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Stock Markets February 19, 2026

Charter Hall flags higher FY2026 costs, stock retreats after volatile open

Management attributes cost rise to bonus accruals amid strong operations; material financial benefit from recent inflows pushed into FY2027

By Nina Shah
Charter Hall flags higher FY2026 costs, stock retreats after volatile open

Charter Hall Group shares fell after an initial strong market reaction to its first-half 2026 results as the company guided to higher operating costs for fiscal 2026. Management said the uplift in expenses reflects bonus accruals tied to operational performance rather than an erosion of fixed-cost leverage. Much of the capital deployment and inflows that could drive earnings were recorded late in the first half and are expected to have their full impact in fiscal 2027.

Key Points

  • Charter Hall expects fiscal 2026 costs of about A$146 million, up from A$129 million in fiscal 2025, driven by bonus accruals tied to operational performance.
  • Management indicated that recent inflows, mandates, and transactions will not materially affect fiscal 2026 earnings, with the full financial impact deferred to fiscal 2027 when capital deployment timing is expected to boost growth.
  • The company's shares fell after an initial 6% opening gain, closing down 4.6% as investors re-evaluated near-term cost pressures versus expected FY2027 earnings gains; sectors impacted include real estate investment and Australian equities.

Charter Hall Group's stock closed down 4.6% on Thursday after an opening surge of approximately 6% on the release of its first-half 2026 results. Investors digested guidance that the company's operating costs are expected to rise in fiscal 2026, prompting the intraday reversal and subsequent decline.

Cost guidance and drivers

The firm signalled that total costs for fiscal year 2026 are expected to be around A$146 million, up from A$129 million in fiscal 2025. Management said the projected increase stems from bonus accruals tied to strong operational outcomes rather than a failure to extract further fixed-cost leverage.

For context on recent cost management, Charter Hall reduced overheads from A$148 million in fiscal 2024 to A$129 million in fiscal 2025, a move the company highlighted when discussing the 2026 guidance.

Timing of inflows and earnings impact

During the results presentation, management noted that new inflows, mandates, and transactions are unlikely to meaningfully affect fiscal 2026 earnings. The company expects the full financial benefit of those items to be realised in fiscal 2027, reflecting the timing of capital deployment and integration.

Charter Hall also said a substantial portion of first-half 2026 capital deployment and inflows occurred late in the reporting period. That timing underpins management's view that fiscal 2027 will be a stronger growth year, with current estimates pointing to roughly 9% earnings per share growth for fiscal 2027.

Market reaction and implications

Investors reacted to the combination of higher near-term cost guidance and delayed earnings upside from recent inflows. The stock's intraday movement - opening higher then closing substantially lower - reflects market reassessment of near-term profitability versus the expectation for stronger earnings in the subsequent fiscal year.

Charter Hall's commentary focused on operational performance-linked compensation as the driver of higher costs, and on the timing of capital deployment as the reason growth is expected to be realised mainly in fiscal 2027.

Risks

  • Higher projected operating costs in fiscal 2026 could weigh on near-term earnings and investor returns in the real estate investment sector.
  • Timing risk from late first-half capital deployment means expected earnings contributions may be delayed into fiscal 2027, creating uncertainty for FY2026 performance.
  • Market volatility driven by mixed signals - stronger operational performance offset by increased bonus accruals - may affect investor sentiment toward property investment stocks.

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