Why Lifestyle Communities (LIC) is one ASX share to watch


Companies and indices mentioned:


I think Lifestyle Communities (ASX: LIC) is one ASX share to watch after making an announcement today.

About Lifestyle Communities

Lifestyle Communities is based in Melbourne, Victoria. It develops, owns and manages affordable independent living residential land lease communities. Lifestyle Communities has 22 residential land lease communities in planning, development or under management.

What did the business announce today?

It has executed a contract of sale to purchase a 9-hectare site located in Clyde, Victoria. The site has been acquired on 3-year terms and settlement is expected to occur in mid-2023 with construction anticipated to commence soon afterwards.

Lifestyle Communities explained why it was interested in the location. Melbourne’s south east corridor is one of the fastest growing urban areas in Australia. It’s already home to approximately 330,000 people aged over 50 and this demographic is forecast to grow significantly over the next 20 years. The Clyde site is actually located only 5.5km from the recently announced land acquisition in Clyde North.

This will be the 22nd community and will allow for the construction of approximately 230 homes, bringing the total to 4,518 home sites.

Lifestyle Communities Managing Director James Kelly said:”This acquisition is an exciting opportunity for Lifestyle Communities to lock-in our future pipeline in Melbourne’s south-east growth corridor where we have an established brand and a strong referral base…The Clyde project will follow on nicely from the tail end of the recent acquisition in Clyde North which is expected to commence construction in 12 months. This gives Lifestyle a housing pipeline of approximately 8 years in this fast-growing corridor.”

Another announcement

The business also announced it has increased debt facility by $50 million and extended the length of it. That means it has a combined facility of $275 million maturing in 2024 and 2025.

The new facility will be useful if more sites become available because of the economic slowdown.

Mr Kelly continued: “We are seeing a number of high-quality sites come to market because of the change in macro conditions…Our intention remains to continue to acquire two new sites every 12 months with the additional funding available to support the occasional additional site if the opportunity arises.”

Summary

I like the Lifestyle Communities is focused on the long term growth of the business, and that it’s willing to take advantage of the current market conditions.

The company has an attractive model because its residents pay a site rental fee which is approximately 21% to 25% of the age pension after receipt of rental assistance. This rental income is steadily growing each year and will form a larger part of earnings as it grows. In the HY20 result there was an organic rental increase of 3.5% which is a solid growth rate.

It would have been better to buy shares under $7, but I wouldn’t mind buying a small parcel today.

3 stocks to own in July 2020...

Amidst the COVID-19 confusion, there are some companies still growing FAST (think: online meetings through Zoom, streaming companies like Netflix and eHealth services provided by Teledoc).

While the world grapples with COVID-19, some companies are still growing rapidly. The entire cloud computing market is valued around $US210 billion but if you ask me, it seems clear as day that this market is only going to get bigger in 2020 and beyond.

That's why our top investment analyst has just identified 3 growth stocks in a net cash position, with strong competitive forces... and obvious tailwinds at their back. He owns all three of them right now!

Claim a FREE investing report on our analyst's "3 best share ideas for the cloud revolution" when you create a free Rask Australia account.

Our report is 100% free and unlocks hundreds of hours of bonus content.

Simply click here to access the report.


Disclaimer and warning: This information is published by The Rask Group Pty Ltd and contains general financial advice and information. That means, the information/advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms of Service and Financial Services Guide before using this website.

Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned. 

Jaz Harrison

Jaz Harrison

Jaz is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.