Charter Hall Group · ASX:CHC
Charter Hall — Investor Day (June 2023)
57 slides from Charter Hall's investor day presentation, Jun 15, 2023
Slide 1: Charter Hall Group 2023 Development Showcase
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Slide 2: Acknowledgement of Country
Acknowledgement of Country Charter Hall is proud to work with our customers and communities to invest in, develop and manage properties on land across Australia. We pay our respects to the Traditional Owners, their Elders past, present and emerging and recognise their continuing culture and contribu
Slide 3: Agenda
David Harrison Managing Director & Group CEO Agenda 1. Charter Hall Development Framework 2. Industrial & Logistics Platform Richard Stacker Industrial & 3. Industrial & Logistics Development Strategy; Logistics CEO Opportunities; Case Studies 4. Industrial & Logistics Q&A Andrew Simons 5. Office Pl
Slide 4: Charter Hall Development Framework
Charter Hall Development Framework David Harrison, Managing Director & Group CEO Image: Coles, Horsley Drive Business Park, Wetherill Park Sydney NSW Charter Hall Group 2023 Development Showcase 4
Slide 5: Development within the $72bn Charter Hall strategic framework
Charter Hall Development Framework Development within the $72bn 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 to bette
Slide 6: Developments Completed FY17 to 1H FY23
Charter Hall Development Framework Developments Completed FY17 to 1H FY23 NSW and VIC account for 76% of developments during the period Developments by state completed during Development Contribution to FUM FY17 to 1H FY23 FY17 to 1H FY23 TAS WA 0.5% $20.0bn SA 3% 8% $18.0bn $17.4bn $16.0bn QLD VIC
Slide 7: Development – committed and uncommitted
Charter Hall Development Framework Development – committed and uncommitted – $6.3bn of committed development represents projects that have been pre-leased and construction commenced – $7.3bn of uncommitted represents captive opportunities that provide a pathway to further committed developments Tota
Slide 8: The Charter Hall competitive advantage
Charter Hall Development Framework The Charter Hall competitive advantage Cross-sector tenant relationships drive development opportunities Top 20 platform tenants by net income 17.6% Industrial & Logistics Social Infrastructure Long WALE Retail Shopping Centre Retail Office 5.2% 4.3% 4.1% 4.1% 4.1%
Slide 9: Industrial & Logistics Platform
Industrial & Logistics Platform Richard Stacker, Industrial & Logistics CEO Image: Bridgestone, MidWest Logistics Hub, Truganina Vic Charter Hall Group 2023 Development Showcase 9
Slide 10: Charter Hall Industrial & Logistics Platform
Industrial & Logistics Platform Charter Hall Industrial & Logistics Platform FUM Properties $ 24.5bn 307 Occupancy WALE 99.5% 10.3yrs Net Lettable Area Tenants 7.1m sqm 306 Development book CHC investment $6.3bn $ 0.5bn Flagstone Logistics Estate, North Maclean Qld Note: FUM and Development book as
Slide 11: Development & Delivery Management Capability and Team
Industrial & Logistics Platform Industrial & Logistics Capability and Team 7 36 3 6 Large national team with extensive capabilities and track-record 20 ▪ 90+ team of Industrial specialists Expertise across transactions, development, asset, Funds Asset & Transactions Accounting Support management, pr
Slide 12: Structural trends driving medium to long-term demand resilience
Industrial & Logistics Platform Industrial & Logistics Market - Structural trends driving medium to long-term demand resilience Continued structural drivers of demand Population growth continues to surprise on the upside Overall growth is reaching levels not seen since FY09, net-overseas migration i
Slide 13: Limited availability of development stock
Industrial & Logistics Platform Limited availability of development stock Vacancy levels to be below equilibrium levels over near-term – 4 million sqm of vacant space needed to get back to market equilibrium (4%) Australian Industrial Supply Vacancy Rate and Net Face Rental Growth Completed Under Co
Slide 14: Supply imbalance anticipated to continue and drive rental growth
Industrial & Logistics Platform Industrial & Logistics Market - Supply imbalance anticipated to continue and will drive rental growth and underpin asset valuations National vacancy levels Rents increasing at historically high levels – Prime annual rental growth (%) Significant demand has driven vaca
Slide 15: Industrial & Logistics Development Strategy; Opportunities; Case Studies
Industrial & Logistics Development Strategy; Opportunities; Case Studies Andrew Simons, Head of Development – Industrial & Logistics Image: MidWest Logistics Hub, Truganina Vic Charter Hall Group 2023 Development Showcase 15
Slide 16: Development contribution to FUM growth
Industrial & Logistics Development Development contribution to FUM growth Industrial Sector FUM ($bn) Total GAV Developed-To-Core (committed + land holdings) $23.8bn Developed-To-Core (completed) Acquired Stable $3.9bn $19.1bn $1.4bn $4.8bn $4.3bn $12.3bn MidWest Logistics Hub, Melbourne Vic $9.1bn
