This article is from the Australian Property Journal archive
CHARTER Hall’s (ASX: CHC) busy year of equity raising and investment has delivered a 25.5% increase in annual operating earnings.
The group had gradually increased its full year guidance throughout the year, and still topped its most recent forecast of 24% growth.
Funds under management grew by $7.2 billion to $30.4 billion, leading to the strong OEPS growth, and a 6% increase in distributions per security. The group’s managed funds grew by $7.2 billion to $30.4 billion driven by $3.3 billion of net acquisitions, the $1.6 billion acquisition of Folkestone, positive revaluation of $1.2 billion, and $1.0 billion put towards developments.
Around $3.4 billion of new equity inflow across the platform was translated into the group’s largest ever year for transactions, with $5.0 billion of gross deals.
A further $4.2 billion of FUM growth year-to-date has been recorded, for a current total of $34.6 billion.
CHC has kicked off the new year with the $700 million purchase of a 49% share a portfolio of 37 Telstra towers, and has just acquired Telstra’s Melbourne headquarters at 242 Exhibition St for $830 million in partnership with its unlisted Charter Hall Prime Office Fund and Canada’s Public Sector Pension Investment Board, as well as a 50% interest in Chifley Tower in the Sydney CBD for $900 million.
More recently, it teamed up with Canada’s Quadreal and Abacus Property Group to buy 201 Elizabeth St in Sydney for $630 million, and is in due diligence with Abacus to take over Australian Unity Office Fund.
The group’s development pipeline delivered $1.1 billion of completions over the year, and has grown from $3.5 billion in June 2016 to over $6.5 billion.
The property investment portfolio increased by 8.1% to $1.8 billion and generated a 9.1% return. Over five years that it has been 13.3% per annum, outperforming the MSCI/IPD Unlisted Wholesale Property Fund Index which returned 10.8% over the same period.
Managing director and group chief executive David Harrison said the group still enjoys $3.0 billion of investment growth capacity.
“This leaves us well positioned to continue growing via our development pipeline as well of taking advantage of strategic opportunities as they arise.”
Total portfolio occupancy was 97.7% and the weighted average lease expiry improved to 7.6 years. The portfolio remains has an 81% weighting to the east coast, and its top 10 asset exposures represent only 11.4% of earnings.
CHC’s fund management portfolio has grown to 844 properties, 3,419 tenancies, an increased WALE of 8.2 years and that return net rental income of more than $1.7 billion.
The $3.4 billion of gross equity inflows comprised $1.802 billion raised in wholesale funds, $219 million in wholesale partnerships, $691 million raised in direct funds and $692 million in listed funds.
The group completed 666 separate leasing deals across over 915,000 sqm of space, and has just completed a lease with AustralianSuper at Wesley development that takes the Melbourne CBD project to full pre-commitment.
Guidance is for 18% to 20% growth in post-tax operating earnings per security over FY19.
FY20 guidance includes $132 million for the CHOT performance fee, payable in April next year, with $50 million of the amount already accrued in FY19 earnings.
FY20 distribution per security guidance is for 6% growth over FY19. The future distribution payout ratio will be 60% to 95% of OEPS.
Harrisons said capital management remains a key focus with $6.3 billion of new and refinanced debt facilities during the period and no material maturities in FY20.
He said the group maintains financial flexibility and substantial funding capacity across the funds platform with $4.1 billion of available liquidity, and with a 5.4% balance sheet gearing, net of cash, look-through gearing of 30.8%, weighted average debt maturity of 7.1 years and $114 million of cash on hand.
