Charter Hall Group · ASX:CHC
Charter Hall — H1 FY2013 Earnings Presentation
53 slides from Charter Hall's earnings presentation, Feb 26, 2013
Slide 1: Half Year Results, 6 months to 31 December 2012
For personal use only 26 February 2013 Charter Hall Group Half Year Results 6 months to 31 December 2012
Slide 2: Disclaimer
For personal use only 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
Slide 3: Presenters and agenda
For personal use only David Harrison David Southon Paul Altschwager Joint Managing Joint Managing Chief Financial Director Director Officer 1 Results summary and Group overview 2 Operational performance 3 Financial performance 4 Strategy, outlook and guidance 5 Additional Information 2
Slide 4: Results summary and Group overview
For personal use only 01 Results summary and Group overview
Slide 5: Results Summary: Key achievements
Results Summary For personal use only Key achievements Increase in operating earnings to 11.76cps, up 4.6% on pcp1 Secured $570m of new equity commitments during 1HY13 Secured $1.3bn of additional property assets delivering 12% growth in FUM to $10.0bn today Charter Hall Group realised $41m
Slide 6: Results Summary: Half year summary
Results Summary For personal use only Half year summary Increase in operating earnings to 11.76cps, up 4.6% on pcp1 – Statutory profit after tax of $29.9m, up 52.7% on pcp – Operating earnings of $35.1m, up 5.7% on pcp1 – Distribution of 9.8cps, up 7.7% on pcp – NTA per security is $2.12, down 1c
Slide 7: Solid securityholder returns
Results Summary For personal use only Solid securityholder returns Total securityholder return 1HY13: 48.4% Distribution per security growth Solid performance over 1 and 3 years to 31 January 20131 9.80 9.10 9.10 8.50 8.00 80.0% 70.3% 6.15 6.40 60.0% 1HY10 2HY10 1HY11 2HY11 1HY12 2HY12 1HY13 40.0% 3
Slide 8: Our strategy
Group Overview For personal use only Our strategy Our strategy is to access, deploy and manage equity that is invested in core Australian real estate sectors to create value and provide growing income and capital returns for investors. ACCESS Access to multiple equity sources including listed, poole
Slide 9: Investment strategy
Group Overview For personal use only Investment strategy Our investment strategy, focusing on core property asset sectors, will endure macroeconomic cycles and generate growing income and capital returns, consistent with the investment appetite of investors in the real estate asset class. OFFICE RET
Slide 10: Activity since June 2012: Office
Activity since 30 June 2012 For personal use only Office Equity raising completed for $55m retail investor syndicate (CHIF8) 144 Stirling Street Trust, less than 3 months after launch CHOT substantially de-risked with Citigroup, QR National, Government and other new lease / renewals totalling ov
Slide 11: Activity since June 2012: Retail
Activity since 30 June 2012 For personal use only Retail Established a new unlisted wholesale partnership with a global institutional investor to acquire Bateau Bay Square1 for $164m Established a new wholesale partnership with Telstra Super which acquired a $207m Bunnings portfolio located acro
Slide 12: Activity since June 2012: Industrial
Activity since 30 June 2012 For personal use only Industrial Direct Industrial Fund 1 (DIF1) equity raising closed oversubscribed at $120m. Deployed capital to secure a $210m portfolio with a 12 year WALE DIF2 launched with acquisition of $55m of seed assets, targeting a total portfolio value of
Slide 13: Australian focused property platform
Group Overview For personal use only Australian focused property platform Today, Charter Hall manages a $10bn property portfolio NO. OF PROPERTIES NO. OF TENANTS LETTABLE AREA TOTAL ASSETS GROSS INCOME (SQM) ($M) ($M pa) 195 2,975 2.5m 9,9751 861 Diversification by equity source Diversification by a
Slide 14: Expertise across risk/return spectrum
Group Overview For personal use only Expertise across risk/return spectrum A significant manager of wholesale, listed and retail investor clients’ capital Target Return Risk vs. Target Return Profile 20% + $0.4bn Development Office Retail 15 – 17% Wholesale Wholesale Industrial Partnerships Pooled
Slide 15: Operational performance
For personal use only 02 Operational performance
Slide 16: Quality of earnings
Operational Performance For personal use only Quality of earnings EBITDA of $35.2m1, up 2.4% from $34.3m2 89% of EBITDA generated from 60% of EBITDA from annuity style income property investments 20.0 Direct property $18.3m investment 18.0 $16.7m Property Funds 8% 16.0 Management $14.3m $14.2m 14.
