Charter Hall reaffirms strong distribution growth

It comes just days after Scentre, the shopping centre operator of Westfield malls in Australia, became the first major REIT to ditch its interim distribution in order to shore up its finances.

It highlights the divide between struggling retail landlords and those in a more secure position with a large exposure to industrial and office assets.

Across Charter Hall’s funds platform, 9.7 per cent of tenants are classified as small-to-medium enterprises under the National Cabinet Commercial Code, which requires landlords to act in good faith negotiations and offer reductions in rent based on the tenant’s reduction in trade during COVID-19.

Its top four tenants by net income are the government, Telstra, Wesfarmers and Woolworths, which provide Charter Hall a predictable income stream.

“We are partnering with those tenants who have been affected adversely by COVID-19 and to support them through this challenging period,” Charter Hall chief executive David Harrison said.

“We’ve also looked to partner with our investors to optimise portfolio quality and resilience, whilst judiciously deploying further capital into pre-leased developments and selective acquisitions.”

Charter Hall said its “develop to core” strategy was providing opportunities to deliver returns to investors, having increased its development pipeline to $7.3 billion.

The Charter Hall Prime Office Fund last month received development approval for a $1.5 billion project at 555 Collins Street in Melbourne while the Charter Hall Prime Industrial Fund secured two long-term pre-lease commitments for high-tech distribution centres for Coles in Sydney and Melbourne worth approximately $400 million.

Mr Harrison said the group had $5 billion in existing investment capacity across its various funds with about 40 per cent of that in cash and expected its capital partners to deploy additional equity in the next year.