Eureka Expands NSW Footprint with $6.7M Coral Tree Lodge Acquisition
Eureka Group Holdings has secured Coral Tree Lodge Tourist Park on the NSW South Coast, marking its seventh acquisition since last year's capital raise and reinforcing its strategy to address rental shortages in regional markets.
- Acquisition of Coral Tree Lodge Tourist Park for $6.7 million
- Initial yield of 8.6% on 2.33ha waterfront property
- 123 sites including permanent, annual, and motel units
- Opportunity to convert short-term sites to long-term rentals
- Shoalhaven region faces chronic affordable rental shortage
Strategic Acquisition in a Tight Rental Market
Eureka Group Holdings Limited (ASX – EGH) has taken a decisive step in expanding its portfolio with the acquisition of Coral Tree Lodge Tourist Park, a mixed-use tourist and rental accommodation site located in Greenwell Point on the New South Wales South Coast. The $6.7 million purchase reflects an initial yield of 8.6%, underscoring the asset's income-generating potential.
The 2.33-hectare freehold waterfront property comprises 123 sites, including 73 permanent and annual long-term rental sites alongside 22 motel units. This blend positions the park uniquely to serve both transient visitors and longer-term residents, a duality that aligns well with Eureka's focus on affordable, all-age rental accommodation.
Addressing Rental Shortages in Shoalhaven
Located just 14 kilometres from Nowra, the commercial hub of the Shoalhaven region, Coral Tree Lodge sits within a market grappling with a severe shortage of affordable rental housing. With Nowra's vacancy rate at a mere 1.0%; well below the balanced market threshold of 3.0%; workers are commuting from distant areas such as Kangaroo Valley and Jervis Bay to meet local labour demand.
Simon Owen, Eureka’s Managing Director and CEO, highlighted the strategic importance of the acquisition, noting the region's strong and diverse economy and proximity to Sydney. The move fits squarely within Eureka's expansion strategy, which targets regions with acute rental shortages to provide affordable housing solutions.
Growth Potential Through Rental Conversion
Beyond the existing income, the park offers immediate scope to convert seven short-term sites into long-term rental dwellings under current approvals, with further conversions subject to Shoalhaven Council's consideration. This flexibility could enhance the site's income profile and support a forecasted five-year unlevered internal rate of return (IRR) between 16.1% and 18.6%, depending on the extent of rental conversions.
Additional amenities such as a manager’s residence, BBQ area, swimming pool, games room, boat ramp, and guest laundry enhance the park’s appeal to residents and visitors alike, reinforcing its position as a desirable community hub.
Capitalising on Recent Fundraising Momentum
This acquisition marks Eureka’s seventh since its $70.4 million capital raising in October 2024, demonstrating the company’s active deployment of capital into high-yielding assets aligned with its strategic vision. Settlement is expected by the end of August, signaling a swift integration into Eureka’s portfolio.
As the company continues to navigate the evolving rental landscape in regional NSW, Coral Tree Lodge stands as a tangible example of how targeted acquisitions can address housing shortages while delivering attractive returns.
Bottom Line?
Eureka’s latest acquisition not only strengthens its regional rental portfolio but also sets the stage for further growth amid tightening housing markets.
Questions in the middle?
- How quickly will Eureka secure council approvals for additional rental conversions?
- What impact will increased long-term rentals have on the park’s overall yield and IRR?
- Could Eureka replicate this acquisition strategy in other high-demand regional markets?
