This article is from the Australian Property Journal archive
LARGE format retail specialist Home Consortium is targeting another $150 million in acquisitions by the end of June to seed its proposed health, wellness and government services fund.
The group has already collected $350 million worth of properties earmarked for its next spin-off trust – tentatively named HealthCo – and is hoping to take that to $500 million before its listing.
HomeCo – which itself listed late in 2019 – said it will appoint advisers in coming weeks and will separately provide an update around the proposed board and management personnel. It is targeting a 10-15% co-investment in the proposed trust.
Assets picked up so far include childcare centres in Sydney and Melbourne, a medical and childcare facility in Brisbane and a fund-through development project on the Gold Coast with government, university, medical and childcare exposure.
HomeCo recently spun off its Daily Needs REIT and listed the trust in November. The trust has grown its funds under management by 16% to about $1 billion and has outperformed the S&P/ASX 200 A-REIT index by 4% since listing.
The Daily Needs REIT is defensively-minded, made up of properties leased to tenants that offer day-to-day needs, such as supermarkets and Bunnings warehouses, and that have managed to stay open and perform well during the pandemic. Woolworths, Dan Murphy’s, Coles and Liquorland together account for 26.5% of the Daily Needs REIT’s income.
The Daily Needs REIT has announced a 9% upgrade to full year funds from operations guidance versus PDS. It is touting a strong growth pipeline with significant growth in net tangible assets and income expected.
HomeCo itself has $1.7 billion of funds under management, with 23 properties on its balance sheet, valued at $634 million and with a weighted average capitalisation rate of 6.6%. The portfolio has a weighted average lease expiry of 7.7 years and a weighted average rent review of 3.06%.
“HomeCo is on track to execute its objective to deliver above average risk adjusted returns to securityholders and continues to build a platform for sustainable long-term growth via the own, develop and manage model,” managing director and chief executive officer, Di Pilla said.
He added that HomeCo is “well positioned to grow earnings and FUM by leveraging the existing asset base to over $5 billion and there is significant potential to increase this further through establishing capital partnerships”.
Utilising its low site coverage assets, it is planning an 11,400 sqm development in Cairns with a forecast cash yield of 9%, a 12,500 sqm development in Ballarat with a federal government tenancy that opened and the remaining site expected to open later this year, and in Wagga Wagga, 4,200 sqm is open and trading with a further 15,500 sqm expected to open in the same period with a forecast cash yield of 7%.
HomeCo’s full year funds from operations guidance FFO guidance is for no less than $35 million, or 12.9 cents per security, reaffirming the 4% full year upgrade in December.
An interim dividend of 6.0 cents per security was declared. Full year dividend guidance is 12.0c.
HomeCo took on warehouses that had been vacated by Woolworths’ collapsed hardware chain, Masters in 2016 and converted them into large format and convenience retail centres that have weathered the pandemic challenges this year well.
