Eureka Group Holdings (ASX: EGH) expects FY26 underlying EBITDA to meet or exceed $21.1 million, driven by seniors’ occupancy above 97% and rent growth exceeding 6%. Capital recycling and a robust acquisition pipeline support growth.
- FY26 EBITDA guidance at or above $21.1 million
- Seniors’ occupancy steady above 97%, all-age rentals at 95%
- Like-for-like rent growth expected over 6%
- Non-core asset sale of Broken Hill village for $4.4 million
- Over $120 million in accretive rental assets under review
Strong Occupancy and Rent Growth Drive Earnings Upside
Eureka Group Holdings (ASX:EGH) has reaffirmed its FY26 earnings guidance, now expecting underlying EBITDA to finish at or above the top of its $20.2 million to $21.1 million range, representing 20-25% growth on FY25. Underlying EPS is also anticipated at the upper end of the 3.37 to 3.44 cents range, up 7.5-10% year-on-year.
This confidence stems from a resilient operating performance, with seniors’ rental villages maintaining occupancy around 97% and all-age rental communities improving sharply to 95% from 86% at the half-year mark. Like-for-like rent growth is forecast to exceed 6%, reflecting sustained demand for affordable rental housing amid constrained supply.
Capital Recycling and Strategic Asset Management
As part of its disciplined capital allocation, Eureka has initiated a sell-down of rental units at its Bundamba and Eagleby communities in Brisbane. These strata-titled assets are being divested to unlock between $22 million and $24 million over the next two to three years, with proceeds earmarked for higher-returning development and acquisitions.
Continuing its non-core asset disposal strategy, the group has exchanged contracts for the sale of a 42-unit seniors’ village in Broken Hill for $4.4 million, slightly below its $5.1 million book value. The remote location and small scale of this asset underpin the decision to exit.
Expanding Pipeline and Funds Management Initiatives
Eureka’s acquisition pipeline now exceeds $120 million, with assets under due diligence or advanced price discovery. The group is advancing its funds management strategy to build a capital-light business alongside its owned portfolio, aiming to increase recurring fee income and balance sheet flexibility.
Development activity remains robust despite delays from council permitting processes, which continue to constrain affordable housing supply nationally. New homes are being delivered across multiple communities including Hillside, Benalla, Nagambie, Emerald, Paynesville, and Burrum River.
Navigating Higher Interest Rates and Regulatory Changes
The group operates in a higher-for-longer interest rate environment, with the cash rate at 4.35%, and has factored increased funding costs into its guidance. Proposed Commonwealth Budget changes to capital gains tax and negative gearing are widely expected to tighten affordable rental housing supply further, potentially benefiting Eureka’s market position.
Managing Director Simon Owen highlighted the strong second-half trading momentum and disciplined capital deployment, underscoring the group’s strategy to recycle capital into higher-returning opportunities.
Bottom Line?
Eureka’s strong occupancy and rent growth underpin solid FY26 earnings, but watch how development delays and rising costs shape its growth trajectory.
Questions in the middle?
- How will council permitting delays impact the timing of Eureka’s development pipeline?
- What effect will proposed tax changes have on affordable rental housing supply and demand?
- Can Eureka’s funds management strategy significantly diversify its income and reduce balance sheet risk?