Charter Hall Group · ASX:CHC
Charter Hall — Bank of America Merrill Lynch Global Real Estate & Australian Investment Conference 2013
46 slides from Charter Hall's conference presentation, Sep 13, 2013
Slide 1: Charter Hall Group
11-13 September 2013 Charter Hall Group Bank of America Merrill Lynch Global Real Estate & Australian Investment Conference
Slide 2: Contents
Contents David Harrison David Southon Paul Altschwager Joint Managing Director Joint Managing Director Chief Financial Officer 1 Group overview 2 Operational performance 3 Financial performance 4 Strategy, outlook and guidance 5 Additional information 1
Slide 3: Group Overview
Group Overview
Slide 4: Charter Hall Group
Charter Hall Group • Charter Hall Group (ASX:CHC) is one of Australia’s leading fully integrated property groups • Over 22 years experience managing high quality property on behalf of institutional, wholesale and retail clients • $10.3bn funds under management across office, retail and industrial se
Slide 5: Key achievements
Key achievements 12 months to 30 June 2013 OEPS growth Investment $1.0 billion net 11.3%1 yield +12% equity inflows 6.7%2 to 7.5% $3.1 billion 18% Australian transactions $2.1bn of acquisitions FUM growth $1.0bn of divestments 1. FY12 is stated prior to specific items relating to the net CQO transac
Slide 6: Another active year
Another active year 12 months to 30 June 2013 • Increase in operating earnings per security to 23.94cps, up 11.3%1 – Statutory profit after tax of $54.8m, up from $16.7m – Operating earnings of $71.8m, up 12.9%1 – Distribution of 20.2cps, up 11.0% – NTA per security is $2.13, in line with 30 June 20
Slide 7: Solid securityholder returns
Solid securityholder returns Charter Hall was the best performing A-REIT in FY13, with a total securityholder return of 80.6% Distribution per security growth Total performance over 1 and 3 years to 30 June 20131 70% 20.20 18.20 60% 16.50 80.6% 12.55 50% 40% FY10 FY11 FY12 FY13 30% 25.8% Operating e
Slide 8: Our strategy in action
Our strategy in action Group overview Our strategy is to use our specialist property expertise to access, deploy and manage equity and invest alongside our partners to create value and provide superior returns for our clients and Charter Hall securityholders. ACCESS DEPLOY MANAGE INVEST Access to mu
Slide 9: Australian focused property platform
Australian focused property platform Group overview Charter Hall manages a $10.3bn total property portfolio NO. OF PROPERTIES NO. OF TENANTS LETTABLE AREA (SQM) TOTAL ASSETS ($M) FY13 GROSS INCOME ($M) 2002 2,968 2.8m 10,3231 909 Equity source diversification Asset type diversification June 2013 Jun
Slide 10: Sector focused investment strategy
Sector focused investment strategy Group overview Our investment strategy, focusing on core property asset sectors, should endure macroeconomic cycles and generate growing income and capital returns, consistent with the investment appetite of investors in the real estate asset class. Charter Hall Gr
Slide 11: Expertise across risk/return spectrum
Expertise across risk/return spectrum Group overview A significant manager of wholesale, listed and retail investor capital Risk vs. Target Return Profile Target Return Development 20% + $0.3bn Office Retail 15 – 17% Industrial Wholesale Partnerships Diversified Wholesale Pooled 11 – 14% $1.8bn $0.6
Slide 12: Operational Performance
Operational Performance
Slide 13: High proportion of annuity income
High proportion of annuity income Quality of earnings Operating earnings1 of $71.8m, up 12.9% from $63.6m2 90% of operating earnings generated 62% of operating earnings generated from annuity style income from property investments 45.0 (62% property investments, 28% property funds management) Direct
Slide 14: Property investments total $603m
Property investments total $603m Property investments (Charter Hall Group balance sheet) • Charter Hall’s property investments total $603m1, up from $530m as at 30 June 2012 • Delivered FY13 operating earnings of $44.5m1, 62% of total operating earnings • Annualised property funds investment yield o
Slide 15: Property funds management EBITDA up 14.6%
Property funds management EBITDA up 14.6% Property funds management • Property funds management operating earnings of $27.3m • Total revenue equates to 87bps of FUM1 (65bps from annuity and 22bps from non-annuity sources) Annuity style revenue (75%) $M FY13 FY12 Growth 45.0 Revenue 83.5 74.9 11.5% 4
Slide 16: Australian FUM platform growth of 18%
