This article is from the Australian Property Journal archive
EUREKA Group has maintained the takeover offer from rival Aspen Group is “inadequate”, and pointed to a strong set of interim numbers and outlook as to further reasons why the bid “undervalues” the retirement village operator.
Eureka announced a 16% increase in first-half revenue compared to the prior corresponding period (pcp), which it said reflected strong resident demand, rental growth and asset acquisitions.
Underlying EBITDA lifted 19% to $7.1 million, including like-for-like village growth of 11%. Profit after tax of $6.3 million was down from $7.8 million, reflecting a lower level of property revaluations and higher interest costs during the period.
Contrary to many other commercial real estate owners, Eureka saw some portfolio value uplift in the period, with a $5.6 million lift in overall value driven by increased village earnings. Weighted average capitalisation rate firmed over six months to 8.25% from 8.32%.
Village occupancy was stable at 98%.
During the period it progressed its acquisition and development growth strategy with the $44 million acquisition six Western Australian villages comprising 321 units for a new fund. There were also 14 individual unit acquisitions and the purchase of land in Gladstone, Queensland for a greenfield development, while completion was reached at its Brassall development, which is now fully leased.
Underlying earnings per security dipped from 1.50c in the pcp to 1.50cps, while interim dividend inched upwards from 0.67c to 0.70c per security.
Eureka executive chairman, Murray Boyte, said the results reflect excellent progress towards “achieving institutional scale in the specialised affordable seniors build-to-rent market”.
Aspen offer “inadequate”: Eureka
Eureka again publicly rebuffed Aspen’s off-market takeover bid announced in January.
The all-scrip bid, which values Eureka at $166 million, proposes a merger ratio of 0.26 Aspen securities per Eureka share, representing an implied price of $0.441 per Eureka share or a discount of 4.2% to Eureka’s current share price at 28th February.
“Aspen’s current offer is considered inadequate by the Board and undervalues Eureka, as the implied bid price represents either a discount or no meaningful premium over Eureka’s share price at any time in the past 12 months,” Eureka said on Friday.
“Based on Eureka’s 1H24 earnings and outlook, the board also believes the proposed bid undervalues the underlying strength of Eureka’s business model and its future growth potential.”
Eureka said it has now appointed an independent expert to “opine on whether the proposed bid is fair and reasonable, and this opinion will be included in the target’s statement”.
