Thank you for standing by, and welcome to the Lifestyle Communities Full Year Results Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Kelly, Managing Director. Please go ahead.
Thank you, and welcome everyone to the FY 2022 conference call. I have Darren Rowland with me as well, who's our CFO and also joint company secretary. I've gotta say, over 20 years of Lifestyle Communities, or nearly 20 years, perhaps that is one of the more interesting years that we've been through. We started the financial year in Melbourne with four months of lockdown and then worked through the ramifications that this had, you know, on both the sort of morale of our team, but also on the confidence of our customers. We had sort of challenges left, right, and center of labor and supply chains and then now we're sort of facing constant reports of sort of softening property markets and rising interest rates and all the rest of it.
It's kind of for us, we've got a lot of muscle memory around years like this and, it doesn't trouble us, but, and it sort of really does lean into our settings to give us confidence about, the way, we've set up Lifestyle from the get-go. I'll come to that a bit later. In light of all this, I have to say I feel extraordinarily proud of the Lifestyle Communities team. They have really just smashed another year out, and hit our, settlement goal of 401 settlements as well as a whole lot of other milestones.
Certainly extraordinarily proud of our marketing team, who really showed amazing resilience and strength by doubling down during lockdowns and really reaching out to our customers to keep them engaged, obviously supported by our amazing referral rates that kept the phones ringing. Opened the batting with a new website, digital platform, and above-the-line strategies, which kept attracting new customers and drove conversion. The hustle and innovation they showed was just next level. Also incredibly proud of our wonderful sales team who pulled out all stops to ensure that we kept selling them out of the challenges, and then went deep into what we had learned in the past five lockdowns and all that to make sure that we continued to prosper. Our strong referral rates certainly aided their endeavors as they're increasing brand awareness.
They achieved enough sales to deliver the 401 settlements and a further 267 sales in the bag for FY 2023. Our resales team delivered 156 sales in total, 143, which attracted a DMF. That was at a time, also where we're finding this whole land lease market is really strengthening post-COVID. People just want a home and to move in and certainly that's really supporting our resale market. Super proud of our projects team, who worked with all our different contractors to ensure that we had the program to deliver the homes that we needed on time and never missed a homeowner settlement date. They found numerous workarounds when the situation required and was supported by the strong contractor supply base that we've built up in nearly 20 years.
Our single builder strategy, oh my God, I'm so glad we had that because that really continued to pay off in ensuring that the supply chain issues didn't delay any settlements. This year we actually celebrated Todd Devine Homes building their 3,000th home. It's such a wonderful milestone of what is probably one of the truly unique partnerships around and moving forward that partnership only strengthens. Also really proud of our community management team, who looked after our communities through lockdown, but also working to ensure that we sell the homes on time and deliver the service level that continued to drive our 50% referral rate on new sales and a 60%+ referral rate on resales. They also continued focus on the 30-year refurbishment plan for each community.
We spent about AUD 1.5 million on new carpets, furniture, bathrooms, right across the suite of completed communities just to maintain the quality of presentation and also helped drive our capital growth and again, our ongoing referral rates. Really proud of our acquisition team, who acquired four sites over the period, which increased our pipeline of sites to be developed to 2,200. Our current settings enable us to keep acquiring up to three sites per year. We're constantly in the market using our proven network of landowners to achieve this. We continue to look at the land around Melbourne and Geelong, as well as regional coastal Victoria as the tree change and sea change market strengthens post-COVID.
I'm also incredibly proud of our finance team, who drove our project management accounting process to ensure that we're always focusing ahead with price increases and keeping our projects at cash break-even. At the same time, this team implemented a new SAP system and were also instrumental in the implementation of the new CRM system Salesforce, which will be a game changer over time in the way we manage inquiries and leads, as well as our homeowner interface on the homeowner portal. Finally, this was all backed by our fantastic people experience team, who onboarded about 50 new team members over this period to resource our future growth across all our projects and communities. The quality of these resources has really never been higher, all attracted to Lifestyle by our laser-like focus on our purpose, our team, and customer-centric culture.
Most of all, I have to say, the whole team achieved all the above with grit, determination, innovation, humor, care, and empathy, at all times ensuring our customer homeowner always came first. That is what I'm most proud of, and I have no doubt that what the team has learned over this past year just sets us up so well for the future. Before closing remarks, I'll now pass over to Darren to talk more about the financials and the year that was.
