Charter Hall Group · ASX:CHC
Charter Hall — Investor Day (November 2013)
139 slides from Charter Hall's investor day presentation, Nov 21, 2013
Slide 1: Charter Hall Group Investor Day 2013
21 November 2013 Charter Hall Group For personal use only Investor Day 2013
Slide 2: Agenda
Charter Hall Group Agenda For personal use only Overview of Charter Hall vision, values and strategy 1 David Southon & David Harrison, Joint Managing Directors Our view of real estate markets around the nation 2 Chris Freeman, Research Manager Wholesale funds – Growth, positioning and performance 3
Slide 3: Overview of Charter Hall Vision, Values and Strategy
Overview of Charter Hall Vision, Values and Strategy David Southon & David Harrison, Joint Managing Directors For personal use only
Slide 4: What do we stand for?
Charter Hall Group What do we stand for? A 3 minute video For personal use only Charter Hall Group Investor Day 2013 3
Slide 5: Our Vision
Charter Hall Group Our Vision Vision, purpose, values, strategy and goals For personal use only OUR VISION The smart property choice OUR PURPOSE To grow investor wealth through smart property outcomes OUR VALUES INTEGRITY ACCOUNTABILITY PASSION EXPERTISE COLLABORATION OUR STRATEGY To use our special
Slide 6: Investing in our Brand
Charter Hall Group Investing in our Brand For personal use only Retail Signage Office Digital Screens Industrial Pylon Sign Charter Hall Group Investor Day 2013 5
Slide 7: Upgraded Investor Centre
Charter Hall Group Upgraded Investor Centre www.charterhall.com.au For personal use only Charter Hall’s new Investor Centre • Our Investor Centre provides investors with access to information on Charter Hall Group, our listed and unlisted managed funds and provides a facility for prospective investo
Slide 8: New Way of Working
Charter Hall Group New Way of Working Adding value to Charter Hall and our clients For personal use only • Physical space designed to support a workforce that is empowered to work anywhere, anytime with a focus on the business results • Being an employer of choice, attracting and retaining people wh
Slide 9: Corporate Responsibility and Sustainability
Charter Hall Group Corporate Responsibility and Sustainability For personal use only Sustainability continues to be a core part of how we manage risks and enhance value across our business Sustainable • To grow investor wealth by delivering smart property outcomes business • To actively work to redu
Slide 10: Evolution of the Business Model
Charter Hall Group Evolution of the Business Model Repositioning of the business 2010-2013 For personal use only FY10 21 Nov 2013 Comment Progress since FY10 Property Funds Management • Focus on smart solutions for investors, tenants and Domestic FUM $7.9bn $10.1bn Total FUM communities in Australia
Slide 11: Charter Hall Competitive Advantages
Charter Hall Group Charter Hall Competitive Advantages For personal use only • Focused – domestic focus, specific asset sectors with specialist professionals • Multiple sources of equity – through the cycle diversity of equity flows • Track record – long term relationships with investors built on co
Slide 12: Recap on FY14 Activity to date
Charter Hall Group Recap on FY14 Activity to date For personal use only • Completed a $150m equity raising target for CPIF • Successfully closed DIF2 capital raising oversubscribed at $135m • CLP has increased total equity committed to $356m and total investment capacity to $525m through an addition
Slide 13: $331m of Gross Equity in Funds Secured FY14 to date
Charter Hall Group $331m of Gross Equity in Funds Secured FY14 to date For personal use only $77m $16m Direct Industrial Charter Hall Retail REIT $6m Fund No.2 Core Plus Office Fund DRP Completed equity raise IRP $31m $103m $98m Core Logistics Core Plus Charter Hall Office Trust Partnership Industri
Slide 14: What next? Positioned for growth 2014+
Charter Hall Group What next? Positioned for growth 2014+ 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 p
Slide 15: Solid Earnings Growth Expected in FY14
Charter Hall Group Solid Earnings Growth Expected in FY14 For personal use only Charter Hall is well positioned to continue to capitalise on our ability to access, deploy, manage and co-invest across core property sectors of office, retail and industrial We confirm guidance provided to the market in
Slide 16: Questions?
For personal use only Questions?