Slide 17: Property Investment portfolio
Property Investment For personal use only Property Investment portfolio Charter Hall’s property investments total $561m1 Delivered HY13 EBITDA of $21.0m1, 60% of the total EBITDA Annualised property co-investment earnings yield of 7.4%, up from 6.7% pcp WALE of 6.1 years and 97.8% occupancy
Slide 18: Property Investment portfolio returns
Property Investment For personal use only Property Investment portfolio Charter Hall securityholders have benefited from improved fund performance and active management of the investment portfolio Increase in property co-investment earnings yield to 7.4%, up from 6.7% on pcp OWNERSHIP CHARTER HA
Slide 19: Property Investment portfolio metrics
Property Investment For personal use only Property Investment portfolio metrics Lease expiry profile1 (31 December 2012) Top 10 tenants (31 December 2012) TENANT % PORTFOLIO LEASED (BY GROSS INCOME) Australian Governments 9.9 Wesfarmers 9.0 Woolworths 6.0 47.7% Telstra 6.0 Macquarie Group 3.1 Westpa
Slide 20: Australian FUM platform growth
Property Funds Management For personal use only Australian FUM platform growth Group FUM $10.0bn at February 2013 Australian property FUM has increased by $1.1bn in 6 months Offshore property FUM is $0.4bn, in line with June 2012 Total Group FUM Australian FUM by Equity Source 12.0 12.0 $10.7b
Slide 21: Secured inflows from a range of equity sources
Property Funds Management For personal use only Secured inflows from a range of equity sources Secured $570m in new equity during 1HY13 from a range of equity sources across the funds platform A further $271m of equity and equity commitments secured since 1 January 2013 1HY12 2HY12 1HY13 ($M) ($
Slide 22: Property funds management
Property Funds Management For personal use only Property funds management Half year property funds management EBITDA of $14.2m Total revenue equates to 86bps of FUM3 (62bps from annuity and 24bps from non-annuity sources) 25.0 Annuity style revenue $M 1HY13 1HY12 5 Revenue 40.6 39.0 $19.6m $19.2
Slide 23: Capital recycling strategy
Capital Management For personal use only Capital recycling strategy EQUITY RECYCLED ($M) FY12 2 1HY13 Total We recycle our capital to seed additional high value opportunities for CHC and our clients (12mths) (6mths) – Over the past 18 months, $109m has been realised and $71m Equity realised redepl
Slide 24: Financial performance
For personal use only 03 Financial performance
Slide 25: Key financial metrics
Financial Performance For personal use only Key financial metrics GROUP 1HY13 1HY12 CHANGE Statutory profit after tax $29.9m $19.6m 52.7% Operating earnings (before specific items)2 $35.1m $33.2m 5.7% Operating earnings $35.1m $30.9m 13.4% Operating earnings per security (before specific items) (EPS
Slide 26: Operating earnings
Financial Performance For personal use only Operating earnings Operating earnings growth of 5.7%2 to $35.1m $M 1HY13 1HY12 GROWTH % – Direct property investment income is reducing as the Direct property investment1 2.7 3.4 (19.5%) strategy to selldown DRF portfolio is progressed. Investment in pro
Slide 27: Property funds management earnings
Financial Performance For personal use only Property funds management earnings $M GROWTH 1HY13 1HY12 Headline property funds management % EBITDA flat. Annuity Style Revenue1 29.3 29.4 (0.2%) Development and Project Management 3.4 3.9 (13.3%) – When adjusted for 1HY13 restructuring cost of $1.2m, i
Slide 28: Reconciliation of operating earnings to statutory profit
Financial Performance For personal use only Reconciliation of operating earnings to statutory profit $3.5m ($1.4m) ($4.8m) ($0.8m) ($1.7m) $35.1m $29.9m 1 2 Operating earnings MTM of financial Fair value Non-cash security Amortisation Other Statutory profit after derivatives adjustments on based cos
