- HomeCo acquires 100% interest in the Queensland property
- Property has fully leased yield of 4.75%
- HomeCo to start $70M institutional placement to fund acquisition
This morning, HomeCo Daily Needs REIT (ASX: HDN) announced it will be acquiring Town Centre Victoria Point in Queensland.
Located about 30 kilometres southeast of Brisbane, the large scale 7.6-hectare asset is anchored by Woolworths, Bunnings, Healius and Endeavour Group, and accessible by two major arterial roads.
HDN said the strategic rationale behind the transaction includes the high-quality nature of the asset, a long WALE of 7.1 years with 82% contracted escalations and a fixed WARR of 3.44%.
It was also highlighted that the centre had no department stores, discount department stores, and no exposure to discretionary specialty retailers, precluding HDN from the associated risks.
The tenant mix for the centre includes 60% neighbourhood, 22% large format retail, and 18% health and services, three sectors that have been performing well in recent times, a Savills report showing a divergence between the neighbourhood and LFR, compared to discretionary retail.
HomeCo Daily Needs REIT said $70 million in funding will come from an institutional placement, the remainder coming from debt. While the acquisition will cost $160 million, stamp duty comes in at $9 million, transaction costs $3 million, bringing the total cost to $172 million.
The placement was announced today with the settlement of new securities expected on Thursday. Trading of those new securities is expected to begin Friday 9 July.
New units in HDN will be issued at $1.45, which represents a 3% discount to the last close price of $1.495 on 2 July 2021.
HomeCo Daily Needs REIT said the financial impact “is immediately accretive to HDN’s previous FY22 FFO/unit guidance of 8.3cpu.” HDN also said gearing is “expected to be at the mid-point of HDN’s target gearing range of 30–40%.”
