Slide 1: 2012 Half Year Results
Charter Hall Group For personal use only 2012 Half Year Results 23 February 2012
Slide 2: Contents
Contents For personal use only 1 Results summary David Harrison Joint Managing Director 2 Property investment 3 Property funds management David Southon Joint Managing Director 4 Development investment 5 Financials and capital management 6 Outlook and guidance 7 Annexures 2
Slide 3: Results summary
Charter Hall Group For personal use only 01 Results summary
Slide 4: Half year highlights
Half year highlights For personal use only Earnings on track Statutory profit after tax of $19.6m (includes impact of mark to market valuations / derivatives and other non-cash items) Operating earnings (pre net CQO fee of ($0.3m) and organisational restructure cost of ($2.0m))1 of $33.2m or 11.
Slide 5: Key metrics
Key metrics For personal use only Group Key Metrics 1HFY12 1HFY11 Change Statutory profit after tax1 $19.6m $46.8m (58.1%) Operating earnings (pre net CQO fee and organisational restructure) $33.2m $30.8m 7.8% Operating earnings (post net CQO fee and organisational restructure) $30.9m $30.8m 0.3% Op
Slide 6: Charter Hall Group strategic objectives
Charter Hall Group strategic objectives For personal use only Charter Hall aims to grow investor wealth from delivering smart property outcomes Focused on generating a higher return on equity via the following initiatives – Recycling capital into higher return investments (>15.0% of Charter Hall
Slide 7: Charter Hall divisional strategies
Charter Hall divisional strategies For personal use only Drive return enhancements from capital invested across Property Investments Property Investment Improve earnings quality, annual rental growth rates and capital growth prospects from Charter Hall property investments Target growth in dev
Slide 8: Functional organisation structure
Functional organisation structure For personal use only Management has implemented a new organisation structure that categorises the business between Investment Management and Services Divisions – Further operational efficiencies expected to be realised as a result of the new structure DAVID HARRI
Slide 9: Group earnings and investment overview
Group earnings and investment overview For personal use only Charter Hall is a diversified property group with a vertically integrated business model – 85.1% of Charter Hall’s EBITDA for the 6 months to 31 December 2011 is annuity style ($29.6m) comprising $20.1m from Property Investment and $9.6m
Slide 10: Group EBITDA breakdown
Group EBITDA breakdown For personal use only Operating EBITDA for the 6 months to 31 December 2011 of $34.8m1,2, up 13% from $30.9m on pcp Property Investment EBITDA $20.07m (58%) $20.07m $18.00m HY11 HY12 $13.47m $10.62m Funds Management EBITDA $13.47m (39%) $2.27m Development Investment $1.30m E
Slide 11: Property investment
Charter Hall Group For personal use only 02 Property investment
Slide 12: Property investment
Property investment For personal use only Charter Hall has $575.7m co-invested in its managed funds2 – Half year revenue of $20.2m reflecting average gross annualised income yield of 7.0% with a weighted average rent review profile of 3.8% – Significant improvement in property investment income yi
Slide 13: Property Investments portfolio metrics
Property Investments portfolio metrics (ex CQO US) For personal use only Charter Hall managed properties weighted average market capitalisation rate of 8.1% Charter Hall managed properties weighted annual average rent reviews of 3.8% Weighted average lease expiry of 6.5 years 2,767 tenants a
Slide 14: Property investment portfolio
Property investment portfolio Direct property and co-investments (31 December 2011) For personal use only Ownership Charter Hall 1HFY12 Market cap Discount Minimum Rental Stake investment Charter Hall rate rate reviews investment revenue (%) ($m) ($m) (%) (%) (%) Listed Funds Charter Hall Office REI
Slide 15: Property funds management
Charter Hall Group For personal use only 03 Property funds management
Slide 16: Property funds management
Property funds management For personal use only Funds under management decreased from $10.7bn to $10.1bn, driven by $0.7bn of divestments (predominantly CQO US asset sales of $0.5bn) – Recent equity raisings have provided CPIF and CPOF with capacity to make additional acquisitions (CPOF raised $10
