When it comes to stability, real estate investment trusts can be a good place to look among the various ASX sectors.
One such trust that has released its results recently is the Charter Hall Retail REIT (ASX: CQR), which, as the name suggests, invests in a portfolio of retail assets.
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Another solid year
The trust said in a statement to the ASX in early August that its full-year operating earnings had come in at $153.4 million, up 4% on FY25.
The trust paid dividends of 25.5 cents per share, up 3.3% on the previous year, and its net tangible assets stood at $5.03 per unit.
In terms of operating highlights, the trust said it was progressing towards its target of investing in 50% convenience retail shopping centres and 50% convenience net lease retail assets.
The trust's portfolio occupancy sat at 99.1% at the end of the year.
Charter Hall Retail's Chief Executive Officer, Ben Ellis, said:
FY26 was a milestone year as we completed the transition towards our target 50% allocation to Convenience Net Lease Retail assets. Over the past six years, the REIT has diversified its income base through the addition of high-quality tenant covenants and a series of accretive investments. This portfolio evolution has increased exposure to capital-efficient assets supported by strong underlying land values and predominantly inflation-linked rental growth. These investments delivered $317 million in value creation while enhancing the REIT's long-term earnings growth profile.
Mr Ellis said the shopping centre portfolio continued to perform strongly, "with specialty tenant retention increased to a record 86%, as many of our trade areas continue to benefit from historically low levels of new retail supply''.
He added:
With development activity constrained by elevated construction costs, we expect existing convenience retail assets to benefit from improved productivity and resilient rental growth, supporting long-term value creation for CQR investors.
CQR provided guidance for FY27 for operating earnings to grow by no less than 3.5% and dividends to grow by 3.5% to 26.4 cents per share.
Brokers keen on steady dividend outlook
UBS has a buy rating on CQR shares, with a price target of $4.65, compared with the current price of $4.15.
The broker said the trust's dividend guidance beat expectations by 2% while earnings guidance was in line.
UBS is forecasting a dividend yield of 6.2% in FY27, increasing to 7.1% by FY30.
Macquarie, meanwhile, has a neutral rating on the stock and a price target of $4.18.
The broker said it was attracted to the trust's growth outlook and yield, "however, we downgrade our recommendation on valuation grounds with the share price approaching a 2-year high''.
Macquarie is forecasting a yield of 6.3% this year, increasing to 6.8% by FY29.
