HomeCo Daily Needs (ASX:HDN) share price halted for placement and major acquisition

Here's what this property company is buying…

| More on:
two businessmen shake hands amid a backdrop of tall buildings, indicating a share price movement or merger between ASX property companies

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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

This morning the convenience-focused retail property company's shares were placed in a trading halt.

Why is the HomeCo Daily Needs share price halted?

The HomeCo Daily Needs share price was halted this morning after it announced a new acquisition and accompanying placement.

According to the release, the company has acquired Town Centre Victoria Point in Queensland for a total purchase price of $160 million. This price represents a fully leased yield of 4.75%.

The release advises that Town Centre Victoria Point is anchored by highly productive major national and ASX-listed tenants. These include Woolworths Group Ltd (ASX: WOW), Bunnings, Healius Ltd (ASX: HLS), and Endeavour Group Ltd (ASX: EDV).

Management notes that the acquisition is aligned to its target model portfolio of 60% Neighbourhood, 22% Large Format Retail, and 18% Health & Services.

Placement

In order to fund the acquisition, the company is undertaking a fully underwritten institutional placement to raise $70 million at an issue price of $1.45 per new share. This represents a discount of just 3% to its last close price.

Positively, management expects the acquisition to be immediately accretive to earnings in FY 2022. Furthermore, it notes that its balance sheet gearing is expected to be at the mid-point of target 30–40% gearing range post-transaction.

Another positive is that, post-transaction, management sees increased potential for inclusion in both the S&P/ASX 300 Index and FTSE EPRA NAREIT's Global Real Estate Index at the September 2021 rebalance.

Fund Portfolio Manager Paul Doherty said: "Opportunities to acquire an asset of this quality and scale are rare, particularly one which complements our strategy and existing portfolio so strongly. This well-located flagship convenience property is anchored by high quality, strongly performing tenants on long term leases with attractive organic growth. In addition, the property offers significant long-term potential to drive enhanced returns through development by capitalising on the property's significant expansion potential."

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 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.

More on Mergers & Acquisitions

two men in business suits sit across from each other at a table with a chess board on it. Both hold their hands to their chins and look down in serious contemplation of their next move.
Resources Shares

'Not ruled out': Could BHP still buy Anglo-American?

This mega-deal might not be as dead as it looks.

Read more »

Happy couple looking at a phone and waiting for their flight at an airport.
Travel Shares

Flight Centre share price higher on acquisition news

The travel agent is betting big on cruises. Here's what you need to know.

Read more »

A young woman with her mouth open and her hands out showing surprise and delight as uranium share prices skyrocket
Consumer Staples & Discretionary Shares

Myer and Premier Investments shares jump on huge merger news

The two retailers are combining some of their operations. Let's dig deeper into the plan.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

Guess which $9 billion company is acquiring another ASX stock

This big fish is looking to acquire a small fish in a $45 million deal.

Read more »

Two male ASX investors and executives wearing dark coloured suits sit at a table holding their mobile phones discussing the highest trading ASX 200 shares today
Mergers & Acquisitions

TPG Telecom shares rise on $5.2b asset sale to Vocus

The telco is unlocking value by divesting assets. Here's what's happening.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Technology Shares

Why are Appen shares sinking today?

Let's see what is going on with this high-flying tech stock today.

Read more »

A silhouette shot of two business man shake hands in a boardroom setting with light coming from full length glass windows beyond them.
Mergers & Acquisitions

Rio Tinto share price rises on $10b Arcadium Lithium takeover deal

Management believes the deal makes it a global leader in energy transition commodities.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Mergers & Acquisitions

Arcadium Lithium shares rocket 46% on Rio Tinto takeover approach

The mining giant could soon become the third largest lithium supplier.

Read more »