Slide 17: Our View of Real Estate Markets Around the Nation
Our View of Real Estate Markets Around the Nation Chris Freeman, Research Manager For personal use only
Slide 18: Research at Charter Hall
Research Research at Charter Hall Charter Pack and promotion For personal use only • Detailed research reports for use internally and major investment partners • Viewed as fund management IP, so rarely publicly distribute or actively promote detailed forecasts and analysis Charter Hall Group Investo
Slide 19: Capital Fundamentals
For personal use only Capital Fundamentals
Slide 20: Fixed interest rates and property yield spread
Research Capital Fundamentals Fixed interest rates and property yield spread For personal use only • Secure property appears very attractive in the current interest rate environment • Upward movements in bond yields likely to see a reallocation away from fixed interest. AMP’s October Global Investor
Slide 21: Significant reallocating to property is planned
Research Capital Fundamentals Significant reallocating to property is planned For personal use only Figure 3. Net increase or decrease in allocations expected in next quarter Bonds Property Net percentage of survey respondents to increase or decrease allocations to each asset category. Source: AMP G
Slide 22: A-REIT share price/NTA history by type
Research Capital Fundamentals A-REIT share price/NTA history by type For personal use only • This reallocation is occurring at a time when ‘rent-collecting’ A-REIT’s have broadly grown to be at (or above) NTA • Thereby effectively transitioning from being net sellers to buyers of assets Source: Bloo
Slide 23: Australian superannuation growth
Research Capital Fundamentals Australian superannuation growth For personal use only • With the strong recovery of the equities market the total assets of Australian Superannuation Funds exceeded Australian GDP for the first time since 2007 • In FY13 superannuation assets rose by $217bn, while nomin
Slide 24: Office Market
For personal use only Office Market
Slide 25: Employment and vacancy
Research Office Markets Employment and vacancy For personal use only • But while capital drivers are strong, full time employment growth has slowed notably from mid-2011 • This corresponds to rising vacancy in office markets over the past two years Employment Growth by Type & Population Ratio Major
Slide 26: Major CBD absorption vs. ASX
Research Office Markets Major CBD absorption vs. ASX 200 For personal use only • However, the performance of the equities market provides a strong leading indicator that tenant demand is likely to recover, with the caveat that this has largely been driven by growth in multiples Source: JLL/IRESS/Cha
Slide 27: Corporate profits and professional job advertisements
Research Office Markets Corporate profits and professional job advertisements For personal use only • This is reinforced by improved corporate profitability and a recent rise in professional job advertisements • Real corporate profits have started to recover and major banks saw revenues rise 5.8% in
Slide 28: Department of Employment forecasts
Research Office Markets Department of Employment forecasts For personal use only • 5 year employment growth expectations from the Department of Employment still favour Perth and Brisbane • However these markets are likely to see the greatest supply impact over the medium term Source: DOE / Charter H
Slide 29: Committed and uncommitted supply
Research Office Markets Committed and uncommitted supply For personal use only • Upcoming supply is significant in all markets moving forward • Having seen significant levels of stock come online in 2013, Melbourne now has the lowest relative level of supply under construction Source: JLL / Charter
Slide 30: Office Markets: Strategy in action
Research Office Markets Strategy in action For personal use only • Acquired Bankwest Place, Perth for $458m in Joint Venture with CPOF and institutional partners – 12 year lease to Commonwealth Bank of Australia – Well below market rents – Looks through current cycle • Acquired 9 Castlereagh Street
Slide 31: Retail Market
For personal use only Retail Market
Slide 32: Non discretionary sectors continue to outperform
Research Retail Market Non discretionary sectors continue to outperform For personal use only • Retail turnover remains below trend, with non-discretionary expenditure significantly outperforming • Department stores causing a significant drag on overall growth numbers Rolling Annual Retail Turnover
Slide 33: Centre composition and exposure to food retailing by GLA
Research Retail Market Centre composition and exposure to food retailing by GLA For personal use only 15.3% 29.6% 59.7% Source: Urbis, Charter Hall Research Charter Hall Group Investor Day 2013 32 32
Slide 34: Retail leasing spreads and occupancy costs
33 Research Retail Market Retail leasing spreads and occupancy costs For personal use only • Looking at leasing spreads of listed A-REITs shows that sub-regional and neighbourhood centre owners are still seeing positive leasing spreads, while tougher retail conditions are being reflected in centers
