Charter Hall Group · ASX:CHC
Charter Hall — H1 FY2020 Earnings Presentation
50 slides from Charter Hall's earnings presentation, Feb 19, 2020
Slide 1: 2020 Half Year Results
2 Chifley Square, Sydney Charter Hall Group 2020 Half Year Results 19 February 2020 Charter Hall Group 2020 Half Year Results
Slide 2: Agenda
1 Highlights and Strategy 2 Property Funds Management 3 Property Investment Agenda 4 Financial Result 5 Outlook and Guidance 6 Additional Information David Harrison Sean McMahon Russell Proutt Managing Director Chief Investment Officer Chief Financial Officer & Group CEO Charter Charter Hall Hall Gr
Slide 3: Highlights and Strategy
Highlights and Strategy Campbellfield Plaza, Vic Arnott's, Distribution Facility, Huntingwood, Sydney Charter Hall Group 2020 Half Year Results 3
Slide 4: Group highlights
Highlights and Strategy Group highlights1 Group investment capacity remains at $4.1bn Group Returns Property Investments Funds Management Investment Capacity Operating earnings FUM growth (6 months) Group investment capacity Total Property Investment $ 226m (PI) return4 $ 8.5bn Maintained $4.1bn Sta
Slide 5: Our strategy
Highlights and Strategy Our strategy We use our property expertise to access, deploy, manage and invest equity in our core real estate sectors to create value and generate superior returns for our customers Access Deploy Manage Invest Accessing equity from listed, wholesale Creating value through at
Slide 6: Earnings growth
Highlights and Strategy Earnings growth Operating earnings per security growth Operating earnings per security growth (excluding CHOT Performance fee) Pre-tax OEPS Post-tax OEPS OEPS excl CHOT performance fee post-tax 62.4cps 56.3cps 39.4cps 43.5cps 33.8cps 47.4cps 48.5cps 33.6cps 33.1cps 40.5cps 30
Slide 7: Property Funds Management
Property Funds Management 242 Exhibition Street, Melbourne Charter Hall Group 2020 Half Year Results 7
Slide 8: Group funds management portfolio
Property Funds Management Group funds management portfolio Consistent growth in all equity segments Portfolio value Lettable area No. of No. of Net income WALE Occupancy WACR ($bn) (m sqm) Properties Tenancies ($m) (years) (%) (%) 31 December 2019 38.9 7.7 1,116 4,145 2,073 8.9 97.7 5.32 30 June 201
Slide 9: Funds under management growth
Property Funds Management Funds under management growth FUM growth of 27.9% in 1H FY20, to $38.9bn Funds under management movement ($bn) Funds under management by equity source ($bn) Wholesale Listed Retail $38.9bn $5.7bn $30.4bn $8.1bn $0.9bn $38.9bn $1.2bn $5.0bn $6.9bn ($0.6bn) $23.2bn $6.3bn $25
Slide 10: 1H FY20 transactional activity
Property Funds Management 1H FY20 transactional activity • Strong transactional activity in Office, Industrial & Logistics, Diversified & Long WALE Industrial & Diversified & Shopping Centre Social ($m) Office Total Logistics Long WALE Retail Infrastructure Acquisitions 2,455 727 2,498 62 43 5,785 D
Slide 11: Development activity
Property Funds Management Development activity Continues to drive asset creation and attract capital • Development completions of $0.6bn over the last 12 months • Majority of committed projects are de-risked through pre-leases and fixed • Industrial development pipeline increasing despite completion
Slide 12: Equity flows
Property Funds Management Equity flows 37,000 investor customers across Wholesale, Listed & Direct Diversified equity sources with $3.0bn gross equity deployed across 12 funds in the 6 months to 31 December 2019: • Wholesale equity raisings of $1.4bn including raisings in CPOF, DVP, CHAIT and newly
Slide 13: Leasing activity
