Slide 1: Charter Hall Group Full Year Results
23 August 2016 Charter Hall Group Full Year Results 1 Shelley Street, Sydney, NSW 12 months to 30 June 2016
Slide 2: Agenda
Agenda 1 FY16 Results Summary 2 Property Investments 3 Property Funds Management 4 Financial Result 5 Outlook and Guidance 6 Additional Information David Harrison Paul Altschwager Managing Director & Chief Financial Officer Group CEO CHARTER HALL GROUP | Full Year Results | 30 June 2016 2
Slide 3: FY16 Results Summary
FY16 Results Summary CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 4: Key Highlights
Key Highlights Group Returns Property Investments3 Funds Management Capital Management 10.5% OEPS & Total property return FUM up 28.7% Balance sheet gearing 11.2% DPS growth 19.1% to $17.5b 0% $3.7b in gross 25.5%2 total 10.1% NTA per transactions Look through gearing securityholder return security
Slide 5: Sustained Growth
Sustained Growth Total performance over 1, 3 and 5 years (% pa)1 Operating earnings per security growth2 cps 35 40% 30.4 30 27.5 34.3% 25.3 35% 25 22.9 20.7 19.2 30% 20 15.8 25.5% 15 25% 23.1% 22.2% 10 20.3% 20% 19.1% 5 15% 0 12.7% FY10 FY11 FY12 FY13 FY14 FY15 FY16 10.5% 9.7% 10% Distribution per s
Slide 6: Consistent Delivery on Strategy
Consistent Delivery on Strategy Access Deploy Manage Invest Creating value Property funds Investing Access to through attractive management, asset alongside our multiple equity sources investment management, leasing capital partners opportunities and development services $17.5b FUM $1.1b of property
Slide 7: Property Investments
Property Investments CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 8: Growth in Property Investment Earnings
Growth in Property Investment Earnings • Property investment earnings increased by 26.4% − Like for like growth of 5.6% − Change in invested capital contributed 20.8% • Property Investment total property return of 19.1% comprising 7.4% earnings yield and 11.7% capital growth • Portfolio WALE remaine
Slide 9: High Quality Diversified Property Portfolio
High Quality Diversified Property Portfolio Weighted Average Lease Expire (WALE) Lease Expiry Profile1 60% LWIP2 19.4 LWIP 18.3 50% 54% of leases expiring between June 2024 and CLP 9.9 40% June 2040 LWHP 9.4 30% CPIF 8.4 CQR 6.9 20% Portfolio WALE remained CPOF 6.5 stable at 8.8 years 10% RP2 5.4 0%
Slide 10: Property Investment Portfolio Assets
Property Investment Portfolio Assets The net movement in the Property Investment Portfolio Property Investment Movement to 30 June 2016 was $154m to $1.1b: $51m • $157m investment including CQR, CLP and CPIF $1,149m ($101m) $98m $1,098m $157m • $101m capital return including DOF, DIF3 and CHOT $944m
Slide 11: Property Funds Management
Property Funds Management CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 12: Group Funds Management Portfolio
Group Funds Management Portfolio Portfolio Portfolio No. of No. of Gross WALE1 Occupancy WACR2 Value ($b) Size (m2) Properties Tenants Income ($m) (years) (%) (%) FY16 17.5 4.8 296 2,550 1,306 7.9 98.6 6.54 FY15 13.6 4.0 276 2,289 1,120 7.9 97.8 7.10 Diversification by equity source Asset type diver
Slide 13: FUM Growth
FUM Growth FUM growth driven by transaction activity and valuation uplift across all sectors • FUM has increased $3.9b, or 28.7% during FY16 to $17.5b • 15.9% CAGR1 in FUM since June 2010 FUM movement FUM2 by equity source 18.0 $17.5b $0.5b $17.5b $2.5b +28.7% 16.0 $1.1b +3.7% $3.0b ($0.7b) +8.1% +2
Slide 14: Property Transactions
Property Transactions • During the 12 months to 30 June 2016, $3.7b of transactions were completed including $3.0b of acquisitions and $0.7b of divestments Transactions closed during the full year to 30 June 2016 $m Office Industrial Retail TOTAL Acquisitions $946 $1,337 $719 $3,002 Divestments $367
Slide 15: Development Activity Enhances Fund Performance
Development Activity Enhances Fund Performance • Development opportunities undertaken to enhance both income yield and total returns for managed funds • In-house development skills are a core competency • Committed projects / development pipeline includes 46 office, industrial and retail projects •
Slide 16: Equity Inflows Across the Funds Platform
Equity Inflows Across the Funds Platform • Diversified equity sources • $1,467m in gross equity deployed1 ($1,099m net) during FY16 across all equity sources FY14 FY15 FY16 ($m) ($m) ($m) Wholesale Pooled Funds 651 653 606 Wholesale Partnerships 261 598 467 Listed Funds2 260 274 76 Direct Funds3 277
Slide 17: Financial Result
Financial Result CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 18: Profit and Loss
