Charter Hall Group · ASX:CHC
Charter Hall — H1 FY2013 Earnings Presentation
35 slides from Charter Hall's earnings presentation, Feb 26, 2013
Slide 1: Charter Hall Group Half Year Results
26 February 2013 Charter Hall Group Half Year Results 6 months to 31 December 2012
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Charter Hall Group (being Charter Hall Limited (ABN 57 113 531 150) and Charter Hall Funds Management Limited (ABN 31 082 991 786) (AFSL 262861) as the responsible entity for Charter Hall Property Trust (ARSN 113 339 147)) (the “Group”). It is a pres
Slide 3: Presenters and agenda
David Harrison David Southon Paul Altschwager Joint Managing Joint Managing Chief Financial Director Director Officer 1 Results summary and Group overview 2 Operational performance 3 Financial performance 4 Strategy, outlook and guidance 5 Additional Information 2
Slide 4: Results summary and Group overview
01 Results summary and Group overview
Slide 5: Key achievements
Results Summary Key achievements Increase in operating earnings to 11.76cps, up 4.6% on pcp1 Secured $570m of new equity commitments during 1HY13 Secured $1.3bn of additional property assets delivering 12% growth in FUM to $10.0bn today Charter Hall Group realised $41m of equity co-investmen
Slide 6: Half year summary
Results Summary Half year summary Increase in operating earnings to 11.76cps, up 4.6% on pcp1 – Statutory profit after tax of $29.9m, up 52.7% on pcp – Operating earnings of $35.1m, up 5.7% on pcp1 – Distribution of 9.8cps, up 7.7% on pcp – NTA per security is $2.12, down 1c from 30 June 2012 12
Slide 7: Solid securityholder returns
Results Summary Solid securityholder returns Total securityholder return 1HY13: 48.4% Distribution per security growth Solid performance over 1 and 3 years to 31 January 20131 9.80 9.10 9.10 8.50 8.00 80.0% 70.3% 6.15 6.40 60.0% 1HY10 2HY10 1HY11 2HY11 1HY12 2HY12 1HY13 40.0% 31.7% 20.1% 18.2% Earni
Slide 8: Our strategy
Group Overview Our strategy Our strategy is to access, deploy and manage equity that is invested in core Australian real estate sectors to create value and provide growing income and capital returns for investors. ACCESS Access to multiple equity sources including listed, pooled wholesale, partnersh
Slide 9: Investment strategy
Group Overview Investment strategy Our investment strategy, focusing on core property asset sectors, will endure macroeconomic cycles and generate growing income and capital returns, consistent with the investment appetite of investors in the real estate asset class. OFFICE RETAIL INDUSTRIAL Artist‟
Slide 10: Office
Activity since 30 June 2012 Office Equity raising completed for $55m retail investor syndicate (CHIF8) 144 Stirling Street Trust, less than 3 months after launch CHOT substantially de-risked with Citigroup, QR National, Government and other new lease / renewals totalling over 40,000m2 CPOF acq
Slide 11: Retail
Activity since 30 June 2012 Retail Established a new unlisted wholesale partnership with a global institutional investor to acquire Bateau Bay Square1 for $164m Established a new wholesale partnership with Telstra Super which acquired a $207m Bunnings portfolio located across Australia Bateau Ba
Slide 12: Industrial
Activity since 30 June 2012 Industrial Direct Industrial Fund 1 (DIF1) equity raising closed oversubscribed at $120m. Deployed capital to secure a $210m portfolio with a 12 year WALE DIF2 launched with acquisition of $55m of seed assets, targeting a total portfolio value of $220m CPIF ranks as
Slide 13: Australian focused property platform
Group Overview Australian focused property platform Today, Charter Hall manages a $10bn property portfolio NO. OF PROPERTIES NO. OF TENANTS LETTABLE AREA TOTAL ASSETS GROSS INCOME (SQM) ($M) ($M pa) 195 2,975 2.5m 9,9751 861 Diversification by equity source Diversification by asset type February 201
Slide 14: Expertise across risk/return spectrum
Group Overview Expertise across risk/return spectrum A significant manager of wholesale, listed and retail investor clients‟ capital Target Return Risk vs. Target Return Profile 20% + $0.4bn Development Office Retail 15 – 17% Wholesale Wholesale Industrial Partnerships Pooled funds Retail Investor
Slide 15: Operational performance
02 Operational performance
Slide 16: Quality of earnings
Operational Performance Quality of earnings EBITDA of $35.2m1, up 2.4% from $34.3m2 89% of EBITDA generated from 60% of EBITDA from annuity style income property investments 20.0 Direct property $18.3m investment 18.0 $16.7m Property Funds 8% 16.0 Management $14.3m $14.2m 14.0 40% 12.0 10.0 1H12 8
Slide 17: Property Investment portfolio
Property Investment Property Investment portfolio Charter Hall‟s property investments total $561m1 Delivered HY13 EBITDA of $21.0m1, 60% of the total EBITDA Annualised property co-investment earnings yield of 7.4%, up from 6.7% pcp WALE of 6.1 years and 97.8% occupancy Property Investments b
Slide 18: Property Investment portfolio
Property Investment Property Investment portfolio Charter Hall securityholders have benefited from improved fund performance and active management of the investment portfolio Increase in property co-investment earnings yield to 7.4%, up from 6.7% on pcp OWNERSHIP CHARTER HALL CHARTER HALL PROPOR
