HomeCo Daily Needs expansion paying off

HomeCo Daily Needs REIT announced a 30% gain in earnings in FY22 and an 18% increase in distributions per security as which underscores the strategic rationale for the transformational merger with Aventus and the significant progress being made to capitalise on HDN’s enhanced growth pipeline.

HDN Chair, Simon Shakesheff said, “Today’s result builds on HDN’s strong track record since listing in November 2020 and delivers against the REIT’s core objective to provide stable and growing distributions notwithstanding increased macroeconomic volatility since the beginning of the year.”

“The transformational merger with Aventus has been successfully integrated and the management team has maintained strong operational momentum with over 99% occupancy and 99% rent collection in FY22. The management team is capitalising on HDN’s enhanced portfolio scale to drive rental growth in a higher inflation and interest rate environment as demonstrated by positive leasing spreads of +5.7% and comparable NOI growth of +5.1%.”

“Furthermore, HDN has taken proactive capital management measures to strengthen its balance sheet with the sale of our Sunshine Coast LFR asset for $140m, reducing pro forma gearing towards the bottom-end of our target gearing range. The repayment of debt following the sale will increase HDN’s interest rate hedging to 73.5% and provide greater income certainty,” Mr Shakesheff said.

HDN CEO, Sid Sharma said, “The portfolio recorded strong valuation gains of $203m over 2H FY22 which underscores the growing demand for daily needs assets from both private and increasingly, institutional investors. Investors remain attracted to high quality daily needs assets offering defensive income streams underpinned by attractive long-term megatrends. We believe the shift to omni-channel retailing is a long-term structural tailwind which is driving the evolution of our asset base into critical last mile infrastructure.”

“We are making significant progress unlocking and accelerating our value accretive $500m+ development pipeline following the Aventus merger with over 30 projects in various stages of planning. We successfully delivered our FY22 projects on time and budget and we are now targeting to commence over $75m of developments in FY23 at a ~7% ROIC.”

“As we move into FY23, HDN is well positioned with pro forma gearing of 30.6% which is at the bottom end of our 30-40% target gearing range. The REIT is in a strong position to fund its accretive development pipeline and capitalise on attractive acquisition opportunities which may emerge with ongoing macroeconomic uncertainty and market volatility.” Mr Sharma said.