Macquarie Leisure acquires Goodlife Health Clubs for $60 million to boost earnings growth potential

31 July 2007

Macquarie Leisure to become major player in health and fitness market

Macquarie Leisure Trust Group (ASX:MLE) today announced the acquisition of the Goodlife Health Club chain (“Goodlife”) of 18 established fitness centres in Australia for A$60 million.

Established in 1998, the Goodlife chain is the dominant branded fitness chain in Queensland with 13 sites and has successfully expanded its operations into Victoria with four sites and New South Wales with one site. Three further sites are in the planning stage with another established site under a call option.

The acquisition is expected to deliver significant earnings accretion of 3 - 5 per cent and distribution accretion of 8 -10 per cent in the 2009 financial year.¹

Macquarie Leisure’s chairman Mr Neil Balnaves said: “We are delighted with the acquisition of Goodlife as it is an ideal platform for Macquarie Leisure to become a major player in the Australian health and fitness market.”

Goodlife comprises an established portfolio of medium to large clubs with a strong membership base and modern facilities on competitive long-term leases with an average lease term in excess of 15 years. The chain’s position is further strengthened by an experienced and proven management team who will retain an equity interest and will be incentivised to drive future expansion through a long term performance incentive.

Group CEO, Mr Greg Shaw said: “The transaction was particularly compelling to Macquarie Leisure, not only for the strength of the existing operations and current roll-out program but also because of the operating synergies and site acquisition opportunities that could be delivered through the Macquarie Leisure and broader Macquarie Real Estate portfolio.  We have a number of immediate opportunities for fitness facilities to enhance returns from existing bowling sites, to cross promote to the AMF Bowling and Dreamworld staff and customer base and to negotiate more competitive purchasing agreements”.

The Australian fitness industry continues to enjoy strong growth through positive fundamentals including:

• increased consumer interest in pro-active health management and weight loss;
• government and health industry initiatives to promote healthy lifestyles;
• greater interest in fitness from an ageing population;
• rising disposable incomes and increased spending on leisure and lifestyle; and,
• global consolidation of the industry with branded chains enjoying above average market growth with higher quality and more profitable facilities. 

“We see significant opportunities to expand the portfolio in Australia’s metropolitan markets over the next three years particularly as health club ownership in Australia is highly fragmented and market penetration of approximately 9 per cent is well below that of other developed countries at approximately 15 per cent.  In the medium term, Asia is also likely to provide strong growth opportunities with penetration rates of below one per cent and an emerging middle class with high levels of disposable income available for leisure activities,” Mr Shaw added.

The acquisition is intended to be funded through an appropriate combination of debt and equity. In the short term the transaction will be completed utilising existing debt capacity within current facility limits.  The transaction is subject to assignment of property leases which is expected to occur within six weeks.

¹Assumes 70 per cent equity funding and 30 per cent debt funding and no additional developments beyond those currently identified.

Macquarie Leisure Trust Group is a stapled entity with assets under management of more than A$600 million. The Group owns and operates world class leisure assets including Dreamworld, WhiteWater World, d’Albora Marinas, AMF Bowling and Main Event.   More than A$23 billion of real estate assets are managed by Macquarie Real Estate and its associates, across a portfolio of listed and unlisted property trusts, unlisted development funds and property investment syndicates, globally.

For further information, please contact 1300 365 585 or propfunds@macquarie.com

Due care and attention has been exercised in the preparation of forecast information, however, forecasts, by their very nature, are subject to uncertainty and contingencies, many of which are outside the control of MLML. Actual results may vary from any forecasts and any variation may be materially positive or negative.