Lifestyle Communities Limited (ASX: LIC) has reported its half-year result for the six months to 31 December 2019.
What is Lifestyle Communities?
Based in Victoria, Lifestyle Communities develops, owns and manages affordable independent living residential land lease communities. Lifestyle Communities has twenty residential land lease communities in planning, development or under management.
Lifestyle Communities result numbers
Total management and other revenue increased by 22.4% to $15.3 million. Site rental income increased by 25.6% to $11.4 million due to an increased number of homes under management and a rental increase of 3.5%.
Deferred management fees rose by 20.8% to $2.4 million due to 37 resales in this half-year compared to 30 in the prior corresponding period.
The gross profit on the construction and sale of homes fell 41.1% to $8.6 million with a lower number of settlements, it's expected that FY20's settlements will be weighted to the second half. This includes Mount Duneed and Kaduna Park.
Development expenses, including sales and marketing costs for new projects, increased 18.8% due to higher sales in the period. Management rental expenses rose 18.8% with additional homes under management.
Looking at the balance sheet, net assets rose by 4.9% to $267 million as the business continues to build its portfolio of locations. Both the value of its properties and its debt increased.
Lifestyle Communities dividend
The Board of Lifestyle Communities decided to declare an interim fully franked dividend of 3 cents per share, an increase of 20% compared to last year.
Is Lifestyle Communities a buy?
In FY20 129 new home settlements have been achieved to 14 February 2020, a further 213 are scheduled for completion of construction by 30 June 2020 of which 165 are sold and awaiting settlement.
Planning delays meant that construction at Kaduna Park and Wollert was commenced later than planned.
I like that Lifestyle is receiving a growing stream of rental income from the homeowners, with the weekly site fee being 21% to 25% of the age pension after receiving rental assistance. This leads to growing dividends.
The share price has performed strongly over the past year, though it's down 4.5% today at the time of writing. With interest rates being so low, I'm not sure I want to buy shares whilst house prices being very high.
