HomeCo ramps up funds management with health property next up

Property group Home Consortium is stepping up efforts to become a funds manager capitalising on daily shopping and medical needs.

Home Consortium CEO David Di Pilla. Picture: Peter Clark

Property group Home Consortium, once known for converting former Masters stores into shopping outlets, is stepping up efforts to become a funds manager capitalising on daily shopping and medical needs.

The company spun off a supermarket owning trust last year and when releasing its half year results on Wednesday flagged that it hopes to eventually grow its medical fund holdings to $2bn.

To get there it will spin off a trust of medical and government assets that could amount to about $500m, with HomeCo running a dual track process that could see either a float or an unlisted fund being created.

Chief executive David Di Pilla has made running funds a bigger part of its overall $1.8bn business that is backed by his own Aurrum Group, the founders of Spotlight, Chemist Warehouse and the Besen family.

High-profile banker Matthew Grounds, the Oatley family and Aussie Home Loans founder John Symond have also backed ­HomeCo.

Mr Di Pilla said that COVID meant that the “daily migration” into the city had probably reduced as people were spending more time at home meeting their needs in a more convenient manner.

HomeCo is shifting towards becoming a capital light manager with minimal balance sheet debt and higher return on invested capital.

It fell to a first half loss of $34.6m but a better metric for the company was its funds from operations of $18.7m. HomeCo shares fell 9c to $3.73.

The HomeCo Daily Needs REIT it spun off last November has outperformed and it said the health company process was targeting a first close in this half.

That fund is to be seeded with about $350m of assets and is receiving good interest from investors keen on healthcare, wellness and government-exposed assets.

HomeCo said that in this financial year it would generate funds from operations guidance of no less than $35m, equating to 12.9c per security, reaffirming the 4 per cent upgrade given last December.

The company said it had $200m of liquidity available to deploy to grow its funds management business. HomeCo said its distribution policy was expected to “evolve” as it shifted more into funds management where it may reinvest if it can drive returns above the cost of capital.