Charter Hall Social Infrastructure REIT reports 13.1% earnings growth in FY26 results
In its FY26 full year results presentation for the period ended 30 June 2026, Charter Hall Social Infrastructure REIT (ASX:CQE) reported operating earnings per unit of 17.3 cents (cpu), up 13.1% on FY25. Management attributed the result to accretive portfolio curation and strong organic rental growth.
The REIT reported distributions per unit (DPU) of 17.0 cpu, an 11.8% increase, alongside net tangible assets (NTA) per unit of $3.93, up 1.8%. Looking ahead, management outlined FY27 guidance of no less than 18.1 cpu for EPU and 18.0 cpu for DPU.
FY26 at a glance:
- Operating EPU: 17.3 cpu (+13.1%)
- DPU: 17.0 cpu (+11.8%)
- NTA per unit: $3.93 (+1.8%)
- Portfolio value: $2.3bn (+9.6%)
- Occupancy: 99.7% | WALE: 11.4 years
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FY26 financial performance and portfolio curation
The presentation detailed like-for-like (LFL) net property income growth of 4.2%, supported by the REIT’s ongoing portfolio curation strategy. Total net property income rose 10.0% to $119.9m, delivering operating earnings of $64.2m.
The FY26 payout ratio stood at 98%, reflecting the REIT’s distribution of the majority of its operating earnings to unitholders.
Central to the earnings story is a deliberate reshaping of the portfolio since 30 June 2022. Over that period, CQE acquired 11 properties totalling $534m at an average yield of 6.2%, while divesting 86 early learning properties totalling $369m at an average yield of 4.4%. This delivered a positive yield spread of 1.8%.
Management highlighted that income from non-early learning assets has been upweighted to 39%, improving sector diversification and the quality of tenant covenants across the portfolio.
| Metric | FY25 | FY26 | % Change |
|---|---|---|---|
| Total Net Property Income | $109.0m | $119.9m | +10.0% |
| Operating Earnings | $57.0m | $64.2m | +12.6% |
| EPU | 15.3 cpu | 17.3 cpu | +13.1% |
| DPU | 15.2 cpu | 17.0 cpu | +11.8% |
The two acquisitions strengthening the portfolio
Two accretive acquisitions during FY26 formed the centrepiece of the REIT’s growth story, lifting WALE and broadening the tenant base.
Sonic Healthcare pathology laboratory
In June 2026, CQE acquired a 25% interest in a world-class integrated pathology laboratory in Brisbane, Queensland, fully leased to Sonic Healthcare Limited, an ASX-50 tenant. The interest was acquired for $111.2m on a 5.6% property yield.
The property is secured by a 20-year triple net lease with a further 30 years of options and annual CPI-linked rent reviews (capped at 3.5%). It serves as Sonic’s central laboratory for Queensland and parts of New South Wales and the Northern Territory, with the 43,500 sqm facility supporting a network of over 450 pathology collection centres.
The Sonic Healthcare acquisition was funded through the simultaneous divestment of 9 early learning properties at an average 3.4% premium to book value, avoiding equity dilution while upgrading tenant covenant quality from private childcare operators to an ASX-50 corporate guarantee.
Western Sydney University campus
CQE increased its higher education exposure through a 50% interest in a purpose-built university campus at 1 Parramatta Square, Parramatta, fully leased to Western Sydney University. The acquisition totalled $152.0m on an initial yield of 6.5%.
The asset carries a long-term lease of over 16 years, with further option periods totalling 15 years and annual rent reviews of 3.75%. Completed in 2017, the modern vertical-style building holds 5-Star Green Star and 5-star NABERS ratings, and represents critical education infrastructure within Parramatta’s CBD.
What is social infrastructure property?
Social infrastructure refers to property that delivers essential community services, spanning early learning, life sciences and health, higher education, and government services. These are the assets that underpin everyday community activity.
For investors, essential-service assets typically offer lower correlation to the broader economy, long WALEs, and high-quality tenant covenants provided by government and market-leading operators. Income tends to be predictable, underpinned by leases with fixed and CPI-linked rent reviews.
CQE’s sub-sector mix by income as at 30 June 2026 was:
- Early Learning: 61%
- Life Sciences & Health: 23%
- Higher Education: 10%
- Government Services: 6%
The REIT pointed to supportive demographic tailwinds, with Australia’s population forecast to grow by 3.5m over the next 10 years, underpinning demand for these assets.
A resilient balance sheet and capital position
The REIT reported NTA per unit of $3.93, up from $3.86 at 30 June 2025. This was supported by a net property revaluation uplift of $19.2m (1.0% on a LFL basis), with 100% of the portfolio independently valued during FY26.
Key capital management metrics as at 30 June 2026:
- Balance sheet gearing: 33.7% (below the midpoint of the 30–40% target range)
- Weighted average cost of debt: 5.2%
- Weighted average debt maturity: 3.8 years, with no facilities expiring until June 2029
- Hedging: 73% average across FY27, 50% in FY28
CQE stated strategy
The REIT’s stated approach is to provide investors with resilient income and capital growth through continued portfolio curation, active asset management and prudent capital management across its diversified social infrastructure portfolio.
Outlook and FY27 guidance
Management outlined its intention to continue executing CQE’s strategy of actively managing its diversified social infrastructure property portfolio. The presentation noted that positive industry and demographic fundamentals are expected to provide further opportunities in the sector.
Based on information currently available and barring any unforeseen events, the REIT provided the following FY27 guidance:
- EPU guidance: no less than 18.1 cpu (growth of at least 4.6% on FY26)
- DPU guidance: 18.0 cpu (growth of 5.9% on FY26)
The guidance implies a two-year average EPU growth of 9.2%, continuing the trajectory from 15.3 cpu in FY25 to 17.3 cpu in FY26, and a targeted 18.1 cpu in FY27.
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