HomeCo Daily Needs (ASX:HDN) share price halted on acquisition and guidance upgrade news

Here’s why this share is in a trading halt…
The post HomeCo Daily Needs (ASX:HDN) share price halted on acquisition and guidance upgrade news appeared first on The Motley Fool Australia. –

The HomeCo Daily Needs REIT (ASX: HDN) share price won’t be going anywhere on Monday.

This morning the convenience retail-focused real estate investment trust (REIT) requested a trading halt.

Why is the HomeCo Daily Needs share price in a trading halt?

The HomeCo Daily Needs share price was placed in a trading halt this morning so the company could undertake a capital raising.

According to the release, the company is raising $88.3 million via a fully underwritten placement at an issue price of $1.61 per share. This represents a 3.6% discount to the current HomeCo Daily Needs share price.

Why is the company raising funds?

The company is raising capital to partially fund the acquisition of a 100% interest in six daily needs assets for a total purchase price of $222 million. This represents a weighted average acquisition capitalisation rate of 5.78%.

The release explains that these assets have 80% exposure to major national tenants. This includes retailers such as Coles Group Ltd (ASX: COL), JB Hi-Fi Limited (ASX: JBH), and Super Retail Group Ltd (ASX: SUL).

In addition, management notes that the acquisition increases exposure to strategic growth corridors and accretive brownfield development opportunities.

Another positive is the highly secure income these assets provide. This is via long weighted average lease expiries (WALE) of 7.1 years, a 99.5% occupancy rate, and a fixed WARR of 3.3%.

HomeCo Daily Needs’ Fund Portfolio Manager, Paul Doherty, commented: “The acquisitions and placement announced today are consistent with HDN’s strategy to secure high-quality daily needs focused assets which complement our model portfolio and deliver stable and growing distributions.”

“The acquisition properties were all secured off market and offer highly defensive and growing income streams via long-term leases to major national tenants, high occupancy and embedded rental growth through fixed annual rental reviews of 3.3%. Furthermore, the assets are strategically located in key growth corridors with low site coverage, which provides further upside potential from future accretive brownfield development.”

Guidance upgrade

Also potentially giving the HomeCo Daily Needs share price a boost is management’s guidance. It is expecting the acquisitions to be accretive to its funds from operations (FFO) in FY 2022.

Management is forecasting 3% accretion to its FFO per share in FY 2022. As a result, it has lifted its distribution guidance from 8 cents per share to 8.25 per share.

Based on the latest HomeCo Daily Needs share price of $1.66, this will mean a yield of 5% for investors.

The post HomeCo Daily Needs (ASX:HDN) share price halted on acquisition and guidance upgrade news appeared first on The Motley Fool Australia.

Should you invest $1,000 in HomeCo Daily Needs right now?

Before you consider HomeCo Daily Needs, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and HomeCo Daily Needs wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

4 ASX shares just got a massive boost

Analysts rate these ASX dividend shares as buys

Top broker says Coles (ASX:COL) share price is a buy
What does the future look like for the Coles (ASX:COL) share price?
2 buy-rated ASX dividend shares with attractive yields

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Super Retail Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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!