Charter Hall Group · ASX:CHC
Charter Hall — H1 FY2023 Earnings Presentation
43 slides from Charter Hall's earnings presentation, Feb 20, 2023
Slide 1: Charter Hall Group 2023 Half Year Results
Charter Hall Charter Hall Long WALE REIT 2022 Full Group Year Results
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
Agenda 1. Highlights and Strategy 2. Group Funds Management 3. Property Investment 4. Financial Result 5. Update and Guidance 6. Additional Information Cover: Coles, MidWest Logistics Hub, Truganina (CPIF) Left: 333 George Street, Sydney (CPOF & DOF) Charter CharterHall HallGroup Group 2023 2023Half
Slide 4: Highlights and Strategy
1Southern Charter Charter 2023 Hall 2023Half HalfYear YearResults Highlights and Strategy Cross, Melbourne (CPOF) HallGroup Group Results Charter Hall Group 2023 Half Year Results
Slide 5: Group highlights
Highlights and Strategy Group highlights1 Group Returns Property Investments Funds Management Investment Capacity Operating earnings (6 months) Property Investment portfolio Group FUM5 Group investment capacity 7 $240 million $3.0bn $88.0bn ↑ 10.1% in 6 months $6.5bn Statutory profit 2 (6 months) Pr
Slide 6: Our Strategic Pillars
Highlights and Strategy Our Strategic Pillars1 We use our expertise to access, deploy, manage and invest equity to create value and generate superior returns for our investor customers Access Deploy Manage Invest Accessing equity from listed, Creating value through attractive Funds management, asset
Slide 7: Operating earnings per security growth
Highlights and Strategy Operating earnings per Operating earnings and distributions per security growth security growth OEPS (post-tax) cps DPS (cash paid) cps - Strength of underlying retained earnings driving fund creation and growth 115.6cps - Consistent DPS growth of 6% from FY18 to FY22 - Cumul
Slide 8: Group Funds Management
2 Group Funds Management Glendenning Logistics Estate, 56-62 Glendenning Road Glendenning (CLP) CharterHall Charter HallGroup Group 2023 2023Half HalfYear YearResults Results Results
Slide 9: Funds Under Management (FUM) growth
Group Funds Management Funds Under Management (FUM) growth Property FUM growth of 11.2% from $65.6bn to $73.0bn Group FUM growth ($bn) Property FUM by equity source ($bn) Group FUM 80.0 4.5-year Property FUM CAGR of 29.0% $88.0bn 75.0 Wholesale 27.9% $73.0bn PIM 70.0 Listed 29.3% $65.6bn $10.9bn Par
Slide 10: Group funds management portfolio
Group Funds Management Group funds management portfolio Diversification of equity sources and by sector Group FUM by equity source Group FUM by sector SC Retail $4.5bn Social Infrastructure 5.1% Direct (Unlisted) Equity Wholesale (Unlisted) Equity $3.7bn $11.3bn $62.8bn 4.2% 12.8% 71.4% Industrial &
Slide 11: Property funds management portfolio
Group Funds Management Property funds management portfolio Largest diversified property portfolio in Australia Portfolio value Lettable area No. of Net rent WARR1 WALE Occupancy WACR Property FUM ($bn) (m sqm) Properties ($m) (%) (years) (%) (%) 31 December 2022 73.0 11.7 1,681 3,136 3.7 8.2 98.0 4.
Slide 12: Diversified tenant customers
Group Funds Management Diversified tenant customers The top 20 tenants are represented by Government, multinationals & listed companies – The top 20 tenants represent 56% of property platform income – 21% of platform leases are NNN and 20% of platform net income is CPI-linked – 71% repeat tenants an
Slide 13: Leasing success – Office
Group Funds Management Leasing success – Office Strong leasing momentum with 258,368 sqm leased across 167 deals – 7.9 year WALE achieved on all deals nationally – 96.2% office portfolio occupancy versus national average of 85.4%1 – 5.9 year WALE across our Office portfolio 1H FY23 FY22 Occupancy an
Slide 14: Leasing success – Industrial & Logistics
Group Funds Management Leasing success – Industrial & Logistics Strong leasing momentum with 477,470 sqm leased across 46 deals – 6.1 year WALE achieved on all deals nationally – 99.5% Industrial & Logistics portfolio occupancy – 10.3 year WALE across our Industrial & Logistics portfolio 1H FY23 FY2
Slide 15: Equity inflows
Group Funds Management Equity inflows1 ($m) FY20 FY21 FY22 1H FY23 - Diverse sources of equity across Wholesale, Listed and Direct Wholesale pooled funds 1,272 2,111 1,575 547 - Wholesale flows weighted towards partnerships Wholesale partnerships 1,298 1,448 1,137 1,224 - ~100 wholesale investors Li
