HomeCo Daily Needs REIT Has Rental Upside From Population Growth but Also Recession Risks
HomeCo Daily Needs REIT is underweight its target 50% neighborhood malls, and 20% health and services, and overweight the target 30% large-format. We expect neighborhood mall and health exposure to increase toward the target, via acquisition, development and tenant remixing, as population growth in HomeCo’s catchments makes neighborhood malls more feasible. The REIT faces cyclical risks in the event of a recession, but should achieve good long-term rental growth as its large-format sites mature, and it grows exposure to neighborhood tenants.