Charter Hall Group · ASX:CHC
Charter Hall — 1HY14 Earnings Presentation
59 slides from Charter Hall's earnings presentation, Feb 11, 2016
Slide 1: Half Year Results, 6 months to 31 December 2013
NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S PERSONS 25 February 2014 Charter Hall Group Half Year Results 6 months to 31 December 2013
Slide 2: Disclaimer
Charter Hall Group 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 “Gr
Slide 3: Disclaimer
Charter Hall Group Disclaimer Except as required by law, no representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information, opinions and conclusions, or as to the reasonableness of any assumption, contained in this presentation. The pro forma
Slide 4: Agenda
Charter Hall Group Agenda David Harrison David Southon Paul Altschwager Joint Managing Director Joint Managing Director Chief Financial Officer 1 Results summary and Group overview 2 Operational performance 3 Financial performance 4 Equity raising 5 Strategy, outlook and guidance 6 Additional inform
Slide 5: Results Summary and Group Overview
Results Summary and Group Overview
Slide 6: Key achievements
Charter Hall Group Key achievements Results summary OEPS growth DPS growth Total 10.0%1 on pcp 12.2% on pcp Securityholder Return of 18%2 $1.9bn Australian FUM $702m gross transactions up 6% to equity inflows $1.0bn of acquisitions $0.9bn of divestments $10.5bn 1. 1HY13 is restated to include the no
Slide 7: Another active half
Charter Hall Group Another active half Results summary, equity raising and guidance • Increase in operating earnings per security to 12.42cps, up 10.0% – Statutory profit after tax of $28.6m – Operating earnings of $38.1m, up 13.1%1 – Distribution of 11.0cps, up 12.2% on pcp • Property funds managem
Slide 8: Solid securityholder returns
Charter Hall Group Solid securityholder returns Results summary Total securityholder return for the 12 months to 31 December 2013 : 18.2% Distribution per security growth Total performance over 1 and 3 years to 31 December 20131 11.00 10.40 9.80 25.0% 9.10 9.10 21.9% 8.00 8.50 20.2% 20.0% 6.15 6.40
Slide 9: Our strategy
Charter Hall Group Our strategy Group overview Our strategy is to use our specialist property expertise to access, deploy, manage and invest equity alongside our partners to create value and provide sustainable returns for our investment partners and Charter Hall securityholders. ACCESS DEPLOY MANAG
Slide 10: Office Sector Activity
Charter Hall Group Office Sector Activity Since 30 June 2013 • The $2.3bn CHOT wholesale partnership acquired the remaining 50% of No.1 Martin Place for $220m from a Charter Hall managed syndicate • The $1.8bn CPOF wholesale pooled fund raised a total of $302m1 in new equity being a combination of r
Slide 11: Retail Sector Activity
Charter Hall Group Retail Sector Activity Since 30 June 2013 • Total Australian1 retail FUM has increased by 10% to $2.9bn • Retail asset acquisitions totalled $214m over 1HY14 at an average year 1 yield of 7.7% • CQR’s $80m institutional equity placement and $8m conditional placement to Charter Hal
Slide 12: Industrial Sector Activity
Charter Hall Group Industrial Sector Activity Since 30 June 2013 • The Group‘s Industrial FUM has grown by 47% from $1.1bn to $1.6bn • The $0.6bn1 Core Logistics Partnership (CLP) continues to grow with additional equity commitments driving acquisition momentum • The $0.7bn Core Plus Industrial Fund
Slide 13: Expertise across risk/return spectrum
Charter Hall Group 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% + $0.1bn Office Retail 15 – 17% Industrial Wholesale Partnerships Diversified Wholesale Pooled 1
Slide 14: Operational Performance
Charter Hall * Operational Performance
Slide 15: Earnings Composition
Charter Hall Group Earnings Composition Operating earnings Operating earnings of $38.1m1, up 13.1% from $33.7m Property Investment Earnings Drivers 700.0 9.0% • Property investments growth of 7.6% • Property funds management growth of 23.3% 600.0 Property Investment Portfolio $m 8.0% 500.0 Co-invest
Slide 16: Property funds management
Charter Hall Group Property funds management Property funds management • Property funds management EBITDA margin on revenue increased to 36.1% from 34.8% $25.0m $M 1HY14 1HY13 Growth +14.6% $22.0m Revenue 47.4 40.6 16.9% Net operating expenses (30.3) (26.5) 14.6% $20.0m $19.2m Property funds managem
