Eureka Group (ASX: EGL) Acquires Benalla Tourist Park for $11.7 Million, Expanding Victorian Footprint
Eureka Group (ASX: EGL) has announced a strategic expansion of its portfolio with the acquisition of the Eureka Group Benalla Tourist Park. This move establishes the company’s initial all-age rental community in Victoria. This $11.7 million investment is reported to deliver an attractive 8.0% initial yield, securing a foothold in a promising regional Victorian rental market. This investor update follows a recent ASX announcement outlining the company’s growth trajectory.
The mixed-use tourist community spans 4.1 hectares of freehold land, situated approximately 200 kilometres northeast of Melbourne. It generates revenue from 145 sites across various accommodation categories. The acquisition highlights management’s disciplined approach to value-accretive growth, focusing on properties that offer substantial development potential and acquisition prices below estimated replacement cost.
How Does This Acquisition Align with Eureka Group’s Broader Acquisition Strategy?
The acquisition of Eureka Group Benalla Tourist Park marks a strategic diversification into Victoria’s all-age rental accommodation market. The property’s mixed-use model provides varied revenue streams, aiming to reduce dependency on single market segments whilst leveraging Eureka’s core competency in affordable accommodation provision.
The 145 revenue-generating sites include four distinct accommodation categories, designed to capture different market segments:
- 61 land-lease homes that provide stable long-term residential income.
- 9 park-owned rental units that deliver immediate rental returns.
- 29 tourist cabins that capture short-stay tourism revenue.
- 46 sites and motel rooms that serve transient accommodation needs.
Located along the Hume Freeway, a major Victorian transport corridor, the property benefits from strategic positioning within a region experiencing economic growth. The surrounding area supports a population of 14,528 people with a diverse economy driven by construction, manufacturing, agriculture, and renewable energy sectors.
The tourist park features a range of amenities such as a community centre, swimming pool, camp kitchen, and amenity blocks. These facilities are intended to enhance the property’s appeal across different tenant demographics whilst supporting the community atmosphere that distinguishes Eureka’s properties.
What Financial Metrics Support Compelling Returns from This $11.7 Million Investment?
The $11.7 million purchase price for Eureka Group Benalla Tourist Park is associated with investment metrics that align with the company’s value-focused acquisition strategy. The property’s 8.0% initial yield is reported to significantly exceed current commercial property benchmarks, aiming to provide immediate cash flow generation upon settlement.
Management’s targeted 17.0% five-year internal rate of return (IRR) reflects confidence in both organic growth opportunities and development potential. The investment thesis centres on several value-creation catalysts that aim to distinguish this acquisition from typical commercial property investments.
The purchase price is reported to represent value when assessed against replacement costs, with the acquisition equating to approximately $80,700 per existing revenue-generating site. This below-replacement-cost acquisition aims to provide an immediate margin of safety whilst positioning Eureka to benefit from regional Victoria’s rental fundamentals.
A compelling aspect is the immediate development opportunity. The site includes existing development approval to construct 21 additional one- and two-bedroom rental units, representing a 14.5% increase in rental capacity without lengthy approval processes.
Upon completion of planned developments, Eureka Group Benalla Tourist Park is expected to comprise 176 predominantly long-term rental units and land-lease homes. This expansion aims to significantly enhance the property’s income-generating capacity whilst supporting the targeted returns.
What Market Conditions Support Regional Accommodation Investments in Victoria?
Benalla’s rental market demonstrates tight supply-demand dynamics that underpin successful regional accommodation investments in Victoria. Chief Executive Officer Simon Owen highlighted that rental vacancy rates in Benalla have remained at or below 3% since mid-2016 and currently sit at just 1.3%.
The region has experienced consistent rental growth, with rates increasing at an average 8.5% per annum over the same period. This rental growth is reported to exceed inflation, providing a foundation for organic income growth across the Eureka Group Benalla Tourist Park.
