The Charter Hall Group (ASX: CHC) share price is up by 6.33% at the time of writing to $13.94, following a very positive market reaction to its earnings release for the half year to December 31 2019.
Charter Hall is a property fund manager and developer across the office, retail, industrial and residential sectors, with offices in Sydney, Melbourne, Brisbane, Adelaide, and Perth.
Property investment portfolio up by 13%
Charter Hall reported that its property investment portfolio increased by 13.4% to $2.1 billion and generated a 12.5% total property investment return during the year.
The group commented that the earnings resilience and diversification of the property investment portfolio continues to remain its core strength. The portfolio's top 10 asset exposures represented only 6.0% of earnings and it is 82% weighted towards east coast markets.
The company further noted that its portfolio occupancy remained strong at 97.6%, while the weighted average lease expiry (WALE) improved to 8.9 years.
Property funds management
Charter Hall's fund management portfolio is well-diversified with over 4,000 tenancies across 5 sectors and is 7.7 million square metres in size.
The company's managed funds grew by $8.5 billion to reach $38.9 billion this result was driven by $5.8 billion of net acquisitions as well as a positive revaluation of $1.2 billion and capex spend on developments of $0.9 billion.
It increased the portfolio WALE to 8.9 years as a result of transactional activity and delivered more than $2.0 billion dollars of net rental income.
The group recorded $2,978 million of gross equity inflows from wholesale funds, wholesale partnerships and direct funds.
Charter Hall believes that it is now well positioned to continue growing via its development pipeline as well of taking advantage of strategic opportunities as they arise.
Development activity and pipeline moving forward
Development completions totalled $568 million of funds under management in the last 12 months, with development activity continuing to drive asset creation and attract capital. Notwithstanding completions, Chart Hall also noted that its $6.8 billion pipeline continues to be re-stocked.
The group commented that it will continue to use its cross-sector tenant relationships and the scale of its portfolio to create investment grade opportunities.
Outlook for the rest of FY20
Charter Hall has upgraded its FY20 guidance from 30% to approximately 40% growth in post-tax operating earnings per security (OEPS) over FY19. However, it pointed out that this is based on no material change in current market conditions but reflects recent valuations, updated performance fee expectations and transactional activity.
The company's FY20 distribution per security guidance has been stated as 6% growth over FY19.