Slide 29: Balance sheet
Financial Performance For personal use only Balance sheet $M 31 DEC 12 30 JUN 12 Cash 25.5 39.3 Property investments 615.1 614.0 2.18 Development investments 60.4 71.2 2.16 0.9c (1.7c) 1.9c Other tangible assets 53.1 54.6 (1.5c) 2.14 $2.12 $2.13 Intangibles 100.0 98.7 2.12 Total assets 854.1 877.8 2
Slide 30: Cashflow reconciliation
Financial Performance For personal use only Cashflow reconciliation ($3.4m) ($0.3m) ($1.1m) $0.8m ($2.8m) $35.1m $31.2m $29.8m $28.4m 1 Operating Earnings Change in Change in payables Earnings vs Other Operating Cashflow CHOT September Operating Cashflow Distribution 2 receivables distribution recei
Slide 31: Debt management
Financial Performance For personal use only Debt management Across fund platform, $0.6bn of debt refinanced in 1HY13 - Weighted average maturity increased to 3.2 years, from 3.1 years at 30 June 2012 - Weighted average cost of debt at 6.2%, down from 6.9% at 31 December 2011 $3.7bn of drawn debt
Slide 32: Strategy, outlook and guidance
For personal use only 04 Strategy, outlook and guidance
Slide 33: FY13 Progress on strategic objectives
Strategy For personal use only FY13 Progress on strategic objectives Strategy FY 13 Objectives Progress on FY13 Objectives • Continue to achieve the investment • 5 new partnerships and funds added objectives of our investors. • Improved performance across fund platform • Enhance return on equity • R
Slide 34: FY13 earnings guidance
Outlook For personal use only FY13 earnings guidance Barring unexpected events, we forecast: FY13 operating earnings to be in the range of 22.5 to 23.5 cps, representing 5% to 9% growth over FY12 33
Slide 35: 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 Nick Kelly Paul Altschwager Head of Investor Relations Chief Financial Officer +61
Slide 36: Annexure
For personal use only Annexure
Slide 37: Additional Information contents
For personal use only Additional Information 1 Property Funds Management Platform 2 2 Property Investment Highlights 4 3 Financial Information 10 4 Development 14 5 Capital management and funding 15 1
Slide 38: Charter Hall managed funds
Property funds management For personal use only Charter Hall managed funds Listed Fund Wholesale Funds, Mandates, Partnerships Retail Investor Funds Development Funds $2.2bn $5.5bn $1.8bn $0.4bn ($99m co-invested) ($371m co-invested) ($63m co-invested) ($18m co-invested) CQR1 Partnerships Pooled CHD
Slide 39: Charter Hall managed funds metrics
Property funds management For personal use only Charter Hall managed funds TOTAL SECTOR EQUITY NO. OF LETTABLE OCCUPANCY WEIGHTED WALE WEIGHTED PROPERTY SOURCE PROPERTIES AREA (SQM) AVERAGE (BY INCOME AVERAGE ASSETS ($M) RENT REVIEW IN YEARS) CAP RATES Top 5 Managed Funds CQR 2,181 Retail Listed 91
Slide 40: Property investment portfolio
Property investment highlights For personal use only Property investment portfolio OWNERSHIP CHARTER HALL 1HY13 PROPORTION OF MARKET DISCOUNT MINIMUM CHARTER HALL STAKE INVESTMENT CHARTER HALL CHARTER HALL CAP RATE RATE RENTAL INVESTMENT INVESTMENT INVESTMENT REVIEWS YIELD INCOME PORTFOLIO (%) ($M)
Slide 41: Core Plus Office Fund (CPOF)
Property investment highlights For personal use only Core Plus Office Fund (CPOF) KEY EVENTS DURING 1HY13 PORTFOLIO CHARACTERISTICS KEY METRICS CPOF outperforms the IPD/Mercer Wholesale Property Funds Index (total office funds) over 1, Gross property assets1 $1.7 billion 3 and 5 year periods to 31
Slide 42: Core Plus Industrial Fund (CPIF)
Property investment highlights For personal use only Core Plus Industrial Fund (CPIF) KEY EVENTS DURING 1HY13 PORTFOLIO CHARACTERISTIC KEY METRICS Outperformed the Industrial component of the IPD/Mercer Wholesale Property Funds Index Gross property assets $626 million (total funds) over all time p
