Charter Hall Group, strategy demonstrating its resilience

Team Veye | 02 Oct 2020 ASX - CHC
Charter Hall Group, strategy demonstrating its resilience

Charter Hall Group (ASX: CHC)

Extending the “bp Partnership” – Creation of NZD $262 million bp NZ Fund

Charter Hall Group (ASX: CHC) on 10 September 2020 announced that it has extended its Partnership with global multinational corporation “bp”, by creating a new fund that has contracted to acquire a 49% interest in a NZ $534 million portfolio of 70 triple net leased (NNN), Long WALE Convenience Retail properties leased to bp in New Zealand.

(Chart source: TradingView)

The portfolio, consisting of the majority of bp’s owned Convenience Retail properties in New Zealand, has been acquired in a sale and leaseback transaction and will have a 20-year WALE at acquisition with initial lease terms of properties in the portfolio ranging from 18 to 22 years.

The portfolio is geographically diversified with 78% of the portfolio in metropolitan locations and 72% located in NZ’s top 3 cities, with Auckland representing 51% of the portfolio value

Charter Hall Group FY20 Results

Charter Hall Group (ASX: CHC) on 20 August 2020 announced its FY20 results for the period ending 30 June 2020. Key financial and operational highlights for the period are:

(Graphic Source – Company Reports)

Financial highlights:

  • Operating earnings of $322.8 million, or OEPS post-tax of 69.3cps, up 46.3% on the prior corresponding period (pcp)
  • Statutory profit of $345.9 million, after tax attributable to stapled securityholders, up 47% on pcp
  • Distributions of 35.7cps, up 6% on pcp
  • Total Platform Return of 18.8%

Operating highlights:

  • Access: $5.1 billion of gross equity raised and $4.6 billion of net inflows generated
  • Deploy: $8.3 billion of gross transactions
  • Manage: $40.5 billion of FUM at year end, with $1.3 billion of FUM growth post-balance date to take FUM to $41.8 billion
  • Invest: Property Investments up $184 million to $2.0 billion, delivering a 10% return for the year while investing alongside our investor customers (Data Source – Company Reports)


Veye’s Take

Despite the challenges presented by COVID-19, the Charter Hall Group has delivered another strong year of growth, with FUM up 33% to $40.5 billion. During the period the Group successfully launched several new partnerships with investors and new tenant partnership funds with Telstra, BP Australia and post-balance date with Ampol. This success in partnering with its tenant and investor customers has been rewarded with strong equity flows across all equity sources. These strong equity flows have translated into continued platform growth. The Group maintains financial flexibility and substantial funding capacity across the fund’s platform with $5.0 billion of available liquidity. The reduced payout ratio from FY20 has added substantial retained earnings to support future investment activity. After some retracement, the RSI has again turned up. The stock can have the potential to grow significantly in short to medium term. Veye maintains a "Hold" on “Charter Hall Group” at the current price of $12.72


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