Thanks, James. I'd certainly echo those comments. It was a one for the ages this year and, you know, from my perspective, it's a privilege to be able to pull together the results and show off the hard work of the team. It's one of the great parts of my role here at Lifestyle. Just on the P&L, it's obviously the continued growth in the portfolio of homes under management is the primary driver of our results this year. 401 new home settlements compared to 255 last year was a great uplift in activity levels. The increased portfolio size flowed through to higher operating results, increased number of resales, and we're also pleased to see homeowners achieving sales or continuing to achieve sales price growth when they sell their home and move on.
We've certainly seen some inflationary pressures in the building industry this year, particularly timber and steel and other supply chain challenges. With a strong property market during the early and middle parts of the year, we've been able to recover those increases and maintain our cash cost recovery model. We didn't chase the market up with our sales pricing during the upswing, and this leaves us with a bit of room to absorb inflation and interest rate rises, as they come through. It was pleasing to see the gross margin from new home sales and also our community operating margins remaining steady during this environment. Overheads definitely had some increases, and you'll see that coming through on the P&L. The primary drivers of this, insurance, particularly D&O, as the share price has increased, and the market cap has grown.
We've also had an increase in the accounting expense related to our employee share scheme. As we look forward to FY 2023, we expect the sales and marketing costs to continue to increase as we launch seven new projects for sale during the year. These costs typically front run the settlements coming through. We're also expecting the continued growth in our overheads to support the increased activity levels through FY 2023. On the balance sheet, we made a deliberate decision during lockdown to continue building, increase our inventory levels. This gave us homes ready to sell when the lockdown period ended, but it also gave us a bit of latency in our supply chain, which helped us manage our way through those challenges in the second half and keep the build program on track.
We also made a deliberate decision to keep our trades engaged during lockdown, and that played through in the busy period post-lockdown, where we maintained that loyalty with our trade base. This all saw us well-placed to service customers as we emerged from the lockdown with homes ready to sell and certainty of delivery dates, which is an important factor when people are making what can often be a very emotional move from the family home into a new home with us. Delivering certainty is a core part of our promise. We settled on several land passes in the pipeline during the period, as well as signing four new contracts, as James mentioned. This sees us replenish the future pipeline and sets us up well for growth over the next three to five years.
The gearing levels reduced a little bit in the second half of the year as we saw those sort of higher settlement numbers come through and the capital recycling model play through. We also had some uplifts in the valuation of the property portfolio. We do expect the gearing to creep up a little bit in the course of FY 2023 as the land settles for the contracted sites and the development activity ramps up as we launch those projects. Like in many businesses, we're very mindful of the rising interest rate environment at the moment, and we've set our sales prices to include future allowances for upward movements as rates normalize off their pandemic lows.
To assist us with the pipeline, we finalized an extension to our debt facility in August 2021, and we'd once again like to thank our lenders, the NAB, HSBC, and the CBA for their continued support. The current facility that we've got is sufficient to fund all the projects that we've got in the development pipeline, as well as future land acquisitions. We're well placed there. Finally, on the cash flow, you can see the increased settlements flowing through the operating cash flow line with strong cash collections at Mount Duneed, Kaduna Park, and St Leonards as they settled out in the second half. Overall debt levels increased, as I mentioned, with the settlement of the land acquisitions at Ballarat, Phillip Island, and Wollert.
Moving into FY 2023, we do expect operating cash flow to remain positive during FY 2023, but it will reduce relative to FY 2022, just as the construction period ramps up for the seven new projects that we're launching during the year. We expect our debt levels to sort of follow that trajectory. For a detailed breakdown of the cash flow by property, I just encourage everyone to look at slide 36 of the pack, which breaks down our cash flow by property. Just in closing for me, I would like to give a big shout-out to our team and the broader Lifestyle team for the enormous effort during the period as we implemented the new IT systems.
These implementation projects take a lot of discretionary effort over and above people's day jobs, and certainly I was very proud of the way the team have embraced the changes, and it sees us really well set up for FY 2023 and beyond. Thanks, James.
Thanks, Darren. Just before questions, I'll just close with a couple of thoughts. It's interesting when you've been doing it as long as I have been doing it and still just as passionate as the day we started. I reflect back on all the other times of turbulence that we've had, and there is a little bit of turbulence coming up with interest rates and inflation, all those other things. The business model we set up from the get-go was a really simple one, to sell really cheap homes in or really affordable homes, I should say, in fantastic communities that were aspirational to people downsizing, looking to live a bigger life. Where this model has always worked for us is that two key drivers.
