EUREKA TURNAROUND CONTINUES WITH $5M BOOST
Written on the 4 December 2014 by Nick Nichols
EUREKA Group Holdings (ASX: EGH) has raised $5 million in fresh capital to boost its acquisition program, with the company confirming it continues to eye a number of retirement property assets in key regional markets.
The issue, pitched at 25c a share to professional and institutional investors, closed "substantially" oversubscribed, says the listed company which is headed by chartered accountant Robin Levison.
The Varsity Lakes-based Eureka says the funds will be applied to the acquisition of both freehold seniors villages and management rights. The company has indicated that it is currently negotiating on "multiple assets".
The capital raising marks another chapter in Eureka's turnaround story since Levison was appointed chairman at the end of last year.
Shareholders were told at the annual general meeting last month that net profit for the first four months of this financial year, to the end of October, were ahead of the full six months results recorded to the end of December 2013.
"Occupancy at Eureka Villages continues to be at the 90 per cent level as demand for seniors' rental accommodation remains strong, particularly in the regional areas that Eureka specialises in," says Levison.
"The company is now ready to add further villages to its inventory and looks forward to building on the benefits of scope and scale that exists currently with the management of greater than 1400 units."
Eureka last month revealed it was proceeding with the acquisition of a South Australian retirement village, Elizabeth Vale 2, for $4.38 million with a cash outlay by the company of $1.196 million.
Settlement of this acquisition is due in late January, which will add 308 units to the Eureka stable and lift total units in its portfolio to 1418.
Eureka posted 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.
The company grew net assets over past financial year from $4 million to $6.5 million.
Author: Nick Nichols