HomeCo Daily Needs REIT has reported a robust half-year result, doubling its profit to $243.5 million driven by significant fair value gains on its property portfolio, while maintaining stable distributions to unitholders.
- Profit after tax more than doubles to $243.5 million
- Revenue rises 6% to $190.4 million
- Funds from operations (FFO) increase modestly to $92.4 million
- Stable interim distribution of 4.3 cents per unit declared
- Refinanced debt facilities extending maturities to 2028 and beyond
Strong Financial Performance Amid Market Stability
HomeCo Daily Needs REIT (ASX – HDN) has delivered a standout half-year performance for the six months ending 31 December 2025, with profit after tax soaring to $243.5 million, more than doubling the $116.8 million reported in the prior corresponding period. This impressive growth was primarily underpinned by a substantial $151.8 million net fair value gain on investment properties and financial assets, reflecting favourable market conditions and effective portfolio management.
Revenue from ordinary activities increased by 6% to $190.4 million, supported by higher property income and a modest rise in share of profits from equity-accounted investees. Funds from operations (FFO), a key measure of underlying earnings, edged up to $92.4 million or 4.4 cents per unit, indicating steady operational performance despite rising finance costs.
Portfolio and Capital Management
The REIT’s property portfolio remains robust, valued at $5.0 billion across 45 daily needs assets nationwide, slightly down from 46 assets due to strategic disposals and joint venture transactions. The weighted average capitalisation rate tightened slightly to 5.5%, signalling sustained investor demand for quality retail property assets.
Capital management initiatives included refinancing key debt facilities, extending maturities to July 2028 and beyond, and maintaining a gearing ratio of 35.2%. The group continues to comply with all financial covenants, supported by a cash balance of $25.4 million and undrawn debt facilities, ensuring financial flexibility amid evolving market conditions.
Distributions and Unitholder Returns
HomeCo declared stable interim distributions totaling 4.3 cents per unit for the half-year, consistent with the prior period. The distribution reinvestment plan (DRP) remained active with no discount applied, allowing unitholders to reinvest distributions into new units at prevailing market prices. During the period, nearly 1.9 million units were issued under the DRP, reflecting ongoing investor confidence.
The REIT’s management highlighted no significant changes in the state of affairs during the half-year and confirmed no material events post-reporting period that would impact future operations. The financial statements were reviewed by KPMG with an unqualified opinion, underscoring the reliability of the reported results.
Looking Ahead
While the strong fair value gains have boosted reported profit, these are non-cash and subject to market fluctuations. The modest growth in FFO and stable distributions suggest a cautious but positive outlook. Investors will be watching closely how HomeCo navigates potential changes in property valuations and interest rates in the coming months.
Bottom Line?
HomeCo’s solid half-year results set a confident tone, but the sustainability of profit growth hinges on future property market dynamics.
Questions in the middle?
- How sustainable are the recent fair value gains amid changing market conditions?
- What impact will rising interest rates have on HomeCo’s finance costs and distributions?
- How will the new joint venture investments contribute to future earnings?