Charter Hall Group (ASX:CHC) reported first-half FY2026 operating earnings of AUD 239 million, or 50.5 cents per security, with Managing Director and Group CEO David Harrison citing “continued momentum across every segment of the business.” The group upgraded full-year FY2026 operating earnings guidance to approximately 100 cents per security, which management said represents 23% growth over FY2025 and is 5 cents above the company’s previously upgraded AGM guidance of 95 cents.
The company also reiterated distribution guidance for FY2026 of 6% growth over FY2025, extending what Harrison described as a 15-year history of annual DPS growth. In the half, distribution per security increased 6%, while the company retained about half of earnings for reinvestment under its payout policy.
Funds under management growth and record equity inflows
Harrison said investment management secured AUD 4.8 billion of gross equity inflows in the half, the strongest six-month result in the group’s history. He noted inflows in the last six months exceeded the prior full 12-month period, and said the record was broad-based across wholesale pool funds and partnerships, including the previously announced Challenger mandate secured during the half.
During Q&A, Harrison addressed questions on the newly launched Convenience Retail Fund (CCRF). He said there was “another AUD 1 billion of acquisition capacity” in the vehicle over and above acquisitions announced, and he expected the fund’s “dry powder” to grow as additional equity is raised. He declined to provide specific acquisition guidance for the second half, but said the fund would likely be a strong contributor to further growth.
Transactions, valuations, and operating environment
Charter Hall reported total transaction volume of AUD 9.8 billion for the half, comprising AUD 6.6 billion of acquisitions and AUD 3.2 billion of divestments. Management said acquisitions, development completions, and positive valuation movements outweighed divestments, with valuation support “largely driven by rental growth” amid reduced supply and improved tenant demand across the markets where the group operates.
Harrison also pointed to what he described as early signs of valuation recovery and the benefits of “disciplined portfolio curation” across the group’s listed REITs. He noted property FUM surpassed the peak reached in June 2023, prior to the subsequent devaluation cycle.
In response to questions about bond yield volatility and capital market conditions, Harrison said it would be “naive” to suggest bond yields do not impact property discussions, but argued that a gap remained between bond yields and the unlevered and levered returns the business believes it can deliver across core, value-add, and opportunistic strategies. He also said he continues to see institutional investors “under weight” their strategic property allocations, and suggested capital could shift toward property from other alternatives, particularly private equity, due to longer holding periods and reduced realizations.
Portfolio metrics and sector updates
The company described a large, diversified property platform of more than 1,600 assets spanning 11.5 million square meters of lettable area, with 97% occupancy and a 7.5-year WALE. The group said it collects more than AUD 3.6 billion in net annual rent across more than 5,300 leases.
- Industrial & logistics: Charter Hall said it manages over 7.2 million square meters of lettable area and an approximately 20 million square meter land bank. Management stated the portfolio remains about 17% below market rents, implying potential positive rental reversions over time. The industrial development pipeline was cited at AUD 6.5 billion.
- Office: The group said it manages Australia’s largest office platform at over AUD 26 billion, with 2.1 million square meters. In the half, 124,000 square meters were leased across 134 transactions, with 93% tenant retention (existing or expanded footprints). Occupancy was 95%, and management said net effective rents outpaced face rent growth.
- Convenience retail: Charter Hall said its convenience retail platform manages around AUD 15 billion of assets (or over AUD 17 billion including long-WALE Bunnings assets). Harrison referenced the prior year’s take-private of HPI and noted a AUD 290 million Bunnings sale-and-leaseback acquisition completed in the half.
- Social infrastructure: Management reiterated social infrastructure as a strategic focus, describing the portfolio as 100% occupied with long WALEs and predominantly triple- and double-net lease structures.
Harrison also discussed office market dynamics in Q&A, including the impact of work-from-home and AI-related concerns. He said he believes the “hysteria” around work-from-home is dissipating and argued the best-quality, modern CBD buildings should perform better than older, less competitive stock. He suggested AI-driven impacts could be more pronounced in suburban office markets than in core CBD locations.
Development pipeline and ESG initiatives
Chief Investment Officer Sean McMahon said the development pipeline totaled AUD 17.9 billion, with AUD 4.8 billion of committed developments. He said 74% of committed office developments were pre-leased and 94% of committed industrial logistics developments were pre-leased.
McMahon also highlighted AUD 5.5 billion of living and mixed-use projects with strategic planning approvals, including the SEPP planning approval at Gordon Shopping Centre, which he said added a potential multi-stage project of AUD 1.6 billion end value. In Q&A, management emphasized optionality around whether to develop, partner, or potentially trade assets, and said more than 95% of the gross completion value in that mixed-use pipeline is intended as build-to-sell, funded with majority external capital.
On sustainability, McMahon said Charter Hall had installed 89.7 megawatts of solar across the platform, reported green loans exceeding AUD 8 billion, and stated that from July 2025 the whole platform operates as net zero through existing on-site solar and renewable electricity contracts. He also cited recent GRESB recognition, with 18 funds in the top quartile and five ranked in the top 10 globally, alongside GRESB public disclosure and MSCI ratings for listed entities.
Financial performance, balance sheet, and updated guidance
CFO Anastasia Clarke reported operating earnings after tax of AUD 238.8 million, up 21.6% from the prior comparable period. She said revenue growth was driven across property investment income, development investment income, and funds management revenue. Statutory profit after tax was AUD 272.8 million, which she said reflected the combination of operating earnings and positive property revaluations.
Clarke said development investment EBITDA rose to AUD 38.1 million, about 10% of group EBITDA, supported by successful development completions sold down to funds. Funds management EBITDA was AUD 142.3 million, with base fees up 5.3% and transaction fees at AUD 32 million, reflecting large transaction volumes. She noted variable operating costs increased to AUD 73.5 million, primarily due to employee and payroll tax accruals associated with outperformance.
On the balance sheet, the group reported gearing of 7.7% and said it had added AUD 400 million of new undrawn debt lines after the balance date, contributing to AUD 1 billion of investment capacity (“dry powder”). Net tangible assets increased to AUD 5.54, which Clarke attributed to positive revaluations and retained earnings. Management also pointed to more than AUD 7.8 billion of total platform deployment capacity.
Harrison closed by upgrading FY2026 operating earnings guidance to approximately AUD 1.00 per security, excluding any expectation for performance fees, and reaffirming FY2026 distribution guidance of 6% growth.
About Charter Hall Group (ASX:CHC)
Charter Hall is one of Australia's leading fully integrated property investment and funds management groups. We use our expertise to access, deploy, manage and invest equity to create value and generate superior returns for our investor customers. We've curated a diverse portfolio of high-quality properties across our core sectors Office, Industrial & Logistics, Retail and Social Infrastructure. With partnerships and financial discipline at the heart of our approach, we create and invest in places that support our customers, people and communities grow.
