Shares of Charter Hall Retail REIT (ASX: CQR), one of Australia's leading ASX-listed real estate investment trusts (REIT), entered a trading halt today following the announcement of a strong annual operating profit result, acquisition, and capital raising.
Results
In the year to 30 June 2015, Charter Hall Retail REIT, managed by the Charter Hall Group (ASX: CHC), announced operating earnings of 29.7 cents per unit, up 5.2% year over year. Distributions of 27.5 cents per unit were announced, representing a payout ratio of 92.6%.
Gross rental income climbed 9%, with valuation gains on properties and joint ventures lifting the group's statutory profit by 91%. Net tangible assets per unit climbed 5.6% over the year, to $3.59.
"Our performance during the period is underpinned by a focus on active asset management, enhanced portfolio quality and prudent capital management," REIT Fund Manager, Scott Dundas, said.
Over the 12-month period, the REIT achieved a weighted average anchor lease duration of 10.7 years and increased its weighted average debt maturity to 5.8 years, from 3.7 years.
Capital Raising and Acquisition
While releasing today's results to the market, the REIT took the step of announcing an acquisition of two "high quality" shopping centres. Located in regional New South Wales and the Northern Territory, the two supermarket-anchored centres will cost $94.9 million, reflecting an initial yield of 7.2%.
The deal will be funded by a $50 million institutional only placement, proceeds from previous divestments and debt funding of $31 million.
The REIT's deputy fund manager, Phil Schretzmeyer, said, "The acquisition of the Portfolio is in line with the REIT's strategy of acquiring supermarket-anchored centres that enhance the quality of the REIT's already strong property portfolio."
What Now
Looking ahead, the Charter Hall Retail REIT is targeting operating earnings between 30.25 and 30.75 cents per unit, barring any unforeseen events. The payout ratio range is expected to remain between 90% and 95%.
Mr Dundas said: "Ongoing investor interest in this asset class has resulted in yields for high-quality assets tightening sharply over the past twelve months and as such we are expecting to see growth in the value of the REIT's portfolio over the 2016 financial year."
