Slide 1: Managing Charter Hall Office REIT
For personal use only Managing Charter Hall Office REIT A presentation by Charter Hall Group 16 June 2011
Slide 2: Executive summary
Executive summary Charter Hall Group (ASX:CHC) (“CHC”) has outperformed as manager of the Charter Hall Office REIT (ASX:CQO) (“CQO”) For personal use only – Prior to hedge funds acquiring units, CQO outperformed peers and the S&P/ASX A-REIT 200 Index under CHC management – CHC has undertaken a num
Slide 3: Contents
Contents For personal use only 1. Charter Hall as manager of CQO 2. CQO Australia strategy 3. Risks associated with the removal of Charter Hall 4. Australian and US office markets 5. Charter Hall credentials Appendices: Appendix A – Charter Hall governance and resources Appendix B – Charter Hall off
Slide 4: Charter Hall as manager of CQO
For personal use only 01 Charter Hall as manager of CQO
Slide 5: Charter Hall has outperformed as manager of CQO
Charter Hall has outperformed as manager of CQO For personal use only CHC management initiatives have delivered value to CQO outperformed the A-REIT index under management by CHC (prior CQO unitholders to hedge funds acquiring an interest in CQO)1 CHC has been an active manager of CQO Performanc
Slide 6: CQO portfolio has achieved higher returns under Charter Hall management
CQO portfolio has achieved higher returns under Charter Hall management For personal use only Key global CQO achievements under CHC management Australian portfolio performance has improved with include: CHC management Leases agreed over 220,000sqm3 of the portfolio: Pre CHC1 Post CHC2 – Leases e
Slide 7: Charter Hall has undertaken active management of CQO's Australian portfolio
Charter Hall has undertaken active management of CQO’s Australian portfolio For personal use only CHC has a fully integrated real estate platform enabling CQO Australian vacancy is much lower than the market1 in-house value creation across the asset life cycle – Asset and property management syste
Slide 8: Divestment of US portfolio
Divestment of US portfolio For personal use only In line with CQO’s stated strategy to reweight to Australia, CQO has commenced the final phase to sell its US portfolio CQO engaged Bank of America Merrill Lynch to run an independent sale process to sell the US portfolio – 28 expressions of inter
Slide 9: CQO Australia Strategy
For personal use only 02 CQO Australia Strategy
Slide 10: Overview
Overview For personal use only CQO (post sale of the US) will comprise a high quality portfolio of 19 assets with a value of $1.9bn – Predominantly Premium / A-Grade (92%) – CQO is focused on key growth office markets (Sydney and Melbourne) with strong demand and limited supply Conservative capi
Slide 11: CQO Australia strategy
CQO Australia strategy For personal use only CQO’s strategy is focused on maximising attractiveness of CQO to investors to capture income/capital growth from the portfolio that will result in further closing the gap between NTA and unit price, underpinning strong investor total share return Gene
Slide 12: CQO is an enhanced vehicle post sale of the US
CQO is an enhanced vehicle post sale of the US Reduced gearing1 Higher occupancy1 For personal use only 95% 43% (13%) 8% c.30% 87% Pre-sale of the US Post-sale of the US Pre-sale of the US Post-sale of the US Portfolio is focused on key Australian markets1 Enhanced tenant retention1 USA ACT 7% 89% W
Slide 13: Australian portfolio statistics
Australian portfolio statistics Top 10 tenants (by gross income)1 Asset diversification (by gross value)1 For personal use only Australian Government 21% Macquarie Group Ltd 9% Telstra Corporation Ltd 8% Citigroup 7% Allianz 4% Gilbert & Tobin 3% Wilson Parking 3% Deacons 2% Credit Union 2% Australi
Slide 14: Supportive capital structure
Supportive capital structure For personal use only CQO (post sale of US portfolio) will have gearing of c30% – Recommend gearing policy (25-35%) – Recommend target payout range (80-90%) Weighted average debt maturity of three years Management has agreed terms for a three year $290m back stop f
Slide 15: Risks associated with the removal of Charter Hall
For personal use only 03 Risks associated with the removal of Charter Hall
Slide 16: Removal of Charter Hall as manager or winding up
Removal of Charter Hall as manager or winding up For personal use only Breach of Change of RE of CQO will trigger a change in control in debt documentation causing an “event of default” debt Upon an “event of default”, Banks have the ability to prevent the payment of distributions / return of ca
Slide 17: Questions that CQO unitholders should be asking activist hedge funds
Questions that CQO unitholders should be asking “activist hedge funds” and their advisers For personal use only Who is your proposed replacement responsible entity (“RE”) for CQO? What is their relevant experience? Who are the directors of the replacement RE and their skills / experience? How
Slide 18: Australian and US Office Market
For personal use only 04 Australian and US Office Market