Benalla’s economic diversity aims to reduce concentration risk whilst providing multiple sources of accommodation demand. The construction sector drives demand for temporary worker accommodation, whilst manufacturing and agriculture provide stable employment supporting long-term rental requirements.
In addition, renewable energy projects in the region create repeat worker accommodation demand, supporting the tourist park’s diversified revenue model. The property’s positioning along the Hume Freeway provides accessibility for both tourism and worker accommodation markets.
The Eureka Group Benalla Tourist Park aims to benefit from this economic diversity through its mixed-use model. Permanent residents are expected to provide stable income, whilst tourist cabins and motel rooms capture transient demand from infrastructure projects and tourism.
Do Operational Synergies Emerge from the Benalla Acquisition?
The Benalla acquisition strengthens Eureka Group’s regional Victorian presence and is anticipated to create operational synergies with existing assets. The company already operates seniors rental villages in Shepparton and Albury, both located within a 75-minute drive of the newly acquired property.
This geographic clustering offers several strategic advantages that are expected to enhance investment returns. Centralised management across three nearby properties aims to reduce administrative costs and enable resource sharing between communities.
Established relationships with local contractors, suppliers, and regulatory bodies are intended to reduce execution risk for development projects at Benalla. Moreover, market knowledge gained from operating nearby properties provides insights into tenant preferences and regional economic trends.
This concentrated presence in northeastern Victoria aims to position Eureka Group as a participant in regional affordable accommodation provision. This market approach can create competitive advantages through economies of scale and enhanced tenant attraction capabilities.
Risk diversification benefits are expected to emerge from multiple properties across different towns within the same economic region. This approach is intended to provide portfolio resilience whilst maintaining operational familiarity and management efficiency.
What Development Opportunities Drive Future Value Creation for This All-Age Rental Community in Victoria?
The Eureka Group Benalla Tourist Park presents both immediate and medium-term development catalysts that are expected to enhance investor returns beyond the initial yield. The property benefits from two existing development approvals that provide clear pathways for expansion, aligning with the vision for an expanded all-age rental community in Victoria.
Phase One development allows for immediate construction of 21 new one- and two-bedroom rental units under existing approvals. This development represents a 14.5% increase in rental capacity and provides near-term yield enhancement opportunities.
Phase Two expansion involves amending the second development approval to create additional rental units, subject to Council approval. This is intended to provide medium-term growth options that support the targeted 17.0% five-year IRR.
The 4.1-hectare freehold site provides ample space for expansion whilst maintaining community amenities and character. The site’s size enables flexible development planning that can respond to evolving market demands and demographic trends.
Development activities will focus on creating predominantly long-term rental units and land-lease homes. This approach aligns with Eureka’s core competency whilst capturing the rental growth trends evident in regional Victoria.
How Does This Acquisition Fit Eureka Group’s Broader Strategic Expansion?
The Benalla acquisition demonstrates management’s disciplined approach to value-accretive growth whilst expanding into complementary market segments. The company’s active acquisition pipeline includes a $100 million portfolio of properties currently under due diligence.
The company’s evolution into Australia’s leading diversified affordable accommodation provider presents compelling opportunities for investors. Regional Australian property markets are expected to benefit from strong demographic tailwinds and rental growth fundamentals that support sustainable returns.
This acquisition represents Eureka’s ninth purchase within the past year, indicating consistent execution capability and market opportunity identification. Each acquisition follows consistent criteria: attractive initial yields, significant development potential, and below-replacement-cost pricing.
Settlement is expected in late November 2025, subject to customary conditions. This timeline is intended to enable Eureka Group to immediately begin generating returns from Benalla whilst progressing development plans.
Key investment catalysts include an active acquisition pipeline, geographic diversification through Victorian market entry, development upside from immediate and future expansion opportunities, and demonstrated market approach through consistent acquisition execution. This financial report highlights a significant step in the company’s growth.
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