The Charter Hall Group (ASX: CHC) share price is on watch this morning after the property business announced 14% growth of its funds under management to $46.4 billion.
In early trading the Charter Hall share price has fallen 5% in response to the report.
If you haven't heard of Charter Hall, it's a diversified property business that owns and also manages a large property portfolio on behalf of shareholders various property funds including Charter Hall Long WALE REIT (ASX: CLW).
Charter Hall's FY21 half-year result
The company reported that it generated $129 million of operating earnings, equating to operating earnings per share (EPS) of 27.8 cents. It generated $173 million of statutory profit.
Charter Hall managing director David Harrison said: "Notwithstanding the challenges presented by COVID-19, we have been well insulated by our on-going focus on long WALE properties leased to high quality tenants. As a result, we continue to enjoy the support of our investors who remain keen to invest alongside us in Australian commercial real estate."
Property investment
Charter Hall runs its own property investment portfolio worth $2 billion. This portfolio generated a total property investment return of 10.9% for the period.
Management said that the earnings resilience and diversification of the property investment portfolio continues to remain a key strength, with the top 10 asset exposures representing only 10.4% of earnings and the portfolio is 80% weighted towards the Australian East Coast market. Portfolio occupancy was 97.1% and the weighted average lease expiry (WALE) improved from 8.7 years to 9.1 years.
The property investment yield was 6% for the half-year.
Property funds management
Charter Hall said that its fund management portfolio is now 8.5 million sqm in size, diversified across five sectors. The funds under management (FUM) grew by 14% to $46.4 billion, driven by $3.5 billion of net acquisitions (and $6.2 billion gross transactions), positive property revaluations of $1.1 billion and capital expenditure on developments of $1.2 billion.
The property business announced that it experienced $2.8 billion of gross equity allotment, comprising $766 million in wholesale pooled funds, $1.1 billion in wholesale partnerships, $392 million allotted in listed funds and $520 million in direct funds.
Management said it still had $6.4 billion of investment capacity to keep growing.
The property funds management yield was 4.8%, according to Charter Hall.
Balance sheet
A key focus of the business is capital management with $3.7 billion of new and refinanced facilities during the period and no material maturities in FY21 or FY22. Charter Hall said that it maintains financial flexibility and substantial funding capacity.
The weighted average gearing across the fund platform was 28%, which Charter Hall said was conservative.
Charter Hall distribution and outlook
Charter Hall reminded investors that the distribution for this result was 18.6 cents per security, representing growth of around 6%. The FY21 distribution is still expected to grow by 6% compared to FY20.
The group's previous FY21 guidance was for post-tax operating EPS (OEPS) of approximately 53 cents per security. Assuming no material changes in the market conditions and the COVID-19 operating environment doesn't significantly worsen, the FY21 guidance for OEPS is no less than 55 cents, excluding any accrued performance fees, which would represent a slight increase in underlying operating earnings.
