HealthCo Healthcare & Wellness REIT [ASX:HCW] posted its half-year results for the period ending 31 December 2022 and said it will be upping FY2023 funds from operations guidance (FFO) to 7.1 cents per unit.
This decision — a 4% upgrade to the group’s last posted guidance — came off the back of strong portfolio results and the satisfying delivery of its development pipeline.
HCW also said that its previous FY23 distribution per unit (DPU) guidance of 7.5 cents will remain the same.
Shares for the REIT were slightly up on Friday afternoon, trading at $1.57 a share. However, the healthcare REIT has plunged 25% in the last full year and more than 10% in the past month alone.
The REIT is also down 12% in its sector and 15% compared with the wider market.
Source: tradingview.com
Healthco explains half-year results and its upgrade to FFO guidance
On Friday morning HealthCo REIT (Real Estate Investment Trust) released its results for the first half of FY2023. HCW claimed its results were evidence of strong performance for its portfolio fundamentals, showcasing the group’s ability to source accretive acquisitions and a well-managed development pipeline.
These were the group’s key highlights:
Financial
- 1H FY23 FFO of $10.0 million (3.1 CPU)
- 1H FY23 DPU of 3.75 CPU in line with FY23 guidance
- Gearing of 15.5% with $276 million of available liquidity
- NTA/unit of $2 in line with Jun-22, with property valuations underpinned by income growth
Operational
- 99% occupancy
- 100% cash rent collection
- 10-year WALE secured by high-quality and growing income streams
Investment and development
- The group completed its $80 million development of the George Private Hospital in Camden, NSW
- $81 million life sciences acquisition in Macquarie Park, NSW, and strategic partnership with Aegros
- A strategic partnership has now been made with Mater Misericordiae (Mater), beginning with the co-ownership and anchor tenancy at the Springfield Health Hub, QLD
- Acquisition of Vitality Village Health Hub on the Sunshine Coast, QLD, for $28.9 million at a 6.5% yield
Revenue from ordinary activities went up 85% compared with the prior half year, with the group bringing in $18.3 million (the REIT pulled $9.95 million in the six months to 30 July 2021).
Profit went down half-on-half by 86% from $10.8 million to $1.5 million.
The healthcare REIT reported cash and undrawn debt of $276.4 million, down from $377.7 million in capital in the year’s first half.
Healthco concluded its report by saying it will not change its FY23 DPU guidance of 7.5 cents.
The REIT also explained that its FY23 FFO guidance upgrade of 7.1 CPU represents 15% growth on the prior period and 4% on its previous guidance of 6.8 cents.
HCW’s Senior Portfolio Manager, Sam Morris, commented on the group’s half-year results:
‘Our first half FY23 result marks another period of strong operational performance and significant progress unlocking our value accretive development pipeline.
‘We achieved a major development milestone in the period with the successful completion of The George paediatric hospital in Camden, South-West Sydney. The project was completed on-time and on budget and demonstrates the REIT’s ability to secure and develop high quality institutional grade healthcare real estate.’
Five bargain stocks
With many of the effects of the pandemic still lingering, we now have an influx of new challenges — inflation, the war, continually rising rates…
Households and businesses alike are still feeling the pinch.
The silver lining is that it’s in times like these that some real ASX stock bargains can emerge — if you know where to look.
Our small caps expert Callum Newman has done the hard work for you.
He’s found five of what he calls ‘the best stocks to own in Australia’ right now.
And the best part is, right now, they don’t even cost that much.
Click here to discover Callum’s top five Aussie bargain stocks.
Regards,
Mahlia Stewart,
For Money Morning