CHARTER HALL GROUP — AGM Information 2020

Nov 11, 2020

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130 Lonsdale Street, Melbourne VIC
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Charter Hall Group

2020 Annual General Meeting

12 November 2020

Charter Hall Group 2020 Annual General Meeting

1. Chair’s Address: David Clarke

Agenda

2. Managing Director’s Address: David Harrison

3. Formal Business

Charter Hall Group 2020 Annual General MeetingCharter Hall Group 2020 Annual General Meeting

Chair’s Address

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Dandenong Distribution Centre, Dandenong South, Melbourne VIC 130 Lonsdale Street, Melbourne VIC 3

Charter Hall Group 2020 Annual General Meeting

Chair’s Address

Board of Directors

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David Clarke Chair

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David Ross Non-Executive Director

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Anne Brennan Non-Executive Director

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Karen Moses Non-Executive Director

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Philip Garling Non-Executive Director

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David Harrison Managing Director & Group CEO

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Greg Paramor AO Non-Executive Director

Charter Hall Group 2020 Annual General Meeting

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Chair’s Address

Operating in the COVID-19 environment

Charter Hall strategy demonstrating its resilience

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Access

• Accelerating demand for industrial & logistics

• Direct flows have averaged $95m per month during FY20

• Continued securing wholesale pooled and partnership inflows

• Listed inflows of $1.4bn during FY20

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Deploy

Manage

• -

• Continued momentum in sale Proportion of rent from SME and leaseback transactions tenants of 10.2% across the funds platform

• Pivoted volume toward Industrial & logistics

  • Platform benefited from high occupancy, long WALE portfolios and resilient tenant industries

• Taken advantage of reduced buyer competition

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Invest

• Incremental balance sheet investments weighted towards Industrial & Logistics & Long WALE portfolios

• Balance sheet highly diversified with Top 10 asset exposures representing only 7.4% of Group earnings

• High proportion of government and strong covenant corporate tenants in resilient industries

Charter Hall Group 2020 Annual General Meeting

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Chair’s Address

53.9cps

Operating earnings growth

Operating earnings per security growth

Operating earnings per security growth (excluding CHOT Performance fee)

OEPS (pre-tax) cps OEPS (post-tax) cps

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86.6cps
69.3cps
56.3cps
43.5cps
40.5cps 47.4cps
35.9cps [37.7cps]
27.5cps [30.4cps]
[25.3cps]
[22.9cps]
19.2cps [20.7cps]
15.8cps
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
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39.4cps
33.6cps [33.8cps]
30.4cps
27.5cps
25.3cps
22.9cps
19.2cps [20.7cps]
15.8cps
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FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

Charter Hall Group 2020 Annual General Meeting

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Chair’s Address
ESG
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Environment

Climate resilience

Net zero target

Implementation of Scope 1 and Scope 2 Net Zero by 2030 pathway.

Renewable Energy

21MW of solar installed across our retail, industrial and office portfolios, in partnership with our tenant customers, when operating at capacity has the potential to generate 32.3MWh of energy, equivalent to powering 2,150 homes, over a twelve month period.

Sustainable Portfolios

Australia’s largest Green Star footprint with 230 assets achieving a Green Star Performance or Design and As Built ratings and 8 office funds in top 11 portfolios in NABERS Sustainable Portfolios index.

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Social

Strong communities

Pledge 1%

$933,000 donated to the community through our partnerships, including $500,000 for bushfire relief and recovery.

60% of employees engaged in volunteering. 45,285 sqm in Pledge 1% space, valued at $1.9 million provided for community use.

Engaged employees

93% employee engagement score and Charter Hall was recognised in the Women’s Index – Australia as one of the leading ASX listed companies to demonstrate gender equality.

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Governance

Responsible Business

TCFD alignment underway

Climate Strategy evolving to prepare our business for a low carbon economy and/or business as usual climate scenarios.

Working to protect human rights

Mandatory employee Modern Slavery training. High risk suppliers engaged through pre-qualification survey, measuring awareness and understanding of modern slavery issues.

Charter Hall Group 2020 Annual General Meeting

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Managing Director’s Address

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Campbellfield Plaza, Vic Charter Hall Group 2020 Annual General Meeting

2 Chifley, Square, Sydney NSW 130 Lonsdale Street, Melbourne VIC 8

Managing Director’s Address

15 years as a listed company

15 years of outperformance relative to the AREIT index

Total Shareholder Return vs. ASX 200 Property Accumulation Index (XPJAI)

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Return on Contributed Equity
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(Compound Annual Growth Rate)

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CHC XPJAI
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25.8% p.a.
22.1% p.a.
21.5% p.a.
15.7% p.a.
9.2% p.a.
4.4% p.a.
3.1% p.a.
2.0% p.a.
3 Years 5 Years 10 Years Since Listing
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23.3%
Return on contributed equity (pre-tax) %
Return on contributed equity (post-tax) %
15.1%
11.6%
11.5%
18.6%
12.7%
10.2% 10.1%
8.7%
FY16 FY17 FY18 FY19 FY20
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Source: UBS

