Homeco Daily Needs Reit · ASX:HDN
Homeco Daily Needs Reit — H1 2024 Earnings Presentation
33 slides from Homeco Daily Needs Reit's earnings presentation, Feb 16, 2024
Slide 1: 1H FY24 Results Presentation
1H FY24 Results Presentation 16 February 2024
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 Results Overview 2 Portfolio Update 3 Growth Opportunities 4 Financial Results 5 Outlook & Guidance Sid Sharma Will McMicking Paul Doherty HMC Capital HMC Capital HDN Fund Head of Real Estate Group CFO Portfolio Manager & HDN CEO Rosenthal (VIC)
Slide 4: Results Overview
Hawthorne East (VIC) Results Overview
Slide 5: 1H FY24 Performance
1H FY24 Performance Daily Needs REIT Period of active capital recycling and strong underlying NOI growth driven by improved leasing fundamentals, CPI-linked income and development completions FINANCIAL ASSET MANAGEMENT INVESTMENT 4.3 cpu >99% $302m TRADITIONAL LFR ASSET DISPOSALS5 1H FY24 FFO OCCUPA
Slide 6: Investment strategy
Investment strategy Daily Needs REIT Owner and developer of strategic last mile infrastructure focused on daily needs & services MODEL PORTFOLIO STRONG INVESTMENT ACCRETIVE DEVELOPMENT STRATEGIC REAL ESTATE CONSTRUCTION FUNDAMENTALS PIPELINE INFRASTRUCTURE Portfolio Target $380/sqm $600m+ ~13m peopl
Slide 7: 2. Portfolio Update
Leppington (NSW) 2. Portfolio Update
Slide 8: Property portfolio summary
Property portfolio summary Daily Needs REIT $4.7bn portfolio diversified by subsector, tenant and geography Platform Overview Tenant mix Rent composition Key portfolio metrics Large Format 10% Portfolio value $4,678m 36% Retail Fixed Neighbourhood 20% Landbank (sqm) 2.5m sqm CPI 17% Health & 47% 70%
Slide 9: Robust operational performance
Robust operational performance Daily Needs REIT Strengthening operational performance underpinned by tenant demand for omni-channel last-mile infrastructure in Australia’s leading growth corridors 1 Occupancy Cash collection CompProperty Comp PropertyNOI NOI STRONG RENT COLLECTION AND GROWTH ✓ >99%
Slide 10: Highly defensive and diversified income streams
Highly defensive and diversified income streams Daily Needs REIT High quality and diversified portfolio delivering secure and growing cash flow $380 >83% 3.8% 70% 20% 10% Avg. rent / sqm1 National retailers2 WARR3 Fixed CPI Supermarket4 Top 10 tenants – by gross income2 Portfolio subsectors – gross
Slide 11: Sustainability Achievements
Sustainability Achievements Daily Needs Implementing HMC Capital’s Sustainability Commitments across the HDN portfolio REIT Environmental Social Governance ✓ On track with Net Zero Energy Roadmap ✓ 50% gender diversity achieved ✓Awarded 2024 ESG Regional Top-Rated targets with 30% reduction in Scope
Slide 12: Sustainability Progress
Sustainability Progress Daily Needs REIT Net Zero Energy Roadmap Net Zero Progress Baseline Formed Advancing towards a green, low carbon economy & FY22 Net Zero by 2028 FY23 ✓ Solar Baseline Formed ✓ Solar Net Zero Target Solar PV active in 50% ✓ EV Charging 10 sites, with an FY24 Reduction Rollout
Slide 13: 3. Growth Opportunities
Daily Needs REIT Glenmore Park (NSW) 3. Growth Opportunities 12
Slide 14: $463m of accretive capital recycling in 1H FY24
$463m of accretive capital recycling in 1H FY24 Daily Needs REIT Acquisition of 2 brand new daily needs assets in high growth Western Sydney locations funded by the disposal of traditional LFR assets in-line with book value Disposals Acquisitions Property State Settlement Sale proceeds Kellyville, N
Slide 15: HDN development pipeline overview
HDN development pipeline overview Daily Needs REIT $600m value accretive development pipeline remains key long-term embedded growth driver for HDN HDN Development pipeline evolution Pipeline continues to offer compelling risk ✓x adjusted returns >$600m >$500m Accelerating remixing towards more ✓x de
Slide 16: Development projects remain on track
Development projects remain on track Daily Needs 100% pre-committed1 tenant demand-led development strategies expected to achieve ~7% ROIC REIT 2 & valuation uplift of ~$15m Glenmore Park, NSW Mackay, QLD Gregory Hills Home, NSW 4 level Health & Services precinct anchored by Construction of addition
Slide 17: Near term value enhancement strategies