Slide 35: Retail turnover growth by category
Research Retail Property Sector Retail turnover growth by category For personal use only • Consumer confidence and retail turnover are closely correlated, but a discrepancy has been evident in the past two years. The rise in confidence evident since late 2011 has thus far not translated into retail
Slide 36: Relative yields in retail sector
Research Retail Market Relative yields in retail sector For personal use only • Yield recompression appears highly likely, with neighbourhood and sub-regional centres trading above long run averages Neighbourhood Avg: 8.03% Peak: 6.64% Now: 8.51% Sub-Regional Avg: 7.45% Peak: 6.32% Now: 7.66% Region
Slide 37: Relative yields in retail sector
Research Retail Market Relative yields in retail sector For personal use only • Neighbourhood and sub-regional assets trading significantly higher than the peak yield witnessed in 2007 • Looking at the average spread relative to regional centres shows a yield disparity not evident since 2001. When t
Slide 38: Retail Market: Strategy in action
Research Retail Market Strategy in action For personal use only • Acquired Bateau Bay Square in NSW for $164m with global partner – Supermarket orientated, sub-regional centre • CQR raised $119m to buy three neighbourhood centres – Tamworth, Dubbo and Lake Macquarie – 9.6% average yield across portf
Slide 39: Industrial Market
For personal use only Industrial Market
Slide 40: Broad supply and demand
39 Research Industrial Market Broad supply and demand For personal use only • Industrial property’s demand and supply profile suggests it is arguably the best placed asset class • Demand for space in 2012 was the highest since 2005, with real development approvals 18% below the 10 year average and 4
Slide 41: Gross corporate profits – manufacturing vs. logistics
Research Industrial Market Gross corporate profits – manufacturing vs. logistics For personal use only • Manufacturing’s decline is shown in gross corporate profit levels, a clear drag on industrial tenant demand • Logistics, fuelled by internet retailing and the high $AUD has seen profits rise by 5
Slide 42: Supply and demand 2013
41 Research Industrial Market Supply and demand 2013 For personal use only • Thus far over 60% of major leases tracked have been for new premises via either pre-lease or design and construction agreements. Traditional leases of existing stock represents 35% of activity, with the majority of demand f
Slide 43: Supply under construction by city and precinct
42 Research Industrial Market Supply under construction by city and precinct For personal use only Toll Ipec Super Retail Group Bunnings Distribution Blue Star Linfox Source: Charter Hall analysis of JLL Data Charter Hall Group Investor Day 2013 42
Slide 44: Vacancy by grade yield spreads
Research Industrial Market Vacancy by grade yield spreads For personal use only • There is a greater quantum of secondary stock available for lease, with tenants clearly favouring prime assets • While yield spreads to secondary assets are very attractive, the risk profile is substantially heightened
Slide 45: Composition of returns
44 Research Industrial Market Composition of returns For personal use only • The industrial sector has marginally outperformed over the longer term, with a lower level of volatility than broader property • However, this performance may be understated as IPD’s basket is significantly overweight in Sy
Slide 46: Industrial Market: Strategy in action
Research Industrial Market Strategy in action For personal use only • Retail funds closed $211 million DIF1 Portfolio – DIF1 lease expiry profile 12.1 years • Closed $120m equity raising for DIF2 oversubscribed – DIF2 targeting 10+ year WALE – Current assets possess a 13.0 year lease expiry profile
Slide 47: Questions?
For personal use only Questions?
Slide 48: Wholesale Pooled – Growth positioning and performance
Wholesale Pooled – Growth positioning and performance For personal use only
Slide 49: Wholesale Pooled Funds FUM contribution
Wholesale Pooled Funds Wholesale Pooled Funds FUM contribution 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 ($M) 200 2,968 2.8m 10,323 909 FUM Equity Sources CHC Balance Sheet Co
Slide 50: Wholesale Pooled Funds key characteristics
Wholesale Pooled Funds Wholesale Pooled Funds Key characteristics For personal use only • Investment mandate for Core Plus Office Fund (CPOF) and Core Plus Industrial Fund (CPIF) focussed principally on core type returns with ability to undertake projects to enhance value • Value created through enh
Slide 51: CPOF and CPIF FUM
Wholesale Pooled Funds CPOF and CPIF FUM For personal use only Growth in CPOF and CPIF FUM ($m) Cumulative CPOF and CPIF Equity Commitments 2500m 1800m 1600m $2,360 $1,589 2000m $2,100 1400m $1,407 $1,826 $1,900 1200m $1,764 1500m $1,204 $1,560 1000m $1,085 $1,030 $975 $975 800m 1000m $919 600m 500m
Slide 52: CPOF and CPIF assets and co-investment stake
