Property manager and landlord HomeCo will tap investors in a $125 million fully underwritten capital raising as it seeks to diversify its portfolio into health and welfare buildings, pushing beyond its hyper-convenience shopping centre model.
The new securities, to be issued at $3.80 effectively a 2.6 per cent discount to the last close price, will be used to purchase six childcare related properties.
They include two standalone childcare centres in Melbourne, another two in Sydney, a newly constructed childcare centre and medical facility in Brisbane, and mixed use university/childcare/medical development on the Gold Coast.
HomeCo has also signed a separate $32 million deal to acquire the large format Gregory Hills Home Centre in NSW.
The acquisitions will increase HomeCo’s health, wellness and government exposure to more than $400 million in assets and provide it with the scale to start a second standalone fund in the first half of 2021.
The deal will increase HomeCo’s funds under management to $1.7 billion across 47 assets, an 87 per cent boost since it listed on the ASX in late 2019.
The new securities will be entitled to a dividend for the half year ending December 31, 2020 and will rank equally with the group’s existing ordinary stapled securities.
Under the raising, HomeCo will issue 32.9 million new securities or about 12.8 per cent of existing stapled securities. It expects trading on the new securities to start on Thursday December 10. The placement is underwritten by Goldman Sachs.
HomeCo carved out a convenience retailing niche for itself from the ashes of Woolworth’s failed Masters chain, successfully stacked malls converted from Masters sites with tenants like Woolworths, Chemist Warehouse, Dan Murphy’s, Spotlight and Anaconda.
The deal comes service stations, storage units, soaring demand for online shopping and ‘the Bunnings effect’ have allowed Australian Real Estate Investment Trusts (AREITs) stocks to show some resilience after a tumultuous year for real estate markets globally.
In the 2020 REIT survey by BDO Australia, it says AREITs saw performance slumps across the board but values held for those with logistics and warehouse units servicing huge volumes of online shopping orders, and those with community assets such as caravan parks, Bunnings properties and service station assets.
The financial consequences of COVID-19 has made it particularly challenging for some AREITs to deliver their usual strong performance.
The survey showed the industrial property category delivered the only positive return over the 12 months to June 30, 2020, generating 1.4 per cent compared with 56.2 per cent in 2019. The retail category was the poorest performing, delivering a negative 36.5 per cent return – more than double that of the previous year of a negative 12.7 per cent.
The S&P/ASX A-REIT 200 Index returned negative 22.1 per cent in FY20, underperforming the broader market index (S&P/ASX 200 Index) by negative 11.3 per cent.
Source: Thanks smh.com