Eureka Group upgrades FY26 guidance on strong occupancy

Eureka Group (ASX:EGH) has upgraded its financial outlook in a trading update for the financial year ending June 30.

Underpinned by tight portfolio occupancy and above-CPI rent growth, the group now expects underlying EBITDA to finish at or above the upper limit of its initial $20.2 million to $21.1 million guidance range, representing a stellar 20% to 25% rise in the prior year.

Underlying earnings per share are projected to land at the top end of the 3.37 to 3.44 cent range, marking an increase of up to 10% on FY25.

Operational performance across Eureka’s property portfolio remains outstandingly strong.

Seniors' occupancy has maintained its high baseline above 97%, while all-age long-term rental occupancy experienced a lift to 95%, climbing sharply from the 86% recorded at the first-half result.

Driven by an acute structural undersupply and sustained demand for affordable accommodation, like-for-like rent growth is anticipated to surpass 6% for FY26.

To fund future high-returning developments and strategic acquisitions, Eureka is actively pursuing capital partnering and asset recycling initiatives.

This includes the contracted sale of a non-core 42-unit village in Broken Hill for $4.4 million, alongside residential sell-downs at the Eagleby and Bundamba communities.

Additionally, the group has over $120 million in accretive rental assets currently under advanced due diligence.

The operational results have insulated Eureka's upgraded earnings guidance against rising funding costs driven by the nation's higher-for-longer 4.35% cash rate environment.