Charter Hall Group · ASX:CHC
Charter Hall — FY2020 Earnings Presentation
55 slides from Charter Hall's earnings presentation, Aug 20, 2020
Slide 1: Charter Hall Group 2020 Full Year Results
Charter Hall Group 2020 Full Year Results 130 Lonsdale Street, Melbourne VIC 20 August 2020 Charter Hall Group 2020 Full Year Results
Slide 2: Agenda
1. Highlights and Strategy 2. Property Funds Management 3. Property Investment 4. Financial Result Agenda 5. Outlook and Guidance 6. Additional Information David Harrison Sean McMahon Russell Proutt Managing Director & Chief Investment Chief Financial Group CEO Officer Officer Charter Hall Group 202
Slide 3: Highlights and Strategy
Highlights and Strategy Charter Hall Group 2020 Full Year Results Dandenong Distribution Centre, Dandenong South, Melbourne VIC
Slide 4: Group highlights
Highlights and Strategy Group highlights1 Group investment capacity of $5.0bn Group Returns Property Investments Funds Management Investment Capacity Operating earnings FUM growth Group investment capacity6 Property Investment portfolio $ 323m $ 10.1bn Statutory profit2 $ 2.0bn to $ 5.0bn $ 346m 10.
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, Creating value through attractive F
Slide 6: Operating in the COVID-19 environment
Highlights and Strategy Operating in the COVID-19 environment Charter Hall strategy demonstrating its resilience Access Deploy Manage Invest - Accelerating demand for - Continued momentum in sale - Proportion of rent from SME - Incremental balance sheet industrial & logistics and leaseback transacti
Slide 7: Operating earnings growth
Highlights and Strategy Operating earnings growth Operating earnings per security growth Operating earnings per security growth (excluding CHOT Performance fee) OEPS (pre-tax) cps OEPS (post-tax) cps 53.9cps 86.6cps 39.4cps 69.3cps 33.6cps 33.8cps 56.3cps 30.4cps 27.5cps 25.3cps 43.5cps 40.5cps 47.4
Slide 8: 15 years as a listed company
Highlights and Strategy 15 years as a listed company ’07 ’14 ’19 Launches CPIF, now Launches LWIP and Secures Telstra Exchange valued at $5.2bn LWHP, with a current and BP portfolios for ’05 ’11 combined value of $2.5bn ’17 combined value of $1.6bn Charter Hall lists on the Charter Hall celebrates i
Slide 9: 15 years as a listed company: outperformance
Highlights and Strategy 15 years as a listed company 15 years of outperformance relative to the AREIT index Total Shareholder Return vs. ASX 200 Property Accumulation Index (XPJAI) Return on Contributed Equity (Compound Annual Growth Rate) 23.3% CHC XPJAI Return on contributed equity (pre-tax) % Ret
Slide 10: Property Funds Management
Property Funds Management Charter Hall Group 2020 Full Year Results ALDI Prestons Distribution Centre, Prestons NSW
Slide 11: High occupancy and sector leading WALE's
Property Funds Management Group funds management portfolio High occupancy and sector leading WALE’s Portfolio value Lettable area No. of No. of Net rent WALE Occupancy WACR ($bn) (m sqm) Properties Tenancies ($m) (years) (%) (%) 30 June 2020 40.5 7.9 1,104 4,051 2,167 8.6 97.5 5.27 30 June 2019 30.4
Slide 12: Funds under management growth
Property Funds Management Funds under management growth FUM growth of 33.2% in FY20, to $40.5bn Funds under management movement ($bn) Funds under management by equity source ($bn) Wholesale Listed Retail 5-year FUM CAGR: 22.6% 30.5% 26.2% $40.5bn $1.3bn $40.5bn $6.1bn $8.5bn ($1.1bn) $1.4bn $30.4bn
Slide 13: FY20 transactional activity
Property Funds Management FY20 transactional activity 67% growth in transactional activity Office Industrial & Long WALE Shopping Centre Social Total ($m) Logistics Retail Retail Infrastructure / Other Acquisitions 3,334 1,906 1,212 62 760 7,275 Divestments (229) (107) (194) (420) (72) (1,023) Net t
Slide 14: Development activity
