Citi downgrades Lifestyle Communities stock to Neutral on VCAT ruling

Published 11/07/2025, 06:12
Citi downgrades Lifestyle Communities stock to Neutral on VCAT ruling

Investing.com - Citi downgraded Lifestyle Communities Ltd (ASX:LIC) from Buy to Neutral on Friday, slashing its price target to AUD4.50 from AUD9.00 following a recent Victorian Civil and Administrative Tribunal (VCAT) decision.

The downgrade comes after VCAT ruled that certain contracts used by the retirement community operator were void, prompting Citi to remove all deferred management fees (DMF) from its estimates and valuation models.

Despite decent sales activity in the first half of calendar year 2025, with 98 sales recorded, Citi analyst Suraj Nebhani expressed concerns about potential risks to the company’s interest cover ratio (ICR) covenant.

Lifestyle Communities management has indicated it intends to continue charging DMF until a final VCAT order is received, though Citi has taken what it describes as a "conservative view" by eliminating these fees from its financial projections.

The investment bank also cited "near term sales uncertainty" following the VCAT decision and resulting negative publicity as factors that could create additional downside risk for the company, leading to the new Neutral/High Risk rating.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.