The Eureka Group Holdings Ltd (ASX: EGH) share price is in focus today after the company announced the acquisition of the Townsville Lakes Holiday Park in North Queensland, which is immediately earnings accretive and expected to increase Eureka's all-age rental portfolio by 8%.
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What did Eureka Group report?
- Acquisition of Townsville Lakes Holiday Park for $6.75 million
- Initial yield of 9.1% including transaction costs
- Target five-year internal rate of return (IRR) of 18.2%
- Expansion of all-age rental portfolio by 8% (rent collecting homes/sites)
- 110 sites added: 26 short-term cabins, 82 short-term ensuite sites, 2 park rentals
- Further $120 million of acquisitions under due diligence or advanced price discovery
What else do investors need to know?
The Townsville Lakes Holiday Park is situated in Townsville, supporting a diversified local economy and a population of over 200,000. Eureka already operates two well-occupied seniors communities in Townsville, both running at full capacity with significant demand.
The newly acquired park offers amenities such as a swimming pool and camp kitchen, and is expected to benefit from converting short-term sites to long-term rental housing. The deal is forecast to deliver robust returns, thanks to Townsville's strong jobs market, low rental vacancy rate of 0.6%, and a 30% rise in local house prices over the past year.
Settlement of the acquisition is anticipated before the end of August, and Eureka says it remains committed to expanding its Queensland footprint, with more opportunities being evaluated.
What did Eureka Group management say?
Managing Director and CEO Simon Owen said:
We continue to identify acquisitions that are consistent with Eureka's strategy of expanding its all-age rental portfolio in regional locations supported by favourable demographic and housing market fundamentals.
What's next for Eureka Group?
Eureka plans to reposition the Townsville Lakes park by converting short-stay accommodation into long-term rental properties over the next three to five years. This initiative aims to address the ongoing housing supply shortage in the region while generating attractive and stable returns for shareholders.
The company is also progressing approximately $120 million worth of additional acquisitions, underlining its strategy of ongoing portfolio growth focused on regional Australian communities.
Eureka Group share price snapshot
Over the past 12 months, Eureka Group shares have risen 17%, outperforming the All Ordinaries Index (ASX: XAO), which has risen 1% over the same period.
