Charter Hall Group · ASX:CHC
Charter Hall — FY2015 Earnings Presentation
56 slides from Charter Hall's earnings presentation, Aug 26, 2015
Slide 1: Charter Hall Group Full Year Results
For personal use only 26 August 2015 Charter Hall Group Full Year Results Artist’s Impression 30 June 2015 333 George Street, Sydney, NSW
Slide 2: Agenda
Agenda For personal use only 1 FY15 Results Summary 2 Property Investment 3 Property Funds Management 4 Financial Result 5 Outlook and Guidance 6 Additional Information David Harrison David Southon Paul Altschwager Joint Managing Director Joint Managing Director Chief Financial Officer CHARTER HALL
Slide 3: FY15 Results Summary
FY15 Results Summary For personal use only CHARTER HALL GROUP | Full Year Results | 30 June 2015
Slide 4: Key Achievements
Key Achievements For personal use only FY15 Results Summary1 Total Securityholder 8.7% OEPS growth 8.5% DPS growth Return of 11.8%2 $2.6b in transactions $1.7b gross Australian FUM equity inflows $1.9b of acquisitions up 18% to $13.6b $0.7b of divestments $1.3b net equity inflows 1. Figures and stat
Slide 5: Solid Growth
Solid Growth For personal use only FY15 Results Summary Increase in operating earnings per security (OEPS) to 27.5cps, up 8.7% • Statutory profit after tax of $117.9m, up 43.6% • Operating earnings of $98.8m, up 21.7% • Distribution per security of 24.2cps, up 8.5% Property Investments (PI) operatin
Slide 6: Total Securityholder Returns
Total Securityholder Returns For personal use only FY15 Results Summary Operating earnings per security growth2 • Total securityholder return for 1 year to 30 June 2015: 11.8% 30 27.5 • Best performance in A-REIT 200 index over 3 years: 32.9% pa1 25.3 25 22.9 20.7 20 19.2 Total performance over 3 an
Slide 7: Consistent Delivery on Strategy
Consistent Delivery on Strategy For personal use only FY15 Results Summary Access Deploy Manage Invest Access to Creating value Property funds Investing through attractive management, asset multiple equity investment management, leasing alongside our sources capital partners opportunities and develo
Slide 8: Operating Earnings Composition
Operating Earnings Composition For personal use only FY15 Results Summary Property Investment Earnings Drivers 1,000 9% Operating earnings of $98.8m1, up 21.7% pcp from $81.2m 8% 800 • 59% of operating earnings from Property Investment 7% Co-investment Yield (%) PI Portfolio ($m) 6% • Property Inves
Slide 9: Property Investment
Property Investment For personal use only CHARTER HALL GROUP | Full Year Results | 30 June 2015
Slide 10: Growth in Property Investment Earnings of 17.3%
Growth in Property Investment Earnings of 17.3% For personal use only Property Investment • Charter Hall Group’s balance sheet investments increased by $224m to $944m • Portfolio WALE1 increased by 1.5 years to 9.1 years during FY15, driven by investment into LWIP • WACR reduced 57bps to 7.00%2 % of
Slide 11: Enhanced Portfolio Quality
Enhanced Portfolio Quality For personal use only Property Investment Charter Hall Group continues to focus on reweighting its Property Investments towards a more diversified portfolio • Property Investment portfolio has increased its exposure to long WALE industrial, hospitality and retail assets •
Slide 12: Portfolio WALE and Lease Expiry
Portfolio WALE and Lease Expiry For personal use only Property Investment CHC’s Portfolio composition and upcoming lease expiries are actively managed • Portfolio WALE increased by 1.5 years to 9.1 years during FY15 • 50% of leases expiring between June 2024 and June 2040 Core Investments WALE and P
Slide 13: Top Tenants by Gross Income
Top Tenants by Gross Income For personal use only Property Investment • Property Investment portfolio has high occupancy at 97.7% • Strong focus on quality of tenant covenants Occupancy by Gross Income1 Top 10 Tenants by Gross Income2 DIF3 100.0% Woolworths 22.4% LWIP2 100.0% Government 6.8% LWIP 10
Slide 14: Property Investment Portfolio Net Returns
Property Investment Portfolio Net Returns For personal use only Property Investment • CHC current investment portfolio net return over five years to 30 June 2015 is 16.7% per annum, outperforming the IPD/Mercer Wholesale Unlisted Property Funds Index (NAV post fees) which returned 9.2% over the same
Slide 15: Property Funds Management
Property Funds Management For personal use only CHARTER HALL GROUP | Full Year Results | 30 June 2015
