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Home Consortium (ASX: HMC) now seeking $600m for HealthCo float

Market News, Real Estate
ASX:HMC      MCAP $2.263B
26 July 2021 16:30 (AEST)
Home Consortium (ASX:HMC) - MD and CEO, David Di Pilla

Source: Home Consortium

HomeCo (HMC) has unveiled the specifics of its proposed $600 million HealthCo REIT initial public offering, which would pay a 4.5 per cent yield.

David Di Pilla’s HealthCo pre-IPO presentation has upped the capital to be raised by $100 million after HomeCo announced plans to raise $500 million just a couple of weeks ago. With another $500 million for the unlisted health and wellness fund.

The REIT’s initial portfolio will include 22 investment properties and five development projects with a 96 per cent occupancy rate and a weighted average lease expiration of 9.4 years.

A three per cent weighted average rent review exists across its leases with fixed escalations, which comprises 85 per cent of gross income.

The portfolio is spread across government, private hospitals, aged care, childcare, and primary care and wellness subsectors around the country.

Private hospitals and medical centres represent roughly 29 per cent of HealthCo REIT’s initial portfolio by income, with GenisisCare tenancies, of which the company just acquired eight, representing 15 per cent of income across the portfolio.

Megatrends in healthcare, according to HomeCo, will enhance demand in the industry in the long term, with an ageing population and those aged 65 and above spending three to five times more on healthcare than those aged under 65.  

Healthcare real estate, according to HomeCo, has exhibited “low levels of correlation to traditional property sectors”, which will result “in superior risk-adjusted returns and attractive yields in a low interest rate environment”.

HomeCo will manage the new HealthCo REIT and will also manage a wholesale co-investment fund vehicle that will take a slice of assets valued up to $250 million.

HMC will retain a 20 per cent stake in the new REIT subject to a 12-month voluntary escrow arrangement and will also manage an unlisted wholesale vehicle.

The wholesale fund may assist HealthCo REIT in getting access to a broader pool of investment opportunities.

If HomeCo raises the $600 million, it will be the year’s second-largest IPO, behind PEXA, and the third deal worth $500 million or more in the last three years.

Shares in Home Consortium are up 1.47 per cent, rounding off the day of trading at $5.54 per share.

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