Australian real estate investment trust (REIT) HomeCo Daily Needs [ASX:HDN] has taken the time to look closely at the home and properties market for the timeline leading to June 2023, and presented its findings for investors.
Reflecting on results pertaining to its own portfolio strength and its progress on accretive developments, HomeCo says that its June 2023 period took an impact of -$73 million, which was mostly due to a 13 base points cap rate expansion to 5.48%, even with half of its assets independently valued in the half.
HDN shares rose more than 1% by midday, trading for $1.22 cents each.
HDN is currently down 4.5% so far in 2023, and trails the wider S&P 200 average by more than 7%:
www.TradingView.com
HomeCo discusses June 2023 property valuations and developments
The company sought to update on its valuations for properties and assets over the period to June 2023 today, sharing its preliminary unaudited net findings.
The group said that it had taken a valuation impact of -$73 million, which it explained was driven primarily by 13 basis points, of cap rate expansion to 5.48% and with greater than 50% of assets independently valued in the half.
The REIT stated it has a robust operational performance trajectory, however, with 99% rent collections at 99% occupancy and leasing, which spreads 6% of year-to-date metrics.
HomeCo stated proactive leasing has resulted in more than 35% of FY24 income with a stronger focus on mixing more defensive daily needs tenants.
Its FY23 development pipeline is now 100% pre-committed, is tracking to budget, and has been chalked up to $80 million.
The company says it has maintained some strength in its balance sheet with its pro-forma gearing below the midpoint of 30–40% target range.
Operational metrics were noted as stable with foot traffic in the March quarter up 4% and annualised foot traffic up 20% higher than 2019 (pre-pandemic) levels.
The group reported that its FY23 FFO guidance will remain the same at 8.6 cents per unit, and it has decided that a distribution of 2.075 cents per unit for the quarter ended June 30 shall be declared.
This resulted in the declaration of full year FY23 distributions of 8.3 cents per unit, which is in line with company guidance.
CEO of HomeCo Sid Sharma said:
‘The modest decline in asset valuations reflects the impact of higher interest rates on capitalisation rates, however, this was partially offset by solid rental growth across the portfolio. Pleasingly, HDN’s balance sheet remains well capitalised with pro-forma gearing below the midpoint of our 30-40% target range.
‘We continue to see strong transactional pricing and liquidity for well-located daily needs assets. This is supporting our strategy to own real estate in metro locations which facilitate both in-store and online fulfilment in a cost-effective and timely manner for Australia’s leading daily needs retailers.’
Source: HDN
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Regards,
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For Money Morning
