Credit Suisse updates estimates to account for the establishment of the HomeCo Daily Needs REIT ((HDN)). Earnings dilution is expected, given Home Consortium has only a 27% interest in the REIT.
Since the spin-off, management, with total assets of $1.5bn, intends to grow assets to over $5m, although the broker notes the timing is unclear.
The objective is to sell down the remaining 100%-owned assets to 20% stakes and redeploy the capital. Neutral retained. Target is raised to $3.82 from $3.21.
Sector: Real Estate.
Target price is $3.82.Current Price is $3.90. Difference: ($0.08) – (brackets indicate current price is over target). If HMC meets the Credit Suisse target it will return approximately -2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
