Charter Hall Earnings: Asset Sales at Book Value Have Derisked This REIT

Charter Hall Retail REIT is on track to meet guidance and our full-year operating earnings per unit estimate of AUD 27.4 cents with AUD 13.5 cents per unit delivered in the first half. We expect modest earnings declines for the next few years given rising debt costs. But once debt costs peak, which we expect around 2027, revenue growth should again translate to earnings growth. Charter Hall Retail REIT’s 4.3% cost of debt is not far below our long-term estimated cost of debt of 6.5%, so we think a fair bit of pain has already been taken.