HomeCo Daily Needs (HDN) H1 2025 earnings summary

Executive summary

• Achieved strong operational and top-line revenue performance in 1H FY25, with FFO per unit at 4.3 cents and DPU at 4.3 cents, supported by targeted asset recycling and reinvestment into high-growth metropolitan daily needs assets.

• Portfolio value reached $4.9bn, diversified by subsector, tenant, and geography, with >99% occupancy and >99% rent collection since IPO.

• Strategic asset recycling: $250m in disposals and $200m in acquisitions focused on metro daily needs assets, improving portfolio quality and cash flow resilience.

• Robust development pipeline over $650m, with $75m of pre-committed projects commenced in 1H FY25 targeting ~7%+ ROIC.

• Sustainability initiatives advanced, with solar PV at 31 sites and a 4.2 Star NABERS Energy rating portfolio average.

Financial highlights

• Property NOI grew to $142.2m in 1H FY25, up 4% YoY, with comparable NOI growth of 4% and leasing spreads of 6.1%.

• FFO was $89.9m (4.3 cents per unit), stable YoY, despite a 14% increase in net interest expense.

• NTA per unit increased to $1.45, up 1% from June 2024, driven by asset revaluations.

• Gearing at 36% as of December 2024, reducing to 34.6% pro-forma post-Logan sale, within the 30-40% target range.

• Interest coverage ratio at 3.2x, with 80% of drawn debt hedged and cost of debt at 4.7% per annum.

Outlook and guidance

• FY25 FFO guidance reaffirmed at 8.8 cents per unit (+2.3% YoY) and distribution guidance at 8.5 cents per unit (+2.4% YoY).

• Targeting $100-120m in FY25 development commencements at ~7% ROIC.

• Expect to maintain leasing spreads of 5-6% in the short to medium term.

• Directors believe the group will comply with future financial covenants and meet obligations for at least 12 months from approval date.