Profit and Loss • 26.2% growth in Operating Earnings to $124.7m $m FY16 FY15 Change % Property investment 78.5 62.1 26.4% • OEPS growth of 10.5% to 30.4cps and DPS growth of Property funds management 71.4 56.8 25.7% 11.2% to 26.9cps Corporate (25.2) (20.1) (25.4%) Operating earnings 124.7 98.8 26.2%
Slide 19: Segment Result
Segment Result • Modified segment reporting to reflect organisational $m FY16 FY15 Change % restructure and better align with peers, including also Property investments income 78.5 63.0 24.6% showing a proportionately consolidated profit and loss Interest and expenses (0.0) (0.9) 100% • Refer Append
Slide 20: Balance Sheet and Cashflow
Balance Sheet and Cashflow Balance Sheet $m 30 June 2016 30 June 2015 • Strong balance sheet maintained Cash 145 152 Property investments 1,098 944 Cash position of $145m and nil debt Other assets 108 104 $154m increase in Property Investments made up of $56m net investments ($157m investments a
Slide 21: Outlook and Guidance
Outlook and Guidance CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 22: Long WALE REIT Update
Long WALE REIT Update • Charter Hall has progressed preparations to list on the ASX a new real estate investment trust, Charter Hall Long WALE REIT – all internal vendor approvals have now been secured • Long WALE REIT will be a unique ASX listed REIT that owns a diversified portfolio of long WALE p
Slide 23: FY17 Outlook and Earnings Guidance
FY17 Outlook and Earnings Guidance We believe the property market landscape will continue to accommodate growth • Lower for longer low inflation low interest rate environment with record spread between discount rates and bond rates • Relative attractiveness of commercial property • Continued equity
Slide 24: Additional Information
Additional Information CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 25: Additional Information
Additional Information 1 Group Overview 2 Property Investments Portfolio 3 Financials 4 Capital Management and Funding CHARTER HALL GROUP | Full Year Results | 30 June 2016 25
Slide 26: Appendix – Group Overview
Appendix – Group Overview CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 27: Charter Hall Group Property Overview
Charter Hall Group Property Overview 2 74 Properties valued at $0.1b Properties valued at $3.4b Office 0 Office 9 Retail 1 Retail 45 Industrial 1 Industrial 20 Total m2 of assets 22 Total m2 of assets 846 NT Total employees 37 QLD 39 84 Properties valued at $2.7b Properties valued at $6.3b WA Office
Slide 28: Charter Hall Group Overview
Charter Hall Group Overview Property Funds Management Platform $17.5b FUM • Asset management • Investment management FUM $17.5b • Property management • Transaction services No. of properties 296 • Development management • Capital management Gross income $1.3b • Technical services Property Funds Mana
Slide 29: Charter Hall Managed Funds
Charter Hall Managed Funds FUM as at 30 June 2016 Office $8.1b Industrial $4.5b Retail $4.9b CHOT CPOF BSWF1 CLP CPIF LWHP RP2 LWIP Wholesale $2.3b $3.0b $0.6b $1.6b $2.0b $0.7b $0.1b $0.7b Equity CHOF 5 Mandates RP6 Mandates LWIP2 $83m $0.8b $0.3b $0.2b $0.1b DOF PFA Workzone DIFs/CDC DAT DAT2 $0.8
Slide 30: Office Sector Activity
Office Sector Activity 12 months to 30 June 2016 • Office FUM increased 19% to $8.1b • $1.3b of transactional activity (with $946m acquisitions and $367m divestments) • $525m acquisition of 1 Shelley Street, Sydney a prominently positioned prime-grade office building located directly adjacent to the
Slide 31: Industrial Sector Activity
Industrial Sector Activity 12 months to 30 June 2016 • Industrial FUM increased 61% to $4.5b • Completed $1.3b of acquisitions across 19 assets • $190m of divestments across 12 assets as part of strategy to enhance the quality of the portfolio • Completed 32 leasing deals totaling 402,000m2. Major l
Slide 32: Retail Sector Activity
Retail Sector Activity1 12 months to 30 June 2016 • Retail FUM increased 23% to $4.9b • Completed $719m of acquisitions and $183m of divestments • Continued focus on majors WALE with completion of 10 majors leasing deals • Completed 363 specialty leasing deals over 21,000m2 at 2.3% spreads • Occupan
Slide 33: Charter Hall Direct Activity
Charter Hall Direct Activity 12 months to 30 June 2016 • Direct Retail Investor FUM increased 32% to $2.5b • Raised over $318m of external equity • Completed over $500m of acquisitions • Launched two Direct Automotive Funds for a total value of $185m – Direct Automotive Trust (DAT) and Direct Automo
Slide 34: Charter Hall Direct Funds Network
