Charter Hall Group · ASX:CHC
Charter Hall — FY2024 Earnings Presentation
47 slides from Charter Hall's earnings presentation, Aug 21, 2024
Slide 1: Full Year Results 2024
Charter Hall Group Full Year Results 2024 ASX:CHC Charter Hall Group 2024 Full Year Results
Slide 2: Agenda
Agenda 1. Highlights and Strategy 2. Group Funds Management 3. Property Investment 4. Financial Result 5. Guidance 6. Additional Information Acknowledgement of Country Charter Hall acknowledges the Traditional Custodians of the lands on which we work and gather. We pay our respects to Elders past an
Slide 3: Highlights and Strategy
1 Highlights and Strategy 60 King William Street Adelaide (CPOF) Charter Hall Group 2024 Full Year Results 3
Slide 4: Group highlights
Highlights and Strategy Group highlights1 Group Returns Property Investments Funds Management Investment Capacity Operating earnings Property Investment portfolio Group FUM4 Group investment capacity 2 $359 million $2.8bn $80.9bn $6.6bn Balance sheet OEPS Property Investment EBITDA growth (pcp) Gros
Slide 5: Our Strategic Pillars
Highlights and Strategy Our Strategic Pillars1 Access Deploy Manage Invest Accessing equity from listed, Creating value through attractive Funds management, asset Investing alongside our We use our expertise to wholesale and retail investors investment opportunities management, leasing and capital p
Slide 6: Operating earnings growth
Highlights and Strategy Operating earnings growth Operating earnings and distributions growth DPS (cash paid) DPS (grossed up)1 - Strength of underlying retained earnings driving OEPS (post-tax) fund creation and growth - Cumulative retained earnings of $1.2bn since 115.6cps FY14 funding organic gro
Slide 7: Group EBITDA margins
Highlights and Strategy Group EBITDA margins Group EBITDA margins, FY19 vs FY24 (%) - Margin expansion over 5yrs achieved through platform scale - Annuity EBITDA margin continues to expand, with PI & FM EBITDA growth outpacing expense growth 79.3% 76.2% 74.4% EBITDA Margin 65.8% Annuity EBITDA Margi
Slide 8: Group Funds Management
2 Group Funds Management Gateway Plaza Leopold (CQR) Charter Hall Group 2024 Full Year Results 8
Slide 9: Group funds management portfolio
Group Funds Management Group funds management portfolio – Diversification of equity sources and by sector – 31% Industrial & Logistics, 31% Office, 20% Listed Equities, 18% Retail and Social Infrastructure Group FUM by equity source Group FUM by sector Social Infrastructure SC Retail $3.9bn Direct E
Slide 10: Property Funds Under Management (FUM) growth
Group Funds Management Property Funds Under Management (FUM) growth – Total property FUM of $65.5bn – 2X FUM growth over 5 years despite cap rate volatility Property FUM growth ($bn) Property FUM by equity source ($bn) 5-year Property FUM CAGR of 16.6% ($6.1bn) 80.0 Wholesale 18.5% ($2.4bn) $71.9bn
Slide 11: Property funds management portfolio
Group Funds Management Property funds management portfolio Largest diversified property portfolio in Australia Portfolio value Lettable area No. of Net rent WARR WALE Occupancy WACR Property FUM ($bn) (m sqm) Properties ($m) (%) (years) (%) (%) 30 June 2024 65.5 11.4 1,618 3,266 3.4 8.1 97.9 5.5 30
Slide 12: Diversified tenant customers
Group Funds Management Diversified tenant customers The top 20 tenants are represented by Government, multinationals and listed companies – The top 20 tenants represent 55% of property platform income with a WALE of 9.3 years – 23% of platform leases are NNN and 22% of platform net income is CPI-lin
