Charter Hall Group · ASX:CHC
Charter Hall — Investor Day (March 2021)
61 slides from Charter Hall's investor day presentation, Mar 31, 2021
Slide 1: Charter Hall Group Development Showcase
Charter Hall Group Development Showcase 31 March 2021
Slide 2: Agenda
David Harrison Managing Director & Group CEO Agenda 1. Welcome and Overview of Development at Charter Hall Carmel Hourigan 2. Office Platform – How Development adds value Office CEO 3. Office Development Strategy; Opportunities; Case Studies 4. Office Q&A Andrew Borger Head of Development 5. Industr
Slide 3: Welcome and Overview of Development at Charter Hall
Welcome and Overview of Development at Charter Hall David Harrison, Group Managing Director & Group CEO MidWest Logistics Hub 442-540 Dohertys Road Truganina Charter Hall Group 2021 Development Showcase 3
Slide 4: Development within the $46.4bn Charter Hall strategic framework
Overview of Development at Charter Hall Development within the $46.4bn Charter Hall strategic framework – Attracting capital through access to a development pipeline of stock not available on-market – Newer assets with less obsolescence risk Access – Development gains retained within funds leading t
Slide 5: Development platform attracts capital and enhances returns
Overview of Development at Charter Hall Development platform attracts capital and enhances returns Development has become an increasing proportion of fund growth – NSW and VIC account for 74% of development during the period Development completed by state Cumulative development completions by sector
Slide 6: Development – committed and uncommitted
Overview of Development at Charter Hall Development – committed and uncommitted – $3.6bn of committed development represents projects that have been pre-leased and construction commenced – $3.4bn of uncommitted represents captive opportunities that provide a pathway to further committed developments
Slide 7: New office development analysis – Developments under construction
Overview of Development at Charter Hall New office development analysis – Developments under construction Tenant customers continue to seek quality accommodation Pre-commitments Analysis (Box Size by NLA%) Occupier growth in pre-lease tenants – Financial services tenants represent the majority of pr
Slide 8: Accelerated structural trends driving industrial & logistics demand
Overview of Development at Charter Hall Accelerated structural trends driving industrial & logistics demand Charter Hall platform benefiting from major structural shifts Online retail penetration (%) Goods and services consumption growth (%) Total food turnover ($ million) Online retailing reached l
Slide 9: The Charter Hall competitive advantage
Overview of Development at Charter Hall The Charter Hall competitive advantage Cross-sector tenant relationships drive development opportunities Top 20 platform tenants by net income 12.5% 6.4% 5.9% 5.2% 5.1% 3.3% 2.7% 2.1% 1.9% 1.8% 1.6% 1.5% 1.5% 1.4% 1.1% 1.0% 0.8% 0.8% 0.7% 0.7% Goodstart Common
Slide 10: Development Investment (DI) earnings contribution
Overview of Development at Charter Hall Development Investment (DI) earnings contribution DI EBITDA an on-going contributor to Group earnings – Projects that initially did not fit into existing fund development mandates where the Group took initial development ownership Office Industrial Long WALE R
Slide 11: Office Platform – How Development adds value
Office Platform – How Development adds value Carmel Hourigan, Office CEO 130 Lonsdale Street, Melbourne Charter Hall Group 2021 Development Showcase 11
Slide 12: Office capability and team
Office Development Office capability and team 74 10 74 20 Large national team with extensive capabilities and track-record Sydney • 140+ team of Commercial specialists 28 Asset & Property Expertise across transactions, development, asset Funds Management, Development Melbourne management, property m
Slide 13: Charter Hall manages Australia’s most resilient office portfolio
Office Development Charter Hall manages Australia’s most resilient office portfolio Largest manager of Australian office for third-party capital, with a market leading exposure to government tenants and longest WALE vs key peers Largest manager of Australian office for Market leading exposure to gov
Slide 14: We deliver outperformance to our fund investors
Office Development We deliver outperformance to our fund investors CPOF has consistently outperformed the MSCI core office benchmark Total returns per annum – Core Unlisted Office Funds vs. MSCI Core Office Index (to January 2021) 5 years 7 years 10 years 14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0%
Slide 15: CPOF has delivered $1.9bn of value creation above contributed equity
Office Development CPOF has delivered $1.9bn of value creation above contributed equity Tactical shift to higher quality, modern assets through capital recycling and developed to core $bn Legend 7.5 # Asset Acquisition # Asset Disposal 7.0 # Developed to Core (completed) NTA plus 6.5 distributions #
