Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • CQR reported operating earnings of AUD 147.5 million, or 25.4 cents per unit, with statutory profit reaching AUD 213.8 million.

  • The REIT completed the AUD 367.5 million investment in Hotel Property Investments Ltd with partner Hostplus, securing 100% ownership of a diversified AUD 1.3 billion portfolio.

  • Portfolio occupancy remained high at 98.9%, supported by positive specialty leasing spreads of 5.5% and record specialty sales productivity of AUD 11,356 per sqm.

Charter Hall Retail REIT (ASX:CQR) today released its financial results for the year ended 30 June 2025. The REIT reported operating earnings of AUD 147.5 million, equating to 25.4 cents per unit (cpu). Distributions were 24.7 cpu, in line with the previous year. Statutory profit stood at AUD 213.8 million.

Net Tangible Assets (NTA) per unit increased 2.9% to AUD 4.64, reflecting portfolio revaluations. Balance sheet gearing was reported at 27.1% on a pro forma basis and 35.0% on a look-through basis. The REIT maintained diversified funding with a weighted average debt maturity of 2.8 years.

Portfolio Activity and Growth

During FY25, CQR, together with Hostplus, completed the acquisition of Hotel Property Investments Ltd (ASX:HPI), securing a AUD 1.3 billion portfolio of 57 pub and accommodation assets. CQR’s equity contribution was AUD 367.5 million. The HPI portfolio, with 100% occupancy and a weighted average lease expiry (WALE) of 8.9 years, is underpinned by CPI-linked rent reviews expected to deliver consistent growth of 3.6% through the cycle.

Additional acquisitions during the year included Corio Village (VIC) and Glebe Hill Village (TAS) for AUD 65.0 million, alongside single-asset purchases such as Ampol Marsden Park (NSW) for AUD 21.0 million and Cecil Hotel (QLD) for AUD 14.3 million. Divestments included Lake Macquarie Square (NSW) for AUD 122.5 million and supermarket assets in NSW totalling AUD 31.9 million.

The portfolio was 99% independently revalued during the year, with convenience shopping centre valuations increasing 2.9% and convenience net lease retail up 3.9%. Overall, cap rates tightened by five basis points to 5.74%.

Operating Performance

Portfolio occupancy stood at 98.9%, while Like-for-like net property income grew by 2.6%, supported by supermarket MAT growth of 2.5% and specialty sales productivity reaching AUD 11,356 per sqm, up 2.6% on the prior year. Leasing activity included 272 specialty leases, delivering an average positive leasing spread of 5.5%.

The tenant mix remains weighted towards major convenience retailers, with Woolworths, Coles, bp, Wesfarmers, Aldi, Ampol, Endeavour and Gull accounting for 61% of rental income. The portfolio WALE is 7.0 years, with majors at 9.3 years.

Capital Management and CCRF

CQR continued its focus on capital management, refinancing the HPI debt platform and prepaying USPP noteholders. Moody’s affirmed its Baa1 issuer rating and senior unsecured rating with a stable outlook. The REIT’s weighted average cost of debt was 4.9% in FY25.

CQR also facilitated the establishment of the Charter Hall Convenience Retail Fund (CCRF), a wholesale pooled fund focused on metropolitan convenience retail. CQR sold four assets and its 49.9% interests in RP1 and RP2 into CCRF, retaining AUD 385 million (22% ownership) and realising a net return of AUD 294 million. CCRF has raised AUD 1.75 billion in equity and exchanged on AUD 504 million in acquisitions.

Outlook

CQR provided FY26 guidance for operating earnings of approximately 26.3 cpu, representing 3.5% growth, and distributions of 25.4 cpu, up 2.8%. From FY26, CQR will pay quarterly distributions.