Property Funds Management Leasing activity Deals completed over the last 12 months Shopping Centre Social Office Industrial & Logistics Retail Infrastructure Existing assets leased 140,872 629,151 109,137 27,770 (lettable area sqm) Major leases Developments leased 47,784 254,776 8,432 2,517 (lettabl
Slide 14: Property Investment
Property Investment Bunnings Claremont, Perth Charter Hall Group 2020 Half Year Results 14
Slide 15: Property Investment portfolio
Property Investment Property Investment portfolio 82% east coast weighting Portfolio value No. of WALE Occupancy WARR WACR WADR ($m) Properties (years) (%) (%) (%) (%) 31 December 2019 2,092 1,044 8.9 97.6 3.5 5.34 6.7 30 June 2019 1,844 793 7.6 97.7 3.5 5.64 6.9 Diversification by property investme
Slide 16: Property Investment portfolio movement
Property Investment Property Investment portfolio movement • During the 6 months to 31 December 2019 the Property Investment portfolio increased by 13.4% (+$248m) to $2,092m predominantly driven by $151m of net investments and $97m of revaluations • PI yield of 6.1% remains attractive Property Inves
Slide 17: Diversified PI earnings
Property Investment Diversified PI earnings Top 10 asset exposures represent only 6.0% of earnings • 78% repeat customers across 2,236 leases • Tenant retention rate of 81% for the 6 months to 31 December 2019 Top 10 tenants by net income Property Investment earnings (by sector) Top 10 asset exposur
Slide 18: ESG
Property Investment ESG Environment Social Governance Climate resilience Engagement and inclusion Responsible business 100% net zero target Donations of $500,000 for bushfire emergency TCFD alignment underway In Scope 1 and Scope 2 emissions by 2030 from base buildings in Supporting Australian Red C
Slide 19: Financial Result
Financial Result 130 Lonsdale Street, Melbourne Charter Hall Group 2020 Half Year Results 19
Slide 20: Earnings summary
Financial Result Earnings summary • EBITDA of $299.8m, a 123.4% increase over 1H FY19 ($m) 1H FY19 1H FY20 Change % - Continued expansion of property funds management platform and strong fund PI EBITDA 52.6 56.8 8.0% performance underpins segment profitability DI EBITDA 1.4 14.8 928.3% • Interest ex
Slide 21: Property funds management
Financial Result Property funds management • PFM revenue up 127.6% to $287.3m ($m) 1H FY19 1H FY20 Change % • Investment management revenue up 146.7% to $258.6m: Fund management fees 51.8 71.2 37.5% - Continued momentum in FUM driving funds management fee growth of 37.5% Transaction and performance
Slide 22: Operating cashflow
Financial Result Operating cashflow • 1H FY20 distribution covered 120% by operating cashflow • The cashflow difference between 1H FY20 operating earnings and operating cashflow is primarily driven by timing of earnings recognition and receipt of cash $226m ($5m) $8m ($177m) $46m $98m $82m Operating
Slide 23: Balance sheet and return metrics
Financial Result Balance sheet and return metrics • Utilised investment capacity from June 2019 to deploy into Property Investments, which along ($m) 30-Jun-19 31-Dec-19 with revaluations, has grown the Property Investment Portfolio to $2.1bn Cash 114 57 • NTA per security growth of 12.1% since June
Slide 24: Debt and capital management
Financial Result Debt and capital management • Group continued to be managed in line with strategy Funds platform debt metrics1 30-Jun-19 31-Dec-19 – Substantial funding capacity available across the Group with $4.1bn of available Total platform facility limits ($m) 12,872 15,817 liquidity Total pla
Slide 25: Outlook & Guidance
Outlook & Guidance Dandenong Distribution Centre, Dandenong South, Melbourne Charter Hall Group 2020 Half Year Results 25
Slide 26: FY20 earnings guidance
