This article is from the Australian Property Journal archive
LISTED Convenience and large-format retail asset owner HomeCo Daily Needs REIT has seen $46 million, or 1.0% shaved off the value of its portfolio as its “noncyclical” assets weathered the valuation storm seen across the broader commercial real estate sector – as did its sister healthcare trust, which has attracted more third-party investment.
The preliminary unaudited portfolio valuation has increased by $57 million, or 1.2%, over six months to $4.734 billion net of acquisitions and transfers to assets held for sale of $56 million, as well as capital expenditure incurred during the period of $46 million, representing a net valuation decrease of $46 million.
“Strong net operating income growth across the portfolio continues to support asset values despite a modest easing in capitalisation rates,” HomeCo Daily Needs REIT CEO, Sid Sharma said.
“Our continued ability to transact on assets in line with book values also reflects the quality of our metro-located portfolio and has provided valuers with the necessary evidence to support valuations.”
Occupancy and cash collections exceed 99% across the portfolio, translating into re-leasing spreads of over 6.5%, whilst maintaining low incentives of about 5%.
“This is being underpinned by HDN’s exposure to a predominantly national tenant base, metropolitan locations and focus on essential retail, services, and omni-channel infrastructure which are non-cyclical,” Sharma said.
The REIT declared a quarterly distribution for the December quarter of 2.075c per unit.
HealthCo sees valuation gain
Meanwhile, its HMC Capital stablemate, HealthCo Healthcare and Wellness REIT (HCW) saw a gain of $38.3 million, or 2.5%, in its portfolio value, including in its interest in UHF.
The were was a $500,000 net gain realised on HCW’s investment property portfolio, with a $37.9 million net gain realised on HCW’s equity-accounted investments, driven by a $28.2 million net gain at Nepean Private Hospital.
HMC announced in September that UHF successfully secured $650 million of equity commitments including from three major global institutional investors. A fourth domestic institutional investor has now received investment committee approval for the remaining $75 million equity commitment, which was underwritten by HMC, and is in the process of completing final documentation. Funding by the new investor is expected by the end of calendar year 2023.
“The successful establishment of the fund with major global institutional investors creates additional funding flexibility for HCW’s value accretive development pipeline,” it said.
HealthCo Healthcare & Wellness REIT chief financial officer Christian Soberg, said, “The $38 million net valuation gain reflects the high-quality nature of HCW’s portfolio, resilient characteristics of healthcare property as an asset class, and strong contracted net operating income growth across the assets with over 70% of leases being CPI linked.”
It declared a distribution of 2.0c per unit for the December quarter and reaffirmed FY24 FFO per unit and distributions per unit guidance of 8.0c.