Slide 19: Property Investment portfolio metrics
Property Investment Property Investment portfolio metrics Lease expiry profile1 (31 December 2012) Top 10 tenants (31 December 2012) TENANT % PORTFOLIO LEASED (BY GROSS INCOME) Australian Governments 9.9 Wesfarmers 9.0 Woolworths 6.0 47.7% Telstra 6.0 Macquarie Group 3.1 Westpac Group 2.7 BHP Billit
Slide 20: Australian FUM platform growth
Property Funds Management Australian FUM platform growth Group FUM $10.0bn at February 2013 Australian property FUM has increased by $1.1bn in 6 months Offshore property FUM is $0.4bn, in line with June 2012 Total Group FUM Australian FUM by Equity Source 12.0 12.0 $10.7bn 10.0 $10.2bn $10.0bn
Slide 21: Secured inflows from a range of equity sources
Property Funds Management Secured inflows from a range of equity sources Secured $570m in new equity during 1HY13 from a range of equity sources across the funds platform A further $271m of equity and equity commitments secured since 1 January 2013 1HY12 2HY12 1HY13 ($M) ($M) ($M) Wholesale Pool
Slide 22: Property funds management
Property Funds Management Property funds management Half year property funds management EBITDA of $14.2m Total revenue equates to 86bps of FUM3 (62bps from annuity and 24bps from non-annuity sources) 25.0 Annuity style revenue $M 1HY13 1HY12 5 Revenue 40.6 39.0 $19.6m $19.2m Net Operating Expens
Slide 23: Capital recycling strategy
Capital Management Capital recycling strategy EQUITY RECYCLED ($M) FY12 2 1HY13 Total We recycle our capital to seed additional high value opportunities for CHC and our clients (12mths) (6mths) – Over the past 18 months, $109m has been realised and $71m Equity realised redeployed Mentone Showrooms
Slide 24: Financial performance
03 Financial performance
Slide 25: Key financial metrics
Financial Performance Key financial metrics GROUP 1HY13 1HY12 CHANGE Statutory profit after tax $29.9m $19.6m 52.7% Operating earnings (before specific items)2 $35.1m $33.2m 5.7% Operating earnings $35.1m $30.9m 13.4% Operating earnings per security (before specific items) (EPS) 11.76cps 11.24cps 4.
Slide 26: Operating earnings
Financial Performance Operating earnings Operating earnings growth of 5.7%2 to $35.1m $M 1HY13 1HY12 GROWTH % – Direct property investment income is reducing as the Direct property investment1 2.7 3.4 (19.5%) strategy to selldown DRF portfolio is progressed. Investment in property funds 18.3 16.7
Slide 27: Property funds management earnings
Financial Performance Property funds management earnings $M GROWTH 1HY13 1HY12 Headline property funds management % EBITDA flat. Annuity Style Revenue1 29.3 29.4 (0.2%) Development and Project Management 3.4 3.9 (13.3%) – When adjusted for 1HY13 restructuring Transaction Services 5.2 3.1 66.1% cos
Slide 28: Reconciliation of operating earnings to statutory profit
Financial Performance Reconciliation of operating earnings to statutory profit $3.5m ($1.4m) ($4.8m) ($0.8m) ($1.7m) $35.1m $29.9m 1 2 Operating earnings MTM of financial Fair value Non-cash security Amortisation Other Statutory profit after derivatives adjustments on based costs tax investments and
Slide 29: Balance sheet
Financial Performance Balance sheet $M 31 DEC 12 30 JUN 12 Cash 25.5 39.3 Property investments 615.1 614.0 2.18 Development investments 60.4 71.2 2.16 0.9c (1.7c) 1.9c Other tangible assets 53.1 54.6 (1.5c) 2.14 $2.12 $2.13 Intangibles 100.0 98.7 2.12 Total assets 854.1 877.8 2.10 Borrowings 37.3 51
Slide 30: Cashflow reconciliation
Financial Performance Cashflow reconciliation ($3.4m) ($0.3m) ($1.1m) $0.8m ($2.8m) $35.1m $31.2m $29.8m $28.4m 1 Operating Earnings Change in Change in payables Earnings vs Other Operating Cashflow CHOT September Operating Cashflow Distribution 2 receivables distribution received quarter distributi
Slide 31: Debt management
Financial Performance Debt management Across fund platform, $0.6bn of debt refinanced in 1HY13 - Weighted average maturity increased to 3.2 years, from 3.1 years at 30 June 2012 - Weighted average cost of debt at 6.2%, down from 6.9% at 31 December 2011 $3.7bn of drawn debt across platform with
Slide 32: Strategy, outlook and guidance
04 Strategy, outlook and guidance
Slide 33: FY13 Progress on strategic objectives
Strategy FY13 Progress on strategic objectives Strategy FY 13 Objectives Progress on FY13 Objectives • Continue to achieve the investment • 5 new partnerships and funds added objectives of our investors. • Improved performance across fund platform • Enhance return on equity • ROE up from 9.1% to 9.6
Slide 34: FY13 earnings guidance
Outlook FY13 earnings guidance Barring unexpected events, we forecast: FY13 operating earnings to be in the range of 22.5 to 23.5 cps, representing 5% to 9% growth over FY12 33
Slide 35: Further information
Further information David Southon David Harrison Joint Managing Director Joint Managing Director +61 2 8908 4025 +61 2 8908 4033 david.southon@charterhall.com.au david.harrison@charterhall.com.au Nick Kelly Paul Altschwager Head of Investor Relations Chief Financial Officer +61 2 8908 4028 +61 2 829