This article is from the Australian Property Journal archive
CHARTER Hall Retail REIT’s portfolio optimisation program is flowing through to its balance sheet, as healthy income growth pushed up property values.
The trust posted an operating earnings increase of 2% to 15.61 cents per unit and, and of 2% for distributions to 14.28 cpu. Statutory profit was down from $80.8 million to $55.5 million.
Like-for-like net property income was up 2.1% across its convenience-based, supermarket-anchored shopping centres, which was up from 1.8% from June and drove an increase of $15 million in values across its 58 properties.
The portfolio was externally revalued during the period at $2.76 billion, retaining its 98.1% occupancy, and its cap rate tightened marginally from 6.15% to 6.14%.
“We believe our focus on convenience and convenience-plus assets will deliver long-term sustainable growth in earnings for investors,” chief executive officer Greg Chubb said.
“This stable growth is underpinned by the strength of our supermarkets, retail services and convenience-based food offering. This in turn is reflected in the growth in our asset values.”
During the period, the trust picked up Campbellfield Plaza in Melbourne’s northern suburbs for $74 million, which Chubb said provided the opportunity to acquire a high quality dominant convenience-plus shopping centre, underpinned by a secure income profile.
It also offloaded two lower-growth assets, Coomera Square in Queensland and the freestanding Woolworths asset in Young, New South Wales, for a combined $76.1 million; and divested 47.5% of Salamander Bay $83.1 million to reduce single asset exposure, while retaining majority ownership of a convenience-plus centre.
The trust completed 172 specialty leases at an average spread of 1.9%, up from 1.3% at June.
Supermarkets in the portfolio paying turnover rent lifted from 53% to 55% over six months. They generate 74% of major tenant rental income, and delivered 2.7% MAT growth in turnover.
The trust derives 92% of rental income from convenience based non-discretionary tenants.
During the half, the $60 million redevelopment of Lake Macquarie Fair in New South Wales was substantially completed, and a new expanded Coles supermarket opened in January.
The trust also completed the $11 million redevelopment of Wanneroo Central IN Perth, which includes a new full line ALDI supermarket, additional specialty food, and services.
Weighted average debt maturity is at 5.3 years, with an average hedge maturity of 3.7 years. Balance sheet gearing remains at the lower end of the target 30% to 40% range at 32.2%, with cash and undrawn debt capacity of $233 million.
The trust’s full-year is for operating earnings to grow by 2% over FY18, and the distribution payout ratio range is expected to remain between 90% and 95%.
Australian Property Journal
