This article is from the Australian Property Journal archive
HOMECO’S newly-listed Daily Needs REIT has picked up a Bunnings warehouse for $56 million, further weighting its portfolio to Sydney’s western growth corridor, as it forecast its funds from operations to be well ahead of its IPO forecast.
The asset in Seven Hills is on a 22,300 sqm site that was acquired on a passing yield of 5.1%.
It is strategically located near the intersection of the M2 and M7 motorways.
Bunnings has been trading from the location for 10 years. Completion of the deal is subject to Bunnings not exercising its pre-emptive right to acquire the asset from the vendor.
The acquisition will be fully debt funded and is expected to be immediately accretive to 2021’s full-year funds from operations per unit. The trust expects FFO per unit to be a minimum of 6% ahead of its IPO forecast.
Its gearing will remain within the 30-40% target range post-transaction, at 34.9%.
“The Bunnings Seven Hills acquisition by HDN increases the HomeCo Group’s exposure to the Western Sydney growth corridor in line with several other recent acquisitions,” HomeCo said.
HomeCo has just acquired Gregory Hills Home Centre in western Sydney for $32 million, on a cap rate of 6.25%. The large format retail centre is anchored by Services NSW and Total Tools and is perched on a site of 2.7 hectares with 220 car parks and a low site coverage of 31%.
Among the seed assets for the Daily Needs REIT was the Woolworths-anchored Gregory Hills Town Centre, for which HomeCo paid $70 million a couple of months ago, as well as the Glenmore Park Town Centre, picked up at the same time for $150 million.
Glenmore Park is anchored by Woolworths, Coles and ALDI supermarkets and has 30% of income derived from healthcare and wellness services. The centre’s coverage ratio is 38%.
Other assets in western Sydney are located in Penrith and Prestons. As the trust listed late last month, it announced the purchase of Marsden Park Shopping Centre in Queensland for $48 million.
HomeCo last week launched an equity raising to partially fund the $163 million purchase of six health, education and government services properties and Gregory Hill Home Centre, charging ahead with plans for another spin-off fund – a “health, wellness & government REIT”.
HomeCo itself floated in October of last year.