Slide 16: Well Diversified Funds Management Portfolio
Well Diversified Funds Management Portfolio For personal use only Portfolio No. of No. of Gross WALE2 Occupancy WACR3 Size ($b) Properties Tenants Income ($m) (years) (%) (%) FY15 13.6 276 2,289 1,120 7.9 97.8 7.10 FY14 11.5 209 2,289 1,000 7.3 96.8 7.68 Diversification by equity source Asset type d
Slide 17: Office Sector Activity
Office Sector Activity For personal use only Property Funds Management 12 months to 30 June 2015 • Office FUM increased 3% to $6.7b • Completed $325m of acquisitions and $545m of divestments • $220m acquisition of the Western Sydney University’s new office campus in Parramatta's CBD, Sydney, with a
Slide 18: Retail Sector Activity
Retail Sector Activity For personal use only Property Funds Management 12 months to 30 June 2015 • Retail FUM increased 20% to $3.5b • Completed $466m of acquisitions and $87m of divestments • Completed 405 leasing deals over 92,771sqm with occupancy remaining strong at 98.6% • Established and expan
Slide 19: Industrial Sector Activity
Industrial Sector Activity For personal use only Property Funds Management 12 months to 30 June 2015 • Industrial FUM increased 32% to $2.8b • Completed $539m of acquisitions and $64m of divestments including: ‒ Acquisition of the six asset ($171m) Inghams portfolio with assets allocated to CLP, DIF
Slide 20: Hospitality Sector Activity
Hospitality Sector Activity For personal use only Property Funds Management 12 months to 30 June 2015 • Established the Group’s first investment in the Hospitality sector via a new wholesale partnership, LWIP (Long WALE Investment Partnership) which is a 50:50 partnership between Charter Hall and Ho
Slide 21: Australian FUM Growth of 18% Drives Earnings
Australian FUM Growth of 18% Drives Earnings For personal use only Property Funds Management FUM growth driven by activity in the Industrial, Retail and Hospitality sectors • Australian property FUM has increased $2.1b, or 18% during FY15 to $13.6b • 13.5% CAGR in domestic FUM since June 2010 Total
Slide 22: Secured Inflows Across the Funds Platform
Secured Inflows Across the Funds Platform For personal use only Property Funds Management • Diversified equity sources • Secured $1.7b in gross equity flows3 ($1.3b net) during FY15 across all equity sources FY13 FY14 FY15 ($m) ($m) ($m) Wholesale Pooled Funds 147 651 653 Wholesale Partnerships 599
Slide 23: PFM EBITDA Growth of 26.2%
PFM EBITDA Growth of 26.2% For personal use only Property Funds Management • PFM EBITDA margin on revenue has increased from 36.2% to 40.1% 80 $70.4 $m FY15 FY14 Change % 70 FY14 $60.9 FY15 Revenue 112.9 99.1 13.9% 60 Net operating expenses (67.6) (63.2) 7.0% PFM Revenue ($m) 50 $42.5 PFM EBITDA1 45
Slide 24: Development Adding to Fund Performance
Development Adding to Fund Performance For personal use only Property Funds Management • Redevelopment opportunities undertaken to enhance both income yield and total returns for managed funds • In-house development skills are a core competency • Development pipeline includes major office projects W
Slide 25: Financial Result
Financial Result For personal use only CHARTER HALL GROUP | Full Year Results | 30 June 2015
Slide 26: Profit and Loss by Segment
Profit and Loss by Segment For personal use only Financial Result • 21.7% growth in Operating Earnings to $98.8m $m FY15 FY14 Change % Property investment 58.3 49.7 17.3% • PI operating earnings up 17.3% to $58.3m Property funds management 43.3 34.6 25.2% Co-invested an additional $187m Security-b
Slide 27: Property Investment Earning Growth of 17.3%
Property Investment Earning Growth of 17.3% For personal use only Financial Result Operating earnings from Property Investment of $58.3m, up 17.3% • $13.3m contribution from additional $187m net investments • $1.6m or 3.3% growth in earnings from the comparable Retail and Industrial investments • $2
Slide 28: Property Funds Management Earnings Up 25.2%
Property Funds Management Earnings Up 25.2% For personal use only Financial Result • PFM operating earnings of $43.3m,up 25.2% $m FY15 FY14 Change % • Investment Management revenue growth of 15.7% Investment management 70.4 60.9 15.7% driven by: Property services 42.5 38.2 10.9% $5.1m increase in
Slide 29: Balance Sheet Capacity
