This article is from the Australian Property Journal archive
CHARTER Hall Social Infrastructure REIT has upgraded its full year distribution guidance, buoyed by the performance of the childcare sector during the pandemic.
The trust (CQE) posted an interim profit of $57.8 million and operating earnings of $29.1 million, equating to 8.0 cpu. Distributions were 7.5 cpu.
It collected 99.6% of rent during the first half and net property valuation increases totalled $25.3 million, or 2.2%.
Social infrastructure properties, such as childcare and healthcare assets have proven to be resilient assets throughout the pandemic. Heavily weighted to the childcare sector, CQE said upgraded its full year distribution guidance forecast from 15.0 to 15.7 cents per unit, based on continued tenant performance.
“The key drivers of increasing childcare demand remain and there has not been any structural change to the market as a result of COVID-19. Childcare continues to be both an essential labour supply mechanism to the Australian economy, whilst providing significant learning benefits to young children,” it said.
The trust extended 58 leases to by an average of 12 years to 20 years with its major tenant Goodstart during the period, had four out of five five-year options renewed by tenants, and picked up a pair of childcare centres with average lease expiries of 20 years.
“There has been a strong recovery in childcare attendances post the COVID-19 pandemic and associated restrictions with operator’s occupancy levels returning to pre COVID-19 levels.
“Government funding, which was critical to support the operators during the pandemic period continues to grow, underlining the importance to the economy and educational and learning benefits being provided.”
CQE spent $202.5 million on two major acquisitions during the period, and is well positioned to make further purchases.
It bought the 11-storey, A grade offices home to Queensland’s largest Catholic, not-for-profit health provider, Mater Misericordiae in a sale and leaseback deal, and the new purpose-built South Australian Emergency Services Command Centre and an under-construction multi-deck car park next door. Both offer long-term leases.
“Consistent with CQE’s strategy, our focus during the period has been on enhancing income sustainability and resilience by improving the quality of tenants and leases within the portfolio,” CQE fund manager, Travis Butcher said.
“CQE is well positioned in the current economic environment with low gearing and $130 million of investment capacity to deliver secure income and capital growth to investors”.
The trust expects recent acquisitions and completion of developments will add to earnings and distribution growth in future years.
