Fund Manager Summary
The fund managers believe that despite recent challenges, including a weak first-half result and a $275 million capital raise, there are significant opportunities ahead for Lifestyle Communities Ltd (LIC). In their opinion, the management's emphasis on low cancellation rates (less than 1% for deposits exceeding $5,000) and expectations for settlement catch-up in the coming periods remain positive indicators. They note that annuity cashflows from rental revenue and fees are showing strong growth, which could enhance future leverage as occupancy increases. Furthermore, the replenished balance sheet positions LIC to take advantage of discounted land being sold off by financially troubled companies, potentially improving development margins due to lower land costs. Consequently, while they are holding onto existing shares, they opted not to participate in the capital raise.
Source: Trading View
Commentary From The Managers
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HMC Capital
31 Oct 2025
$5.18
Summary
- HMC Capital notes a steady start to FY26 for Lifestyle Communities (ASX: LIC -9.8%), with 54 new settlements and 237 contracts on hand.
- Out of the contracts, 160 are due to settle this year, indicating strong operational performance despite external challenges.
- The number of completed homes awaiting sale has declined 16% to 216, showcasing effective inventory management.
- LIC has successfully completed several land divestments, notably in Ocean Grove, reducing net debt to $348m, ahead of target.
- The update is viewed as operationally sound and directionally positive, reinforcing a constructive outlook.
- There are signs of an improving Victorian property market, which is expected to enhance settlement momentum and balance sheet deleveraging.
- Broader demographic trends, particularly as baby boomers downsize, are anticipated to support growth.
- Despite recent underperformance in October on low trading volumes, HMC Capital remains optimistic about future prospects.
- LIC is currently trading at a ~14% discount to net asset value (excluding deferred tax liability), presenting a potential opportunity.
- The ongoing VCAT appeal outcome is identified as a key swing factor that could positively impact earnings and valuation.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
HMC Capital
31 Oct 2025
$5.18
- HMC Capital notes a steady start to FY26 for Lifestyle Communities (ASX: LIC -9.8%), with 54 new settlements and 237 contracts on hand.
- Out of the contracts, 160 are due to settle this year, indicating strong operational performance despite external challenges.
- The number of completed homes awaiting sale has declined 16% to 216, showcasing effective inventory management.
- LIC has successfully completed several land divestments, notably in Ocean Grove, reducing net debt to $348m, ahead of target.
- The update is viewed as operationally sound and directionally positive, reinforcing a constructive outlook.
- There are signs of an improving Victorian property market, which is expected to enhance settlement momentum and balance sheet deleveraging.
- Broader demographic trends, particularly as baby boomers downsize, are anticipated to support growth.
- Despite recent underperformance in October on low trading volumes, HMC Capital remains optimistic about future prospects.
- LIC is currently trading at a ~14% discount to net asset value (excluding deferred tax liability), presenting a potential opportunity.
- The ongoing VCAT appeal outcome is identified as a key swing factor that could positively impact earnings and valuation.
Summary
HMC Capital
30 Sept 2025
$5.74
- Lifestyle Communities (LIC) underperformed this quarter, down -18% due to a negative outcome at the Victorian Civil and Administrative Tribunal (VCAT).
- In early September, LIC lodged an appeal with the Supreme Court of Victoria, with a decision expected in 6–12 months.
- Despite near-term challenges, HMC Capital remains constructive on the outlook, supported by:
- Supportive macro drivers from ageing downsizers and persistent housing undersupply.
- A clear plan to de-lever the balance sheet below $360m by December 2025, aided by $114m of contracted non-core land sales expected to settle over FY26, reducing equity raise risk.
- Signs of stabilisation in new home settlements, with 35 completed and 162 contracted in FY26, showing recovery from the FY25 trough.
- Optionality from a favourable outcome on the VCAT appeal, although uncertain.
- Valuation support as LIC trades at a discount to NAV/share (excluding deferred tax losses).
- Post quarter end, LIC provided a trading update indicating progress on de-gearing the balance sheet ahead of plan and stabilisation of sales and settlement rates.
- With a focus on delivery, a new marketing campaign, and supportive macro drivers, HMC Capital sees potential for the discount to narrow and will continue collaborating with management and the Board to drive value creation.
