Not many people know Eureka Group or even Village Life, SunnyCove or SCV. Six years ago, in July 2008, this was the largest group of villages in the country, all rentals. They had 105 villages owned or managed by a rebranded SCV.
Today, as the listed Eureka Group, it has about 25 rental villages with 1,419 units of which Eureka owns just 150 – the rest are managed for investment syndicates. They just announced a 700% increase in net profit to $662K for the financial year.
It has been a remarkable journey from 2008 to now. In that year, even before the full impact of the GFC, SCV made an operating loss of $33 million with no cash in the bank.
Both Village Life and SunnyCove had grown rapidly with the promoters predicting Australia would follow America, embracing rental villages. The rental offer was a village unit plus 2 meals a day for 85% of the pension.
The 105 villages were built in approximately 8 years up to 2008 using predominantly mum and dad investor syndicates.
In 2006 ex jackaroo Michael Gordon (pictured) stepped in thinking he could make the rental villages profitable. He had sold his 575 Peppercorn child-care centres in 2004 for $240 million in cash.
With 215 staff and a turnover of just $25 million p.a. from the 105 SCV villages, Gordon was quickly funding the business personally by millions of dollars per month. He finally walked away from his investment of close to $50 million in December 2008 plus what he had put in for the operating cash flow.
In 2009 the advisory arm of KordaMentha (liquidators), 333 Capital, came in and started picking up the pieces. Village and care veteran Mike Bosel was brought across from Prime Trust; he stripped down the company rapidly, setting its direction. Then Greg Rekers, an outside residential property management expert, came in for the long haul to rebuild the business. He runs it today.
It has taken five years of restructuring to get down from 105 villages to the ownership of just 150 units and management of 25 villages and a $662,000 net profit. You have to admire their persistence.
Today their offer is a weekly rental fee of between $235 and $345 for a single pensioner. Meals are additional.
Ingenia is the only other major rental operator. Only a few not-for-profit’s are building rental units today, as part of their affordable housing mission.
