HomeCo Daily Needs REIT expanded its portfolio after entering an agreement to purchase assets from its parent.
The conditional agreement will see Home Consortium Limited (HMC) sell 100 per cent interest in a portfolio of seven large format assets and one neighbourhood shopping centre to the REIT, which launched a $265 million equity raising for purchase.
The REIT, which branched from David Di Pilla’s Home Consortium at the end of last year, purchased the assets on a 6.75 per cent weighted average cap rate.
HomeCo Daily Needs REIT will outlay $266.4 million for the assets, with the raising structured as an underwritten 1-for-2.36 accelerated non-renounceable entitlement offer.
Goldman Sachs is handling the offer, which was priced at $1.295.
The seven assets include Marsden Park in New South Wales, Box Hill and South Morang in Victoria, and Upper Coomera, Bundall, Toowoomba and Mackay in Queensland.
Each of the acquisitions are subject to requisite approvals including a unit-holder vote, with the purchase expected to be complete in July 2021 – if approved.
The REIT will also enter a separate purchase of the Armstrong Creek Town Centre $55.6 million, presenting a 6.0 per cent cap rate.
HDN portfolio fund manager Paul Doherty said the acquisitions and associated equity raise are in line with the strategy to grow HDN’s portfolio of high-quality convenience-based assets in the metropolitan growth corridors of Australia’s major cities.
“The acquisition asset mix is complementary to HDN’s existing portfolio and maintains our defensive exposure across HDN’s model portfolio sub-sectors of Neighbourhood, Large Format Retail and Health & Services, ” he said.
HDN independent non-executive chairman Simon Shakesheff said the announcement builds on HDN’s strong growth trajectory since IPO.
“[The REIT] is executing on its stated strategy to provide Unitholders with consistent and growing distributions by investing in a diversified portfolio of high quality, stabilised convenience focused assets,” he said.
“The proposed acquisitions and equity raising substantially improve the quality and scale of HDN’s portfolio and are expected to deliver FFO accretion and reduced gearing. The proposed transaction demonstrates the strong alignment of interests with Home Consortium, HDN’s largest Unitholder and manager.”