Slide 17: Funds under management reconciliation
Funds under management reconciliation For personal use only Reduction in FUM primarily due to divestment of the CQO US platform +$34m +$67m ($698m) +$40m $10,700m $10,143m1 2 30-Jun-11 Revaluation Acquisitions Divestments FX Movement 31-Dec-11 1. FUM includes assets currently under management and
Slide 18: Funds management income
Funds management income For personal use only 71% of funds management revenue annuity style1 Average of 76bps of FUM on an annualised basis (39bps investment management and 37bps from other services)1 Implementation of organisational review expected to provide further EBITDA margin expansion A
Slide 19: Investment management revenue
Investment management revenue For personal use only 1HFY11 - $19.4m4 1HFY12 - $19.6m4 Wholesale Unlisted Wholesale Unlisted Funds Funds $5.0m (26%) $6.0m (31%) Retail Investor Retail Investor Funds Funds $3.2m (16%) $3.6m (18%) Listed Funds $10.0m (51%) Listed Funds $11.2m (58%) 1. Listed Funds refe
Slide 20: Property management and leasing
Property management and leasing For personal use only Charter Hall provides leasing, property management and asset management services across the platform – Charter Hall managed funds generated $321.3m of gross rental income during the half year across its Australian portfolio Property management1
Slide 21: Development management services
Development management services For personal use only Revenue of $3.5m over the half year4 – Current projects across Office, Retail, Residential and Industrial Active development book of $1.4bn across range of managed funds – 13 active projects across platform – Total development book of $1.8bn2
Slide 22: Trends and initiatives
Trends and initiatives For personal use only Sector Trends Charter Hall Initiatives Preference for geographic specific funds Focus on capital management Complete reweighting of portfolios to Australia Listed Funds – Debt refinancing and buy backs Focus on quality of earnings and earnings gro
Slide 23: Development investment
Charter Hall Group For personal use only 04 Development investment
Slide 24: Investments in Development
Investments in Development For personal use only $46.0m1 of development co-investments (book value), diversified across eight projects Projected equity multiple of 1.3x from existing development investments Developments ($m – CHC share) Current value of investment Further equity Expected equity
Slide 25: Investment in CIP
Investment in CIP For personal use only Charter Hall owns 50% of industrial pre-lease developer (CIP)1 The current economic climate has made it a challenging first half for CIP Earnings are expected to be weighted to the second half of FY12 Providing a pipeline of quality assets to Charter H
Slide 26: Case study – La Trobe
Case study – 685 La Trobe For personal use only In May 2011, Charter Hall acquired 50% of office development 685 La Trobe Street, Melbourne Charter Hall is developing a prime grade 38,000sqm, 12 level office building in the Docklands precinct – Will include over 1,000sqm in retail space and 151
Slide 27: Financials and capital management
Charter Hall Group For personal use only 05 Financials and capital management
Slide 28: Income statement
Income statement 1HFY12 1HFY12 1HFY11 (DRF (DRF net (DRF net For personal use only consolidated) contribution basis) contribution basis) Direct net property income 7.4 0.3 0.1 Statutory profit after tax of Indirect property income 16.9 19.9 18.2 $19.6m 1 Property investment income 24.2 20.2 18.3 I
Slide 29: Reconciliation to statutory profit
Reconciliation to statutory profit For personal use only Charter Hall’s statutory profit after tax has been adversely impacted by non-cash items ($2.0m) ($0.3m) ($0.6m) ($2.1m) ($1.3m) ($4.0m) ($3.3m) $33.2m $30.9m $19.6m Operating Organisational Net CQO fee Operating Net Fair Value Gains/loss on
Slide 30: Balance sheet
Balance sheet For personal use only 31-Dec-11 30-Jun-11 31-Dec-11 $m (DRF on net contribution (DRF on net contribution (DRF consolidated) basis)1 basis) Cash 24.9 21.4 23.9 Property investments2 676.6 575.7 593.5 Development investments 72.9 72.9 68.8 Other tangible assets 61.1 60.2 65.8 Intangibles
Slide 31: Capital management profile
Capital management profile $3.6bn of drawn debt across platform with weighted average maturity of 2.4 years For personal use only – $1.1bn of debt refinanced over 1HFY12 Charter Hall on balance sheet gearing target of 0-10% Charter Hall look through gearing has reduced 3.6% from 36.6% at 30 Ju
