Everyone, on behalf of the Board of Directors, it's my pleasure to welcome you all to the 2025 annual unit holders meeting of Charter Hall Retail REIT. My name is Roger Davis and I am the Chair of the Charter Hall Retail REIT Board of Directors. It is now 2:00 P.M. and as the necessary quorum is present, I declare that this meeting properly constituted and open. I would like to commence today's presentation with an Acknowledgement of Country. Charter Hall acknowledges the traditional custodians of the land on which we work and gather. We pay our respects to elders past and present and recognize their continued care and contribution to country.
I'd now like to introduce my fellow Board members, Sue Palmer, Independent Director, who is Chair of the Audit Risk and Compliance Committee; Michael Gorman, Independent Director and a member of the ARCC; Paul Craig, Independent Director, who joins us this year and you'll hear more from him later; Ben Ellis, Charter Hall Retail CEO and Fund Manager; and David Harrison, Charter Hall Managing Director and Group CEO. Also present today, and I welcome Joanne Donovan, our Head of Retail Finance; Mark Bryant and Rebecca Hourigan, our Company Secretaries. Our Auditor, PricewaterhouseCoopers, is also present and will be available to answer any questions about their audit of the financial statements from unit holders. CQR's strategy is to be the leading owner of convenience retail property. We're also aiming to, over the longer term, deliver the highest EPS growth in Australia within the convenience retail sector.
This year, our portfolio of convenience retail assets has continued to demonstrate its resilience. Consumer spending in convenience retail has remained resilient and the CQR portfolio has enjoyed some of the strongest operating statistics in its history, with occupancy, leasing spreads, supermarkets in turnover, and footfall across the portfolio all performing strongly. Our portfolio of net lease and shopping center convenience retail assets continues to deliver a highly defensive and resilient income stream, and we're pleased to close the HPI transaction during the year in this regard. This further bolsters our net lease retail position and materially enhances our forecast earnings growth. In financial year 2025, our like-for-like net property income, or NPI, grew 2.6%, with shopping center like-for-like NPI growth of 2.4% and net lease retail like-for-like growth of 3.1%.
Our net operating earnings were $0.254 per unit and we paid a distribution per unit of $0.247, in line with guidance. This equated to a payout ratio of 97%. Our pro forma balance sheet gearing at June 30th, 2025, was 27.1%, giving us capacity to selectively acquire and undertake growth initiatives. At June 30th, 2025, we saw a 2.9% increase in the portfolio's NTA per unit to $4.64. The REIT today has recovered considerably in value since 12 months ago, with the CQR security price increasing approximately 20% since we held this AGM one year ago. Despite this solid recovery in value, however, the REIT still trades at a discount to its NTA. The Board is confident that the strategies we have put in place will continue to move the REIT's value towards and ultimately beyond its NTA value per unit.
The convenience retail property sector appears to be moving towards a period of sustained and potentially above-market average capital growth due to strong demand for convenience retail property. This strong rising demand for investment in the sector is occurring concurrent with very strong population growth and a multi-decade low forecast supply of assets. These factors combined are likely, in the Board's view, to see a positive market environment for CQR in the years ahead. We are pleased to report a return to EPS growth this year and also the first upgrade in the REIT's distribution in many years. The ASX release today announced a further uplift in our EPS guidance for financial year 2026 to $0.264 per unit, which is a strong 4% uplift on EPS in financial year 2025. Good news indeed.
The Board is focusing on supporting all strategies aimed at maximizing the REIT's earnings per security moving forward, which will in turn see a more consistent and positive growth in distribution income for security holders. Ben will discuss the financial highlights in more detail in his address. Turning now to our ESG highlights, CQR achieved net zero carbon emissions at Scope 1 and Scope 2 from 1st of July , 2025. This was achieved through existing on-site solar generation, off-site renewable electricity supplied through our PPA with Engie and nature-based carbon offsets. We now have 16.5 MW of solar installed on our rooftops, with 11.3 MWh of installed battery capacity at six sites, with multiple sites anticipated to see increased battery capacity in FY 2026. Pleasingly, our performance has also been recognized with CQR achieving a ranking of second in Australia and New Zealand for listed retail entities in the 2025 GRESB report.
Tenant customer engagement is equally important in driving center performance, and for the fifth year in a row, the Group has achieved the number one Net Promoter Score from the CentreSAT Customer Satisfaction Survey conducted by Monash University, with an NPS of +28. This score is materially ahead of many of our Australian shopping center peers. CQR and Charter Hall team recognize the important roles our centers play in supporting the communities in which we operate. Annually, we deliver a number of national and local initiatives within our convenience-based shopping centers, and we are deeply committed to our partnerships and our responsibility to create shared social value in our communities and across our supply chain. Finally, good governance remains an important element of sustainability, and it's something your Board of Directors is keenly focused on.
We're structured so that we have a majority of independent directors on the Board whose role is to ensure management adheres to the agreed strategy of CQR and makes decisions in the interests of all unit holders. We also appoint external auditors to audit the accounts and independently approve CQR's financial statements. PwC have audited our financial statements for over the last 10 years, and for 2026, we are commencing as auditors with EY in order to ensure independence. I'd like to thank PwC for all their contribution to CQR over that time. In fulfilling these duties, I would like to again assure unit holders that your directors are ever mindful of their responsibilities to act in the best interests of all unit holders.