Our homeowners can always sell their homes to the first home buyer, and they're the ones who buy 99% of all our customers' homes, and they're always in the market. Already, government's reaching out with first home buyer grants to make sure that that's still stimulated. The other interesting thing that's happened to first home buyers is they're now pretty much excluded out of the new home market. It's just got too expensive for them. They're now mostly focused on the established market, which is really helping our customers sell their homes. The other part of the model has always been selling at AUD 87 million House plus , which means that our homeowner can sell their homes, free up equity and live a bit of life.
The imperative on them to move is no different than it was from the get-go, which is you know, time is nigh, life's just rehearsal, so they have to seize the moment to think about when they do that. That's been really helped post-COVID. I think the silver lining in that has been that it's been a sort of come to Jesus moment for any baby boomer, and I'm 63, and I think about it is that, you know, how do you tick off the bucket list in the years to come? You've got to kinda get on with it. I think it's very much evident in the minds of our customer.
That model serves extremely well and continues to service extremely well in the future, and it's why I'm feeling very positive about the model ongoing. That discipline of sticking to those settings has served us just so well for nearly 20 years and just, again, gives you just so much confidence about the years to come. As Darren mentioned, we're launching seven projects, which is the most we've ever launched, and it's with great excitement that the team look at this. The innovation that's going into our designs, you can see from the presentations and what we're doing is just next level and we're really adapting all what we're doing to look at what the aspirational baby boomer is looking for, and we've very much adapted our product and our facilities to meet that.
Over the next three years, we're forecasting to deliver somewhere between 1400 and 1700 new home settlements and 550-750 resale settlements. As I mentioned before, we've been gearing up to resource and get match fit to deliver those. We also continue to make real inroads on our ESG strategy, and the one project I love the most is the integrated microgrid at Meridian. This is one of the largest integrated residential microgrids in Australia, and we'll see it's installing 450 kW of solar actually on our homeowners' roofs. We'll own the panels. As well as 150 kW of centralized batteries.
Particularly this time when energy costs are just so current and relevant and topical, this should decrease our homeowners' variable energy bills by up to 50%. It's a really timely outcome potentially when it's going on. We also continue to welcome new competitors to Victoria in the belief that this will help further educate the addressable market on the benefits of downsizing to a land lease community. We continue to evolve all our products in light of the changing demographic and that we're trying to attract and really, again, excited by this new product range that we've launched, our latest project at Meridian. In closing, oh my God, this year we just saw Lifestyle at its absolute best.
With about 140 team members now who are just doing a fantastic job, and I'm proud of every one of them. We also have 4,500 homeowners living in Lifestyle's communities and I again feel, you know, that we're doing more right than wrong with our referral rates sit and still this discipline of going out to every community every six months and meeting all the homeowners and getting across issues they might have. This has put us in really good stead for ensuring that we always are optimizing, maximizing and focused on the home experience in our communities. Thank you again for joining us on this call and happy to take any questions that you might have. Thank you.
Thank you, Mr. Kelly. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Michael Peet from Goldman Sachs. Please go ahead.
Hi, James and Darren. Congratulations on the results. Just a question about, costs and development margin to start with. Just thinking about, you probably know broadly or pretty well what those margins will be on the homes that are awaiting settlement. Can you tell us a little bit about what's happening with construction costs and house prices, and what should we expect for that development margin as we head into 2023?
Hi, Michael. Thanks for joining us. Yeah, interesting times, definitely. We feel like construction costs, while we certainly are not gonna call that the inflationary environment has finished. We do feel it's leveling off a little bit. Yeah, we're not expecting a similar sort of run in FY 2023 that we had at that sort of second half of FY 2022. In terms of the margin, I mean, ultimately, our pricing model hasn't changed. So the cash cost recovery model continues. We're not expecting major differences in our model. Largely from period to period, we do see the margin move around a little bit sometimes, which can be down to mix of projects settling and some of our pricing strategy playing through.
As an example of Meridian, it's the latest project that's just started settling. We typically price the homes slightly cheaper at the start of the development, so they make a slightly lower margin, and then it ratchets throughout the development. I guess from that perspective, we've been able to pass through the cost increases in the form of, you know, small price rises. The flying market in the early part of sort of FY 2022 through to the period post-Christmas, we didn't really chase that with our sales prices, so that's left a bit of room for some small increases just to recover any inflation. I guess a long way to say we're not expecting major changes next year.
