Why the Home Consortium (ASX:HMC) share price is falling today

Today marks three consecutive days in the red for the Home Consortium Ltd (ASX: HMC) share price, with the real estate investment trust (REIT)‘s shares shedding more than 8% of their value so far this week. 

This coincides with the release of Home Consortium’s HY21 results today, a set of results that the company believes demonstrates the continued execution of its ‘own, develop and manage’ strategy.

What’s moving the Home Co share price today?

The Home Co share price is weaker today following the release of the company’s half-year results. The company highlighted that since its initial public offering (IPO), HomeCo has significantly outperformed the S&P/ASX 200 Index (ASX: XJO) by more than 31% and the S&P/ASX 200 A-REIT Index by more than 50%. 

The company reported a funds from operations (FFO) of 7.3 cents per security. FFO is the metric used to determine a REIT’s profitability and financial health. In many ways it mirrors the earnings per share (EPS) that most companies report on. 

Commenting on the results, HomeCo’s managing director and CEO Mr David Di Pilla said:

We have made significant progress in transitioning to a capital light manager with minimal balance sheet gearing. With funds under management of approximately $1.7 billion today we are well positioned to grow earnings and FUM by leveraging the existing asset base to over $5  billion and there is significant potential to increase this further through establishing capital partnerships.

The company is eyeing growth through a number of additional direct property investments with a combined 39,400 sqm of gross leasable area for health, retail and commercial development. Major tenants include Services Australia, Chemist Warehouse and Spotlight. The company is targeting to open these developments around 1H FY22 with more than 50% leasing pre-commitments made for the area. 

Overall, the report highlights the company’s focus on driving further FUM growth with institutional partners via co-investments in large-scale assets or alternative unlisted assets. 

The company also noted an interim FY21 dividend of 6.0 cents per share and FY21 dividend guidance of 12.0 cents per share. This represents a dividend yield of approximately 3.2% at today’s prices. 

Outlook

Looking ahead, Mr Di Pilla said: 

HomeCo is on track to execute its objective to deliver above average risk adjusted returns to security holders and continues to build a platform for sustainable long-term growth via the Own, Develop and Manage model.

HomeCo provided an FY21 FFO guidance of no less than $35.0 million or 12.9 cents per security, which reaffirms the 4% upgrade provided on 4 December 2020. The guidance is provided on the basis of no unforeseen circumstances or further extended COVID-19 lockdowns and government-mandated restrictions. 

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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