Charter Hall Group · ASX:CHC
Charter Hall — H1 FY2018 Earnings Presentation
49 slides from Charter Hall's earnings presentation, Feb 22, 2018
Slide 1: Charter Hall Group 2018 Half Year Results
22 February 2018 Charter Hall Group 2018 Half Year Results 6 months to 31 December 2017 Western Sydney University, 1 Parramatta Square, Parramatta NSW
Slide 2: Agenda
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Agenda 1. Group Highlights 2. Property Funds Management 3. Property Investment 4. Financial Result 5. Outlook and Guidance 6. Additional Information David Harrison Sean McMahon Russell Proutt Managing Director & Chief Investment
Slide 3: Group Highlights
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Group Highlights Artist impression of GPO Tower, Adelaide, SA
Slide 4: Group Highlights
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Group Highlights Group maintained $3.2bn of investment growth capacity Group Returns Property Investments Funds Management Balance Sheet 11.9% 10.4% FUM growth $121m 0% balance sheet Total Property to $21.9bn statutory profit gea
Slide 5: Our Strategy
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Our Strategy We use our property expertise to access, deploy, manage and invest equity in our core real estate sectors – office, retail and industrial – to create value and generate superior returns for our customers. ACCESS DEPL
Slide 6: Operational Highlights
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Operational Highlights OFFICE INDUSTRIAL RETAIL 67 Leasing deals executed 30 Leasing deals executed 234 Leasing deals executed across 72,000sqm across 464,000sqm across 43,000sqm Major pre-leases to Vanguard 175,000sqm new pre-le
Slide 7: Sustained Growth
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Sustained Growth FY16 OEPS to FY18 OEPS (guidance) reflects growth of 10.3% per annum Operating earnings per security growth1 Distributions per security growth 15.6cps 20.4cps 19.6cps 14.4cps 13.3cps 12.1cps 15.0cps 11.0cps 13.7c
Slide 8: Property Funds Management
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Property Funds Management 485 Dohertys Rd, Truganina VIC
Slide 9: Group Funds Management Portfolio
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Group Funds Management Portfolio Portfolio Lettable No. of No. of Gross WALE1 Occupancy WACR2 Value ($bn) Area (m sqm) Properties Tenants Income ($m) (years) (%) (%) 31 Dec 17 21.9 5.5 336 2,617 1,541 7.7 97.8 5.91 30 Jun 17 19.8
Slide 10: Funds Under Management Growth
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Funds Under Management Growth Funds under management movement ($bn) Funds under management by equity source ($bn) $21.9bn $0.4bn $21.9bn $19.8bn $2.8bn $1.5bn ($0.5bn) $0.6bn $17.5bn $2.8bn $4.4bn $2.5bn $4.1bn $19.8bn $13.6bn $2
Slide 11: Property Investment Portfolio Returns
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Property Investment Portfolio Returns • The Property Investment Portfolios total property return1 over the five years to 31 December 2017 is 13.6% per annum, outperforming the MSCI/IPD Unlisted Wholesale Property Fund Index (NAV
Slide 12: 1H FY18 Transactional Activity
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 1H FY18 Transactional Activity • Consistent transaction volume across core sectors • Average acquisition value of $70m versus average divestment value of $20m Long WALE Shopping Centre ($m) Office Industrial Total Retail Retail A
Slide 13: Development Activity
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Development Activity Continues to drive asset creation and attract capital • Development activity is undertaken by funds/partnerships to enhance income yield and total returns • In-house development skills are a core competency o
Slide 14: Equity Flows
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Equity Flows Diversified equity sources with $880m gross equity raised in the 6 months to 31 December 2017: • Across the Group six open ended pooled unlisted funds continue to raise new equity • $480m raised in Wholesale Funds an
Slide 15: Property Investment
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Property Investment WeWork, 333 George Street, Sydney NSW
Slide 16: Property Investment Portfolio
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Property Investment Portfolio Portfolio No. of WALE Occupancy WARR1 WACR WADR2 Value ($m) Properties (years) (%) (%) (%) (%) 31 Dec 17 1,631 303 7.4 97.8 3.5 5.93 7.3 30 Jun 17 1,527 292 7.4 97.7 3.6 6.09 7.3 Top 10 Tenants by Gr
Slide 17: Property Investment Portfolio Movement