Okay, great. Just on the community operating margin, you managed to increase that through the year despite having no rent increase. You got 3.7% rent increases on 1st July. Should we expect a little bit of margin expansion here, or are you likely to reinvest that into some of the older communities on refurbishments, et cetera?
We did actually get an increase last year as well. The no increase was the year before.
Yeah, I'm behind.
Yeah. That has played through this year a little bit. Yeah, I mean, our plan really continues there as well, to be honest. We continue to reinvest back into those older communities. As we build a bit more scale and the rate of new settlements is increasing, it does increase the pool of funds available for refurbishments a little bit. We're definitely continuing to reinvest back in those older communities. Again, we're not really expecting major movements in those margins this year. We've just been through our sort of reviews, and we've set the budget for this year and, yeah, we've got a good solid plan in place to sort of keep that margin steady for this year.
Final one for me. Just average equity release and the earlier you focused on the 80%, but in reality you're probably homeowners are, I suspect, you know, selling their homes at a deeper discount than that. What's the sort of dollar average equity release that you delivered maybe this year and overall percentage discount to the median?
Yeah. The dollar figure of this year was AUD 240,000, which was a slight increase on the year prior. We're definitely not seeing the discounting play through in the outer suburbs yet. It hasn't really affected the equity free up that our customers have been getting yet. We're mindful that it might move around a little bit throughout the course of the year, but equally all of our homeowners have enjoyed the large uplift that happened in the early part of the year. It sort of, you know, went up like a rocket and now it might come down a little bit, but, you know, at the end of the day, it's probably gonna level out.
Brilliant. Thank you.
Thank you. Your next question comes from Andrew MacFarlane from Jarden. Please go ahead.
Oh, hi, guys. Thanks for the time. Look, just in terms of the launch, and you gave a bit of detail on the back of the pack, but just wondering how you're seeing, I guess, timing in terms of sale to settlement at the moment and what it's sort of looking like, you know, versus historic.
Andy, you're saying sales rates at the moment in terms of how they're?
No, sorry, James. I'm talking in terms of, you know, book to sale and then booking to settlement. I'm talking in terms of construction timelines.
Yeah. Andy, it's interesting. Is this in terms of, you know, are homeowners, existing homes staying on the market a bit longer? Is that where you're going?
No, I'm going with, you know, building time frames. Is it taking longer? Like, if you're gonna put-
Oh, good question.
You book a sale in the first quarter, different time frames for then booking a settlement kind of thing.
Andy, actually, all we've done on that, construction times have gone out a little bit. All we're doing is ordering them a bit earlier. We've pulled forward the order book. You know, rather than if we've got a home to deliver in March, we'll now order it and we would have ordered in September, then, you know, we now will order in August to make sure we still deliver it in March. We've just changed our internal processes and, our ordering process to accommodate just a slightly longer construction time. Most of it's actually around windows, funnily enough. The rest of our supply chain is pretty good. It's, we've just got a little problem with getting windows. It doesn't.
You know, with the Todd Devine relationship, which basically franks our order book because we've got purchasing power to sort of give us a much better steer on supply, a guarantee of supply. It's just this one element really that's just giving us a little bit of grief. All my reading is that, you know, by next year we'll start to see that soften out again. That should start to bring off pricing as well, as well as give us more certainty on supply chains and bring construction times back a bit.
Yeah. That's great. Thanks. I know you were talking before, sort of around the 30th June, just in terms of, you know, we've been seeing a slowing in the retirement market. What are you seeing in terms of, you know, you talked about this before, but what are you seeing in terms of a pull forward of sales? There were some comments around people actually bringing decisions forward because they thought, you know, they might, you know, the market might get weaker before it got better again. What are you seeing, I guess, in terms of that decision making in your inquiries and how do you sort of think about that in terms of the sales and settlements going forward for FY 2023?
Not really seeing much change for, to be honest, Andy. Like, in the outer burbs, you might have seen prices come back maybe 1 or 2%. It's nothing like the inner burbs, where maybe if you read the press, they're saying it's come back, you know, 10-15%. It's not been nearly as significant in the outer burbs as it always is with the, you know, the case when we get a cycle up in property prices, the outer burbs goes down much less than the inner burbs.
