Cap Rate Compression Continues in Retail Sector

The Charter Hall Retail REIT continues to benefit from cap rate compression in the retail and convenience sectors.

The REIT has independently revalued 100% of the portfolio as at 31 December 2021 showing a cap rate compression of 43bps from 5.81% to 5.38%.

The portfolio consists of 50 retail centres (worth c$3.1bn) and 316 convenience fuel outlets (worth c$885m)

The valuations resulted in a +$314 million, or 8.5% increase on prior book values inclusive of forecast capital expenditure with the overall portfolio value increasing in value from $3,647 million to $4,012 million.

The valuations reflect the depth of capital pursing property assets underpinned by high quality tenant businesses.

Recent on market campaigns for retail assets, similar to the average Charter Hall Retail REIT, typically has 10+ interested parties and 3+ genuine expressions of interest from high quality investment groups.

The unaudited impact of the valuations announced today by Charter Hall represent an 11.7% increase on the June 2021 NTA taking the estimated NTA per security from $4.01 to $4.48.

CQR announced a 9.5% earnings upgrade in August following the expansion of the BP and Coles fuel station convenience stores.

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About Warwick Petschack

Warwick has over 25 years of property investment and management experience. Principally responsible as Managing Director for Capital Management Australia and Joint Managing Director for Chauvel Capital Partners and Editor of Australian Property Markets News.

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