Charter Hall Group · ASX:CHC
Charter Hall — FY2013 Earnings Presentation
62 slides from Charter Hall's earnings presentation, Aug 28, 2013
Slide 1: Charter Hall Group Full Year Results
Charter Hall Group For personal use only Full Year Results 12 months to 30 June 2013
Slide 2: Agenda
Agenda For personal use only David Harrison David Southon Paul Altschwager Joint Managing Director Joint Managing Director Chief Financial Officer 1 Results summary and Group overview 2 Operational performance 3 Financial performance 4 Strategy, outlook and guidance 5 Additional information Charter
Slide 3: Results Summary and Group Overview
Results Summary and Group Overview For personal use only
Slide 4: Key achievements
Key achievements 12 months to 30 June 2013 For personal use only OEPS growth Investment $1.0 billion net 11.3%1 yield +12% equity inflows 6.7%2 to 7.5% $3.1 billion 18% Australian transactions $2.1bn of acquisitions FUM growth $1.0bn of divestments 1. FY12 is stated prior to specific items relating
Slide 5: Another active year
Another active year Results summary For personal use only • Increase in operating earnings per security to 23.94cps, up 11.3%1 – Statutory profit after tax of $54.8m, up from $16.7m – Operating earnings of $71.8m, up 12.9%1 – Distribution of 20.2cps, up 11.0% – NTA per security is $2.13, in line wit
Slide 6: Solid securityholder returns
Solid securityholder returns Results summary For personal use only Charter Hall was the best performing A-REIT in FY13, with a total securityholder return of 80.6% Distribution per security growth Total performance over 1 and 3 years to 30 June 20131 70% 20.20 18.20 60% 16.50 80.6% 12.55 50% 40% FY1
Slide 7: Our strategy in action
Our strategy in action Group overview For personal use only Our strategy is to use our specialist property expertise to access, deploy and manage equity and invest alongside our partners to create value and provide superior returns for our clients and Charter Hall securityholders. ACCESS DEPLOY MANA
Slide 8: Australian focused property platform
Australian focused property platform Group overview For personal use only Charter Hall manages a $10.3bn total property portfolio NO. OF PROPERTIES NO. OF TENANTS LETTABLE AREA (SQM) TOTAL ASSETS ($M) FY13 GROSS INCOME ($M) 2002 2,968 2.8m 10,3231 909 Equity source diversification Asset type diversi
Slide 9: Sector focused investment strategy
Sector focused investment strategy Group overview For personal use only Our investment strategy, focusing on core property asset sectors, should endure macroeconomic cycles and generate growing income and capital returns, consistent with the investment appetite of investors in the real estate asset
Slide 10: Expertise across risk/return spectrum
Expertise across risk/return spectrum Group overview For personal use only A significant manager of wholesale, listed and retail investor capital Risk vs. Target Return Profile Target Return Development 20% + $0.3bn Office Retail 15 – 17% Industrial Wholesale Partnerships Diversified Wholesale Poole
Slide 11: Operational Performance
Operational Performance For personal use only
Slide 12: High proportion of annuity income
High proportion of annuity income Quality of earnings For personal use only Operating earnings1 of $71.8m, up 12.9% from $63.6m2 90% of operating earnings generated 62% of operating earnings generated from annuity style income from property investments 45.0 (62% property investments, 28% property fu
Slide 13: Property investments total $603m
Property investments total $603m Property investments (Charter Hall Group balance sheet) For personal use only • Charter Hall’s property investments total $603m1, up from $530m as at 30 June 2012 • Delivered FY13 operating earnings of $44.5m1, 62% of total operating earnings • Annualised property fu
Slide 14: Property investment portfolio
Property investment portfolio Property investments (Charter Hall Group balance sheet) For personal use only Ownership Charter Hall FY13 Charter Proportion of Market Discount Weighted Charter Hall stake investment Hall Investment Charter Hall cap rate rate average investment 30/06/13 30/06/132 income
Slide 15: Property funds management EBITDA up 14.6%
Property funds management EBITDA up 14.6% Property funds management For personal use only • Property funds management operating earnings of $27.3m 1 • Total revenue equates to 87bps of FUM2 (65bps from annuity and 22bps from non-annuity sources) Annuity style revenue (75%) $M FY13 FY12 Growth 45.0 R
Slide 16: Australian FUM platform growth of 18%
Australian FUM platform growth of 18% Property funds management For personal use only • Group FUM up 16% to $10.3bn at 30 June 2013 • Australian property FUM has increased by $1.5bn over the last year to $9.9bn • Offshore property FUM has reduced to $0.4bn Total Group FUM Australian FUM by Equity So