You tend to find it slightly harder to sell in a slowing market, particularly because you're sort of, you know, you're dealing with homeowners' expectations. They thought their home was worth AUD 700, 000, now the agents say AUD 680,000 . We've always had a selling process through these times where we actually focus on the equity free up rather than actual prices. Because what matters to them is what they thought they were going to put into their bank account, not what they're gonna sell their home for. We will propose a slightly smaller, more affordable product, giving the same equity free up.
We use CoreLogic a lot in that process to look up the customer's home, get a best read of what the value is gonna be, and then we do the arbitrage between what they'd like to free up in equity and then what home they can afford. You know, in that case, we wouldn't be showing them a three-bedroom home, we'd be showing them a two and a half bedroom home, or we'll be showing them a two and a half bedroom home, we'll be showing them a two bedroom home to make sure they still get an equity free up. Our team's really well trained when we've got a slightly falling market. In terms of their ability to sell their homes, we're not seeing much of a change at the moment, Andy.
Like, the first time buyer is still very, very strong, certainly around the outer suburbs of Melbourne, and that just continues to sort of move forward.
Makes sense. Two last ones from me, the two data points. One, just wondering what the current referral rate's running at. I know you've got something you need to disclose it, sort of running into, you know, the 40 sort of zip code. What does that look like today?
It's still around the 50% mark, and it did drop a bit through lockdown just when we couldn't run any of the events that drive their referral. In the second half of the year, it sort of crept back up again. It is just slightly below 50, but still in that sort of range.
Just the last one, just on the FTE. What you talked around today about op costs, sort of operating costs are going up. Obviously, that one's gonna be representative of sales and marketing. But how should we sort of think about it going forward? I know you've talked before about buying four sites last year. You're thinking going towards, you know, buying three. You know, realize there can be a bit of flex in that. But yeah, what are you thinking in terms of what is that FTE today, and how do you sort of think about that as we go forward from FTE?
Most of the FTE is really associated with the new projects, which gets expensed against the projects. In terms of corporate overheads, we've had a very small growth in the numbers in the corporate overhead, you know, maybe three or four people. We're kind of match fit at the corporate level. It's really just adding resources into the projects, as we need, and they obviously expense against those projects. They're covered through the sales price of the home. We kind of, it just flexes with the number of new projects or projects we have under management or communities we have under management.
Okay. Thank you, guys.
Thank you. Your next question comes from Tom Bodor from UBS. Please go ahead.
Good afternoon. I just was interested in, sort of the discussion around potentially no DMF options for customers that, might prefer a higher upfront contribution. Is that something you are considering or is it still off the table?
We've never, you know, initially when selling against operators in Victoria with no DMF, but charging much higher upfront prices. We've found that, you know, our consumers, our customers vote with their wallet. They'd prefer to have the money in their pocket up front and be able to enjoy a bigger life with that money and pay it at the end than, you know, paying a much higher upfront price and have less money when they downsize, and therefore have less money to enjoy when they downsize. I think with the war gen, that might have been less relevant. With the baby boom gen, baby boom generation, that's much more relevant. You know, we've seen that equity free up to AUD 230,000.
You know, if our house prices were that much more, then obviously they wouldn't be freeing up anything like that sort of equity.
I'm just thinking for people that have sold their houses for a bit more and free up more equity, do they run into problems with pension eligibility and not being able to claim rent assist if they sell a house for too much, and they might prefer to put it into the house up front?
Yeah. We don't really get that sort of. That's a very rare occurrence. You know, again, our average equity free up is AUD 240, so that's well below the threshold. You know, I think the record price someone ever sold for. Usually we find, Tom, with those people, with people with that sort of money, generally are self-funded retirees. They're less so pension. Again, you know, 85% of our customers are pensioners. We don't come across that frequently.
Okay. No, that's clear. Thank you.
It's a nice problem to have. I've got to say if it was.
No, absolutely. It's a quality problem for those people that are losing their pension because they have too much money. Just around funding the business going forward. I appreciate you've got the new debt facility. Just be interested as you ramp up production into, particularly into 2024 and 2025, and you're buying sites. Does the size of the facility sort of dictate how you sort of commit capital or do you feel that there's ample headroom sort of for all scenarios, including the scenario where sales might be a bit stronger and you wanna pull stuff forward?
