REPORTING SEASON: Charter Hall Retail REIT (CQR)

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Figure 1: Charter Hall Retail REIT 12 month chart

 

Charter Hall Retail REIT (CQR) profit boosted by favourable property valuations

– Charter Hall Retail (CQR) posted a weaker than expected 5.2% rise in operating earnings to $110.8m for the year ended June 30. The 90.7% surge in its statutory profit was driven by $66.8m in favourable property valuations and a 9% rise in gross rental income. CQR is heavily focused on supermarkets and the non-discretionary part of the retail market, particularly in rural areas.

– CQR generates more than half of its annual base rent from leasing properties to Woolworths and Wesfarmers subsidiaries. Over the year, two supermarket anchored shopping centres were purchased for $97.1m in QLD and SA at an average yield of 7.2%. Two major restgelopments were completed in VIC and QLD while six non-core retail properties were sold for $37.6m.

– The property group entered a trading halt ahead of a capital raising announcement this morning. The REIT (Real Estate Investment Trust) aims to raise $50m via an institutional placement to help purchase two shopping centres worth $94.9m. The first is the Goulburn Plaza centre in NSW, with Coles and Kmart as anchor tenants. The second is Katherine Central in NT, which has Woolworths and Target Country as major tenants.

– A 13.8c/unit distribution has already been declared, payable to eligible investors on 31 August. The ex-dividend date was 26 June. Looking ahead, CQR said it expects FY16 operating earnings between 30.25c and 30.75 cents per unit; a 1.8% to 3.5% improvement on FY15.

– CQR shares are in a halt today, however are up by only ~1% so far this calendar year.

 

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Steven Daghlian, Market Analyst,