Wholesale Pooled Funds CPOF and CPIF FUM For personal use only Number of assets under management (CPOF and CPIF) Charter Hall Co-Investment Stake (CPOF and CPIF) (% of committed equity) 25% 40 24% 23% 23% 35 36 20% 30 19% 19% 31 30 30 30 18% 29 25 15% 15% 20 12% 18 10% 15 10 5% 5 1 0 0% FY06 FY07 FY
Slide 53: CPOF and CPIF occupancy
Wholesale Pooled Funds CPOF and CPIF occupancy For personal use only CPOF and CPIF Occupancy Performance 100% 100% 100% 100% 98% 98% 98% 96% 97% 97% 96% 94% 92% 90% 88% 86% 84% 82% 80% FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 • The Wholesale Pooled Fund team in conjunction with Charter Hall’s special
Slide 54: CPOF $1.8bn office portfolio
Wholesale Pooled Funds CPOF $ 1.8 bn office portfolio For personal use only Portfolio characteristics Key metrics Gross property assets $1.82 billion Total debt $825 million Gearing (look through) 45% Number of assets 15 Occupancy1 97% Weighted average lease expiry1 5.1 years CBD assets1 92% Prime g
Slide 55: CPOF Outperformance
Wholesale Pooled Funds CPIF Outperformance For personal use only • CPOF has outperformed the IPD/Mercer Wholesale Property Funds Index (total office funds) over 1, 3 and 5 year periods to 30 June 2013 CPOF Performance to June 2013 9.9% 9.1% 8.8% 8.7% 7.8% 7.9% 2.7% 1.3% 1.2% 1.4% 0.9% 1.3% 12 Months
Slide 56: CPOF Acquisition and leasing activity
Wholesale Pooled Funds CPOF Acquisition and leasing activity For personal use only Major Activity over 18 months 11 Exhibition Street, Melbourne 9 Castlereagh St, Sydney Re-leased 11,748sqm of space to BUPA $172m 10 year term 21,000sqm Bank West Place, Perth (33%) Secured 18 months ahead of expiry $
Slide 57: CPOF Enhancement strategy
Wholesale Pooled Funds CPOF Enhancement strategy For personal use only Key events during FY13 • Planning consent obtained for a new building at 333 George St, Sydney and a significant expansion and upgrade of 570 Bourke St, Melbourne • Combined both projects are forecast to generate 5% NTA accretion
Slide 58: Enhancing Value from Core Assets Bourke Street, Melbourne
Wholesale Pooled Funds Enhancing Value from Core Assets 570 Bourke Street, Melbourne For personal use only • CPOF acquired 50% for $75m in June 2008 at a 7.0% cap rate • The balance of the asset was purchased from the joint owner for $76.5m in September 2010 at 8.0% cap rate • The asset has now been
Slide 59: Enhancing Value from Core Assets Bourke Street, Melbourne
Wholesale Pooled Funds Enhancing Value from Core Assets 570 Bourke Street, Melbourne For personal use only • Highly accretive returns using available floor space potential at effectively no land cost • Returns enhanced by value uplift of the existing asset due to “repositioning” effect of new podium
Slide 60: Review event completed and well supported
Wholesale Pooled Funds CPIF Review event completed and well supported For personal use only • CPOF is an open-ended investment vehicle with a long-term investment mandate • A Review Event occurred in 2013 where some unit holders redeemed (or sold) their stake due to changes in their investment strat
Slide 61: CPIF $665m industrial portfolio
Wholesale Pooled Funds CPIF $665m industrial portfolio For personal use only Portfolio characteristics Key metrics Portfolio Value $665 million Total net debt $130 million Gearing (look-through) 20% Number of assets 24 Occupancy 99% Weighted average lease expiry 8.5 years Core assets 95% Weighted av
Slide 62: CPIF Outperformance
Wholesale Pooled Funds CPIF Outperformance For personal use only • Outperformed the industrial component of the IPD/Mercer Wholesale Property Funds Index (total funds) over all time periods to 30 June 2013 CPIF Relative Performance to 30 June 13 9.7% 8.6% 8.5% 8.5% 8.2% 7.8% 2.8% 2.0% 1.1% 0.7% 0.8%
Slide 63: CPIF Acquisition and leasing activity
Wholesale Pooled Funds CPIF Acquisition and leasing activity For personal use only Key events during and post FY13 80 - 120 Canberra Street, 15 Huntingwood Drive, Hemmant, Qld Huntingwood, NSW $13.25m $16.2m 45,000sqm 12,740sqm 2 Bannister Road, Canning Vale WA $70.5m 83,250sqm 15 Long Street, 11 Hu
Slide 64: CPIF Investment and Acquisition Strategy: Sourcing Assets
Wholesale Pooled Funds CPIF Investment and Acquisition Strategy Sourcing Assets For personal use only • Attractive acquisition opportunities for both short and long WALE industrial assets • CPIF aims to offer long portfolio WALE (8.5 years) with targeted long term equity IRR in excess of 11%pa • Foc
Slide 65: CPIF Land Bank build-to-hold Approach
Wholesale Pooled Funds CPIF Investment and Acquisition Strategy Land Bank “build-to-hold” Approach For personal use only • Acquisition of land bank in Brisbane (Berrinba and Willawong) and Sydney (Smithfield) to create product • Development agreement with CIP to source and secure pre-lease commitmen
Slide 66: Commercial Industrial Properties (CIP) pipeline
Wholesale Pooled Funds CPIF Investment and Acquisition Strategy Commercial Industrial Properties (CIP) pipeline For personal use only • Charter Hall’s ownership (50% of CIP) provides visibility into its development pipeline • Typically $400 - $500m of prospective industrial assets under consideratio