Charter Hall Direct Funds Network • For the 12 months to 30 June 2016, Charter Hall Direct managed three of the top ten funds ranked by performance in The Property Council/IPD Australian Unlisted Core Retail Property Fund Index1 35% 30% 27% 26% 25% 21% 20% 19% 17% 16% 16% 15% 13% 14% 13% 13% 13% 13%
Slide 35: Appendix - Property Investment Portfolio
Appendix - Property Investment Portfolio CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 36: CHC Property Investment Portfolio
CHC Property Investment Portfolio As at 30 June 20161 Ownership Charter Hall Charter Hall WALE Market Discount FY16 Charter Hall Charter Hall EPU Stake Investment Investment Cap Rate Rate Average Investment Investment Growth 3 3 Income rental Yield FY16 Yield FY15 reviews (%) ($m) ($m) (years) (%) (
Slide 37: Property Investment Portfolio Net Returns
Property Investment Portfolio Net Returns • The Property Investment portfolio’s total property return over the five years to 30 June 2016 is 16.0% per annum, outperforming the MSCI/IPD Unlisted Wholesale Pooled Property Fund Index (NAV post fees) which returned 9.7% over the same period • The total
Slide 38: Charter Hall Prime Office Fund (CPOF)
Charter Hall Prime Office Fund (CPOF) Key events during FY16 Portfolio characteristics Key metrics 1 Gross property assets $3.0b • CPOF acquired 900 Ann Street, Fortitude Valley a fully pre-committed Total debt (look through) $0.8b development asset to Aurizon (12 year lease), scheduled for completi
Slide 39: Charter Hall Office Trust (CHOT)
Charter Hall Office Trust (CHOT) Key events during FY16 Portfolio characteristics Key metrics Gross property assets $2.3b • Divested CHOT’s Newcastle, Australia Place and Parramatta assets at $23m or 19% above Dec 15 valuation Total debt $1.1b • Investment returns – achieved NOI of $44.4m (or $3.3m)
Slide 40: Core Logistics Partnership (CLP)
Core Logistics Partnership (CLP) Key events during FY16 Portfolio characteristics Key metrics • Acquired four investments (Parkwest Estate $189m, Gepps Cross $46m, Gross property assets $1.6b Stockyards Estate $120m (50%) & Centurion Hazelmere $46.7m) and one Total debt $0.4b development site (Dryst
Slide 41: Charter Hall Prime Industrial Fund (CPIF)
Charter Hall Prime Industrial Fund (CPIF) Key events during FY16 Portfolio characteristics Key metrics • CPIF is one of the highest ranked unlisted wholesale property fund1 Gross property assets $2.0b (all sectors) over the 3 years to 30 June 2016 according to Mercer / IPD Total debt $0.2b Wholesale
Slide 42: Charter Hall Retail REIT (CQR)
Charter Hall Retail REIT (CQR) Key events during FY16 Portfolio characteristics Key metrics • Acquired a 47.5% interest in Charter Hall Retail Partnership No. 2 Trust, Gross property assets $2.5b which owns Bateau Bay Square. This was partially funded via a placement of Total look through debt (net
Slide 43: Long WALE Investment Portfolio (LWIP)
Long WALE Investment Portfolio (LWIP) Key events during FY16 Portfolio characteristics Key metrics Gross property assets $0.7b • $679m portfolio of 54 ALH leased hotels including 18 Dan Murphy’s Total debt $0.3b • Portfolio WALE of 18.3 years at June 2016 with CPI annual rental Gearing (balance shee
Slide 44: Appendix - Financials
Appendix - Financials CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 45: Key Financial Metrics
Key Financial Metrics Group FY16 FY15 Change Statutory profit after tax $215.2m $117.9m 82.5% Operating earnings $124.7m $98.8m 26.2% Operating earnings per security (OEPS) 30.4cps 27.5cps 10.5% Distribution per security (DPS) 26.9cps 24.2cps 11.2% Return on Equity1 (earnings) 10.8% 11.4% (0.6%) Bal
Slide 46: Reconciliation of Segment Result to Previous Disclosure – FY16
Reconciliation of Segment Result to Previous Disclosure – FY16 Following table reconciles from the previous segment disclosure and the changes made to arrive at the new segment disclosure Unallocated Security- 1) CIP profit after tax re-classified to Previous Restructuring Depreciation FY16 CIP 1 2
Slide 47: Reconciliation of Segment Result to Previous Disclosure – FY15
Reconciliation of Segment Result to Previous Disclosure – FY15 Following table reconciles from the previous segment disclosure and the changes made to arrive at the new segment disclosure Unallocated Security- 1) CIP profit after tax re-classified to Previous Restructuring Depreciation FY15 CIP 1 2
Slide 48: Operating Expenses and MER
Operating Expenses and MER Following table shows total expenses split by segment, using the revised segment disclosure adopted for FY16 and the previous disclosure split FY16 Previous FY16 FY15 Previous FY15 Disclosure Segments Disclosure Segments FUM $b 17.5 17.5 13.6 13.6 $m PI expenses 1.1 1.1 1.