Outlook & Guidance FY20 earnings guidance Our guidance is as follows: • The Group’s previous FY20 guidance was for post-tax operating earnings per security (OEPS) growth of approximately 30% over FY19 • Based on no material change in current market conditions and reflecting recent valuations, update
Slide 27: Additional Information
Additional Information • Management Team • Property Funds Management • Property Investment 9 Castlereagh Street, Sydney Charter Hall Group 2020 Half Year Results 27
Slide 28: 6.1 Management Team
Appendix 6.1 Management Team Charter Charter Hall HallGroup Group2020 2020 Half Half Year YearResults Results 28
Slide 29: Deep Management Bench
Appendix – Management Team Deep Management Bench Charter Hall Executive Leadership Group David Harrison Managing Director & Group CEO 32 years industry experience Sean McMahon Russell Proutt Natalie Devlin Adrian Taylor Richard Stacker Greg Chubb Steven Bennett Sheridan Ware Chief Investment Chief F
Slide 30: 6.2 Property Funds Management
Appendix 6.2 Property Funds Management Charter Hall Group 2020 Half Year Results 30
Slide 31: Charter Hall group property overview
Appendix – Property Funds Management Charter Hall group property overview1 NT QLD 3 properties valued at $0.1bn 388 properties valued at $6.7bn Office - Office 16 Diversified and Long WALE 1 Diversified and Long WALE 118 Shopping Centre Retail - Shopping Centre Retail 10 NT Industrial & Logistics -
Slide 32: Charter Hall managed funds
Appendix – Property Funds Management Charter Hall managed funds Office Industrial & Logistics Shopping Centre Retail Diversified & Long WALE, Social Infrastructure $ 17.9bn $7.8bn $4.3bn $8.9bn Equity Wholesale CPOF CHOT BSWF1 CPIF CLP CPRF RPs2 LWHP LWIPs3 CHET $ 6.9bn $ 3.4bn $ 0.6bn $ 4.6bn $ 1.9
Slide 33: Wholesale Pooled and Partnerships
Appendix – Property Funds Management Wholesale Pooled and Partnerships FUM Gearing $25.1bn 31.9% Occupancy WALE 97% 8.1yrs Cap rate CHC investment 5.1 % $1,383m Charter Hall Group 2020 Half Year Results Drystone Industrial Estate, Truganina, Melbourne 33
Slide 34: Major wholesale property investment portfolio returns
Appendix - Property Funds Management Major wholesale property investment portfolio returns • The below chart shows the total property return of each major wholesale property fund relative to its sector specific benchmark index 27.5% 15.9% 14.4% 13.9% 13.8% 13.8% 13.8% 13.7% 11.5% 10.9% 10.9% 10.2% 8
Slide 35: Listed
Appendix – Property Funds Management Listed FUM Gearing $8.1bn 26.9% Occupancy WALE 99% 10.5yrs Cap rate CHC investment 5.8 % $647m Charter Hall Group 2020 Half Year Results BP, Forestville, Sydney 35
Slide 36: Charter Hall Direct
Appendix – Property Funds Management Charter Hall Direct FUM Gearing $5.7bn 25.0% Occupancy WALE 99% 9.3yrs Cap rate CHC investment 5.5 % $62m Charter Hall Group 2020 Half Year Results 10 Shelley Street, Sydney 36
Slide 37: Direct funds net return since inception
Appendix – Property Funds Management Direct funds net return since inception The active Direct Funds have returned 12.7.% p.a out performing the benchmark1 by 2.9% 2 19% 16% 14% 12% 12% 13% 12% 12% 11% 10% 11% 11% 11% 11% 10% 10% 10% 10% 10% 9% 9% 9% DIF2 DIF3 CDC Trust DIF4 BW Trust DAT DAT2 DCSF P
Slide 38: 6.3 Property Investment
Appendix 6.3 Property Investment Charter Hall Group 2020 Half Year Results 38
Slide 39: CHPT Property Investment portfolio
Appendix – Property Investment CHPT Property Investment portfolio Ownership stake Charter Hall Charter Hall PI WALE WACR WADR WARR PI Yield2 (%) Investment Income (years) (%) (%) (%) (%) ($m) ($m) Office 805.6 19.8 6.7 5.0 6.5 3.8 5.5 Charter Hall Prime Office Fund (CPOF) 6.9 318.9 7.1 7.0 5.0 6.5 3
Slide 40: Charter Hall Prime Office Fund (CPOF)
