Charter Hall Group · ASX:CHC
Charter Hall — H1 FY2021 Earnings Presentation
43 slides from Charter Hall's earnings presentation, Feb 17, 2021
Slide 1: Charter Hall Group Half Year FY21 Results
Charter Hall Group Half Year FY21 Results 17 February 2021
Slide 2: Agenda
Agenda David Harrison Managing Director & Group CEO 1. Highlights and Strategy 2. Property Funds Management Sean McMahon Chief Investment 3. Property Investment Officer 4. Financial Result 5. Outlook and Guidance 6. Additional Information Russell Proutt Chief Financial Officer Cover: David Jones Cas
Slide 3: Highlights and Strategy
Highlights and Strategy ALDI Distribution Centre, Dandenong, Melbourne Charter Hall Group 2021 Half Year Results
Slide 4: Group Highlights
Highlights and Strategy Group Highlights1 Group Returns Property Investments Funds Management Investment Capacity Operating earnings (6 months) Property Investment portfolio FUM growth (6 months) Group investment capacity 6 $129m $2.0bn $5.8bn $6.4bn Statutory profit 2 (6 months) to $173m $46.4bn Ba
Slide 5: Our Strategy
Highlights and Strategy Our Strategy We use our property expertise to access, deploy, manage and invest equity in our core real estate sectors to create value and generate superior returns for our customers Access Deploy Manage Invest Accessing equity from listed, wholesale Creating value through at
Slide 6: Operating Earnings Growth
Highlights and Strategy Operating Earnings Growth Operating earnings per security growth Operating earnings per security growth (excluding CHOT Performance fee) 5 Year CAGR (post-tax) 20.3%1 5 Year CAGR (post-tax) 14.4%1 55.0cps2 5 Year CAGR (pre-tax) 25.8%1 53.9cps 86.6cps OEPS (pre tax) cps OEPS (
Slide 7: Charter Hall Performance
Highlights and Strategy Charter Hall Performance Outperformance relative to AREIT Index Total Shareholder Return vs ASX 200 Property Accumulation Index (XPJAI): 1-Year, 3-Year, 5-Year & Since Listing Returns (Compound Annual Growth Rate) CHC XPJAI 39.6% p.a. 37.0% p.a. 32.1% p.a. 19.0% p.a. 7.0% p.a
Slide 8: Property Funds Management
Property Funds Management 2 Chifley Square, Sydney Charter Hall Group 2021 Half Year Results 8
Slide 9: Group Funds Management Portfolio
Property Funds Management Group Funds Management Portfolio 14.4% FUM growth over six months Portfolio value Lettable area No. of Net rent WALE Occupancy WACR ($bn) (m sqm) Properties ($m) (years) (%) (%) 3 1 December 2020 46.4 8.5 1,395 2,317 9.1 97.2 5.11 30 June 2020 40.5 7.9 1,104 2,167 8.6 97.5
Slide 10: Diversified Tenant Customers
Property Funds Management Diversified Tenant Customers The top 20 tenants make up 58% of platform rent – 25% of platform leases are NNN – Cross-sector relationships continue to drive platform growth Top 20 platform tenants by net income 12.5% Industrial Long Social Shopping & WALE Infrastructure Cen
Slide 11: Funds Under Management Growth
Property Funds Management Funds Under Management Growth FUM growth of 14.4% in 1H FY21, to $46.4bn Funds under management movement ($bn) Funds under management by equity source ($bn) $1.2bn $46.4bn $46.4bn $4.9bn ($1.3bn) $1.1bn $40.5bn $6.8bn $40.5bn $6.1bn $9.5bn $30.4bn $8.2bn $5.0bn $30.1bn $23.
