Charter Hall Group · ASX:CHC
Charter Hall — FY2010 Earnings Presentation
53 slides from Charter Hall's earnings presentation, Aug 24, 2010
Slide 1: Charter Hall Group 2010 Annual Results
Charter Hall Group For personal use only 2010 Annual Results 24 August 2010
Slide 2: Contents
Contents For personal use only 1 FY10 summary David Harrison Joint Managing Director 2 Group strategy and managed funds overview 3 Charter Hall Property Trust (CHPT) David Southon 4 Development, leasing and property management Joint Managing Director 5 Financials and capital management 6 Outlook and
Slide 3: FY10 summary
Charter Hall Group For personal use only 01 FY10 summary
Slide 4: FY10 Highlights
FY10 Highlights For personal use only Expansion of funds management platform Acquired majority of Macquarie core real estate platform Increase in FUM from $3.4bn to $10.2bn Expanded into listed funds management Substantially increased exposure to unlisted retail investor market Positioned
Slide 5: FY10 Highlights
FY10 Highlights For personal use only Delivered results at underlying property level Investment property – Leased 254,000sqm of space across fund products – Maintained well above industry average WALEs across funds Development – Realised two office developments in CHOF4 at or above hurdle return
Slide 6: FY10 Summary
FY10 Summary For personal use only FY10 FY09 Operating Earnings1 $34.9m $34.8m Operating EPS 4.11cps 7.61cps DPS 3.20cps 4.96cps NPAT (AIFRS) $0.2m ($82.2m) At 30 June 10 At 30 June 09 FUM $10.2bn $3.4bn Total Group Assets $988m $524m Total Group Net Assets2 $773m $494m NTA (per unit) $0.56 $0.71 Ge
Slide 7: Group Operating Revenue
Group Operating Revenue For personal use only FY10 Operating Revenue of $74.2m1 $32.4m FY09 Other corporate Base FY10 mgmt revenue 28% $26.4m fees 29% $21.7m $15.8m Property Income $11.1m $10.6m 43% $4.5m $2.0m $1.5m $2.0m $1.1m $1.1m $0.9m $1.1m Property Income Base Management Other Property Perf
Slide 8: Group strategy and managed funds overview
Charter Hall Group For personal use only 02 Group strategy and managed funds overview
Slide 9: Group Business Model
Group Business Model Charter Hall is a specialist property fund manager with a vertically integrated business model For personal use only 20 funds diversified across the risk/return spectrum and equity sources Charter Hall Group (ASX:CHC) Stapled Security Charter Hall Limited (CHL) Charter Hall
Slide 10: Group Structure
Group Structure For personal use only Integration of the Macquarie Real Estate funds management platform is progressing well Physical move 9 Staff moved in March 2010 Systems integration 9 Majority of systems now integrated Business division restructure 9 Reduced number of direct reports and estab
Slide 11: Group Strategy
Group Strategy For personal use only Charter Hall aims to be Australia’s leading specialist property fund manager – Utilising a vertically integrated business model – Diversified across the risk/reward spectrum within mainstream asset sectors Charter Hall aims to maximise long term return on equ
Slide 12: Listed REITs Strategy: Charter Hall Office REIT
Listed REITs Strategy Charter Hall Office REIT (ASX:CQO) For personal use only Fund CQO Achieved over last 12 months Total Assets1 $4,463m 2 Exiting non-core markets – Australian NTA exposure up from 47% to 64% Net Assets $2,068m Strengthened balance sheet (refinancings, simplified derivatives,
Slide 13: Listed REITs Strategy: Charter Hall Retail REIT
Listed REITs Strategy Charter Hall Retail REIT (ASX:CQR) For personal use only Fund CQR Achieved over last 12 months Total Assets1 $2,126m Completed A$1.6bn of US asset sales and eliminated A$1.4bn of US CMBS debt Net Assets $1,110m Re-invested offshore capital in Australia with four acquisition
Slide 14: Wholesale Investment Fund Strategy
