Eureka buys management and letting rights of Oxford Crest’s village portfolio

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Rental village operator Eureka, which has 32 home sites and eight under management, has entered into conditional contracts to acquire the management and letting rights for six villages in southeast Queensland.

“The villages are currently operated by Oxford Crest and provide affordable rental accommodation for seniors. Consideration for the acquisition of the MLRs and the associated real estate (managers’ units) is $6.1 million (excluding transactions costs) and will be earnings accretive from year one. The transaction will be funded by debt and cash reserves and settlement is scheduled for 1 February 2022,” Eureka, which achieved 98% occupancy under CEO Cameron Taylor in FY21, told the ASX.

“The annual return on investment (prior to funding costs) is forecast to be 13% after incremental support office costs.”

The seniors’ rental villages acquired are in Deagon, an outer northern suburb of Brisbane, and Beachmere, Moreton Bay; Raceview and Bundamba in the Ipswich region and follow the acquisition of Gainsborough Lifestyle Village, Brassall, in July 2021; Toowoomba which gives Eureka its initial presence in a significant regional city which has been targeted by Eureka for further acquisition and development; and Gympie (pictured), which complements Eureka’s existing owned village in that town.

“The six villages comprise 414 units, of which approximately 330 would be managed by Eureka. The majority of the units are owned by external investors, affording Eureka a further opportunity to increase units under management in the portfolio. Eureka will continue to actively identify strategic opportunities to grow its managed portfolio in the seniors’ independent living sector alongside its ownership model. The Eureka village management model is characterised by above average returns, low management risk and ownership potential through progressively acquiring individual units.”

Following this acquisition, the total number of units under Eureka management will be 2,580, up from 2,191 at 30 June 2021.