Balance Sheet Capacity For personal use only Financial Result • Strong balance sheet maintained $m 30 June 2015 30 Jun 2014 Cash position of $152m at 30 June 2015 following Cash 152 50 equity raise in May 2015 Property investments 944 720 $224m increase in property investments through Developmen
Slide 30: NTA Per Security and Cap Rate Bridge
NTA Per Security and Cap Rate Bridge For personal use only Financial Result • NTA per security uplift of 38cps primarily due to capital raise and cap rate compression in existing property investment portfolio • WACR has reduced by 57 basis points: Existing Property Investments cap rate compression
Slide 31: Cashflow
Cashflow For personal use only Financial Result Operating Earnings to Operating Cashflow • FY15 distribution covered 111% by operating $3.5m ($6.3m) $2.8m $2.4m cashflow $101.2m $98.8m • DRP participation of 21.9%1 will retain $92.2m approximately $10.8m of the 2H15 distribution. Total cash retained
Slide 32: Outlook and Guidance
Outlook and Guidance For personal use only CHARTER HALL GROUP | Full Year Results | 30 June 2015
Slide 33: FY16 Outlook and Earnings Guidance
FY16 Outlook and Earnings Guidance For personal use only Outlook and Guidance • The Australian property yield spread to bond yields and the cost of debt remains attractive for domestic and offshore investors • Charter Hall continues to focus on investing in assets with strong tenant covenants and lo
Slide 34: Additional Information
Additional Information For personal use only CHARTER HALL GROUP | Full Year Results | 30 June 2015
Slide 35: Additional Information
Additional Information For personal use only 1 Group & Managed Funds Overview 36 2 Property Investment Portfolio 38 3 Fund Updates 39 4 Financial Performance 45 5 Capital Management and Funding 50 6 Fund Key 53 CHARTER HALL GROUP | Full Year Results | 30 June 2015 35
Slide 36: Charter Hall Group Group Overview
Charter Hall Group For personal use only Group Overview Property Funds Management Platform $13.6b FUM • Investment management FUM $13.6b • Asset management • Transaction services No. of properties 276 • Property management • Capital management Gross income $1.1b • Development management • Technical
Slide 37: Charter Hall Managed Funds
Charter Hall Managed Funds For personal use only FUM as at 30 June 2015 Listed AREIT Wholesale Pooled funds, Partnerships Retail investor funds Funds being realised $2.1b and Mandates $9.5b $1.9b $0.1b ($147m ($731m co-invested) ($64m co-invested) ($2m co-invested excluding co-invested) developments
Slide 38: CHC Property Investment Portfolio
CHC Property Investment Portfolio For personal use only As at 30 June 2015 Charter Hall Charter Hall Ownership Charter Hall Investment Market Average Investment 3 Stake Investment Income WALE Cap Rate Discount Rate rental reviews Yield (%) ($m) ($m) (years) (%) (%) (%) (%) Listed Fund 147 11.8 Chart
Slide 39: Core Plus Office Fund (CPOF)
Core Plus Office Fund (CPOF) For personal use only Property Investment Portfolio Key events during FY15 Portfolio characteristics Key metrics 1 Gross property assets $2.3b • CPOF acquired a 50% interest of 169 Macquarie Street, Parramatta, Total debt (look through) $0.8b fully leased to the Western
Slide 40: Charter Hall Office Trust (CHOT)
Charter Hall Office Trust (CHOT) For personal use only Property Investment Portfolio Key events during FY15 Portfolio characteristics Key metrics Gross property assets $2.2b • Total of 89,089sqm leases executed and terms agreed on a further Total debt $1.0b 29,369sqm – representing 32% of the portfo
Slide 41: Long WALE Investment Portfolio (LWIP)
Long WALE Investment Portfolio 1 (LWIP1) For personal use only Property Investment Portfolio Key events during FY15 Portfolio characteristics Key metrics 1 Gross property assets $0.6b • $640m portfolio of 54 ALH leased hotels including 18 Dan Murphy’s Total debt $0.3b • Portfolio WALE of 19.3 years
Slide 42: Charter Hall Retail REIT (CQR)
Charter Hall Retail REIT (CQR) For personal use only Property Investment Portfolio Key events during FY15 Portfolio characteristics Key metrics Gross property assets $2.2b • Acquired or contracted four properties for $192m at average initial yield Total look-through debt (net of cash) $0.7b of 7.2%
Slide 43: Core Logistics Partnership (CLP)
