You may have missed that property business Home Consortium Ltd (ASX: HMC) sent its share price 2% higher yesterday despite the coronavirus crunch on the share market.
If you're not sure what Home Consortium is, the original idea was to transform the abandoned Masters locations and turn them into shopping centres.
What happened to Home Consortium?
The property business released its half-year result for the six months to 31 December 2019, declaring that it had delivered on its prospectus forecast.
It generated an operating profit of $12.4 million and a net loss of $2.7 million. It made $0.3 million of funds from operations (FFO) but a $8.4 million loss looking at adjusted funds from operations (AFFO). However, these numbers are skewed because of the ASX listing, refinancing and the developing & opening of centres.
Home Consortium said it had $22 million of annualised Freehold FFO for the month of December 2019. FY20 pro-forma Freehold FFO is tracking ahead of its prospectus forecast and it's increasing its guidance by 10% ahead of the forecast.
Foot traffic has increased across its centres with 2 million visits in December 2019 and 21% like for like growth in the fourth quarter.
There has been 26,000 square metres opened between the IPO and 31 December 2019 across 21 trading freehold centres with trading occupancy of 84.4% at the end of the half-year.
97% of gross lettable area (GLA) across 21 trading centres is now under a signed lease or memorandum of understanding, compared to 93.5% at IPO.
It maintained its weighted average lease expiry (WALE) at 8.5 years.
Two centres have been successfully opened since the IPO, being Hawthorn East and Keysborough in Victoria. It has also completed three leasehold acquisitions since IPO being Hawthorn East in Victoria, Upper Coomera in Queensland and Coffs Harbour in New South Wales.
Developments
The property company said that three new centres are under development with an expected ungeared 7% or more cash yield and 10 'pad' sites are in development with an expected 12% or more cash yield.
The group is targeting investment committee approval for a further three development sites.
Other initiatives
It announced a partnership with Aurrum Childcare, Aurrum has signed a heads of agreement to lease six childcare centres from HomeCo which are expected to be rolled out in FY21 and FY22, taking the total to 12 centres. Aurrum Group currently has a shareholding of over 30% of Home Consortium. HomeCo will have the opportunity to participate in the value of Aurrum Childcare via a $5 million convertible note with the ability to convert into a 50% equity interest in year five, or redeem at a coupon rate of BBSW plus 7% per annum.
Home Consortium is also considering establishing a new healthcare & wellness real estate investment trust (REIT), which would be managed by Home Consortium.
Dividend
The Board of Home Consortium declared an interim dividend of 4.5 cents per share, representing an annualised grossed-up dividend yield of 3.4%.
Outlook
Management are confident about the future and said that Freehold FFO is expected to be 10% ahead of the prospectus forecast with 99% target occupancy across its trading centres by the end of the 2020 calendar year.
