Home Consortium raised $300 million for the REIT based around the strong COVID-19 theme of essential services retailing.
Prior to ringing the bell to commence trading, Home Consortium CEO David Di Pilla told The Australian Financial Review he expected a very strong debut for the Daily Needs REIT.
“There’s been a rate cut and our peers have rallied by more than 10 per cent. We also listed the REIT at a nil premium to net tangible assets.”
Mr Di Pilla said the upsized debt facility would help drive the strategy of growing assets under management, including acquiring assets from the Home Consortium balance sheet.
“We have $200 million of undrawn funding lines to make acquisitions and continue to develop our significant land bank,” Mr Di Pilla said.
“We expect strong growth from our assets”.
HomeCo boosted its portfolio to 18 malls ahead of its ASX debut, exchanging contracts to acquire the Marsden Park Shopping Centre in Logan City in southeast Queensland for $48 million, on a yield of 6.75 per cent and a weighted average lease expiry of eight years.
The acquisition will deliver a 4.5 per cent boost to its full-year earnings or funds from operations (FFO), which were forecast at just under $19 million pre-IPO. Gearing will increase to 31 per cent from 26 per cent, near the bottom end of its target range.
More than a quarter of the trust’s rental income will come from Woolworths and Coles leases, with Super Retail Group, Spotlight, IGA and Amart among the top 20 retailers by income.
“This vehicle has been very carefully constructed. A lot of thought went into it,” Mr Di Pilla said.
“It’s been diversified by [retail] sub-sectors, tenants and geography, so it should perform under all market conditions.
“Our rent collections were in the mid-90 per cents during the pandemic. The November rent collection is at 94 per cent and we expect that to get up to 98-99 per cent [by the end of the month].”