Slide 16: CPOF’s development projects have delivered enhanced returns to investors
Office Development CPOF’s development projects have delivered enhanced returns to investors Develop to Core strategy has contributed an average of 25% to annual investor returns over the last 5 years Development contribution to CPOF returns Value Creation 20.9% 16.8% 20.3% 31.4% 35.9% Western Sydney
Slide 17: Flight to quality – Divergent impact of downturns
Office Development Flight to quality – Divergent impact of downturns Economic downturns historically trigger a flight to quality in both occupier and investor demand Age Profile of CBD Office Buildings (% of total stock) Average Prime Grade Building Age (years) 50% 25 21 21 40% 20 20 17 17 30% 15 13
Slide 18: Charter Hall have deep development experience and develop to core within funds
Office Development Charter Hall have deep development experience and develop to core within funds Projects completed 100% leased; Average WALE of 11.2 years and delivered significant valuation gains 100% pre-leased prior to 100% pre-leased at construction 100% leased 6mths post PC 100% pre-leased 12
Slide 19: Charter Hall maintain strong cross-sector customer relationships
Office Development Charter Hall maintain strong cross-sector customer relationships We have leveraged our deep, cross sector tenant relationships to achieve pre-commitments for our market leading development pipeline 30-55 Main Beach 28B McPherson Street, 570 Bourke Street, 343 Albert Street, 2 Park
Slide 20: Office Development Strategy; Opportunities; Case Studies
Office Development Strategy; Opportunities; Case Studies Andrew Borger, Head of Development – Office Artist impression: 60 King William Street, Adelaide Charter Hall Group 2021 Development Showcase 20
Slide 21: Development as value-add driver
Office Development Office Development as value-add driver Identify, secure, convert and deliver Develop to Core product providing superior returns and assets. Achieved through: – Add value to existing portfolio – Assess potential value adds for Acquisition DD – Originate on and off market site acqui
Slide 22: Office development pipeline - committed
Office Development Office development pipeline - committed Australia’s largest office development portfolio under construction by NLA: $2.25bn under construction, Total NLA 173,215 and 60% Office pre-commit 150 Lonsdale Street, Melbourne 6 Hassall Street, Parramatta 555, Collins Street (North), Melb
Slide 23: Office development pipeline - uncommitted
Office Development Office development pipeline - uncommitted Further $2.25bn of future pipeline Projects Status State NLA (sqm) 360 Queen Street DA approved QLD 44,150 iQ, Westmead Stage 2 DA approved NSW 16,757 iQ, Westmead Stage 3 DA to be lodged NSW 14,384 555 Collins Street (South) DA approved V
Slide 24: Demand for office space varies by industry
Office Development Demand for office space varies by industry - growth is expected to be led by tech, healthcare and government tenant customers Five year growth in occupier demand (sqm) 1,200,000 116,883 1,048,777 1,000,000 21,407 26,818 30,669 39,872 60,107 800,000 62,938 69,947 73,946 600,000 120
Slide 25: Charter Hall Office top tenant customers
Office Development Charter Hall Office top tenant customers Primarily exposed to high quality government or blue-chip tenants in resilient industries Charter Hall Office platform – top 20 tenant customers by net income 26.0% 8.6% 4.4% 3.2% 3.0% 2.6% 1.6% 1.6% 1.5% 1.4% 1.3% 1.3% 1.1% 1.1% 1.0% 1.0%
Slide 26: Deep relationships across government tenant customers
Office Development Deep relationships across government tenant customers 26% of Office rent from government tenant customers Top 15 government tenant customers (by rent) $35m Office $30m Industrial & Logistics $25m $24m Shopping Centre Retail $16m $14m $13m $12m $9m $8m $8m $7m $6m $5m $5m Governmen
Slide 27: Technology for the new breed of digital tenant
Office Development Technology for the new breed of digital tenant Delivering Australia’s smartest office buildings that future proofs business and seamlessly supports staff. – Touch-less access – Cyber security – Artificial Intelligence (AI) – Number plate recognition – Electric vehicle charging – F
Slide 28: Future proofing our portfolio via sustainability initiatives
Office Development Future proofing our portfolio via sustainability initiatives Largest Portfolio by NLA of 6 star Green star developments in Australia – CHOT and CPOF assets have been registered for a WELL Portfolio rating with Brisbane and Melbourne workplaces registered for WELL Certification. In
Slide 29: A move to scale has seen the rise of precincts in Australia’s CBD’s
Office Development A move to scale has seen the rise of precincts in Australia’s CBD’s Charter Hall has demonstrated deep expertise $1.5bn Wesley Precinct including: – 130 Lonsdale Street, Melbourne – 60,600sqm NLA Premium Office and Retail – Value $738m – 140 Lonsdale Street, Melbourne – 22,760sqm
