This article is from the Australian Property Journal archive
The Charter Hall Retail REIT (CQR) and wholesale partner Hostplus are inching towards 100% ownership of pubs landlord Hotel Property Investments (HPI), while it is planning on active asset management and portfolio curation across its convenience retail and shopping centre portfolio to drive future earnings growth.
CQR has now invested $318 million alongside Hostplus to secure a 85.4% stake in ASX-listed HPI, which has a diversified $1.3 billion portfolio of 58 pub and accommodation assets with 100% occupancy and a 9.2 year weighted average lease expiry.
CQR said the portfolio’s attractive CPI rent review structure will deliver consistent rent growth of 3.6% through the cycle.
“CQR’s strategy is to deliver the highest property income and earnings growth from the convenience retail sector. Portfolio curation and active asset management together with prudent capital management will deliver earnings growth going forward,” it said.
“Positive leasing spreads, high occupancy levels, inflation linked rental growth and MAT growth will also deliver like-for-like net property income (NPI) growth. The acquisition of HPI and its attractive rent review structure will deliver enhanced property income growth for investors,” CQR said.
“Looking forward CQR’s portfolio and capital structure is now positioned for growth.”
Major tenants Woolworths, Coles, bp, Wesfarmers, Aldi, Ampol, Endeavour and Gull represent 57% of CQR’s portfolio rental income. The total portfolio weighted average lease expiry (WALE) is 7.0 years and majors WALE is 9.7 years.
During the half 99% of CQR’s portfolio was independently revalued. Cap rates remained stable for the calendar year. Its convenience shopping centre portfolio saw valuations tick up by 1.7%, and valuations in in its convenience net lease retail portfolio lifted 2.3%, driven by CPI linked rental growth and uplift in value on the HPI investment.
CQR reported first-half operating earnings of $73.1 million, or 12.6c per unit, and distributions of 12.3c per unit. Statutory profit came in at $108.6 million.
Like-for-like NPI growth was 3.0%, with shopping centre like-for-like NPI growth at 2.5% and net lease retail like-for-like NPI growth 4.5%.
Specialty leasing spreads came in at 3.8% with 99 specialty lease renewals at a 3.1% leasing spread and 44 new leases at a 5.9% leasing spread.
Total MAT growth of 3.4% with supermarket MAT growth of 3.9%. Specialty sales productivity of $11,278 per sqm, up 1.8% to a new benchmark for the REIT.
CQR reaffirmed its FY25 operating earnings to be approximately 25.4c per unit and FY25 distribution to be in line with the FY24 distribution of 24.7c per unit.
During the half, CQR made a 50% acquisition of a convenience shopping centre Glebe Hill Village in Hobart for $50.3 million, reflecting a 5.9% yield, while it made whole acquisitions in Ampol Marsden Park for $21 million, Cecil Hotel in Southport for $14.3 million, and pub Harlow in Richmond $9 million, on an average yield of 6.3%.
