Home Consortium today provides an update in relation to a number of asset recycling initiatives which are consistent with strategy to transition to a capital light fund manager with scalable platforms for growth.
The agreed acquisition of Health Hub Morayfield for $110.0 million provides HealthCo with a significant and recently developed integrated healthcare ecosystem asset in one of Australia’s fastest growing regions. In addition, HomeCo has secured $23.2 million of high quality childcare acquisitions. These acquisitions will be warehoused on balance sheet prior to the proposed establishment of an ASX-listed and unlisted fund later this calendar year.
Following these acquisitions, HealthCo’s seed portfolio increases to ~$480 million and remains well positioned for continued growth with ~$300 million of additional assets currently under due diligence.
HomeCo has entered into a put and call option to acquire Health Hub Morayfield, QLD for $110.0 million reflecting a capitalisation rate of 5.40%. Completion is subject to a unitholder vote of the seller. The property delivers a diverse range of primary medical services including a GP clinic, pharmacy, radiology and other allied health services in addition to child care services.
Home Co has also acquired two child care centre. The first at, Woolloongabba comprises a standalone childcare centre leased to Busy Bees which was acquired for $13.0 million reflecting a capitalisation rate of 5.50%. The second, a standalone childcare centre in Five Dock, leased to Greenwood (owned by G8 Education (ASX: GEM)) and is expected to settle in late May 2021. The asset was acquired for $10.2 million reflecting a capitalisation rate of 5.50%.
HomeCo has conditionally exchanged contracts to sell an LFR property at 321 – 343 Morayfield Road, Morayfield, (about 2 kilometres south of the Health Hub) with settlement expected to occur in late May 2021. The sale will realise gross proceeds of $28.4 million, 3.5% above 31 December 2020 book value.
This sale builds upon the previously announced sale of an LFR property in Bathurst, NSW on 29 January 2021. The sale realised gross proceeds of $17.0 million, consistent with what was disclosed at HomeCo’s 1H FY21 result on 24 February 2021.
Following these transactions and the previously announced LFR asset sales of $266.4 million to HomeCo Daily Needs REIT, HomeCo’s directly owned portfolio of LFR assets will decrease to $154.6 million.
HomeCo will continue to actively manage its remaining LFR assets held on balance sheet and will continue evaluating asset recycling opportunities, including sale to HDN or sale to third parties, to deliver optimum long term securityholder returns.
HomeCo Managing Director and Chief Executive Officer David Di Pilla said: “We remain on track to establis HealthCo later this year and today’s update further demonstrates our ability to source high quality assets which are well suited to the model portfolio strategy we announced last month for HealthCo.
“Pleasingly, we continue to execute our strategy in a capital efficient manner through active capital recycling. Our balance sheet is well capitalised with minimal debt, providing us with significant capacity to secure additional assets for HealthCo including several which are currently under due diligence.”
HomeCo reaffirms FY21 FFO guidance of no less than $35.0 million (12.9 cents per security). HomeCo also reaffirms FY21 dividend guidance of 12.0 cents per security.
HomeCo recently engaged L.E.K. Consulting Australia Pty Ltd to undertake a detailed industry report analysing the five key sub sectors in which HealthCo is targeting investment. The report which is in the process of being finalised indicates a potential addressable market of ~$220 billion of healthcare real estate in Australia. Further details on the L.E.K. report will be released in the coming weeks via an official HealthCo announcement.
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