Slide 30: 130 Lonsdale Street, Melbourne
Office Development 130 Lonsdale Street, Melbourne – Valuation on completion: $738m – NLA: 60,590sqm – Occupancy on completion: 100% – WALE on completion: 10.8 years – PC: March 2020 – Design and construction cost: $333m – Building quality: – Premium – 6 star NABERS Energy – 5 Star NABERS Energy – Go
Slide 31: 60 King William Street, Adelaide
Office Development 60 King William Street, Adelaide – Valuation on completion: $413m – NLA: 42,687sqm – Office pre-commit: 72% – 10 year lease to Commonwealth Government – Forecast PC: Mid 2023 – Design and construction cost: $178m – Building quality: – A-Grade and Premium lifting – 6 Star Green Sta
Slide 32: Higher education broadening into life sciences
Office Development Higher education broadening into life sciences Australia’s largest portfolio of higher education projects with a portfolio in excess of $1bn. Deep expertise in curriculum design understanding, delivery, and operations. iQ Westmead – Labs and Research 6 Hassall Street – Engineering
Slide 33: 6 Hassall Street, Parramatta
Office Development 6 Hassall Street, Parramatta Engineering Business Success – Valuation on completion: $340m – NLA: 28,910sqm – Office pre-commit: 47% – 15 year lease to Western Sydney University – Forecast PC: Q3 2021 – Design and construction cost: $127m – Building quality: – A-Grade – 6 star Gre
Slide 34: 555 Collins Street (North), Melbourne
Office Development 555 Collins Street (North), Melbourne – Valuation on completion: $720m – NLA: 51,606sqm – 8 year lease to Amazon – Forecast PC: CY 2023 – Design and construction cost: $297m – Building quality: – Premium – 6 Star Green Star – 5 Star NABERS Energy – 4 Star NABERS Water – Platinum W
Slide 35: Future development opportunity – Shelley Street precinct, Sydney
Barangaroo International Towers 1, 2 & 3 (not CPOF assets) Office Development Floor plates typical 2,350sqm , Land ~ 5,700sqm per tower Current FSR ~18.1:1 Future development opportunity – Access to Trains Shelley Street Wynyard Station Pedestrian Tunnel precinct, Sydney 10 Charter Hall has Shelley
Slide 36: Office Q&A
Office Q&A Artist impression: 360 Queen Street, Brisbane Charter Hall Group 2021 Development Showcase 36
Slide 37: Industrial & Logistics Platform – How Development adds value
Industrial & Logistics Platform – How Development adds value Richard Stacker, Industrial & Logistics CEO Chullora Logistics Park 2 Hume Highway, Chullora Charter Hall Group 2021 Development Showcase 37
Slide 38: Industrial & Logistics capability and team
Industrial & Logistics Development Industrial & Logistics capability and team 7 23 20 Large national team with extensive 48 capabilities and track-record Sydney • 60+ team of Industrial specialists Expertise across transactions, development, asset Funds Asset & Property Development 14 management, pr
Slide 39: Leasing volumes continue at record levels
Industrial & Logistics Development Leasing volumes continue at record levels Strong occupier demand activity, driven by non discretionary retail, growing omni channel requirements and online retailers, coupled with steady but constrained supply Gross leasing volumes (sqm millions) Supply (sqm millio
Slide 40: Multi sector relationships – Charter Hall Group
Industrial & Logistics Development Multi sector relationships – Charter Hall Group Top 20 Charter Hall Group Customers Top 20 Charter Hall Industrial Customers Growth through Charter Hall’s cross sector customer engagement & collaboration Government 12.5% Coles 9.6% Woolworths 6.4% • Customer cross-
Slide 41: Key customers national coverage & leveraging multi sector relationship
Industrial & Logistics Development Key customers national coverage & leveraging multi sector relationship across Charter Hall Consumer Staples Government E-Tailers FY20 FY15 FY15 FY17 FY16 FY20 FY20 NSW FY18 61k sqm 30k sqm 40k sqm - 119k sqm x11 - 19k sqm 17k sqm 22k sqm 21k sqm x2 FY21 3k sqm FY16
Slide 42: CPIF & CLP Fund growth driven by consistent development activity
Industrial & Logistics Development CPIF & CLP Fund growth driven by consistent development activity CPIF Today 7.0 Inception CPIF Legend 6.0 Developed Development Landbank Stabilised Sold GAV Committed Uncommitted Created 5.0 11.3% $1.7bn of CPIF Value 4.0 5-year NTA + return Distributions 3.0 Equit
Slide 43: Industrial sector growth & returns from developments
Industrial & Logistics Development Industrial sector growth & returns from developments The Develop to Core strategy for our funds has delivered a total $3.9bn or 31% of the Industrial Sectors $12.3bn FUM with a cumulative annual growth rate of 24% over the past 5 years Industrial Sector FUM Stable
Slide 44: Industrial & Logistics Development Strategy; Opportunities; Case Studies
Industrial & Logistics Development Strategy; Opportunities; Case Studies Andrew Simons, Head of Development – Industrial & Logistics MidWest Logistics Hub 500 Dohertys Road, Truganina Charter Hall Group 2021 Development Showcase 44