Yeah, it's a really good question, Tom. It's ultimately the size of the facility absolutely is a constraint, but it's a deliberate one, and it's one we've had in place for a very long time. It drives the discipline through the business that we love in that, you know, the only way we can grow the business faster is to sell faster, and the only way we can do that is to do an amazing job. We like the capital discipline that sits within the business. Always through the process as we finish communities and we add them to the balance sheet, that allows us to borrow a bit more, and that will continue to be the plan. The existing debt facility is AUD 375 million. You know, it was drawn to AUD 245 million at 30th June.
We'll continue to draw into that over the course of this year as we launch these new projects. As settlements come through, you know, either that allows us to do an extra site with the existing facility, or it gives us a bit more confidence to go back to the market and increase the facility size again, which is, you know, pretty much what we've done, for a long time. I mean, when I started, the debt facility was sort of AUD 80 million, and we've grown it three or four times over my tenure here.
Okay, thanks. Onto the ICR. I appreciate the disclosure around the covenants. Just wanted to understand what the denominator and numerator are on the ICR. I presume it's cash interest, not P&L interest, and just be keen to
Yeah, that's right. Cash interest paid.
Yep. On the other side of that calculation.
Oh, yeah, sorry. It's an adjusted EBITDA figure.
Okay. Just around how that's adjusted, is it sort of closer to a cash EBITDA number, or how does that adjustment work?
Yeah, yeah. Well, sorry, it calculates off the statutory EBITDA.
Okay. All right, thanks. Just a final one is just that more recent sales rate, where do you need to sort of see it sit to get to where you wanna be at the end of 2023 to support that medium-term settlement range? How many houses do you think you need to sell over the course of FY 2023, and how does that compare to today's sales rates?
James is only ever gonna answer this question with more. Yeah, it's interesting, Tom, 'cause a lot of the sales rates this year will be driven by project timing of launches rather than necessarily run rate. If we look at it right now as we sit here today, we're actually only selling out of three projects at the moment. That's Wollert, Deanside, and Meridian. Come September, we're launching Woodlea and the Bellarine, and then in the second half of the year, we've got the balance of the projects then. The sales rate will actually be driven more by those sort of step changes as new projects come online as opposed to a sort of monthly run rate. I think in terms of the projects that are selling, really, we just need them to keep doing what they're doing.
All of them are selling really well in line with our sort of plans and, you know, that's what we plan to do for the balance of those projects. No material change to what's happening today.
Okay, thank you.
Thank you. Your next question comes from Aaron Muller from Canaccord Genuity. Please go ahead.
Yeah, good day, guys. Congratulations on the results. Just a couple of questions from me. Just in terms of the FY 2023 guidance for settlements to be similar to FY 2022, just interested in how we should think about the first half, second half split. James, just in terms of the second question is just in terms of new land opportunities, given the softness in the property market, are you seeing any vendor price expectations coming off at all?
I'll ask the latter and then maybe Darren the former. Yeah, still lots of land opportunities. We're not seeing really in the outer 'burbs, you're not quite seeing, you know, demand fall for new house sites. Yeah, we haven't seen it come off all that much. It's still pretty tight out there in terms of getting land access. In saying that, you know, we've always got some very strong relationships built over a long period of time that we are always leaning into to get land access. You know, watch this space as always. Yeah, we haven't seen a significant increase in supply of englobo land, mainly because it's still pretty busy out there in terms of land sales.
You know, maybe in the tightening credit market that might change, but at this stage, we're not seeing it. To the former question.
Pretty consistent half on half this year, Aaron. It might be, you know, 10 this way or that way, but certainly no major variance half on half we're expecting in 2023.
Okay, great. Thanks, guys.
Thank you. Your next question comes from Scott Hudson from MST. Please go ahead.
Yeah, good afternoon, gentlemen. James, could you just give us a sense of, I guess, the cadence of sales at the moment? Have you seen any slowdown post, I guess, recent interest rate rises?
No. Interest rate rises don't really impact us all that much, Scott. Again, out in the outer 'burbs, you see people, you know, switch from the new home market into the established market. They can afford less. If interest rates hit again, they just buy a lesser quality established home. Again, you know, the government will be leaning in again if that does slow down with some more incentives, whether it's the federal government. I think it's been out pretty loud and proud about some of their initiatives and, you know, I'm sure with the new budget, with the election coming, Victoria will see some more promises to the first-time buyers. Yeah, we haven't seen much change, Scott, in our area. That's kind of how it's always been.
You know, like, it's never extremely different from the get-go. Even through the GFC, it was the same. You know, everything will slow down. The first home buyer gets reinvigorated to stay in the market and keep buying.