Slide 17: Australian FUM platform
Charter Hall Group Australian FUM platform Property funds management • Total FUM of $10.6bn up $0.3bn or 3% • Australian property FUM has increased by $0.6bn or 6% over 1HY14 to $10.5bn • Offshore property FUM has reduced to $0.1bn following the sale of CQR’s Polish portfolio Total Group FUM Austral
Slide 18: Secured inflows across the funds platform
Charter Hall Group Secured inflows across the funds platform Property funds management • Secured $702m1 in gross new equity during 1HY14 across all equity sources • A further $213m1 of gross equity has been secured since 31 December 2013 1HY13 2HY13 1HY14 Since FY14 ($m) ($m) ($m) 31 Dec 13 YTD ($m)
Slide 19: Property investments earnings growth of 7.6%
Charter Hall Group Property investments earnings growth of 7.6% Charter Hall Group balance sheet property investments • Charter Hall’s property investments total $622m, up from $603m as at 30 June 2013 • Contributed 1HY14 operating earnings of $23.2m1, 58%2 of total operating earnings • Annualised p
Slide 20: Property investment portfolio
Charter Hall Group Property investment portfolio Charter Hall Group balance sheet property investments Ownership Charter Hall 1HY14 Charter Proportion of Market Discount Weighted Charter Hall stake investment Hall Investment Charter Hall cap rate rate average investment 31/12/13 31/12/132 income3 in
Slide 21: Capital recycling program substantially completed
Charter Hall Group Capital recycling program substantially completed Capital management of the Charter Hall investment portfolio CHC capital recycled ($m) FY12 FY13 1HY14 Total We recycle our capital to seed additional high value Equity realised opportunities for Charter Hall and our clients Mentone
Slide 22: Financial Performance
Charter Hall * Financial Performance
Slide 23: Key financial metrics
Charter Hall Group Key financial metrics Financial performance GROUP 1HY14 1HY13 Change Statutory profit after tax $28.6m $29.9m (4.3%) Operating earnings1 $38.1m $33.7m 13.1% Operating earnings per security1 (OEPS) 12.42cps 11.29cps 10.0% Distribution per security (DPS) 11.00cps 9.80cps 12.2% Retur
Slide 24: Income statement
Charter Hall Group Income statement Financial performance by segment • Operating earnings growth of 13.1%1 to $38.1m $M 1HY14 1HY13 Change % Direct property investment 0.7 2.7 (76.0%) • Total property investment operating earnings Property funds investment 22.5 18.8 19.5% growth of 7.6% to $23.2m To
Slide 25: Property investment earnings growth of 7.6%
Charter Hall Group Property investment earnings growth of 7.6% Financial performance • Operating earnings from property funds investments up 7.6% to $23.2m – Existing funds – $0.4m from NOI growth and reduced borrowing costs – $3.8m contribution from new investments since 1HY13 – ($2.7m) from sale o
Slide 26: Property funds management earnings growth of 23.3%
Charter Hall Group Property funds management earnings growth of 23.3% Financial performance $M 1HY14 1HY13 Growth % • Property funds management operating earnings up 23.3% Investment management 22.0 19.2 14.6% • Revenue growth of 16.9% Property management 7.0 6.3 12.3% Transaction and performance fe
Slide 27: Balance Sheet and Cashflow
Charter Hall Group Balance Sheet and Cashflow Financial position Balance sheet ($m) 31-Dec-13 30-Jun-13 Cash 14.3 12.2 ($2.5m) Property investments 622.3 603.0 ($3.5m) Development investments 61.0 59.7 ($2.7m) $2.3m Other tangible assets 55.7 47.8 Intangibles 91.8 96.1 Total assets 845.1 818.8 Borro
Slide 28: Group debt platform
Charter Hall Group Group debt platform Balance sheet management • Across fund platform, $2.7bn of new and refinanced debt to 31 December 2013 • Weighted average cost of debt¹ of 5.5%, reduced from 5.7% • Weighted average maturity2 of 3.1 years • $4.3bn of drawn debt across platform, with a further $
Slide 29: Equity Raising
Charter Hall * Equity Raising
Slide 30: Equity raising: strategic rationale
Charter Hall Group Equity raising Strategic rationale • $140m Institutional Placement is being undertaken to: – Provide capacity to invest alongside Charter Hall’s capital partners – Supplement Charter Hall’s capital recycling program – Continue reweighting Charter Hall’s investment portfolio into l
