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Ingenia + Sun Partnership
November 7, 2018
Ingenia announced this week a Strategic Partnership with Sun Communities, Inc, a leading US manufactured housing REIT, established to support the acceleration of Ingenia’s business plan through new greenfield developments
The Partnership provides for the placement of 23,176,816 securities to Sun Communities at $3.2172 per security, representing a 8.75% premium to 30 day VWAP at 5 November 2018 and resulting in Sun Communities owning 9.99% of issued capital on completion of the Placement providing them also with a seat on the Board of Ingenia.
Proceeds from the deal will be used by Ingenia to fund the acquisition of two established communities in South East Queensland, accelerate new cabin rollout and provide initial equity funding for the Strategic Partnership.
The proposed acquisitions comprise:
A $29.5 million, 380 site community 16 kilometres from the Brisbane CBD located in a strong growth corridor which is dominated by park owned rental sites and provides a significant opportunity to reposition and enhance returns. The community is anticipated to generate an initial yield of over 7%; and
A premium holiday park on the Queensland Sunshine Coast
The transaction also provides Ingenia with access to 40 years of sector knowledge in a leading manufactured housing market, supporting Ingenia’s aspiration to become Australia’s leading owner, operator and developer of lifestyle and holiday communities
Both parties will contribute equal capital to acquire and develop assets, with Ingenia holding a right to acquire each development on completion. The Strategic Partnership will be governed by a separate Board, with Ingenia and Sun each appointing two Directors.
The Placement and subsequent use of proceeds will be marginally accretive to earnings in FY19. Ingenia’s FY19 underlying EPS guidance of 5-10% growth on FY18 is reaffirmed. Ingenia is on track to deliver 350+ new home settlements in FY19. EBIT is forecast to increase by 15-20% on FY18 (up from original guidance of 10-15% growth).