This article is from the Australian Property Journal archive
HOME Consortium has launched a $190 million raising to fund the acquisitions of three convenience-based neighbourhood centres from Woolworths and an aged care facility, as well as its recent purchase of the Parafield Retail Complex.
Each of the shopping centres are anchored by Woolworths supermarkets and were bought for a total of $127.8 million.
They include Prestons Place at 1985 Camden Valley Way in Sydney and Rosenthal Shopping Centre at 90 Vineyard Rd in Melbourne’s Sunbury, and an 87.4% freehold interest in Vincentia Marketplace, on Jervis Bay, where it will enter into a co-ownership agreement with Woolworths.
HomeCo plans to spin off the centres, along with other assets, into a new trust focusing on retail properties catering to daily needs.
“The acquisitions announced today are an exciting step for HomeCo and increase daily needs and HealthCo services tenant exposure to 47%, consistent with HomeCo’s strategy of increasing its weighting towards hyper-convenience based retail and healthcare and wellness assets,” HomeCo executive chairman and chief executive officer, David Di Pilla said.
HomeCo emerged in 2017 out of the purchase and conversion of 61 former warehouses used by Woolworths’ failed hardware chain Masters, and listed last year. It recently revealed an unaudited portfolio valuation increase of 5.2% over the half year to $1.014 billion, as well as the $25 million acquisition of the 15,500 sqm Parafield Retail Complex in Adelaide’s north. The site has existing leases with Officeworks, Supercheap Auto, Hungry Jacks and Tradezone with a heads of agreement with Bunnings subsidiary Adelaide Tools, and is currently leased from Parafield Airport with 28 years remaining with a 49 year option renewal.
Foot traffic at its centres increase 9% and 17% in May and June.
HomeCo also announced yesterday its acquisition of the 250 bed facility Aurrum Erina north of Sydney from Aurrum Aged Care, an entity associated with Di Pilla, for $32.59 million with a leaseback agreement 10 years with two further options of 10 years each. The facility will likely be included in another new trust based around health and wellness.
Aurru Erina will be funded by the payment of $12.59 million in cash and the issue of $20 million of new fully paid ordinary stapled securities at an issue price of $2.88.
The raising will also include a fully underwritten institutional placement of $140 million, and a non-underwritten security purchase plan for eligible securityholders to raise $30 million.
Goldman Sachs Australia Pty Limited and Jarden Partners Limited will underwrite the placement. New securities will be issued at a fixed price of $2.88 per new security, at a 4.0% discount to the last close and 6.9% discount to the five day volume average weighted price.
Acquisitions are immediately accretive to funds from operations and result in pro-forma FY21 FFO guidance of at least $0.15 per security. The group declared a fully franked final FY20 dividend of 7.5 cps.
Home Consortium posted a buoyant interim report 120 days after its IPO, but top brass were forced to take pay cuts as part of measures to absorb up to $7 million in tenant support initiatives due to the coronavirus pandemic.
Prior to the new acquisitions, national retailers and services account for 90% of all of its tenants, and specialty tenants represent just 4% of the portfolio. The portfolio has a weighted average lease expiry of 8.2 years, and 3% of current tenants have lease expiries in the next 20 months.
Works at its Richlands site in Queensland have recommenced, and will begin at three new developments at Ellenbrook in Western Australia, and Bathurst and Wagga Wagga in New South Wales. They are scheduled to open by June next year and increase HomeCo’s operating centres to 296, and seven of its 10 development centres being open for trade.
