CQE Posts 15.2 Cents Distribution, Extends Debt Maturity to 4.9 Years

Strong FY25 Performance Anchored by Strategic Acquisitions

Charter Hall Social Infrastructure REIT (CQE) has delivered a solid financial performance for the 2025 fiscal year, reporting distributions per unit (DPU) of 15.2 cents, consistent with its upgraded guidance announced earlier in the year. The REIT’s earnings per unit (EPU) stood at 15.3 cents, reflecting steady operational income despite a modest increase in finance costs.

Key to CQE’s growth strategy was $144 million in accretive acquisitions, notably a 22.5% interest in the Western Sydney University campus in Parramatta and a specialised pathology laboratory leased to Clinipath Pathology in Osborne Park, WA. These assets offer long-term leases with strong tenant covenants and attractive initial yields around 6.2% to 6.7%, reinforcing the REIT’s focus on essential social infrastructure.

Portfolio Curation and Divestments Enhance Quality and Yield

Alongside acquisitions, CQE divested $151 million of properties, primarily early learning centres, achieving an 8.3% premium to book value at a 4.4% yield. This active portfolio curation has improved the overall quality and resilience of the asset base, which now comprises 328 properties with a weighted average lease expiry (WALE) of 11.6 years and full occupancy.

The portfolio’s rental growth remains robust, with 69 market rent reviews completed in FY25 delivering a 10.5% uplift. Looking ahead, 28% of income is subject to market rent reviews over the next three years, underpinning future income growth prospects.

Balance Sheet Strengthened by Debt Refinancing

In July 2025, CQE successfully refinanced its debt platform, securing $900 million in facilities with extended maturities averaging 4.9 years and improved lender diversification through the introduction of $450 million in Asian Term Loan facilities. The refinancing also enhanced key covenant terms and maintained gearing at a conservative 30.5%, positioning the REIT with financial flexibility to pursue further growth.

The weighted average cost of debt stands at 5.0%, supported by 72% hedging coverage for FY26, reflecting prudent risk management amid a rising interest rate environment.

Sustainability and Social Impact Remain Core

CQE continues to lead in sustainability, maintaining net zero Scope 1 and 2 emissions and achieving high ESG ratings, including a Level A GRESB Public Disclosure. The REIT’s portfolio supports essential community services, with early learning centres providing approximately 28,000 licensed places daily and investments in health, education, and government facilities.

Engagement with tenants remains strong, and CQE has implemented initiatives such as solar installations across its assets and partnerships to support vulnerable families through fee-free early learning programs.

Outlook, Confident Growth Supported by Demographics and Policy

Looking forward, CQE has guided a 10.5% increase in distributions for FY26 to 16.8 cents per unit, reflecting confidence in the social infrastructure sector’s fundamentals. Population growth, government funding increases, and policy support for early learning and higher education underpin the REIT’s growth prospects.

With a diversified portfolio, long lease terms, and a strong balance sheet, CQE is well positioned to deliver resilient income and capital growth for investors in the evolving social infrastructure landscape.