Slide 67: Enhancing Value from Core Assets: Canberra Street, Brisbane
Wholesale Pooled Funds Enhancing Value from Core Assets 18-120 Canberra Street, Brisbane, Qld For personal use only • Acquired 4.8ha of freehold land in tightly held Port of Brisbane precinct • Purchase price of $13.25m in July 2012 with an acquisition yield of 6.4% with 6 months to lease expiry • N
Slide 68: Wholesale Partnerships
Wholesale Partnerships Adrian Taylor – Head of Wholesale Partnerships For personal use only
Slide 69: Wholesale Partnerships - Background
Wholesale Partnerships Wholesale Partnerships - Background For personal use only Wholesale Partnerships Comprise: • Partnerships which typically include two or more capital partners including Charter Hall • Wholesale Mandates which typically have no Charter Hall Co-Investment, however, may include a
Slide 70: Wholesale Partnerships - Scope
Wholesale Partnerships Wholesale Partnerships - Scope For personal use only • Some Partnership investors also invest within our pooled funds • Partnership formation allows access to specific sector exposures (office/retail/logistics) with: – ability to reflect investors individual risk appetites – a
Slide 71: Attracting investors and capturing demand
Wholesale Partnerships Attracting investors and capturing demand For personal use only What investors want: • Access to opportunities • To leverage Charter Hall’s skills/resources and relationships • To be involved in establishing structure around their specific needs • To obtain high quality exposu
Slide 72: Partnerships Investment Timeline
Wholesale Partnerships Partnerships Investment Timeline For personal use only Fund creation and major acquisitions over 18 months Value Charter Hall Office Trust (CHOT) 17 assets/ $2,031m Bank West Place $458m Keperra Square Bunnings (BP Fund) 1 asset/ $63m 10 assets/ $239m Core Logistics Bateau Bay
Slide 73: Partnership Summary
Wholesale Partnerships Partnership Summary For personal use only Since August 2012 (excludes CHOT), the Partnership platform has invested in $1.5 billion of Office, Retail and Industrial assets. On average, these assets are less than 5 years old, have a 9 year WALE, high occupancy and have an averag
Slide 74: Organic growth and alignment
Wholesale Partnerships Organic growth and alignment For personal use only CHC Co- CHC Co- Indep. Valuation Fund Sector invest invest (%) ($A'm) ($A'm) Charter Hall Office Trust Office 174.9 14.5% 2,241 Riverside Centre, SA Office Nil Nil 76 Bateau Bay Square Retail 17.6 20.0% 164 BP Fund (Bunnings)
Slide 75: FY13 Growth Analysis – Diversification
Wholesale Partnerships FY13 Growth Analysis – Diversification in line with CHC strategy For personal use only Charter Hall views everyday-needs retailing and logistics based industrial assets as well positioned to deliver stable income through the next cycle By Sector By State Office Industrial 35%
Slide 76: FY13 Growth Analysis – Strength of Tenants
Wholesale Partnerships FY13 Growth Analysis – Strength of Tenants By Gross Income For personal use only 91% of portfolio income derived from Government or Investment Grade or equivalent tenants Top 10 Tenants Tenant Grade 25% Wesfarmers (incl subsidaries) Other/ Specialities, 16% Metcash 9% 13% Bank
Slide 77: FY13 Growth Analysis - Lease expiry profile
Wholesale Partnerships FY13 Growth Analysis - Lease expiry profile By Gross Income For personal use only Strong WALE of 9.0 years 70% 60% 50% 40% 30% 20% 10% 0% Vacant FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023+ Charter Hall Group Investor Day 2013 76
Slide 78: Wholesale Mandates – Case Study: Bankwest Place and Raine Square
Wholesale Partnerships Wholesale Mandates – Case Study Bankwest Place and Raine Square, Perth For personal use only In June 2013, a domestic super fund and a global institutional investor, in partnership with Core Plus Office Fund (CPOF), acquired the $458m Bankwest Place Complex in Perth Investment
Slide 79: Questions?
For personal use only Questions?
Slide 80: Retail (Direct) Investor Funds: Capitalising on SMSF growth
Retail (Direct) Investor Funds Capitalising on our position and leveraging off growth in SMSFs Richard Stacker, Head of Charter Hall Direct Property For personal use only
Slide 81: Success and competitive advantage of the Direct model
Success and competitive advantage of the Direct model For personal use only
Slide 82: Direct FUM Contribution
Direct FUM Contribution 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) 200 2,968 2.8m 10,3231 909 FUM Equity Sources CHC Balance Sheet Co-Investment ($10.3 billion as at June
Slide 83: Direct Growth in FUM
Direct Property Direct Growth in FUM For personal use only Growth in CH Direct FUM Direct Property business has seen growth $m of 47% in FUM in three years $2,000 47% Increase in FUM to June 2013 $1,800 • Mixture of organic growth and acquisition of $1,600 $1,670m other management rights $1,400 $1,5
Slide 84: #1 Ranked in Sector and Growing Market Share
