joondalup shopping centre homeco
HomeCo large format retail in Joondalup, WA. Image – HomeCo.
  • 6 assets acquired across the eastern seaboard
  • Includes two strategic adjoining property acquisitions in VIC and QLD
  • $88.3M placement was also undertaken

HomeCo Daily Needs REIT (ASX: HDN) has recently announced the acquisition of 100% interest in six daily needs assets for a total of $222 million. The weighted average acquisition capitalisation rate was 5.78%.

“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%,” said HDN Fund Portfolio Manager, Paul Doherty.

“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 acquisitions have 80% exposure to major national tenants including Coles, JB Hi-Fi, Spotlight and Super Retail Group. HDN noted it was a highly secure income via long WALE of 7.1 years, 99.5% occupancy, and a fixed WARR of 3.3%.

Property Suburb State Price Cap Rate Anchor tenants
Upper Coomera Hungry Jacks Upper Coomera Queensland $7.0 million 3.86%
Woodlea Town Centre Aintree Victoria $55.4 million 5.25% Coles
Pakenham Lifestyle Centre Pakenham Victoria $98.5 million 6%
Armstrong Creek Dan Murphy’s and Quick Service Restaurants Armstrong Creek Victoria $21.5 million 5%
HomeCo Coffs Harbour Coffs Harbour New South Wales $22.4 million 6.50% Anaconda, Sydney Tools
HomeCo Lismore Lismore New South Wales $17.2 million 7% Spotlight, PetStock, BCF

HomeCo Daily Needs REIT will also be undertaking a fully underwritten placement to raise $88.3 million at an issue price of $1.61 per unit to partially fund the acquisitions and associated transaction costs.

The issue price represents a 3.3% discount to the last close price of $1.665 on 10 September 2021, and a 2.6% discount to the 5 day VWAP of $1.6522 on 10 September 2021.

The financial impacts of the acquisitions and placement are anticipated to be 3% accretive to FY22 FFO/unit and FY22 DPU guidance upgraded from 8.0 cents to 8.25 cents.

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