Core Logistics Partnership (CLP) For personal use only Property Investment Portfolio Key events during FY15 Portfolio characteristics Key metrics Gross property assets $0.9b • Acquired five assets during FY15 Total debt $0.2b • Portfolio gross assets of $0.9b including current pre-leased forward fun
Slide 44: Core Plus Industrial Fund (CPIF)
Core Plus Industrial Fund (CPIF) For personal use only Property Investment Portfolio Key events during FY15 Portfolio characteristics Key metrics Gross property assets $1.1b • CPIF highest ranked unlisted wholesale property fund1 (all sectors) over the 3 years to 30 June 2015 according to Mercer / I
Slide 45: Update on Deployment of Equity Raising
Update on Deployment of Equity Raising For personal use only Financial Performance • A $225m private placement was undertaken in May 2015 to: Enable Charter Hall to fund identified equity investments alongside its capital partners; and Provide capacity for future co-investment as growth opportun
Slide 46: Key Financial Metrics
Key Financial Metrics For personal use only Financial Performance Group FY15 FY14 Change Statutory profit after tax $117.9m $82.1m 43.6% Operating earnings $98.8m $81.2m 21.7% Operating earnings per security (OEPS) 27.5cps 25.3cps 8.7% Distribution per security (DPS) 24.2cps 22.3cps 8.5% Return on E
Slide 47: Detailed Operating Earnings
Detailed Operating Earnings For personal use only Financial Performance $m FY15 FY14 Change Change % Property Investment Property funds investment income 59.2 48.7 10.5 21.6% Net interest income / (expense) 0.1 1.2 (1.1) (89.3%) Operating costs (1.0) (0.2) (0.8) 398.1% Property Investment 58.3 49.7
Slide 48: Property Funds Management Operating Earnings
Property Funds Management Operating Earnings For personal use only Financial Performance $m FY15 FY14 Change Change % Revenue Fund management fees 49.9 44.7 5.1 11.5% Transaction and performance fees 20.6 16.1 4.4 27.4% Investment management 70.4 60.9 9.6 15.7% Property management fees 15.0 14.3 0.6
Slide 49: Reconciliation of Operating Earnings to Statutory Profit
Reconciliation of Operating Earnings to Statutory Profit For personal use only Financial Performance $m FY15 FY14 Operating earnings 98.8 81.2 Net fair value loss on financial derivatives1 (5.6) (0.9) Net fair value movements of investments and property1 37.4 13.2 Amortisation and impairment of inta
Slide 50: PFM Platform Debt Management
PFM Platform Debt Management For personal use only Capital Management and Funding Key debt metrics • Substantial funding capacity available across the funds Managed funds platform Jun 15 Jun 14 platform Group facility limit ($m) 6,336 5,485 $6.3b of debt facilities across 26 funds and the Group Gr
Slide 51: Debt Maturity Profile
Debt Maturity Profile For personal use only Capital Management and Funding • Weighted average maturity at 30 June 2015 is 3.5 years • Look through weighted average debt maturity at 30 June 2015 is 3.2 years Total group CHC look-through 2,000 300 271 1,800 1,746 250 1,600 Debt Facilities ($m) 1,400 1
Slide 52: CHC Look Through Hedge Maturity Profile
CHC Look Through Hedge Maturity Profile For personal use only Capital Management and Funding • The hedge portfolio has a duration of 3.3 years • The passing weighted average hedge rate is 3.2% • The passing weighted average cost of debt is 4.88% CHC look-through hedge maturity profile 700 3.80% Weig
Slide 53: Fund Key
Fund Key For personal use only Listed entities Retail investor funds CHC Charter Hall Group BW Trust BW Trust (Direct syndicate) CQR Charter Hall Retail REIT CDC Charter Hall Direct CDC Trust CHIF8 144 Stirling Street Trust Wholesale (Pooled and Partnerships) DIF, DIF2, DIF3 Direct Industrial Fund s
Slide 54: About Charter Hall Group
About Charter Hall Group For personal use only Charter Hall Group (ASX:CHC) is one of Australia’s leading fully integrated property groups, with over 24 years’ experience managing high quality property on behalf of institutional, wholesale and retail clients. As at 30 June 2015 Charter Hall had $13.
Slide 55: Contact Us
Contact Us For personal use only David Harrison David Southon Joint Managing Director Joint Managing Director Charter Hall Group Charter Hall Group T: +61 2 8651 9142 T: +61 2 8651 9143 david.harrison@charterhall.com.au david.southon@charterhall.com.au Paul Altschwager Nick Kelly Chief Financial Off
Slide 56: Sydney Head Office
Sydney Head Office Level 20, No.1 Martin Place, Sydney, NSW, 2000 T: +61 2 8651 9000 For personal use only