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Property Investment Portfolio Movement • During the 6 months to 31 December 2017 the Property Investment Portfolio increased by 6.8% (+$104m) to $1,631m • The Property Investment yield remains attractive at 6.4% • The decrease in
Slide 18: Major Tenant Customer Relationships
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Major Tenant Customer Relationships 65% repeat tenant customers across 1,450 leases • Tenant retention rate of 77.5% in 1H FY18 • CHC continues to be a major player within the sale and leaseback market with over $3.0bn sale and l
Slide 19: Sustainability
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Sustainability Charter Hall has Australia’s largest Green Star footprint Charter Hall is part of the international Philanthropy movement with 178 Green Star Performance ratings across Pledge 1%. Our Pledge is through: operating a
Slide 20: Financial Result
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Financial Result Bunnings Warehouse, Mackay South QLD
Slide 21: Earnings Summary
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Earnings Summary $m 1H FY18 1H FY17 Change % • Statutory profit after tax of $120.6m1 PI operating earnings 51.0 41.3 23.3% Change in Property Investment valuation2 of $28.3m PFM operating earnings pre-tax 60.8 50.1 21.3% Opera
Slide 22: Segment Result
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Segment Result $m 1H FY18 1H FY17 Change % • PI operating earnings growth driven by: PI revenue 50.7 41.1 23.3% 3.5% WARR across Property Investments Portfolio Interest and expenses 0.3 0.2 33.3% Strong market rental reversio
Slide 23: Property Funds Management Composition
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Property Funds Management Composition $m 1H FY18 1H FY17 Change % • PFM revenue up 14.7% to $107.5m Fund management fees 42.6 35.7 19.3% Transaction and performance fees 39.6 34.8 13.7% • Investment Management revenue up 16.5% to
Slide 24: Operating Cashflow
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Operating Cashflow • 1H FY18 distribution covered 75% by operating cashflow • The negative cashflow variance between 1H FY18 operating earnings and operating cashflow is primarily driven by timing and includes: An interim payme
Slide 25: Balance Sheet
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Balance Sheet $m 31 Dec 2017 30 Jun 2017 • Strong balance sheet maintained: Cash $87m $174m Cash position of $87m to fund identified and pipeline Property Investments $1,631m $1,527m investments Other assets $137m $106m Consi
Slide 26: Debt and Capital Management
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Debt and Capital Management Key debt metrics funds platform 31 Dec 2017 30 Jun 2017 • Substantial funding capacity available across the Group funds Combined fund facility limits ($m) 9,601 8,611 platform with $3.2bn of available
Slide 27: Outlook & Guidance
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Outlook & Guidance 231 Elizabeth Street, Sydney NSW
Slide 28: FY18 Earnings Guidance
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 FY18 Earnings Guidance We believe the property market landscape will continue to accommodate growth • Asset growth is expected in submarkets that are underpinned by favourable property fundamentals where there is effective rental
Slide 29: Additional Information
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Additional Information 1. Property Funds Management 2. Property Investment 441 Dohertys Road, Truganina VIC
Slide 30: Appendix – Property Funds Management
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Appendix – Property Funds Management 9 Castlereagh Street, Sydney NSW
Slide 31: Charter Hall Group Property Overview
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Charter Hall Group Property Overview1 2 83 Properties valued at $0.1bn Properties valued at $4.5bn Office 0 Office 12 Retail 1 Retail 48 Industrial 1 Industrial 23 NT QLD 103 46 Properties valued at $8.7bn Properties valued at $2
Slide 32: Charter Hall Managed Funds
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Charter Hall Managed Funds Office $10.0bn Industrial $5.8bn Retail $6.0bn CHOT CPOF1 BSWF1 CLP CPIF LWHP RP2 LWIPs3 $2.7bn $3.7bn $0.5bn $1.5bn $2.8bn $1.0bn $0.1bn $0.6bn Wholesale Equity 75 CCT Mandates RP6 Mandates CPRF $0.4bn
Slide 33: Office
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Office “As one of the largest managers of CBD office properties in Australia, our strategy to actively manage our portfolio is creating enhanced value for investors through the successful re-development of existing assets, strate
Slide 34: Industrial