Slide 19: Australia: office is at a cyclical trough
Australia: office is at a cyclical trough with fundamentals ensuring high risk adjusted returns For personal use only Australian office markets are in recovery from a cyclical Vacancy rates have fallen across all CBD office markets, trough post the GFC particularly H2 2010 Strong demand drivers
Slide 20: US: Significant demand for office assets, fundamental issues persist
US: Significant demand for office assets however, fundamental issues persist in the market For personal use only Sales of office property in the US is currently in an US office rental growth is soft2 upswing 10% – Driven by capital focused on high quality assets and availability of debt at a low c
Slide 21: Charter Hall credentials
For personal use only 05 Charter Hall credentials
Slide 22: Charter Hall Group
Charter Hall Group For personal use only CHC is the largest independent specialist Australian real estate fund manager with greater than $10bn of FUM Diversified property group with a vertically integrated business model providing a holistic solution to property outcomes Over 270 staff located
Slide 23: Overview - Skills across all sectors
Overview - Skills across all sectors For personal use only Charter Hall is the only Australian real estate fund manager with skills across all core sectors and asset types with ~100 asset / property management staff in Australia DIVERSIFIED VEHICLES OPPORTUNISTIC (Development) Charter Hall Opportu
Slide 24: Charter Hall – Funds Management Platform
Charter Hall – Funds Management Platform For personal use only CHC manages two listed funds, twelve retail unlisted funds and six wholesale unlisted funds across a diverse range of property sectors CQO is CHC’s largest fund, with the highest co-investment, providing significant alignment CHC c
Slide 25: Office is a core capability
Office is a core capability For personal use only Office is the core competency of CHC CHC is the leading manager of office assets1 – A$6.7bn office AUM across Australia and the US – 74 office assets globally – Over 1.5m sqm of office properties owned or managed $6.7bn $6.3bn $5.7bn – Manages circ
Slide 26: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Charter Hall Group (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). It is a pre
Slide 27: Appendix A - Charter Hall Governance and Resources
For personal use only Appendix A - Charter Hall Governance and Resources
Slide 28: Charter Hall Governance
Charter Hall Governance For personal use only Charter Hall operates under a strict corporate governance and risk management framework Charter Hall Office Management Limited has adopted additional protocols (in additional to existing protocols) recognising potential conflicts that may arise in re
Slide 29: Independent Director Committee of CQO
Independent Director Committee of CQO For personal use only Roger Davis Andrew Love Jim Broadbent Independent Chairman Independent Director Independent Director Member of Audit, Risk and Compliance Committee. A Andrew has been involved with the reconstruction and Member of Audit, Risk and Compliance
Slide 30: Charter Hall Resources: Joint Managing Directors
Charter Hall Resources Charter Hall Joint Managing Directors For personal use only David Harrison David Southon Joint Managing Director Joint Managing Director As Charter Hall Group’s Joint Managing Director, David Harrison is jointly responsible for all David is a co-founder of Charter Hall Group.
Slide 31: Charter Hall Resources: CQO Management Team
Charter Hall Resources CQO Management Team For personal use only Adrian Taylor Jill Rikard-Bell Craig Newman Chief Executive Officer Chief Operating Officer Head of Asset Management Prior to joining Charter Hall Adrian was an executive Jill has 21 years real estate experience and is Chief Craig is t
Slide 32: Appendix B - Charter Hall office capability
For personal use only Appendix B - Charter Hall office capability
Slide 33: Case Study – Collins Street, Melbourne
Charter Hall office capability Case Study – 171 Collins Street, Melbourne For personal use only 31,000m2 Premium Grade CBD office asset with a targeted 6 star green star as built environmental rating CHC development manager for CQO Sold 50% interest to CBUS Property in December 10 BHP Billit
Slide 34: Case Study – Brisbane Square
Charter Hall office capability Case Study – Brisbane Square For personal use only Off-market acquisition of a new core office asset (57,000sqm) Fully leased to government institution (54%) and domestic bank (45%) reflecting an 11 year WALE Passing income 40% below market rent and purchase pric
Slide 35: Select Charter Hall Group office asset development projects
Charter Hall office capability Select Charter Hall Group office asset development projects For personal use only 275 George Street, Brisbane Qld 130 Stirling Street, Perth WA More than 40,000m² of A-Grade office and retail Comprises 11,900m² of A-Grade office space space over 30 levels, this ecologi