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Charter Hall Education Trust (CQE) Reports Solid Result

Charter Hall Education Trust (ASX: CQE) has just released its full year financial results with an increase in operating earnings supporting an increased distribution to owners.

Charter Hall Education Trust is an Australian Real Estate Investment Trust (A-REIT) that invests in early learning centres throughout Australia and New Zealand. The trust contains a portfolio of more than 400 properties with a valuation north of $1 billion. The majority of their properties are located in Australia with Queensland being home to 125 or just under 30% whilst there are now 48 properties located across the ditch in New Zealand.

What You Need To Know

Operating earnings for the year were up 5.5% on the previous corresponding period at $42.2 million.

Distributions paid to shareholders is up 6% at $0.16 per unit. This translates into a dividend yield of 4.44% based on the share price at the time of writing.

The statutory result looks less impressive with net profit coming in at $68.7 million, representing a 33% decline on last year. However, the statutory result can be somewhat misleading in isolation as it can be heavily affected year to year by property revaluations within the portfolio.

Life for like rental growth across the portfolio for the 12 months was 2.3% which was in line with expectations. One key indicator that signifies the quality of the property portfolio is the long Weighted Average Lease Expiry (WALE) of 9.9 years. Generally speaking, the longer the lease expiry the greater the comfort investors can have around the sustainability of and growth in revenues.

Spending For Growth

During the year, 6 developments were completed with a combined completion value of $30.7 million. In addition, 7 existing assets were sold for a total of $9.2 million.

14 development sites were acquired along with 5 existing childcare centres for a total completion value of $118.7 million.

As at the end of the financial year, there are 31 development sites in the pipeline with an approximate completion value of $190.2 million.

The fund also recently acquired a 50% interest in the Brisbane City Council Bus Network Terminal for $51.25 million, introducing a secure government tenant to the portfolio.

Update To Fund Mandate

Today, CQE has also announced a broadening of its fund mandate to include additional Social Infrastructure sub-sectors in order to improve the fund’s long term income sustainability.

Whilst the fund’s main focus will remain in childcare, this will be complemented by opportunistic purchases within other sub-sectors of the social infrastructure space with a preference for Education, Government services, Transport and Health.

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At the time of publishing, Luke has no financial interest in any companies mentioned.

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