Property Funds Management Development activity Development continues to drive FUM growth & attract capital Development activity Completions Committed projects Uncommitted projects2 Total pipeline3 (completion value ($m) (last 12 months) Office 1,319 870 3,339 4,209 Industrial & Logistics 328 1,348 9
Slide 15: Equity flows
Property Funds Management Equity flows Diversified equity sources with $5.1bn gross equity flows across 24 funds in the last 12 months – Wholesale equity raisings of $2.6bn including raisings in CPOF, DVP, CHAIT and Telstra Exchanges Trust – Listed equity flows of $1.4bn with 6 raisings across CLW,
Slide 16: Property Investment
Property Investment Charter Hall Group 2020 Full Year Results 2 Chifley, Square, Sydney NSW
Slide 17: Property Investment portfolio
Property Investment Property Investment portfolio 81% east coast weighting Portfolio value No. of WALE Occupancy WARR WACR WADR ($bn) Properties (years) (%) (%) (%) (%) 30 June 2020 2.0 1,027 8.7 97.6 3.3 5.25 6.5 30 June 2019 1.8 793 7.6 97.7 3.5 5.64 6.9 Diversification by sector Geographic alloca
Slide 18: Property Investment portfolio movement
Property Investment Property Investment portfolio movement PI yield of 6.2% remains attractive Property Investment portfolio movement Property Investment portfolio yield 10.0% Portfolio value $m PI Yield % $68m ($26m) $2,028m 8.0% $143m $2,028m $1,844m $1,706m $1,527m 6.0% $1,098m $944m 4.0% $1,844m
Slide 19: Diversified PI earnings
Property Investment Diversified PI earnings Top 10 asset exposures represent only 7.4% of Group earnings (post-tax) – 74% repeat customers across 2,130 leases – Tenant retention rate of 86.5% for the 12 months to 30 June 2020 Top 10 tenants by net income1 Property Investment earnings (by sector) Top
Slide 20: ESG
Property Investment ESG Environment Social Governance Climate resilience Strong communities Responsible Business Net zero target Pledge 1% TCFD alignment underway Implementation of Scope 1 and Scope 2 Net Zero by $933,000 donated to the community through our 2030 pathway. partnerships, including $50
Slide 21: Financial Result
Financial Result Charter Hall Group 2020 Full Year Results Arnott’s Distribution Centre, Huntingwood, Sydney NSW
Slide 22: Earnings summary
Financial Result Earnings summary – DI EBITDA increased with accelerated completion of ($m) FY19 FY20 Change % Folkestone developments PI EBITDA 110.8 120.0 8.3% DI EBITDA 7.8 17.1 119.9% – PFM EBITDA increase includes CHOT performance PFM EBITDA1 156.6 289.0 84.5% fee of $98m and strong transaction
Slide 23: Property funds management
Financial Result Property funds management – PFM revenue up 56.8% to $412.3m ($m) FY19 FY20 Change % Fund management fees 114.0 153.3 34.5% – Investment management revenue up 69.8% to $357.1m: Transaction and performance fees 96.3 203.8 111.7% – Continued momentum in FUM driving funds Investment man
Slide 24: Operating cashflow
Financial Result Operating cashflow – 2.4 times coverage of FY20 distribution by operating cashflow – The cashflow difference between FY20 operating earnings and operating cashflow is primarily driven by timing of earnings recognition and receipt of cash $15m $402m $52m $18m $323m ($5m) $166m Operat
Slide 25: Balance sheet and return metrics
Financial Result Balance sheet and return metrics – Increase in cash reflects receipt of performance fees ($m) 30 June 2019 30 June 2020 and retained earnings, resulting in net zero gearing Cash 114 239 Property investment 1,844 2,028 – Utilised investment capacity from June 2019 to Development inve
Slide 26: Capital management
Financial Result Capital management $5.0bn of liquidity/investment capacity Funds Platform Balance Sheet gearing (by equity source) 100.0% Funds platform debt metrics1 30 Jun 19 30 Jun 20 90.0% Total platform facility limits ($m) 12,872 16,553 80.0% Total platform undrawn debt ($m) 3,547 3,585 70.0%
Slide 27: Outlook & Guidance
Outlook & Guidance Charter Hall Group 2020 Full Year Results GPO Exchange, Adelaide SA
Slide 28: FY21 – Year to date activity
