Neighbourhood mall owner boosted by food anchors

Neighbourhood mall owner Charter Hall Retail REIT has defied the odds of the global pandemic with its food-based tenants providing solid sales growth in the first few months of the financial year.

With its larger mixed-tenancy peers struggling to get out of the red, the trust sailed through the September quarter with a 5.7 per cent rise in sales growth. Supermarkets, the foundation of the portfolio, achieved 8.9 per cent growth.

The $2 billion ASX-listed fund owns 53 malls across the country which are anchored by Coles, Woolworths and Aldi supermarkets. During the quarter, the trust also extended its partnership
with BP, acquiring an interest in a portfolio of 70 fuel and convenience locations across New Zealand.

Greg Chubb: Our focus is on convenience.
Greg Chubb: Our focus is on convenience.Credit:Anthony Johnson

Trust chief executive Greg Chubb said given the convenience-based nature of the tenants, the centres were in high demand which meant 92 per cent of rent was collected in the quarter, with 5 per cent of tenants needing support and the outstanding 3 per cent awaiting collection.


“With the exception of Victoria, tenant support across the portfolio continues to diminish, reflecting resilient footfall and improved trading conditions. The trust has four assets in Victoria that represent 14 per cent of the total portfolio,” Mr Chubb said.

“The resilience of the portfolio and improved rent collections supports the provisioning for expected
credit loss made at June 30 of about of $1.5 million and we remain comfortable with this level of provisioning.”

Saranga Ranasinghe, vice-president of ratings agency Moody’s Investors Service, said recently that the trust’s results for the 2020 year highlight the resilience of its non-discretionary retail assets despite challenging operating conditions.

“The trust’s convenience-based and non-discretionary anchor tenants performed well due to increased demand for essential products, although its specialty tenants were affected by coronavirus-related trading disruptions,” Ms Ranasinghe said.

“We view the addition of BP to the portfolio as credit positive, because it will improve the trust’s diversification and business profile.”

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