Corporate Overview

With over 30 years’ experience in property investment and funds management, Charter Hall is one of Australia’s leading fully inte-grated property groups. We use our property expertise to access, deploy, manage and invest equity across our core sectors – office, convenience and long WALE retail, industrial and logistics, and social infrastructure.

Charter Hall (ASX Code: CHC) is listed on the Australian Securities Exchange, with our balance sheet capital primarily invested along- side our investors in both funds and partnerships. Currently we have more than $2.0bn1 co-invested in our funds and partnerships.

Operating with prudence, we’ve carefully curated an $41.8bn1 plus diverse portfolio of over 1,3001 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.

Taking a long-term view, our $6.8bn development pipeline of develop to core projects delivers sustainable, technologically enabled assets for our customers and high quality long leased assets 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.

Strategic corporate development

Charter Hall Group is focused on increasing our investment reach across Australia through new funds, capital partners, tenant cus- tomers, asset acquisitions and development activity across office, convenience and long WALE retail, industrial and 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 producing potential new product within our funds (develop to core) to limit the need to buy assets in a competitive on-market environment.

1 As at 20 August 2020 

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 predomi- nantly leased to corporate and government tenants on long-term leases. Our focus on quality, well-located assets, with 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 resilient and durable cash flows through enhancing tenant quality, extending WALEs and actively managing 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 1,3001 properties valued at $41.8bn1 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.

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 $8.5bn in sales and leaseback transactions in the past five years, embedding us as the leader in the long WALE triple net lease sector.

1 Figure as at 20 August 2020

Sector forecasts

OFFICE: The office sector is facing cyclical headwinds as the growth in occupier demand is impacted by the broader economic uncertainty. Office vacancies are expected to rise in most markets, albeit in Australia’s two major markets, Sydney and Melbourne, it is off historic lows.

The overall impact on office demand will ultimately be driven by the competing forces of rising workspace ratios and shifting demand for workers in an office workplace environment. Whilst some companies will allow more WFH and/or relocate staff from CBD to suburban markets as part of a hub and spoke ecosystem system, the modest new supply outlook will be positive in limiting what may otherwise have been significant increase in vacancy.

There will likely be increased investment demand for prime assets as they benefit from a flight to quality, as tenants focus on a building’s wellness and amenity, and creating a safe work environment in which their staff can collaborate and foster a positive culture.

INDUSTRIAL: Income resilience and macro tailwinds have underpinned industrial’s outperformance; the sector recorded a total annual return of 11.6% in the year to 30 June 2020 well above all other major sectors.

Growth in online retailing and businesses looking to optimise their supply chains is continuing to accelerate at an unprecedented pace, supporting demand for high-quality logistics assets.

The sectoral shift towards industrial is well underway; strong occupier demand coupled with limited supply is driving an appreciation in rents and capital values. Yields have reduced to, or near, record low levels. Despite the sharpening of industrial yields, the gap to bond yields is at historically high levels further enhancing the attractiveness of the sector. Additionally, the low interest rate environment presents as an opportunity for occupiers to consider sale-and- leaseback strategies to optimise their capital management or to reinvest in their business.

RETAIL: Supermarkets and ancillary retailers located in smaller convenience focused centres will continue to benefit in a post COVID -19 world, as consumers continue to focus on convenience.

Larger retail malls that are more exposed to discretionary retail will continue to struggle. Their performance reflects both the cyclical elements associated with a slowing economy and the acceleration of the structural changes from growth in online shopping.

 

OTHER: Property related social infrastructure, such as childcare, seniors housing (manufactured housing and aged care), student accommodation, government premises and medical/health facilities, will increasingly become an attractive sector for investors. The underlying demand drivers and attractive yields are set to attract further capital into these assets.

The growth in social infrastructure opportunities is primarily being driven by:

  • Demographic and social changes;
  • Demand for better quality facilities;
  • Relative high population growth rates and greater urbanisation of our major cities; and
  • Growing realisation that operators should focus on their core business of managing and delivering services to the community rather than the provision, ownership and management of the underlying property assets.

Performance verification

Charter Hall’s two flagship pooled funds, the Charter Hall Prime Office Fund (CPOF) and Charter Hall Prime Industrial Fund (CPIF) have outperformend the MSCI Mercer Australia Core Wholesale Monthly index.

CPIF returned 10.7% and CPOF 6.9% for the 12 months to 30 June 2020 versus –2.7% for index. For the 3, 5 and 10 years, CPIF has returned 10.7% p.a, 11.0% p.a and 11.3 p.a while CPOF has returned 11.3%p.a, 13.7% p.a and 11.8% p.a respectively. By comparison, the index over 3, 5 and 10 year timeframes has returned 5.3% pa 8.1% and 8.6% pa. 

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.