homeco-keysborough-aventus-bankstown-feature
Image: HomeCo, Aventus.
  • HomeCo to acquire all AVN securities
  • Merger offer price $3.82, comprising HDN securities, and cash or HMC securities
  • Merged group will have a combined portfolio of $4.1 billion

This week began with the announcement of FY22 funds from operation (FFO) guidance from Aventus (ASX: AVN). The company said FFO per security had estimated growth of 5% on FY21. The increase brings the FFO amount to circa 20.5 cents per security.

This improved outlook reflects the continued rental growth from the portfolio and lower interest expense. This guidance includes a number of items that are non-recurring in nature and excluding these one-off effects results in normalised FFO of 20.3 cents per security.

Merger

Also on Monday, HomeCo Daily Needs REIT (ASX: HDN) and HomeCo (ASX: HMC) announced that they had entered into a binding scheme implementation deed with Aventus (ASX: AVN) to acquire all AVN securities.

The move comes with unanimous support from both HDN and AVN boards, the merged company will have a combined portfolio of $4.1 billion and market capitalisation of approximately $3.2 billion.

HDN also said the merged group will be eligible for S&P/ASX200 index inclusion with pathway towards S&P/ASX100 index inclusion over time.

“We believe the merger is strategically and financially attractive for both HDN and AVN… The increased scale and enhanced capability will allow the merged group to unlock significant value that would not have been accessible on a standalone basis.”

HDN Chair, Simon Shakesheff

Bruce Carter, AVN Chairman, echoed the positive message: “The Merger is attractive for Aventus security holders, both because of the potential offered by being part of the larger merged groups and because the offer reflects a material premium to Aventus’ trading price and its NTA.”

Details

Aventus security holders will receive consideration with an implied value of $3.82 per AVN security. The deal comprises 2.2 HDN units for every 1 unit in Aventus Retail Property Fund (ARPF), and $0.285 cash or 0.038 HMC securities for every 1 share in Aventus Holdings Limited (AHL).

HDN is contributing 93% of the total consideration paid to AVN security holders to acquire 100% of ARPF, which holds all of AVN’s real estate assets.

HMC is contributing 7% of the total consideration paid to AVN security holders to acquire 100% of AHL.

Following the implementation of the merger, Darren Holland and Lawrence Wong of AVN will be offered roles as CEO and CFO of HDN, respectively. Current AVN directors Darren Holland, Bruce Carter and Robyn Stubbs will also be appointed to the HDN Board.

BB Retail Capital Pty Ltd and associated entities (BBRC) currently holds a voting interest in approximately 22.6% of all Aventus securities.

BBRC has confirmed to Aventus that, based on disclosed terms of the Merger, it intends to vote in favour of the Schemes in the absence of a superior proposal, among other conditions.

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