Charter Hall Retail REIT reported a robust half-year result with statutory profit surging to $240.7 million, driven by portfolio growth and strategic transactions. The REIT also advanced its convenience retail focus and announced a major debt refinancing.
- Statutory profit more than doubles to $240.7 million
- Operating earnings rise modestly to $75.6 million
- Convenience net lease retail portfolio share grows to 49%
- Charter Hall Convenience Retail Fund raises $2.5 billion equity
- Secured $1.6 billion debt refinancing completed post balance date
Strong Financial Performance Amid Strategic Portfolio Shift
Charter Hall Retail REIT has delivered a standout half-year financial performance for the six months ending 31 December 2025, with statutory profit soaring to $240.7 million, up 127.7% from $105.7 million in the prior corresponding period. Operating earnings, a key internal measure of profitability, increased modestly by 3.4% to $75.6 million, reflecting solid underlying property income growth and favourable transactional activity despite rising finance costs.
The REIT’s income from ordinary activities rose 1.7% to $136.2 million, underpinned by higher net property income from a stable like-for-like portfolio and the positive impact of recent acquisitions and disposals. Basic earnings per unit more than doubled to 41.41 cents, signalling strong returns to unitholders.
Portfolio Evolution, Convenience Retail Takes Centre Stage
Continuing its disciplined portfolio curation strategy, Charter Hall Retail REIT has notably increased its exposure to convenience net lease retail assets, which now represent 49% of the portfolio by value, up from 39% six months earlier. This shift reflects a strategic pivot towards assets with stable, long-term income streams such as service stations, hardware stores, and hospitality venues.
A key driver of this repositioning is the Charter Hall Convenience Retail Fund (CCRF), a newly established wholesale pooled fund focused on metropolitan convenience shopping centres and net lease retail properties across Australia. Since its inception in July 2025, CCRF has raised $2.5 billion in equity, with Charter Hall Retail REIT holding a 17.2% stake valued at $435 million. The fund has acquired multiple convenience retail centres and a portfolio of Bunnings net lease assets, further cementing the REIT’s footprint in this sector.
Active Capital Recycling and Expansion
During the half-year, the REIT completed several acquisitions including four Bunnings assets and the Eagers Kirrawee site in New South Wales, totaling $206.8 million, with additional convenience retail centres acquired for $251.3 million pending settlement. Notably, the REIT increased its investment in the Charter Hall AP Fund (Ampol 1 portfolio) from 5% to 49.9%, committing $406.7 million, expected to settle in March 2026.
On the disposal front, Mareeba Square in Queensland was sold for $28 million, and Lansell Square in Victoria was exchanged for sale at $110.1 million, with settlement anticipated in March 2026. These transactions align with the REIT’s strategy to optimise portfolio composition and capital allocation.
Balance Sheet and Refinancing Update
Charter Hall Retail REIT’s total assets stood at $4.26 billion as at 31 December 2025, with net assets attributable to unitholders increasing to $2.85 billion. The REIT’s gearing ratio improved to 29.2% on a balance sheet basis, down from 32.5% six months prior, reflecting prudent capital management.
Post balance date, the REIT secured a $1.6 billion secured debt facility across eight existing lenders, replacing its previously unsecured debt platform. This refinancing includes full repayment of the US Private Placement notes and associated cross-currency interest rate swaps, positioning the REIT for enhanced financial flexibility and potentially lower funding costs.
Accounting Changes and Distribution
In a notable accounting update, the REIT early adopted the new AASB18 standard, transitioning its joint ventures and associates from equity accounting to fair value through profit or loss. This change enhances transparency around investment income and fair value movements but complicates direct comparability with prior periods.
The REIT declared an interim distribution of 6.40 cents per unit for the quarter ended 31 December 2025, payable in February 2026, consistent with its policy of distributing earnings guided by operating earnings and cash flow.
Bottom Line?
Charter Hall Retail REIT’s strong profit growth and strategic portfolio repositioning set the stage for continued focus on convenience retail and disciplined capital management amid evolving market conditions.
Questions in the middle?
- How will the early adoption of AASB18 affect future earnings volatility and investor perception?
- What impact will the secured debt refinancing have on the REIT’s cost of capital and financial flexibility?
- How will the increasing weighting towards convenience net lease retail influence long-term portfolio resilience?