Direct Property #1 Ranked in Sector and Growing Market Share For personal use only CHC % of Unlisted Retail Sector Direct have significantly increased market share 16% and ranking over the past four years 14% 14% 12% • Market share increased from 2% to 14% of the 10% 10% unlisted retail sector 8% 9%
Slide 85: Direct's Competitive Advantage
Direct Property Direct’s Competitive Advantage For personal use only Direct retain various competitive advantages in the retail investor funds market, including: • Institutional Manager regarded highly compared to non institutional peers • Demise, exit and sale of many previous competitors • Long es
Slide 86: Direct's Growth in Revenue
Direct Property Direct’s Growth in Revenue For personal use only Growth in Charter Hall Direct Revenue $m (with and without co-investment income) Revenue (excluding CHC co-investments) $20 $18.9m has grown 96% over the past two years $18 whilst returning 65% to Charter Hall $15.3m $16 $14.7m $14 • I
Slide 87: Direct Business Model
Direct Property Direct Business Model For personal use only Direct model is focused on growth in FUM from: • Single/multiple property syndications (>$50m) • Unlisted retail funds diversified by asset and geography (~$200m) • Sector specific (industrial, office, retail) • Acquisition of unlisted mana
Slide 88: Direct Product Asset Targets
Direct Property Direct Product Asset Targets Fund and syndicate style assets targeted For personal use only Criteria Office Retail Industrial $ size $50m+ $10-$30m $10-50m Property Type B+ above Neighbourhood centres, Prime grade Hardware Location CBD and fringes Flexible Near established precincts
Slide 89: Direct Product Structure
Direct Property Direct Product Structure Syndicate vs fund For personal use only • Different characteristics to consider (sector, asset quality, size and risk) in developing product as well as understanding appetite and design/distribute product that meets investor needs • Refined product suite (leg
Slide 90: Direct Fee Structure – Syndication and Fund
Direct Property Direct Fee Structure – Syndication and Fund For personal use only Type of fee WorkZone syndication Direct Industrial Fund No.1 Fund size (asset value) $124.5m $210.4m Base management fee 0.50% - 0.60% pa of GAV 0.60% pa of GAV Transaction fee 1.80% - 2.30% of purchase price 2.00% of
Slide 91: Direct fund and syndicate performance
Direct Property Direct fund and syndicate performance For personal use only Equity IRR (%) Fund Performance (12 months to 30 September 2013) Direct’s ongoing funds and historical 12% syndicates have performed strongly over 10% 10.50% 8% the past 12 months and also over the long 8.60% 6% 8% term 4% 2
Slide 92: Growth in SMSF's and Direct's Approach to Accessing this Sector
Growth in SMSF’s and Direct’s Approach to Accessing this Sector For personal use only
Slide 93: Continuing growth in SMSFs
Direct Property Continuing growth in SMSFs For personal use only Total Superannuation Growth in Past 5 Years SMSFs sector continues to represent the largest growing segment of the $1.62 trillion super industry • Size of the superannuation industry rose by 15.5% in 12 months to June 2013 to $1.62 tri
Slide 94: Profiling of SMSFs
Direct Property Profiling of SMSFs Core Data research For personal use only Key reasons for moving to a SMSF structure Core Data study captured the multiple perspectives 5.8 Greater control over investments 4.3 on service provisions to SMSFs (trustees, financial 5.9 planners and accountants) Invest
Slide 95: Planned shifts in SMSF Asset Allocation
Direct Property Planned shifts in SMSF Asset Allocation Core Data Research For personal use only SMSFs were asked about upcoming shifts in asset allocation expected in the next year • Cash and term deposits identified for reductions driven by low interest rates • SMSF trustees indicate growing inter
Slide 96: Charter Hall Award Winner
Direct Property Charter Hall Award Winner For personal use only Charter Hall 2013 winner of the Self Managed Super Fund Awards - Commercial Property, SMSF Member Category • Charter Hall was the most highly rated provider in Commercial Property from 19 property fund managers/advisers (including liste
Slide 97: Leveraging SMSF Space
Direct Property Leveraging SMSF Space For personal use only Strategy to target SMSF investors • Education • Provision of educational tools and information packs • Dedicated section on Charter Hall website, signup for regular e-comms • Partnerships • With financial planning dealerships/accountants/pr
Slide 98: Our Distribution Channels
Direct Property Our Distribution Channels For personal use only Equity Raise by Product Since January 2010 Direct accesses equity from multiple channels, 700.0m with new equity averaging $156m pa since New Equity flows of Average of $156m January 2010 600.0m pa Over 3.5 Years 593.5m 500.0m • Direct
Slide 99: Direct Short to medium term growth plans
Direct Short to medium term growth plans For personal use only
Slide 100: 2013/14 FUM outlook
