Australia's Lifestyle Communities hits over 3-1/2-yr low on overcharging claims
15/07/2024 09:28
(Updates with Citi comments in paragraphs 6-8)
By Sneha Kumar
July 15 (Reuters) -
Lifestyle Communities' LIC.AX stock closed 18.1% lower on
Monday, a more than 3-1/2-year low, after the Australian real
estate rental company took note of client allegations accusing
it of collecting excess fees, with some homeowners also filing
legal applications.
Shares touched their lowest levels since November 2020, with
the stock having lost over 30% in value so far this year.
Lifestyle Communities, which marked its biggest intraday
percentage loss since March 2020, said it has been engaging with
some homeowners at one of its communities at Wollert in
northwest Melbourne since February.
"The homeowners have not been satisfied with our responses
and have made applications to the Victorian Civil and
Administrative Tribunal (VCAT)," the company said in a
statement, in response to a media report that highlighted
complaints around over-charging management fees and issues
regarding its exit fee policy.
Lifestyle Communities has denied the allegations made in the
VCAT applications, with intentions to defend them.
"Deferred management fees are permissible in all states
except for South Australia. In Victoria, most land lease
operators charge a deferred management fee (DMF)," the company
said.
Analysts at Citi expressed support for the company's stance
around the justification of these fees, but said, "These legal
proceedings may raise investor concerns around the contract
structure for LIC and whether the DMF/Exit fee can be sustained
into the future."
A resolution from VCAT could take an extended period to
conclude and could possibly be an overhang on the company's
shares in the near term, they added.
The company's shares emerged as the biggest percentage loser
on the ASX 200 benchmark index .AXJO .
(Reporting by Sneha Kumar; Editing by Janane Venkatraman
)
((Sneha.Kumar@thomsonreuters.com;))