Strong Coles and Woolies sales help prop up Charter Hall Retail REIT as profits fall

The Charter Hall Retail Trust has reported a 5.6% drop in interim statutory profits to $41.7 million despite “resilient” non-discretionary sales growth from its anchor tenants Coles and Woolworths.

The two supermarket groups recorded sales growth of 4.6% for the six month reporting period to December 31, 2011, compared with the REIT’s specialty tenants, which managed sales growth of just 1.7%.

Acting CEO Scott Dundas says the resilience of non-discretionary retail spending “continues to positively reinforce the REIT’s underlying strategy of being a specialist owner of supermarket anchored neighbourhood and sub-regional shopping centres in Australia.

“We believe the continued sales growth of this sector, as highlighted by recent Australian Bureau of Statistics retail data which reported annual food-based turnover of 4.2%, coupled with 8.2% specialty occupancy costs of the REIT’s portfolio provides a positive opportunity for further income and capital growth for unitholders,” Dundas says.

Over the six-month period Charter Hall Retail disposed of four US retail assets as it refocused on strengthening its Australian portfolio with the acquisition of three former Centro-managed malls, all of which are anchored by either a “dominant” Coles or Woolworth’s supermarket.

The trust intends to sell a further three wholly owned assets in the US by June 2012.

In December the trust acquired the Lansell Plaza in Bendigo for $32 million from the Centro Group and the Gladstone Shopping Centre in Queensland from a syndicate managed by the Centro Group for $17 million.

In August it acquired the Albany Creek Shopping Centre in Brisbane for $40.1 million from a Centro/MCS-managed syndicate.

In its annual results, Charter Hall Retail REIT said its Australian portfolio continued to perform well during the year, “highlighting the resilience of the non-discretionary retail sector”.

Occupancy across its Australian portfolio stands at 98.7% with same property net operating income growth of 3.5%

The $946 million portfolio achieved specialty rental rate growth of 4.1% and signed 82 new lease and 77 renewal transactions in the half year.

 

 

 

 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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