Charter Hall Retail (CQR) H2 2024 earnings summary

Executive summary

• Operating earnings per security reached AUD 0.274, matching full-year guidance, with resilient and growing income streams driven by inflation-linked rental growth and strong supermarket turnover rents.

• Portfolio curation led to divestment of five non-core assets for $315m, acquisition of high-quality centers, and a record-high occupancy of 98.8% for convenience shopping centers.

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

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

• 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.

Financial highlights

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

• Operating earnings totaled AUD 159.0 million (AUD 0.274 per unit), down 4.7% year-over-year; distribution was AUD 0.247 per unit, with a payout ratio of 90.3%.

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

• NTA per unit decreased by 4.7% to 4.51 cents, reflecting valuation and derivative impacts.

• Statutory earnings dropped to $17.2m from $37.8m, impacted by valuation and derivative movements.

Outlook and guidance

• FY 2025 operating earnings expected to be approximately AUD 0.254 per unit; distributions per unit to remain in line with FY 2024 at AUD 0.247, representing a 7.0% yield.

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

• Strategy remains focused on non-discretionary retail, with inflation-linked rental growth underpinning asset values.

• Zero-cost hedge restructure provides additional interest rate protection for FY 2026.