Charter Hall Retail REIT Posts $147.5M Operating Earnings, 2.6% Income Growth
Charter Hall Retail REIT reported solid FY25 results, highlighted by a full acquisition of Hotel Property Investments Ltd and strong operational metrics, setting the stage for continued earnings growth in FY26.
- Operating earnings of $147.5 million, stable distributions at 24.7 cents per unit
- Full acquisition of Hotel Property Investments Ltd alongside Hostplus, enhancing income profile
- Like-for-like net property income growth of 2.6% and record specialty sales productivity
- Portfolio occupancy remains high at 98.9%, with strong leasing spreads
- Guidance for FY26 anticipates 3.5% earnings growth and quarterly distributions
Strong Financial Performance Anchors FY25
Charter Hall Retail REIT (ASX – CQR) has delivered a robust set of results for the financial year ended June 30, 2025, with operating earnings reaching $147.5 million, translating to 25.4 cents per unit. Distributions remained steady at 24.7 cents per unit, matching the previous year, while statutory profit climbed to $213.8 million. The REIT’s net tangible assets per unit increased by 2.9% to $4.64, reflecting underlying portfolio strength and effective management.
Strategic Acquisition of Hotel Property Investments Ltd
A standout highlight was the completion of the full acquisition of Hotel Property Investments Ltd (HPI) in partnership with wholesale investor Hostplus. This move added a diversified $1.3 billion portfolio of 57 pub and accommodation assets with 100% occupancy and a weighted average lease expiry (WALE) of 8.9 years. The HPI portfolio’s rent structure, featuring CPI-linked reviews with fixed collars, is expected to deliver consistent rent growth of 3.6% through the cycle, materially enhancing CQR’s income growth profile.
Operational Excellence and Portfolio Quality
Operationally, CQR’s portfolio demonstrated resilience and growth. Like-for-like net property income rose 2.6%, supported by specialty leasing spreads averaging +5.5%, with new leases achieving an impressive 7.6% increase. Specialty sales productivity hit a new record of $11,356 per square metre, underscoring the strength of tenant sales performance. Portfolio occupancy remained exceptionally high at 98.9%, while major tenants such as Woolworths, Coles, and Ampol continued to anchor the portfolio with long-term leases and strong sales metrics.
Capital Management and Funding Strategy
Prudent capital management remains central to CQR’s strategy. The REIT refinanced the entire HPI debt platform, securing favourable pricing and tenure, while maintaining a balanced gearing ratio of 27.1% and a look-through gearing of 35.0%. Moody’s affirmed CQR’s Baa1 issuer rating with a stable outlook, reflecting confidence in the REIT’s financial discipline. The weighted average debt maturity stands at 2.8 years, providing a comfortable runway for future growth initiatives.
Outlook – Growth and Distribution Stability
Looking ahead, CQR has provided guidance for FY26 operating earnings to increase by approximately 3.5% to 26.3 cents per unit, with distributions expected to grow by 2.8% to 25.4 cents per unit. Notably, the REIT will transition to quarterly distributions starting in Q1 FY26, aligning with investor preferences for more regular income streams. The management team remains focused on leveraging its convenience retail sector expertise to drive organic income and earnings growth.
Bottom Line?
With a strengthened portfolio and clear growth guidance, Charter Hall Retail REIT is poised to deliver steady returns amid evolving retail dynamics.
Questions in the middle?
- How will the integration of HPI assets impact CQR’s earnings volatility and risk profile?
- What are the potential effects of rising interest rates on CQR’s cost of debt and distribution sustainability?
- How might changes in consumer retail behavior influence specialty leasing spreads and occupancy rates?
