Charter Hall to step up focus on wholesale funds
Charter Hall Group, which started its life as an unlisted fund, will continue the theme with a focus on its stable of unlisted funds in the coming years.
Charter Hall generates about 60 per cent of its income from its property investments - its stakes in the Charter Hall Office and the listed Charter Hall Retail fund - as well its suite of wholesale funds, including the Charter Hall Office Core-Plus fund, which has won approval to redevelop the office tower at 333 George Street.
The balance 40 per cent comes from funds under management, which have risen to $10 billion.
For the six months to December, Charter Hall posted a statutory profit after tax of $29.9 million, up 52.7 per cent on the previous corresponding period. Operating earnings per share were 11.76¢, up 4.6 per cent.
The company declared an interim distribution of 9.8¢, up 7.7 per cent on the previous corresponding period, and payable on Wednesday.
The Charter Hall Group joint managing director, David Harrison, forecast earnings guidance of between 22.5¢ and 23.5¢ per share, a rise of between 5 per cent and 9 per cent.
The half-year results were marginally higher than market expectations, thanks to increased funds under management and management fees from its industrial and office wholesale funds.
"Our strategic focus on accessing, deploying and managing equity invested in core Australian real estate has strengthened our business, delivering improved quality of earnings," Mr Harrison said.
"In line with this strategy, over the first half-year we have secured $570 million of new equity commitments from our wholesale, listed and retail investors, and secured $1.3 billion of Australian office, retail and industrial property assets, which has increased total portfolio funds under management to $10 billion," Mr Harrison said.
He said Charter Hall had several investment avenues from which it could source capital, including institutional super funds and a combination of local and overseas property securities funds.
The other joint managing director, David Southon, said the rise in funds under management to $10 billion was helped by the additional $271 million of equity secured since January 1.
He said 89 per cent of the earnings before interest, tax, depreciation and amortisation was generated from annuity style income, which kept the underlying earnings stable.
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For the six months to December, Charter Hall reported a statutory profit after tax of $29.9 million (up 52.7% year-on-year), operating earnings per share of 11.76 cents (up 4.6%), and declared an interim distribution of 9.8 cents (up 7.7%).
Charter Hall’s total funds under management rose to $10 billion. Growth was driven by $570 million of new equity commitments in the first half and the acquisition of $1.3 billion of Australian office, retail and industrial property assets, plus an additional $271 million of equity secured since January 1.
Charter Hall is stepping up its focus on wholesale and unlisted funds managed by the listed parent company. This strategy aims to increase stable management fees and equity inflows from wholesale, listed and retail investors, improving the quality and predictability of earnings.
About 60% of Charter Hall’s income comes from its property investments (including stakes in the Charter Hall Office and listed Charter Hall Retail fund and its wholesale funds), while the remaining 40% is generated from funds under management.
Charter Hall’s joint managing director David Harrison forecast earnings guidance between 22.5 and 23.5 cents per share, representing an expected rise of roughly 5% to 9%. This guidance gives shareholders an indication of expected future operating earnings per share.
Charter Hall sources capital from several avenues including institutional super funds and a mix of local and overseas property securities funds, as well as wholesale, listed and retail investor commitments.
The Charter Hall Office Core‑Plus fund has won approval to redevelop the office tower at 333 George Street, illustrating how wholesale and unlisted funds are being used to acquire and add value to prime office assets.
Charter Hall reported that 89% of its EBITDA was generated from annuity-style income, which helps keep underlying earnings stable. That annuity-style income comes from recurring management fees and long-term property cash flows.
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