Outlook & Guidance FY21 – Year to date activity $1.3bn of net transactions since 30 June 2020 $0.1bn $0.1bn $0.0bn ($0.1bn) $41.8bn $0.2bn $0.2bn $0.7bn $40.5bn Jun-20 Ampol Owens-Illinois Minto Hassall St Brownes Dairy Visy, Epping West Ryde Aug-20 (Visy) Facility Marketplace Asset type diversifica
Slide 29: FY21 operating earnings guidance
Outlook & Guidance FY21 operating earnings guidance – Based on no material change in current market conditions, FUM growth already achieved in FY21 and assuming the COVID-19 operating environment does not deteriorate markedly from here, FY21 guidance is for post-tax operating earnings per security o
Slide 30: Additional Information
Additional Information 6.1 Management Team 6.2 Property Funds Management 6.3 Property Investment Charter Hall Group 2020 Full Year Results Chullora Logistics Park, 2 Hume Highway, Chullora NSW
Slide 31: Appendix 6.1 Management Team
Appendix 6.1 Management Team Charter Hall Group 2020 Full Year Results
Slide 32: Management Bench Experience
Appendix – Management Team Management Bench Experience Charter Hall Executive Leadership Group David Harrison Managing Director & Group CEO 33 years industry experience Sean McMahon Russell Proutt Natalie Devlin Carmel Hourigan1 Richard Stacker Greg Chubb Steven Bennett Sheridan Ware Chief Investmen
Slide 33: Appendix 6.2 Property Funds Management
Appendix 6.2 Property Funds Management Charter Hall Group 2020 Full Year Results
Slide 34: Charter Hall Group property overview
Appendix – Property Funds Management Charter Hall Group property overview1 $0.1bn $6.7bn $3.4bn $1.7bn $18.1bn $36b $9.9bn 1. Excludes 21 New Zealand assets; valued at $0.1bn (predominantly childcare assets) $0.4bn Charter Hall Group 2020 Full Year Results 34
Slide 35: Charter Hall managed funds
Appendix – Property Funds Management Charter Hall managed funds Office Industrial & Logistics Shopping Centre Retail Long WALE Retail Social Infrastructure / Other $ 19.6bn $ 10.4bn $ 3.8bn $ 4.0bn $ 2.7bn Equity Wholesale CPOF CHOT BSWF1 CPIF CLP CPRF RPs2 LWHP LWIPs3 CIB CHET $ 7.1bn $ 3.5bn $ 0.6
Slide 36: Wholesale Pooled and Partnerships
Appendix – Property Funds Management Wholesale Pooled and Partnerships FUM Gearing $26.3bn Pooled: $12.3bn 32% Partnerships: $14.0bn Occupancy WALE 97% 7.7yrs Cap rate CHC investment 5.1 % $1.3bn Charter Hall Group 2020 Full Year Results ALDI Brendale Distribution Centre, Brendale QLD
Slide 37: 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 25.6% 13.7% 13.9% 12.8% 12.8% 12.8% 12.2% 11.8% 11.0% 10.8% 10.8% 9.7% 8.3%
Slide 38: Listed
Appendix – Property Funds Management Listed FUM Gearing $8.2bn 23% Occupancy WALE 98% 10.7yrs Cap rate CHC investment1 5.8% $0.7bn 1. Held at accounting value not market value Charter Hall Group 2020 Full Year Results 242 Exhibition Street, Melbourne VIC
Slide 39: Charter Hall Direct
Appendix – Property Funds Management Charter Hall Direct FUM Gearing $6.1bn 28% Occupancy WALE 98% 9.0yrs Cap rate CHC investment 5.4% $0.1bn Charter Hall Group 2020 Full Year Results 10 Shelley Street, Sydney NSW
Slide 40: Direct funds net return since inception
Appendix – Property Funds Management Direct funds net return since inception The active Direct Funds have returned 13.0% p.a out performing the benchmark1 by 4.4% 2 Title Net Return (% p.a.) Benchmark (% p.a.) 18.9% 15.1% 13.8% 13.0% 11.2% 8.6% 8.5% 9.8% 8.5% 8.5% 9.6% 9.7% 7.7% 7.0% 6.2% 7.9% 5.4%
Slide 41: Leasing activity
Appendix – Property Funds Management Leasing activity Deals completed over the last 12 months Long WALE Shopping Centre Social Office Industrial & Logistics Retail Retail Infrastructure Existing assets leased 130,500 590,300 - 56,100 84,100 (lettable area sqm) Major leases Developments leased 26,700
Slide 42: Pledge 1%
Additional Information Pledge 1% As Australia endures droughts, bushfires and COVID-19, our community investment, aligned to Pledge 1%, sees us directly contribute to supporting vulnerable Australians and providing training and employment opportunities People Places Partnerships 60% our of people co
