The Charter Hall Group (ASX: CHC) share price is up another 5% right now. That means it's now up more than 11% this week, bringing this year's gain to 45%.
Yesterday, the business upgraded its FY22 earnings guidance and updated the market about its funds under management (FUM) growth.
However, this morning the company revealed that it has signed a long-term agreement with one of Australia's largest companies, Telstra Corporation Ltd (ASX: TLS).
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Telstra signs new Charter Hall rental agreement
Charter Hall announced that it has secured a pre-commitment from Telstra at its $450 million development in the Adelaide CBD – 60 King William Street.
The real estate business noted this 10-year agreement builds on Charter Hall's long-term tenant customer relationship with Telstra, including its global headquarters.
Telstra will relocate its Adelaide workforce to the new office space once completed in 2023.
Joining Federal Government Agency Services Australia at 60 King William Street, Telstra will occupy approximately 6,000 square metres of space across two levels.
Charter Hall Office CEO, Carmel Hourigan said:
We are pleased to be further extending our deep relationship with Telstra and welcoming their team to 60 King William Street, which is set to raise the bar for innovative and sustainable workplaces in South Australia. This agreement brings Telstra's total leased space with us to more than 130,000sqm across Australia, underpinning the strength of our partnership and reflecting Charter Hall's ability to deliver high quality, technology enabled buildings to meet the needs of Telstra's business.
FY22 earnings guidance and FUM growth
The property management business has gone through the process of independently valuing almost all of its properties, resulting in a net valuation uplift of around $3.5 billion as at 31 December 2021.
It was also noted that Charter Hall Long WALE REIT (ASX: CLW) and Hostplus have unconditional ALE Property Group (ASX: LEP) securityholder and court approval to complete the deal on 17 December 2021.
As a result, group FUM is now expected to be $61.3 billion at 31 December 2021.
These valuation uplifts increase FUM and likely the performance fees payable at testing dates during the financial year, so it upgraded its FY22 operating earnings per security (EPS) of no less than $1.05 per security.
The FY22 distribution per security guidance remains unchanged and is for 6% growth compared to the distributions paid in FY21.
Charter Hall managing director and CEO David Harrison said:
It is pleasing to see the hard work we have put into curating and growing high quality portfolios for our fund investors over many years has delivered excellent financial returns, well above expectations and performance fee hurdles.
The resultant performance fees, whilst positive for the group, also highlights the outperformance delivered for investors given fund investors typically receive 80% of excess total returns above the hurdles established at inception of the funds and partnerships.
Charter Hall share price snapshot
The high level of growth of the Charter Hall has seen its market capitalisation rise to $9.7 billion according to the ASX.
