Company Reports

We intend to cease coverage of Lifestyle Communities. We plan to drop coverage on or around July 9, 2026.

Lifestyle Communities’ earnings comprise land lease property sales and rent collection. It collects rent on about 4,000 land lease sites across over 20 land lease communities in Victoria, Australia. Its strategy is to build communities in Victoria’s coastal and outer metropolitan areas. Following significant land acquisitions over the past few years, Lifestyle has a pipeline of about 2,500 new dwellings and 18 sites currently in development or planning. All target the over-50s population and leverage the positive theme of an aging population and rising cost of housing.

Lifestyle reported 43 net sales of new homes in the third quarter of fiscal 2026, a step down from 60 in the second quarter. Management cited cautious buyers and subdued sentiment due to broader economic uncertainty. Shares fell 2% on the day.

Lifestyle's first-half fiscal 2026 underlying operating profit after tax fell 29% to AUD 16 million on last year, largely driven by 7% lower home settlements and a 5% decrease in average new homes selling price. Shares fell 7% on the day Feb. 20.

Lifestyle Communities’ earnings comprise land lease property sales and rent collection. It collects rent on about 4,000 land lease sites across over 20 land lease communities in Victoria, Australia. Its strategy is to build communities in Victoria’s coastal and outer metropolitan areas. Following significant land acquisitions over the past few years, Lifestyle has a pipeline of about 2,500 new dwellings and 18 sites currently in development or planning. All target the over-50s population and leverage the positive theme of an aging population and rising cost of housing.

Lifestyle is to offer all existing homeowners the option to move to a new exit-fee model. Exit fees will be capped at up to 20% of the initial house purchase price. It intends to offer this fee structure regardless of the outcome of the Victorian Civil and Administrative Tribunal appeal.

Lifestyle Communities said sales have averaged about 50 new homes per quarter for the past three quarters. This is a significant step up from 20 in early fiscal 2025, but far below fiscal 2024 when almost 100 homes were sold per quarter.

Lifestyle Communities’ earnings comprise land lease property sales and rent collection. It collects rent on about 4,000 land lease sites across over 20 land lease communities in Victoria, Australia. Its strategy is to build communities in Victoria’s coastal and outer metropolitan areas. Following significant land acquisitions over the past few years, Lifestyle has a pipeline of about 2,500 new dwellings and 18 sites currently in development or planning. All target the over-50s population and leverage the positive theme of an aging population and rising cost of housing.

Lifestyle Communities' fiscal 2025 underlying operating profit after tax fell 15% to AUD 45 million. The year was marred by the Victorian Civil and Administrative Tribunal ruling exit fees on existing contracts were unenforceable. Lifestyle intends to appeal.

The Victorian Civil and Administrative Tribunal's Judge Woodward has issued an interim stay of orders, or a hold on issuing any court-mandated orders, to Lifestyle Communities. Earlier in the month, Judge Woodward ruled that the exit fee clause on existing contracts was void and unenforceable.

The headline of our prior note could be misinterpreted. The Victorian Civil and Administrative Tribunal ruled the exit fee clause in Lifestyle Communities' contracts void as the amount is unknown. Exit fees are a portion of house sales prices. Shares fell 40% and Lifestyle intends to appeal.

The Victorian Civil and Administrative Tribunal has ruled that the exit fee clause in Lifestyle Communities' contracts is void due to the precise fee being unclear. Exit fees are a portion of house sale fees, including capital gains. Lifestyle intends to appeal the decision.

Lifestyle Communities’ earnings comprise land lease property sales and rent collection. It collects rent on about 4,000 land lease sites across over 20 land lease communities in Victoria, Australia. Its strategy is to build communities in Victoria’s coastal and outer metropolitan areas. Following significant land acquisitions over the past few years, Lifestyle has a pipeline of about 2,500 new dwellings and 18 sites currently in development or planning. All target the over-50s population and leverage the positive theme of an aging population and rising cost of housing.

Lifestyle Communities provided a third-quarter fiscal 2025 trading update. Although weakness continued in Victoria, Lifestyle's new home sales were 20% higher than first- and second-quarter sales combined.

No-moat Lifestyle Communities reported a 10% increase in new home settlements in first-half fiscal 2025 compared with the prior corresponding period, or PCP. NPAT of AUD 23 million was also 9% higher, a strong result considering the backdrop. We had expected fiscal 2025 to be a recovery year, with fewer sales and deep discounting due to negative media attention and weakness in the housing sector, but an increase in volumes leads us to think a recovery is underway.

Lifestyle’s earnings comprise land lease property sales and rent collection. It collects rent on about 3,000 land lease sites across over 20 land lease communities in Victoria, Australia. Its strategy is to build communities in Victoria’s coastal and outer metropolitan areas. Following significant land acquisitions over the past few years, Lifestyle has a pipeline of about 2,500 new dwellings and 18 sites currently in development or planning. All target the over-50s population and leverage the positive theme of an aging population and the rising cost of housing.

Lifestyle’s earnings comprise land lease property sales and rent collection. It collects rent on about 3,000 land lease sites across over 20 land lease communities in Victoria, Australia. Its strategy is to build communities in Victoria’s coastal and outer metropolitan areas. Following significant land acquisitions over the past few years, Lifestyle has a pipeline of about 2,500 new dwellings and 18 sites currently in development or planning. All target the over-50s population and leverage the positive theme of an aging population and the rising cost of housing.

Lifestyle Communities’ start to fiscal 2025 is weaker than we expected. First-half guidance is for 120 to 130 home settlements, flat with the previous corresponding period. We think negative media coverage in mid-2024 regarding the charging of a deferred management fee, and housing cyclicality delaying resident’s purchase decisions are likely to weigh on the firm’s sales volumes and pricing over fiscal 2025. At current prices, Lifestyle screens as fairly valued.

Our AUD 8.60 per share fair value estimate for no-moat Lifestyle Communities is unchanged on the retirement announcement of co-founder and Managing Director James Kelly. Kelly co-founded the company 21 years ago and has served as managing director since its 2007 listing on the Australian Securities Exchange. He will step down at the end of 2024. A new CEO is yet to be appointed. However, from Jan. 1, 2025 David Blight, non-executive director and chair, will assume the role of executive chairman until a new CEO is appointed. Although the market initially responded negatively to the announcement, share prices have since stabilized and are flat with the preannouncement price, trading at about a 10% premium to our fair value estimate.

We initiate coverage on Lifestyle Communities with a fair value estimate of AUD 8.60 per share and a no-moat rating. We forecast revenue to grow at a 10-year compound annual growth rate of 12% and adjusted EBIT margins to approximately double to 22% by fiscal 2034 compared with fiscal 2024 as the earnings mix shifts toward higher-margin rent. We use a weighted cost of capital of 6.4%, reflecting a low cost of equity for the stable earnings in the rental and deferred management fee businesses, which make up the majority of our fair value estimate. We assign an Uncertainty Rating of Medium and a Capital Allocation Rating of Standard. Lifestyle screens as fairly valued.