This article is from the Australian Property Journal archive
CHARTER Hall Retail REIT showed its resilience during the lockdowns, posting a 9.2% growth in operating earnings after providing $7.6 million in COVID-19 tenant support.
The REIT posted operating earnings of $82.1 million, up $6.9 million or 9.2% on the previous corresponding period. Operating earnings was 14.22 cents per unit, up 8.0% on pcp whilst the statutory profit was $368.6 million, up $285.8 million on pcp. CQR announced a distribution of 11.7cpu, an increase of 9.3%.
CEO Ben Ellis said the portfolio continues to demonstrate its strength and resilience, delivering 2.3% Speciality MAT growth and 1.8% positive leasing spreads in a period when significant COVID-19 mandated closures and restrictions were in place.
“Pleasingly, when restrictions have been lifted, we’ve seen tenants trading rebound quickly in the period that follows.”
Specialty productivity remained strong at $9,822 per sqm and was moderately impacted by mandated store closures and trading restrictions, Similarly, occupancy costs remain sustainable at 11.5% and when adjusted for COVID 19 rental support, the occupancy costs normalise to 10.8%.
During the period CQR provided $7.6 million, or 5.0% of 1H FY22 rent in COVID-19 tenant support. This compares to $5.9 million of tenant support in 1H FY21. $5.0 million, or 65% of this support was provided as rent-free incentives with $2.6 million, or 35% provided as rent deferrals. Only $670,000, or 0.5% of 1H FY22 rent remains outstanding.
The REIT’s total portfolio increased in value by $363 million with acquisitions of $51 million, capex of $38 million and net valuation growth of $274 million. The total portfolio cap rate moved from 5.81% at June 2021 to 5.38% at December 2021. The shopping centre convenience retail portfolio cap rate compressed from 6.12% at June 2021 to 5.66% at December 2021 while the long WALE convenience retail portfolio cap rate firmed from 4.69% to 4.37% over the same period.
Ellis said strong MAT growth, positive leasing spreads and high occupancy levels are expected to continue as market conditions normalise. Portfolio income is expected to benefit from inflation-linked rental growth, while investor demand for high quality non-discretionary convenience-based assets will continue to support valuation growth.
“CQR’s previous earnings guidance as at 1 December 2021 was for FY22 earnings per unit of no less than 28.2 cents per unit and distributions per unit of no less than 24.3 cents per unit.
“Today CQR is pleased to announce that barring any further unforeseen events, or a further deterioration in the COVID-19 environment, FY22 earnings per unit is expected to be no less than 28.4 cents per unit representing growth of no less than 3.9% on FY21 earnings per unit. FY22 distributions per unit are expected to be no less than 24.5 cents per unit representing growth of no less than 4.5% on FY21 distributions per unit.” Ellis concluded.
