Charter Hall Group · ASX:CHC
Charter Hall — H1 FY2019 Earnings Presentation
51 slides from Charter Hall's earnings presentation, Feb 22, 2019
Slide 1: Charter Hall Group 2019 Half Year Results
22 February 2019 Charter Hall Group 2019 Half Year Results 6 months to 31 December 2018 10 & 12 Shelley Street, Sydney NSW
Slide 2: Agenda
Charter Hall Group I 2019 Half Year Results 2019 Half Year Results Agenda 1. Group Highlights 2. Property Funds Management 3. Property Investment 4. Financial Result 5. Outlook and Guidance 6. Additional Information David Harrison Sean McMahon Russell Proutt Managing Director Chief Investment Office
Slide 3: Group Highlights
Charter Hall Group I 2019 Half Year Results Our Strategy 1. Group Highlights 3 Richlands Distribution Facility (Coca Cola Amatil), 220-260 Orchard Road, Richlands QLD
Slide 4: Group highlights
Charter Hall Group I 2019 Half Year Results Group Highlights Group highlights1 Group investment capacity of $2.6bn Group returns Property Investments Funds Management Balance sheet 12.0% 22.4% FUM growth to $108m operating earnings 5.5% balance sheet Total Property Investment $28.4bn $134m statutory
Slide 5: Our strategy
Charter Hall Group I 2019 Half Year Results Group Highlights Our strategy We use our property expertise to access, deploy, manage and invest equity in our core real estate sectors to create value and generate superior returns for our customers. Access Deploy Manage Invest Accessing equity from Creat
Slide 6: Operational highlights
Charter Hall Group I 2019 Half Year Results Group Highlights Operational highlights Office Industrial Retail Social Infrastructure 95 17 210 12 LEASING DEALS EXECUTED ACROSS LEASING DEALS EXECUTED ACROSS LEASING DEALS EXECUTED ACROSS LEASING DEALS EXECUTED ACROSS 134,000sqm 197,000sqm 52,000sqm 6,00
Slide 7: Sustained growth
Charter Hall Group I 2019 Half Year Results Group Highlights Sustained growth Strong growth in earnings underpinning distribution growth Operating earnings per security growth Distributions per security growth 2 DPS (grossed up) DPS Pre-tax OEPS Post-tax OEPS 27.7cps 1, 2 1 20.0cps 24.0cps 1 18.3cps
Slide 8: Property Funds Management
Charter Hall Group I 2019 Half Year Results 2. Property Funds Management 8 ATO Building, 12-26 Franklin Street, Adelaide SA
Slide 9: Group funds management portfolio
Charter Hall Group I 2019 Half Year Results Property Funds Management Group funds management portfolio 83% east coast weighting Portfolio Value Lettable Area No. of No. of Gross Income WALE1 Occupancy WACR2 ($bn) (m sqm) Properties Tenancies ($m) (years) (%) (%) 31 Dec 18 28.4 6.3 820 3,157 1,883 8.
