EUREKA PORTFOLIO GETS $3.25M BOOST
30 January 2015, Written by Jenna Rathbone
EUREKA Group Holdings' (ASX:EGH) strategy to move into the owner-operator market has seen the company boost its portfolio with a 57-unit retirement village in South Australia.
The Varsity Lakes-based company says the $3.25 million acquisition has increased units under ownership to 367 and lifting total units in the group, including those under management, to 1535.
"It is pleasing to see the market embracing the Eureka strategy put in place in January 2013 whereby the company is moving away from a specialist management rights operator to an owner-operator model," says Eureka chairman Robin Levison (pictured).
"This change has seen Eureka not only move to a fully secured funding position, with a significant reduction in the underlying borrowing rate, but also has seen strong institutional investor support for the strategy change."
Director Lachlan McIntosh says although Eureka is changing its focus towards owning assets for the "long-term certainty of earnings", it will still play a large role in the management of retirement villages.
"We will keep managing villages forever but we are diverting far more capital to the acquisition of real estate," says McIntosh.
The acquisition, Myall Retirement Village in Whyalla, is expected to generate annual revenue of around $900,000 and is already 95 per cent occupied.
The Village has 10-double rooms which Eureka says is a significant advantage over normal configurations and EBITDA is forecast to be higher than a standard 57-unit regional retirement home.
Eureka has already moved in, with the company's management staff in place at the newly acquired site.
Eureka reported a net profit of $661,000 in FY14, up from $75,000 a year earlier, despite a 2 per cent drop in revenue to $10.66 million.
Author: Jenna Rathbone
About: Jenna Rathbone is a Queensland-based journalist who writes on a range of issues including business and property affairs and social issues.Connect via: Twitter