HomeCo Reports $219M Valuation Gain, Refinances $810M Debt with Margin Cut
HomeCo Daily Needs REIT has reported a $219 million preliminary valuation gain alongside a strategic refinancing of $810 million in debt, reaffirming its FY26 distribution guidance amid strong portfolio fundamentals.
- Preliminary unaudited portfolio valuation gain of $219 million (+4.5%)
- Refinanced $810 million debt due July 2026, extended to July 2028 with margin improvement
- Quarterly distribution declared at 2.15 cents per unit
- FY26 distribution per unit and funds from operations guidance reaffirmed
- Portfolio maintains high occupancy and rent collection rates above 99%
Robust Valuation Growth
HomeCo Daily Needs REIT (ASX, HDN) has announced a preliminary unaudited gross valuation gain of $219 million as of 31 December 2025, representing a 4.5% increase over the portfolio value at 30 June 2025. This marks the fourth consecutive period of positive revaluation gains, underscoring the resilience of its daily needs retail assets. The uplift was primarily driven by strong net operating income growth and a modest tightening of capitalization rates by 5 basis points to 5.51%.
Strategic Debt Refinancing
In a move that signals lender confidence, HDN successfully refinanced $810 million of debt originally maturing in July 2026, extending the maturity to July 2028. The refinancing also achieved a margin improvement of 42.5 basis points, enhancing the cost of capital for the REIT. Approximately 70% of the debt is hedged until December 2026, providing stability amid market fluctuations.
Distribution and Guidance
The REIT declared a quarterly distribution of 2.15 cents per unit for the period ending 31 December 2025. Importantly, HomeCo reaffirmed its full-year FY26 distribution per unit guidance of 8.6 cents and funds from operations (FFO) guidance of 9.0 cents per unit. This consistency reflects confidence in the portfolio’s operational performance and income stability.
Portfolio Strength and Market Position
HomeCo Daily Needs REIT’s portfolio spans 46 properties valued at approximately $5.1 billion, concentrated in Australia’s major metropolitan growth corridors including Sydney, Melbourne, Brisbane, Perth, and Adelaide. The REIT benefits from high occupancy rates and rent collection exceeding 99%, supported by a tenant base focused on non-discretionary daily needs retail. This sector’s defensive characteristics continue to attract investor demand, underpinning the REIT’s valuation gains and operational metrics.
Looking Ahead
With a strong balance sheet maintained at gearing levels within the targeted 30-40% range, and a successful refinancing that extends debt maturity and reduces costs, HomeCo Daily Needs REIT appears well-positioned to navigate the evolving retail property landscape. The reaffirmed guidance and steady distributions will be closely watched by investors seeking reliable income streams in a competitive market.
Bottom Line?
HomeCo’s latest results reinforce its position as a resilient daily needs retail landlord, but upcoming audited figures and market conditions will test its momentum.
Questions in the middle?
- How will the REIT’s valuation gains hold up once audited figures are released?
- What impact will the extended debt maturity and margin improvement have on future earnings?
- Can HomeCo sustain high occupancy and rent collection amid changing retail dynamics?