Slide 10: Funds under management growth
Charter Hall Group I 2019 Half Year Results Property Funds Management Funds under management growth 5 year FUM growth of 22.3% per annum • Post 31 December 2018, the DVP wholesale partnership was formed with seed assets totaling $113m including the 50.5% interest in 1 Brisbane. CHC has sold down to
Slide 11: Major property investment portfolio returns
Charter Hall Group I 2019 Half Year Results Property Funds Management Major property investment portfolio returns 1 • The Property Investment Portfolios total property return over • The below chart shows the total property return of each major the five years to 31 December 2018 is 14.2% per annum, P
Slide 12: 1H FY19 transactional activity
Charter Hall Group I 2019 Half Year Results Property Funds Management 1H FY19 transactional activity • Acquisition activity led by the Office and Industrial sectors Long WALE Shopping Centre Social ($m) Office Industrial Total Retail Retail Infrastructure Acquisitions 1,850 730 317 161 9 3,067 Dives
Slide 13: Development activity
Charter Hall Group I 2019 Half Year Results Property Funds Management Development activity Continues to drive asset creation and attract capital • Development completions have added $2.6bn of FUM • Majority of committed projects are de-risked through over the last 3 years pre-leases and fixed price
Slide 14: Leasing activity
Charter Hall Group I 2019 Half Year Results Property Funds Management Leasing activity Deals completed over the last 12 months Social Office Industrial Retail Infrastructure Existing assets leased 131,403 284,947 89,403 12,197 (lettable area) Major leases Developments leased 53,888 99,154 - - (letta
Slide 15: Equity flows
Charter Hall Group I 2019 Half Year Results Property Funds Management Equity flows Diversified equity sources with $1,220m gross equity raised in the 6 months to 31 December 2018: • Across the Group, thirteen funds have raised equity in the half • $172m raised in Listed funds with CLW completing two
Slide 16: Property Investment
Charter Hall Group I 2019 Half Year Results 3. Property Investment 16 Dandenong South Industrial Centre (Bombardier), 34-35 Frankston Road, Dandenong VIC
Slide 17: Property Investment portfolio
Charter Hall Group I 2019 Half Year Results Property Investment Property Investment portfolio 81% east coast weighting Portfolio Value No of WALE Occupancy WARR1 WACR WADR2 ($m) Properties (years) (%) (%) (%) (%) 31 Dec 18 1,821 762 7.5 97.8 3.5 5.73 7.0 30 Jun 18 1,706 298 7.2 97.9 3.6 5.80 7.1 Div
Slide 18: Property Investment portfolio movement
Charter Hall Group I 2019 Half Year Results Property Investment Property Investment portfolio movement • During the 6 months to 31 December 2018 the Property Investment Portfolio increased by 6.7% (+$115m) to $1,821m predominantly driven by the investment in CQE • PI yield of 6.0% remains attractive
Slide 19: Diversified earnings resilience
Charter Hall Group I 2019 Half Year Results Property Investment Diversified earnings resilience Top 10 asset exposures represent only 10.8% of earnings • 71% repeat customers across 1,824 leases • Tenant retention rate of 78% for the six months to 31 Dec 2018 Top 10 tenants by gross income Property
Slide 20: Sustainability
Charter Hall Group I 2019 Half Year Results Property Investment Sustainability ENHANCING WORKPLACE BUILDING COMMUNITY Becoming a leader in health and wellbeing in our communities by: Creating Australia’s largest community network of hubs: • Increasing our footprint of WELL rated buildings • Supporti
Slide 21: Financial Result
Charter Hall Group I 2019 Half Year Results 4. Financial Result 21 Western Sydney University, 1 Parramatta Square, Parramatta NSW
Slide 22: Earnings summary
Charter Hall Group I 2019 Half Year Results Financial Result Earnings summary ($m) 1H FY19 1H FY18 Change % • EBITDA of $134.2m, a 19.0% increase over Property investment (PI) 52.1 50.2 3.8% 1H FY18 Development investment (DI) 1.4 - - – Expansion of property funds management Property funds managemen
Slide 23: Property funds management
Charter Hall Group I 2019 Half Year Results Financial Result Property funds management ($m) 1H FY19 1H FY18 Change% • PFM revenue up 24.8% to $126.2m Fund management fees 51.8 42.6 21.6% • Investment management revenue up 27.5% to Transaction and performance fees 53.0 39.6 33.8% $104.8m: Investment
