Benalla Deal Tests Eureka’s Growth Amid Development and Market Risks

Eureka’s Strategic Entry into Victoria’s Rental Market

Eureka Group Holdings Limited (ASX, EGH) has taken a significant step in expanding its rental community portfolio with the acquisition of Benalla Tourist Park, located approximately 200 kilometres northeast of Melbourne. This marks Eureka’s first foray into all-age rental communities within Victoria, diversifying its geographic footprint beyond its existing senior rental villages in nearby regional centres.

The $11.7 million purchase secures a mixed-use village comprising 145 revenue-generating sites, including land-lease homes, park-owned rentals, tourist cabins, and motel rooms. The acquisition offers an attractive initial yield of 8.0%, with management targeting a five-year internal rate of return (IRR) of 17.0%, underscoring confidence in the asset’s income potential and growth prospects.

Development Upside and Market Fundamentals

Benalla Tourist Park sits on a large 4.1-hectare freehold site with existing development approvals allowing Eureka to immediately add 21 new one- and two-bedroom rental units. There is further upside potential subject to council approval, which could increase the community’s scale and revenue base. This development pipeline aligns with Eureka’s strategy to enhance long-term rental accommodation supply in regional markets.

Benalla itself benefits from a balanced rental market, with vacancy rates consistently below 3% since 2016 and currently at a tight 1.3%. Rental rates have grown at an average of 8.5% annually, reflecting strong demand driven by a diverse local economy encompassing construction, manufacturing, agriculture, and renewable energy sectors. These fundamentals support Eureka’s focus on providing affordable housing for retirees, key workers, and tradespeople.

Portfolio Growth and Regional Synergies

This acquisition is Eureka’s ninth in the past year, highlighting an aggressive expansion phase. The company also has approximately $100 million in further acquisitions under due diligence, signaling ongoing growth ambitions. Benalla’s proximity to Eureka’s existing villages in Shepparton and Albury; both within a 75-minute drive; offers operational synergies and regional scale advantages.

CEO Simon Owen emphasised the strategic fit of the acquisition, noting the strong local economy, attractive yield, and below replacement cost pricing. The mix of permanent residents, long-term rentals, and tourist accommodation diversifies revenue streams and reduces risk exposure.

Settlement is expected in late November 2025, subject to customary conditions, positioning Eureka to capitalise on both immediate income and future development opportunities in a key regional Victorian market.