Charter Hall Group (ASX: CHC) reported 13.0% growth in operating earnings post-tax to $107.5 million for the half year ended 31 December 2018. More interestingly, the Group has upgraded its previous FY19 guidance for post-tax operating earnings per security growth of 8- 10% over FY18 to 14%-17% growth in post-tax operating earnings per security over FY18.
The news sent the stock price to surge up by 2.112% in early trade to stand at $8.945 on 22 February 2019 (12:41 PM AEST).
The Group’s Statutory profit after tax was $133.5 million in H1 FY19, an increase of 10.7% on previous corresponding period. EBITDA grew by 19.0% to $134.2 million driven by the expansion of the property fund management platform. This translates a growth of 22.4% or $5.2 billion in Funds Under Management (FUM) of $28.4 billion as at 31 December 2018, driven by the $1.6 billion acquisition of Folkestone, positive revaluation of $700 million and capex spend on developments of $500 million. On the basis of asset type diversification, 46% of $28.4 billion FUM comprises of Office Sector that stands at $13.1 billion, followed by Industrial sector which is 25% of FUM valued at $7.1 billion.
H1 FY19 Operating Earnings Per Share post-tax grew 13% to 23.1 cents per share while the Distribution Per Share declared by the company was 16.5 cents per share, up 6.0% on H1 FY18. It represents the dividend payout ratio of 72% lower than 76% as announced in the half year ended 31 December 2017.
Charter Hall’s Managing Director and Group CEO, David Harrison stated: “Following an active six months, the Group is pleased to announce another positive result achieving growth across all key metrics to deliver 1H FY19 OEPS growth of 13.0% to 23.1cps.”
Group’s investment management revenue was up 27.5% to $104.8 million in 1H FY19 compared to the previous corresponding period. It reflects the continued momentum in FUM driving funds management fee growth of 21.6% with transaction and performance fee earned 33.8% higher due to the active acquisition and divestment program.
Charter Hall’s Property Funds Management portfolio is well-diversified, having grown to 820 properties, 3,157 tenancies, a WALE of 8.0 years and delivering more than $1.8 billion of gross rental income. Moreover, the group has witnessed $1.2 billion of gross equity inflows comprising of $743 million n raised in Wholesale Funds and Partnerships, $305 million raised in Direct Funds and $172 million in Listed Funds.
On the balance sheet front, the company continued its focus on capital management and secured new and refinanced debt facilities of $4.1 billion during the period with no material maturities in Fiscal 2020. The company maintained its gearing at a modest 5.5% with a weighted average debt maturity of 7.1 years. Further, the Group confirmed the financial flexibility and substantial funding capacity across the fund platform with $2.6 billion of available liquidity and cash on hand of $115 million as at 31 December 2018.
Moreover, the Group expects its distribution payout ratio to range within 70% and 95% of operating earnings per security post-tax. FY19 guidance reportedly includes a $40 million accrual for the CHOT performance fee.
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