HomeCo Daily Needs REIT Posts $142M Valuation Gain, Confirms FY25 Distribution
HomeCo Daily Needs REIT has recorded a $142 million preliminary valuation gain for the June 2025 quarter, driven by income growth and cap rate tightening, while reaffirming its full-year distribution guidance.
- Preliminary unaudited portfolio valuation up 3.0% to $4.96 billion
- $142 million valuation gain driven by net operating income growth and cap rate tightening
- Quarterly distribution declared at 2.125 cents per unit with DRP activated at no discount
- FY25 distribution per unit guidance confirmed at 8.5 cents
- Strong balance sheet with gearing within 30-40% target range
Robust Valuation Growth Amid Market Stability
HomeCo Daily Needs REIT (HDN) has reported a preliminary unaudited valuation increase of $142 million, representing a 3.0% uplift on its portfolio value as at 30 June 2025. This brings the total portfolio valuation to approximately $4.96 billion, underscoring the REIT's steady growth trajectory in a competitive real estate market.
The valuation gain is primarily attributed to strong net operating income growth complemented by a modest tightening of capitalization rates to 5.56%, which collectively contributed an $80 million net valuation increase. Additionally, $63 million was invested in capital expenditure, largely development-related, signaling ongoing asset enhancement efforts.
Valuation Methodology and Portfolio Insights
Of the 48 properties in HDN's portfolio, 25% by book value underwent independent valuation, showing a gross increase of 3.1% and a net increase of 2.2%. The remaining 75% were internally valued, with gross and net increases of 2.9% and 1.5%, respectively. This balanced approach reflects both market validation and internal confidence in asset performance.
HDN's portfolio spans key metropolitan growth corridors across Sydney, Melbourne, Brisbane, Perth, and Adelaide, focusing on convenience-based assets such as neighbourhood retail, large format retail, and health and services. The REIT also maintains a strategic stake in the Last Mile Logistics unlisted fund, targeting essential last mile infrastructure assets.
Distribution and Financial Guidance
For the quarter ended 30 June 2025, HDN declared a distribution of 2.125 cents per unit, with the Distribution Reinvestment Plan (DRP) activated at no discount, offering unitholders a flexible income reinvestment option. The REIT reaffirmed its full-year FY25 distribution per unit guidance at 8.5 cents and funds from operations (FFO) per unit guidance at 8.8 cents, maintaining a consistent outlook for income stability.
Financially, HDN continues to demonstrate prudent balance sheet management, with gearing positioned at the midpoint of its 30-40% target range. This conservative leverage stance supports both growth initiatives and resilience amid market fluctuations.
Looking Ahead
While these preliminary valuations remain subject to audit, the results reinforce HomeCo Daily Needs REIT’s position as Australia’s leading daily needs REIT, delivering steady income and capital growth. Investors will be watching closely for the audited figures and the impact of ongoing capital expenditure on future earnings and portfolio quality.
Bottom Line?
HomeCo’s solid valuation gains and reaffirmed guidance set a confident tone, but the audited results will be key to confirming this momentum.
Questions in the middle?
- How will the audited valuation figures compare to these preliminary estimates?
- What impact will the $63 million capital expenditure have on future income streams?
- How might market conditions affect HDN’s cap rates and valuation trajectory in the coming quarters?