Slide 17: Secured inflows across the funds platform
Secured inflows across the funds platform Property funds management For personal use only • Secured $1.2bn in gross new equity during FY13 from a range of equity sources investing across the funds platform • A further $179m of gross equity secured since 1 July 2013 FY12 FY13 ($M) ($M) Wholesale Pool
Slide 18: $1.2 billion of gross equity secured
$1.2 billion of gross equity secured Property funds management For personal use only $164m $78m $77m $185m $25m Bankwest Place & RP2 Direct Industrial PFA Diversified 144 Stirling Bank of Queensland New retail partnership Fund 1&2 Property Trust Street Trust Building Appointed manager & New office p
Slide 19: Capital recycling continues to progress
Capital recycling continues to progress Capital management of the Charter Hall investment portfolio For personal use only CHC capital recycled ($m) FY12 FY13 Total Equity realised We recycle our capital to seed additional high value opportunities for CHC and our clients Mentone Showrooms 16 - 16 DPF
Slide 20: Progressive realisation of specific funds
Progressive realisation of specific funds Capital management For personal use only In line with our stated strategy, Charter Hall is progressing the realisation of funds which have reached or are approaching the end of their investment term: • Total $580m FUM targeted to be exited in over the next 1
Slide 21: Financial Performance
Financial Performance For personal use only
Slide 22: Key financial metrics
Key financial metrics Financial performance For personal use only GROUP FY13 FY12 Change Statutory profit after tax $54.8m $16.7m 228.8% Operating earnings1 $71.8m $63.6m 12.9% Operating earnings per security (OEPS) 23.94cps 21.51cps 11.3% Distribution per security (DPS) 20.20cps 18.20cps 11.0% Retu
Slide 23: Income statement
Income statement Financial performance by segment For personal use only $M FY13 FY12 Change % • Operating earnings growth of 12.9%1 to Direct property investment 4.9 6.1 (19.6%) $71.8m Property funds investment 39.6 33.4 18.4% • Total property investment operating earnings Property funds management
Slide 24: Property investment earnings growth of 12.7%
Property investment earnings growth of 12.7% Financial performance For personal use only • Operating earnings from all property investments up 12.7% to $44.5m – Existing funds - 3.2% like for like NOI growth, $1.6m net benefit from acquisitions and reduced borrowing costs – $2.2m contribution from n
Slide 25: Property funds management growth of 13.1%
Property funds management growth of 13.1% Financial performance For personal use only $M FY13 FY12 Growth % • Property funds management operating earnings up 13.1% Annuity style revenue 62.4 58.3 7.0% Non-annuity style revenue 21.1 16.6 27.1% • Revenue growth of 11.5% Total property funds management
Slide 26: Operating cashflow
Operating cashflow Financial performance For personal use only ($7.8m) $3.0m ($2.0m) $1.3m ($14.2m) $71.8m $66.3m $60.7m $52.1m Operating Change in Change in Earnings vs Depreciation Operating CHOF4 Operating Distribution Earnings receivables payables distribution Cashflow performance fee Cashflow (
Slide 27: Balance sheet
Balance sheet Financial position For personal use only Balance sheet ($m) 30-Jun-13 30-Jun-12 2.18 3.6c (1.0c) Cash 12.2 39.3 (1.7c) 2.16 1.2c (2.1c) Property investments 603.0 614.0 2.14 Development investments 59.7 66.7 Other tangible assets 47.8 56.9 2.12 Intangibles 96.1 98.7 2.10 Total assets 8
Slide 28: Group debt platform
Group debt platform Balance Sheet Management For personal use only • Across fund platform, $0.9bn of new and refinanced debt in FY13 with a further $1.3bn new / refinanced debt since 30 June 2013 – Weighted average cost of debt¹ of 5.7%, down from 6.2% at 30 June 2012 – Weighted average maturity2 of
Slide 29: Security based benefits expense
Security based benefits expense Change in reporting treatment effective FY14 For personal use only $M FY13 FY13 • Security based benefit expense has been treated Actual Proforma as non-operating item in prior years and FY13 Total Revenue 131.1 131.1 Net Operating Expenses (55.7) (55.7) • From FY14,
Slide 30: Strategy, Outlook and Guidance
Strategy, Outlook and Guidance For personal use only
Slide 31: Delivering on FY13 strategic objectives
Delivering on FY13 strategic objectives For personal use only Strategy FY13 objectives FY13 achievements • CPIF ranks as 1st and CPOF 2nd best performing wholesale fund in their sector • Continue to achieve the investment objectives for year to 30 June 20131 ACCESS of our investors • ROE(NTA basis)
Slide 32: FY14 strategic objectives
