Charter Hall has a taste for Coles and Woolies
Charter Hall Retail REIT will continue to re-weight its shopping centre portfolio in favour of Australian shopping centres anchored by Coles and Woolworths following the release of annual results for the year to June 30, 2011.
Strong sales from anchor tenants Coles and Woolworths helped the REIT deliver profits of $62.9 million for the year off a portfolio valued at $1.93 billion.
Coles and Woolworths occupy 67% of gross lettable space in the REIT’s $1.4 billion Australia portfolio.
The annual report highlighted the resilience of its two key tenants, with the listed property trust reporting that Coles and Woolworths are among the top retailers in the world. Charter Hall says its weighting to the “non-discretionary food retail sector” underpins its Australian portfolio.
Charter Hall’s dependence on Coles and Woolies follows property developer Mirvac highlighting the role of the two supermarket groups played in propping up its retail portfolio in the last financial year.
In its 2011 annual results the two supermarket groups accounted for a quarter of Mirvac’s total retail rental income.
During the financial year, the Charter Hall retail trust increased its weighting in Australian properties and sold many of its offshore assets.
The trust will look to offload its remaining US and New Zealand properties over the course of the next financial year, with a medium-term strategy to exit Europe and invest further in Australian properties.
“With a portfolio of predominantly Australian shopping centres anchored by leading national supermarkets, I am confident we are well positioned to deliver defensive and resilient income and capital growth prospects for unit holders,” says chairman John Harkness.
Its Australian shopping centres performed slightly higher than expectations, with net operating income growth of 3.8% and occupancy rates of 98.8%.
The trust acquired 15 Australian shopping centres during the course of the financial year, including eight neighbourhood and regional shopping centres from Woolworths in a $266 million joint venture with Telstra Super.
The most expensive of these was the Gordon Shopping Centre on the Sydney North Shore, anchored by Woolworths and Harvey Norman and bought for $67 million, and the Albany Creek Shopping Centre, in the north-western suburbs of Brisbane bought for $40 million, anchored by Coles.
In total its 70 properties in Australia worth $1.4 billion make up 91% of Charter Hall’s net tangible assets.
The remaining 9% are made up seven shopping centres in Europe (Poland and Germany), 13 in the US and two in New Zealand.
Its total portfolio comprises 93 shopping centres (down from 138 following offshore divestments) covering gross lettable area of 695,000 square metres.