Slide 24: Operating cashflow
Charter Hall Group I 2019 Half Year Results Financial Result Operating cashflow • 1H FY19 distribution covered 93% by operating cashflow • Similar to previous years, operating cashflow is anticipated to fully cover FY distributions $5m ($38m) $8m $108m ($11m) $77m $71m 1 Operating Earnings Earnings
Slide 25: Balance sheet and return metrics
Charter Hall Group I 2019 Half Year Results Financial Result Balance sheet and return metrics ($m) 31 Dec 2018 30 June 2018 • Strong balance sheet maintained: Cash 115 95 – Considerable financial flexibility with Property investment 1,821 1,706 undrawn lines and cash in hand Development investment 8
Slide 26: Debt and capital management
Charter Hall Group I 2019 Half Year Results Financial Result Debt and capital management Key debt metrics funds platform 31 Dec 2018 30 Jun 2018 • Group wide capital portfolio continues to deliver in line with strategy Combined fund facility limits ($m) 11,849 10,256 – Combined fund undrawn debt ($m
Slide 27: Outlook & Guidance
Charter Hall Group I 2019 Half Year Results 5. Outlook & Guidance 27 Only About Children, 160-162 Victoria Road, Northcote VIC
Slide 28: FY19 earnings guidance
Charter Hall Group I 2019 Half Year Results Outlook & Guidance FY19 earnings guidance We believe the property market landscape will continue to accommodate growth • Asset growth is expected in submarkets that are underpinned by favourable property fundamentals where there is effective rental growth
Slide 29: Additional information
Charter Hall Group I 2019 Half Year Results 6. Additional information - Property Funds Management - Property Investment 29
Slide 30: Appendix 6.1 Property Funds Management
Charter Hall Group I 2019 Half Year Results Appendix 6.1 Property Funds Management 30 Only About Children, 40-411 South Road, Brighton East VIC
Slide 31: Charter Hall group property overview
Charter Hall Group I 2019 Half Year Results Appendix – Property Funds Management Charter Hall group property overview1 4 228 Properties valued at $0.1bn Properties valued at $5.6bn Office 0 Office 17 Retail 1 Retail 51 Industrial 1 Industrial 29 Social Infrastructure 2 Social Infrastructure 131 NT Q
Slide 32: Charter Hall managed funds
Charter Hall Group I 2019 Half Year Results Appendix – Property Funds Management Charter Hall managed funds Social Infrastructure/ Office $13.2bn Industrial $7.1bn Retail $6.6bn Other $1.5bn CHOT CPOF1 BSWF1 CLP CPIF LWHP RP2 LWIPs3 CIB Wholesale $2.9bn $5.3bn $0.6bn $1.8bn $3.4bn $1.2bn $0.1bn $0.6
Slide 33: Office
Charter Hall Group I 2019 Half Year Results Appendix – Property Funds Management Office “We create high-quality workplace environments for tenant customers and enhanced returns for our investors through actively managing, developing and acquiring assets to create one of the highest performing office
Slide 34: Industrial
Charter Hall Group I 2019 Half Year Results Appendix – Property Funds Management Industrial “As a leading industrial and logistics property group in Australia we create, own and manage a geographically diverse property portfolio that meets the strategic needs of our tenant customers while also meeti
Slide 35: Retail
Charter Hall Group I 2019 Half Year Results Appendix – Property Funds Management Retail “As the leading owner and manager of convenience based Retail and with a portfolio of supermarket anchored shopping centres, hardware, automotive showrooms and hospitality assets, we are focused on optimizing per
Slide 36: Charter Hall Direct
Charter Hall Group I 2019 Half Year Results Appendix – Property Funds Management Charter Hall Direct “Charter Hall Direct Property is Australia’s leading direct property fund manager, with $4.1 billion of real estate assets under management. We have a strong track record managing unlisted property f
Slide 37: Direct funds net returns since inception
Charter Hall Group I 2019 Half Year Results Appendix – Property Funds Management Direct funds net returns since inception The active Direct Funds have returned 12.4% p.a. outperforming the benchmark1 by 1.4% 18% 18% 17% 13% 13% 13% 12% 12% 12% 11% 11% 11% 11% 12% 11% 12% 11% 11% 11% 10% 9% 9% DIF2 D
Slide 38: Appendix 6.2 Property Investment
