Charter Hall turns in another strong year

Charter Hall turns in another strong year

23 August 2019

Property powerhouse Charter Hall has turned in another strong year with a statutory profit of $235.3 million and operating earnings of $220.7 million, up 25.5 per cent compared with the 2018 financial year.

The group raised over $3.4 billion of equity for the year and deployed $5 billion of transactions, including Sydney landmark Chifley Tower. They are now on their way to managing $40 billion worth of funds after a six-week spree.

Charter Hall’s Managing Director and Group CEO, David Harrison said: “FY19 was an exceptional year for the group. It was a record year for equity raising, with all sources of equity active and $3.4 billion of new equity inflow across the platform. This then translated into our largest ever year for transactions, with $5.0 billion of gross transactions and $3.3 billion of net acquisitions. The Group also successfully acquired and integrated the Folkestone platform into the Charter Hall business. In addition, our Development pipeline delivered $1.1 billion of completions and continues to grow, forming an important avenue of additional growth for the Group.”

The company is benefiting from low long-term bond rates, making commercial real estate attractive, as well as strong institutional demand from global pension funds for hard assets, with Australia one of the safest destinations in the volatile Asian region.

The group’s total property investment portfolio occupancy remained strong at 97.7% and the Weighted Average Lease Expiry (WALE) improved to 7.6 years.

The group’s managed funds grew by $7.2 billion to $30.4 billion driven by $3.3 billion of net acquisitions ($5.0 billion gross), the $1.6 billion acquisition of Folkestone, positive revaluation of $1.2 billion and capex spend on developments of $1.0 billion.

Mr Harrison said demand remained strong for properties with long-term leases and attractive rental growth and said that although the rate of capital rate compression had slowed, there was also lower bond rates.

Charter Hall has backed its “lower for longer” thesis on bond markets by buying up hard assets that Mr Harrison said held growing appeal as sovereign and pension funds faced negative real returns in fixed interest markets.

The group’s development pipeline has grown from $3.5bn three years ago to more than $6.5bn and big projects include a new site in Melbourne’s Collins Street and, eventually, a precinct-style play around Chifley Tower.

Charter Hall has guided to 18-20 per cent growth in post-tax operating earnings per security over last year, making it a clear leader in the property sector.

JPMorgan analysts noted Charter Hall had 85 per cent of its holdings in office, industrial, long leased and social infrastructure property, which had strong capital inflows.

Charter Hall shares closed 3.16 per cent higher at $12.40.