Charter Hall sells two shopping centres for $225M following unsolicited off-market offers

About Charter Hall

Charter Hall Limited, (Charter Hall, the Group, ASX:CHC) is a fully integrated property investment and funds management Group that has been listed on the ASX since 2005. The Group is one of the largest owners of real estate in Australia and its core investments are focused on the Office, Industrial & Logistics, Retail and Social Infrastructure sectors.

$225M sale of shopping centre assets

Charter Hall Retail REIT (ASX:CQR) has announced the contracted sale of two shopping centres for a combined total of $225 million following unsolicited off-market offers for both properties. Southgate Square in South Australia has been sold for $91 million and will settle in February 2024, while Rosebud Plaza in Victoria has been sold for $134.5 million and will settle in June 2024. Sale prices are in line with June 2023 book valuations.

bp Australia portfolio performing well

Charter Hall managed partnerships own a 49 percent interest in a portfolio of 295 convenience retail properties leased to bp across Australia and New Zealand. The leases are geographically diverse, CPI linked, and are prudently structured with bp responsible for all outgoings, structural repairs and maintenance, and capital expenditure. This type of lease structure is known as a triple net lease.

External independent valuations completed on 31 October reveal a 4.1 percent increase, which translates into a $23.1 million valuation uplift. This is despite a slightly higher rental capitalisation rate of 4.77 percent (previously 4.72 percent) in line with higher interest rates. Higher interest rates result in higher capitalisation rates, which drive valuations lower. However, the CPI linked rental increase more than offset the cap rate increase resulting in an overall increase in the value of the portfolio.

22.09 cents distribution for the half-year ending 31 December 2023

The Responsible Entity for the Charter Hall Property Trust and Charter Hall Limited has declared a 22.09 cents distribution per stapled security for the half-year ending 31 December 2023. The two components of the distribution are 12.15 cents per security from the Charter Hall Property Trust and 9.94 cents per security fully franked dividend from Charter Hall Limited. The franking credit attached to the dividend from Charter Hall Limited is equal to 4.26 cents per security. The distribution will be paid on 29 February 2024.

The Future

Distribution per share growth has averaged 7.7 percent per annum from the 2013 to the 2023 financial year.

The Charter Hall capital light partnership model and the Group’s low gearing ratio of just 2.2 percent with $600 million of liquidity, leaves it well placed to maintain consistent and steady distribution growth over the medium term.