Direct Property 2013/14 FUM outlook For personal use only $m Growth in CH Direct FUM $2,000 $400m roll off of legacy FUM in 2013/14. $1,800 Replacement by higher margin $1,600 $1,700m funds/syndicates including: $1,668m $1,400 $1,540m $1,516m $1,478m • WorkZone office syndication $124.5m $1,200 $1,0
Slide 101: Conclusion
Direct Property Conclusion For personal use only • Direct are the #1 fund manager in the unlisted retail funds sector • Direct’s business model is capital light and has translated to increased revenue and margins for CHC • Direct will continue to develop its product suite and distribution channels t
Slide 102: Update on operations
For personal use only Update on operations
Slide 103: Portfolio summary
Group Portfolio summary For personal use only Charter Hall Group property platform by sector Portfolio Size No. of No. of Gross income WALE Occupancy Average cap rate ($bn) properties tenants ($m) (years) (%) (%) Office 6.1 56 645 595 5.1 96.8 7.9 Industrial 1.1 39 51 98 10.9 99.9 8.1 Retail 3.0 105
Slide 104: Our reach
Group Our reach Asset and property management hubs in all major locations in Australia For personal use only As at 30 June 2013 Charter Hall Group Investor Day 2013 103
Slide 105: Integrated management capabilities
GROUP Integrated management capabilities For personal use only Sector specialists Capital Transactions Experienced teams 9 Castlereagh Street, Sydney NSW Development Asset Management Management Project leasing teams Property Management Singleton Square, NSW Sophisticated RM program Regarded by tenan
Slide 106: Asset Management
Group Asset Management Objective: maximise income and value For personal use only 30 professionals in Sydney, Melbourne, Brisbane and Perth offices Team Highly experienced team with diverse backgrounds Strategic Asset Plans Income, expenditure and capital budgets Deliverables Leasing analy
Slide 107: Property Management
Group Property Management Objective: Delivering smart, pro-active solutions For personal use only Fully integrated in house services with experience and capabilities across all 3 sectors Team Regional locations supported by State capital and Head Office teams Property Business Planning Finan
Slide 108: Office and Industrial Portfolio
Office and Industrial Portfolio For personal use only
Slide 109: Portfolio Weightings and Exposure
Office Portfolio Weightings and Exposure For personal use only $ Value - by State $ Value - by Group 2% 25% 14% 45% 43% 16% 32% 23% Partnerships Pooled Direct NSW VIC QLD WA SA/ ACT/ TAS $ Value - by Precinct $ Value - by Grade 2% 19% 15% 21% 81% 62% CBD Suburban Premium A B C Charter Hall Group Inv
Slide 110: Active Leasing
Office Active Leasing For personal use only 605 148,244 96% 1,038,558 136 Sqm Average Tenants Sqm NLA Leases executed Leases completed occupancy Notes: - Figures as at 30 September 2013 Charter Hall Group Investor Day 2013 109
Slide 111: Managing Lease Expiries
Office Managing Lease Expiries By Gross Income For personal use only Charter Hall Group Investor Day 2013 110
Slide 112: Proactive Leasing Approach
Office Proactive Leasing Approach For personal use only Asset Challenge Activity No 1 Martin Place, Macquarie Group lease • Agents appointed – CBRE + DTZ Sydney expiry 30,000 sqm Dec • Target tenant list and actively responding to current requirements 14 • New leases agreed with DLA Piper (6,000 sqm
Slide 113: Buy, Build, Hold pipeline
Office “Buy, Build, Hold” pipeline For personal use only Asset NLA sqm Value $m Status 171 Collins Street, Melbourne 31,000 $230 • Complete • Leasing remaining vacancy Workzone West, Perth 15,573 $125 • Complete • 100% Leased Workzone East, Perth 12,338 $90 • Underway • 50% Leased 175 Eagle Street,
Slide 114: Enhancing amenities
Office Enhancing amenities For personal use only Enhancement Complete Underway Foyer/Lobby upgrades 12 4 Lift upgrades 5 6 End of Trip facilities 5 3 171 Collins Street, Melbourne Sustainability Continued efficiency gains: • Energy- 9% improvement • Water – 3% improvement • Waste – increased co-ming
Slide 115: Industrial Portfolio summary
Industrial Portfolio summary For personal use only Fund Assets Value $m WALE Occupancy Core Plus Industrial Fund 24 $665m 8.5 years 99% Core Logistics Partnership 6 $352m 9.3 years 91% Direct Industrial Fund 7 $210m 12.1 years 100% Direct Industrial Fund No 2 2 $105m 13.0 years 100% TOTAL 42 $1,332m
Slide 116: Industrial Buy, Build, Hold pipeline
Industrial “Buy, Build, Hold” pipeline For personal use only Asset GLA sqm Value $m Status Toll NQX Facility, Rockhampton 7,000 $12.5 • Under construction QLD • 100% Pre-committed Blackwoods Logistics Facility, 13,800 $25 • Under construction Mackay QLD • 100% Pre-committed Northline Logistics Facil
Slide 117: Industrial Active leasing
Industrial Active leasing For personal use only 51 145,562 99% 1,083,000 17 Sqm Average Tenants Sqm GLA Leases executed Leases completed occupancy • 101,873sqm leased or renewed in FY13 • Leased or terms agreed on a further 43,689sqm to 30 September 2013 Major transactions include: • Australia Post
Slide 118: Industrial Managing lease expiries
