Charter Hall Retail REIT (ASX: CQR) – Chair and Manager AGM Addresses

Charter Hall Retail REIT reported operating earnings of 26.4 cents per unit for FY26, representing 4% growth on the prior year, with the board providing FY27 guidance of no less than 27.3 cents per unit, implying growth of at least 3.5%. The company also upgraded FY27 distribution guidance to no less than 26.4 cents per unit, which at the current security price of $3.61 translates to a distribution yield of 7.3%. Net tangible assets increased 8.4% to $5.03 per unit, contributing to a 12-month levered portfolio return of 15.8%.

The portfolio has reached its target strategic mix of approximately 50% shopping centres and 50% net lease convenience retail assets, a shift that management suggests has materially improved income resilience while reducing capital requirements. The rebalancing reflects a deliberate curation approach spanning over a decade. The company deployed $907 million of equity into net lease opportunities, including the take-private of HPI and the sale and leaseback transactions with bp and Ampol, with that deployment increasing in value to $1.2 billion at 30 June 2026. This represents $317 million of value creation, translating to an average uplift of 35% and an average equity internal rate of return of 18%.

Portfolio occupancy stands at 99.1%, with tenant arrears remaining below 0.5%. Same-property net property income grew 3.0% across both the shopping centre and net lease portfolios. The portfolio weighted average lease expiry reached 7.1 years, with major tenants showing a WALE of 8.9 years. Top 10 tenant customer groups, including bp, Ampol, Woolworths, Coles, Bunnings and Wesfarmers-related brands, represent 61% of portfolio rent. The portfolio value on a pro forma basis reached approximately $5.2 billion across 730 assets.

Capital efficiency has improved materially, with shopping centre capital expenditure declining to $28 million in FY26 compared to the five-year average of $75 million, while the net lease portfolio required no capital expenditure. Management highlighted the portfolio’s exposure to inflation-linked rental increases in the net lease segment and strong exposure to supermarket food sales annual growth rental mechanisms as providing inflation hedge characteristics for investors concerned with purchasing power erosion.

Pro forma balance sheet gearing stands at 30.9%, with debt refinancing reducing the debt margin by 40 basis points to 125 basis points and the weighted average cost of debt at 5.0%. The company achieved net zero Scope 1 and Scope 2 emissions from 1 July 2025 for assets under its operational control, with 19.5 megawatts of solar installed across 76% of shopping centres. The shopping centre portfolio maintained a 5 Star NABERS Energy rating and improved to a 4.1 Star NABERS Water rating.

The board noted the current discount to NTA per unit and remains focused on enhancing earnings growth and capital management. Investors should monitor lease expiry profiles over the medium term, tenant covenant developments particularly among major customers, and progress on the stated capital efficiency and earnings growth initiatives in coming reporting periods. This announcement is price sensitive and flagged as material by the ASX.

View the full ASX announcement (PDF)

About Charter Hall Retail REIT (ASX: CQR)

Charter Hall Retail REIT is a real estate investment trust that owns and manages a portfolio of retail properties in Australia and New Zealand, primarily supermarket-anchored neighbourhood shopping centres, service stations, and retail logistics facilities. The trust’s major tenants include leading retailers such as Woolworths, Coles, Wesfarmers, Aldi, Ampol, and BP. It operates approximately 699 properties across Australia and is managed by Charter Hall Group.

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