Australian FUM platform growth of 18% Property funds management • Group FUM up 16% to $10.3bn at 30 June 2013 • Australian property FUM has increased by $1.5bn over the last year to $9.9bn • Offshore property FUM has reduced to $0.4bn Total Group FUM Australian FUM by Equity Source 12 12 $10.7bn $10
Slide 17: Secured inflows across the funds platform
Secured inflows across the funds platform Property funds management • Secured $1.2bn in gross new equity during FY13 from a range of equity sources investing across the funds platform • A further $179m of gross equity secured since 1 July 2013 FY12 FY13 ($M) ($M) Wholesale Pooled Funds 175 147 Whole
Slide 18: $1.2 billion of gross equity secured
$1.2 billion of gross equity secured Property funds management $164m $78m $77m $185m $25m Bankwest Place & RP2 Direct Industrial PFA Diversified 144 Stirling Bank of Queensland New retail partnership Fund 1&2 Property Trust Street Trust Building Appointed manager & New office partnerships responsibl
Slide 19: Capital recycling continues to progress
Capital recycling continues to progress Capital management of the Charter Hall investment portfolio CHC capital recycled ($m) FY12 FY13 Total Equity realised We recycle our capital to seed additional high value opportunities for CHC and our clients Mentone Showrooms 16 - 16 DPF 14 3 17 – Over the pa
Slide 20: Financial Performance
Financial Performance
Slide 21: Key financial metrics
Key financial metrics Financial performance GROUP FY13 FY12 Change Statutory profit after tax $54.8m $16.7m 228.8% Operating earnings1 $71.8m $63.6m 12.9% Operating earnings per security (OEPS) 23.94cps 21.51cps 11.3% Distribution per security (DPS) 20.20cps 18.20cps 11.0% Return on Equity3 (NAV bas
Slide 22: Income statement
Income statement Financial performance by segment $M FY13 FY12 Change % • Operating earnings growth of 12.9%1 to Direct property investment 4.9 6.1 (19.6%) $71.8m Property funds investment 39.6 33.4 18.4% • Total property investment operating earnings Property funds management 27.3 24.1 13.1% growth
Slide 23: Balance sheet
Balance sheet Financial position Balance sheet ($m) 30-Jun-13 30-Jun-12 2.18 3.6c (1.0c) Cash 12.2 39.3 (1.7c) 2.16 1.2c (2.1c) Property investments 603.0 614.0 2.14 Development investments 59.7 66.7 Other tangible assets 47.8 56.9 2.12 Intangibles 96.1 98.7 2.10 Total assets 818.8 875.6 2.08 Borrow
Slide 24: Group debt platform
Group debt platform Balance Sheet Management • Across fund platform, $0.9bn of new and refinanced debt in FY13 with a further $1.3bn new / refinanced debt since 30 June 2013 – Weighted average cost of debt¹ of 5.7%, down from 6.2% at 30 June 2012 – Weighted average maturity2 of 3.2 years, up from 3.
Slide 25: Strategy, Outlook and Guidance
Strategy, Outlook and Guidance
Slide 26: FY14 strategic objectives
FY14 strategic objectives Strategy FY14 objectives • Continue to achieve the investment objectives of our investors ACCESS • Enhance return on equity • Source equity to invest into core real estate sectors targeting growth in the Australian FUM platform of 6-10% pa DEPLOY • Realise a further $112m o
Slide 27: FY14 transactional activity to date
FY14 transactional activity to date Activity since 30 June 2013 Since balance date Charter Hall has: • Completed the CPIF $150m equity raising target • Participated in the $103m CHOT equity raising with Charter Hall Group investing a further $15m • CHOT acquired the remaining 50% interest in No.1 Ma
Slide 28: Well positioned to capture deal flow
Well positioned to capture deal flow FY14 earnings growth drivers • High property portfolio occupancy with average 3.9% rental reviews supporting stable property income growth from property funds investment portfolio • Appetite from all targeted equity sources for Australian real estate • Renewed ap
Slide 29: Solid earnings growth expected in FY14
Solid earnings growth expected in FY14 FY14 earnings guidance Barring unexpected events, we forecast: • FY14 operating earnings growth of approximately 7%1 • The distribution payout ratio is expected to be between 85% and 95% of operating earnings per security2 1. This growth guidance will apply to
Slide 30: Additional information
Additional information
Slide 31: Additional information
Additional information Section Slide 1 Group overview 31 3 Property funds management platform 32 4 Property investment portfolio 35 6 Financial information 38 7 Capital management and funding 41 9 Glossary 43 30
Slide 32: Charter Hall Group
Charter Hall Group Group overview as at 30 June 2013 Property Investment $603m co-investments / $44.5m operating earnings (62% total Group OEPS) OFFICE RETAIL INDUSTRIAL $311m $213m $79m (52% of portfolio) (35% of portfolio) (13% of portfolio) Property Funds Management $10.3bn FUM / $27.3m operating
