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Why the HomeCo (ASX:HDN) share price is one to watch

illustration of three houses with one under a magnifying glass signifying mcgrath share price on watch
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The HomeCo Daily Needs REIT (ASX: HDN) share price is one to watch in early trade today. Shares in the Aussie real esate investment trust (REIT) are worth watching after a half-year results update and FY21 guidance upgrade.

Why is the HomeCo share price on watch?

The HomeCo Daily Needs REIT primarily invests in metro-located, convenience-based assets across neighbourhood retail, large format retail, and health & services.

The HomeCo share price is on watch this morning after the REIT released its interim report for the period ended 31 December 2020 (1H 2021).

HomeCo reported 98.7% occupancy across its portfolio, up 0.2% from October 2020. Supermarket moving annual turnover (MAT) jumped 22% with 2 supermarkets moved to turnover rent.

Annual foot traffic increased 19% on a like for like basis in the December 2020 quarter versus December 2019.

On the financial side, cash collections totalled 99% for November 2020 to January 2021 since the HomeCo REIT’s IPO.

HomeCo has now completed $104 million of acquisitions since IPO which is driving valuation and funds from operations (FFO) growth.

The Aussie REIT reported $3.1 million in FFO from the 23 November IPO to 31 December 2020. That figure came from total revenue of $6.8 million with operating earnings before interest, tax, depreciation and amortisation (EBITDA) totalling $4.1 million.

What about the updated earnings?

It’s not just the half-year update that could move the HomeCo share price in early trade. The Aussie REIT also provided updated earnings guidance for FY2021 alongside this morning’s announcement.

HomeCo upgraded FY2021 (FFO) guidance to 4.2 cents per unit this morning. That reflects a 9% increase to the PDS FY2021 FFO guidance and is the second such upgrade since the group’s November IPO.

The HomeCo share price is on watch after also upgrading net tangible assets to $1.34 per unit compared to $1.33 PDS guidance.

Foolish takeaway

Today’s half-year earnings result was limited, given it only accounted for ~40 days of operations since the REIT’s November 2020 IPO.

However, the HomeCo Daily Needs share price is one to watch after updated earnings guidance for FY2021 announced this morning.

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Motley Fool contributor Ken Hall 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.

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