Shopping centre fund’s growth shows faith in ‘daily needs’ stores
PROPERTY funds manager HomeCo is advancing on its target of $10bn funds under management by spinning off more assets into its listed shopping centre fund as part of a deal in which it picked up $222m in properties.
The fund, the HomeCo Daily Needs REIT, raised funds on Monday to buy two centres from HomeCo and four other new properties.
The burst of deal-making caps a frenzied period by the funds manager, which has also launched a healthcare real estate trust after raising $650m.
It also shows the faith investors are placing in daily needs retail centres, which are serving a rising population of suburban workers and have arguably benefited from the Covid-19 crisis.
Fund portfolio manager Paul Doherty said the acquisitions were consistent with a “strategy to secure high-quality daily needs-focused assets which complement our model portfolio and deliver stable and growing distributions”.
The HomeCo Daily Needs REIT is buying six assets for a total price of $222m, representing a weighted average acquisition capitalisation rate of 5.78 per cent.
The properties sport an 80 per cent exposure to major national tenants, including Coles, JB Hi-Fi, Spotlight and Super Retail Group.
Two fully leased large-format retail assets are being acquired from HomeCo at their June value, effectively a large discount as the market surges.
The HomeCo Daily Needs REIT is undertaking a fully underwritten placement to raise $88.3m at $1.61 per unit to partially fund the acquisitions.
It was underwritten by Goldman Sachs and Jefferies.
The deal is expected to be 3 per cent accretive to fiscal 2022 funds from operations per unit, and distribution per unit guidance was upgraded from 8c to 8.25c.
The trust will have pro forma gearing of 36 per cent, and the deal will further increase the fund’s market freefloat and liquidity as the trust enters the S&P/ASX 300 index on September 17.
The two large external assets being acquired are Woodlea Town Centre and the Pakenham Lifestyle Centre, both in Victoria. The HomeCo large format retail assets are in Coffs Harbour and Lismore.
The trust is also buying a Dan Murphy and Quick Service Restaurants property in Armstrong Creel in Victoria and a Hungry Jacks at Upper Coomera in Queensland.