It’s been a big year for HomeCo Daily Needs REIT (HDN) with the Aventus merger now completed and delivering. The Group’s full-year results (ending 30 June 2022), underscore the strong strategic rationale for the transformational merger and the significant progress being made to capitalise on HDN’s enhanced growth pipeline.
HDN have also announced the sale of its Sunshine Coast (Qld) LFR asset at a 6% premium to Dec-21 book value. In August, HDN entered into an unconditional exchange to sell Sunshine Coast Home for $140.0 million which is expected to settle in September 2022.
The sale of Sunshine Coast Home for $140.0 million is expected to settle in September
HDN Chair, Simon Shakesheff said, “Today’s result builds on HDN’s strong track record since listing in November 2020 and delivers against the REIT’s core objective to provide stable and growing distributions notwithstanding increased macroeconomic volatility since the beginning of the year.”
“The transformational merger with Aventus has been successfully integrated and the management team has maintained strong operational momentum with over 99% occupancy and 99% rent collection in FY22. The management team is capitalising on HDN’s enhanced portfolio scale to drive rental growth in a higher inflation and interest rate environment as demonstrated by positive leasing spreads of +5.7% and comparable NOI growth of +5.1%.”
“Furthermore, HDN has taken proactive capital management measures to strengthen its balance sheet with the sale of our Sunshine Coast LFR asset for $140m, reducing pro forma gearing towards the bottom-end of our target gearing range. The repayment of debt following the sale will increase HDN’s interest rate hedging to 73.5% and provide greater income certainty,” Shakesheff said.
HDN is well placed to continue growing with > $75m in developments to commence in FY23
HDN CEO, Sid Sharma said, “The portfolio recorded strong valuation gains of $203 million over 2H FY22 which underscores the growing demand for daily needs assets from both private and increasingly, institutional investors. Investors remain attracted to high-quality daily needs assets offering defensive income streams underpinned by attractive long-term megatrends. We believe the shift to omnichannel retailing is a long-term structural tailwind which is driving the evolution of our asset base into critical last mile infrastructure.
“We are making significant progress unlocking and accelerating our value accretive $500 million+ development pipeline following the Aventus merger with more than 30 projects in various stages of planning. We successfully delivered our FY22 projects on time and budget and we are now targeting to commence more than $75 million of developments in FY23 at a ~7% ROIC.
“As we move into FY23, HDN is well positioned with pro forma gearing of 30.6% which is at the bottom end of our 30-40% target gearing range. The REIT is in a strong position to fund its accretive development pipeline and capitalise on attractive acquisition opportunities which may emerge with ongoing macroeconomic uncertainty and market volatility.” Sharma said.
HDN is an Australian Real Estate Investment Trust with a mandate to invest in convenience-based assets across the target sub-sectors of Neighbourhood Retail, Large Format Retail and Health & Services
HDN’s total assets as at Jun-22 increased to $4.9bn, driven by the Aventus merger which was completed in March 2022.
HomeCo Daily Needs REIT (HDN) is an Australian Real Estate Investment Trust with a combined portfolio size of approximately 2.5 million square metres of land in Australia’s leading metropolitan growth corridors of Sydney, Melbourne, Brisbane, Perth and Adelaide.
