Stapled structures, being a unit holder and shareholder

Stapled structures

Uncommon in the global market, staple structures have been making strides in the Australian market, creating significant value during these uncertain times.

What are Stapled structures?

Unlike ordinary stocks or REITs, Staple structures offer investors the leverage of being a unitholder and a shareholder in the underlying business. This means, instead of only owning a portion of the business, investors are holders of the company's protection, the investment trust that protects a company, should anything go wrong.

With the above-mentioned continuing to make it to the headlines, we look into the recent developments of two Australian stapled structures that, despite the global pandemic, reached an all-time high since 2017 to over 200% growth at the date of writing.

Charted Hall Group Staples Securities US prohibited (CHC)

Trading at $20, this security has, over the past four years since 2017, appreciated by over 340%. The stapled structure consists of Charted Hall Limited and Charted Hall Property Trust.

Position in CY 2021 Fourth Quarter

Combined under Charted Hall Group, the property group manages 1506 properties with funds under management (FUM) of $61.3 billion. This was reported after an increase in valuation on the group's properties together with the recent agreement to acquire a 100% stake of ALE Property Group(LEP) through the group's consortium (made up of Charter Hall Long Wale REIT "CLW" and Hostplus).

In terms of the recent property valuation during the six month period, which ended by 31 December 2021, the property valuation was estimated at an increase of $3.5 billion, with the acquisition of ALE by Charters Halls consortium expected to result in CLW owning 50% of LEP, which had a pre-transaction property value of $5.7 billion.

Commenting on the transaction and valuation, Charted Hall Group CEO David Harrison said,

"It is pleasing to see the hard work we have put into curating and growing high-quality portfolios for our fund investors over many years has delivered excellent financial returns, well above expectations and performance fee hurdles.

The resultant performance fees, whilst positive for the Group, also highlight the outperformance delivered for investors, given fund investors typically receive 80% of excess total returns above the hurdles established at the inception of the funds and partnerships. As the group's property valuation continues to show growth, Charted Hall Group added that "the FY22 distribution per security guidance remains unchanged and is for 6% growth over FY21 distributions per security".

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Goodman Group Stapled Securities FP (GMG)

Appreciating by over 270%, as at writing, to $25 per share, Goodman Group is a Stapled structure of Goodman Limited, Goodman Industrial Trust, and Goodman Logistics (HK) Limited. The group is divided into four divisions that diversify its portfolio into real estate, industrial facilities, and logistics (incl. storage through warehousing), with operations in 14 countries.

A look into the group's financial position during Q4 CY22.

Goodman's total assets under management (AUM) were valued at $62 billion - this was by 30 September 2021, with the group's like for like net income reflecting a 3.2% growth and work in progress developments valued at $12.7 billion during the period.

Commenting on the results, Greg Goodman, the Group CEO, said:

"The results of the deliberate positioning of our portfolio over the last decade to adapt to and leverage the changes in the digital economy, are now being realized.

Customer demand for high-quality properties close to consumers has never been greater. This is resulting in rental growth, increased development activity, stronger than expected performance from our partnerships, and generally higher levels of profitability, leading to upgraded earnings guidance for FY22."

Given the strong results, "Earnings guidance for FY22 increased with operating EPS growth expected to be in excess of 15%", the company highlighted.

Login to view Goodman Group Stapled Securities FP (GMG) shares

on EasyEquities AUD

Roundup

As stapled structures, these investment vehicles offer investors protection through diversified investment options. Keep in mind that while the stocks consist of the term "Staple", these should not be confused with the consumer staples sector, which consists of companies dealing with essential services.

Depending on the underlying asset, Stapled structures may be more volatile than their peers and industry; in contrast, stocks under the consumer staples sector are considered less volatile and riskier and associated with slow growth.

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Sources – EasyResearch, Goodman Group, Charted Hall Group.

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