Wholesale Investment Fund Strategy Core Plus Office Fund (CPOF) and Core Plus Industrial Fund (CPIF) For personal use only Achieved over last 12 months Fund CPOF CPIF 3rd Party CPOF Mandates – Balance sheet strengthened Assets2 $1,163m $364m1 $230m – Leased 21,760sqm of space (12% of income) Debt
Slide 15: Wholesale Opportunistic Fund Strategy
Wholesale Opportunistic Fund Strategy Charter Hall Opportunistic Funds 4 and 5 (CHOF4 & CHOF5) For personal use only Achieved over last 12 months Fund CHOF4 CHOF5 Successfully realised projects and returned equity and profits to investors Total equity committed $165m $300m – 50% interest in 275 Ge
Slide 16: Charter Hall Direct Strategy
Charter Hall Direct Strategy Diversified, sector specific and single asset funds for retail investors For personal use only Achieved over last 12 months Key Funds CHDPF DPF CHUF Fund raising initiatives: – Macquarie Martin Place Trust (MMPT) raising closed over-subscribed Assets2 $500m $179m1 $147
Slide 17: Superannuation Equity Flows
Superannuation Equity Flows For personal use only Currently $1.26 trillion superannuation FUM – Forecast to grow to a 2020 balance of between $2.5 trillion to $3.0 trillion $3.0 trillion $3,000bn (10% growth pa) SMSFs $2,500bn Retail $2.5 trillion Public sector (7% growth pa) $2,000bn Industry Cor
Slide 18: Superannuation Equity Flows
Superannuation Equity Flows Charter Hall well positioned For personal use only Net contributions currently stable at $60bn+ per year Allocation to property currently 11%1 – Reflects $7bn+ per year potential inflows to property fund managers (before re-investment of income) – Charter Hall’s diver
Slide 19: Charter Hall Property Trust (CHPT)
Charter Hall Group For personal use only 03 Charter Hall Property Trust (CHPT)
Slide 20: CHPT Co-investments
CHPT Co-investments For personal use only Ownership CHPT Market cap rate Discount rate Minimum rental investment reviews (%) ($m) (%) (%) (%) Listed Funds Charter Hall Office REIT (CQO)1 7.5% 155.1 7.8% 9.3% 3.3% Charter Hall Retail REIT (CQR)1 7.4% 82.3 8.1% 9.3% 4.0%2 Wholesale Investment Funds Co
Slide 21: Capitalisation Rate Movements
Capitalisation Rate Movements For personal use only Peak to trough expansion in cap-rates across selected managed funds 8.50% CPRF/DRF CPIF DPF 8.00% CQR CPOF CQO 7.50% Fund Dec 07 Jun 10 Change CPRF/ DRF 7.00% 8.35% +1.35% 7.00% CPIF 6.91% 8.34% +1.43% DPF 6.90% 8.17% +1.27% CQR 6.58% 8.07% +1.50
Slide 22: CHPT Look Through Tenant Profile
CHPT Look Through Tenant Profile For personal use only WALE (years) Top 10 tenants (30 June 2010) CPOF 6.1 Tenant % Portfolio leased (by income) CPIF 9.9 Wesfarmers 8.9% CPRF 7.8 Woolworths Ltd 5.7% Telstra Corporation 5.0% DPF 7.4 Australian Governments 4.8% CHUF 8.0 Westpac Group 3.4% JPMorgan Cha
Slide 23: CHPT Look Through Lease Expiry Profile
CHPT Look Through Lease Expiry Profile For personal use only 62.9% 5.7% 6.7% 8.6% 8.2% 7.8% VACANT FY11 FY12 FY13 FY14 FY15+ NOTES: 1. Shows CHPT’s position based on the expiry profile of individual funds and CHPT’s investment exposure in each fund (weighted on a passing income basis) 23
Slide 24: CHPT Look Through Assets
CHPT Look Through Assets For personal use only Diversification by investment Sector diversity Retail 36% CHDPF 2% CPOF 19% CQR 14% Office 50% Industrial CPIF 10% 14% CQO 26% Geographic diversity Europe 4% Asia 1% CPRF 18% US 16% CHUF 7% DPF 4% New Zealand 2% Australia 77% 24
Slide 25: Development, leasing and property management
Charter Hall Group For personal use only 04 Development, leasing and property management
Slide 26: Development
Development Development Services For personal use only Development services FY10 contribution of $4.5m – Sourced from projects completed in FY10 ($400m) and currently active projects Development book of $2.3bn across range of managed funds – Current book value of $0.6bn – Completing over the nex
