HomeCo readies $800 shopping centre spinoff

Retail landlord HomeCo is defying the coronavirus pandemic by spinning off an $800m trust.

HomeCo has redeveloping sites once used by failed hardware chain Masters.

Retail property owner and funds manager Home Consortium says its on track to spin off its new $800m HomeCo Daily Needs REIT via an in-specie distribution.

The shopping centre trust will comprise a portfolio of stabilised, convenience-based assets targeting consistent growing distributions and could also seek to raise close to $300m.

The company tapped some of the country’s wealthiest families when it snapped up the ex-Masters hardware properties for about $725m in 2016, and it redeveloped the best sites into shopping centres before a successful float last year. It is now turning into a fund manager hoping tap appetite for yield investments.

Buying shopping centres as the coronavirus pandemic and an accelerating shift to e-commerce rip through the sector may appear counter-intuitive but convenience retailing and large format centres have proven their resilience.

Wealthy investors are already backing HomeCo’s brand of daily needs retailing, with investors in the main stock including HomeCo executive chairman David Di Pilla’s own Aurrum Group of investors joined by the founders of Spotlight, Chemist Warehouse, and the Besen family.

Former UBS banker Matthew Grounds, the Oatley family and Aussie Home Loans founder John Symond also went into the HomeCo float last year.

The HomeCo Daily Needs REIT will list in late November, making it the only the property float of a tumultuous year in which the sector was hit by the pandemic and related restrictions.

HomeCo said it intends that the HomeCo Daily Needs REIT undertake an equity raising at the time of its ASX listing but did not disclose its size.

It has tapped ex-Stockland and investment banking heavyweight Simon Shakesheff as independent chairman and former Westfield executive Simon Tuxen as independent director for the new trust.

Goldman Sachs and Macquarie Capital are financial advisers and joint lead managers on the transaction. Morgans Financial and Ord Minnett are joint lead managers, with institutions being sounded this week.

The fund will also buy two Sydney neighbourhood centres as seed assets in the new REIT, taking total assets under management of the vehicle to about $800m.

It has entered into a binding contract to acquire Glenmore Park Town Centre and agreed terms to a contract to acquire a second Sydney metropolitan neighbourhood centre for a total of about $220m.

The deal, flagged by The Australian, will bolster the trust‘s income profile. Glenmore Park Town Centre is a Woolworths, Coles and Aldi anchored centre with over 40 per cent of income from supermarkets and about 30 per cent derived from healthcare and wellness services. The centre is 20km north of the new Badgerys Creek airport.

The other Sydney centre is a Woolworths anchored with gross income from supermarkets and health and wellness services.

Mr Di Pilla said the proposed REIT was “consistent with HomeCo’s stated own, develop and manage strategy and establishes the platform for HomeCo to unlock additional value and growth through further capital recycling and ongoing management fee streams from assets under management”.