HomeCo Daily Needs REIT delivered consistent earnings growth in 1H FY26, underpinned by strong operational execution and disciplined capital management. The REIT reaffirmed its FY26 guidance while progressing a substantial development pipeline valued at over $650 million.
- 1H FY26 FFO per unit up 2.3% to 4.4 cents
- Portfolio valued at $5.1 billion with >99% occupancy and rent collection
- Development pipeline exceeds $650 million targeting ~7%+ ROIC
- Pro forma gearing steady at 34.6%, mid-target range
- Sustainability leadership with fourth consecutive ESG top rating
Consistent Earnings Growth and Operational Strength
HomeCo Daily Needs REIT (HDN) has reported a solid first half for FY26, showcasing consistent earnings growth driven by operational execution and balance sheet discipline. The REIT posted funds from operations (FFO) of 4.4 cents per unit, a 2.3% increase compared to the prior corresponding period, supported by a 4.6% growth in net operating income (NOI). Occupancy and rent collection rates remain impressively high, both exceeding 99%, underscoring the resilience of HDN’s portfolio amid ongoing economic uncertainties.
Robust Portfolio and Strategic Asset Management
HDN’s portfolio is valued at approximately $5.1 billion, heavily weighted towards metropolitan east coast markets including Sydney, Melbourne, and Brisbane. The REIT maintains a diversified tenant base with around 1,350 tenants, including many of Australia’s leading retailers, and a weighted average lease expiry of 4.9 years. Active asset recycling has been a key theme, with recent disposals completed at premiums to book value, enabling reinvestment into higher-growth opportunities such as the acquisition of Warilla Grove and strategic land parcels.
Development Pipeline and Growth Prospects
HomeCo is advancing a development pipeline exceeding $650 million, targeting returns on invested capital (ROIC) of approximately 7% or higher. Key projects include expansions and new developments at Armstrong Creek, Castle Hill, Lutwyche, and Caringbah, among others. These developments are designed to enhance the REIT’s exposure to daily needs retail and last-mile infrastructure, sectors benefiting from strong consumer demand and limited new supply. The REIT has reaffirmed its FY26 guidance, targeting 9.0 cents FFO per unit and 8.6 cents distributions per unit (DPU), alongside a comparable NOI growth target of 4.0%.
Capital Management and Financial Position
HDN’s balance sheet remains robust with net tangible assets (NTA) per unit rising to $1.55, a 5.1% increase since June 2025, driven by portfolio revaluations and favourable derivative movements. Pro forma gearing stands at 34.6%, comfortably within the REIT’s target range, supported by $80 million in liquidity and a hedging program covering over 70% of drawn debt. Recent refinancing efforts have extended debt tenor and reduced margins, positioning HDN well against interest rate volatility.
Sustainability and ESG Leadership
HomeCo continues to lead in environmental, social, and governance (ESG) initiatives, securing its fourth consecutive ESG Regional Top-Rated company award from Morningstar Sustainalytics. The REIT has achieved 4 Star Green Star certifications for key developments and is progressively rolling out solar installations across feasible sites. Governance standards remain high with responsible investment policies embedded in acquisitions and ongoing commitments to social impact through partnerships and reconciliation initiatives.
Bottom Line?
With a strong balance sheet, active development pipeline, and ESG credentials, HomeCo Daily Needs REIT is well positioned to sustain growth amid evolving market dynamics.
Questions in the middle?
- How will HDN’s development pipeline perform amid potential economic headwinds?
- What impact could rising interest rates have on HDN’s cost of debt and distributions?
- How might HDN’s asset recycling strategy evolve to balance growth and portfolio quality?