UBS is increasingly convinced of Charter Hall's ability to continue raising and deploying third-party equity/debt. The broker upgrades earnings estimates by 7-8% to reflect growth in assets under management and co-investments.
Charter Hall has upgraded FY19 operating earnings growth guidance to 24% from 14-17%. The broker had assumed 16%. The upgrade largely reflects an upgrade to the Charter Hall Office Trust performance fee. Upside to this fee, and to assets under management, suggest upside risks to FY20 guidance, the broker believes.
Charter Hall has announced a reduction in its distribution pay-out policy to 70-95% of operating earnings per share from 85-95%. At the lower end, Macquarie calculates this implies a -10% decline versus FY18.
Charter Hall will create a new wholesale shopping centre fund, the Charter Hall Prime Retail Fund, and has also acquired 50% of Coles’ head office in Melbourne. The first acquisition for the CPRF will be Campbelltown Mall in Sydney.