I'd also like to acknowledge that the achievements I've outlined today have all been achieved as a result of the management of the REIT by Charter Hall Group. Investors in CQR receive the benefit of the quality and experience of Charter Hall's capabilities, including opportunity identification, acquisitions, asset management, property management, development, finance, legal, and treasury. The Board remains committed to aligning with best practice frameworks to support transparency and disclosure. Finally, I'd like to thank our unit holders for your support and continued investment in CQR. I'll now hand over to Ben Ellis, Charter Hall Retail CEO, to review the year's financial and operating performance and to discuss the outlook for FY 2026. Ben?
Thank you, Roger. CQR's strategy is focused on delivering the highest property income and earnings growth from the convenience retail property sector. We achieve this by investing in dominant convenience retail property, including convenience-based shopping centers and net lease retail anchored by leading major tenants. Our Shopping Center Portfolio is dominant in their catchments and focused on non-discretionary goods and services that are resilient throughout the economic cycle. Our net lease retail portfolio is focused on essential consumer staples and services. These assets benefit from capital-efficient triple net and double net leases. They have strong tenant governance and income security from long leases, coupled with inflation-linked annual rent reviews. A unique blend of convenience retail assets, specifically curated to maximize earnings growth for CQR Unitho lders, is a key strength of our strategy.
During the year, CQR successfully finalized the privatization of the ASX-listed Hotel Property Investments, or HPI, alongside our wholesale investment partner, Hostplus. This $1.3 billion portfolio acquisition materially enhances the long-term income growth potential for CQR. The investment in HPI continues a long-term focus of CQR to transition to a diversified portfolio of convenience retail assets spread between shopping centers and net lease retail assets. Back in 2015, CQR's portfolio was 100% invested in shopping centers, with a total value of $2.3 billion. Today, in 2025, CQR owns a diversified convenience retail portfolio of over $4.8 billion, with close to 40% of the portfolio invested in net lease retail property. This provides the REIT with a significant diversity of major anchor tenants, rent review mechanisms, and an increased exposure to CapEx-efficient triple net lease structures that will underpin CQR's income growth throughout all economic cycles.
The REIT today provides higher income and earnings growth potential through the market-leading quality of our properties, strength of our tenant governance, our diversified rent review structures ensuring consistent rental growth from anchor tenants, coupled with greatly reduced expense and capital leakage based upon our best-in-class lease structures. During the year, our portfolio occupancy remains strong at 98.9%. The portfolio WALE remains stable at seven years following continued strong leasing renewal activity. 61% of our portfolio is invested in convenience shopping center assets diversified across both the country in terms of major metropolitan markets, but also attractive major regional towns. The balance of 39% of the portfolio is invested in net lease retail assets spread across service stations, market-leading liquor and hospitality assets, and more recently, our increasing exposure to Bunnings leased assets.
In terms of our key tenant exposures across the major supermarket providers, we remain well balanced between Coles and Woolworths, and we continue to partner with Aldi. We also retain significant exposure to major companies such as BP, Ampol, Wesfarmers, Endeavour Group, and AVC . Importantly, when we look at our exposure to any one specialty retailer, it remains limited, with our largest specialty tenant at 1.4% of total portfolio income. We retain a clear bias towards consumer needs, with a focus on convenience retailing, food, and essential services. Strong trading supermarkets remain the foundation of CQR's convenience-based Shopping Center Portfolio. During the period, supermarkets delivered MAT growth of 2.5%. Supermarkets in turnover, or within 10% of their turnover threshold, is a market-leading 85%. Maintaining and increasing this percentage means CQR will generate greater supermarket rent growth than our peers on a long-term basis moving forward.
Our net lease retail assets at financial year-end represent close to 40% of CQR's total portfolio by value. These assets are all triple or double net leased, meaning they are free of any material capital expenditure and provide a true AFFO yield for CQR investors. These assets continue to complement CQR's existing convenience-based Shopping Center Portfolio and provide valuable diversification benefits, enhanced tenant governance quality, along with expense and CapEx-efficient lease structures. No other REIT in Australia retains this compelling mix of true net lease long-well retail assets alongside high-quality convenience-based shopping centers. Today, we announced the purchase of four Bunnings assets for a total of $151 million. These transactions extend CQR's net lease position into the hardware sector, which complements CQR's convenience retail strategy. CQR already owns Bunnings assets adjacent to our existing and highly productive shopping centers.
This recent move towards investing in net lease hardware assets on standalone sites highlights our ambition to continue to grow CQR's net lease convenience retail portfolio. Bunnings is a strong Australian brand, and the national hardware industry is set for growth as Australia's population and urban footprint continue to grow. These acquisitions have been funded 100% via undrawn and available debt capacity, which provides earnings upside for FY 2026 onwards. At our full year results in August, CQR provided FY 2026 EPS guidance of $0.263 per unit, which was a 3.5% increase on the EPS FY 2025. today's ASX announcement provided an increase to our earnings upgrade, with FY 2026 EPS guided to not less than $0.264, a 4% increase FY 2025. the distribution of FY 2026 is now guided to be not less than $0.255, delivering growth FY 2025 of 3.3%.
