Charter Hall Valuation Gains Slow Across Group
16 December 2022
Charter Hall Group notes that in accordance with the Group’s 6-monthly valuation process, approximately 97% of Group platform properties have been independently valued, providing a net valuation uplift of circa $210 million at 31 December, 2022, subject to audit and relevant fund Board approvals of financial statements.
As a result of valuations and transaction activity to date, Group Property FUM is expected to be circa $73 billion as at 31 December, 2022.
The table below breaks down the asset movements by sector:
| Sector | Valuation movement (6 months, %) |
| Industrial & Logistics | +1.1% |
| Office | (0.5%) |
| Long WALE Retail | +2.7% |
| Shopping Centre Retail | +0.1% |
| Social Infrastructure | +0.7% |
| Platform Total | +0.5% |
See more details below
CQR had 98% of the portfolio independently valued as at 31 December 2022.
The valuations resulted in a $108 million, or 2.5% increase on prior book values inclusive of forecast capital expenditure. The overall portfolio value has increased from $4,299 million to $4,433 million and the portfolio average cap rate has expanded 9bps from 5.20% to 5.29%.
The unaudited impact of the valuations announced today represent an increase in the estimated NTA per security from $4.91 to $5.02, an 11 cents per unit, or 2.2% increase on the June 2022 NTA
| $m | Shopping Centre Convenience Retail | Long WALE Convenience Retail | Total Portfolio |
| 30 June 2022 Portfolio Value | 3,339 | 960 | 4,299 |
| Net acquisitions / (disposals) | (1) | 27 | 26 |
| Valuation increase | 471 | 61 | 108 |
| 31 December 2022 Portfolio Value | 3,385 | 1,048 | 4,433 |
| Valuation increase (%) | 1.4% | 6.2% | 2.5% |
| 30 June 2022 weighted average Cap Rate | 5.45% | 4.33% | 5.20% |
| 31 December 2022 weighted average Cap Rate | 5.52% | 4.54%3 | 5.29% |
| Cap Rate change (bps) | 7bps | 21bps | 9bps |
CLW had 93% of the portfolio by gross asset value independently valued as at 31 December 2022 with the balance of the portfolio having been independently valued at 30 June 2022.
The valuations resulted in a $64.6 million, or 0.9% net uplift on prior book values, increasing the overall portfolio value from $7,151 million to $7,215 million during the six-month period to 31 December 2022. The portfolio’s weighted average cap rate has expanded 5bps from 4.36% to 4.41% and excluding the impact of the Metcash lease extension, the portfolio’s weighted average cap rate expanded 10 bps.
The unaudited impact of the valuations announced today are expected to increase CLW’s estimated pro-forma June 2022 NTA per security from $6.17 to $6.26, an increase of 9 cents per security, or 1.4%, reflecting the high percentage of uncapped CPI-linked rent-review assets in the portfolio.
A summary of the CLW portfolio valuation by sector as at 31 December 2022 is outlined below:
| Sector | Properties | Prior book value (A$m) | Valuation (A$m) | Valuation uplift (A$m) | Prior cap rate | Current cap rate | Cap rate movement |
| Long WALE retail | 445 | 3,001.9 | 3,088.0 | 86.1 | 4.28% | 4.33% | 0.06% |
| Industrial & logistics – ex. Metcash | 23 | 1,243.2 | 1,252.1 | 9.0 | 3.71% | 3.84% | 0.13% |
| Industrial & logistics – Metcash | 1 | 198.0 | 221.0 | 23.0 | 6.50% | 4.50% | (2.00%) |
| Office | 13 | 1,365.2 | 1,336.3 | (28.9) | 4.90% | 5.05% | 0.15% |
| Social infrastructure | 41 | 1,028.9 | 1,024.2 | (4.7) | 4.09% | 4.14% | 0.05% |
| Agri-logistics | 27 | 313.7 | 293.7 | (20.0) | 5.21% | 5.71% | 0.50% |
| Total | 550 | 7,150.8 | 7,215.4 | 64.6 | 4.36% | 4.41% | 0.05% |
The Metcash, Canning Vale, Perth property has been split out from the balance of the industrial and logistics portfolio in the above table to separately indicate the impact on portfolio cap rate movement as a result of the recently agreed 10 year lease extension with Metcash at this property.
CLW reaffirms that, based on information currently available and barring any unforeseen events, CLW provides FY23 Operating EPS guidance of 28.0 cents and distribution per security guidance of 28.0 cents.
CQE had 100% of the portfolio by gross asset value independently valued as at 31 December 2022.
The valuations resulted in a $16.3 million or 0.8% uplift on the prior book values. The average passing yield on these properties has expanded 6 bps from 4.70% to 4.76%.
The unaudited impact of the valuations announced today are expected to increase CQE’s pro-forma June 2022 NTA per unit from $4.08 to $4.12, a 4 cents per unit, or 1.0% increase.
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