Homeco Daily Needs Reit · ASX:HDN
Homeco Daily Needs Reit — H1 FY22 Earnings Presentation
44 slides from Homeco Daily Needs Reit's earnings presentation, Feb 23, 2022
Slide 1: HY22 Financial Results Presentation (ASX Release)
Managed by HMC Funds Management Limited (ACN 105 078 635; AFSL 237257) as responsible entity of the HomeCo Daily Needs REIT (ARSN 645 086 620) ASX RELEASE 23 February 2022 HY22 FINANCIAL RESULTS PRESENTATION HomeCo Daily Needs REIT (ASX: HDN) provides the attached HY22 Financial Results Presentation
Slide 2: 1H FY22 Results Presentation
Daily Needs REIT Hills Super Centre (NSW) 1H FY22 PRESENTATION TO RESULTS PRESENTATION….. RETAIL BROKER NETWORKS 23 February 2022….…. AUSTRALIA’S LEADING DAILY NEEDS REIT
Slide 3: Acknowledgement of Country
ACKNOWLEDGEMENT HomeCo Daily Needs REIT acknowledges the Traditional OF COUNTRY Custodians of country throughout Australia and celebrates their diverse culture and connections to land, sea and community. We pay our respect to their Elders past, present and emerging and extend that respect to all Abo
Slide 4: Agenda
AGENDA 1. Highlights & Strategy Presenters 2. Portfolio Update 3. Growth Opportunities Darren Holland Sid Sharma HDN CEO-Designate HMC COO 4. ESG 5. Financial Performance 6. Fee Reduction & Outlook Lawrence Wong Will McMicking HDN CFO-Designate HMC CFO 7. Supplementary Information
Slide 5: Highlights and Strategy
Caringbah (NSW) Rosenthal (VIC) 1. Highlights and Strategy Daily Needs REIT
Slide 6: Process update and 1H FY22 results presentation format
Process update and 1H FY22 results presentation format Daily Needs REIT Merger with AVN on track to complete on time, with implementation expected 4 March 2022 Overview Key Milestones Date ▪ Merger with Aventus (AVN) on track to be implemented on 4 March 2022 Final draft ATO ruling Friday, 18 Februa
Slide 7: Merged Group pro forma 1H FY22 highlights
Merged Group pro forma 1H FY22 highlights1 Daily Needs REIT Delivering against core objective to provide consistent and growing distributions supported by 99% cash collection, positive leasing spreads and accretive developments ASSET FINANCIAL INVESTMENT MANAGEMENT 4.0 cpu 99% HDN-AVN Merger CASH CO
Slide 8: Model portfolio strategy
Model portfolio strategy Daily Needs REIT Portfolio construction designed to provide attractive total returns and protect capital HDN owns a strategic network of last mile infrastructure with latent development potential 1 Strategic Sites 2 Resilient Sub-Sectors 3 Quality Tenants ▪ National portfoli
Slide 9: Post HDN-AVN Merger strategic priorities
Post HDN-AVN Merger strategic priorities Daily Needs REIT Value-add focused development and leasing strategy to deliver enhanced total returns post merger Priorities Strategic initiatives / comment Integrate HDN & AVN ✓ Implementation on track for 4 March 2022 #1 platforms ✓ AVN team to join HMC to
Slide 10: Portfolio Update
Belrose (NSW) 2. Portfolio Update Daily Needs REIT
Slide 11: Australia's leading Daily Needs REIT
Australia’s leading Daily Needs REIT Daily Needs REIT High quality $4.4bn portfolio diversified by subsector, tenant and geography Platform Overview Tenant mix7 Rent composition7 Key portfolio metrics Neighbourhood 8% 16% Fixed Portfolio value1 $4,446m 33% 20% Large Format CPI Landbank (sqm) 2.5m sq
Slide 12: Future last mile logistics infrastructure
Future last mile logistics infrastructure Daily Needs REIT Strategic national footprint spanning 2.5 million sqm in Australia’s leading metropolitan markets and growth corridors with significant development potential Greater Sydney Greater Melbourne Greater Brisbane & Gold Coast Woy Woy Murrindindi
Slide 13: Highly defensive and diversified income streams
Highly defensive and diversified income streams Daily Needs REIT Well positioned to deliver stable and growing distributions $335 99% 84% 3.6% 73% 20% 7% Avg. rent / m2 1 Cash collection2 National tenants3 WARR3,4 Fixed CPI Supermarket Top 10 tenants – by gross income3 Portfolio subsectors – gross i
Slide 14: Portfolio remixing opportunities
Portfolio remixing opportunities Daily Needs REIT Over 80 opportunities identified to accelerate remixing towards more defensive neighbourhood and health uses Neighbourhood Health & Services #43 incremental opportunities identified #40 incremental opportunities identified Supermarket1 (#7) Liquor (#
Slide 15: Strong operational performance