Slide 17: Development Pipeline
Industrial & Logistics Development Development Pipeline $6.3bn Pipeline Committed Uncommitted $3.0bn $3.3bn Committed Developments Summary Completions 25 ~700k FY23 $3.0bn Active Projects sqm GLA $0.9bn GAV 18 in construction 138ha site area Completed GAV 15 yrs 93% 218ha Residual FY23 WALE prelease
Slide 18: Industry Penetration: Strategic Access to Existing & New Customers
Industrial & Logistics Development Industry Penetration: Strategic Access to Existing & New Customers Collaborative relationships with tenant customers is central to Charter Hall’s growth strategy Discretionary Retail/ Consumer Staples Logistics Building / Hardware Transport Pharma & Life Science Ci
Slide 19: Developments benefitting from surge in market rent
Industrial & Logistics Development Developments benefitting from surge in market rent Face & Effective rental premium (project underwrite v rents achieved) 100% 90% 90% 80% Face Effective 80% 70% Munro Footwear, MidWest Logistics Hub, Truganina Vic 60% 50% 45% 40% 36% 29% 28% 30% 20% 10% 0% Sydney M
Slide 20: MidWest Logistics Hub, Truganina Vic
Industrial & Logistics Development MidWest Logistics Hub, Truganina Vic Delivering next generation warehouses with advanced automation solutions Demand driven by tenant customer requirements to automate in new facilities Charter Hall Group 2023 Development Showcase 20
Slide 21: Develop to core industrial projects
Industrial & Logistics Development Develop to core industrial projects Charter Hall has successfully delivered $4.8bn of new projects for our Industrial Funds since 2016 Horsley Drive Business Park, MidWest Logistics Hub, Motorway Industrial Park, Sydney NSW West Melbourne Vic Brisbane Qld Site area
Slide 22: Light Horse Logistics Hub, Eastern Creek NSW
Industrial & Logistics Development Light Horse Logistics Hub, Eastern Creek NSW 35 Ha of prime Industrial land at the junction of the M7 & M4 Motorways Excellent connectivity with ability to service the needs of 4 million people with an hour’s drive. 90% of the 180,000sqm estate is committed to the
Slide 23: ESG Highlights
Industrial & Logistics Development ESG Highlights Environmental Achievements Targets Net Zero Scope 1 & 2 achieved Environment Social Governance 30MW 236 Solar has been installed to date Power meters installed − Maintain Net Zero − Measure and report − Continue to improve across the national portfol
Slide 24: Flagstone Logistics Estate, North Maclean Qld
Industrial & Logistics Development Flagstone Logistics Estate, North Maclean Qld Queensland’s first industrial estate to be powered by 100% renewable energy Hyper Scale 100 Ha Estate, with Excellent Connectivity and ability to accommodate up to 100,000sqm requirements Charter Hall Group 2023 Develop
Slide 25: High Underlying Land Value Providing Redevelopment Alpha
Industrial & Logistics Development High Underlying Land Value Providing Redevelopment Alpha The Industrial portfolio benefits from a substantial embedded underlying land value, providing significant upside for future redevelopments Achieved example Current & Future Potential Repositioning Wetherill
Slide 26: Ascent on Bourke, Alexandria NSW
Industrial & Logistics Development Ascent on Bourke, Alexandria NSW Multi-level warehousing in a highly sought after inner Sydney last-mile location Ascent on Bourke is Charter Hall’s first multi- level project – 80% committed to Schindler Lifts & Coles Charter Hall Group 2023 Development Showcase 2
Slide 27: Industrial Q&A
Industrial Q&A Image: Ascent on Bourke, Alexandria, Sydney NSW Charter Hall Group 2023 Development Showcase 27
Slide 28: Office Platform
Office Platform Carmel Hourigan, Office CEO Image: 360 Queen Street, Brisbane Qld Charter Hall Group 2023 Development Showcase 28
Slide 29: Charter Hall Office Capability
Office Platform Charter Hall Office Capability National integrated office investment management platform dedicated to creating high performing workspaces FUM Properties $ 29.6bn 97 Occupancy WALE 96.2% 5.9yrs Cap rate CHC investment 5.0% $ 1.4bn 555 Collins Street, Melbourne Vic Note: FUM and cap ra
Slide 30: Office Capability and Team
Office Platform Office Capability and Team 31 10 70 25 Large national team with extensive NSW capabilities and track-record 24 VIC ▪ 140+ team of Commercial specialists Property 21 Expertise across transactions, development, asset Funds Development QLD Management & management, property management, c
Slide 31: Australian office market well positioned with strong population growth
Office Platform Australian office market is well positioned with strong population growth and positive return to work trends Economic and Population Projected Growth (CAGR), 2023-2027 1.6% Australia 1.4% Canada 1.2% Singapore 1.0% New Zealand Population Growth (%) 0.8% 0.6% Netherlands UK US 0.4% 0.