Slide 13: Modern, high-occupancy Industrial & Logistics portfolio
Group Funds Management Modern, high-occupancy Industrial & Logistics portfolio Strong leasing momentum with 689,129 sqm leased across 61 transactions – 11.4 year WALE achieved on all transactions nationally – 99.3% Industrial & Logistics portfolio occupancy versus national average of 98.1%1 – 9.3 ye
Slide 14: Modern, high-occupancy Office platform
Group Funds Management Modern, high-occupancy Office platform Strong leasing momentum with 320,347 sqm leased1 across 237 transactions – 6.4 year WALE achieved on all transactions nationally – 96.0% office portfolio occupancy versus national average of 84.0%2 – CPOF continues to have leading sector
Slide 15: Modern, high-occupancy Retail platform
Group Funds Management Modern, high-occupancy Retail platform Strong leasing momentum with 65,852 sqm leased across 356 transactions Shopping Centre Retail Net Lease Retail – 10.3 year WALE achieved on all transactions nationally1 – 11.6 year WALE across our Net Lease Retail portfolio – High portfol
Slide 16: Modern, high-occupancy Social Infrastructure platform
Group Funds Management Modern, high-occupancy Social Infrastructure platform Properties for essential services with low correlation to economic cycle – 19.5 year WALE achieved on all leasing transactions nationally – High portfolio occupancy of 99.9% – 12.6 year WALE across our Social Infrastructure
Slide 17: Equity inflows
Group Funds Management Equity inflows ($m) FY21 FY22 FY23 FY24 - Diverse sources of equity across Wholesale, Listed and Direct Wholesale pooled funds 2,111 1,575 817 305 - Wholesale flows weighted towards partnerships Wholesale partnerships 1,448 1,137 1,432 1,140 - ~100 wholesale investors Listed f
Slide 18: FY24 property transaction activity
Group Funds Management FY24 property transaction activity $4.1bn of transaction activity, comprising over 75 transactions with 23 active funds/partnerships Social Industrial & Shopping Centre ($m) Office Net Lease Retail Infrastructure / Total Logistics Retail Other Acquisitions 0.5 0.5 0.1 0.1 0.5
Slide 19: Development to drive deployment and FUM growth
Group Funds Management Development to drive deployment and FUM growth Development completions of $1.3bn over the last 12 months – 90% of Industrial committed projects are pre-leased1 – 69% of Office committed projects are pre-leased1 Completion value ($m) Completions Committed Uncommitted Total (las
Slide 20: Property Investment
3 Property Investment Eastgate, Bondi Junction (CQR) Charter Hall Group 2024 Full Year Results 20
Slide 21: Property Investment portfolio
Property Investment Property Investment portfolio Property Investment portfolio of $2.8bn Portfolio Value No. of WALE Occupancy WARR WACR WADR ($bn) Properties (years) (%) (%) (%) (%) 30 June 2024 2.8 1,607 7.2 97.4 3.4 5.7 6.8 30 June 2023 3.0 1,576 7.4 97.6 3.6 4.9 6.1 Sector allocation Geographic
Slide 22: Diversified Property Investment earnings
Property Investment Diversified Property Investment earnings Property Investment earnings (by sector) - Property Investment portfolio provides growth Listed and resilience given quality and strong tenant Equities customer composition 6% Social Infrastructure - No single asset is more than 4% of port
Slide 23: ESG Leadership
Property Investment ESG Leadership Achievements in FY24 Looking Forward Net Zero by 2025 Clean energy Scope 3 emissions Environment Circular economy Achieved >70% reduction in Scope 1 and >80% renewable electricity supplied Achieved more than 5% improvement in Partner with tenant customers to reduce