Slide 16: 1H FY23 property transaction activity
Group Funds Management 1H FY23 property transaction activity $7.9bn of transaction activity, comprising over 50 transactions with 18 active funds/partnerships Social Industrial & Long WALE Shopping Office Infrastructure / Total Logistics Retail Centre Retail Other Acquisitions ($bn) 2.6 0.3 3.1 0.1
Slide 17: Development to drive deployment and FUM growth
Group Funds Management Development to drive deployment and FUM growth Development completions of $2.0bn over the last 12 months – 94% of Industrial committed projects are pre-leased – 67% of Office committed projects are pre-leased1 Completion value($m) Completions Committed Uncommitted Total (last
Slide 18: Property Investment
CharterHall Charter 2023 HallGroup 2023Half Group HalfYear YearResults Results Results 3 Property Investment 1 Shelley Street, Sydney (CPOF & 1SST)
Slide 19: Property Investment portfolio
Property Investment Property Investment portfolio Property Investment portfolio now $3.0bn Portfolio Value No. of WALE Occupancy WARR1 WACR WADR ($bn) Properties (years) (%) (%) (%) (%) 31 December 2022 3.0 1,597 7.7 97.4 3.7 4.61 5.8 30 June 2022 2.9 1,462 8.2 97.3 3.6 4.55 5.8 Sector allocation Ge
Slide 20: Property Investment Portfolio growth
Property Investment Property Investment Portfolio Property Investment portfolio yield: 4.8% growth MSCI Core Funds distribution yield: 3.9% 10.0% - Net investments of $132m since June 2022 $3,044m - Investment portfolio 4.5 year CAGR of 13.7% $2,918m p.a. 8.0% - Retained earnings driving co-investme
Slide 21: Diversified Property Investment earnings
Property Investment Diversified Property Investment earnings Property Investment portfolio provides growth and resilience given quality and strong tenant customer composition – No single asset is more than 5% of portfolio investments – 16% of CHPT net income CPI-linked with 3.7% WARR1 – Government n
Slide 22: ESG Leadership
Property Investment ESG Leadership Achievements in 1H FY23 Focus areas in FY23+ Environment Net Zero Carbon by 2025 Long-term PPA signed to $3.4bn in sustainable Scope 3 emissions Accelerated our commitment supply 100% renewable finance transactions Partnering with customers to tackle a by 5 years f
Slide 23: Financial Result
CharterHall Charter 2023 HallGroup 2023Half Group HalfYear YearResults Results Results 4 Financial Result Inghams, MidWest Logistics Hub, Truganina (CPIF) 23
Slide 24: Earnings summary
Financial Result Earnings summary ($m) 1H FY22 1H FY23 Change % PI EBITDA 71.6 66.5 (7.1%) DI EBITDA 27.0 30.4 12.6% - OEPS (post tax) of 50.7cps compared to FM EBITDA 1,2 256.5 229.4 (10.6%) 56.6cps in the prior comparable period EBITDA 355.1 326.3 (8.1%) - PI EBITDA decreased by 7.1% as a result o
Slide 25: Funds management
Financial Result Funds management ($m) 1H FY22 1H FY23 Change % Fund management revenue 114.7 150.9 31.6% Transaction and performance revenue 177.2 96.0 (45.8%) - Funds management revenue growth of 31.6% 291.9 247.0 (15.4%) Investment management revenue continues to outpace operating expense growth
Slide 26: Funds management margins
Financial Result Funds management FM EBITDA margins, FY17-1H FY23 (%) – Margin expansion achieved through platform scale – Funds management margin excluding 78.5% 75.4% transaction and performance fee continues to expand 64.1% – Full year margins expected to moderate, owing to 1H earnings skew 54.4%
Slide 27: Balance sheet and return metrics
Financial Result Balance sheet ($m) 30 Jun 2022 31 Dec 2022 and return metrics Cash Property investment 595 2,918 367 3,044 Development investment 78 140 - NTA per security growth of 4.4% since June Receivables 110 171 2022 to $6.53 Other assets1 308 356 - Balance sheet gearing of 3.0% post Intangib
Slide 28: Platform capital profile
Financial Result Platform capital profile Funds platform debt metrics1 30 Jun 2022 31 Dec 2022 Total facility limits ($m) 25,089 28,019 Total undrawn debt ($m) 6,605 5,560 - $6.5bn of available liquidity plus committed and uncalled equity Total cash ($m) 1,338 944 Weighted average debt maturity (yrs
Slide 29: Guidance
5 HallGroup Group 2021 Full Year Results 2022 Half Year Results Guidance 130 Lonsdale Street, Melbourne (CPOF) Charter CharterHall Charter Hall Group 2023 Half Year Results