Slide 33: Charter Hall managed funds
Charter Hall managed funds As at 30 June 2013 Listed fund Wholesale pooled funds and partnerships Retail investor funds Funds being realised $2.2bn $5.1bn $1.3bn $0.7bn ($103m co-invested) ($396m co-invested) ($11m co-invested) ($121m equity to be realised) CQR1 CHDPF PFA CHOF41 CHOF51 Partnerships
Slide 34: Charter Hall managed funds
Charter Hall managed funds As at 30 June 2013 Total Sector Equity No. of Lettable Occupancy Weighted WALE Weighted property Source properties area average rent (by income average cap assets (sqm) review in years) rate ($m) Top 5 Managed Funds CQR1 2,175 Retail Listed 87 668,395 97% 4.0%2 6.4 8.3% CH
Slide 35: Progressive realisation of specific funds
Progressive realisation of specific funds Capital management In line with our stated strategy, Charter Hall is progressing the realisation of funds which have reached or are approaching the end of their investment term: • Total $580m FUM targeted to be exited in over the next 18 months upon realisat
Slide 36: Property investment portfolio
Property investment portfolio As at 30 June 2013 Ownership Charter Hall FY13 Proportion of Market Discount Minimum FY13 FY12 stake investment Charter Hall Charter Hall cap rate rate rental Charter Hall Charter Hall investment investment reviews investment investment income portfolio yield yield (%)
Slide 37: Property investment portfolio metrics
Property investment portfolio metrics Property investment Lease expiry profile1 (30 June 2013) Top 10 tenants (30 June 2013) 45% Tenant % Portfolio leased 41.2% (By gross income) 40% Australian Governments 8.6 35% Woolworths 5.9 Telstra 5.6 30% Wesfarmers 5.6 25% Macquarie Group 3.0 20% Westpac Grou
Slide 38: Property investment earnings growth of 12.7%
Property investment earnings growth of 12.7% Financial performance • Operating earnings from all property investments up 12.7% to $44.5m – Existing funds - 3.2% like for like NOI growth, $1.6m net benefit from acquisitions and reduced borrowing costs – $2.2m contribution from new investments in 2013
Slide 39: Funds management earnings growth of 13.1%
Funds management earnings growth of 13.1% Financial performance $M FY13 FY12 Growth % • Property funds management operating earnings up 13.1% Annuity style revenue 62.4 58.3 7.0% Non-annuity style revenue 21.1 16.6 27.1% • Revenue growth of 11.5% Total property funds management revenue 83.5 74.9 11.
Slide 40: Operating cashflow
Operating cashflow Financial performance ($7.8m) $3.0m ($2.0m) $1.3m ($14.2m) $71.8m $66.3m $60.7m $52.1m Operating Change in Change in Earnings vs Depreciation Operating CHOF4 Operating Distribution Earnings receivables payables distribution Cashflow performance fee Cashflow (per received clawback
Slide 41: Property funds debt programmes
Property funds debt programmes TOP 5 MANAGED FUNDS OTHER FUNDS 1 ($M) CHC CQR CHOT CPOF CPIF CHDPF WHOLESALE RETAIL PARTNERSHIPS INVESTOR (EX CHOT) FUNDS Asset values2 819 1,881 2,088 1,762 570 518 1,923 1,365 Net debt drawn2 14 680 926 806 51 242 884 531 CHC Ownership % 9% 15% 12% 13% 4% Debt durat
Slide 42: Group and CHC look through debt maturity profile
Group and CHC look through debt maturity profile (by facility limit) Group funds platform debt maturity profile CHC look through debt maturity profile 1,600 $1,509m 400 $1,407m 1,400 350 1,200 300 ($M) 1,000 250 ($M) $860m $211m 800 200 $697m $152m 600 150 $385m 400 100 $73m $238m 200 50 $40m $47m $
Slide 43: Fund Key
Fund Key Listed entities Funds being realised CHC Charter Hall Group CHOF4 Charter Hall Opportunity Fund 4 CQR Charter Hall Retail REIT CHOF5 Charter Hall Opportunity Fund 5 Wholesale pooled funds DPF Diversified Property Fund CPOF Core Plus Office Fund CHUF Charter Hall Umbrella Fund CPIF Core Plus
Slide 44: Disclaimer
Disclaimer This presentation has been prepared by Charter Hall Group (being Charter Hall Limited (ABN 57 113 531 150) and Charter Hall Funds Management Limited (ABN 31 082 991 786) (AFSL 262861) as the responsible entity for Charter Hall Property Trust (ARSN 113 339 147)) (the “Group”). It is a pres
Slide 45: Further information
Further information David Harrison David Southon Joint Managing Director Joint Managing Director +61 2 8908 4033 +61 2 8908 4025 david.harrison@charterhall.com.au david.southon@charterhall.com.au Paul Altschwager Kylie Ramsden Chief Financial Officer Head of Listed Investor Relations +61 2 8295 1004
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