Strong operational performance Daily Needs REIT Resilient and growing income streams notwithstanding ongoing presence of COVID-19 Unadjusted cash rent collection Occupancy Cash collection 99% 99% 99% 99% 99% 99% 99% 99% stable vs 30-Jun-211 for 1H FY22 Supermarket MAT Development growth Leasing Jul-
Slide 16: Growth Opportunities
Highlands (NSW) Gregory Hills Town (NSW) 3. Growth Opportunities Daily Needs REIT
Slide 17: Development strategy and future pipeline
Development strategy and future pipeline Daily Needs REIT Increased focus on unlocking development pipeline to drive enhanced FFO and NTA growth 1 MINOR DEVELOPMENT 2 MAJOR DEVELOPMENT OPPORTUNITIES OPPORTUNITIES Brownfield development and remix opportunities with CAPEX Large scale development oppor
Slide 18: FY22 brownfield developments update
FY22 brownfield developments update Daily Needs REIT >$30m of accretive developments on track to open in FY22 delivering ~10% ROIC1 Leasing Under Practical Projects Est. investment pre-commitments2 Construction Completion Opened in 1H FY22 1. Gregory Hills (NSW) ▪ 3,120 sqm GLA centre extension anch
Slide 19: Brownfield current developments update
Brownfield current developments update Daily Needs REIT FY22 brownfield developments on track to meet practical completion Gregory Hills (NSW) Gregory Hills (NSW) Penrith (NSW) Cranbourne (VIC) 17
Slide 20: FY23 target development opportunities
FY23 target development opportunities Daily Needs REIT Next wave of value enhancing development opportunities 7 >$60m >23,000m2 7.0%+ Opportunities identified Forecast investment Additional GLA Target ROIC1 Target Project commencement Development opportunity Mackay 1H FY23 First stage of multi-stage
Slide 21: FY23+ major development opportunities
FY23+ major development opportunities Daily Needs REIT Potential to accelerate larger scale opportunities across the merged portfolio Jindalee (QLD) Epping (VIC) Tuggerah (NSW) MASTERPLAN REDEVELOPMENT OPPORTUNITY Mackay (QLD) Vincentia (NSW) Richlands (QLD) DEVELOPMENT OPPORTUNITY EXISTING CENTRE H
Slide 22: 2H FY22 Acquisitions
2H FY22 Acquisitions Daily Needs REIT HMC has agreed to sell 3 assets1 to HDN at a ~5% discount to book value, demonstrating strong alignment Gregory Hills Home Centre (NSW) North Lakes (QLD) Richlands (QLD) Confidential (NSW) ▪ LFR and Services focused centre ▪ LFR centre and former Masters ▪ 14,04
Slide 23: ESG
Midlands (WA) Belrose Gregory Super HillsCentre Town (NSW) (NSW) 4. ESG Daily Needs REIT
Slide 24: Sustainability at Home Consortium
Sustainability at Home Consortium Daily Needs REIT We are committed to sustainable practices that drive long term value creation and achieve a positive impact on the communities in which we operate SIX SUSTAINABILITY COMMITMENTS ENVIRONMENTAL SOCIAL GOVERNANCE 1. CLIMATE ACTION 3. CONNECTION 5. ALIG
Slide 25: Sustainability Progress at HDN
Sustainability Progress at HDN Daily Needs REIT Leveraging HomeCo Sustainability and ESG capabilities to support long-term value creation, and the creation of Healthy Communities Progressively implementing HomeCo’s Sustainability Commitments across the HDN portfolio Climate Action and Respect and Ac
Slide 26: Financial Performance
Warners Bay (NSW) Vincentia (NSW) 5. Financial Performance Daily Needs REIT
Slide 27: Income statement
Income statement Daily Needs REIT Strong earnings growth with FFO per unit of 4.0 cents per unit (+14% vs. prior 2H FY21) $ million 1H FY21A1 1H FY22A Property NOI 5.1 44.3 ▪ HDN reported FFO of $30.6m (4.0 cents per unit) for the 1H FY22 period, increasing 38% vs pcp2 or 14% Responsible entity fees
Slide 28: Balance sheet
Balance sheet Daily Needs REIT Valuation gains across the merged group resulted in robust balance sheet post merger with total assets of $4.4bn, net assets of $2.9bn and NTA of $1.40 per unit as at Dec-211 Jun-21 Dec-21 Dec-21 Adjust.1 Dec-21 adj. $ million HDN HDN ARPF Merged1 Cash and cash equival
Slide 29: Capital management
Capital management Daily Needs REIT Investment grade credit rating received with a strong liquidity position as at Dec-21 of $205m on a merged basis Jun-21 Dec-21A Dec-21A adj. $ million adj.1 HDN Merged4 Debt summary ▪ Post the merger, HDN has secured a $1.62 billion senior Facility limit (bank deb
Slide 30: Fee Reduction & Outlook
Cranbourne (VIC) 6. Fee Reduction & Outlook Daily Needs REIT
Slide 31: Fee amendment
