Charter Hall Group · ASX:CHC
Charter Hall — H1 FY2016 Earnings Presentation
53 slides from Charter Hall's earnings presentation, Feb 25, 2016
Slide 1: Charter Hall Group Half Year Results
For personal use only 25 February 2016 Charter Hall Group Half Year Results Artist’s Impression 6 months to 31 December 2015 Adelaide GPO
Slide 2: Agenda
Agenda For personal use only 1 1H FY16 Results Summary 2 Property Investment 3 Property Funds Management 4 Financial Result 5 Outlook and Guidance 6 Additional Information David Harrison Paul Altschwager Adrian Taylor Paul Ford Greg Chubb Managing Director & Chief Financial Officer Head of Office He
Slide 3: 1H FY16 Results Summary
1H FY16 Results Summary For personal use only CHARTER HALL GROUP | Half Year Results | 31 December 2015
Slide 4: Key Achievements
Key Achievements For personal use only 1H FY16 Results Summary1 9.5% OEPS Over 400,000sqm FUM up 17.0% 24.5% total return2 leased growth to $15.9b for 12 months on pcp 283 leasing transactions $1.7b in gross $730m gross 9.9% DPS transactions 8.0% NTA per growth security growth equity inflows on pcp
Slide 5: Growth Momentum Maintained
Growth Momentum Maintained For personal use only 1H FY16 Results Summary Increase in operating earnings per security (OEPS) to 15.0cps, up 9.5% • Statutory profit after tax of $143.5m, up 259.6% • Operating earnings of $61.2m, up 26.3% • Distribution per security of 13.3cps, up 9.9% • NTA per securi
Slide 6: Total Securityholder Returns
Total Securityholder Returns For personal use only 1H FY16 Results Summary Operating earnings per security growth2 • Total securityholder return for 1 year to 31 December 2015: 6.1% cps 16.0 15.0 13.7 14.0 12.4 12.0 10.8 11.3 9.8 Total performance over 3 and 5 years (% pa) to 31 December 20151 10.0
Slide 7: Consistent Delivery on Strategy
Consistent Delivery on Strategy For personal use only 1H FY16 Results Summary Access Deploy Manage Invest Access to Creating value Property funds Investing through attractive management, asset multiple equity investment management, leasing alongside our sources capital partners opportunities and dev
Slide 8: Operating Earnings Composition
Operating Earnings Composition For personal use only 1H FY16 Results Summary Property Investment Earnings Drivers Operating earnings of $61.2m1, up 26.3% pcp from $48.4m 1,200 8% • 59% of operating earnings from Property Investment Property Investment portfolio ($m) 7% 1,000 Co-investment Yield (%)
Slide 9: Property Investment
Property Investment For personal use only CHARTER HALL GROUP | Half Year Results | 31 December 2015
Slide 10: Growth in Property Investment Earnings of 26.3%
Growth in Property Investment Earnings of 26.3% For personal use only Property Investment • Charter Hall Group’s balance sheet investments increased by $186m from $944m to $1,130m • Portfolio WALE1 remained stable at 8.8 years and WACR reduced 42bps to 6.58%2 • Total return4 for 1 year to 31 Decembe
Slide 11: Portfolio WALE and Lease Expiry
Portfolio WALE and Lease Expiry For personal use only Property Investment CHC’s Portfolio composition and upcoming lease expiries are actively managed • Portfolio WALE remained stable at 8.8 years • 51% of leases expiring between June 2024 and June 2040 Core Investments WALE and Portfolio WALE1 Leas
Slide 12: High Occupancy and Strong Tenant Customers
High Occupancy and Strong Tenant Customers For personal use only Property Investment • Property Investment portfolio has high occupancy at 98.2% • Strong focus on quality of tenant covenants Occupancy by Gross Income1 Top 10 Tenants by Gross Income2 DIF3 100.0% ALH (Woolworths) 15.1% LWIP2 100.0% Wo
Slide 13: Property Investment Portfolio Net Returns
Property Investment Portfolio Net Returns For personal use only Property Investment • CHC’s current Property Investment portfolio’s Internal Rate of Return (IRR) over the five years to 31 December 2015 is 16.6% per annum, outperforming the MSCI/IPD Unlisted Wholesale Property Fund Index (NAV post fe
Slide 14: Direct Funds Net Returns
