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Real estate industry

United Group Ltd Acquires Equis Corporation for $A163 Million

Strategic Insights

— 1 min read

United Group Ltd, an Australian company, has acquired American property management business Equis Corporation for $A163 million, marking its first foothold in the United States corporate real estate services (CRE) market. The acquisition, United's third in the last 14 months, is expected to deliver strong immediate revenue growth, with earnings from Equis anticipated to rise by at least 10 to 15 per cent in the next financial year. United's chief executive, Richard Leupen, stated that the company aims to capitalize on the US government's growing trend of outsourcing property management functions.

Key Takeaways:

  • United Group Ltd has acquired Equis Corporation, a US-based property management business, for $A163 million (approximately $US118.97 million).
  • The acquisition marks United's first entry into the United States corporate real estate services (CRE) market and is expected to deliver strong immediate revenue growth.
  • Equis Corporation is entitled to about $30 million in tax breaks from the US government over the next 15 years relating to tax amortisation of goodwill.
  • United expects earnings from Equis to rise by at least 10 to 15 per cent in the next financial year, with the company anticipating that 20 per cent of its earnings in the next financial year will be generated offshore.
  • The acquisition will make United's services division the second biggest in the company, accounting for 28 per cent of earnings before interest, tax, depreciation, and amortisation (EBITDA).
  • United's chief executive, Richard Leupen, indicated that the company may pursue further acquisitions, particularly in the European CRE market.

Statistics:

  • $A163 million (approximately $US118.97 million) - the purchase price of Equis Corporation.
  • 10 to 15 per cent - the anticipated increase in earnings from Equis Corporation in the next financial year.
  • 20 per cent - the percentage of United's earnings in the next financial year expected to be generated offshore.
  • $30 million - the tax breaks Equis Corporation is entitled to over the next 15 years.
  • 28 per cent - the percentage of earnings before interest, tax, depreciation, and amortisation (EBITDA) that the services division will account for after the acquisition.
  • $267.5 million - the price paid by United Group Ltd for the Australian and New Zealand businesses of French rail infrastructure company Alstom in June last year.
  • $45 million - the price paid by United Group Ltd for Singapore-based property management company Premas in April.

Sources:

  • United Group Ltd (ASX:UGL)
  • AAP (Australasian Associated Press)

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