Slide 32: Return to the office is gaining momentum
Office Platform Return to the office is gaining momentum with increased occupancy 3 Days 4 Days 5 Days All managing directors April and 50% of staff in Senior members in July July May May May May May May 2023 May May May February January March March January January February September December Novemb
Slide 33: Demand centred on high quality office space
Office Platform Demand is centred on high quality office space that offers ESG, amenity and experience for employees Occupier reason for moving into Charter Hall Asset (by NLA) National office occupied stock, by grade Prime Secondary Spatial consideration: More/less space 15 Consolidation required 1
Slide 34: Occupier preference for core CBD locations and precincts
Office Platform Occupier preference for core CBD locations and precincts adding to sub market bifurcation Leasing activity since 2021 Sydney - Gross Face Rental Rates Melbourne - Net Face Rental Rates Charter Hall Group 2023 Development Showcase 34
Slide 35: Increased obsolescence and structural vacancy in secondary assets
Office Platform Increased obsolescence and structural vacancy developing in secondary assets Average Office Building Age (years) Direct Vacancy Rate of CBD Office Buildings (by age) 30 Market: < 10 Years Market: > 10 Years Market Prime-Grade Building CHC Office Assets CHC (% by NLA) : 5.0% CHC (% by
Slide 36: Gross leasing activity increasing and high-quality stock capturing demand
Office Platform Gross leasing activity increasing and high-quality stock capturing disproportionate share of demand 179 leasing deals totalling 315,694 sqm of NLA By Deal Type FY23 Q3 FY22 Deals Avg Deal Size Renewals 67% 213,028 sqm 2,316 sqm Retention rate 89% 78% New Leasing 24% 76,275 sqm 1,004
Slide 37: Charter Hall pre-commitment rates remain high
Office Platform Charter Hall pre-commitment rates remain high whilst forecast new supply being pushed out nationally Sydney CBD, Melbourne CBD & Brisbane CBD total Charter Hall track record of development pre-commitments 100% sqm 1H22 Forecast 2H22 Forecast 1H23 Forecast 90% 80% 700,000 70% 600,000
Slide 38: Office Development Strategy; Opportunities; Case Studies
Office Development Strategy; Opportunities; Case Studies Mark Stante, Head of Development – Office Image: 130 Lonsdale Street, Melbourne Vic Charter Hall Group 2023 Development Showcase 38
Slide 39: Office Development as a value-add driver
Office Development Office Development Office Development as a value-add driver Identify, secure, convert and deliver core product for our Office Funds Add value to existing portfolio and assess potential value-add for acquisition due diligence Originate on and off market development site acquisition
Slide 40: Office Development contribution to FUM
Office Development Office Development contribution to FUM 35.0bn $30.1bn 30.0bn $24.9bn $8.7bn 25.0bn $21.2bn $6.3bn Total Office FUM $19.3bn 20.0bn $5.0bn $3.3bn $14.8bn 15.0bn $2.0bn $10.0bn 10.0bn $1.6bn 5.0bn 0.0bn Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Committed Development & Completions Ima
Slide 41: A track record of delivery
Office Development A track record of delivery We have successfully delivered 20+ high quality office, higher education and Asset 150 Lonsdale St 6 Hassall St Innovation Quarter (S1) Mater Hospital Glasshouse 130 Lonsdale St GPO Exchange Year 2022 2021 2021 2021 2020 2020 2020 mixed-use precincts nat
Slide 42: Charter Hall Office Development Capability
Office Development Charter Hall Office Development Capability Proven ability to enhance fund performance through creation of high quality workplaces Office Development overview Committed Projects By Location ACT Development Team Office Space Under Construction 11% 25 people 160ksqm Qld 12% Committed
Slide 43: $2.2bn Completed Development Projects
Office Development $2.2bn Completed 155 Little Lonsdale 31 Duncan Street, 555 Collins Street (North 60 King William Development Projects Street, Melbourne Vic Fortitude Valley Qld Tower), Melbourne Vic Street, Adelaide SA 4 projects comprising 133,100sqm successfully completed in FY23 NLA 23,000 sqm
