Charter Hall Retail (CQR) H2 2024 earnings summary

Executive summary

• Operating earnings reached AUD 159.0 million (27.4 cents per unit), with resilient income growth from inflation-linked rental increases and strong supermarket turnover rents, supported by a focus on non-discretionary convenience retail and record occupancy of 98.8%.

• Portfolio curation included divestment of five non-core assets for $315 million, acquisition of high-quality centers and a 7.5% stake in Hotel Property Investments Ltd, and improved portfolio quality.

• Major tenants now contribute 57% of portfolio income, with 22% from CapEx-efficient net lease retail, supporting income resilience and growth.

• ESG initiatives advanced, with progress toward net zero carbon emissions by 2025 and recognition as the top listed retail entity in Australia and New Zealand by GRESB.

• Achieved strong tenant satisfaction, ranking top among major shopping centre landlords for tenant NPS.

Financial highlights

• Net property income grew 3.2% to AUD 245.3 million, driven by 3.6% same property NPI growth.

• Operating earnings per unit fell to 27.4 cents, down 4.7% year-over-year; distribution per unit was 24.7 cents, a 4.3% decrease, with a payout ratio of 90.3%.

• Net Tangible Assets per unit decreased by 4.7% to $4.51, reflecting valuation and derivative impacts.

• Investment property value decreased to AUD 4.05 billion due to net divestments and a net valuation decrease of AUD 40 million.

• Statutory earnings dropped to $17.2 million, impacted by valuation and derivative movements.

Outlook and guidance

• FY25 operating earnings expected to be approximately 25.4 cents per unit; distributions per unit to remain in line with FY24 at 24.7 cents, representing a 7.0% yield.

• Positive leasing spreads, high occupancy, and MAT growth anticipated to continue driving like-for-like NPI growth.

• Zero-cost hedge restructure provides additional interest rate protection for FY26.