S&P/ASX 200 Index (ASX: XJO) real estate share Lifestyle Communities Ltd (ASX: LIC) is under heavy selling pressure today.
Lifestyle Communities shares closed Friday trading for $12.57. In early afternoon trade on Monday, shares in the retirement communities company are changing hands for $10.44, down 17.0%.
For some context, the ASX 200 is up 0.9% at this time and hitting new record highs.
Here's what investors are mulling over today.
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ASX 200 real estate share catching legal headwinds
The Lifestyle Communities share price is tanking today following media accounts that some residents are taking legal action involving allegedly misleading marketing practices and questionable exit fees charged when residents sell their homes.
Retired policeman Geoff Gauci bought a Lifestyle Communities development at Wollert, in Melbourne, where owners buy the dwelling and lease the land.
According to Gauci (quoted by ABC News):
The way it was presented to me and my wife, I expected everything to be above board, knowing that I'm dealing with Lifestyle, a publicly listed company. I did my homework, and I checked on them. And I would have assumed that everything was kosher.
18 months later, he had a decidedly different take on the ASX 200 real estate share.
"To me, it's like I'm in a financial prison. I've got to bail myself out in order to get out, and it's just wrong," he said.
And Gauci is not alone.
As ABC News reports:
80 residents at the Wollert Lifestyle Community have quietly lodged a claim against Lifestyle Communities in the Victorian Civil and Administrative Tribunal (VCAT) over fees they believe are excessive and in breach of the law.
The ASX 200 real estate share earns roughly $13 million a year from exit fees.
Lifestyle Communities responds
This morning, Lifestyle Communities responded to ABC's coverage.
Management said they've been engaging with the group of homeowners since February 2024. However, those homeowners have not been satisfied with the company's responses and have commenced legal proceedings.
The company said it "respects the rights of homeowners to pursue the VCAT pathway and believes this is the appropriate forum for resolution of the matter".
Noting that its policies are consistent with other industry operators, the ASX 200 real estate share said it rejects the allegations made in the VCAT applications and will defend them accordingly.
"Deferred management fees are permissible in all states except for South Australia. In Victoria, most land lease operators charge a deferred management fee," the company stated.
Additionally, Lifestyle Communities highlighted that, "All fees clearly articulated and explained on our website and in our marketing materials."
Homeowners sign off on fee acknowledgements at each stage of the sales process.
With today's intraday losses factored in, the ASX 200 real estate share is down a painful 42% over 12 months.