Charter Hall Group I 2019 Half Year Results Appendix 6.2 Property Investment 38 M5M7 Logistics Park (GWA), 290 Kurrajong Road, Prestons NSW
Slide 39: Property Investment portfolio
Charter Hall Group I 2019 Half Year Results Appendix – Property Investment Property Investment portfolio Ownership Charter Hall Charter Hall WALE WACR WADR WARR PI Yield2 stake% Investment ($m) PI Income ($m) (years) (%) (%) (%) (%) Office 637.3 17.4 5.7 5.23% 6.7% 3.8% 5.6% Charter Hall Prime Offic
Slide 40: Charter Hall Retail REIT
Charter Hall Group I 2019 Half Year Results Appendix – Property Investment Charter Hall Retail REIT (ASX:CQR) Key events during 1H FY19 Key metrics1 • Divested two lower growth assets for a total consideration of $76.1 million: Gross property assets $2.8bn Coomera Square, QLD (settled in December 20
Slide 41: Charter Hall Education Trust
Charter Hall Group I 2019 Half Year Results Appendix – Property Investment Charter Hall Education Trust (ASX:CQE) Key events during 1H FY19 Key metrics Gross assets $1.1bn • Distribution of 8.0 cents per unit (“cpu”), an increase of 6.0% on pcp Total debt $0.3bn • NTA per unit of $2.87, an increase
Slide 42: Charter Hall Office Trust
Charter Hall Group I 2019 Half Year Results Appendix – Property Investment Charter Hall Office Trust (CHOT) Key events during 1H FY19 Key metrics Gross property assets $2.9bn • Valuations – externally valued at $2.9bn at 31 Dec-18 representing a net Total drawn debt $1.2bn increase of $94.7m or 3.4%
Slide 43: Charter Hall Prime Office Fund
Charter Hall Group I 2019 Half Year Results Appendix – Property Investment Charter Hall Prime Office Fund (CPOF) Key events during 1H FY19 Key metrics • The Fund returned 15.3% in the 12 months to 31 December 2018, outperforming the Gross property assets $5.3bn MSCI Unlisted Wholesale Core Office In
Slide 44: Charter Hall Long WALE REIT
Charter Hall Group I 2019 Half Year Results Appendix – Property Investment Charter Hall Long WALE REIT (ASX:CLW) Key events during 1H FY19 Key metrics • Operating EPS and DPS of 12.9 cents and NTA per security of $4.01 Gross property assets $1.9bn Total debt (balance sheet) $0.5bn • Continued to act
Slide 45: Core Logistics Partnership
Charter Hall Group I 2019 Half Year Results Appendix – Property Investment Core Logistics Partnership (CLP) Key events during 1H FY19 Key metrics Gross property assets $1.8bn • Acquisition of three assets for $84m settled during the half year including the Total debt $0.4bn Coles DC at Smeaton Grang
Slide 46: Charter Hall Prime Industrial Fund
Charter Hall Group I 2019 Half Year Results Appendix – Property Investment Charter Hall Prime Industrial Fund (CPIF) Key events during 1H FY19 Key metrics • Acquisition of eight assets for $296m settled during the half year with a Gross property assets $3.4bn combined WALE of 15.3 years improving th
Slide 47: Portfolio performance review dates
Charter Hall Group I 2019 Half Year Results Appendix – Property Funds Management Portfolio performance review dates Fund Portfolio Performance Review Dates Charter Hall Office Trust (CHOT) FY20 Charter Hall Prime Office Fund (CPOF) 3 yearly – FY21 Brisbane Square Wholesale Fund (BSWF) 3 yearly – FY1
Slide 48: Fund key and glossary
Charter Hall Group I 2019 Half Year Results Additional information Fund key and glossary Listed entities Direct funds ASX:CHC Charter Hall Group BW Trust BW Trust (Direct syndicate) CDC Charter Hall Direct CDC Trust ASX:CQR Charter Hall Retail REIT DIF2, DIF3, DIF4 Direct Industrial Fund series ASX:
Slide 49: Contact information
Charter Hall Group I 2019 Half Year Results Additional information Contact information David Harrison Russell Proutt Sean McMahon Philip Cheetham Managing Director & Group CEO Chief Financial Officer Chief Investment Officer Head of Listed Investor Relations Charter Hall Group Charter Hall Group Cha
Slide 50: Disclaimer
Charter Hall Group I 2019 Half Year Results Additional information Disclaimer 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
Slide 51: www.charterhall.com.au
Charter Hall Group I 2019 Half Year Results Sydney Head Office Level 20, No.1 Martin Place Sydney, NSW, 2000 T: +61 2 8651 9000 Melbourne Level 14, 570 Bourke Street Melbourne VIC 3000 T: +61 3 9903 6100 Brisbane Level 22, Northbank Plaza 69 Ann Street Brisbane QLD 4000 T: +61 7 3228 2000 Perth Leve