- 7.1 per cent increase in operating earnings
- Only 4 per cent of rental income came from pandemic support payments
- Upgraded dividend guidance thanks to high levels of demand from supermarket and neighbour malls
Charter Hall Retail REIT (ASX: CQR), who invest in high-quality Australian supermarket anchored convenience and convenience-plus shopping centres, saw an increase of 7.1 per cent in their operating earnings compared to the first half of FY20 from $70.2m to $75.2m.
The company’s property portfolio has also increased in value from $3.23 billion in 1H FY20 to $3.5 billion in 1H FY21 – an 8.6 per cent jump. Factors influencing this portfolio increase include investments in property joint ventures following the acquisitions of bp New Zealand and the Coles Adelaide Distribution Centre.
These two acquisitions as expected have increased the group’s net borrowings and decreased their overall cash balance.
Of the $141.3 million in rental income during the 1H of FY21, $133 million was collected, with $5.8 million – or 4 per cent – coming from Covid-19 support measures whilst $2.5 million was uncollected.
Whilst April saw more than $5 million in Covid-19 related tenant support, this dropped to less than $2 million from July onwards. August was the only month that saw an increase in support, which was caused by lockdowns in Melbourne.
Woolworths and Coles Groups are both equal top tenants in terms of income with 16.6 per cent each. Woolworths, Coles Group, Wesfarmers – which includes Target, Kmart, Bunnings and Officeworks, Aldi and bp in total represent 54 per cent of portfolio income.
In terms of operational impact, convenience centres have seen an increase in sales partly due to consumers preferring local shops closer to home for essential goods and services.
Rockdale Plaza in Sydney is the most valuable property for the group with a book value of $149 million.
Depending on further Covid-19 lockdowns and government-mandated lockdowns, the group says it expects FY21 earnings guidance to be no less than 27.3 cents per unit with 12.7 cents per unit for the 2H FY21 distribution.
At the close of trade on Monday, CQR was up 2 per cent at $3.57, although still well below the 52-week high of $5.06 recorded last February, just prior to Covid-19.