HomeCo (ASX:HMC) share price rises on latest acquisitions

The Home Consortium Ltd (ASX: HMC) (HomeCo) share price is edging higher after it announced $133 million worth of property acquisitions.
The post HomeCo (ASX:HMC) share price rises on latest acquisitions appeared first on The Motley Fool Australia. –

asx shares for housing boom represented by row of miniature white paper houses with one red house

The Home Consortium Ltd (ASX: HMC) (HomeCo) share price is edging higher today. At the time of writing, shares in the diversified landlord are swapping hands for $4.65. That’s up 2.42%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.28% higher.

HomeCo comes into focus after the company announced $133 million worth of property acquisitions to seed its soon-to-be real estate investment trust (REIT), HealthCo.

Let’s take a closer look at today’s news and what it means for the HomeCo share price.

What’s affecting the HomeCo share price today?

In its statement, HomeCo advised it has purchased 3 properties for HealthCo at a combined value of $133.2 million. The includes $110 million for the purchase of a “health hub” in Morayfield on Queensland’s Sunshine Coast. The remaining $23.2 million is for the purchase of two childcare centres, one in Brisbane and one in Sydney.

HealthCo’s total portfolio value is currently $480 million with another $300 million worth of properties under due diligence.

Last month, HomeCo said it was doubling the equity raise for the proposed trust to $1 billion. The company expects HealthCo to be established by the first half of FY22.

Judging by the HomeCo share price lift, it appears that investors welcome today’s news.

Morayfield Health Hub

HomeCo says the $110 million purchase price for the Morayfield Health Hub represents a capitalisation rate of 5.4%. Services at the property include a GP clinic, pharmacy, radiologist, and allied health services. There are also childcare services at the centre.

The sale will only be approved when the vendor’s unitholders vote to approve it.

According to the company, the Sunshine Coast is one of the fastest growing regions in Australia. In 2020, the population of the region grew 1.64%, national growth was only 0.9%.

Childcare centres

HomeCo is also purchasing childcare centres in Brisbane and Sydney for the HealthCo portfolio. The Brisbane centre is located 3km from the CBD in Woolloongabba and was purchased for $13 million. The purchase price reflects a capitalisation rate of 5.5%. Childcare provider Busy Bees is the current tenant at the property.

The other centre is located in Five Dock, a suburb in Sydney’s Inner West. The sale should settle at the end of this month for a price of $10.2 million, which reflects a capitalisation rate of 5.5% as well. The current tenet is G8 Education Ltd (ASX: GEM) subsidiary, Greenwood.

Property sales

As well as acquisitions, HomeCo announced a number of property sales. In Morayfield, HomeCo sold a shopping centre for $28.4 million. The company says this figure is 3.5% higher than the property’s book value on 31 December 2020. HomeCo previously announced the sale of a shopping centre in Bathurst, NSW for $17 million.

HomeCo’s direct ownership of shopping complexes has dropped to $154.6 million. In its statement, the company says it will continue to look at asset recycling opportunities, to “deliver optimum long term security holder returns”.

Management commentary

HomeCo managing director and CEO David Di Pilla said:

We remain on track to establish HealthCo later this year and today’s update further demonstrates our ability to source high quality assets which are well suited to the model portfolio strategy we announced last month for HealthCo.

Pleasingly, we continue to execute our strategy in a capital efficient manner through active capital recycling. Our balance sheet is well capitalised with minimal debt, providing us with significant capacity to secure additional assets for HealthCo including several which are currently under due diligence.

HomeCo share price snapshot

Over the past 12 months, the HomeCo share price has increased 87.2%. Since hitting its record high of $5.25 at the end of April this year, the value of the company’s shares has fallen 12%.

Home Consortium has a market capitalisation of around $1.3 billion.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post HomeCo (ASX:HMC) share price rises on latest acquisitions appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!