Property Plays Bolster Charter Hall Profits


Charter Hall has seen its funds under management grow by $10 billion, and has reported healthy earnings over the financial year—allowing it to lift distributions for the coming year.

The listed property group reported a lift in operating earnings of 46.3 per cent to $322.8 million, while statutory profit increased by 47 per cent to $345.9 million on 2019.

Charter Hall boosted distributions by 6 per cent to 35.7c per share after securing $5.1bn of equity and transacting $8.3 billion over the year.

The group increased its funds under management by one-third to $40.5 billion by the end of the fiscal year, which has been furthered by an additional $1.3 billion in recent weeks.

Harrison said Charter Hall, now in its fifteenth year as a listed company, had reaped the rewards in forging successful partnerships across its investor and tenant base, which had created continued access to strong equity flows across all equity sources.

“These strong equity flows have translated into continued platform growth [with] our ability to source product off-market and through our development pipeline have been a key part of the group’s success,” Harrison said.

“Momentum in sale and leaseback transactions continues to grow across corporate Australia and the group is well positioned to take advantage of this opportunity to secure strategically aligned assets and portfolios.”

▲ Charter Hall’s strategy of investing in Long WALE assets has allowed it to remain bullish across the logistics and commercial sectors. Image: Chief executive David Harrison.
▲ Charter Hall’s strategy of investing in Long WALE assets has allowed it to remain bullish across the logistics and commercial sectors. Image: Chief executive David Harrison.

Charter Hall completed $1.7 billion worth of developments over the year and says a key driver will be its $6.8 billon pipeline, the bulk of which had been de-risked through pre-leases and fixed price building contracts.

Underpinning Charter Hall’s resilience through the Covid-19 disruption has been a swathe of large portfolio purchases over the financial year which in turn has enabled the group to foster new partnerships with investors and create tenant partnership funds.

Telstra offloaded a $700 million stake in a newly-created property trust, containing 37 of the telco’s higher value exchange properties, in August of last year to a consortium of investors led by Charter Hall.

In December, the group picked up a 49 per cent interest in a portfolio of BP sites worth $1.7 billion in total and comprising 225 convenience retail properties.

It has also struck deals with Ampol—as part of a $682 million 49 per cent stake over 203 freehold petrol stations—as well as agreements with Owens-Illinois and Qube.

Harrison said the pandemic had continued to drive accelerated demand for industrial and logistics assets, which the company had actively pivoted towards.

Flows into its funds also averaged $95 million a month over the fiscal year with wholesale pooled and partnership funds continuing to see inflows.

Despite a nervous start to earnings season, Charter Hall became one of few property players to release guidance, predicting a post-tax operating earnings per security of about 51 cents per share, and distribution per security guidance of 6 per cent growth.

“Based on no material change in current market conditions, funds under management growth already achieved in FY21 and assuming the Covid-19 operating environment does not deteriorate markedly from here, FY21 guidance is for post-tax operating earnings per security of approximately 51.0cps,” Harrison said.

Charter Hall shares gained 6.5 per cent at the close of day Thursday.

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