Build it right, and they will come: Charter Hall
Developer and funds manager giant Charter Hall is investing heavily into the premium office market amid expectations that workers will return if the towers offer high-quality amenities and sustainable credentials.
The group has $70 billion of funds under management through a suite of listed and unlisted trusts and a multibillion-dollar development pipeline which includes a new office tower at Chifley Square in Sydney and the Southern Cross site in Melbourne.
Speaking at the group’s annual results on Thursday, chief executive David Harrison said building owners and tenants are working together to deliver high-quality office blocks to accommodate the new working environment.
He said owners of older towers will struggle to attract tenants unless they undertake significant upgrades to make the towers more sustainable.
“There is no doubt we are seeing a continued bifurcation of the office market where both corporate and government tenants want brand new buildings or completely refurbished stock,” Harrison told analysts at the results.
“Our view is that vacancy in those prime brand new buildings will be much lower than 30 to 40-year-old buildings that will struggle.”
For the year, the group, which has a market value of $6.3 billion, reported a statutory profit of $911.1 million – up $476.8 million from the previous year.
Funds under management, including the deal struck with Paradice Investment Management, grew by $27.6 billion to $79.9 billion for the year. The final dividend was 20.4¢ payable on August 31.
UBS analysts said Charter Hall had a strong year boosted by $372 million of transactions and performance fees.
“The guidance for the 2023 year of 6 per cent growth was ahead of expectations and given Charter Hall’s long-term track record of upgrading through the year, we expect it to be received well,” Grant McCasker of UBS said in a note to clients.
“Business momentum remains strong, with $3.5 billion of transactions since year-end and fund flows, ex the listed trusts, remain [high] in the second half of the 2022 financial year.”
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