HomeCo has announced the acquisition of 6 additional assets for its Daily Needs Trust worth $222m.
The portfolio includes 2 large format retail assets to be acquired from HomeCo and well as the Woodlea Town Centre and a number of adjacent assets to the existing portfolio. The acquisitions reflect a weighted average acquisition capitalisation rate of 5.78%.
The Trust will raise $88m of capital to support the acquisitions.
HDN Fund Portfolio Manager Paul Doherty said: “The acquisitions and placement announced today are consistent with HDN’s strategy to secure high-quality daily needs focused assets which complement our model portfolio and deliver stable and growing distributions. The acquisition properties were all secured off market and offer highly defensive and growing income streams via long-term leases to major national tenants, high occupancy and embedded rental growth through fixed annual rental reviews of 3.3% . Furthermore, the assets are strategically located in key growth corridors with low site coverage, which provides further upside potential from future accretive brownfield development.”
The largest asset in the portfolio is the Woodlea Town Centre, a new Coles-anchored neighbourhood centre located in Melbourne’s Western growth corridor. The Centre was developed in a joint venture by Victoria Investments and Properties and Mirvac with completion in early 2021. The Centre is to be acquired for $55.4m, reflecting a 5.25% cap rate.
The portfolio also includes;
- Pakenham Lifestyle Centre, VIC – a LFR centre located in Melbourne’s southeast growth corridor to be acquired for $98.5m, reflecting a 6.00% cap rate with settlement expected to settle on 1-Dec-21
- The HomeCo Coffs Harbour, NSW a LFR centre to be acquired for $22.4m on a 6.50% cap rate. The Centre is leased to Anaconda and Sydney Tools
- The HomeCo Lismore, NSW – a LFR Centre leased to Spotlight, PetStock and BCF to be acquired for $17.2m on a 7.00% cap rate
- The Armstrong Creek Dan Murphy’s and Quick Service Restaurants (“QSR”), VIC which adjoin the Armstrong Creek Shopping Centre that HDN acquired in Apr-21, to be acquired for $21.5m on a 5.00% cap rate
- The Upper Coomera Hungry Jacks, QLD ($7.0m, 3.86% cap rate) which is a freestanding underutilised pad site located between HomeCo Coomera City Centre and HomeCo Upper Coomera
The HomeCo LFR assets are being acquired at a 16.8% discount to Sep-21 draft independent valuation.
The acquisitions will be partially funded through a $88.3 million fully underwritten placement with an issue price of of $1.61 per New Unit which is a -3.3% discount to the last close price of $1.6650 on 10 September 2021.
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