Slide 49: Segment Earnings – Proportional Basis
Segment Earnings – Proportional Basis Property Property Funds Corporate Total Investments FY16 $m Management • On a look through basis to fund Property rental income 146.7 - - 146.7 investments, CHC generates 81.4% of Property expenses (28.8) - - (28.8) EBITDA from real estate ownership and Manageme
Slide 50: Property Funds Management Operating Earnings
Property Funds Management Operating Earnings $m FY16 FY15 Change Change % Revenue Fund management fees 62.6 49.9 12.7 25.5% Transaction and performance fees 30.7 20.5 10.2 49.8% Investment management 93.3 70.4 22.9 32.5% Property management fees 16.0 15.0 1.0 6.7% Development management fees 8.2 6.8
Slide 51: Appendix – Capital Management and Funding
Appendix – Capital Management and Funding CHARTER HALL GROUP | Full Year Results | 30 June 2016
Slide 52: Debt and Capital Management
Debt and Capital Management • Substantial funding capacity available across the funds Key Debt Metrics platform Managed Funds Platform Jun 16 Jun 15 Group facility limit ($m) 7,527 6,336 $7.5b of debt facilities across 29 funds and the Group Group undrawn debt ($m) 1,667 1,667 $1.7b available un
Slide 53: Debt Maturity Profile
Debt Maturity Profile • Weighted average maturity at 30 June 2016 is 4.0 years up from 3.5 at 30 June 2015 • CHC Look through weighted average maturity at 30 June 2016 is 3.8 years Group CHC - Look through 2,424 2,500 350 322 1,978 300 2,000 273 Debt Facilities ($m) 1,656 250 Debt Facilities ($m) 1,
Slide 54: CHC Property Investments Hedge Maturity Profile
CHC Property Investments Hedge Maturity Profile • The hedge portfolio has a duration of 3.9 years • The passing weighted average hedge rate is 3.20% • The passing weighted average cost of debt is 4.55% 600 3.50% Weighted Average Hedge Rate (%) 500 3.00% 2.50% Hedge ($m) 400 2.00% 300 70% 66% 1.50% 6
Slide 55: Fund Key
Fund Key Listed Entities Direct 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 series BSWF Brisbane Square Whol
Slide 56: About Charter Hall Group
About Charter Hall Group Charter Hall Group (ASX:CHC) is one of Australia’s leading fully integrated property groups, with over 25 years’ experience managing high quality property on behalf of institutional, wholesale and retail clients. As at 30 June 2016 Charter Hall had $17.5 billion of funds und
Slide 57: Contact Us
Contact Us David Harrison Paul Altschwager Managing Director & Group CEO Chief Financial Officer Charter Hall Group Charter Hall Group T: +61 2 8651 9142 T: +61 2 8651 9242 david.harrison@charterhall.com.au paul.altschwager@charterhall.com.au Richard Stacker Global Head of Investor Relations Charter
Slide 58: www.charterhall.com.au
Sydney Head Office Level 20, No.1 Martin Place Sydney, NSW, 2000 T: +61 2 8651 9000 Melbourne Level 12, 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 Level 5, St Georges Square 225 St Georges Terrac