Eureka’s $22.15M Hillside Acquisition Boosts Portfolio by 29%
Eureka Group Holdings has acquired Hillside Garden Village in Perth for $22.15 million, marking its largest single-village purchase and significantly boosting its Western Australia rental portfolio.
- Acquisition of Hillside Garden Village with 200 sites in Mount Richon, Perth
- Purchase price of $22.15 million with an 8.4% initial yield and 15.0% five-year IRR
- Over 87% of revenue secured by long-term rental income from seniors on government pensions
- Potential to develop 27 additional rental units subject to council approval
- Portfolio expanded by 29% following recent capital raise, with conservative 29% loan-to-value ratio
Strategic Expansion in a Growing Market
Eureka Group Holdings Limited (ASX, EGH) has taken a significant step forward in its Western Australian strategy with the acquisition of Hillside Garden Village, a well-established residential home community located in Mount Richon, Perth. The $22.15 million purchase represents Eureka’s largest single-village acquisition to date and adds 200 sites to its portfolio, including a mix of resident-owned land-lease homes and caravan homes.
Mount Richon sits within the City of Armadale, one of the fastest-growing regions in Western Australia, with population projections indicating a 33% increase by 2046. This demographic growth underpins strong demand for rental communities, particularly those catering to seniors, a segment Eureka has targeted with its Seniors Rental Living model.
Robust Income and Development Upside
The acquisition delivers an attractive initial yield of 8.4% and a five-year internal rate of return of 15.0%, reflecting the village’s stable income base. Impressively, over 87% of site revenues are secured through long-term rental agreements, predominantly with seniors receiving government pensions and rent assistance, which provides a resilient income stream.
Beyond immediate earnings, Hillside offers substantial growth potential. The 9.1-hectare freehold site includes approvals for four additional units ready for development and vacant land capable of supporting 23 more rental units, pending council approval. This pipeline aligns with Eureka’s broader strategy to expand its rental offerings and capitalize on the growing demand for affordable, community-oriented housing.
Portfolio Growth and Financial Strength
This acquisition follows Eureka’s October 2024 capital raise of $70.4 million, from which the company has invested $73.5 million in eight communities, adding 828 income-producing sites and increasing its portfolio size by 29%. The company’s pro-forma loan-to-value ratio remains conservative at approximately 29%, preserving capacity for further acquisitions and development projects.
CEO Simon Owen highlighted the strategic importance of Western Australia, noting that Eureka’s existing Seniors Rental Living villages in the region operate at full occupancy with waiting lists. Hillside’s addition not only strengthens Eureka’s presence but also introduces its all-age rental model to the state, broadening its market reach.
Looking Ahead
Settlement of the Hillside acquisition is expected in mid-October, positioning Eureka to quickly integrate the village into its portfolio. With a strong balance sheet and a growing pipeline of development sites, the company appears well-placed to continue capitalizing on demographic trends and the demand for rental communities in Western Australia.
Bottom Line?
Eureka’s latest acquisition cements its foothold in a booming market, but future growth hinges on council approvals and sustained rental demand.
Questions in the middle?
- Will council approvals for the additional 27 rental units be granted without delay?
- How will rising interest rates or economic shifts impact Eureka’s rental income stability?
- What are the company’s plans to expand its all-age rental model beyond Western Australia?
