Why $40m fund buying up pet resorts predicts up to 8pc annual returns for investors

Ray White Capital is seeking to use the funds to buy more than a dozen pet resorts on the east coast of Australia. Picture: Nigel Hallett

The investment arm of one of Australia’s largest real estate companies is betting big on the future of pet resorts, raising $40m for a fund in which it says investors will earn a 6 to 8 per cent dividend each year.

Ray White Capital is seeking to use the funds to buy more than a dozen pet resorts on the east coast of Australia that will be renovated and upgraded with splash pools, grooming facilities and animal playgrounds.

RWC chief executive George Ajaka said there had been an ongoing trend for more pet boarding facilities for some time and more people were willing to pay for better treatment of their pets.

“The average Australian household now has more pets than children, which you could say is a little bit of a sad statistic to some degree,” he said.

RWC, which recently commissioned research into pet ownership across the country, found there were two main profiles of pet owners.

Pets get ‘spoiled rotten’. Picture: David Caird

The first were downsizers who often brought in pets after their children had left home, he said. “On the other end of the spectrum, which is your younger 20 to 40-year-old profile, people who have delayed getting married or having children and they’ve replaced having children with pets,” he said.

Mr Ajaka says there may be a link to the pandemic, in which scores of Australians turned to pets for comfort and general companions.

“Ultimately, the ship has been growing in the last decade, but Covid has really supercharged pet ownership,” he said.

“People have asked me a lot about what I have learnt the most from ­people from pet resorts, and it’s that people will spoil their pets rotten, but they won’t spoil their children rotten,” he said.

“It’s because they want to teach their children a lesson. They want to teach their children how to handle the good, the bad and the difficult times. Whereas with your pets, it’s ­unconditional love.”

That love did come at a cost for RWC, as the investment firm’s capital expenditure was higher than ever.

“We are spending more on cap ex than ever before because people just want the best service for their pets,” he said.

RWC chief executive George Ajaka.

“When customers are dropping their pet off at one of our facilities, they want to see a nice front office, they want to see a splash park, premium rooms, penthouse rooms, training services and grooming services.

“Off the back of that, we’ve spent a fair bit more on our resorts than ever before, but that’s what people want.”

RWC expects pretty comfortable terms for its investors, forecasting a 6 to 8 per cent dividend in the first year of operation. The minimum investment is $100,000.

The company expected it would be between three to five years to acquire a number of new sites and have them up and running, Mr Ajaka said. It expected to make 20 per cent per annum.

RWC first began purchasing pet resorts about two years ago.

The average stay of a pet was between four to five nights, with that number rising slightly over the Christmas period.

Mr Ajaka said he believed between 20 and 50 investors would join its raise, which it was considering closing before the end of the year.