HomeCo Reports $250M Profit, 3% Revenue Growth, and 8.5c Distributions

Strong Financial Performance

HomeCo Daily Needs REIT has delivered a standout financial result for the year ended 30 June 2025, reporting a profit after tax of $250.3 million, a remarkable 205% increase from $82.0 million in the prior year. This surge was primarily driven by a $85 million net gain in fair value adjustments on assets and liabilities, reversing the previous year's net loss of $84.4 million. Revenue from ordinary activities rose modestly by 3% to $365.7 million, reflecting steady growth in property income.

Operational Metrics and Distributions

The REIT’s funds from operations (FFO), a key measure of underlying earnings, increased slightly to $182.5 million or 8.76 cents per unit, up from $178.1 million or 8.57 cents per unit in 2024. This improvement was supported by higher property income, offset by increased interest expenses. Importantly, HomeCo maintained consistent quarterly distributions of 2.125 cents per unit, totaling 8.5 cents for the year, all declared and paid or payable with no discount applied to the distribution reinvestment plan (DRP), underscoring the REIT’s commitment to delivering stable income to unitholders.

Portfolio and Capital Management

At year-end, the portfolio comprised 46 daily needs assets across Australia valued at $4.83 billion, up from $4.61 billion the previous year. The weighted average capitalisation rate remained stable at 5.6%, indicating sustained market confidence in the portfolio’s quality. The group’s gearing ratio was maintained at a prudent 35.2%, with $1.76 billion in drawn debt and $107.9 million in cash and undrawn facilities. Notably, the REIT successfully refinanced key debt facilities, extending maturities to between 2026 and 2030, and maintained interest rate hedging on $1.425 billion of debt to mitigate exposure to rising rates.

Governance and Sustainability

Governance remained robust with an experienced board overseeing operations, including recent director changes that saw the appointment and resignation of a non-executive director during the year. The REIT continues to align its sustainability initiatives with global frameworks such as the United Nations Principles for Responsible Investing (UNPRI) and the Global Real Estate Sustainability Benchmark (GRESB), reflecting a commitment to environmental, social, and governance (ESG) principles. The directors confirmed compliance with environmental regulations and the group’s ongoing focus on sustainability as a driver of long-term value.

Outlook and Strategic Focus

HomeCo Daily Needs REIT’s strategy remains focused on metro-located, convenience-based retail assets across neighbourhood retail, large format retail, and health and services sectors. The group aims to sustain high occupancy rates and secure sustainable rents through a diversified tenant base. Capital management priorities include maintaining an optimal capital structure and pursuing acquisition opportunities within target sectors. With no significant changes in the state of affairs or post-reporting period events, the REIT appears well-positioned to navigate the evolving economic environment.