Charter Hall Retail REIT Boosts Earnings and Expands Portfolio with Strategic Acquisitions

Strong Financial Performance Amid Strategic Growth

Charter Hall Retail REIT (ASX: CQR) has delivered a robust first half for fiscal year 2025, reporting operating earnings of $73.1 million, equating to 12.6 cents per unit, alongside a distribution of 12.3 cents per unit. The REIT’s statutory profit stood at $108.6 million, supported by a net tangible asset value of $4.57 per unit. These results underscore the resilience of CQR’s portfolio, which continues to benefit from a diversified funding base and prudent capital management, with gearing levels at a conservative 31.8%.

Portfolio Enhancement Through Targeted Acquisitions and Divestments

Central to CQR’s growth strategy is its active portfolio curation. The REIT has significantly increased its stake in Hotel Property Investments Ltd (ASX: HPI) to 85.4%, alongside wholesale partner Hostplus, with plans to move towards full ownership. HPI’s diversified portfolio of 58 pub and accommodation assets, boasting 100% occupancy and a weighted average lease expiry (WALE) of 9.2 years, offers stable income growth through a CPI-linked rent review mechanism.

In addition to the HPI investment, CQR acquired a 50% interest in Glebe Hill Village, a convenience shopping centre in Hobart, for $50.3 million at a 5.9% yield. The REIT also secured full ownership of Ampol Marsden Park in NSW, Cecil Hotel in Southport QLD, and Harlow Pub in Richmond Vic, averaging a 6.3% yield. These acquisitions complement the divestment of Lake Macquarie Square, sold for $122.5 million at a slight premium, reflecting the REIT’s disciplined approach to portfolio quality and income growth potential.

Operational Strength and Leasing Momentum

Operationally, CQR’s portfolio remains robust, with like-for-like net property income growth of 3.0%. The convenience shopping centre segment saw 2.5% growth, while the convenience net lease retail portfolio outperformed with 4.5% growth, driven by CPI-linked leases and long WALE of 14 years. Specialty leasing activity was strong, with 143 leases completed at an average positive spread of 3.8%, including new leases achieving 5.9% spreads.

Supermarket tenants, representing a significant portion of rental income, demonstrated resilience with 3.9% comparable MAT growth and 87% paying turnover rent or close to it. Specialty sales productivity hit a record $11,278 per square metre, reinforcing the portfolio’s quality and tenant demand. Occupancy levels remain high at 98.7%, with sustainable occupancy costs of 11.3%.

Capital Management and Credit Profile

Charter Hall Retail REIT maintains a strong balance sheet, with a weighted average debt maturity of three years and no debt maturing until March 2026. Moody’s affirmed CQR’s Baa1 issuer rating with a stable outlook, reflecting confidence in the REIT’s financial discipline. Available investment capacity stands at $271 million, positioning CQR well for further capital deployment to enhance portfolio quality and income growth.

Board Strengthening with Experienced Appointment

In a move to bolster governance and strategic oversight, CQR appointed Lianne Buck as a Non-Executive Director. Buck brings over two decades of experience across investment markets, infrastructure, and real estate sectors, with a strong background in executive and non-executive roles at major Australian institutions. Her expertise is expected to support CQR’s continued execution of its growth strategy and delivery of sustainable returns.

Outlook

Looking ahead, Charter Hall Retail REIT reconfirms its FY25 operating earnings guidance of approximately 25.4 cents per unit and distribution in line with FY24 levels. The combination of portfolio curation, active asset management, and strategic acquisitions like HPI positions CQR to sustain income growth in the convenience retail sector. Investors will be watching how these initiatives translate into long-term value and earnings momentum.