News and Announcements
Invest in Australia’s largest residential property management business
- Published November 29, 2012 10:52AM UTC
- Publisher Wholesale Investor
- Categories Company Updates
The Rental Management Investment Trust (RMIT) will soon list on the ASX, offering investors exposure to what will be Australia’s largest residential property management business.
RMIT, which is set to list on the ASX in December after a capital raising, will invest in the unlisted Rental Management Australia Fund, which has been formed to assist in the acquisition of the RMA group and become one of the leaders in the provision of rental property management. The minimum subscription for the RMIT capital raising is $15 million.
The RMA Group has already entered into a conditional sale agreement with the largest residential property management group in Australia, the listed Run Corp, which has approximately 1 percent of the market with 15,500 properties under management.
RMA Group chief investment officer Stuart Bell explains that the strategy is to consolidate the currently fragmented nature of the residential property management industry, which is mainly serviced by real estate agents. Investors in the RMIT will received quarterly dividends of up to 9.25 percent per annum, plus dividends from the performance of the RMA group into which the RMIT invests.
“Real estate agents have an average of approximately 200 residential properties under management which tends to be a break even proposition for them,” says Bell.
“The RMA group takes advantage of the economies of scale. An increase from the average real estate agents properties under management of 200 to our optimal size of 2000 per locality increases revenues 10 times, whereas salaries only increase 6.5 times and overheads only increase 3.5 times, becoming extremely profitable with EBITDA of $2 million plus.”
The RMA strategy is to acquire rent rolls throughout Australia and “create what is a very good business and one which will dominate a fragmented market.”
The strategy is to split the business into two parts – the property management function and a second, more dynamic, function for business development and acquisition.
While the $15 million offer is almost fully subscribed, the fund is open ended and additional funds will help the growth strategy.
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