This represents a distribution yield of approximately 6.1%, with distributions now being paid on a quarterly basis. I'd like to extend our thanks to the people who manage our portfolio on a day-to-day basis and the support of the Charter Hall Group. We continue to be proud of how they partner and support our teams, tenant customers, communities, and each other. Finally, on behalf of the Board and management team, we'd like to thank all unit holders for their ongoing support of CQR. I'll now hand back to Roger to conduct the formal business of the meeting.
Ben, I'll now pause for a minute to ask you if there are any questions from unit holders here today. There have been no questions. I'd also like to address questions that were submitted to the meeting before. Ben, are there any questions?
No questions. Everyone's very happy. Good to hear.
I will now proceed to the formal business of the meeting. To begin, I table the notice of meeting dated the 3rd of October, which contains the resolution up for consideration today. Copies of the notice of meeting and annual report would have been made available to you by post, email, or available to view on the webpage. Copies are also available from the registration desk. I will take the notice of meeting as read. The first item for consideration today is the election of Independent Director Paul Craig, which will be decided by poll.
Before I open the poll, I'd like to ask Paul to say a few words detailing his background and experience for the benefit of security holders. As explained in the notice of meeting, only the shareholder of Charter Hall Retail Management Limited, being the Charter Hall Group, may appoint a director. Accordingly, it is noted that today's resolution is advisory only and non-binding. Notwithstanding this, directors will, of course, give due consideration to the results of the resolution. Paul.
Thank you, Roger, and good afternoon, everyone. I, myself, have spent the last 35 years working for major full-service global real estate advisors. I've worked across all sectors of real estate, from asset management capacity, advisory, and transactional management, but I commenced my career in retail management. Retail is something to this day that I still remain very passionate about and has continued to be a very big part of my career to date. As a former CEO and MD over the past 28 years of an Australian-New Zealand operating business, which is part of a global listed property group, I've been exposed and I've worked with many listed, unlisted, high net worth, private equity groups, and global capital as part of a role I held as Head of Cross Border Investments. I spread myself across these groups and customers to understand their business models and their mandates.
I'm confident that my broad experience in both governance and operational management gained in my previous roles means that I can provide a broad and diverse skill set as an Independent Non-Executive Director, ensuring the best interests of the shareholders. I look forward to really focusing on my role in my capacity as an Independent Director should I be elected. Thank you.
I'll now declare the poll open and ask all unit holders to cast their votes for or against the resolution by marking the box on their voting card for resolution. A representative of the registry will collect your voting cards. This resolution is an ordinary resolution, and, as you see, is displayed on the screen. I'll now display the respective proxy votes received on the screen. If you haven't already done so, I invite you to mark your voting card and hand it to the representative from our registry moving around the room. Whilst the final results of the resolution won't be known until after the conclusion of the meeting, it's clear from the proxies that Mr. Paul Craig will be elected to the Charter Hall Board. We'll now move to Resolution 2, being the reelection of Independent Director Sue Palmer.
Before I open the poll, I'd like to ask Sue to say a few words detailing her background and experience. As explained in the notice of meeting, only the shareholder of Charter Hall Retail Management Limited, being the Charter Hall Group, may appoint a director. Accordingly, it is noted that today's resolution is advisory only and non-binding. Notwithstanding this, directors will, of course, give due consideration to the results of the resolution. Sue.
Thank you, Roger. I'm very pleased to stand for reelection to the Charter Hall Retail Board. It's been a privilege to serve as a Non-Executive Director and to contribute to the strategic direction and the governance of the REIT. My business experience has been primarily as Chief Financial Officer or Non-Executive Director in organizations such as Teys, Qube, New Hope, and CS Energy. My professional background in finance, governance, and risk management has underpinned my contributions to the Board's discussions and decisions and as Chair of the Audit and Risk Committee. If reelected, I'll continue to bring an independent and objective perspective to the Board deliberations, supporting the execution of our strategy and our drive for growth. Thank you for the opportunity to continue to serve as a Director of Charter Hall Retail.
Thank you, Sue. I now declare the poll open and ask all unit holders to cast their votes for or against the resolution by marking the box on their voting card for the resolution. A representative of the registry will collect your voting cards. This resolution is an ordinary resolution and, as you can see, is displayed on the screen. I'll now display the respective proxy votes received. Results of the proxies are now displayed. Again, if you haven't already done so, I invite you to mark your voting card and hand it to the representative from our registry. Whilst the final results of the resolution won't be known until after the conclusion of the meeting, it's clear from the proxies that Sue Palmer will be reelected to the Board. The results of the poll will be made available to the ASX and displayed on our website later today.
As there is no other business to be considered, I now declare the formal business of the meeting closed. Thank you for your attendance today and ongoing support of CQR. Please join us if you can for some light refreshments outside in the breakout kitchen area. Thank you very much. Have a good day.