This article is from the Australian Property Journal archive
FUND manager HMC Capital’s HomeCo Daily Needs REIT (ASX:HDN) and HealthCo Healthcare and Wellness REIT (ASX:HCW) both reported strong preliminary results ahead of FY22’s close.
HDN recorded a June 2022 preliminary unaudited net valuation gain of $209 million, up 4.6% on December 2021 results, for 10cpu of NTA uplift. With 41% of the this increase driven by income growth.
“HDN’s high quality and strategic asset base remains well positioned for the higher inflation and interest rate environment we are now facing,” said Sid Sharma, CEO of HomeCo Daily Needs REIT.
For the period of July 2021 to May 2022, HDN’s portfolio rent collection was at 99%, with occupancy also at 99%.
While leasing spreads of +5% across more than 103,000sqm GLA from July 2021, is also supporting strong rental growth.
HomeCo’s portfolio assets also amounted over 77 million in total annual customer visits, with foot traffic up by 1.4% over the March quarter compared to the pcp.
“The portfolio recorded strong valuation gains highlighting the growing demand for daily needs assets from both private and increasingly, institutional investors,” added Sharma.
While still subject to year-end audit, the preliminary unaudited portfolio valuation for all 57 HDN assets have been completed, resulting in an increase of 5.2% from December 2021, or up $235 million to $4,786 million at 30 June 2022.
At the same time, net capital expenditure throughout this period was at $26 million, for a net valuation increase of 4.6% or $209 million.
“Investors remain attracted to high quality daily needs assets offering defensive income streams underpinned by attractive long-term megatrends. We believe the shift to omni-channel retailing is a long-term structural tailwind which is driving the evolution of our asset base into critical last mile infrastructure,” said Sharma.
HDN reaffirmed its FY22 statutory FFO per unit guidance of 8.8 cents.
A distribution of 2.12cpu for the quarter ended 30 June 2022 has been declared, resulting in a full year FY22 distribution of 8.28cpu.
Meanwhile, HCW posted a June 2022 preliminary unaudited net valuation gain of $25 million, an increase of 4.1% from December 2021, or an NTA uplift of 8cpu.
“HealthCo continues to deliver against its core objective to provide investors with stable and growing income from a diversified healthcare portfolio underpinned by favourable long-term megatrends,” said Sam Morris, senior portfolio manager of HCW.
HCW’s portfolio occupancy was also at 99%, with unadjusted cash rent collection at 100% since listing.
“We have continued to unlock the significant embedded value in our portfolio and development pipeline where we can generate attractive total returns. HealthCo has the potential to significantly grow its net operating income over the medium-term through the successful delivery of its committed development pipeline, the previously announced acquisitions and increased occupancy across the portfolio,” said Morris.
HCW has undertaken preliminary unaudited valuations the total 27 owned portfolio properties, 13 of which were independent, while the remaining 14 were internal.
This resulted in a valuation gain of $47 million to $647 million, a 7.8% gain from 31 December 2021 to 30 June 2022.
Throughout the period net capital expenditure was at $22 million, representing a net valuation increase of $25 million or 4.1%.
“The preliminary unaudited valuation result provides strong validation for HealthCo’s high quality and well-located portfolio which is benefitting from strong investor appetite for the healthcare sector and healthcare tenant demand,” added Morris.
HCW reaffirmed its FY22 FFO guidance of 5.0cpu, with a declared dividend of 2.25cpu for the quarter ended 30 June 2022.
