HomeCo raising eyes aged-care pivot

HomeCo, one of the hottest floats of 2019, has unveiled a $170m raising to back the expansion of its convenience retail empire and pivot into aged-care.

Property company HomeCo, one of the hottest floats of last year, has unveiled a $170m equity raising to back the expansion of its convenience retail empire while also pivoting into the aged-care sector.

The fund, run by high-profile ex-UBS banker David Di Pilla, bought an aged-care facility in the NSW town of Erina, from interests associated with the banker, and signalled a stronger push into the area.

In February the company flagged plans to assemble and spin off a $1bn collection of health and wellness assets into a real estate investment trust.

Aged care demand is expected to surge with an additional one million people entering the over-70 cohort each decade. HomeCo said a number of development applications had been accelerated through planning systems and four healthcare and wellness centres were being developed.

The 250-bed Erina residential aged care home, north of the Sydney CBD, is run by the private Aurrum Aged Care. It was bought for about $32.59m when HomeCo paid a mix of cash and shares.

The facility will be leased back to Aurrum Aged Care for an initial period of 10 years, with two 10-year options to extend. It will be subject to a vote but has already won backing from families associated with Spotlight and Chemist Warehouse that are on the HomeCo register.

HomeCo also bought three Woolworths anchored, convenience-based neighbourhood centres from Woolworths for $127.8m, adding to its purchase of Parafield retail complex last month.

The raising was split between a $140m underwritten institutional placement via Goldman Sachs and Jarden, and a $30m non-underwritten security purchase plan, with the placement set at $2.88 a share.

The purchases will lift Funds From Operations and result in pro-forma fiscal 2021 FFO guidance of at least 15c per share. HomeCo will also declare a final fiscal 2020 dividend of 7.5c per share.

The Woolworths centres are Prestons Place in the Sydney suburb of Prestons, Vincentia Marketplace in the town of Vincentia and Rosenthal Shopping Centre in the western Melbourne suburb of Sunbury.

Each of the three properties are existing convenience-based neighbourhood centres with Woolworths supermarkets as anchor tenants.

HomeCo is acquiring a full interest in Prestons Place and ­Rosenthal Shopping Centre and an 87.4 per cent stake in the Vincentia property.

Mr Di Pilla said the acquisitions had increased daily needs and health services tenant exposure to 47 per cent of the portfolio, with HomeCo’s strategy of increasing its weighting towards hyper-convenience based retail.