This afternoon, Lifestyle Communities Limited (ASX: LIC) released an announcement in relation to the purchase of a new site in Melbourne. Market reaction was relatively flat with shares ending the day 0.44% lower to close at $9.05.
What does Lifestyle Communities do?
Lifestyle Communities is a retirement village business for people aged 50 and over. All of its retirement villages are located in Victoria, and most of those are located in Melbourne.
The company has an attractive business model with a steady stream of rental income from its residents. As Lifestyle’s portfolio of homes grows, it can tap into a growing stream of earnings. In addition, the company generates revenue (and profit) from each house sale.
Lifestyle has a market capitalisation of $946 million and currently pays a 0.6% dividend yield that is fully franked. The company has seen very strong share price growth over the past 12 months, with shares up by 76% in this time.
What did Lifestyle announce?
Today, the company announced a new conditional contract of sale relating to a site in Pakenham, Victoria. Land settlement is expected to occur during the first half of 2022 with construction anticipated to commence soon afterward.
This acquisition, which is conditional on Lifestyle being issued with a suitable planning permit, will allow for the construction of 170-180 homes and will be the company’s 20th community.
Lifestyle commented that it has a strong track record of developments within Cardinia Shire (a council region in Melbourne’s south-east) and the company is confident a planning permit will be received.
As a result of the Pakenham acquisition, Lifestyle Communities’ portfolio will increase by approximately 175 home sites to 3,960. This figure includes sites in planning, development or under management.
The Packenham project is expected to deliver first customer home settlements in the 2023 financial year.
Commenting on this announcement, Managing Director James Kelly said, “We are pleased to announce the acquisition of a new site in Melbourne’s rapidly expanding south-east growth corridor where Lifestyle Communities has established a well-known brand.”
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