Stock Spotlight: Charter Hall Social Infrastructure REIT (ASX:CQE)

About Charter Hall Social Infrastructure REIT

Charter Hall Retail REIT is the leading owner of property for convenience retailers. Charter Hall Retail REIT is managed by Charter Hall Group (ASX: CHC). Charter Hall is one of Australia's leading fully integrated property investment and funds management groups. We use our expertise to access, deploy, manage and invest equity to create value and generate superior returns for our investor customers. We've curated a diverse portfolio of high-quality properties across our core sectors – Office, Industrial & Logistics, Retail and Social Infrastructure. With partnerships and financial discipline at the heart of our approach, we create and invest in places that support our customers, people and communities to grow.

Key Stats

Source: Yahoo Finance. Data as of 26/08/25.

Growth Potential

• CQE provides resilient income and capital growth, through exposure to a diversified social infrastructure portfolio.
• CQE trades at a discount to the current latest NTA.
• Solid dividend yield.
• Quality assets with strong property fundamentals (100% occupancy and WALE of 11.6 years / only 3.5% of lease income is expiring within the next 5 years). Further, 67% of lease income is subject to annual fixed escalators of ~3%, with the balance being inflation linked and market rent reviews. 28% of the income will see market reviews in the next 3 years.
• 74% of leases are triple-net leases (i.e. the tenant is responsible for all property outgoings and capital expenditure).
• CQE is a play on (1) population growth (estimated to be 30m by 2033); (2) increasing awareness of early childhood education; (3) increasing the number of families with both parents working and hence demand for childcare services. CQE has increased its portfolio weighting towards social infrastructure assets.
• Solid balance sheet position with current gearing of 30.5% (target range 30-40%).
• Strong tailwinds for childcare assets and social infrastructure assets, including government support for the sector through the childcare subsidies system.
• Additional capital management – CQE is currently conducting an on-market buyback of $25m, of which $7m is completed, is for 12 months and remains open until Feb-26.
  

Key Risks

• Regulatory risks.
• Deteriorating property fundamentals.
• Concentrated tenancy risk, especially around Goodstart Early Learning.
• Sentiment towards REITs as bond proxy stocks impacted by expected cash rate hikes.
• Broader reintroduction of stringent lockdowns across Australia due to Covid-19.
• Adverse recommendations which may impact childcare operators when the final recommendations are handed down from the current ACCC inquiry into childcare services supply.