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Shares in Melbourne-based Lifestyle Communities (ASX: LIC) rose sharply this morning after the land-lease group cleared the decks following an adverse tribunal ruling over exit fees by posting a $195.3 million bottom-line loss for FY25.
The statutory loss after tax compares with a $50 million profit in FY24 with the latest result including a $54.5m after-tax provision for repayment of DMF (deferred management fees) collected from previous homeowners and a $135.5 million after-tax writedown in the carrying value of investment properties following the adverse decision handed down by VCAT in July.
The company’s shares were up as much as 10 per cent to $5.68, before settling back to $5.61 at 11.52am (AEDT).
However, the shares are still well off their 2025 highs above $10 achieved in January and yet to recover from falling below $7 in July when VCAT rendered the group’s exit fee clauses in contacts with homeowners void.
Lifestyle Communities still plans to appeal the VCAT decision, with the company revealing that a “material portion” of the writedowns will be reversed if the appeal is successful.
Lifestyle Communities has until 5 September 2025 to prepare and lodge its appeal. The company announced yesterday that VCAT rejected a submission for a longer-term stay on the orders it made in July.
“FY25 was impacted by a challenging external environment, including subdued consumer confidence and softness in the Victorian property market,” says Lifestyle Communities CEO Henry Ruiz.
“We have taken meaningful steps to stabilise and transition the business, underpinned by a clear strategy that prioritises our homeowners and can drive improved shareholder outcomes.”
Ruiz points out that the VCAT case “impacted buyer confidence” during the year.
“We now have a path forward which will offer both new and existing homeowners certainty and choice,” he says.
“The second half of the year brought a welcome recovery in sentiment, with improved engagement from prospective homeowners and an increasing confidence in our offering.
“Our team’s belief in the strength of our value proposition remains high, as does our commitment to delivering an exceptional experience for homeowners across our communities.”
Lifestyle Communities notes that business momentum started building in the second half following early challenges in FY25. The company achieved 41 new home sales in the first half and 98 in second half.
Inventory of unsold homes fell 25 per cent in the second half to 269, with the company expecting further reductions in the current half.
“Throughout the year, we continued to strengthen the underlying resilience of the business by meeting the market on sales pricing, refining our marketing strategy and improving service delivery consistency,” says Ruiz.
“These initiatives are designed to ensure Lifestyle Communities is well positioned for future growth and can adapt effectively to shifting market dynamics.
“Our long-term strategy remains anchored by a growing annuity base, a differentiated customer offering, and a disciplined approach to capital allocation.”
Among the priorities for FY26, Lifestyle Properties plans to “re-contract” with existing customers whose want to move onto the company’s revised DMF contract structure.
“As we look to FY26, our refreshed strategy will see us focused on execution and positioning the business for the next development cycle, which we expect to emerge in late FY26 and early FY27 as the property market conditions improve,” says Ruiz.
“Macro themes remain supportive with the number of people over 55 in Victoria forecast to increase by 61.5 per cent over the next 20 years.
“With strong foundations, a sharpened strategic focus, and a maturing operating model, Lifestyle Communities is well-positioned to realise its long-term potential.”
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