Company Interview / HomeCo. REIT keeps its footing as rates bite

Key points:

Sharma flags a modest FFO dip to 8.8 cents per unit in FY27 on higher interest costsStrong tenant demand and near-full occupancy underpin ongoing rental growthConvenience-focused centres in Sydney, Melbourne and Brisbane drive visitation and spend

Sid Sharma, CEO of HomeCo Daily Needs REIT (ASX:HDN) sets out results that he characterises as disciplined and resilient, despite ongoing interest rate headwinds. Funds from operations come in at $0.09 per unit with distributions at 8.6 cents, both described as in line with guidance. Sharma points to a 6.2% uplift in asset valuations, supported by strong rental growth and portfolio occupancy above 99%. For FY27, he projects a modest 2% dip in FFO to 8.8 cents per unit, driven by higher financing costs, while distributions are expected to be maintained at 8.6 cents.

Sharma highlights what he sees as powerful structural trends supporting HomeCo Daily Needs REIT’s assets, centred on convenience-led shopping in growth corridors of Sydney, Melbourne and Brisbane. Consumers, in his view, are time-poor but still spending, with tenant sales and foot traffic rising and visit times averaging 28 minutes. He states that July and August trading is stronger than late FY26 and expects rents to remain predictable and growing.

Tenant demand is described as robust across the metropolitan portfolio, with key Australian brands such as Woolworths, Coles, Bunnings, Harvey Norman, Nick Scali (ASX:NCK), Super Retail Group (ASX:SUL) and Baby Bunting (ASX:BBN) seeking scarce high-quality space. Selective asset divestments are being considered where values sit inside the cost of debt.