This article is from the Australian Property Journal archive
RETIREMENT village operator Eureka Group Holdings has bucked the trend seen across commercial real estate, netting a 33% increase in portfolio value from positive revaluations combined with acquisitions, development works and capital improvements to $229 million.
An increase in village earnings and a firming of capitalisation rates underpinned a $25.3 million valuations uplift to the portfolio in the second half of FY23, while acquisitions, development works and capital improvements contributed $32 million.
Full-year revenue was up 22% to $36.4 million, driven by organic village growth and acquisitions, while underlying EBITDA lifted 19% to $12.6 million, exceeding initial guidance.
Statutory net profit after tax more than doubled from $8.2 million to $19.2 million.
During the period, Eureka completed the acquisition of three villages comprising 151 units, as well as 37 individual unit acquisitions, increasing the total number of owned units by 13%.
“The like-for-like revenue and EBITDA growth of 10% and 13% respectively demonstrates the annuity nature of our income stream. Eureka’s occupancy rates consistently average 98% across the village portfolio and at least 95% of the rent is underpinned by government pension and rent assistance,” said Eureka executive chairman, Murray Boyte.
“The significant uplift in the value of the portfolio added 4.4c to Eureka’s net tangible assets. This substantiates the favourable locations of Eureka’s properties and the recognition of the specialised affordable build-to-rent sector serving the large cohort of retirees seeking quality rental accommodation.
“We will continue to grow the portfolio through acquisitions and developments as we aim to achieve institutional scale for our portfolio to generate improved returns and value enhancement for shareholders.”
Basic earnings per security doubled to 6.97c per share. A final dividend of 0.67c per share took total FY23 dividends to 1.34c.
The total portfolio now comprises 2,551 units. Eureka operates a core portfolio of 1,576 owned units valued at $213 million and 254 units held in a joint venture valued at $16 million, being Eureka’s 50% share. Eureka also manages 721 units which generated $2.4 million in EBITDA through management rights with a carrying value of $6 million.
Village occupancy was at 99%.
Capital recycling resulted in the disposal of 91 lower-yielding managed units.
During the period, Eureka successfully completed a $28.2 million entitlement offer, with proceeds deployed to acquire villages in Tamworth, NSW and Victoria’s Horsham, commence development at Brassall in Ipswich and reduce gearing.
