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.
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.”