Direct Funds Net Returns For personal use only Property Investment • Over calendar year 2015 Charter Hall Direct managed five of the top ten funds ranked by performance in the PCA/IPD Australian Unlisted Retail Property Fund Index 30% 26.5% 25% 24.2% 23.4% 21.3% 20% 18.6% 18.0% 16.2% 14.5% 15% 13.3%
Slide 15: Property Funds Management
Property Funds Management For personal use only CHARTER HALL GROUP | Half Year Results | 31 December 2015
Slide 16: Well Diversified Funds Management Portfolio
Well Diversified Funds Management Portfolio For personal use only Portfolio Portfolio No. of No. of Gross WALE2 Occupancy WACR3 Value ($b) Size (m sqm) Properties Tenants Income ($m) (years) (%) (%) Dec 15 15.9 4.7 294 2,440 1,267 7.9 98.1 6.66 Jun 15 13.6 4.0 276 2,289 1,120 7.9 97.8 7.10 Diversifi
Slide 17: FUM Growth of 17% Drives Earnings
FUM Growth of 17% Drives Earnings For personal use only Property Funds Management FUM growth driven by activity in the Industrial sector and valuation uplift across all sectors • Australian property FUM has increased $2.3b, or 17.0% during 1H FY16 to $15.9b • 15.5% CAGR1 in domestic FUM since June 2
Slide 18: Inflows Across the Funds Platform
Inflows Across the Funds Platform For personal use only Property Funds Management • Diversified equity sources • Secured $730m in gross equity flows3 ($532m net) during 1H FY16 across all equity sources FY14 FY15 1H FY16 ($m) ($m) ($m) Wholesale Pooled Funds 651 653 166 Wholesale Partnerships 261 59
Slide 19: Property Transactions
Property Transactions For personal use only Property Funds Management • During the 6 months to 31 December 2015, $1.7bn of transactions were completed including $1.4bn of acquisitions and $0.3bn of divestments Transactions closed during the half year to December 2015 Office Industrial Retail Hospita
Slide 20: Development Adding to Fund Performance
Development Adding to Fund Performance For personal use only Property Funds Management • Redevelopment opportunities undertaken to enhance both income yield and total returns for managed funds • In-house development skills are a core competency • Development pipeline includes major office pre-leases
Slide 21: Office Sector Activity
Office Sector Activity For personal use only Property Funds Management 6 months to 31 December 2015 • Office FUM increased 9% to $7.4b • Completed $171m of acquisitions and $147m of divestments ‒ Acquisition of 900 Ann Street, Fortitude Valley, a $170m (100%) forward funded development leased to Aur
Slide 22: Industrial Sector Activity
Industrial Sector Activity For personal use only Property Funds Management 6 months to 31 December 2015 • Industrial FUM increased 36% to $3.8b • Completed $710m of acquisitions and $49m of divestments • Completed 17 leasing deals totaling 210,514sqm including: ‒ An agreement for lease with Target A
Slide 23: Retail Sector Activity
Retail Sector Activity For personal use only Property Funds Management 6 months to 31 December 2015 • Retail FUM increased 17% to $4.1b • Completed $495m of acquisitions and $93m of divestments ‒ CQR acquired $228m in assets including Goulburn Plaza, NSW, Katherine Central, NT and a 47.5% interest i
Slide 24: Hospitality Sector Activity
Hospitality Sector Activity For personal use only Property Funds Management 6 months to 31 December 2015 • Hospitality FUM increased 11% to $616m • LWIP2 acquired two high quality assets leased to ALH with a WALE of 19.9yrs located in Victoria and Queensland for $28m • The ALH Group is the market le
Slide 25: Financial Result
Financial Result For personal use only CHARTER HALL GROUP | Half Year Results | 31 December 2015
Slide 26: Profit and Loss by Segment
Profit and Loss by Segment For personal use only Financial Result $m 1H FY16 1H FY15 Change % • 26.3% growth in Operating Earnings to $61.2m Property investment 35.9 28.4 26.3% • PI operating earnings up 26.3% to $35.9m Property funds management 26.4 21.3 24.0% Invested an additional $97m (net) Se
Slide 27: Property Investment Earning Growth of 26.3%
Property Investment Earning Growth of 26.3% For personal use only Financial Result Operating earnings from Property Investment of $35.9m, up 26.3% • $6.9m contribution from increased investments from deployment of capital • $0.9m or 3.1% growth in earnings from the comparable investments held for a