Slide 45: Development pipeline
Industrial & Logistics Development Development pipeline – Focus on Develop to Core strategy for the Funds by deploying capital in major markets, securing high quality pre-leases and creating development margin that enhances Fund returns – In CY20 15 buildings delivered nationally with a GAV of $690m
Slide 46: Sustainability and ESG
Industrial & Logistics Development Sustainability and ESG A commitment by Charter Hall and its tenant customers to ESG will result in 11,000 Kilowatts of solar installed by 2023 Solar capacity - I&L Development 12,000 10,000 8,000 Cumulative (kW) 6,000 4,000 2,000 0 2020 2021 2022 2023 Financial yea
Slide 47: Development ESG commitment
Industrial & Logistics Development Development ESG commitment – 8-year track record of sustained improvement in our GRESB ratings – In 2020 CPIF’s development projects achieved the highest rating of all Global GRESB development participants Industrial Fund’s commitment to continual increasing GRESB
Slide 48: Industrial Development Case Study 1
Industrial & Logistics Development Industrial Development Case Study 1 MidWest Logistics Hub 442-540 Dohertys Road, Truganina Charter Hall Group 2021 Development Showcase 48
Slide 49: Charter Hall Group 2021 Development Showcase
Charter Hall Group 2021 Development Showcase 49
Slide 50: MidWest Logistics Hub 442-540 Dohertys Road, Truganina
Industrial & Logistics Development MidWest Logistics Hub 442-540 Dohertys Road, Truganina Site area 60ha with 48ha (NDA) On completion GLA 250,000sqm On completion GAV $550m (The acquisition feasibility was at $330m) – Toll (Mars Contract) – 45,000sqm – Bridgestone – 24,000sqm – Ingham’s – 25,000sqm
Slide 51: Industrial Development Case Study 2
Industrial & Logistics Development Industrial Development Case Study 2 Tradecoast Industrial Park 679 Curtain Avenue Pinkenba Charter Hall Group 2021 Development Showcase 51
Slide 52: Tradecoast Industrial Park Curtin Avenue, Pinkenba
Industrial & Logistics Development Tradecoast Industrial Park 679 Curtin Avenue, Pinkenba Site area 11.5ha On completion GLA 77,000sqm On completion GAV $120m – AP Eagers – Sandvik – Caroma Tenant mix – Amazon – Australia Post – DHL – The Tradecoast estate was a strategic and staged effort to acquir
Slide 53: Charter Hall is focused on resilient customer industries
Industrial & Logistics Development Charter Hall is focused on resilient customer industries – Consumer staples dominate Charter Hall’s Industrial customers, representing 52% of total rent – Our strategic relationships with consumer staple customers has driven an 8% increase in weighting over the pas
Slide 54: COVID-19 has accelerated structural trends
Industrial & Logistics Development COVID-19 has accelerated structural trends Charter Hall platform benefitting from major structural shifts Online grocery revenue Grocery industrial and warehouse market share, by area – Online grocery retail revenue has reached levels not anticipated for 5 to 6 yea
Slide 55: Industrial development - Case study 3
Industrial & Logistics Development Industrial development - Case study 3 NSW - Wetherill Park Precinct – Marley Spoon (Woolworths) Tenant mix – Coles (Ocado) – Wetherill Park has become a highly sought-after area of Western Sydney due to its location east of the M7 and proximity to the Sydney orbita
Slide 56: Online grocery and automation
Industrial & Logistics Development Online grocery and automation Coles – Partnership with Ocado – Ocado undertaking a global roll out – Hub and spoke (last mile) model – Ocado are one of the largest global players – Online global rollout of Ocado in other countries including Japan, USA, Canada and E
Slide 57: Online grocery and automation
Industrial & Logistics Development Online grocery and automation Woolworths – Partnership with US based Takeoff technologies using Knapp automation – Micro-fulfilment centres located inside or adjoining existing supermarkets – It holds 10,000 of the most in demand grocery products Charter Hall Group
Slide 58: Grocery logistics and the growth in demand
Industrial & Logistics Development Grocery logistics and the growth in demand Charter Hall continues to target grocery tenant customers in this growing sector Grocery logistics market - sqm 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 Charter Hall Peer 1 Peer 2 Peer 3 Pe
Slide 59: Industrial & Logistics Q&A
Industrial & Logistics Q&A Charter Hall Group 2021 Development Showcase Half Year Results 59
Slide 60: Further information
Additional Information Further information David Harrison Philip Cheetham Managing Director Head of Listed Investor & Group CEO Relations Charter Hall Group Charter Hall Group +61 2 8651 9142 +61 2 8651 9214 david.harrison@charterhall.com.au philip.cheetham@charterhall.com.au Presentation authorised
Slide 61: charterhall.com.au/chc
charterhall.com.au/chc 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 investme