Homeco Daily Needs Reit · ASX:HDN
Homeco Daily Needs Reit — H1 FY2023 Earnings Presentation
35 slides from Homeco Daily Needs Reit's earnings presentation, Feb 20, 2023
Slide 1: 1H FY23 Results Presentation
1H FY23 Results Presentation 20 February 2023 AUSTRALIA’S LEADING DAILY NEEDS REIT
Slide 2: Acknowledgement of Country
Acknowledgement of Country HomeCo Daily Needs REIT acknowledges the Traditional 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 and present and extend that respect to all Aboriginal an
Slide 3: Agenda
Agenda. 1 Highlights & Strategy 2 Portfolio Update 3 Growth Opportunities 4 Financial Results 5 Outlook & Guidance Sid Sharma Will McMicking Andrew Dodds HDN CEO HMC Capital Corporate Finance Group CFO & IR Manager Rosenthal (VIC)
Slide 4: 1. Highlights & Strategy
Woodlea (VIC) 1. Highlights & Strategy
Slide 5: 1H FY23 Performance
1H FY23 Performance Daily Needs REIT Strong rental growth driving operational performance and valuations, offsetting the impacts of rising interest and capitalisation rates FINANCIAL ASSET MANAGEMENT INVESTMENT 4.3 cpu >99% ~$80m 1H FY23 FFO OCCUPANCY ACTIVE DEVELOPMENTS +8% increase versus 1H FY22
Slide 6: Investment Strategy
Investment Strategy Daily Needs REIT Owner and developer of strategic last mile infrastructure focused on daily needs & services Model Portfolio Construction Strong Investment Fundamentals Strategic Real Estate Infrastructure Portfolio Target Secure and growing income streams Unlocking real estate l
Slide 7: 2. Portfolio Update
Gregory Hills Town Centre (NSW) 2. Portfolio Update
Slide 8: Australia's leading Daily Needs REIT
Australia’s leading Daily Needs REIT Daily Needs REIT $4.7bn portfolio diversified by subsector, tenant and geography Platform Overview Tenant mix2 Rent growth composition2 Key portfolio metrics 4% Portfolio value $4,709m Large Format 34% Retail 21% Fixed Landbank (sqm) 2.5m sqm Neighbourhood CPI 18
Slide 9: Robust operational performance
Robust operational performance Daily Needs REIT Rental growth underpinned by strong tenant demand for both existing and new space Occupancy Cash collection >99% >99% for 1H FY231 for 1H FY23 Comp Property NOI Development Leasing +3.8% ~17,000m2 vs 31-Dec-212 11 leases in 1H FY23 Leasing spreads3 Inc
Slide 10: Portfolio resilience
Portfolio resilience Daily Needs REIT Defensively positioned with minimal exposure to discretionary retail and compelling rental growth prospects which are underpinned by favourable portfolio fundamentals and structural tailwinds >99% Occupancy1 Sector leading re-leasing spreads over 2 years3 99% 99
Slide 11: Highly defensive and diversified income streams
Highly defensive and diversified income streams Daily Needs REIT Well positioned to deliver stable and growing NOI growth $350 >99% >83% 3.8% 75% 21% 4% Avg. rent / sqm Cash collection National retailers1 WARR2 Fixed CPI Turnover linked3 Top 10 tenants – by gross income1 Portfolio subsectors – gross
Slide 12: Last Mile Fulfilment
Last Mile Fulfilment Daily Needs REIT Our strategically located infrastructure is supporting a high proportion of our tenants with their store-based fulfilment strategies for both online and in-store sales The Omni-channel Model Value of the Omni-channel Model 1 ✓ Physical store networks complement
Slide 13: Sustainability Progress at HDN
Sustainability Progress at HDN Daily Needs REIT Energy Roadmap Net Zero Progress Baseline Formed Advancing towards a green, low carbon economy & Net Zero by 2028 FY22 ✓ Solar FY23 Baseline Net Zero Target Formed ✓ Solar 50% ✓ EV Charging Solar installed across 8 sites, FY24 Reduction Rollout with an
Slide 14: Sustainability Progress at HDN – Objectives
Sustainability Progress at HDN Daily Needs Implementing HMC Capital’s Sustainability Commitments across the HDN portfolio REIT Our inaugural Sustainability Report details six sustainability ENVIRONMENTAL SOCIAL GOVERNANCE commitments towards "Creating Healthy Communities” Objectives 1. CLIMATE ACTIO
Slide 15: 3. Growth Opportunities
Daily Needs REIT Southlands Boulevarde (WA) 3. Growth Opportunities 14
Slide 16: Capital recycling
Capital recycling Daily Needs REIT Proactive asset recycling into accretive daily needs acquisitions with repositioning and development upside DISPOSALS ACQUISITIONS Sunshine Coast, QLD Epping, VIC Southlands Boulevard, WA Last Mile Logistics Fund ▪ Settled in Sep-22 ▪ Settlement expected in 4Q FY23
Slide 17: HDN development track record
HDN development track record Daily Needs Significant value created since IPO1 which has built on the successful redevelopment of the REIT original Masters portfolio Development activity since listing in Nov-20 ▪ HMC Capital has successfully delivered 50 projects spanning >500,000 sqm of GLA since ac
Slide 18: HDN development pipeline overview