Slide 30: FY23 operating earnings guidance
Guidance FY23 operating earnings guidance Based on no material adverse change in current market conditions, FY23 guidance is for post-tax operating earnings per security of no less than 90 cents. FY23 distribution per security guidance is for 6% growth over FY22. 2 Chifley Square, Sydney (CPOF, CTT,
Slide 31: Additional Information
CharterHall Charter 2023 HallGroup 2023Half Group HalfYear YearResults Results Results 6 Additional Information Charter Hall Offices, 1 Martin Place, Sydney (CHOT)
Slide 32: Management bench experience
Additional Information Management bench experience Charter Hall Executive Committee (EXCO) David Harrison Managing Director & Group CEO 35 years industry experience Sean McMahon Russell Proutt Carmel Hourigan Richard Stacker Natalie Devlin Ben Ellis Steven Bennett Sheridan Ware Chief Investment Chie
Slide 33: Property Platform
Additional Information Charter Hall Group Property Platform1 0.1bn $ $ 12.3bn $ 5.0bn 3.3bn $ 30.5bn $ 0.8bn $ 19.6bn $ $0.6bn Charter Hall Group 1. Excludes Maxim and other smaller investments 2023 Half Year Results 33
Slide 34: Charter Hall managed funds
Additional Information Charter Hall managed funds Industrial Social SC Listed Long WALE Retail Office & Logistics Infrastructure Retail Equities $23.9bn $10.4bn $30.1bn $3.7bn $4.5bn $15.4bn Wholesale 1 4 6 7 10 Australian CPIF CLP LWHP LWIPs LEP CPOF CHOT BSWF CHET CPRF (Unlisted) Equities Equity $
Slide 35: Wholesale pooled and partnerships property funds
Additional Information Wholesale pooled and partnerships property funds FUM Gearing $ 48.2bn 30.0% Occupancy WALE 97.4% 7.8yrs Cap rate CHC investment 4.3% $ 1.7bn 50 Marcus Clarke Street, Canberra (CHCOT) Charter Hall Group 2023 Half Year Results 35
Slide 36: Major wholesale property investment portfolio returns
Additional Information Major wholesale property investment portfolio returns Relative to sector specific IPD/MSCI Core Wholesale indices – Average outperformance of major wholesale property investment against their respective MSCI/IPD sector indices by 1.5x 20.6% 17.3% 15.2% 15.0% 15.2% 15.2% 14.9%
Slide 37: Listed
Additional Information Listed FUM Gearing $ 13.9bn 29.4% Occupancy WALE 99.2% 9.7yrs Cap rate CHC investment1 4.8% $ 0.9bn Geoscience Australia, 101 Jerrabomberra Ave, Narrabundah (CLW & CQE) 1. Held at accounting value not market value Charter Hall Group 2023 Half Year Results 37
Slide 38: Charter Hall Direct
Additional Information Charter Hall Direct FUM Gearing $ 10.9bn 33.6% Occupancy WALE 99.1% 8.1yrs Cap rate CHC investment 4.7% $ 0.4bn Innovation Quarter, 158-164 Hawkesbury Road, Westmead (PFA) Charter Hall Group 2023 Half Year Results 38
Slide 39: Direct funds have returned an average of 12.8% p.a. since inception
Additional Information Direct funds have returned an average of 12.8% p.a. since inception 25.0% 20.0% 19.2% 15.6% 15.3% 15.4% 15.0% 14.0% 11.7% 10.6% 10.1% 9.7% 10.0% 8.5% 8.6% 8.6% 8.5% 6.9% 7.2% 7.2% 6.8% 6.7% 6.1% 5.0% 3.5% - DOF 3 PFA 3 DIF2 3 DIF3 3 DIF4 BW Trust LWF WPS1 WPS2 4 Maxim 5 2014-2
Slide 40: CHPT Property Investment portfolio
Additional Information CHPT Property Investment portfolio Charter Hall Charter Hall Ownership stake Investment PI Income WALE WACR WADR WARR1 PI Yield2 (%) ($m) ($m) (years) (%) (%) (%) (%) Industrial & Logistics Charter Hall Prime Industrial Fund (CPIF) 1.4 121.0 2.4 10.4 3.9 5.6 3.2 3.7 Charter Ha
Slide 41: Portfolio performance review testing FY23 – FY28
Additional Information Portfolio performance review testing FY23 – FY28 Fund Testing frequency Charter Hall Direct Industrial Fund No. 2 (DIF2) FY23 Core Logistics Partnership (CLP) FY23, FY27 plus individual asset divestments Charter Hall Direct Long WALE Fund (LWF) 5 yearly – FY23, FY28, etc FY23
Slide 42: Fund key and glossary
Additional Information Fund key and glossary Listed entities Wholesale funds ASX:CHC Charter Hall Group BSWF Brisbane Square Wholesale Fund ASX:CLW Charter Hall Long WALE REIT CCT Charter Hall Counter Cyclical Trust ASX:CQR Charter Hall Retail REIT CHAB247 Charter Hall Abacus 247 Adelaide Street Tru
Slide 43: 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 Board charterhall.com.au/chc IMPORTANT NOTICE & DISCLAIMER This presentation has been prepared by Charter Hall Funds Management