Slide 44: $3.1bn Committed Development Pipeline
Office Development $3.1bn Committed Development Pipeline 480 Swan Street, 360 Queen Street, ATO Barton, Chifley (South Tower), Richmond Vic Brisbane Qld Canberra ACT Sydney NSW Focus on de-risking projects via strong tenant pre-commitments and successful partnerships with top tier builders PC Late C
Slide 45: Embracing the future of work
Office Development Embracing the future of work Premium workplace amenity, services and community experience is resulting in higher Flexible spaces Lobby lounge, End of Trip Sustainability Outdoor spaces occupancy and tenant & business hubs Concierge & arrival & Wellness Helping our customers achiev
Slide 46: Flex & wellness
Office Development Flex & wellness 555 Collins Street, Melbourne An environment designed for health, wellness and engagement Over 3,000sqm of dedicated to wellness, flexible workspaces and community amenity. Dedicated business hub and flexible workspace across two levels Premium wellness centre and
Slide 47: 555 Collins Street, Melbourne Vic
Office Development 555 Collins Street, Melbourne Vic Charter Hall Group 2023 Development Showcase 47
Slide 48: Lobby & retail experience
Office Development Lobby & retail experience 60 King William Street, Adelaide South Australia’s largest and most sophisticated new office development Adelaide’s first sky lobby with integrated concierge, café and flexible workspace facilities. 1,600sqm of retail amenity including services, cafes and
Slide 49: Sustainability
Office Development Sustainability 480 Swan Street, Richmond Climate Active Carbon Neutral • Construction and in Operation Charter Hall x Built ReLove furniture repurposing • All Electric Plant • 6 Star Greenstar & Platinum Well rating Sustainable finance Green development loan in partnership with CB
Slide 50: Outdoor & mixed mode spaces
Office Development Outdoor & mixed mode spaces 360 Queen Street, Brisbane Integrated workspace & landscape Pocket parks and wintergardens are key features in line with Brisbane City Council’s ‘Buildings that Breathe’ vision. 360 Queen Street leverages Brisbane’s subtropical climate to promote natura
Slide 51: 360 Queen Street, Brisbane Qld
Office Development 360 Queen Street, Brisbane Qld Charter Hall Group 2023 Development Showcase 51
Slide 52: Public realm & community engagement
Office Development Public realm & community engagement Melbourne Knowledge Week Melbourne Fashion Week Wesley Place, Melbourne Melbourne Knowledge Week Held in partnership with City of Melbourne, celebrating Melbourne’s rich potential for innovation by showcasing innovative ideas. Melbourne Fashion
Slide 53: Australia's Ultimate Business Address
Office Development Australia's Ultimate Business Address Sky Terraces Chifley South, Sydney Precinct Last scale development opportunity on the north- eastern skyline. Combined precinct of ~110,000sqm NLA with Chifley North. New activated lobby, business lounge, auditorium and wellness facilities. Re
Slide 54: Development Pipeline
Office Development Development Pipeline Captive high quality develop to core opportunities Asset 555 Collins Street South Innovation Quarter Stg2 + Stg 3 343 Albert Street 383 Kent Street 60 Queen Street Year 2028 2024 2028 2028 2026 Market Melbourne CBD Westmead Brisbane CBD Sydney CBD Brisbane CBD
Slide 55: Office Q&A
Office Q&A Image: 60 King William Street, Adelaide SA Charter Hall Group 2023 Development Showcase 55
Slide 56: Closing comments
Closing comments David Harrison, Managing Director & Group CEO Image: Innovation Quarter, Westmead, Sydney NSW Charter Hall Group 2023 Development Showcase 56
Slide 57: Further information
Further information Investor Relations Tel 1300 365 585 (within Australia) +61 2 8651 9000 (outside Australia) Email reits@charterhall.com.au Presentation authorised by the Chair and Managing Director and Group CEO charterhall.com.au/chc IMPORTANT NOTICE & DISCLAIMER This presentation has been prepa