Slide 12: 1H FY21 Transactional Activity
Property Funds Management 1H FY21 Transactional Activity Transactional activity led by Industrial & Logistics and Long WALE Retail sectors – 27 funds participated in transactions during the half Social Industrial & Long WALE Infrastructure/ Shopping Centre Logistics Retail Office Other Retail Total
Slide 13: Development Drives FUM Growth
Property Funds Management Development Drives FUM Growth $5.2bn of completions and committed projects Completion value($m) Completions Committed Uncommitted Total (last 12 projects projects2 pipeline3 months) Industrial & Logistics 465 1,062 890 1,952 Long WALE Retail - 75 - 75 Office 1,319 2,052 2,2
Slide 14: Equity Inflows
Property Funds Management Equity Inflows ($m) FY18 FY19 FY20 1H FY21 – Strong period of inflows Wholesale pooled funds 649 1,802 1,272 766 from all equity sources – Continued creation of Wholesale partnerships 322 219 1,298 1,140 new Wholesale Partnerships, including Listed funds 77 692 1,369 392 th
Slide 15: Property Investment
Property Investment ALDI Distribution Centre, Dandenong, Melbourne Charter Hall Group 2021 Half Year Results
Slide 16: Property Investment Portfolio
Property Investment Property Investment Portfolio 80% east coast weighting – Property investment WALE increased from 8.7 to 9.1 years Portfolio Value No. of WALE Occupancy WARR WACR WADR ($bn) Properties (years) (%) (%) (%) (%) 31 December 2020 2.0 1,322 9.1 97.1 3.0 5.15 6.3 30 June 2020 2.0 1,027
Slide 17: Property Investment Portfolio Movement
Property Investment Property Investment Portfolio Movement PI yield of 6.0% remains attractive Property Investment portfolio movement Property Investment portfolio yield 10.0% $67m ($67m) $2,028m $2,028m 8.0% $1,844m $1,706m $1,527m $2,028m $2,028m 6.0% $1,098m 4.0% 2.0% - Jun-20 Change in valuation
Slide 18: Diversified Property Investment Earnings
Property Investment Diversified Property Investment Earnings Top 10 asset exposures represent only 10.4% of Group earnings (post-tax) – 77% repeat customers across 2,547 leases – Tenant retention rate of 85.6% for the 6 months to 31 December 2020 Top 10 tenants by net income1 Property Investment ear
Slide 19: ESG
Property Investment Ronald McDonald House Charities Jessie Street Centre, Sydney ESG Urban farm 1 Shelley Street, Sydney Environment Social Governance Climate resilience Strong Communities Responsible Business Signatory to World Green Recognised in 2020 PRI Leveraging our spaces, Recognised as early
Slide 20: Financial Result
Financial Result 12 Shelley Street, Sydney Charter Hall Group 2021 Half Year Results
Slide 21: Earnings Summary
Financial Result ($m) 1H FY20 1H FY21 Change % Earnings PI EBITDA 56.8 60.4 6.3% DI EBITDA 14.8 7.2 (51.4%) Summary PFM EBITDA 1 228.2 97.1 (57.5%) EBITDA 299.8 164.7 (45.1%) – PI EBITDA increased by 6.3%, with continued recycling of capital into new Depreciation (3.8) (4.3) 13.2% funds and partners
Slide 22: Property Funds Management
Financial Result Property Funds ($m) 1H FY20 1H FY21 Change % Management Fund management fees 71.2 89.3 25.4% Transaction and performance fees 187.4 27.1 (85.5%) – Funds management fees up 25.4% driven by Investment management revenue 258.6 116.4 (55.0%) continued momentum in FUM growth Property man
Slide 23: Operating Cashflow
Financial Result Operating Cashflow Sydney CBD 1. Pending settlement $8m ($16m) $129m ($32m) – 1H FY21 distribution covered 150% by operating earnings and 105% by $90m $86m operating cashflow Operating Earnings Non-cash items Change in working Tax expense vs cash Operating Cashflow Distribution capi
Slide 24: Balance Sheet and Return Metrics
Financial Result ($m) 30 Jun 2020 31 Dec 2020 Cash 237 264 Property investment 2,028 2,028 Balance Sheet and Development investment 48 52 Return Metrics Other assets1 107 116 Intangibles 119 115 Total assets 2,538 2,575 – Further strengthened cash position to Borrowings1 232 232 $264m, balance sheet
Slide 25: Capital Management
Financial Result Capital Management Substantial funding capacity available across the Group with $6.4bn of available liquidity plus committed and uncalled equity – $3.7bn of new and refinanced debt facilities agreed in 1H21 with no material maturities in FY21 or FY22 – Weighted average gearing acros
Slide 26: Outlook and Guidance
Outlook and Guidance Coles Distribution Centre, 2 Sturton Road, Adelaide Charter Hall Group 2021 Half Year Results
Slide 27: FY21 Operating Earnings Guidance
Outlook and Guidance FY21 Operating Earnings Guidance The Group’s previous FY21 guidance was for post-tax operating earnings per security (OEPS) growth of approximately 53.0cps. Based on no material change in current market conditions and assuming the COVID-19 operating environment does not deterior
Slide 28: Additional Information
Additional Information Management Team Property Funds Management Property Investment 201 Elizabeth Street, Sydney Charter Hall Group 2021 Half Year Results
