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Charter Hall Social Infrastructure (ASX:CQE) - MD and CEO David Harrison
MD and CEO David Harrison
Source: Charter Hall Social Infrastructure
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  • Charter Hall Social Infrastructure REIT (CQE) has enjoyed a 103.4 per cent statutory profit uplift to $174.1 million
  • Operating earnings of $58 million were up 13.5 per cent while CQE witnessed a slight decrease in operating earnings of three per cent to 16 cents per unit
  • CQE enjoyed a 100 per cent occupancy rate across its portfolio while lifting its weighted average lease expiry (WALE) to 15.2 years from 12.7 years
  • CQE reported that the FY22 anticipated distribution guideline is 16.7cpu, up 6.4 per cent from FY21, based on currently available information
  • Shares in CQE are up 0.28 per cent to $3.55 at 2:40 pm AEST

Charter Hall Social Infrastructure REIT (CQE) has enjoyed a 103.4 per cent statutory profit uplift to $174.1 million but witnessed a slight decrease in operating earnings of three per cent to 16 cents per unit.

Operating earnings of $58 million were up 13.5 per cent and CQE has a balance sheet gearing of 24.5 per cent with an investment capacity of $207 million.

Charter Hall Social Infrastructure REIT fund manager Travis Butcher said the company had delivered on its strategy to enhance income reliance and capital growth.

“It has been an active year which has included the acquisition of two new social infrastructure properties with strong tenant covenants and the extension of 106 leases to an average 20 years with CQE’s major tenant customer, Goodstart,” he said.

“CQE is well positioned with low gearing and $207 million of investment capacity to deliver secure income and capital growth to investors.”

The company enjoyed a 100 per cent occupancy rate across its portfolio while increasing its weighted average lease expiry (WALE) to 15.2 years from 12.7 years.

The majority of leases are now on fixed rent reviews resulting in a forecast weighted average rent review of 2.9 per cent, with the leases set to expire within the next five years representing only 3.4 per cent of rental income.

During this time, CQE purchased two social infrastructure sites with a total on-completion value of $202.5 million and settled three new childcare properties for $12.6 million.

Revaluations of the property portfolio conducted in FY21 resulted in a $119.4 million valuation rise over June 30 2020 values, representing an 11.1 per cent increase net of capital expenditure and a 5.6 per cent passing yield.

CQE proceeded to sell non-core assets to recycle funds into properties with more favourable fundamentals during the financial year.

Charter Hall said these divestments comprised smaller centres (average of 67 places), short WALE (average 6.6 years) and lower socio-economic locations.

There were 44 property divestments totalling $85.3 million throughout the period, including the remaining 20 New Zealand assets. The average yield achieved on these divestments was 5.9 per cent resulting in a 5.7 per cent premium to book value.

Charter Hall said the essential nature of childcare had meant it had avoided many of the impacts associated with COVID-19 induced lockdowns, with government funding continuing to grow.

As at 30 June 2021 there are 8332 long day care centres in Australia, a net increase of 297, or 3.7 per cent for FY21.

The company said the softening in supply growth could be seen in the lower number of centre openings in the first half of 2021 when compared to previous corresponding periods.

CQE reported that the FY22 anticipated distribution guideline is 16.7 cents per unit, up 6.4 per cent from FY21, based on currently available information.

Shares in CQE were up 0.28 per cent to $3.55 at 1:20pm AEST.

CQE by the numbers
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