HomeCo Daily Needs (HDN) H1 2025 earnings summary

Executive summary

• Achieved strong top-line revenue growth in H1 FY25, with FFO per unit up 1.3% YoY and DPU up 2.5% YoY, and a profit of $116.8 million, reversing a prior loss, driven by fair value gains and lower unrealised losses.

• Portfolio value reached $4.8bn, diversified by subsector, tenant, and geography, with occupancy and rent collection both above 99%.

• Strategic asset recycling and acquisitions focused on high-growth metro areas, with $250m in disposals and $200m in acquisitions.

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

• Board changes included the retirement of Foundation Director Greg Hayes and appointment of Zac Fried.

Financial highlights

• Property net income for H1 FY25 grew 4% to $142.2 million, with comparable NOI growth of 4% and leasing spreads of 6.1%.

• FFO was $89.9 million (4.3 cents per unit), flat YoY, and DPU was 4.3 cents, up 2.5% YoY.

• Net tangible assets per unit were $1.45 at 31 December 2024, up from $1.44 at 30 June 2024, driven by valuation growth.

• Gearing at 36.0% (reducing to 34.6% pro-forma), within the 30-40% target range.

• Cash collection and occupancy both above 99%.

Outlook and guidance

• FY25 FFO guidance reaffirmed at 8.8 cents per unit and distributions at 8.5 cents per unit, with a focus on capital recycling and defensive daily needs assets.

• Targeting 4% comparable NOI growth and $100-120 million in annual development commencements at ~7% ROIC.

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