Slide 31: Equity raising: sources and uses
Charter Hall Group Equity raising Strategic rationale • Proceeds from the Placement will be used to: – Repay $40m of debt that has funded recent growth initiatives – Fund $42m of identified investments, which are expected to be fully invested progressively over the remainder of the calendar year – $
Slide 32: Equity raising: transaction impact
Charter Hall Group Equity raising Transaction impact • Updated guidance has been provided by Charter Hall which includes the impact of the equity raising • Distribution payout ratio remains unchanged at 85% - 95% of FY14 operating earnings Key financial metrics Post placement Pre placement Change Ba
Slide 33: Equity raising: offer details
Charter Hall Group Equity raising Offer details • $140m fully underwritten institutional placement Offer pricing summary Metric – Securities to be issued at a fixed price of $3.80 Offer price (security) $3.80 per security Discount to close on 24 February 2014 (3.6%) – Securities will rank equally wi
Slide 34: Strategy, Outlook and Guidance
Strategy, Outlook and Guidance
Slide 35: Activity since 31 December 2013
Charter Hall Group Activity since 31 December 2013 Since balance date Charter Hall has: • Successfully closed the $125m Charter Hall Direct Workzone Syndicate with equity raising completed within 2 months of launch • Launched the $66m Charter Hall Direct VA Trust, an unlisted syndicate investing in
Slide 36: FY14 earnings guidance
Charter Hall Group FY14 earnings guidance Barring unexpected events, our guidance is as follows: • FY14 OEPS growth of 7 – 9% over FY13 • The distribution payout ratio is expected to be between 85% and 95% of operating earnings per security Half year results 31 December 2013 35 Not for distribution
Slide 37: Additional information
Additional information
Slide 38: Additional information
Charter Hall Group Additional information Section Slide 1 Group overview 38 2 Property funds management platform 40 3 Property investment portfolio 42 4 Fund updates 44 5 Financial information 48 6 Capital management and funding 52 7 Additional information 54 8 Glossary 56 Half year results 31 Decem
Slide 39: Group overview
Charter Hall Group Charter Hall Group Group overview Property Investment $622m co-investments / $22.5m operating earnings (58% total Group OEPS)1 OFFICE RETAIL INDUSTRIAL $300m $170m $152m (48% of portfolio) (27% of portfolio) (25% of portfolio) Property Funds Management $10.6bn FUM / $16.7m operati
Slide 40: Australian sector focused investment strategy
Charter Hall Group Australian sector focused investment strategy Group overview Portfolio Size No. of No. of Gross income WALE Occupancy Average cap rate ($bn) properties tenants ($m) (years) (%) (%) Retail 2.9 91 1,545 240 7.0 97.4 7.8 Office 6.1 53 621 556 4.9 96.1 7.6 Industrial 1.6 49 67 131 8.5
Slide 41: Charter Hall managed funds
Charter Hall Group Charter Hall managed funds As at 31 December 2013 Listed fund Wholesale Partnerships, Mandates and Pooled funds Retail investor funds Funds being realised $2.1bn $6.9bn $1.4bn $0.2bn ($113m co-invested) ($484m co-invested) ($11m co-invested) ($42m equity to be realised) CQR1 Partn
Slide 42: Charter Hall managed funds
Charter Hall Group Charter Hall managed funds As at 31 December 2013 Total Sector Equity No. of Lettable Occupancy Weighted WALE Weighted property Source properties area average rent (by income average cap assets (sqm) review in years) rate ($m) Top 5 Managed Funds CQR 2,1381 Retail Listed 77 530,39
Slide 43: Property investment portfolio
Charter Hall Group Property investment portfolio As at 31 December 2013 Ownership Charter Hall HY14 Proportion of Market Discount Minimum HY14 FY13 stake investment Charter Hall Charter Hall cap rate rate rental Charter Hall Charter Hall investment investment reviews investment investment income por
Slide 44: Property investment portfolio metrics
Charter Hall Group Property investment portfolio metrics Property investment Lease expiry profile1 (31 December 2013) Top 10 tenants (31 December 2013) 60% Tenant % Portfolio leased (By gross income) Wesfarmers 9.5 48.1% 50% Australian Governments 8.5 Woolworths 7.6 40% Macquarie Group 5.3 30% Telst
Slide 45: Charter Hall Office Trust (CHOT)