I guess your buyers, their ability to sell their existing home.
Well, they're selling to a first-time buyer. Yeah, they're always selling to first-time buyers.
Timeframe hasn't changed though?
No. I'll tell you what has changed and what's shortened is our established resale market. Our time on the market's just almost negligible at the moment. We just don't, can't get enough stock to sell in that sort of established resale market. That market is incredibly strong, and we're setting some new price records across quite a number of communities as we speak. I think what we're seeing, Scott, is this demand for the ready-to-move market. I think for a lot of baby boomers post-COVID, they're just saying, "We wanna do it, we wanna do it now. What have you got?" That's increasingly what we're hearing from baby boomers wanting to make the move, downsize, grab some cash and start ticking off the bucket list. Yeah, that's been a very strong market for us.
We're just really, you know, how many people we sell a home is very much beyond our control. Anything we can get, we can sell.
Darren, in terms of the, I guess, the headroom on the debt facility, I mean, how do we think about that as we head into sort of these big, an increase development pipeline going into FY 2022 to FY 2024?
Yeah, it's a good question, Scott. We actually obviously set the facility up to cover the projects that we've got in the pipeline. All of the existing developments that we've got planned are funded with that existing facility, as well as the ability for us to keep buying. As we continue to settle the existing projects, and we've got some of our current projects are in that sort of cash recovery mode now, so they'll be sort of pulling some cash in, which will fund a lot of the development costs for the new projects. Yeah, the debt facility's got sufficient headroom in it to cover the plans for FY 2023, as well as the sort of continued buying that we wanna do.
Okay. That's very helpful. Thank you.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Shane Solly from Harbour Asset. Please go ahead.
Hi, guys. Thanks very much for the presentation. Just a couple of quickies from me. First one, you talked about DMF sales increasing between AUD 23 and AUD 25. Can you just talk a bit about the ramp-up on that, given that AUD 550-AUD 750 range, how quickly does that come through?
A really good question, Shane. It's really down to the growth in the portfolio over time. As our portfolio has grown up over the last sort of, you know, eight to 10 years, it's those homes now that are turning over. We expect. I mean, it's a notoriously difficult number to predict, probably the hardest number in our business to predict, to be honest. The best we can do is sort of follow what happened in history with the growth in the portfolio when it was developed in the first place. We know the portfolio's grown over the last eight to 10 years, and therefore that'll drive the increased DMF if those homes start to turn over.
Okay. Thanks very much. Just in terms of the pricing, you'd expect on that range, will it be similar to what you've reported for the period? Or, is there any guidance you can give there or any indication?
I think on that one, you know, we've got a great chart at the back there on all our DMF, on all our resales. That's a guide, Shane. I think we've seen an increasing sort of cohort of investors sort of start to think about our price growth in that space and what that might mean for the DMF. That's one of the things that sort of excites me as a shareholder in terms of, you know, where, what the movement might be in that pricing over time. With this continuing constraint on supply and the growth in baby boom generation, we are seeing some quite high prices across all our communities in terms of resale. That's certainly. It has been a really interesting thing to watch.
The best steer on that is to look at really historical data that we've got in the pack on all our resales to date, yeah.
That's cool. Thank you. Just a last one from me. You're obviously acting ahead of the curve and the corporate overheads in terms of debt supports the three+ villages per annum. Does it support a four+ villages per annum development program?
Yeah, it does. It's not really. A lot of the corporate overhead is around insurance increase, insurance cost increase and all these sort of other costs around just, you know, with a lot of other costs sort of occurring with, you know, we'd be picking up license fees for our new CRM system. You know, there's some other sort of more build costs. It's not actually as much people related. It's more, you know, system and, you know, back office related cost increases. Yes, the answer is yes. We'll still see corporate cost increase, not necessarily just for headcount reasons. It might be salary, you know, market to market and those sort of issues. We're not looking to load on heaps of headcount. Yeah.
Great. Thank you. Appreciate the time.
Thanks, Shane.
Thank you. There are no further questions at this time. I would like to hand back the conference to Mr. Kelly for closing remarks.
Just to say thank you everyone for joining the conference call, and looking forward to seeing many of you on the road show. If you'd like an opportunity to catch up on the road show, we're pretty full, but we've certainly got opportunities for Zoom calls after that. Just reach out to Tamara and she can certainly book you in on that journey. Again, thank you so much for joining and have a great night.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.