Slide 32: Outlook and guidance
Charter Hall Group For personal use only 06 Outlook and guidance
Slide 33: Asset recycling strategy
Asset recycling strategy For personal use only Charter Hall is focused on recycling its co-investment capital into higher return investments – At 30 June 2011, Charter Hall targeted to recycle $100m of capital (15% of NTA over 18 months) – In 1HFY12, Charter Hall recycled $29.2m or 5% of 31 Decemb
Slide 34: Outlook and guidance
Outlook and guidance For personal use only Outlook Global economic environment remains challenging Continue to focus on growing FUM in Australia, in particular through raising capital Ongoing initiatives aimed at increasing efficiency across the platform and cost management Expect medium ter
Slide 35: Questions
Charter Hall Group For personal use only Questions
Slide 36: Annexures
Charter Hall Group For personal use only 07 Annexures
Slide 37: Annexures
Annexures For personal use only A Sustainability B Debt expiry profile C Property portfolio movement D–E Portfolio metrics F–G Funds management platform and intangibles H–I Fund strategies J–K DRF reconciliation L Cash flow reconciliation M Segment result reconciliation N Capital management O–S Unli
Slide 38: Annexure A: Commitment to Sustainability
Annexure A: Commitment to Sustainability For personal use only Charter Hall is integrating sustainability into its business practices across our funds and operations. We recognise the importance of sustainability in contributing to our success. We are focusing on: – Energy efficiency of our port
Slide 39: Annexure B – Look through debt expiry profile
Annexure B – Look through debt expiry profile(by drawn amount) as at 31 December 11 For personal use only Arranged $0.3bn of debt over 1HFY12 CHC CQO $1,400m CQR $1,330m Wholesale Unlisted Funds $1,200m Retail Investor Funds $1,000m $800m $677m $654m $598m $600m $400m $347m $200m $15m $0m FY12 FY1
Slide 40: Annexure C – Property portfolio movement
Annexure C – Property portfolio movement For personal use only 31 December 11 Movement 30 June 2011 CHC stake CHC Other Acquisition / CHC stake CHC (%) investment movements sale (%) investment ($m) ($m)1 ($m) ($m) Listed Funds CQO 10% 180.9 (4.7) - 10% 185.6 CQR 10% 102.9 (1.4) 16.2 8% 88.1 Wholesal
Slide 41: Annexure D – Portfolio metrics
Annexure D – Portfolio metrics For personal use only Weighted average rent reviews 1 CQO 4.0% 2 CQR 4.1% CPOF 4.0% CPIF 3.2% DRF 3.3% CHUF 3.8% DPF 4.0% CHDPF 3.6% CHPT 3.8% 1. Australian portfolio only 2. Based on Australian specialty leases only 41
Slide 42: Annexure E - Portfolio metrics
Annexure E - Portfolio metrics For personal use only Quality of earnings improving with proactive management of well diversified portfolio Capitalisation rates WALE (by income in years)1 CQO 7.8% CQO 4.5 CQR 8.3% CQR 6.6 CPOF 7.8% CPOF 5.7 CPIF 8.2% CPIF 12.0 DRF 8.5% DRF 6.2 CHUF 8.1% CHUF 7.9 DP
Slide 43: Annexure F – Funds management platform
Annexure F – Funds management platform For personal use only Funds under management (FUM) of $10.1bn Listed Funds Wholesale Investor Funds Retail Investor Funds $5.2bn $3.4bn $1.5bn ($284m co-invested) ($204m co-invested) ($125m co-invested) Opportunistic Core Plus CQO2 CQR2 $0.9bn $2.5bn $3.2bn $
Slide 44: Annexure G – Intangibles
Annexure G – Intangibles For personal use only As a component of the consideration for the acquisition of the Macquarie platform, 70% of the offshore revenue generated above $21.4m is payable to Macquarie Group up to a maximum of $15m (earn out) – $1.4m will be paid to Macquarie for revenue receiv
Slide 45: Annexure H - Fund strategies
Annexure H - Fund strategies For personal use only Fund Defined strategies Progress CQO CQO is currently subject to a proposal for the acquisition of all the units of CQO, except certain units held by the bidders or their $3.2bn associates. The proposal is scheduled to be voted on at a unitholder
Slide 46: Annexure I - Fund strategies
Annexure I - Fund strategies For personal use only Fund Defined Strategies Progress Achieved final close for CPOF ($200) and CPIF ($150m) equity raising DA to be lodged for office and retail redevelopment of 333 George Street, Wholesale Sydney Investor Acquire new assets and redevelop Funds ex