FY14 strategic objectives For personal use only Strategy FY14 objectives • Continue to achieve the investment objectives of our investors ACCESS • Enhance return on equity • Source equity to invest into core real estate sectors targeting growth in the Australian FUM platform of 6-10% pa DEPLOY • Rea
Slide 33: FY14 transactional activity to date
FY14 transactional activity to date Activity since 30 June 2013 For personal use only Since balance date Charter Hall has: • Completed the CPIF $150m equity raising target • Participated in the $103m CHOT equity raising with Charter Hall Group investing a further $15m • CHOT acquired the remaining 5
Slide 34: Well positioned to capture deal flow
Well positioned to capture deal flow FY14 earnings growth drivers For personal use only • High property portfolio occupancy with average 3.9% rental reviews supporting stable property income growth from property funds investment portfolio • Appetite from all targeted equity sources for Australian re
Slide 35: Solid earnings growth expected in FY14
Solid earnings growth expected in FY14 FY14 earnings guidance For personal use only Barring unexpected events, we forecast: • FY14 operating earnings growth of approximately 7%1 • The distribution payout ratio is expected to be between 85% and 95% of operating earnings per security2 1. This growth g
Slide 36: For personal use only
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Slide 37: Additional information
Additional information For personal use only
Slide 38: Additional information
Additional information For personal use only Section Slide 1 Group overview 38 2 Activity by sector since 30 June 2012 39 3 Property funds management platform 42 4 Property investment portfolio 44 5 Fund updates 46 6 Financial information 51 7 Capital management and funding 55 9 Glossary 58 Charter
Slide 39: Charter Hall Group
Charter Hall Group Group overview For personal use only Property Investment $603m co-investments / $44.5m operating earnings (62% total Group OEPS) OFFICE RETAIL INDUSTRIAL $311m $213m $79m (52% of portfolio) (35% of portfolio) (13% of portfolio) Property Funds Management $10.3bn FUM / $27.3m operat
Slide 40: Office
Office Activity since 30 June 2012 For personal use only • Secured a net $900m of Australian office properties on behalf of fund investors and partners, increasing our office portfolio by 20% • Established two new partnerships between CPOF and institutional investors which resulted in the acquisitio
Slide 41: Retail
Retail Activity since 30 June 2012 For personal use only • Established three new wholesale partnerships to separately acquire Bateau Bay Square for $164m, a $235m Bunnings portfolio and a retail centre in Keperra, Brisbane for $63m - CHC invested $52m alongside its institutional partners • In Octobe
Slide 42: Industrial
Industrial Activity since 30 June 2012 For personal use only • Secured a net $256m of long WALE, strong covenant properties and land banks on behalf of fund investors and partners • Established the $400m Core Logistics Partnership with two Australian institutional investors which has now acquired 7
Slide 43: Charter Hall managed funds
Charter Hall managed funds As at 30 June 2013 For personal use only Listed fund Wholesale pooled funds and partnerships Retail investor funds Funds being realised $2.2bn $5.1bn $1.3bn $0.7bn ($103m co-invested) ($396m co-invested) ($11m co-invested) ($121m equity to be realised) CQR1 CHDPF PFA CHOF4
Slide 44: Charter Hall managed funds
Charter Hall managed funds As at 30 June 2013 For personal use only Total Sector Equity No. of Lettable Occupancy Weighted WALE Weighted property Source properties area average rent (by income average cap assets (sqm) review in years) rate ($m) Top 5 Managed Funds CQR1 2,175 Retail Listed 87 668,395
Slide 45: Property investment portfolio
Property investment portfolio As at 30 June 2013 For personal use only Ownership Charter Hall FY13 Proportion of Market Discount Minimum FY13 FY12 stake investment Charter Hall Charter Hall cap rate rate rental Charter Hall Charter Hall investment investment reviews investment investment income port
Slide 46: Property investment portfolio metrics
Property investment portfolio metrics Property investment For personal use only Lease expiry profile1 (30 June 2013) Top 10 tenants (30 June 2013) 45% Tenant % Portfolio leased 41.2% (By gross income) 40% Australian Governments 8.6 35% Woolworths 5.9 Telstra 5.6 30% Wesfarmers 5.6 25% Macquarie Grou
Slide 47: Core Plus Office Fund (CPOF)
Core Plus Office Fund (CPOF) For personal use only Key events during FY13 Portfolio characteristics Key metrics • CPOF outperforms the IPD/Mercer Wholesale Property Funds Index (total office funds) over Gross property assets $1.8 billion 1, 3 and 5 year periods to 30 Jun 2013 Total debt $826 million