Charter Hall Group Charter Hall Office Trust (CHOT) Key events during 1HY14 Portfolio characteristics Key metrics • Portfolio occupancy of 95% and a WALE of 4.4 years Gross property assets $2.28 billion Total debt $1.06 billion • Total leasing of 21,423sqm, including leases with Regus, Chubb, Gearin
Slide 46: Core Plus Office Fund (CPOF)
Charter Hall Group Core Plus Office Fund (CPOF) Key events during 1HY14 Portfolio characteristics Key metrics Gross property assets $1.8 billion • Completed the Fund’s 2013 Review Event with 83% of Unit Holders Total debt $839 million remaining in the Fund for a further 7 year term. The next Review
Slide 47: Core Plus Industrial Fund (CPIF)
Charter Hall Group Core Plus Industrial Fund (CPIF) Key events during 1HY14 Portfolio characteristics Key metrics Gross property assets $733 million • CPIF closed a $150m equity raise in August 2013. A further equity raise Total debt $173 million for $120m has opened with majority of the raising com
Slide 48: Charter Hall Retail REIT (CQR)
Charter Hall Group Charter Hall Retail REIT (CQR) Key events during 1HY14 Portfolio characteristics1 Key metrics Gross property assets $1.9 billion • Acquired three properties for $193.2 million at average initial yield of 7.7% Total debt $684m Balance Sheet Gearing 31.6% • Acquisition of Rosebud Pl
Slide 49: Detailed operating earnings
Charter Hall Group Detailed operating earnings 1HY14 1HY13 Variance % ($000s) ($000s) ($000s) Direct Property Investment Direct Property Investment Income 758 5,793 (5,035) (86.9%) Interest Expense (45) (1,769) 1,724 97.5% Non-controlling Interest - (1,108) 1,108 100.0% Operating Costs (63) (211) 14
Slide 50: Property funds management operating earnings
Charter Hall Group Property funds management operating earnings 1HY14 1HY13 Variance % ($000s) ($000s) ($000s) Revenue Fund management fees 22,015 19,207 2,808 14.6% Property management fees 7,036 6,266 769 12.3% Transaction and performance fees 7,726 6,274 1,452 23.1% Development management fees 3,
Slide 51: Reconciliation of operating earnings to statutory profit after tax
Charter Hall Group Reconciliation of operating earnings to statutory profit after tax 1HY14 1HY13 $000s $000s Operating Earnings 38,123 33,699 Fair value adjustments on derivatives1 1,270 (847) Fair value adjustment on investments and property1 (2,234) 3,470 Amortisation of management rights (4,230)
Slide 52: Funds under management growth
Charter Hall Group Funds under management growth $1.0bn ($0.9bn) $0.2bn $10.3bn $10.6bn Jun-13 Acquisitions Disposals Revaluations / Capex Dec-13 FY10 FY11 FY12 FY13 1HY14 CAGR ($bn) ($bn) ($bn) ($bn) ($bn) (%) Australia FUM 6.6 7.6 7.8 9.6 10.4 14% (excluding Development Funds) Development FUM 0.6
Slide 53: Property funds debt programs
Charter Hall Group Property funds debt programs TOP 5 MANAGED FUNDS 1 ($M) CHC CQR CHOT CPOF CPIF CHDPF ALL FUNDS Asset values2 831 2,088 2,302 1,850 731 499 11,276 Net debt drawn2 26 789 1,021 1,850 133 227 4,290 Debt duration³ (years) 1.6 3.3 2.9 3.5 1.6 1.7 3.1 Gearing Balance sheet 3% 35% 45% 40
Slide 54: Group and CHC look through debt maturity profile
Charter Hall Group Group and CHC look through debt maturity profile (by facility limit) Total platform CHC look through debt maturity profile debt maturity profile 1,600 250 1,400 $1,330m 200 1,200 $1,075m $175m 1,000 $886m 150 $862m $m $m $131m $773m 800 100 600 $90m $89m $78m 400 50 200 $43m $82m
Slide 55: International offer restrictions
Charter Hall Group Additional information International offer restrictions This document does not constitute an offer of New Securities in any jurisdiction in which it would be unlawful. New Securities may not be offered or sold in any country outside Australia except to the extent permitted below.
Slide 56: International offer restrictions
Charter Hall Group Additional information International offer restrictions SWITZERLAND The New Securities may not be distributed in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document has been
Slide 57: Fund Key
Charter Hall Group 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
Slide 58: Further information
Charter Hall Group 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 Nick Kelly Chief Financial Officer Head of Investor Relations +61 2
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