Corporate Overview

With over 30 years’ experience in property investment and funds management, Charter Hall is one of Australia’s leading fully integrated property groups. We use our property expertise to access, deploy, manage, and invest equity across our core sectors – Office, Retail, Industrial & Logistics, and Social Infrastructure.

Charter Hall (ASX Code: CHC) is listed on the Australian Securities Exchange, with our balance sheet capital primarily invested alongside our investors in both funds and partnerships. Currently we have more than $2.8 billion co-invested in our funds and partnerships.

Operating with prudence, we’ve carefully curated a $61.3 billion plus diverse portfolio of over 1,516 high quality, long leased properties to more than 4,000 tenants.

Partnership and financial discipline are at the heart of our approach. Acting in the best interest of customers and communities, we combine insight and inventiveness to unlock hidden value.

Charter Hall has also extended its Fund Management capability into another asset class with the 50% acquisition of the $18.2 billion listed equities Fund Manager Paradice Investment Management (PIM), which invests on behalf of wholesale and retail investors across domestic and global listed equities.

Taking a long-term view, our $13.2 billion development pipeline of develop to core projects delivers sustainable, technologically enabled assets for our customers and high quality long leased asset for our funds and partnerships.

The impacts of what we do are far-reaching. From helping businesses succeed by supporting their evolving workplace needs, to providing investors with superior returns for a better retirement, we’re powered by the drive to go further.

Figures as of 31 December 2021


Strategic corporate development

Charter Hall Group is focused on increasing our investment reach across Australia through new funds, capital partners, tenant customers, asset acquisitions and our develop to core pipeline across Office, Convenience and Long WALE Retail, Industrial & Logistics and Social Infrastructure. Charter Hall remains in a strong financial position, supported by a high-quality team focused on delivering outstanding results for our tenant customers and investors.

Our strategic focus continues to be on investment funds and partnerships that are characterised by long WALEs, high occupancy, and annual rent reviews, that deliver real income growth to our investors. Charter Hall’s development pipeline enables us to add value to existing assets while developing high quality, ESG enhanced assets (develop to core) within our funds and partnerships.


Investment Principles & Strategy

Charter Hall is a fully integrated property investment management platform with expertise across investment management, property and asset management, transaction, leasing and development.

We are a leading owner and manager of long WALE assets that are predominantly leased to corporate and government tenants on long term leases. Our focus on quality, well-located assets, with strong ESG credentials and secure long-term leases, together with our ability to unlock hidden value, creates a balance between stability, returns and growth.

Our portfolios are carefully curated with a risk-adjusted focus to optimise returns, while delivering resilience and durable cash flows through enhancing tenant quality, extending the WALE’s, and actively managing each of our assets.

Charter Hall’s development pipeline enables us to add value to existing assets while producing potential new product within our funds (develop to core) to limit the need for buying assets in a competitive on-market environment.

With a property portfolio of more than 1,516 properties valued at $61.3 billion and leased to over 4,000 tenants, Charter Hall’s market penetration creates opportunities to provide cross-sector solutions to tenant customers. It also gives us a competitive advantage to secure long-term leases from these customers who appreciate the scale and diversity of our market reach. More than 70% of our tenant customers lease more than one tenancy from us.

Our leading market share in transactions along with our dedicated teams in each major metropolitan market, provides invaluable insight into local property markets. In the past five years, we have undertaken $35 billion of gross transactions ($28.2 billion in acquisitions and $6.8 billion in divestments) driven by our investment management, transaction, property services and support teams working collaboratively to curate our portfolios for the benefit of our funds and partnerships.

A key advantage we have is our ability to access off-market deals and leverage our skills and relationships to partner with major corporate and government entities on sale and leaseback transactions. We have undertaken more than $11 billion in sales and leaseback transactions in the past five years, embedding us as the leader in the Long WALE triple net lease sector.

Figures as of 31 December 2021


Sector forecasts

Office

Office occupancy has accelerated in major Australian CBDs with the easing of mobility restrictions, reduction of COVID-19 transmission rates and tight labour markets. Leasing data has highlighted demand bifurcation by quality of offices. The stark contrast expanded over the 12-months to March 2022: Prime CBD net absorption increased by 489,000 sqm, while Secondary sector net absorption decreased by 102,800 sqm. Tenants are requiring high quality space as a mechanism to attract and retain staff, and this is driving a flight to quality, leaving lower-quality stock at risk of obsolescence.

Twelve months ago, the focus was on the future of offices. Headlines signalling the death of the office were almost a daily occurrence as people were forecasting the work from home revolution would prevail and office demand would collapse. Whilst we recognised tenants would review their space needs, after all they do that in every economic downturn, we were then, and remain confident now, that businesses will continue to value the office environment as a key facilitator of collaboration, productivity, and an organisation’s culture. The pandemic has also intensified the priorities on health, wellbeing, and sustainability. These factors will contribute to growing divergence in demand between Prime and Secondary office assets. Having close to 2,500 tenants across the platform gives us a unique lens into the way firms are thinking about both their future business and space needs.

Industrial & Logistics

The sector continues to benefit from growing requirements in a post COVID-19 environment. The demand for modern logistics assets is intensifying driven by the ongoing evolution of online retailing, the importance of supply chain resilience, higher transportation costs, sustainability requirements and onshoring. These factors are adding to the shortage of industrial space. Vacancy rates are at historically low levels and the demand for space continues to outweigh the supply of new stock.

As a result, we expect the recent strong rental growth to continue in the next few years.

Additionally, sale and leaseback has been a feature of the industrial & logistics market, and in the current environment, we believe industrial occupiers will continue to consider sale-and-leaseback strategies to enhance their capital management or to reinvest in their business.

Retail

Supermarket sales and ancillary retailers located in smaller convenience focused centres will continue to benefit in the post COVID-19 period, as consumers continue to focus on convenience. Non-discretionary retail spending will underpin the resilience of these assets. Convenience and long WALE retail cashflows continue to be in high demand given their durability and inflation hedging characteristics.

Larger retail malls that are more exposed to discretionary focused retail are still recovering from the fall in foot traffic, tenant sales, reported earnings during COVID- 19. Their performance reflects both cyclical elements and the acceleration of the structural changes arising from the growth in online shopping and the fall-out from COVID-19. This weakness in larger discretionary retail centres has been priced in with significant declines in valuations and investor demand. We expect this weakness to continue in the year ahead.

Other

Property-related Social Infrastructure, such as childcare, senior housing (manufactured housing and aged care), student accommodation, government premises and medical/health facilities, are increasingly becoming an attractive sector for investors. The underlying demand drivers and attractive yields are set to attract further capital into these assets in the year ahead.


Compliance statement
This information has been prepared by Charter Hall Funds Management Limited (ACN 082 991 786) (together, with its related bodies corporate, the Charter Hall Group). This information has been prepared without reference to your particular investment objectives, financial situation or needs and does not purport to contain all the information that a prospective investor may require in evaluating a possible investment. Prospective investors should conduct their own independent review, investigations and analysis of the information contained in or referred to in this publication and the further due diligence information provided. It is not an offer of securities or advice. Any forecast or other forward-looking statement contained in this information may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. There are usually differences between forecast and actual results because events and actual circumstances frequently do not occur as forecast and these differences may be material. Charter Hall Group is not responsible for providing updated information to any prospective investors.