Home / ASX / Transaction activity delivers Charter Hall upgrade

The Charter Hall Group (ASX: CHC) share price is up around 4% after the property manager upgraded its earnings projection for FY21.

It manages property funds across a range of sectors including office, industrial, logistics, retail and social infrastructure. Charter Hall manages assets worth $54 billion spread across 1,404 assets. The business has a $9 billion development pipeline.

Charter Hall upgrades earnings

It has upgraded its operating earnings per share (OPES), to be no less than $0.83 per share for FY22. That means it’s now expecting growth of at least 36% over FY21.

Why is it expecting so much growth?

The upgraded expectations are thanks to funds under management (FUM) growth and transaction activity so far in the current financial year.

That is combined with the independent valuations that have been completed for some of its funds – this has resulted in performance fees due and payable at 31 October 2021. The business has $3.4 billion of industrial assets which resulted in net gains of $329 million, or a 9.6% increase in percentage terms over the 4-month period to 30 June 2021.

Further growth could occur

More independent valuations at 31 December 2021 and 30 June 2022 across the platform are likely to drive further valuation growth and performance fees payable for funds and partnerships.

Both the Long WALE (weighted average lease expiry) Hardware Partnership and Charter Hall Prime Industrial Fund are expected to exceed their performance fee internal rate of return (IRR) hurdles.

In summary, the property asset class, and specifically Charter Hall, is performing well.

Its FUM is now over $54 billion.

Management comments

The Charter Hall Managing Director and CEO David Harrison said:

“The Charter Hall team continues to deliver on its strategy for fund investors and securityholders. Our total development pipeline has expanded beyond $9 billion as we replenish new sites across industrial and office markets and our committed developments grow through further pre-leased development commencements.

“This growth from development has complemented the selective stabilised asset acquisitions across all sectors. While the group continues to deploy investment capacity, we actively refresh and expand this capacity via strong equity inflows across the diversity of our capital channels.”

Summary thoughts on Charter Hall and the share price

It’s no wonder that Charter Hall shares have risen by 47% over the past year with how much asset values have risen. It will be interesting to see what happens when interest rates start rising again. I think some property assets could still be good value, but I think there could be stronger ASX growth shares out there to consider.

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