Slide 47: Annexure J – DRF reconciliation of operating earnings
Annexure J – DRF reconciliation of operating earnings For personal use only 1HFY12 1HFY12 1HFY12 (DRF consolidated) Adjustment (DRF net contribution basis) Direct net property income 7.4 (7.0) 0.3 1 Indirect property income 16.9 3.0 19.9 Property investment income 24.2 (4.0) 20.2 Investment manageme
Slide 48: Annexure K – DRF reconciliation Balance Sheet
Annexure K – DRF reconciliation Balance Sheet For personal use only $m 31 December 2011 31 December 2011 DRF equity accounted 31 December11 (DRF consolidated) DRF balance sheet co-investment (DRF on net contribution basis) Cash 24.9 (3.6) - 21.4 Property investments 676.6 (162.6) 62.1 575.7 Developm
Slide 49: Annexure L - Cashflow reconciliation
Annexure L - Cashflow reconciliation For personal use only 11.24cps ($2.0m) ($0.3m) 10.47cps +$0.1m ($3.5m) ($5.0m +$0.9m +$0.7m 8.16cps $33.2m $30.9m $24.1m 1 Operating Restructure CQO Operating Change in Change in Change in Earnings vs Depreciation Operational earnings pre Earnings trade payables
Slide 50: Annexure M – Reconciliation of segment note to presentation
Annexure M – Reconciliation of segment note to presentation For personal use only The reconciliation of EBITDA performance in the results to the segment information contained in note 6(b) of the Interim Financial Report is set out below Property Property Funds Development DRF Combined Group Invest
Slide 51: Annexure N - Capital management
Annexure N - Capital management For personal use only 1 ($m) CHC CQO CQR CPOF CPIF DRF CHUF DPF CHDPF CHOF4 CHOF5 Asset values2 809 3,253 1,968 1,414 447 184 225 105 525 116 374 Net debt drawn2 11 1,254 831 439 93 86 71 54 230 66 116 Duration3 2.4 2.2 3.6 3.1 1.7 1.9 N/A 0.8 1.7 N/A N/A (years) Gear
Slide 52: Annexure O – Unlisted portfolio detail
Annexure O – Unlisted portfolio detail For personal use only CORE PLUS OFFICE FUND (CPOF) BOOK VALUE INDEPENDENT MKT CAP MKT CAP CAP RATE VALUER’S WALE MIN. RENT VALUATION RATE RATE CHANGE DISCOUNT REVIEW DATE 31 DEC 11 30 JUN 11 RATE/ IRR ($m) (%) (%) (%) (%) (YEARS) (%) 331 & 333 George St, Sydney
Slide 53: Annexure P – Unlisted portfolio detail
Annexure P – Unlisted portfolio detail For personal use only CORE PLUS INDUSTRIAL FUND (CPIF) BOOK INDEPENDENT MKT CAP MKT CAP CAP VALUER’S WALE MIN. RENT VALUE VALUATION RATE RATE RATE DISCOUNT RATE/ REVIEW DATE 31 DEC 11 30 JUN 11 CHANGE IRR VALUE ($m) ($m) (%) (%) (%) (%) (YEARS) (%) 372 Eastern
Slide 54: Annexure Q – Unlisted portfolio detail
Annexure Q – Unlisted portfolio detail For personal use only DIRECT RETAIL FUND (DRF) BOOK INDEPENDENT MKT CAP MKT CAP CAP VALUER’S WALE MIN. VALUE VALUATION RATE RATE RATE DISCOUNT RENT DATE 31 DEC 11 30 JUN 11 CHANGE RATE/ IRR REVIEW ($m) (%) (%) (%) (%) (YEARS) (%) Menai Central, Sydney, NSW 37.0
Slide 55: Annexure R – Unlisted portfolio detail
Annexure R – Unlisted portfolio detail For personal use only DIVERSIFIED PROPERTY FUND (DPF) BOOK INDEPENDENT MKT CAP MKT CAP CAP VALUER’S WALE MIN. RENT VALUE VALUATION RATE RATE RATE DISCOUNT REVIEW DATE 31 DEC 11 30 JUN 11 CHANGE RATE/ IRR (%) ($m) (%) (%) (%) (%) (YEARS) 400 Kent St, Sydney, NSW
Slide 56: Annexure S – Unlisted portfolio detail
Annexure S – Unlisted portfolio detail For personal use only DIRECT PROPERTY FUND (CHDPF) BOOK INDEPENDENT MKT CAP MKT CAP CAP VALUER’S WALE MIN. RENT VALUE VALUATION RATE RATE RATE DISCOUNT REVIEW DATE 31 DEC 11 30 JUN 11 CHANGE RATE/ IRR (%) ($m) (%) (%) (%) (%) (YEARS) 2 Wentworth St, Parramatta,
Slide 57: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Charter Hall Group (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). It is a pre
Slide 58: Fund Key
Fund Key Listed Funds For personal use only CQO Charter Hall Office REIT CQR Charter Hall Retail REIT Wholesale Unlisted Funds CPOF Core Plus Office Fund CPIF Core Plus Industrial Fund Wholesale Opportunistic Funds CHOF4 Charter Hall Opportunity Fund 4 CHOF5 Charter Hall Opportunity Fund 5 Retail In
Slide 59: Further information
For personal use only Further information David Southon David Harrison Joint Managing Director Joint Managing Director +61 2 8908 4025 +61 2 8908 4033 david.southon@charterhall.com.au david.harrison@charterhall.com.au Kylie Ramsden Head of Listed Investor Relations +61 2 8295 1016 kylie.ramsden@char
Slide 60: charterhall.com.au
For personal use only charterhall.com.au