Eureka Pays $5.3M for Fraser Coast Caravan Park, Targets 17.3% IRR via Conversions

Strategic Acquisition on the Fraser Coast

Eureka Group Holdings Limited (ASX: EGH) has announced the acquisition of Burrum River Caravan Park, a mixed-use property located between Hervey Bay and Maryborough on Queensland’s Fraser Coast. The $5.3 million purchase, secured on an initial yield of 8.6%, marks a significant step in Eureka’s ongoing strategy to expand its footprint in regional rental accommodation markets.

The Burrum River Caravan Park spans 3.89 hectares and comprises 99 sites, including 55 Manufactured Housing Estate (MHE) homes, 4 short-term cabins, 37 powered caravan sites, and 3 short-term campsites. The park is well-equipped with amenities such as a manager’s residence, central amenities block, camp kitchen, and an in-ground swimming pool, supporting both permanent residents and tourists.

Unlocking Long-Term Rental Potential

Eureka’s acquisition is not just about immediate income but also about unlocking future value through conversion. The company plans to convert the 37 powered caravan sites into approximately 32 additional long-term rental units, subject to council approval. This conversion is expected to significantly increase the park’s rental income profile and cater to the growing demand for affordable, long-term accommodation in the region.

What's more, Eureka intends to gradually buy back and convert the existing 55 manufactured homes into long-term rental units, further cementing its position as a key provider of rental housing on the Fraser Coast. The company projects a five-year unlevered internal rate of return (IRR) of 17.3% assuming an initial conversion of 16 long-term rental units, highlighting the financial attractiveness of the acquisition.

Responding to Regional Housing and Infrastructure Dynamics

CEO Simon Owen emphasised the strategic timing of the acquisition, noting the Fraser Coast’s ongoing housing crisis and the influx of key workers driven by major infrastructure projects. Notable developments include the $9.5 billion Queensland Train Manufacturing Program in Maryborough and the proposed $2 billion Forest Wind Farm between Gympie and Maryborough. These projects are expected to fuel demand for rental accommodation, particularly for singles, couples, retirees, and essential workers.

With Eureka already operating five seniors rental living communities in the region, all at full occupancy with strong waitlists, the Burrum River acquisition complements its existing portfolio and strengthens its regional presence. This acquisition is the fourth funded from the proceeds of Eureka’s recent $70.4 million capital raising, underscoring the company’s commitment to growth through strategic asset acquisition.

Looking Ahead

The acquisition is expected to settle before the end of the 2025 financial year, pending regulatory approvals. While the conversion plans hinge on council consent, the potential to increase long-term rental stock aligns with broader market trends favouring stable, income-generating assets amid housing shortages. Investors will be watching closely how Eureka navigates these approvals and executes its conversion strategy to realise the projected returns.