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Managing Director’s Address

Group funds management portfolio FY21 YTD FUM growth of $2.9bn (7.2%) to $43.4bn

	Portfolio value ($bn)	Lettable area (m sqm)	No. of Properties	Net income ($m)	WALE (years)	Occupancy (%)	WACR (%)
31 October 2020 43.4 8.2 1,379 2,235 8.9 97.2 5.26
30 June 2020 40.5 7.9 1,104 2,167 8.6 97.5 5.27
30 June 2019 30.4 6.6 844 1,713 8.2 97.9 5.58

Diversification by equity source

Asset type diversification

WALE by sector

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Social Infrastructure
Retail Equity $2.9bn
$6.1bn 6.6%
14.0% SC Retail 14.2
13.7
$3.7bn
8.5% Industrial & Logistics
$11.5bn
26.5% 11.1
Anchor WALE
Long WALE Retail 11.5
$5.3bn
Listed Funds 12.2%
6.8
$8.8bn20.2% $43.4bn $43.4bn 5.5
Wholesale
Equity $28.6bn
65.8%
SC Retail Office Industrial & Long WALE Social
Office Logistics Retail Infrastructure
$20.0bn
46.1%
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Managing Director’s Address

Funds under management growth FY21 YTD FUM growth of $2.9bn (7.2%) to $43.4bn

• FUM growth of 33.2% in FY20, to $40.5bn

Funds under management movement ($bn)

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$43.4bn
$1.3bn $40.5bn
$1.4bn
$8.5bn ($1.1bn)
$30.4bn
Jun-19 Acquisitions Divestments Net Capex Jun-20 Oct-20
revaluations
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Funds under management by equity source ($bn)

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Wholesale Listed Retail
$43.4bn
$40.5bn
$6.1bn
$6.1bn
$8.8bn
$30.4bn $8.2bn
$5.0bn
$28.6bn
$23.2bn
$26.3bn
$6.3bn
$19.8bn $2.9bn
$17.5bn
$2.8bn $4.4bn
$19.2bn
$13.6bn $2.5bn $4.1bn
$15.9bn
$2.5bn
$1.9bn
$2.2bn $12.4bn $12.9bn
$9.5bn
Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Oct-20
28.7% 13.7% 17.0% 31.1% 33.2% 7.2%
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Charter Hall Group 2020 Annual General Meeting

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Managing Director’s Address

Transactional activity FY21 YTD transactional activity led by Industrial & Logistics and Long WALE Retail

FY20 ($m)	Industrial & Logistics	Long WALE Retail	Office	Social Infrastructure / Other	Shopping Centre Retail	Total
Acquisitions	1,906	1,212	3,334	760	62	7,275
Divestments	(107)	(194)	(229)	(72)	(420)	(1,023)
Net transactions	1,799	1,018	3,106	688	(358)	6,252
Gross transactions	2,014	1,407	3,563	832	482	8,297

FY21 YTD ($m)	Industrial & Logistics	Long WALE Retail	Office	Social Infrastructure / Other	Shopping Centre Retail	Total
Acquisitions	1,146	1,408	204	286	-	3,045
Divestments	(156)	(105)	-	(59)	(57)	(377)
Net transactions	990	1,303	204	227	(57)	2,668
Gross transactions	1,302	1,513	204	345	57	3,421

Charter Hall Group 2020 Annual General Meeting

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Managing Director’s Address

Equity Flows

FY21 YTD Equity flows led by CPIF & new partnerships

• Diversified equity sources with $5.1bn gross equity flows across 24 funds in FY20

• Listed equity flows of $1.4bn with 6 raisings across CLW, CQR and CQE in FY20

• FY21 YTD total equity invested of $1.8bn

($m)	FY17	FY18	FY19	FY20		FY21 YTD
Wholesale pooled funds	776	649	1,802	1,272		731
Wholesale partnerships	217	322	219	1,298		765
Listed funds	988	77	692	1,369		126
Direct funds	355	653	691	1,136		210
Gross equity invested	2,336	1,701	3,404	5,076		1,832
Net equity invested	1,689	1,487	3,287	4,585		1,753

Note: Equity flows includes equity received or returned only and excludes undrawn equity commitments

Charter Hall Group 2020 Annual General Meeting

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Outlook & Guidance

FY21 operating earnings guidance

• Based on no material change in current market conditions and assuming the COVID-19 operating environment does not deteriorate markedly from here, the Group upgrades FY21 guidance for post-tax operating earnings per security of approximately 53.0 cps from previous guidance of 51.0 cps

• FY21 distribution per security guidance remains unchanged and is for 6% growth over FY20

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2 Park Street, Sydney NSW

Charter Hall Group 2020 Annual General Meeting

Formal Business

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ALDI Prestons Distribution Centre, Prestons NSW

Charter Hall Group 2020 Annual General Meeting

Formal Business

Item 1 – Annual Report

To receive and consider the Annual Report, consisting of the Financial Report and Directors' Report, and Auditor's Report for the year ended 30 June 2020.