Summary
HMC Capital
31 Aug 2025
$5.48
- HMC Capital updates its investment thesis on Lifestyle Communities (+27.9%) following the release of FY25 results.
- Focus on steps taken to shore up the balance sheet and early sales and settlement rate trends in FY26.
- Clear path to de-lever the balance sheet by 31 December 2025, reducing equity raise risks.
- Signs of improvement in sales rates observed.
- Supportive macro thematics, including an aging downsizing population and housing shortage.
- Leverage to a recovering Victorian property market.
- Currently trading at a discount to NAV/share (excluding Deferred Tax Losses) despite DMF carrying value reduction.
- Uncertain but potential for a successful appeal of the VCAT decision.
- HMC Capital will continue to engage with management and the Board to drive value creation for shareholders and Fund investors.
Summary
HMC Capital
31 July 2025
$4.44
- HMC Capital notes that Lifestyle Communities (ASX:LIC) faced a significant decline of 37% this month due to an adverse ruling regarding its Deferred Management Fee (DMF) structure.
- The ruling from the Victorian Civil and Administrative Tribunal (VCAT) was unexpected by the market.
- Lifestyle Communities plans to appeal the decision, which may take up to 12 months.
- If the appeal fails, the potential write-down impact on accrued DMF is approximately $1.44/share (post tax).
- The stock is currently perceived as oversold, trading near its adjusted NTA.
- In contrast, Ingenia Communities, a listed land lease peer, is trading at a premium of over 35% to NTA.
- Despite this setback, HMC Capital maintains strong conviction in the long-term fundamentals of the land lease sector.
- The sector benefits from real asset-backed exposure to residential trends, particularly with demand from downsizing baby boomers.
- HMC Capital continues to engage with LIC management to explore ways to recover value for shareholders.
Summary
HMC Capital
30 June 2025
$7.00
- Lifestyle Communities experienced a 10.0% decline in share price for the quarter.
- Recent update on VCAT proceedings regarding the Deferred Management Fee (DMF) structure indicates that hearings are concluded, with a decision expected by 6 July 2025.
- Post-announcement, the stock underperformed due to investor concerns about the resolution timeline.
- The recent IPO of Gemlife Communities may have impacted Lifestyle Communities as investors reallocated funds.
- Despite recent share price performance, HMC Capital maintains high conviction in the growth outlook for land lease communities in Australia.
- Expectations for a resolution on the DMF dispute, progress on non-core land sales, and stabilization in sales and settlement rates could lead to significant upside in share price.
Summary
Yarra Capital Management
30 Sept 2024
$8.43
- Lifestyle Communities (LIC) remains an overweight position for Yarra Capital Management.
- The company underperformed during the period due to a trading update.
- Lifestyle Communities withdrew its forward-looking guidance.
- The uncertainty was influenced by recent media coverage.
- Yarra Capital Management continues to monitor the situation closely.
Summary
Yarra Capital Management
31 July 2024
$9.00
- Lifestyle Communities Ltd (LIC) has underperformed recently due to a trading update.
- The company has withdrawn its forward-looking guidance.
- This decision is attributed to difficulties in quantifying the impact of uncertainty stemming from recent media coverage.
- Yarra Capital Management continues to monitor the situation closely.
- The fund manager's investment thesis remains under review in light of these developments.
Summary
Endeavor Asset Management
30 Apr 2024
$12.03
- Endeavor Asset Management sold their investment in Lifestyle Communities (LIC) due to concerns over extended ‘sales to settlements’ timeframes affecting the company’s balance sheet. <liInformation gathered through the network indicated little improvement in the sales dynamic, which raised doubts about the company's future growth.
- LIC's second half guidance for FY24 heavily relied on timely settlements, prompting Endeavor Asset Management to exit at an average price of $14.72/share.
- Post-exit, LIC announced lower settlement forecasts, leading to a share price drop to around $12/share, validating Endeavor Asset Management's decision.
- While optimistic about LIC’s long-term prospects and management quality, Endeavor Asset Management remains cautious due to short-term settlement and development cost challenges.
- The fund continues to monitor the share price for potential re-entry opportunities.