Appendix – Property Investment Charter Hall Prime Office Fund (CPOF) Key events during H1 FY20 Key metrics • The Fund’s Gross Asset Value (GAV) grew to $6.9bn in the 6 month period to 31 December 2019 driven by revaluation gains and the strategic acquisition of 2 Chifley Square, Sydney Gross propert
Slide 41: Charter Hall Office Trust (CHOT)
Appendix – Property Investment Charter Hall Office Trust (CHOT) Key events during H1 FY20 Key metrics • Leasing – ~58,000sqm of leasing signed during the HY20 Gross property assets $3.45bn • Development - AFL with the Australian Federal Police (AFP) for the development of a new 22,750sqm office towe
Slide 42: Charter Hall Prime Industrial Fund (CPIF)
Appendix – Property Investment Charter Hall Prime Industrial Fund (CPIF) Key events during H1 FY20 Key metrics • Acquisition of 3 core stabilised assets for $466m with a combined WALE of 19.0 years improving the Fund’s closing WALE to 10.7 years and strengthening CPIF’s relationship with Gross prope
Slide 43: Core Logistics Partnerships (CLP)
Appendix – Property Investment Core Logistics Partnerships (CLP) Key events during H1 FY20 Key metrics • Exchanged to acquire a 4.0 hectare development site at Glendenning in NSW with a potential to deliver 21,000sqm of GLA and an on completion value of Gross property assets $1.9bn ῀$55m in line wit
Slide 44: Charter Hall Retail REIT (ASX:CQR)
Appendix – Property Investment Charter Hall Retail REIT (ASX:CQR) Key metrics2 Key events during H1 FY20 • Acquired 20% interest in Pacific Square, Maroubra and Bass Hill Plaza in Gross property assets $3.2bn September 2019 and 14.7% interest in a BP portfolio of Long WALE convenience retail assets
Slide 45: Charter Hall Long WALE REIT (ASX:CLW)
Appendix – Property Investment Charter Hall Long WALE REIT (ASX:CLW) Key events during H1 FY20 Key metrics • Delivered first half FY20 operating EPS and DPS of 14.0 cents Gross property assets $3.6bn • Upgraded full year FY20 operating EPS guidance twice Gearing (balance sheet)1 23.8% – Barring any
Slide 46: Charter Hall Social Infrastructure REIT (ASX:CQE)
Appendix – Property Investment Charter Hall Social Infrastructure REIT (ASX:CQE) Key events during H1 FY20 Key metrics • Distribution of 8.35 cpu, an increase of 4.4% on pcp Gross assets $1.3bn • NTA per unit of $3.05, an increase of 3.0% from $2.96 per unit at 30 June 2019 Gearing (balance sheet)2
Slide 47: Portfolio performance review dates
Additional information Portfolio performance review dates Fund Portfolio Performance Review Dates Charter Hall Office Trust (CHOT) FY20 Core Logistics Partnership (CLP) 7 yearly – FY20 plus individual asset divestment performance fees Charter Hall Direct CDC Trust (CDC) FY20 Charter Hall Direct Indu
Slide 48: Fund key and glossary
Appendix – Property Investment Fund key and glossary Listed entities Direct funds ASX:CHC Charter Hall Group BW Trust BW Trust (Direct syndicate) ASX:CQR Charter Hall Retail REIT CDC Charter Hall Direct CDC Trust ASX:CLW Charter Hall Long WALE REIT DIF2, DIF3, DIF4 Direct Industrial Fund series ASX:
Slide 49: Contact information
Appendix – Additional information Contact information David Harrison Sean McMahon Russell Proutt Philip Cheetham Managing Director & Group CEO Chief Investment Officer Chief Financial Officer Head of Listed Investor Relations Charter Hall Group Charter Hall Group Charter Hall Group Charter Hall Grou
Slide 50: Office addresses
Sydney Head Office Melbourne Brisbane Perth Adelaide Level 20, No.1 Martin Place Level 14, 570 Bourke Street Level 3, The Annex Level 5, St Georges Square Level 2, 80 Pirie Street Sydney NSW 2000 Melbourne VIC 3000 275 George Street 225 St Georges Terrace Adelaide SA 5000 Brisbane QLD 4000 Perth WA