HDN development pipeline overview Daily Needs REIT Accelerating value enhancing developments with future pipeline upscaled to $600m Targeting higher annual development Future development pipeline commencements ADDITIONAL ~$100M $600m+ INVESTMENT OPPORTUNITIES $80m+ $80m+ $500m+ FY23 COMMENCEMENTS WO
Slide 19: FY23 Developments
FY23 Developments Daily Needs >$80m of development projects will commence in FY23 at ~7% target ROIC1 REIT >$80m >28,000m ~7% Forecast commencements Additional GLA Target blended ROIC1 Indicative Indicative Indicative Project start date Development opportunity capex completion South Nowra Commenced
Slide 20: FY23 major development projects
FY23 major development projects Daily Needs REIT 100% pre-committed with fixed price D&C contracts significantly de-risking projects Health & Services precincts Leisure & Lifestyle precincts GLENMORE PARK SOUTH NOWRA MACKAY 100% pre-committed1 100% pre-committed1 100% pre-committed1 Construction of
Slide 21: 4. Financial Results
Daily Needs REIT Braybrook (VIC) 4. Financial Results 20
Slide 22: Funds from Operations
Funds from Operations Daily Needs REIT Delivered FFO of 4.3 cents per unit (+8% vs. 1H FY22) $ million 1H FY22 1H FY23 ▪ HDN reported Funds from Operations (FFO) of $89.4m for 1H Property NOI 44.3 124.3 FY23. The increase vs 1H FY22 was driven by the full period impact of the Aventus transaction whi
Slide 23: Balance sheet
Balance sheet Daily Needs REIT Balance sheet remains robust with low gearing and resilient asset valuations $ million Jun-22 Dec-22 ▪ Net valuation gains from investment properties were Cash and cash equivalents 23.2 20.9 relatively flat with an $11m net increase4 resulting from NOI Assets held for
Slide 24: Capital management
Capital management Daily Needs Strong liquidity of $325m and ~70% hedged debt from Jun-23 to Jun-261 REIT $ million Jun-22 Dec-22 ▪ HDN entered into $475m of forward start interest rate swap Debt summary hedges post Dec-22 commencing from Jun-23, at an Facility limit (bank debt) 1,820.0 1,820.0 aver
Slide 25: 5. Outlook & Guidance
Daily Needs REIT Victoria Point (QLD) 5. Outlook & Guidance 24
Slide 26: FY23 Outlook and guidance
FY23 Outlook and guidance Daily Needs REIT FFO and DPU guidance maintained despite higher interest costs FY23 OUTLOOK FY23 GUIDANCE 1▪ HDN reaffirms FY23 FFO/ unit and DPU guidance of 8.6 cents and 8.3 cents, respectively. Key guidance assumptions include: 8.6 cents FY23 FFO/unit1 – 3.8% comparable
Slide 27: 6. Supplementary Information
Daily Needs REIT Castle Hill (NSW) 6. Supplementary Information 26
Slide 28: National portfolio
National portfolio Daily Needs REIT Critical last mile infrastructure supporting omni-channel retailing and fulfilment across Australia 20% 53 QLD: $0.9bn Properties1 Properties1 12 Total portfolio NT Greater Brisbane 17% Portfolio value $4.7bn QLD Tenants >1,200 WA 12 47% SA NSW: $2.2bn 4 Propertie
Slide 29: HDN Owns Strategic Last Mile Infrastructure
HDN Owns Strategic Last Mile Infrastructure Daily Needs Strategic footprint spanning 2.5m sqm in Australia’s leading metropolitan markets & growth REIT corridors Greater Melbourne Greater Sydney Greater Brisbane & Gold Coast Murrindindi Woy Woy Rosenthal Coral Sea McGraths Hill (APS1) Sunshine Coast
Slide 30: Last Mile Fulfilment
Last Mile Fulfilment Daily Needs ~77%1 of HDN’s tenants are using their existing store network for omni-channel fulfilment REIT Click & Collect In-Store Fulfilment Supermarkets LFR - Automotive Direct to Boot & Pick Up - Woolworths Hawthorn In-store Fulfilment - Repco Penrith ▪ Direct to Boot and Pi
Slide 31: Investment in HMC Capital's Last Mile Logistics (LML) Fund
Investment in HMC Capital’s Last Mile Logistics (LML) Fund Daily Needs REIT Strategic investment in complementary strategy that provides future growth optionality LML Fund overview Rationale ▪ Acquire core plus transition assets with upside via repositioning STRATEGIC INVESTMENT Investment strategy
Slide 32: Additional financial information
Additional financial information Daily Needs REIT Statutory profit to FFO reconciliation $ million 1H FY23 Total revenue 166.5 Share of profits from associates – APS1 0.2 Property expenses (41.5) Investment management fees (8.9) Other corporate expenses (1.6) Operating EBITDA 114.7 Fair value moveme
Slide 33: Portfolio summary metrics
Portfolio summary metrics Daily Needs REIT Occupancy WALE Asset State GLA (sqm) Site area (sqm) Site Coverage (%)1 Fair Value ($m) Cap rate (%) (by area)2 (by income)3 Operating Armstrong Creek VIC 9,657 20,650 47% 97% 8.6 74 5.00% Armstrong Creek PAD VIC 2,882 10,929 26% 100% 7.6 24 4.25% Ballarat
Slide 34: Contacts
Contacts Daily Needs REIT Investors and analysts Media Andrew Dodds Sid Sharma John Frey HMC Capital HDN CEO Corporate Communications Corporate Finance & IR Manager +61 423 810 851 +61 434 361 318 +61 411 361 361 andrew.dodds@hmccapital.com.au sid.sharma@hmccapital.com.au john@brightoncomms.com.au A
Slide 35: 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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