Charter Hall's twin focus to counter any weakness

DIVERSIFIED property group Charter Hall will focus on consolidating its funds management business through the wholesale market to offset any weakness in development projects.

DIVERSIFIED property group Charter Hall will focus on consolidating its funds management business through the wholesale market to offset any weakness in development projects.

The group said about 61 per cent of overall earnings in the past year were generated from management of its wholesale funds, through management fees and recurring income from office and retail rents.

There has also been a significant inflow of cash to the unlisted funds as investors look for less volatile havens from the sharemarket and low 10-year bonds.

Charter Hall's joint managing director, David Harrison, said the year was one of consolidation. He added that in the coming year the group would reweight its focus to Australian office, food-anchored retail and logistic warehouses through the listed and unlisted funds.

For the year to June 30, the group reported a statutory profit after tax of $16.7 million, down 68.1 per cent on the prior corresponding period due to the asset sales in the US from the previously listed Charter Hall Office REIT.

Excluding the one-off write-downs, operating earnings were $63.6 million or 21.5? per security, a 4.4 per rise on the 2011 year.

The full-year distribution of 18.2?, up 10.3 per cent on the previous corresponding period, was paid yesterday.

Mr Harrison forecast operating earnings for the financial year to June 30, 2013, to be in the range of 22.5? to 23? per security, or between 5 to 7 per cent growth over the 2012 financial year. The results were in line with market expectations.

Goldman Sachs Australia's senior REIT analyst, Simon Wheatley, said the result was generally positive, with Charter Hall's management saying the cost of debt in managed funds (in which Charter Hall has investment stakes) has fallen from 7.4 per cent to 6.2 per cent, and cuts in corporate overheads to provide some benefit to the 2013 financial year.

During the year the group undertook a write-down on its 15 per cent interest in the wholesale fund, CHOF5, which was primarily driven by the Little Bay Cove development of about $5.8 million.

Charter Hall has increased its funds under management to $9.4 billion since June 30.

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