Summary
DS Capital
31 Mar 2024
$15.20
- Lifestyle Communities delivered a softer than expected earnings result due to slower new home settlements.
- The extending sales cycle resulted from higher interest rates and customer concerns about builder completion risk.
- Customers are waiting longer to put their homes on the market until they see a substantially completed home.
- Lifestyle announced a capital raising to leverage opportunities for adding sites that are typically unavailable in a robust environment.
- Despite recent developments, DS Capital remains confident in management's ability to navigate this challenging period.
Summary
Ausbil Investment Management
31 Mar 2024
$15.20
- Ausbil sold their investment in Lifestyle Communities (LIC) after a 12.9% decline in share value.
- A slower pace of new home settlements resulted in softer outcomes than anticipated.
- The announcement of an unexpected capital raising was disappointing to longstanding investors.
- The investment thesis for LIC was based on a capital recycling model, utilizing proceeds from house sales to fund future land purchases and developments.
- LIC's land lease model aimed to generate long-term recurring rental revenue.
- The decision to accelerate land purchases through capital raising is viewed as a breach of longstanding discipline.
- This shift may lead to heightened operational risks associated with increased development activity.
Summary
Ausbil Investment Management
28 Feb 2024
$14.97
- Ausbil noted a decline of -13.9% in Lifestyle Communities (LIC) shares.
- Slower new home settlements contributed to results that fell short of expectations.
- The announcement of an unexpected capital raising disappointed longstanding investors.
- LIC's investment premise is based on a capital recycling model that uses proceeds from house sales for future land acquisitions and developments.
- The company's decision to accelerate land purchases breached its longstanding discipline.
- This shift may introduce operational risks by increasing the pace of new development activity.
Summary
Endeavor Asset Management
28 Feb 2024
$14.97
- Endeavor Asset Management acknowledges a weak first-half result for Lifestyle Communities (LIC).
- The recent $275 million capital raise has led to some investor disappointment.
- Development expenditure has increased as anticipated, but delays in home settlements have negatively impacted the balance sheet.
- Management notes that cancellation rates remain low (less than 1% for deposits over $5,000).
- Settlements are expected to catch up in upcoming periods.
- The equity raise has overshadowed positive long-term growth prospects for LIC.
- Annuity cashflows from rental revenue and fees show strong growth, indicating future leverage from increased occupancy.
- The replenished balance sheet places LIC in a strong position to capitalize on discounted land being sold by financially troubled companies.
- This strategy should improve development margins over time due to lower land costs.
- Endeavor Asset Management continues to hold its existing LIC shares but did not participate in the capital raise.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
A $275 million capital raise may have dimmed the spotlight on Lifestyle Communities, yet the underlying growth potential and strategic positioning suggest that patience could reward investors as the market rebounds from temporary setbacks.
Last Updated: 31 Oct 2025
Query The Data
Frequently Asked Questions
Who is investing in Lifestyle Communities Ltd (ASX:LIC)?
Fund managers including Endeavor Asset Management, Ausbil, DS Capital, Yarra Capital Management and HMC Capital have invested in Lifestyle Communities Ltd (ASX:LIC).
Why do fund managers invest in Lifestyle Communities Ltd?
Fund managers are investing in Lifestyle Communities Ltd due to its strong long-term growth potential despite recent challenges. The company has low cancellation rates for deposits, indicating stable demand, and is positioned to benefit from discounted land acquisitions, which could enhance development margins. Additionally, robust growth in annuity cashflows suggests future profitability as occupancy increases. These factors contribute to a favorable outlook for the company's financial recovery and growth.
What happened to Lifestyle Communities Ltd (ASX:LIC)?
Fund managers maintain their investment in Lifestyle Communities Ltd (ASX:LIC) due to several factors despite recent challenges. The company is seen as trading at a discount to its net asset value (NAV), particularly following an adverse ruling on its Deferred Management Fee structure. Fund managers express confidence in the long-term fundamentals of the land lease sector, driven by an aging population and a persistent housing shortage. Additionally, LIC has a clear strategy to reduce its debt and improve its balance sheet by the end of 2025, with early signs of recovery in sales and settlements. The ongoing appeal against the VCAT decision and supportive macroeconomic conditions further underpin the fund managers' positive outlook.