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. Recession presents a cyclical risk, but the REIT should achieve good long-term rental growth as its large-format sites mature, and it grows exposure to neighborhood tenants.