Morningstar | Charter Hall Not Chicken in Empire Building; FVE Increased to AUD 6. See Updated Analyst Note from 07 Dec 2018
Charter Hall Group remains one of the most active acquirers of Australian property, continuing to rapidly expand and diversify its funds management platform. The recent rate of growth in funds under management is running ahead of expectations, with the firm reporting net recent acquisitions, adding AUD 1.4 billion to funds under management. This in conjunction with the recently acquired Folkestone Property platform has pushed funds under management to AUD 26.4 billion in November.Aside from the AUD 205 million acquisition of Folkestone and its AUD 1.6 billion of funds under management, the firm’s satellite funds appear to be widening their investment remit to more esoteric property. In this regard, the Charter Hall’s Long WALE REIT in December invested AUD 224 million to buy a series of chicken-rearing properties at a high yield--around 7.5%--on a 16-year lease to Inghams Group. This portfolio comprised 27 rural properties, a mix of hatcheries, feed mills, and breeder farms all on triple-net-lease structures, with the tenant responsible for all repairs, maintenance, and capital replacement.
With the firm showing increased appetite to buy less conventional asset classes and merge with more conventional property funds, we’ve slightly raised our growth expectations for funds under management. We’ve also pushed back the timing of the large performance fee due from Charter Hall Office Trust from fiscal 2019 to fiscal 2020. Our fair value estimate for narrow-moat-rated Charter Hall increases to AUD 6 from AUD 5.80. The stock continues to screen as overvalued, currently trading around AUD 7.30
Charter Hall Group is engaged in the investment in property funds, and property funds management. Co. has the following two reportable segments: Property Investments, which comprises investments in property funds; as well as Property Direct Investments, which comprises direct interests in investment properties; and Property Funds Management, which comprises funds management services, property management services and other property services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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