Slide 43: Charter Hall Office Trust (CHOT)
Property investment highlights For personal use only Charter Hall Office Trust (CHOT) KEY EVENTS DURING 1HY13 PORTFOLIO CHARACTERISTICS KEY METRICS Portfolio nearing full occupancy at 99% (incl. HOA) Gross property assets $2.1 billion Total debt $957 million Net Tangible Assets increased by $78m
Slide 44: Wholesale Partnerships and Mandates
Property investment highlights For personal use only Wholesale Partnerships and Mandates KEY EVENTS DURING 1HY13 PORTFOLIO CHARACTERISTICS2 KEY METRICS Retail Partnership No.2 Bay Village acquisition – Acquired Bateau Bay1 in Bateau Charter Hall partnerships $473 million Bay, Central Coast NSW for
Slide 45: Charter Hall Retail REIT (CQR)
Property investment highlights For personal use only Charter Hall Retail REIT (CQR) KEY EVENTS DURING 1HY13 PORTFOLIO CHARACTERISTICS KEY METRICS Successfully raised $119 million of new equity for accretive transactions Gross property assets $2.2 billion Total debt $902 million Acquired three pr
Slide 46: Detailed operating earnings
Financial information For personal use only Detailed operating earnings ($M) 1HY13 1HY12 Net rental income 5.8 7.4 Property funds investment income 18.6 16.9 Property investment income 24.4 24.3 Investment management fees 19.2 19.6 Property and facilities management fees 6.6 5.8 Leasing fees (exclud
Slide 47: DRF reconciliation of balance sheet
Financial information For personal use only DRF reconciliation of balance sheet: 31 December 2012 $M 31 DEC 2012 31 DEC 2012 DRF 31 DEC 2012 (DRF CONSOLIDATED) DRF BALANCE SHEET ADJUSTMENTS (DRF ON NET CONTRIBUTION BASIS) Cash 25.5 (1.6) - 23.9 Property investments 615.8 (82.7) 29.5 562.6 Developmen
Slide 48: Reconciliation of operating earnings to statutory profit after tax
Financial information For personal use only Reconciliation of operating earnings to statutory profit after tax 1HY13 1HY12 $000s $000s Operating earnings before specific items 35,094 33,203 Specific items1 - (2,261) Operating earnings 35,094 30,942 Fair value adjustments on derivatives (847) (8,933)
Slide 49: Funds under management reconciliation
Financial information For personal use only Funds under management reconciliation $1.1bn ($0.4bn) $0.2bn $0.2bn $9.8bn $10.0bn $8.9bn 30‐Jun‐12 Revaluations Acquisitions Disposals 31‐Dec‐12 Acquisitions Today FY10 FY11 FY12 1HY13 TODAY ($BN) ($BN) ($BN) ($BN) ($BN) Australia FUM (excluding Developme
Slide 50: Development book and pipeline
Development For personal use only Development book and pipeline PROJECT STATUS FUND SECTOR PROJECT VALUE COMPLETION DATE ($M) Investment Funds CQR projects Active CQR Retail 133 FY13-FY15 171 Collins Street, Melbourne Active CHOT Office 135 FY13 175 Eagle Street, Brisbane Active CHOT Office 25 FY16-
Slide 51: Property funds debt programmes
Capital management & funding For personal use only Property funds debt programmes DIRECT PROPERTY TOP 5 MANAGED FUNDS OTHER FUNDS 1 ($M) CHC DRF CHOT CQR CPOF CPIF CHDPF WHOLESALE RETAIL DEVELOPMENT PARTNERSHIPS FUNDS FUNDS Asset values2 7453 84 2,017 1,520 1,520 620 529 452 907 309 Net debt drawn2
Slide 52: Look through debt expiry profile
Capital management & funding For personal use only Look through debt expiry profile (by facility limit) as at 31 December 2012 $1,600m CHC CQR $1,400m $1,338m $1,251m Wholesale Development Funds $1,200m Wholesale Unlisted Funds Retail Investor Funds $1,000m $823m $900m $800m $600m $400m $200m $139m
Slide 53: 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 Nick Kelly Paul Altschwager Head of Investor Relations Chief Financial Officer +61