Fee amendment Daily Needs REIT Base management fee reduction of 5 basis points for GAV >$5bn Base management fees (bps) GAV1 ratchet Current Amended ▪ HMC has agreed to enhance HDN’s cost structure following the significant increase in the scale of the entity post the <$1.5 billion 65 65 merger with
Slide 32: Outlook and guidance
Outlook and guidance Daily Needs REIT Upgrading FY22 pro forma FFO guidance to 9.3 cpu (from 8.9 cpu) ▪ 4.5% upgrade to FY22 pro forma FFO/unit guidance of 8.9 cents outlined in the Merger booklet 9.3 cents ▪ Assumes Merger was implemented on 1-Jul-2021 (i.e. 12 month impact). FY22 PRO FORMA FFO/UNI
Slide 33: Supplementary Information
Kotara (NSW) HomeCoCastle Rosenthal (VIC) Hill (NSW) 7. Supplementary Information Daily Needs REIT
Slide 34: National portfolio
National portfolio Daily Needs REIT Critical last mile infrastructure supporting omni-channel retailing and fulfilment across Australia 21% 51 QLD: $0.9bn Properties Properties 12 Total portfolio NT Greater Brisbane 20% Portfolio value1 $4.4bn QLD Tenants >1,200 WA 12 46% SA NSW: $2.0bn 4 Properties
Slide 35: HDN journey since IPO
HDN journey since IPO Daily Needs REIT HDN has become Australia’s leading Daily Needs REIT with enhanced scale, diversification and growth prospects post the merger with AVN IPO 1H FY22 (Nov-20) pro forma Change FFO/unit 6.7cpu1 9.3cpu2 +39% Market cap ($bn) $0.6bn $2.8bn3 +335% Expect ASX200 index
Slide 36: Targeting strong total returns
Targeting strong total returns Daily Needs REIT Well positioned to deliver attractive total returns underpinned by embedded rental growth and accretive investment opportunities Indicative target annual total returns % p.a. + ~1-2% ~3% ~6% Accretive Accretive Strong Distribution Yield1 NOI Growth Dev
Slide 37: Strong portfolio revaluation gains
Strong portfolio revaluation gains Daily Needs REIT Gains underpinned by solid operational and investment market fundamentals Merged Group portfolio valuation (A$m) +$350m $4,446m $225m +$41m $4,055m $16m $125m $2,519m $25m $2,278m $1,926m $1,777m 1 2 30 June 2021 balance Capital expenditure Net val
Slide 38: Net tangible assets
Net tangible assets Daily Needs REIT Pro forma NTA of $1.40 per unit NTA per unit evolution $1.50 $0.13 $1.49 $0.08 $1.24 per unit prior to December revaluations $1.45 $1.40 $1.40 $1.36 $0.01 $1.35 $1.30 $1.25 $1.20 $1.15 $1.10 30-Jun-21 Acquisitions in 1H Dec-21 revaluations 31-Dec-21 HDN Merger wi
Slide 39: Portfolio summary metrics – HDN
Portfolio summary metrics – HDN Daily Needs REIT Site Coverage Occupancy WALE Asset State Classification GLA (sqm) Site area (sqm) Fair Value ($m) Cap rate (%) (%)1 (by area)2 (by income)3 Armstrong Creek VIC Operating 12,750 31,629 40% 100% 9.4 $89 5.00% Box Hill VIC Operating 13,866 40,475 34% 100
Slide 40: Portfolio summary metrics – AVN
Portfolio summary metrics – AVN Daily Needs REIT Site Coverage Occupancy WALE Asset State Classification GLA (sqm) Site area (sqm) Fair Value ($m) Cap rate (%) (%)1 (by area)2 (by income)3 Bankstown NSW Operating 17,535 40,240 44% 100% 4.0 $89 5.50% Belrose NSW Operating 36,594 44,265 83% 100% 2.6 $
Slide 41: Merged Group portfolio
Merged Group portfolio Daily Needs REIT Scale portfolio with significant development pipeline HDN AVN Merged Group Portfolio statistics (Dec-21) Portfolio value $1,926m $2,519 $4,446m WACR 5.34% 5.70% 5.55% WALE 7.1 years 3.4 years 5.0 years Occupancy1 99 99 99 Land size 1.3m sqm 1.2m sqm 2.5m sqm P
Slide 42: Additional financial information
Additional financial information Daily Needs REIT Statutory profit to FFO reconciliation Statutory profit to operating cash flow reconciliation $ million 1H FY22 $ million 1H FY22 Total revenue 56.9 Statutory Profit 120.6 Property expenses (15.2) Responsible entity fees (5.4) Adjustments for: Other
Slide 43: Contacts
Contacts Daily Needs REIT Investors and analysts Media Misha Mohl Will McMicking John Frey Group Head of Strategy & IR Group Chief Financial Officer Corporate communications Home Consortium Home Consortium Home Consortium +61 422 371 575 +61 451 634 991 +61 411 361 361 misha.mohl@home-co.com.au Will
Slide 44: Disclaimer
Disclaimer Daily Needs REIT This presentation (Presentation) has been prepared by HMC Funds Management Limited (ACN 106 078 635, AFSL 237 257) (Responsible Entity) as responsible entity of HomeCo Daily Needs REIT (ARSN 645 086 620). Summary information This Presentation contains summary information
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