Slide 27: Development: CIP (50% owned)
Development CIP (50% owned) For personal use only National industrial development business CIP P&L (100%) FY10 FY09 ($m) ($m) – Strong relationships with many blue-chip clients including Fosters, Coles, Gross profit 10.8 15.1 and Toll Corporate overhead (6.4) (9.0) – Over 600,000sqm of industrial
Slide 28: Leasing Services
Leasing Services For personal use only Charter Hall provides leasing services across its managed funds $0.5m of revenue in FY10, expect stronger contribution in FY11 Group’s internal leasing expertise provides real value for development and repositioning of projects Top five tenants by area wi
Slide 29: Property Management Services
Property Management Services For personal use only Substantial property management business acquired as part of Macquarie platform transaction – Sydney head office with three satellite offices throughout Australia – Providing property management services across most Australian portfolios. – In-hou
Slide 30: Financials and capital management
Charter Hall Group For personal use only 05 Financials and capital management
Slide 31: Income Statement
Income Statement For personal use only FY10 FY09 $m $m Direct net property income 14.1 2.0 Indirect property income 18.1 24.4 Total CHPT income 32.2 26.4 Development investment income1 1.1 1.5 Fund management and other corporate income 40.9 30.0 Total CHL income 42.0 31.5 Total income 74.2 57.9 Expe
Slide 32: Operating Earnings Bridge
Operating Earnings Bridge For personal use only 7.61cps (2.10) (0.13) (1.59) +0.31 4.11cps FY09 EPS June 2009 Equity DRP Drop in operational Platform acquisition FY10 EPS Raising earnings 32
Slide 33: Operating Earnings Reconciliation
Operating Earnings Reconciliation For personal use only FY10 ($15.7m) +$49.2m ($15.3m) ($53.0m) 4.11cps 3.20cps +$34.9m +$29.8m +$0.2m AIFRS Profit FV Adjustments CPRF Other Gain/loss on sale Operating Earnings Distribution Consolidation or purchase Impairment NOTES: 1. Other includes business combi
Slide 34: Balance Sheet
Balance Sheet For personal use only 30 June 2010 30 June 2010 30 June 2010 $m CHC excl CPRF 30 June 20091 CPRF CHC consolidated1 Cash 26.8 1.6 28.4 1.9 Total Tangible assets 616.2 252.8 869.0 523.5 Total Assets 735.5 252.8 988.3 523.5 Borrowings 0.0 91.2 91.2 14.2 Total liabilities 68.6 96.6 165.2 2
Slide 35: Capital Management
Capital Management Managed Funds1 For personal use only Fund CHC CPOF CPRF CPIF CQO CQR CHDPF CHUF DPF Asset values ($m)2 960 1,163 251 406 3,333 1,945 500 152 153 Net debt drawn ($m)2 - 505 90 165 1,116 746 219 N/A 83 Duration (years)3 - 2.1 1.0 1.4 2.7 2.8 0.4 N/A 1.6 Loan to value ratio Balance s
Slide 36: Capital Management: Debt expiry profile
Capital Management Managed Funds For personal use only Debt expiry profile by fund based on drawn debt – No maturities until 2H FY11 $2,000m $1,800m Opportunistic (Opp) Wholesale Investment (WI) $1,600m CQR Direct Investor Funds (DIF) CQO CQR $1,400m $1,200m $1,000m CQR CQO CQR $800m CQR CQO $600m
Slide 37: Outlook and guidance
Charter Hall Group For personal use only 06 Outlook and guidance
Slide 38: Outlook and guidance
Outlook and guidance For personal use only Direct market showing signs of recovery – In general capitalisation rates stabilised and now compressing – Improved capacity and pricing in debt markets will provide further stimulus to the property cycle recovery The Group has formulated clear strategi
Slide 39: Appendix
Charter Hall Group For personal use only 07 Appendix
Slide 40: Appendix A – CHPT Co-Investments
Appendix A – CHPT Co-Investments For personal use only 30 JUNE 10 MOVEMENT 30 JUNE 2009 CHPT Fair Value Acquisitions/ CHPT CHPT stake investment Movement (Sales) CHPT stake investment (%) ($m) ($m) ($m) (%) ($m) CPOF 17% 112.6 (9.4) - 23% 122.0 CPIF 25% 55.8 (6.2) - 25% 62.0 CPRF 66% 103.3 (37.7) 1.