Industrial Managing lease expiries By Gross Income For personal use only 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23+ Charter Hall Group Investor Day 2013 117
Slide 119: Retail portfolio
Retail portfolio John Courtney, Head of Portfolio Operations (AUS and NZ) For personal use only
Slide 120: Retail Key Portfolio Statistics
Retail Key Portfolio Statistics As at 30 September 2013 For personal use only • 791 Retail assets across Australia in 1 listed and 4 wholesale funds and partnerships – 17 Sub Regional Shopping Centres – 43 Neighbourhood Shopping Centres – 19 Freestanding Supermarkets • Portfolio value over $2.3bn •
Slide 121: Experienced operational teams
Retail Experienced operational teams For personal use only A team of over 140 people within the Dedicated retail experts within the Retail Team working in collaboration Capital Transactions Team. with Charter Hall Services Divisions to deliver on operational excellence. Capital Transactions Asset De
Slide 122: Disciplined Investment Strategy
Retail Disciplined Investment Strategy For personal use only Typical Typical GLA Anchor Tenants • Neighbourhood and Woolworths sub-regional Neighbourhood < 10,000 sqm Coles supermarket anchored Woolworths • $20 - $100m asset Coles value for CQR Sub-regional 10,000 to 40,000 sqm Kmart Big W • Value u
Slide 123: Transaction Activity: Acquisitions by CQR
Retail Transaction Activity Acquisitions by CQR For personal use only Secret Harbour, WA ($33m) Tamworth, NSW ($35m) Lake Macquarie, NSW (50% sale from DRF to CQR, 100% interest $70m) Dubbo, NSW ($31m) South Gate, SA ($60m) Charter Hall Group Investor Day 2013 122
Slide 124: Transaction Activity: Wholesale funds and partnerships
Retail Transaction Activity Acquisitions by wholesale funds and partnerships For personal use only Bateau Bay Square, NSW ($164m) Keperra Square, QLD ($63m) Charter Hall Group Investor Day 2013 123
Slide 125: Results delivered through the Asset Life-Cycle
Retail Results delivered “through the Asset Life-Cycle” For personal use only • Fully vertically integrated platform – Functional teams work seamlessly to maximise value of the property throughout its life-cycle Strategic Strategic Asset – Expert in niche sector of supermarket anchored Asset Plannin
Slide 126: Property Management Resources
Retail Property Management Resources Our portfolio is managed across 12 hubs located throughout Australia For personal use only Charter Hall Group Investor Day 2013 125
Slide 127: Brand Strategy
Retail Brand Strategy Core Brand Idea For personal use only The community square for today Targeting Customers Customer Experience Relevance A place to meet Local, people focused A forum, the plaza, the Trend of service providing a belonging common. oriented and and connection experience based Creat
Slide 128: Brand Strategy
Retail Brand Strategy For personal use only Charter Hall Group Investor Day 2013 127
Slide 129: Specialty Tenant Leasing Activity
Retail Specialty Tenant Leasing Activity Australia - specialty tenant lease expiry at 30 September 2013 For personal use only 476 specialty leases Specialty tenant Current specialty Leasing deals completed since WALE steady at retention rate of completed on 1 July 2012 49,200 m2 GLA 3.1 years 85% an
Slide 130: Anchor Tenant Leasing Activity
Retail Anchor Tenant Leasing Activity Australian anchor tenant lease expiry at 30 September 2013 For personal use only 10 Anchor tenant Anchor Tenant Major tenant 37,000 m2 Majors Leasing deals completed WALE 11.7 years GLA occupancy rate Deals completed since 1 July 2012 on 9.5 % of the 100% Portfo
Slide 131: Asset Enhancement and Redevelopment
Retail Asset Enhancement and Redevelopment For personal use only • Value of major developments completed from 1 July 2012 to 30 Sept 2013 - $98.9 m • Current major projects underway ( approved ) - $59.2 m • Forecast pipeline of projects to commence within the next 3 years – over $250 m Projects Comp
Slide 132: Development Activity
Retail RETAIL Development Activity For personal use only Singleton Square – NSW Singleton Square – NSW Allenstown Square - QLD Lansell Square - VIC South Hedland Square - WA Charter Hall Group Investor Day 2013 131
Slide 133: Retail Trends
Retail Trends For personal use only • A focus on service offerings and experience in centre and a connection with the local communities as the “meeting place” • Strong competition between Woolworths and Wesfarmers business in all of their retail formats i.e. Liquor, Supermarkets, DDS, Hardware – Inn
Slide 134: Questions?
For personal use only Questions?
Slide 135: Closing remarks
Closing remarks David Harrison, Joint Managing Director For personal use only
Slide 136: Expertise across risk/return spectrum
Expertise across risk/return spectrum For personal use only A 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 Pooled 11 – 14% $1.8bn $0.6bn Li
Slide 137: Charter Hall Investor Day 2013 - Thank you
Charter Hall Investor Day 2013 Thank you for your participation For personal use only
Slide 138: 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 139: For personal use only
For personal use only