Charter Hall maintains growth

22 August 2023

Charter Hall’s (ASX:CHC) divestment strategy achieved a net value increase of $33 million to $3.0 billion.

The earnings resilience and diversification of the Property Investment portfolio maintained its strength. No single asset represents more than 4% of portfolio investments, Government covenants are the largest tenant exposure and make up 23% of portfolio income while 18% of net income is derived from leases with CPI-linked rent reviews, with a sector leading exposure to investment grade tenant customers.

Charter Hall’s Managing Director and Group CEO, David Harrison said: “Despite challenging conditions, FY23 maintained Group FUM despite downward valuations driven by rising interest rates. Property FUM grew $6.2 billion to $71.9 billion and our operating earnings ex-transaction and performance fees grew strongly, reflecting growth in FUM, the benefits of scale and our diligent focus on costs.

“We delivered $3.1 billion of new developments for our funds, successfully completing 4 new office buildings and 17 logistics facilities. We remain well-placed to deploy capital into opportunities as they emerge, with $6 billion in available liquidity, which has risen to $7 billion post balance date with the $1.2 billion CPIF Asian Term Loan facility closing in August, whilst the committed and uncommitted $13.9 billion development pipeline provides further organic growth potential.”

Portfolio occupancy remained resilient at 97.6%, the Weighted Average Lease Expiry (WALE) remains healthy at 7.4 years and the Weighted Average Rent Review (WARR) is 3.6% per annum.

Funds under management (FUM) grew by $7.5 billion to $87.4 billion, comprising $71.9 billion of Property FUM together with a 50% investment in the $15.6 billion of FUM managed by Paradice Investment Management (PIM).

Property FUM grew by $6.2 billion, or 9.5%, driven by $4.8 billion of net acquisitions, devaluations of $1.6 billion and capex spend predominantly on developments of $3.0 billion.

The Group’s $2.8 billion of gross equity inflows allotted during the period, comprised inflows of $817 million in Wholesale Pooled Funds, $1.4 billion in Wholesale Partnerships, $9 million in Listed Funds and $542 million in the Direct business.

Development activity drives modern asset creation which reduces average age of buildings, enhances investor returns and attracts new capital to our funds. Development completions totalled $3.1 billion in the last 12 months. Notwithstanding completions, the pipeline continues to be re-stocked and is currently $13.9 billion with $6.6 billion in committed development project value.

The Group continues to use its cross-sector tenant relationships and the scale of our portfolio to create development opportunities for both tenants and investors. The breadth of this market reach generates significant market intelligence thereby enhancing our value-add capability. Development activity is predominantly undertaken by funds/partnerships with the majority of committed projects being de-risked through pre-leasing and fixed price building contracts.

FY24 earnings guidance is for post-tax operating earnings per security is approximately 75 cents per security. FY24 distribution per security guidance is for 6% growth over FY23.