Land Lease Communities

Land Lease Communities (LLCs) offer investors an attractive proposition with opportunity from development income, inflation-linked longer-term cashflows and a capital light model. For operational assets, EBIT margins are typically 60%-70%. Residents benefit from lower entry price, no stamp duty, full exposure to capital growth, simple contract terms, access to Government rent assistance and amenities. Our accompanying report explores this sector. 

• Australia’s +65 yr population is expected to grow from 4.75m currently to 7.0m by 2040.
• We view penetration rates as 1.0%-1.5% for LLCs (age 55-85yrs), 5.0% for Retirement Villages (75-85 yrs) and 5.2% (+85yrs) for Aged Care. The entire senior living sector has ~500,000 places.
• There are +40k LLCs operational sites and 15k-20k sites under development.
• The top 5 operators of LLCs have 2/3rd market share of current and under-development sites.
• Transaction activity in the sector is vibrant, with at least ten +$100m deals in LLC and Retirement Villages since 2021.  
• 2/3rd of homes in LLCs are trading at 10%-70% discount to homes in close proximity, providing valuation comfort for incoming investors.