Slide 24: Financial Result
4 Financial Result 555 Collins Street Melbourne (CPOF) Charter Hall Group 2024 Full Year Results 24
Slide 25: Earnings summary
Financial Result Earnings summary ($m) FY23 FY24 Change % Property Investment (PI) EBITDA1 248.5 271.0 9.1% Development Investment (DI) EBITDA 36.6 36.4 (0.5%) - PI EBITDA increased by 9.1%, excludes co-investment finance costs and Funds Management (FM) EBITDA 1,2 375.4 271.6 (27.7%) elimination of
Slide 26: Funds management
Financial Result Funds management ($m) FY23 FY24 Change % Funds management revenue 306.3 294.7 (3.8%) Transaction and performance revenue 165.7 57.0 (65.6%) - FY23 FM EBITDA included $165.7m of transaction and performance revenue Transaction and performance revenue 165.7 57.0 (65.6%) compared to $57
Slide 27: Balance sheet and return metrics
Financial Result Balance sheet ($m) 30 Jun 2023 30 Jun 2024 and return metrics Cash Property investment 401 2,951 383 2,758 Development investment 131 74 - Available cash of $383 million Receivables 140 100 Other assets1 314 196 - Strong balance sheet maintained with low gearing at 3.0% Intangibles
Slide 28: Platform capital profile and gearing
Financial Result Funds platform debt metrics1 30 Jun 2023 30 Jun 2024 Total facility limits ($m) 29,068 30,054 Platform capital profile Total undrawn debt ($m) 5,171 5,782 Total cash ($m) 852 795 Weighted average debt maturity (yrs.)2 3.9 3.7 - $6.6bn of available liquidity plus committed and uncall
Slide 29: Guidance
5 Guidance Criterion Industries Glendenning Logistics Estate Glendenning (CLP) Charter Hall Group 2024 Full Year Results 29
Slide 30: FY25 operating earnings guidance
Guidance FY25 operating earnings guidance Based on no material change in current market conditions, FY25 guidance is for post-tax operating earnings per security of approximately 79 cents. FY25 distribution per security guidance is for 6% growth over FY24. Hello Fresh, Light Horse Logistics Hub, Eas
Slide 31: Additional Information
6 Additional Information Charter Hall Offices 275 George Street, Brisbane (CPOF) Charter Hall Group 2024 Full Year Results 31
Slide 32: Management bench experience
Additional Information Management bench experience Charter Hall Executive Committee (EXCO) David Harrison Managing Director & Group CEO 37 years industry experience Sean McMahon Anastasia Clarke Avi Anger Carmel Hourigan Steven Bennett Natalie Devlin Richard Stacker Ben Ellis Chief Investment Chief
Slide 33: Charter Hall Group Property Platform
Additional Information Charter Hall Group Property Platform1 0.2bn $ 10.5bn $ 4.7bn $ 3.0bn $ 28.0bn $ 16.7bn $ 0.7bn $ 1. Excludes Maxim and other smaller investments Charter Hall Group 2024 Full Year Results 0.5bn $ 33
Slide 34: Charter Hall investment strategies
Additional Information Charter Hall investment strategies Wholesale Listed Funds Direct Funds $59.8bn $12.0bn $9.2bn Pooled Partnerships Listed CPIF Industrial PIM ASX:CLW Industrial $13.1bn $6.5bn $15.1bn $5.8bn $3.7bn CPOF Office ASX:CQR Office $9.4bn $10.8bn $4.0bn $4.1bn Retail ASX:CQE Retail $3
Slide 35: Charter Hall sector valuation movement – June 2024
Additional Information Charter Hall sector valuation movement – June 2024 Valuation Valuation Cap rate Cap rate June 2024 movement movement increases increases cap rate (6 months) (12 months) (6 months) (12 months) Industrial & Logistics (1.9%) (6.9%) 28 bps 85 bps 5.3% Net Lease Retail (2.3%) (1.2%
Slide 36: Four-year valuation cycle