Slide 28: Property Funds Management Earnings Up 24.0%
Property Funds Management Earnings Up 24.0% For personal use only Financial Result • PFM operating earnings of $26.4m,up 24.0% $m 1H FY16 1H FY15 Change % • Investment Management revenue growth of 26.7% Investment management 46.5 36.7 26.7% driven by: Property services 20.0 19.2 4.2% $5.3m increas
Slide 29: Balance Sheet Capacity
Balance Sheet Capacity For personal use only Financial Result • Strong balance sheet maintained $m 31 December 2015 30 June 2015 Cash 61 152 Cash position of $61m at 31 December 2015 Property investments 1,130 944 $186m increase in Property Investments made up of $97m net investments and $89m of
Slide 30: Property Investments
Property Investments For personal use only Financial Result The net movement in Property Investments to 31 December 2015 was $186m including: • $71m investment in CQR (including DRP and placement) • $35m investment in CLP and $16m investment in CPIF • $25m net divestment in Direct, CHOT, RP2 and RP6
Slide 31: NTA Per Security and Cap Rate Bridge
NTA Per Security and Cap Rate Bridge For personal use only Financial Result • NTA per security growth of 22cps (8.0%) primarily due to cap rate compression in existing property investment portfolio • WACR has reduced by 42bps with the following movements by sector: Office: 52bps decrease to 6.61%
Slide 32: Outlook and Guidance
Outlook and Guidance For personal use only CHARTER HALL GROUP | Half Year Results | 31 December 2015
Slide 33: FY16 Outlook and Earnings Guidance
FY16 Outlook and Earnings Guidance For personal use only Outlook and Guidance Given volatility across global equity markets, the stable return characteristics of direct property have become increasingly compelling. Because of this, we expect quality assets to continue to be highly sought during 2016
Slide 34: Additional Information
Additional Information For personal use only CHARTER HALL GROUP | Half Year Results | 31 December 2015
Slide 35: Additional Information
Additional Information For personal use only 1 Group & Managed Funds Overview 36 2 Property Investment Portfolio 38 3 Fund Updates 39 4 Key Financial Metrics 45 5 Capital Management and Funding 48 6 Fund Key 50 CHARTER HALL GROUP | Half Year Results | 31 December 2015 35
Slide 36: Charter Hall Group Overview
Charter Hall Group For personal use only Group Overview Property Funds Management Platform $15.9b FUM • Investment management FUM $15.9b • Asset management • Transaction services No. of properties 294 • Property management • Capital management Gross income $1.3b • Development management • Technical
Slide 37: Charter Hall Managed Funds
Charter Hall Managed Funds For personal use only FUM as at 31 December 2015 Office $7.4b Industrial $3.8b Retail $4.1b2 Hospitality $0.6b2 ($396m Property Investment) ($258m Property Investment) ($335m Property Investments) ($141m Property Investments) CHOT CPOF CLP CPIF LWHP RP2 LWIP2 LWIP2 BSWF3 W
Slide 38: CHC Property Investment Portfolio
CHC Property Investment Portfolio For personal use only As at 31 December 2015 Charter Hall Charter Hall Ownership Charter Hall Investment Market Average Investment 3 Stake Investment Income WALE Cap Rate Discount Rate rental reviews Yield (%) ($m) ($m) (years) (%) (%) (%) (%) Listed 224 7.0 Charter
Slide 39: Core Plus Office Fund (CPOF)
Core Plus Office Fund (CPOF) For personal use only Property Investment Portfolio Key events during 1H FY16 Portfolio characteristics Key metrics Gross property assets1 $2.5b • CPOF settled contracts to acquire 55 King Street, Melbourne for Total debt (look through) $0.8b $78.5m in February 2016 Gear
Slide 40: Charter Hall Office Trust (CHOT)
Charter Hall Office Trust (CHOT) For personal use only Property Investment Portfolio Key events during 1H FY16 Portfolio characteristics Key metrics Gross property assets $2.4b • CHOT’s return for CY15 was 26% making CHOT the best performing Total debt $1.1b wholesale office fund in Australia over e
Slide 41: Core Plus Industrial Fund (CPIF)
