Why Property Strategy Matters for Eureka (ASX:EGH) and Desane (ASX:DGH) Beyond the S&P/ASX 200

Eureka Group Holdings (ASX:EGH) spent A$92.4 million on acquisitions, development and Capital works in FY26, then agreed in September to buy six more New South Wales communities for $123.8 million. Desane Group Holdings (ASX:DGH) spent the same year selling one Lane Cove building and pushing two development sites closer to income.

Both are real estate companies outside the S&P/ASX 200 that own Australian property. The contrast lies in what each asks of that property. Eureka wants a growing stream of rent from homes; Desane wants to lift the value and income of a handful of commercial sites in Sydney and Brisbane.

Eureka's bet on affordable rental communities

Eureka owns and operates rental villages for independent seniors and, increasingly, all-age communities and holiday parks. Its FY26 results, for the year to 30 June 2026 and released on 20 August, showed Revenue of $56.7 million, up 24 per cent, with rental income rising 32 per cent to $44.9 million.

Underlying EBITDA (earnings before interest, tax, Depreciation and amortisation, excluding one-off items) rose 29 per cent to $21.7 million. Underlying Earnings per share increased 10 per cent to 3.45 cents. Statutory net profit fell 17 per cent to $16.7 million, a reminder that reported profit and the company's preferred underlying measure can move in opposite directions.

Occupancy was 97 per cent across seniors' villages and 95 per cent for long-term all-age sites. The number of all-age rental sites jumped from 436 to 1,357, and Assets under management reached about $500 million across 61 communities.

The Ingenia deal and the fresh capital

On 3 September Eureka announced the purchase of six communities with 953 sites across Greater Sydney, the Central Coast, the Hunter Valley and the Shoalhaven from Ingenia Communities Group. The ingoing yield, meaning first-year Net Income as a share of the price, was put at 8.1 per cent.

The deal is funded by an $80.2 million entitlement offer at $0.615 a share, plus $80 million of new bank debt, part of which is set aside for future growth. The company raised FY27 guidance to underlying earnings of at least 4.2 cents a share, from at least 3.9 cents. Settlement is expected by the end of calendar 2026.

A day later, Eureka was named for addition to the All Ordinaries in S&P Dow Jones Indices' September rebalance, effective 21 September 2026.

Desane's small portfolio with development upside

Desane is a much smaller Sydney-based property investor and developer. Its preliminary final report, released on 26 August for the year to 30 June 2026, values seven Investment properties at $91.3 million in total.

The largest holdings are 159 Allen Street in Leichhardt, carried at $25.0 million and now fully leased, and a Brisbane City Council-leased site at Wacol valued at $20.1 million. Other holdings include a Lane Cove building let to Signature Orthopaedics until November 2032 and three more Norton Street properties in Leichhardt.

Rental income slipped 2.8 per cent to $2.198 million. A $2.1 million Fair Value uplift, well below the prior year's $6.2 million, left statutory net profit at roughly $0.02 million, against $3.3 million in FY25. Net tangible assets (NTA), the Book Value of assets less liabilities and intangibles, were $1.69 a share.

Two projects that will shape Desane's income

Desane's strategy is concentrated in two projects. At 91 Thornton Drive, Penrith, it plans a 44-unit industrial strata development on a 1.165-hectare site. A July development portfolio update said construction was expected to begin in the second half of 2026.

At 322 Norton Street, Leichhardt, demolition and bulk excavation are complete and a new store is being built for Petbarn under a 10-year Lease with two five-year options. The report notes about $1.1 million of contracted works remain, due by 31 December 2026.

Desane paid a 2.0 cent special dividend, 82 per cent franked, in December 2025 and declared no final dividend for FY26. Market Index ranks the company around 1,490th of more than 2,300 ASX-listed companies by size, well outside the main S&P/ASX indices.

Comparing how hard each Balance Sheet works

By our calculation, Desane's rental income of $2.198 million equals about 2.4 per cent of the $91.3 million book value of its investment properties. That low figure reflects land and buildings held for redevelopment, rather than fully income-producing assets.

Eureka's new NSW portfolio is priced at an 8.1 per cent ingoing yield. The two numbers are not directly comparable, because one is gross rent against book value and the other is a net Yield on purchase price, but the gap illustrates the different strategies.

Debt tells a similar story. Desane's $13.9 million of borrowings equal about 15 per cent of its property book value, by our calculation, and it held $10.9 million in cash and fixed-interest securities. Eureka reported a loan-to-value ratio of 34.2 per cent at 30 June, up from 20.6 per cent, against a 40 per cent internal ceiling. Interest cover, earnings relative to interest costs, was 3.5 times.

Eureka's $0.615 Offer Price sat about 7 per cent above its FY26 NTA of 57.7 cents a share, by our calculation.

Risks that differ in kind

Eureka's main risks relate to growth. Rapid acquisitions add integration demands, and the offer lifts the share count by about 30 per cent, diluting holders who do not participate. More Debt also increases sensitivity to interest rates and to any softening in occupancy.

Desane's risks are concentration and delivery. Its value sits in a few properties, and the Penrith and Leichhardt projects still need to be built and, in Penrith's case, sold or leased. Property revaluations can swing statutory results, as FY26 showed, and dividends have been irregular.

What to watch next

For Eureka, the key indicators are the retail offer outcome, completion of the Ingenia purchase, occupancy across new holiday-park acquisitions such as Mandurah Coastal and Townsville Lakes listed on its ASX announcements page, and delivery against the 4.2 cent earnings target.

For Desane, watch whether Penrith construction begins as planned, when the Petbarn store opens, and whether recurring rent grows enough to narrow the gap between income and a development-heavy balance sheet.