Charter Hall Group released the full FY15 results for its Charter Hall Retail REIT (ASX:CQR) this morning. Positive numbers were recorded along with the announcement of an equity raising.
The REIT recorded a statutory profit of $162.5 million and operating earnings of $110.8 million or 29.7 cents per share with distributions of $102.9 million or 27.5 cent per share, representing a payout ratio of 92.6 per cent. The REIT’s portfolio value grew by 8.7 per cent to $2.16 billion with a net tangible asset per unit of $3.59, up 5.6 per cent.
Overall the portfolio’s net operating income grew by 2.4 per cent, occupancy came in at 98.4 per cent and the weighted average anchor lease duration came in at 10.7 years. A total of 15 anchor lease deals were completed including the first lease transaction with Aldi Supermarkets.
Fund Manager for the REIT, Scott Dundas commented, “Our performance during the period is underpinned by a focus on active asset management, enhanced portfolio quality and prudent capital management. We are proud to have delivered a sound result for the year, reporting operating earnings of 29.7 cents per unit, a distribution of 27.5 cents per unit and stable performance across our portfolio. This result ensures we continue to deliver a secure income stream for our investors.” “2015 has been a very active year for the REIT. We have worked to address the REIT’s debt funding platform and continued to enhance the quality of the portfolio through strategic acquisitions, divestments and redevelopments.”
The REIT also announced today that it will raise equity through a fully underwritten institutional placement of $50 million, at an offer price of $4.02 per unit. The raising will assist in the acquisition of two regional shopping centres located in regional NSW and the Northern Territory. Along with raised equity, the acquisitions will be funded with $21 million of net proceeds from the sale of three properties and debt funding of $31 million, utilising the increased debt capacity from the REIT’s recent debt restructure.
Looking into 2016, barring unforeseen events, the REIT forecasts for FY16 is operating earnings of between 30.25 and 30.75 cents per unit and it expects distribution to remain between 90 to 95 per cent.
“Despite the challenging trading conditions, the active management of our portfolio is a key focus and we will continue to work with our customers to deliver vibrant shopping centre experiences while focusing on leasing and development to maximise property returns” said Mr Dundas.
Not including dividends, the REIT’s share price has gained 5.8 per cent in the last twelve month. The healthy growth reflects consistent growth in operating earnings and consequently distributions. The REIT is currently in a trading halt due to the equity raising, however today’s results are very much in line with guidance and is unlikely to cause much movement in its share price. Going forward, if the consistent growth continues, the REIT’s share price is likely to continue on it's long term up trend.
Author: Ben Visser
Aug 17, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.