Core Plus Industrial Fund (CPIF) For personal use only Property Investment Portfolio Key events during 1H FY16 Portfolio characteristics Key metrics Gross property assets $1.7b • CPIF is one of the highest ranked unlisted wholesale property funds1 (all sectors) over the 3 years to 31 December 2015 a
Slide 42: Core Logistics Partnership (CLP)
Core Logistics Partnership (CLP) For personal use only Property Investment Portfolio Key events during 1H FY16 Portfolio characteristics Key metrics Gross property assets $1.4b • Acquired or completed circa $320m of assets during 1H FY16 with a further $175m to settle early 2HY16. Divested $33m duri
Slide 43: Charter Hall Retail REIT (CQR)
Charter Hall Retail REIT (CQR) For personal use only Property Investment Portfolio Key events during 1H FY16 Portfolio characteristics Key metrics Gross property assets $2.5b • Acquired $228m in assets at an average initial yield of 7.0% Total look through debt (net of cash) $0.9b • Continuing dispo
Slide 44: Long WALE Investment Portfolio (LWIP)
Long WALE Investment Portfolio (LWIP) For personal use only Property Investment Portfolio Key events during 1H FY16 Portfolio characteristics Key metrics 1 Gross property assets $0.7b • $675m portfolio of 54 ALH leased hotels including 18 Dan Murphy’s Total debt $0.3b • Portfolio WALE of 18.8 years
Slide 45: Key Financial Metrics
Key Financial Metrics For personal use only Financial Performance Group 1H FY16 1H FY15 Change Statutory profit after tax $143.5m $39.9m 259.6% Operating earnings $61.2m $48.4m 26.3% Operating earnings per security (OEPS) 15.0cps 13.7cps 9.5% Distribution per security (DPS) 13.3cps 12.1cps 9.9% Retu
Slide 46: Property Funds Management Operating Earnings
Property Funds Management Operating Earnings For personal use only Financial Performance $m 1H FY16 1H FY15 Change Change % Revenue Fund management fees 29.3 24.1 5.2 21.9% Transaction and performance fees 17.2 12.6 4.6 36.0% Investment management 46.5 36.7 9.8 26.7% Property management fees 8.1 7.5
Slide 47: Reconciliation of Operating Earnings to Statutory Profit
Reconciliation of Operating Earnings to Statutory Profit For personal use only Financial Performance $m 1H FY16 1H FY15 Operating earnings 61.2 48.4 Net fair value loss on financial derivatives1 (1.8) (7.3) Net value adjustments on investments1 88.7 4.0 Amortisation and impairment of intangibles (4.
Slide 48: Group Debt Management
Group Debt Management For personal use only Capital Management and Funding Key Debt Metrics Dec 15 Jun 15 • Substantial funding capacity available across the funds platform Group facility limit ($m) 6,901 6,336 $6.9bn of debt facilities across 26 funds and the Group undrawn debt ($m) 1,459 1,667 G
Slide 49: Debt Maturity Profile
Debt Maturity Profile For personal use only Capital Management and Funding • CHC look through weighted average maturity at 31 December 2015 is 3.3 years Total Group CHC look through 2,000 300 1,800 1,632 250 206 1,600 217 Debt Facilities ($m) 1,400 1,331 198 Debt Facilities ($m) 1,275 1,258 200 1,20
Slide 50: Fund Key
Fund Key For personal use only Listed Entities Direct Funds CHC Charter Hall Group BW Trust BW Trust (Direct syndicate) CQR Charter Hall Retail REIT CDC Charter Hall Direct CDC Trust CHIF8 144 Stirling Street Trust Wholesale (Pooled and Partnerships) DIF, DIF2, DIF3 Direct Industrial Fund series BSW
Slide 51: About Charter Hall Group
About Charter Hall Group For personal use only Charter Hall Group (ASX:CHC) is one of Australia’s leading fully integrated property groups, with over 24 years’ experience managing high quality property on behalf of institutional, wholesale and retail clients. As at 31 December 2015 Charter Hall had
Slide 52: Contact Us
Contact Us For personal use only David Harrison Paul Altschwager Managing Director & Group CEO Chief Financial Officer Charter Hall Group Charter Hall Group T: +61 2 8651 9142 T: +61 2 8651 9242 david.harrison@charterhall.com.au paul.altschwager@charterhall.com.au Richard Stacker Nick Kelly Head of
Slide 53: Sydney Head Office
Sydney Head Office Level 20, No.1 Martin Place, Sydney, NSW, 2000 T: +61 2 8651 9000 For personal use only