Slide 48: Core Plus Industrial Fund (CPIF)
Core Plus Industrial Fund (CPIF) For personal use only Key events during FY13 Portfolio characteristics Key metrics • Outperformed the Industrial component of the IPD/Mercer Wholesale Property Funds Gross property assets $560 million Index (total funds) over all time periods to 30 June 2013. (+1.4%
Slide 49: Charter Hall Office Trust (CHOT)
Charter Hall Office Trust (CHOT) For personal use only Key events during FY13 Portfolio characteristics Key metrics • Portfolio occupancy is steady at 97% with a WALE of 4.4 years Gross property assets $2.0 billion • Total leasing of 32,814sqm during FY13 with renewal of Citibank for Total debt $961
Slide 50: Wholesale Partnerships and Mandates
Wholesale Partnerships and Mandates1 For personal use only Key events during FY13 Portfolio characteristics Key metrics • Retail Partnership No.2 – Acquired Bateau Bay Square in Bateau Charter Hall partnerships $0.6 billion Bay, Central Coast NSW for $164m in August 2012, reflecting an 8% Gross AUM
Slide 51: Charter Hall Retail REIT (CQR)
Charter Hall Retail REIT (CQR) For personal use only Key events during FY13 Portfolio characteristics1 Key metrics • Successfully raised $119 million of new equity for accretive Gross property assets $1.7 billion transactions, the first S&P ASX A-REIT 200 stock to raise growth equity Total debt $600
Slide 52: Detailed operating earnings
Detailed operating earnings For personal use only FY13 FY12 Variance % ($000s) ($000s) ($000s) Direct Property Investment Direct Property Investment Income 9,101 13,946 (4,845) -34.7% DRF interest expense (2,289) (4,789) 2,500 -52.2% Non-controlling interest (1,613) (2,544) 931 -36.6% Less: Operatin
Slide 53: Property funds management operating earnings
Property funds management operating earnings For personal use only FY13 FY12 Variance % ($000s) ($000s) ($000s) Annuity Style Revenue Fund management fees 39,123 37,932 1,191 3.1% Property management fees 12,699 12,094 605 5.0% Leasing fees (non-project) 8,154 5,533 2,621 47.4% Facilities and Projec
Slide 54: Reconciliation of operating earnings to statutory profit after tax
Reconciliation of operating earnings to statutory profit after tax For personal use only FY13 FY12 $000s $000s Operating earnings before specific items 71,785 63,586 Specific items1 - (8,741) Operating earnings 71,785 54,845 Non-cash security-based benefits expense (3,035) (2,338) Fair value adjustm
Slide 55: Funds under management growth
Funds under management growth For personal use only $1.0bn ($0.6bn) $1.1bn ($0.4bn) $0.1bn $0.2bn $10.3bn $9.8bn $8.9bn Jun-12 Revaluations Acquisitions Disposals Dec-12 Revaluations Acquisitions Disposals Jun-13 FY10 FY11 FY12 1HY13 FY13 CAGR ($BN) ($BN) ($BN) ($BN) ($BN) (%) Australia FUM 6.6 7.6
Slide 56: Property funds debt programmes
Property funds debt programmes For personal use only TOP 5 MANAGED FUNDS OTHER FUNDS 1 ($M) CHC CQR CHOT CPOF CPIF CHDPF WHOLESALE RETAIL PARTNERSHIPS INVESTOR (EX CHOT) FUNDS Asset values2 819 1,881 2,088 1,762 570 518 1,923 1,365 Net debt drawn2 14 680 926 806 51 242 884 531 CHC Ownership % 9% 15%
Slide 57: Group and CHC look through debt maturity profile
Group and CHC look through debt maturity profile (by facility limit) For personal use only Group funds platform debt maturity profile CHC look through debt maturity profile 1,600 $1,509m 400 $1,407m 1,400 350 1,200 300 ($M) 1,000 250 ($M) $860m $211m 800 200 $697m $152m 600 150 $385m 400 100 $73m $2
Slide 58: CHC look through swap maturity profile
CHC look through swap maturity profile For personal use only • The swap maturity profile is on a look through basis to CHC managed funds in which CHC has an investment. • The managed funds swap portfolio has a weighted average duration of 2.6 years. • The weighted average swap rate is 4.3% across th
Slide 59: Fund Key
Fund Key For personal use only Listed entities Funds being realised CHC Charter Hall Group CHOF4 Charter Hall Opportunity Fund 4 CQR Charter Hall Retail REIT CHOF5 Charter Hall Opportunity Fund 5 Wholesale pooled funds DPF Diversified Property Fund CPOF Core Plus Office Fund CHUF Charter Hall Umbrel
Slide 60: Disclaimer
Disclaimer For personal use only 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
Slide 61: Further information
Further information For personal use only David Harrison David Southon Joint Managing Director Joint Managing Director +61 2 8908 4033 +61 2 8908 4025 david.harrison@charterhall.com.au david.southon@charterhall.com.au Paul Altschwager Kylie Ramsden Chief Financial Officer Head of Listed Investor Rel
Slide 62: For personal use only
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