Charter Hall Group announced its 1H FY23 results for the period ending 31 December 2022 revealing a -9.1% drop in pre-tax operating earnings and a decline in net equity inflows as the markets adjust to a world of higher interest rates.
Net Equity Inflows for the Group were just $1.08bn for the 6 months, compared to $4.0bn for the year ending June 2022 and less than 50% of the same period last year.
Total Funds Under Management did continue to grow, up 11.2% to $88.0bn, however the Groups’ investment in Paradice Investment Management (PIM) (CHC own 50% of PIM) has shown a loss of $4.2bn in FUM. Charter Hall didn’t elaborate on the performance of PIM in their results.
Charter Hall’s Managing Director and Group CEO, David Harrison said: “Charter Hall Group continues to deliver sector leading returns for investors in our funds. Our focus remains on curating sustainable and resilient portfolios that deliver earnings growth for investors through all market conditions. This focus on performance for our investors and our co-investment alongside them continues to attract capital to the platform. 1H FY23 was no exception, with $2.1 billion of gross equity allotted which helped facilitate $7.9 billion of gross transactions.
“We’ve also delivered over $2 billion of development completions in the last 12 months, providing our investors access to unique investment opportunities in new, purpose-built assets. We remain well placed to continue growing the platform with $6.5 billion in available liquidity, significant opportunities in our sale and leaseback pipeline, our $15.4 billion development pipeline as well as a number of new product initiatives.”
The existing property investment portfolio performed well over the last 6 months, growing by $126m to $3.0bn and generating a 10.4% Total Property Investment Return.
The Group will however face challenges to maintain these returns in the year ahead as market values adjust to a higher interest rate environment, putting downwards pressure on valuations, and as a consequence lower management & performance fees which have been the mainstay of the group for many years.
The Group reaffirmed its FY23 earnings guidance for post-tax operating earnings per security of no less than 90.0cps and a FY23 distribution per security guidance of 6% growth over FY22.