Slide 43: Appendix 6.3 Property Investment
Appendix 6.3 Property Investment Charter Hall Group 2020 Full Year Results
Slide 44: CHPT Property Investment portfolio
Appendix – Property Investment CHPT Property Investment portfolio Charter Hall Charter Hall PI Ownership stake Investment Income WALE WACR WADR WARR PI Yield2 (%) ($m) ($m) (years) (%) (%) (%) (%) Office Charter Hall Prime Office Fund (CPOF) 6.2 312.9 14.5 7.0 4.9 6.4 3.7 4.8 Charter Hall Office Tru
Slide 45: Charter Hall Prime Office Fund (CPOF)
Appendix – Property Investment Charter Hall Prime Office Fund (CPOF) Key events during FY20 Key metrics − The Fund’s Gross Asset Value (GAV) grew by $1.5bn to $7.1bn in the 12 month period to Gross property assets $7.1bn 30 June 2020 Gearing (balance sheet) 20.2% − 130 Lonsdale Street reached practi
Slide 46: Charter Hall Office Trust (CHOT)
Appendix – Property Investment Charter Hall Office Trust (CHOT) Key events during FY20 Key metrics − Leasing – ~85,000sqm of leasing during FY20 including Australian Federal Police (AFP) 30 year pre-commitment at 140 Lonsdale St, Melbourne Gross property assets $3.5bn Gearing (balance sheet) 44.9% −
Slide 47: Charter Hall Prime Industrial Fund (CPIF)
Appendix – Property Investment Charter Hall Prime Industrial Fund (CPIF) Key events during FY20 Key metrics − Acquisition of 8 core stabilised assets, for $840m with a combined WALE of 13.2 years Gross property assets $5.2bn improving the Fund’s closing WALE to 10.2 years Gearing (look-through) 18.1
Slide 48: Core Logistics Partnerships (CLP)
Appendix – Property Investment Core Logistics Partnerships (CLP) Key events during FY20 Key metrics − Acquired a 4.0 ha development site at Glendenning in NSW Gross property assets $2.0bn − Development completions achieved with combined GAV of $155m at Eastern Creek and Gearing 32.9% Woodpark Estate
Slide 49: Charter Hall Retail REIT (ASX: CQR)
Appendix – Property Investment Charter Hall Retail REIT (ASX: CQR) Key events during FY20 Key metrics2 − Acquired 20% interest in Pacific Square, Maroubra and Bass Hill Plaza in September 2019 and a total of 47.5% interest in a BP portfolio of Long WALE convenience retail assets in December 2019 Gro
Slide 50: Charter Hall Long WALE REIT (ASX: CLW)
Appendix – Property Investment Charter Hall Long WALE REIT (ASX: CLW) Key events during FY20 Key metrics − $1.4bn of earnings accretive investment activity, increasing portfolio WALE and enhancing tenant covenant strength and diversification Gross property assets $3.6bn Gearing (balance sheet)1 24.2
Slide 51: Charter Hall Social Infrastructure REIT (ASX: CQE)
Appendix – Property Investment Charter Hall Social Infrastructure REIT (ASX: CQE) Key events during FY20 Key metrics − Completed a $100m institutional placement in May 2020 and $23m unit purchase plan in June 2020 reducing the gearing of CQE to 16.4% Gross assets1 $1.3bn Gearing (balance sheet)2 16.
Slide 52: Portfolio performance review dates
Additional information Portfolio performance review dates Fund Portfolio Performance Review Dates Charter Hall Prime Office Fund (CPOF) 3 yearly – FY21 Brisbane Square Wholesale Fund (BSWF) 3 yearly – FY22 Charter Hall Direct Industrial Fund No. 4 (DIF4) 5 yearly – FY22 Charter Hall Prime Industrial
Slide 53: Fund key and glossary
Additional information 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:CQE Char
Slide 54: Further information
Further information Presentation authorised by the Board 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 G
Slide 55: Important Notice & Disclaimer
IMPORTANT NOTICE & DISCLAIMER This presentation has been prepared by Charter Hall Funds Management Limited ACN 082 991 786)) (together, with its related bodies corporate, the Charter Hall Group). This presentation has been prepared without reference to your particular investment objectives, financia