Additional Information Four-year valuation cycle Charter Hall sector LFL WACR over the last 4 years Cap rate movements more than offset by valuation growth 6.50% - On average across all sectors, cap rates have risen over the last two years by almost the same amount they fell during Jun-20 to Jun-22
Slide 37: Scale and cross sector capability create sale and leaseback opportunities
Additional Information Scale and cross sector capability create significant sale and leaseback opportunities Sale and leaseback transactions continue to grow our NNN exposure Charter Hall sale and leaseback transactions (by tenant industry) Existing Charter Hall sale and leaseback partnerships Other
Slide 38: Wholesale pooled and partnerships property funds
Additional Information Wholesale pooled and partnerships property funds FUM Gearing1 $ 44.7bn 35.5% Occupancy WALE 97.3% 7.9yrs Cap rate CHC investment 5.3% $ 1.7bn Australia Post headquarters, 480 Swan Street, Richmond, Melbourne (CPOF) 1. Gearing has been adjusted for any contracted divestments po
Slide 39: Major wholesale property investment portfolio returns
Additional Information Major wholesale property investment portfolio returns Relative to sector specific IPD/MSCI Core Wholesale indices 15.6% 14.6% 10.3% 10.6% 10.6% 7.7% 5.2% 1.5% 1.4% 1.4% 0.5% 0.5% CHOT CPOF CPIF CLP LWHP LWIP 5 years 5 years 5 years 5 years 5 years 5 years Net Return (% p.a) MS
Slide 40: Listed property funds
Additional Information Listed property funds FUM Gearing1 $ 12.0bn 29.4% Occupancy WALE 99.3% 9.6yrs Cap rate CHC investment2 5.5% $ 0.7bn Bunnings, Caboolture (CLW) 1. Reflects aggregate balance sheet gearing of all listed REITs. Gearing has been adjusted for any contracted divestments post Jun-24
Slide 41: Direct property funds
Additional Information Direct property funds FUM Gearing1 $ 8.8bn 39.4% Occupancy WALE 98.9% 7.2yrs Cap rate CHC investment 5.9% $ 0.3bn Woolworths, Translink Distribution Centre, Translink (DIF4 & CPIF) 1. Direct gearing includes both Charter Hall and Folkestone Direct Funds and has been adjusted f
Slide 42: Direct funds have returned an average of 6.9% p.a. since inception
Additional Information Direct funds have returned an average of 6.9% p.a. since inception 25% 20% 14.4% 15% 13.2% 9.8% 10% 9.1% 7.7% 7.4% 5.8% 6.3% 5.6% 5.6% 5% 3.8% 4.0% 3.2% 3.0% 1.9% 0.6% - (2.8%) (5%) (4.6%) (10%) 1 1 1 DOF PFA DIF3 DIF4 BW Trust LWF WPS1 WPS2 Maxim2 2014-2024 2017-2024 2014-202
Slide 43: CHPT Property Investment portfolio
Additional Information CHPT Property Investment portfolio Charter Hall Charter Hall Charter Hall PI Net Income Ownership stake Investment PI Net Income PI EBITDA WALE WACR WADR WARR Yield1 (%) ($m) ($m) ($m) (years) (%) (%) (%) (%) Industrial & Logistics Charter Hall Prime Industrial Fund (CPIF) 1.3
Slide 44: CHPT Property Investment portfolio – future disclosure format
Additional Information CHPT Property Investment portfolio – future disclosure format Ownership Charter Hall Charter Hall PI WALE WACR WADR WARR stake Investment EBITDA Income (years) (%) (%) (%) (%) ($) ($m) Industrial & Logistics 4.0 653.7 57.0 8.3 5.2 6.7 3.1 Office 10.4 1,211.1 135.7 6.2 5.8 6.7
Slide 45: Major fund performance review testing periods
Additional Information Major fund performance review testing periods Fund Testing frequency Counter Cyclical Trust (CCT) FY25 Charter Hall Direct Office Fund (DOF) 5 yearly – FY25, etc Brisbane Square Wholesale Fund (BSWF) 3 yearly – FY25, FY28 etc Charter Hall 242 Exhibition St Trust (242X) 3 yearl
Slide 46: 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 47: 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