Slide 29: Management Bench Experience
Additional Information Management Bench Experience Charter Hall Executive Leadership Group David Harrison Managing Director & Group CEO 33 years industry experience Sean McMahon Russell Proutt Carmel Hourigan Richard Stacker Natalie Devlin Greg Chubb Steven Bennett Sheridan Ware Chief Investment Chi
Slide 30: Charter Hall Group Property Overview
Additional Information Charter Hall Group Property Overview1 $ 0.1bn $ 3.9bn 7.5bn $ 2.0bn $ $ 20.7bn 10.9bn $ $0.5bn Charter Hall Group 1. Excludes New Zealand assets; Maxim and other smaller investments 2021 Half Year Results 30
Slide 31: Charter Hall Managed Funds
Additional Information Charter Hall Managed Funds Long WALE Social Industrial Shopping Retail Infrastructure/ & Logistics Office Centre Retail Other $ 12.3bn $ 6.0bn $ 21.2bn $ 3.1bn $ 3.8bn CPIF CLP LWHP LWIPs3 CPOF CHOT BSWF1 DVAP CHET CPRF RPs2 Wholesale Equity $6.3bn $ 2.0bn $1.8bn $0.7bn $7.7bn
Slide 32: Wholesale Pooled and Partnerships
Additional Information Wholesale Pooled and Partnerships FUM Gearing $ 30.1bn 29.5% Occupancy WALE 96.8% 8.3yrs Cap rate CHC investment 4.92% $ 1.3bn No. 1 Martin Place, Sydney Charter Hall Group 2021 Half Year Results 32
Slide 33: Wholesale Platform
Additional Information Wholesale Platform Wholesale Partnership deals in 1H FY21 Wholesale Platform, FUM by Equity Origin 1 North America Partner Tenant Size (m) 9% Middle East 1% $682m Europe Asia Pacific 11% 26% $353m $141m2 $30.1bn 99 Investors Various $190m Future Australia Development 53% 1. Gr
Slide 34: Major Wholesale Property Investment Portfolio Returns
Additional Information Major Wholesale Property Investment Portfolio Returns Relative to sector specific benchmark indices 22.2% 14.2% 12.3% 12.5% 12.6% 11.3% 11.3% 11.3% 11.2% 11.2% 1.3% 1.3% CHOT CPOF CPIF CLP LWHP LWIP 2015 to 2020 2015 to 2020 2015 to 2020 2015 to 2020 2015 to 2020 2015 to 2020
Slide 35: Listed
Additional Information Listed FUM Gearing $ 9.5bn 23.5% Occupancy WALE 97.8% 11.2yrs Cap rate CHC investment1 5.64% $ 0.6bn Woolworths, Distribution Centre, Dandenong 1. Held at accounting value not market value Charter Hall Group 2021 Half Year Results 35
Slide 36: Charter Hall Direct
Additional Information Charter Hall Direct FUM Gearing $ 6.8bn 28.4% Occupancy WALE 97.9% 9.0yrs Cap rate CHC investment 5.22% $ 0.1bn 10 Shelley Street, Sydney Charter Hall Group 2021 Half Year Results 36
Slide 37: Direct Funds have returned an average of 12.0% p.a. since inception
Additional Information Direct Funds have returned an average of 12.0% p.a. since inception Outperforming their respective MSCI/IPD indices by a factor of approximately 1.5x 25.0% 20.0% 19.2% 15.1% 15.0% 14.3% 12.4% 11.1% 10.4% 10.2% 9.6% 10.0% 8.9% 9.0% 8.4% 8.3% 8.2% 8.2% 7.5% 6.8% 6.1% 5.0% 5.4% 5
Slide 38: CHPT Property Investment Portfolio
Additional Information CHPT Property Investment Portfolio Charter Hall Charter Hall Ownership stake Investment PI Income WALE WACR WADR WARR PI Yield2 (%) ($m) ($m) (years) (%) (%) (%) (%) Industrial & Logistics Charter Hall Prime Industrial Fund (CPIF) 3.0 142.4 3.3 10.6 4.8 6.3 2.9 5.0 Core Logist
Slide 39: Statutory Balance Sheet Reconciliation
Additional Information Statutory Balance Sheet Reconciliation Adj. 1: Adj 2: ($m) Statutory Balance Sheet Reclassify LWF as Equity Accounted Reclassify mark-to-market on Investor Presentation (slide 24) investment derivatives Cash 267 (3) - 264 Property Investment 1,968 60 2,028 Development Investme
Slide 40: Portfolio Performance Review Dates
Additional Information Portfolio Performance Review Dates Fund Portfolio Performance Review Dates Charter Hall Prime Office Fund (CPOF) 3 yearly – FY21, FY24, etc Brisbane Square Wholesale Fund (BSWF) 3 yearly – FY22, FY25, etc Charter Hall Direct Industrial Fund No. 4 (DIF4) 5 yearly – FY22, FY27,
Slide 41: Fund Key and Glossary
Additional Information Fund Key and Glossary Listed entities Direct funds ASX:CHC Charter Hall Group BW Trust Charter Hall Direct BW Trust (Direct syndicate) ASX:CQR Charter Hall Retail REIT DIF2, DIF3, DIF4 Charter Hall Direct Industrial Fund series ASX:CLW Charter Hall Long WALE REIT DOF Charter H
Slide 42: Further information
Additional Information Further information David Harrison Sean McMahon Russell Proutt Philip Cheetham Managing Director Chief Investment Chief Financial Head of Listed Investor & Group CEO Officer Officer Relations Charter Hall Group Charter Hall Group Charter Hall Group Charter Hall Group +61 2 865
Slide 43: Important Notice & Disclaimer
charterhall.com.au/chc IMPORTANT NOTICE & DISCLAIMER This presentation has been prepared by Charter Hall Funds Management Limited ACN 082 991 786)) (together, with its related bodies corporate, the Charter Hall Group). This presentation has been prepared without reference to your particular investme