Eureka Group Holdings Expands NSW Portfolio With Six-Community Acquisition

Eureka Group Holdings (ASX: EGH) has agreed to acquire six New South Wales lifestyle and mixed-use communities from Ingenia Communities (ASX: INA) for $123.8 million, supported by a fully underwritten $80.2m equity raising and new debt facilities.

The NSW Living Portfolio comprises 953 sites across Greater Sydney, the Central Coast, Hunter Valley, and Shoalhaven, lifting Eureka’s portfolio to 70 villages and 5,492 homes and sites under management.

The established assets are being acquired at an 8.1% ingoing yield with a forecast five-year unlevered internal rate of return of 15%, while 71% of the sites are permanent and provide an immediate recurring income base.

Eureka will fund part of the purchase through a 1-for-3.29 accelerated non-renounceable entitlement offer at $0.615 per new share, expected to issue about 130.4 million shares equivalent to 30.4% of its existing shares on issue.

The transaction has prompted Eureka to lift its 2027 financial year underlying EPS guidance to at least 4.2 cents, representing 22% growth on the prior year and 8% above its previous guidance of at least 3.9 cents.

Portfolio Broadens Across NSW

The acquisition includes two land lease communities and four mixed-use communities, with the portfolio containing 680 permanent sites, 114 tourist cabins, and 159 tourist sites across its six established properties.

Eureka’s NSW exposure will rise from 8% to 24% of total homes and sites under management, while the transaction establishes its first Greater Sydney presence and adds scale across several coastal and employment-linked markets.

Eureka has identified potential value-creation measures including operating efficiencies, infill and densification, conversion of tourism inventory to long-term rental, refurbishment and resale of older homes, and selective capital recycling across the acquired communities.

“Australia's structural rental undersupply, declining home ownership, and ageing demographics continue to provide an attractive backdrop for continued investment into affordable seniors and all-age accommodation,” chief executive officer Simon Owen said.

“The acquisition is aligned with our strategy of acquiring established communities at attractive entry yields, with opportunities to improve operating performance and densify selected sites.”

Retail-Institutional Equity Raising

The $80.2m equity raising is fully underwritten and comprises accelerated institutional and retail components, with the institutional offer opening on 3 September and the retail offer scheduled to run from 10 September to 23 September.

The $0.615 offer price represents a 0.4% discount to Eureka’s five-day volume-weighted average price of $0.617 at 1 September and a 4.4% discount to its adjusted 10-day VWAP of $0.643.

Filetron Pty Ltd, which holds a 34.8% interest in Eureka, has committed to take up its full entitlement, while eligible retail holders taking their full entitlement can apply for additional shares through an oversubscription facility.

Together with $53.6m of new committed debt, the equity proceeds provide $133.8m of funding for the $123.8m purchase price, $6.7m of stamp duty and $3.3m of other transaction costs.

Eureka has secured $80m of new committed debt facilities in total, leaving $26.4m available for future acquisitions and developments after the NSW Living Portfolio funding requirement.