GDI Property Group (ASX:GDI) advances accommodation investment strategy

• GDI Property Group (GDI) is acquiring two motels in South Hedland, WA, as part of its strategy to invest in and manage workforce accommodation properties
• The $27 million buy includes the South Hedland Motel (SHM) and Lodge Motel, which have generated an average EBITDA of $6.7 million over the last 15 years
• GDI is also forming a 50:50 joint venture (JV) with Tulla Group, an investment group of the Maloney family, to own and manage ‘co-living’ facilities
• GDI plans to invest $33 million into the JV, which will use GDI’s investment to fund the settlement of the SHM and Lodge Motel acquisitions
• GDI shares ended Monday afternoon 2.33 per cent in the red to close at 84 cents

GDI Property Group (GDI) has entered into a call option to acquire two motels in South Hedland, WA, as part of its strategy to invest in and manage workforce accommodation properties.

The property owner and fund manager will acquire the South Hedland Motel and the accompanied Lodge Motel (SHM) for a combined price of $27 million.

The SHM has around 107 rooms, with the capacity to add up to another 40. Just 300 metres away lies the Lodge Motel, which contains 135 rooms.

Over the last 15 years, the motels have generated average earnings before interest tax, depreciation and amortisation (EBITDA) of $6.7 million. For FY22 alone, they reported an EBITDA of $9.7 million, with the current financial year reportedly tracking to be 25 per cent higher.

GDI said the acquisition aligned with its broader strategy of investing in and managing workforce accommodation properties.

In this vein, the company has signed a term sheet with Tulla Group to form an equally-split joint venture (JV) to own and manage ‘co-living’ facilities.

Tulla owns and operates a village in Norseman, WA, which, along with the SHM and Lodge, will be the seed assets of the JV

GDI said it considered this a “tremendous opportunity” to invest in, own, manage and syndicate mining accommodation facilities and was looking forward to working alongside the Tulla Group.

GDI plans to invest $33 million into the JV, which it will fund through a debt facility. The JV will use GDI’s investment to fund the settlement of the SHM and Lodge Motel acquisitions.

The real estate company expects the acquisition will settle by no later than April 14.

GDI shares ended Monday afternoon 2.33 per cent in the red to close at 84 cents.