HDN outlays $322m for eight retail investments

Coles occupies 3978 sqm at Armstrong Creek Town Centre.

Home Co Daily Needs REIT (HDN) is acquiring eight retail investments for $322 million.

Seven of them are coming from HMC Funds Management Limited, a wholly owned subsidiary of its parent, Home Consortium.

The final property, Armstrong Creek Town Centre, south of Geelong, was listed last April by Wel.Co.

HDN floated five months ago.

In December it paid Canberra Raiders $56m for a Bunnings-backed investment, in Sydney’s north west Seven Hills.

HMC is undertaking a $265m equity raising to fund the eight purchases announced today.

Seven Home Co centres

HDN has agreed to pay HMC $266.4m for seven Large Format Retail assets:

In Queensland, these are:

  • Home Co Bundall, at 100 Bundall Road, just west of Surfers Paradise;
  • Home Co Upper Coomera, corner of Days and Old Coach roads, at the Gold Coast’s northern outskirts;
  • Home Co Mackay, at the corner of Mackay-Bucasia and Holds roads;
  • Home Co Toowoomba South, at 471 Hume Street, Kearney Springs.

In New South Wales, the deal includes HomeCo Marsden Park.

Two of the properties are in Victoria, at Box Hill – a major activity centre often dubbed Melbourne’s second city, given its skyline – and South Morang, a north east suburb.

This portfolio’s purchase price reflects a six per cent discount to the upcoming ($283.7m) June 30, 2021, valuation.

In a statement the group said the surplus – $17.3m – will be realised by HDN unit holders in early July, 2021, which is when the deal is hoped to be completed.

“The acquisitions are subject to all requisite approvals, including an HDN Unitholder vote,” it added.

“The Notice of Meeting will be accompanied by an independent expert’s report, opining on the fairness and reasonableness of the transaction, due to the related party nature of the transaction” (story continues below).

Armstrong Creek Town Centre

In a separate deal – HDN is picking up the near new Armstrong Creek Town Centre for $55.6m.

The price reflects a six per cent core cap rate. Settlement is due later this month.

This deal will proceed regardless of the HDN unitholder vote affecting the LFR portfolio, the manager said.

Armstrong Creek is a major growth corridor; more than 24,000 vehicles a day pass the 2.07 hectare town centre at 458-540 Surf Coast Highway.

The investment contains 9755 sqm of retail – 41pc of which is occupied by Coles on an initial 15 year lease – and 441 car parks.

Colliers’ Tim McIntosh and Mike Crittenden represented Wel.Co.

The town centre forms part of a 40ha master-planned community which will contain another 75,000 sqm of retail and 1200 dwellings.

About 50,000 sqm is allocated to non-retail commercial investments, including a childcare centre and medical complexes.

HDN on growth trajectory: manager

“Today’s announcement builds on HDN’s strong growth trajectory since [the] Initial Public Offering,” HDN non-executive chairman, Simon Shakesheff, said.

“HDN 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 added.

“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.

“[They further] demonstrate the strong alignment of interests with Home Consortium, HDN’s largest unitholder and manager”.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.