Charter Hall Retail REIT releases earnings of $166.9 million

Charter Hall Retail REIT (ASX:CQR) released FY23 results, with earnings up 1.5% against the corresponding period, with 25.80 cents per unit distributions.

The property trust achieved $37.8 million in statutory profit, a significant decrease after revaluations of assets that reduced the portfolio by $15 million.

Over the financial year, CQR’s investment strategy ensured resilience and growing income for investors. The group proactively acquired $118 million in off-market assets, including Z Energy and Gull in New Zealand. Divestments of $203 million, including Coles Distribution Centre and Brickworks in South Australia, were made.

The geographically diverse portfolio has an occupancy rate of 98.6% and a WALE of 7.4 years.

Ben Ellis, CEO of Charter Hall Retail, said, “The blend of Long WALE and convenience retail assets continues to produce meaningful income growth for investors. FY23 saw CQR deliver 5.3% distribution growth against a backdrop of rising interest rates. With 59% of portfolio income growth linked to inflation, the portfolio also proved its defensiveness as income growth largely offset cap rate movements, and CQR experienced a very modest decline in book values. Looking forward, the quality of our portfolio, along with strong sales growth of our tenants and the resilient nature of CQR’s assets, will see them continue to deliver income growth and support valuations despite a more subdued economic environment.”

Portfolio income is expected to benefit from direct and indirect inflation-linked rental growth, which will also underpin asset values.

CQR expects FY24 operating earnings to be approximately 27.4 cents per unit.

The distribution payout ratio range is expected to be 90 – 95% of operating earnings.