
Ingenia is a real estate group that owns, develops and manages a portfolio of senior lifestyle communities and family holiday parks in Australia. The company generates revenue through 3 main streams. Firstly, lifestyle and holiday divisions that earn rental income and revenue from the sale of manufactured homes. Secondly, a portfolio of rental communities targeted towards the elderly and lastly, a portfolio of deferred management fee (DMF) communities.
The company is currently looking to expand its land lease communities in order to target baby boomers looking to retire and downsize. Land lease communities allow residents to purchase the home only and then lease the underlying land from Ingenia. As a result, residents don't have to pay stamp duty, making the entry price attractive.
How has Ingenia performed in 2019?
Ingenia settled its highest ever number of homes in the year to June, with demand fuelled by baby boomers looking to downsize. Despite a generally weaker residential market, the company settled a record 337 dwelling, a 17% increase from the year prior.
The strong performance in settlements saw Ingenia exceed guidance for the third consecutive year when the company reported full-year results for FY19. Highlights for the financial year included a 26% increase in earning before interest and tax to a record $61.5 million, and 21% increase in revenue of $228.7 million. Ingenia also saw an underlying earnings per share increase of 19% and a 26% increase in operating cash flow of $59.3 million.
Ingenia has capped off 2019 nicely with its recent addition to the ASX 200 in the December rebalance. Being included in the ASX 200 will expose the company's share registry to increased demand from index funds.
Should you buy?
Ingenia has a diverse portfolio of land lease communities in Queensland, New South Wales and Victoria. The company looks to develop 336 new homesites and has 10 projects due for completion in FY20. Ingenia boasts a rental occupancy rate of 91%, giving investors exposure to a reliable rental yield.
I am genuinely excited to see how Ingenia performs as it offers great exposure to the wave of baby boomers who are set to retire in the medium term. In addition, the company's inclusion in the ASX 200 should serve as an indicator of its long-term potential.