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Industrial “As one of Australia’s leading managers and developers of industrial and logistics real estate our focus is on owning and managing a geographically diverse portfolio of properties with strong tenant covenants, whilst l
Slide 35: Retail
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Retail “As the leading owner and manager of Australian supermarket anchored shopping centres and with a portfolio of hardware, automotive showroom and hospitality assets, we are providing a secure and growing income stream for ou
Slide 36: Direct
Charter Hall | Charter Hall Direct “Charter Hall Direct is Australia’s leading manager of unlisted property funds and syndicates for retail investors including high net worth, self managed super funds and mum and dad investors that are self directed or use financial advisers.” RICHARD STACKER GROUP
Slide 37: Direct Funds Net Returns Since Inception
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Direct Funds Net Returns Since Inception The active Direct Funds have returned 12.9% p.a. outperforming the benchmark 1 by 1.2% 20.0% 19.1% 17.7% 14.7% 13.5% 12.5% 12.5% 12.8% 12.9% 13.0% 12.3% 12.2% 11.6% 12.4% 11.8% 11.7% 11.4%
Slide 38: Appendix – Property Investment
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Appendix – Property Investment Coca Cola Amatil, Richlands QLD
Slide 39: Property Investment Portfolio
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Property Investment Portfolio Ownership Charter Hall Charter Hall WALE 2 Stake (%) Investment ($m) PI Income ($m) (years) WACR (%) WADR (%) WARR (%) PI Yield (%) Office 562.3 17.1 5.4 5.6% 7.0% 3.8% 6.3% Charter Hall Prime Office
Slide 40: Charter Hall Retail REIT (CQR)
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Charter Hall Retail REIT (CQR) Key events during 1H FY18 Key metrics • Acquired Salamander Bay, NSW and Highfields Village, QLD for the combined Gross property assets $2.9bn consideration of $215.5m Total debt $1.0bn • Divested 1
Slide 41: Charter Hall Office Trust (CHOT)
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Charter Hall Office Trust (CHOT) Key events during 1H FY18 Key metrics Gross property assets $2.7bn • The portfolio was independently valued at $2.7bn as at 31 December 2017 representing a net valuation increase of 5.0% against t
Slide 42: Charter Hall Prime Office Fund (CPOF)
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Charter Hall Prime Office Fund (CPOF) Key events during 1H FY18 Key metrics • CPOF returned 15.3% in the 12 months to 31 December 2017, outperforming Gross property assets $3.7bn the MSCI / IPD Unlisted Wholesale Core Office Inde
Slide 43: Charter Hall Long WALE REIT (CLW)
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Charter Hall Long WALE REIT (CLW) Key events during 1H FY18 Key metrics • Entered agreement to acquire Virgin Australia Head Office in Queensland1 Gross property assets2 $1.5bn – $90.8m purchase price, reflecting a portfolio capi
Slide 44: Core Logistics Partnership (CLP)
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Core Logistics Partnership (CLP) Key events during 1H FY18 Key metrics • CLP have exchanged contracts for the divestment of non-core land parcels Gross property assets $1.5bn with a combined realisation value of $51.0m Total debt
Slide 45: Charter Hall Prime Industrial Fund (CPIF)
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Charter Hall Prime Industrial Fund (CPIF) Key events during 1H FY18 Key metrics • Acquisition of three assets for $311m settled during the period, this includes Gross property assets $2.8bn Hastings Deering portfolio at Acacia Ri
Slide 46: Fund Key and Glossary
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Fund Key and Glossary 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 DIF2, DIF3, DIF4 Direct Industrial Fund series CLW Char
Slide 47: Contact Us
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 Contact Us David Harrison Russell Proutt Chief Financial Officer Managing Director & Group CEO Charter Hall Group Charter Hall Group T: +61 2 8651 9142 T: +61 2 8651 9493 david.harrison@charterhall.com.au russell.proutt@charterha
Slide 48: Disclaimer
Charter Hall | Charter Hall Group Half Year Results I 22 February 2018 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 referenc
Slide 49: www.charterhall.com.au
Sydney Charter Head Hall | Office Level 20, No.1 Martin Place Sydney, NSW, 2000 T: +61 2 8651 9000 Melbourne Level 12, 570 Bourke Street Melbourne VIC 3000 T: +61 3 9903 6100 Brisbane Level 22, Northbank Plaza 69 Ann Street Brisbane QLD 4000 T: +61 7 3228 2000 Perth Level 5, St Georges Square 225 St