Near term value enhancement strategies Daily Needs REIT Example of repeatable & high ROIC strategy which is expected to drive incremental portfolio gains Southlands Boulevarde (WA) ▪ Rare triple supermarket anchored centre with development upside 1 ACQUIRED IN FY23 ▪ Acquisition price of $92.5m, rep
Slide 18: FY24 development opportunities
FY24 development opportunities Daily Needs Target >$120m of FY24 commencements at ~7% ROIC1 will be assessed against preference to REIT maintain balance sheet strength and other opportunistic capital deployment initiatives Development Opportunities Project Description GLA (sqm) Cranbourne (VIC) Leis
Slide 19: 4. Financial Results
Daily Needs REIT Gregory Hills (NSW) 4. Financial Results 18
Slide 20: Earnings summary
Earnings summary Daily Needs REIT 1H FY24 FFO of 4.3 cents per unit $ million 1H FY23 1H FY24 Property NOI 129.1 136.1 Distribution from equity-accounted investees 0.2 1.0 ▪ Strong comp NOI Growth of 4.0% driven by re-leasing spreads of 6.4%, weighted average rent reviews of 3.8% driven by higher CP
Slide 21: Balance sheet
TBU Balance sheet Daily Needs REIT Resilient portfolio valuation provides platform for continued asset recycling and organic growth $ million Jun-23 Dec-23 Cash and cash equivalents 16.2 14.6 ▪ HDN has a robust balance sheet at Dec-23 with net assets of $3.0bn and gearing of 34.3% Assets held for sa
Slide 22: Capital management
Capital management Daily Needs REIT Strong liquidity of $212m and 92% hedged debt $ million Jun-23 Dec-23 ▪ Dec-23 gearing of 34.3% is at the lower end of the target Debt summary gearing range of 30-40% Facility limit (bank debt) 1,820.0 1,820.0 ▪ Hedged debt of 92.4%, which provides strong interest
Slide 23: 5. Outlook & Guidance
Daily Needs REIT Gregory Hills Town Centre (NSW) 5. Outlook & Guidance 22
Slide 24: FY24 Outlook and guidance
FY24 Outlook and guidance Daily Needs REIT FFO/unit & DPU guidance reaffirmed FY24 OUTLOOK FY24 GUIDANCE ▪ Strong top-line revenue growth underpinned by high quality and defensive cash flows ROBUST RENTAL GROWTH OUTLOOK ▪ Portfolio continuing to achieve retail sector leading leasing metrics ▪ Target
Slide 25: 6. Supplementary Information
Daily Needs REIT Belrose (NSW) 6. Supplementary Information 24
Slide 26: National portfolio
National portfolio Daily Needs REIT Critical last mile infrastructure supporting omni-channel retailing and fulfilment across Australia 20% 51 QLD: $0.9bn Properties1 12 Properties1 Total portfolio Greater Brisbane & NT 18% Portfolio value $4.7bn Gold Coast QLD Tenants >1,200 WA 12 50% SA NSW: $2.3b
Slide 27: 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 corridors REIT with 80% of assets located in capital cities Greater Melbourne Greater Sydney Greater Brisbane & Gold Coast Murrindindi Woy Woy Rosenthal
Slide 28: Strengthening operational metrics
Strengthening operational metrics Daily Needs Tenants increasingly recognise the value of HDN’s strategic last mile real estate REIT OCCUPANCY1 CASH RENT COLLECTION RELEASING SPREADS Underpinned by exposure to predominantly national tenant base, metropolitan locations and Consistently collecting 99%
Slide 29: Strengthening retailer performance
Strengthening retailer performance Daily Needs REIT Profitability across major tenants remains robust post-COVID SALES CAGR (FY19-FY23)1 GROSS PROFIT MARGIN (FY19-FY23)1 FY19 Margin FY23 Margin 63.5% % Expansion 17.3% 0.6% 8.8% 46.2% 7.9% 1.1% 62.9% 5.4% 4.5% 3.9% 28.1% 45.1% (0.6%) 26.4% 1.6% 22.7%
Slide 30: Additional financial information
Additional financial information Daily Needs REIT Statutory profit to FFO reconciliation Portfolio value to balance sheet reconciliation $ million 1HFY23 1HFY24 Jun-23 Dec-23 $ million Property income 166.5 178.7 Portfolio valuation 4,677.0 4,677.7 Share of (loss)/profit of equity-accounted investee
Slide 31: 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 12,539 59,709 21% 97% 7.4 108 5.13% Ballarat VIC 20,099 52,084 39% 100% 4.1 57 6.00% Bankstown NSW 17,
Slide 32: Contacts
Contacts Daily Needs REIT Investors and analysts Media Andrew Dodds Sid Sharma John Frey HMC Capital HMC Capital Corporate Communications Corporate Finance & IR Manager Head of Real Estate +61 423 810 851 +61 434 361 318 +61 411 361 361 andrew.dodds@hmccapital.com.au sid.sharma@hmccapital.com.au joh
Slide 33: 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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