Slide 41: Appendix B – Earnings Reconciliation
Appendix B – Earnings Reconciliation For personal use only FY10 FY09 ($m) ($m) NPAT (AIFRS) excludes non-controlling interest 0.2 (82.2) Fair value adjustments 53.0 (115.3) CPRF consolidation impairment 15.3 - Gain/loss on sale or purchase (49.2) (1.3) Other 15.7 3.1 Operating Earnings 34.9 34.8 41
Slide 42: Appendix C - Cashflow Reconciliation
Appendix C - Cashflow Reconciliation For personal use only FY10 $1.4m ($1.0m) $3.5m $38.8m $34.9m Operating Earnings Other Change in trade debtors Change in trade creditors Operating Cashflow NOTE: Other includes: Depreciation, non cash equity accounted profit, and CPRF’s non-controlling interest 42
Slide 43: Appendix D – AUM
Appendix D – AUM Reconciliation of FUM change over FY10 For personal use only +$0.6bn ($0.9bn) +$7.2bn ($0.1bn) +$10.2bn +$3.4bn FY09 Macquarie Platform Additions Sales Valuation Changes FY10 NOTE: FY09 balance reflects FUM as reported in the FY09 Result Presentation (24 August 2009) 43
Slide 44: Appendix D - AUM
Appendix D - AUM For personal use only Assets under management (FUM) of $10.2bn across 20 funds Charter Hall FUM $10.2bn Wholesale Investor Funds Retail Investor Funds Listed Funds $2.51bn $1.55bn $6.16bn Opportunistic Core Plus $0.71bn $1.80bn CHDPF DPF CHUF $0.15bn $0.15bn $0.50bn CHOF4 CHOF5 CP
Slide 45: Appendix E – Unlisted Portfolio Detail
Appendix E – Unlisted Portfolio Detail For personal use only CORE PLUS OFFICE FUND (CPOF) BOOK VALUE INDEPENDENT MKT CAP MKT CAP MCR VALUER’S WALE MIN. RENT VALUATION RATE RATE CHANGE DISCOUNT REVIEW DATE 30 JUN 10 31 DEC 09 RATE/ IRR ($m) (%) (%) (%) (%) (YEARS) (%) 331 & 333 George St, Sydney, NSW
Slide 46: Appendix F – Unlisted Portfolio Detail
Appendix F – Unlisted Portfolio Detail For personal use only CORE PLUS INDUSTRIAL FUND (CPIF) BOOK INDEPENDENT MKT CAP MKT CAP MCR VALUER’S WALE MIN. RENT VALUE VALUATION RATE RATE CHANGE DISCOUNT REVIEW DATE 30 JUN 10 31 DEC 09 RATE/ IRR ($m) (%) (%) (%) (%) (YEARS) (%) 372 Eastern Valley Way, Chat
Slide 47: Appendix G – Unlisted Portfolio Detail
Appendix G – Unlisted Portfolio Detail For personal use only DIRECT RETAIL FUND (DRF) BOOK INDEPENDENT MKT CAP MKT CAP MCR VALUER’S WALE MIN. RENT VALUE VALUATION RATE RATE CHANGE DISCOUNT REVIEW DATE 30 JUN 10 31 DEC 09 RATE/ IRR ($m) (%) (%) (%) (%) (YEARS) (%) Menai Central, Sydney, NSW 34.7 30-J
Slide 48: Appendix H – Unlisted Portfolio Detail
Appendix H – Unlisted Portfolio Detail For personal use only DIVERSIFIED PROPERTY FUND (DPF) BOOK INDEPENDENT MKT CAP MKT CAP MCR VALUER’S WALE MIN. VALUE VALUATION RATE RATE CHANGE DISCOUNT RENT DATE 30 JUN 10 31 DEC 09 RATE/ IRR REVIEW ($m) (%) (%) (%) (%) (YEARS) (%) 400 Kent Street, Sydney, NSW
Slide 49: Appendix I – Unlisted Portfolio Detail
Appendix I – Unlisted Portfolio Detail For personal use only DIRECT PROPERTY FUND (CHDPF) BOOK INDEPENDENT MKT CAP MKT CAP MCR VALUER’S WALE VALUE VALUATION DATE RATE RATE CHANGE DISCOUNT 30 JUN 10 31 DEC 09 RATE/ IRR ($m) (%) (%) (%) (%) (YEARS) 2 Wentworth St, Parramatta, NSW 35.1 31-Dec-09 8.50%
Slide 50: 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 51: Fund Key
Fund Key Listed Funds For personal use only CQO Charter Hall Office REIT CQR Charter Hall Retail REIT Wholesale Investment Funds CPOF Core Plus Office Fund CPIF Core Plus Industrial Fund Wholesale Opportunistic Funds CHOF4 Charter Hall Opportunistic Fund 4 CHOF5 Charter Hall Opportunistic Fund 5 Ret
Slide 52: Further information
For personal use only 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 Jelte Bakker Kylie Ramsden Chief Financial Officer Head of Listed Investor Relatio
Slide 53: charterhall.com.au
For personal use only charterhall.com.au