Charter Hall Retail REIT Posts 25.4c Operating Earnings, $4.3bn Asset Base

Robust Portfolio Growth and Strategic Acquisitions

Charter Hall Retail REIT (CQR) has delivered a resilient FY25 performance, marked by a strategic portfolio expansion and disciplined capital management. Following the completion of the Charter Hall Convenience Retail Fund (CCRF) transaction in July, the REIT’s property investment value stands at a substantial $4.3 billion. This includes the accretive acquisition of Hotel Property Investments (HPI), a $1.3 billion portfolio of 57 pub and accommodation assets, which is expected to enhance CQR’s income growth profile with a forecast rental uplift of 3.6%.

The acquisition of HPI not only diversifies CQR’s asset base but also strengthens its net lease retail segment, now representing 39% of the portfolio. The portfolio’s high occupancy rate of 98.9% and a weighted average lease expiry (WALE) of 7 years reflect the quality and resilience of its tenant covenant and income streams.

Stable Financial Performance Amid Rising Debt Costs

Operating earnings per unit were reported at 25.4 cents, aligning with prior guidance and maintaining distribution stability at 24.7 cents per unit. Despite a rise in the weighted average cost of debt to 4.9%, driven by market interest rate movements, CQR’s proforma balance sheet gearing remains conservative at 27.1%, with a look-through gearing of 35.0%, comfortably within its target range.

Moody’s reaffirmed CQR’s Baa1 issuer rating with a stable outlook, underscoring the REIT’s strong credit profile and diversified funding sources. The REIT’s capital management strategy included a $294 million capital return post-CCRF transactions, reflecting prudent balance sheet optimisation.

Operational Excellence and Tenant Satisfaction

CQR’s portfolio curation continues to focus on convenience retail assets with strategic locations, high visibility, and long-term tenant covenants. Specialty leasing spreads remain healthy, with a retention rate of 85% and specialty sales productivity reaching a historic high of $11,356 per square metre. Supermarkets, a key anchor tenant group, demonstrated resilience with 2.5% moving annual turnover growth and 85% operating on turnover or near-turnover rent structures.

The REIT’s tenant-centric approach is reflected in its ranking as the #1 preferred landlord among peers for four consecutive years, supported by a dedicated team of 150 retail specialists focused on tenant performance and innovation.

Sustainability Leadership and Net Zero Commitment

Charter Hall Retail REIT has cemented its position as an ESG leader in the retail property sector. It achieved a second-place ranking in the 2024 GRESB Report for listed retail entities in Australia and New Zealand and attained a 'Negligible Risk' rating from Sustainalytics. The REIT is on track to achieve net zero emissions from 1 July 2025, leveraging on-site solar generation, off-site renewable electricity through a power purchase agreement with Engie, and nature-based carbon offsets.

Additional sustainability initiatives include significant social procurement spend supporting vulnerable women, community engagement through Indigenous cultural programs, and ongoing efforts to divert waste from landfill, all reinforcing CQR’s commitment to responsible and inclusive growth.

Outlook and FY26 Guidance

Looking ahead, CQR projects operating earnings per unit growth of 3.5% to 26.3 cents and distribution per unit growth of 2.8% to 25.4 cents for FY26, translating to a distribution yield of approximately 6.2%. The REIT’s strategy remains focused on portfolio curation, capital recycling, and leveraging the scale and diversification benefits of CCRF. With limited new retail supply and ongoing population growth in Australia, CQR is well positioned to sustain income growth and net tangible asset uplift.