Eureka Posts 31% EBITDA Growth, Eyes 25% Expansion in FY26

Strong Financial Performance Amid Rising Demand

Eureka Group Holdings Limited has delivered a compelling FY25 performance, with revenue climbing 11% to $45.8 million and underlying EBITDA rising 31% to $16.9 million. This growth is underpinned by robust resident demand, rental increases, and a $18.6 million uplift in property valuations, reflecting the company’s strategic positioning in the affordable rental sector.

Occupancy rates remain near record levels at 98%, bolstered by government pension indexing and a tight rental market, particularly in Queensland where occupancy is consistently at 99-100%. The company’s focus on seniors and all-age rental communities taps into structural housing affordability challenges and an ageing population, providing a stable and growing income stream.

Expanding Portfolio Through Strategic Acquisitions

Eureka has aggressively expanded its footprint, acquiring six mixed-use residential home villages and caravan parks since November 2024. These acquisitions, including Kin Kora Caravan Park in Gladstone and Tuggerah Shores on the NSW Central Coast, add 673 sites at attractive ingoing yields averaging 8.9% and target development IRRs exceeding 12.5%. Notably, these purchases were made significantly below replacement cost, enhancing the company’s growth potential and asset quality.

The company’s portfolio now comprises 1,616 owned seniors rental units, 436 all-age rental sites, and additional units held through joint ventures and managed funds, totaling $388 million in assets under management. This scale supports Eureka’s ambition to become a market leader in affordable rental accommodation by building scale and delivering value.

Development Pipeline and Growth Strategy

Eureka’s development pipeline includes over 650 units across multiple sites, with plans to expand rental communities in Queensland and other states. The company is focused on repurposing existing built form such as caravan parks and motels to rapidly scale its asset base with low risk and strong returns. This approach addresses the acute shortage of affordable rental housing in regional and outer metropolitan areas, targeting essential workers and retirees.

Looking ahead, Eureka targets underlying EPS growth of 7.5-10% and EBITDA growth of 20-25% in FY26, driven by the timing of acquisitions and organic rental growth. The company’s capital management remains robust, with a loan-to-value ratio of 20.6% and gearing at a conservative 18.5%, providing flexibility to fund further expansion.

Market Context and Sector Dynamics

The broader Australian housing market is grappling with declining homeownership and rising rental demand, particularly among younger cohorts and retirees with limited superannuation. Rental affordability remains at crisis levels, with vacancy rates at historic lows. Eureka’s focus on affordable seniors and all-age rental communities positions it well to benefit from these structural trends and government support initiatives aimed at expanding social and affordable housing.

With a stable and growing income base supported by indexed government pensions and a diversified resident mix, Eureka offers investors exposure to a resilient segment of the real estate market that combines social impact with attractive financial returns.