17 June 2016, Written by Jenna Rathbone


EUREKA Group Holdings (ASX:EGH) continues to build on its flourishing retirement village portfolio, raising a further $12.5 million to fund the acquisition of six new properties.

But, that is just the beginning for the company which is emerging as the rising star of Gold Coast listed companies.

Over the past few years Eureka has embarked on a bold acquisition spree under the leadership of chair Robin Levison (pictured), and it is fast achieving its aim of becoming the largest rental-only retirement village operator in Australia.

In January 2014, when Levison joined the business, Eureka managed 30 properties by way of management rights and owned none, generating annualised EBITDA of around $1 million.

Today Eureka manages 28 villages and owns 19 villages, including the freehold land and buildings, and is generating annualised EBITDA of $10.5 million.

Asked if Eureka's aggressive acquisition strategy is sustainable, Levison says the company has identified more than 2000 acquisition opportunities across the country and completed preliminary due diligence on 200.

Over the next two to three years Eureka hopes to own 5000 units or 90 villages.  To achieve that, Levison says the company will continue to acquire the properties as they become available.  

"It is Eureka's goal to become the largest operator of low-cost rental retirement housing in Australia," says Levison.

"In the low-cost housing area cost control is paramount and economies of scale backed by a shared services Gold Coast based support and processing model is the best way to achieve the cost control outcome required."

This week Eureka was successful in raising $12.5 million at 75c per share from institutional investors.

The funds will go towards acquiring six new villages, with more information about the purchases to be released at the end of the month.

Eureka's share price held up well following the capital raising, sitting above the 75c issue price after emerging from a trading halt.

"To date the company strategy has been well received and we have executed on everything we have said we would do," says Levison.

"We believe we can create strong investor returns, as well as help solve a major Australian societal issue which is appealing to investors.

"We have an enviable register of small and mid-cap institutional investors who seem to want to grow with the company and not be diluted.  Also, as our own market capitalisation grows we gain the liquidity and size required for larger funds to begin investing as we have witnessed over the last two capital raisings that have been approximately four times oversubscribed."  

Levsion says Eureka has another nine acquisition opportunities in the pipeline.

He says no dividend will be paid in the near future, with the company reinvesting profits into the company.

Levison presided over former ASX-listed mining services company Industrea, building it from a $3 million minnow to a $750 million major ahead of a takeover by GE Mining in 2012.

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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.
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