Charter Hall Retail (CQR):  This morning, the supermarket landlord reported their half-year results for 2026, which were largely in line with market expectations. Though generally, there should be minimal excitement on results day for this very boring and stable supermarket trust. HNW Income has an 3.7% weighting to CQR.

Key Points:

  • Earnings Up: CQR reported an earnings increase of 3.4%, driven by an 8% increase in property income, which was partly offset by higher interest repayments. Over the half, CQR has been busy in the market, divesting $679 million in assets and acquiring $35 million in new assets with a focus on Bunnings Warehouse sites in Queensland. This has moved CQR to a near 50-50 split between shopping centres and convenience retail sites. (See Below)
  • Balance Sheet Solid: Following the transactions, gearing currently sits at 29%, with an average cost of debt of 4.8%, and an average debt maturity of 4 years. The lower cost of debt follows a $1.6 billion refinance during the half that lowered the interest rate by 0.4%, a move that looks pretty good right now.
  • Distribution Up: CQR reported a half-year distribution of 12.8 cents per share, representing a 4.1% on last year’s distribution.
  • Valuation: NTA increased by 5.8% to $4.91, following convenience retail valuation growth driven by inflation-linked rental income and strong asset transactions.
  • Outlook:  CQR management reiterated guidance for FY26 distribution of 25.5 cents per unit, representing a 3.3% increase in this year’s distribution and a 6.6% distribution yield.

Portfolio Strategy:  CQR offers the portfolio exposure to non-discretionary retailing via a diversified portfolio of neighbourhood shopping centres typically anchored by a Woolworths or Coles supermarket as well as service stations. CQR’s portfolio has an occupancy of 99% with an average weighted lease term of 7 years. Long leases linked to CPI to quality tenants such as Woolworths, Coles, Bunnings, Aldi, Ampol and BP give a high degree of confidence that CQR can maintain and grow their distributions over time.

CQR finished down 1.5% to $3.78, a good outcome on a day that saw a broad-based market sell-off. Over the past year, CQR has been a solid citizen in the portfolio, returning 22%