This article is from the Australian Property Journal archive
SHOPPING, convenience, and large-format retail centre landlord HomeCo Daily Needs REIT (HDN) has reaffirmed full-year guidance after recording better-than-expected income growth.
The HomeCo spin-off trust posted interim funds from operations growth of 8% to $89.4 million compared to a year earlier, while distributions lifted 2% to 4.2c per unit.
Gearing came down to 31.5%.
Occupancy across its portfolio is over 99% and the trust recorded 99% cash rent collections, as well as a strong 5.9% positive leasing spread across 75 leasing deals.
Full-year FFO guidance of 8.6c per unit and distributions guidance of 8.3c per unit were reaffirmed, while comparable property net operating income growth guidance was revised upwards from 3.3% to 3.8%.
“We are pleased to today reaffirm our FY23 FFO and DPU guidance with better-than-expected underlying income growth from our portfolio offsetting higher interest costs now assumed in our guidance,” said HMC Capital Group chief financial officer, Will McMicking.
“HDN is well positioned as we move into a more subdued economic environment with a highly defensive tenant base, low and sustainable rents, minimal vacancy and expiries and a strong balance sheet.”
HDN CEO, Sid Sharma said, “Our 1H FY23 result marks a continuation of our strong underlying growth trajectory with HDN delivering solid rental growth, cash collection and net valuation movements. Our operational results are underpinned by strong tenant demand for both our existing portfolio and developments, which is translating into solid rental growth.”
HDN expects to see a change in development commencements in FY24 to over $120 million from $80 million in FY23, and the identified development pipeline has now increased to over $600 million beyond FY23.
During the half, HDN sold off assets on the Sunshine Coast and in and Epping for about $210 million and deployed about $143 million into acquisitions, including of Southlands Boulevarde in Perth at a fully-let yield of circa 8% that is immediately FFO accretive.
HDN also made a $50 million commitment to the Last Mile Logistics unlisted, which Sharma said has the potential to create a significant future acquisition pipeline.