Note: There is no requirement for Securityholders to approve these reports.

Charter Hall Group 2020 Annual General Meeting

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Formal Business

Item 2 – Election and Re-Election of Director of CHL

To consider and, if thought fit, pass the following ordinary resolutions of CHL:

“That Mr David Ross, a Director of CHL retiring in accordance with the CHL Constitution, is re-elected as a Director of CHL."

Charter Hall Group 2020 Annual General Meeting

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Formal Business

Item 2 – Proxies – Election and Re-Election of Director of CHL

FOR:	96.89%
OPEN:	0.09%
AGAINST:	3.03%

Note: Figures do not add to 100% due to rounding.

Charter Hall Group 2020 Annual General Meeting

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Formal Business

Item 3 – Adoption of Remuneration Report

To consider and, if thought fit, pass the following ordinary resolution of CHL:

"That the Remuneration Report included in the Annual Report for the year ended 30 June 2020 be adopted." Note: The vote on this resolution is advisory only and does not bind Charter Hall Group or the Directors of CHL.

Charter Hall Group 2020 Annual General Meeting

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Formal Business

Item 3 – Proxies – Adoption of Remuneration Report

FOR:	98.37%
OPEN:	0.08%
AGAINST:	1.55%

Charter Hall Group 2020 Annual General Meeting

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Formal Business

Item 4 – Issue of service rights to Mr David Harrison - Performance Rights and Options Plan (Deferred portion of Short Term Incentive (STI) for FY20)

To consider and, if thought fit, pass the following ordinary resolution of CHL and CHPT:

“That approval is given for all purposes under the Corporations Act and the Listing Rules (in particular, Listing Rule 10.14) for the issue of 80,922 service rights to Mr David Harrison as described in the Explanatory Memorandum.”

Charter Hall Group 2020 Annual General Meeting

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Formal Business

Item 4 – Proxies – Issue of service rights to Mr David Harrison - Performance Rights and Options Plan (Deferred portion of Short Term Incentive (STI) for FY20)

FOR:	99.26%
OPEN:	0.08%
AGAINST:	0.66%

Charter Hall Group 2020 Annual General Meeting

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Formal Business

Item 5 – Issue of performance rights to Mr David Harrison – Performance Rights and Options Plan (Long Term Incentive (LTI))

To consider and, if thought fit, pass the following ordinary resolution of CHL and CHPT:

“That approval is given for all purposes under the Corporations Act and the Listing Rules (in particular, Listing Rule 10.14) for the issue of 265,737 performance rights to Mr David Harrison as described in the Explanatory Memorandum;

Charter Hall Group 2020 Annual General Meeting

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Formal Business

Item 5 – Proxies – Issue of performance rights to Mr David Harrison – Performance Rights and Options Plan (Long Term Incentive (LTI))

FOR:	99.26%
OPEN:	0.08%
AGAINST:	0.66%

Charter Hall Group 2020 Annual General Meeting

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Questions

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GPO Exchange, Adelaide SA

Charter Hall Group 2020 Annual General Meeting

Meeting closed

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Arnott’s Distribution Centre, Huntingwood, Sydney NSW

Charter Hall Group 2020 Annual General Meeting

Further information

Presentation authorised by the Board

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David Harrison

Managing Director & Group CEO Charter Hall Group

T: +61 2 8651 9142 E: david.harrison@charterhall.com.au

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Sean McMahon

Chief Investment Officer Charter Hall Group

T: +61 2 8651 9147

E: sean.mcmahon@charterhall.com.au

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Russell Proutt

Chief Financial Officer Charter Hall Group

T: +61 2 8651 9493

E: russell.proutt@charterhall.com.au

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Philip Cheetham

Head of Listed Investor Relations Charter Hall Group

T: +61 2 8651 9214

E: philip.cheetham@charterhall.com.au

Charter Hall Group 2020 Annual General Meeting

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IMPORTANT NOTICE & DISCLAIMER

This presentation has been prepared by Charter Hall Funds Management Limited ACN 082 991 786)) (together, with its related bodies corporate, the Charter Hall Group).

This presentation 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, nor does it contain all the information which would be required in a product disclosure statement prepared in accordance with the requirements of the Corporations Act 2001 (Commonwealth) (Corporations Act). Prospective investors should conduct their own independent review, investigations and analysis of the information contained in or referred to in this presentation and the further due diligence information provided.

Statements in this presentation are made only as of the date of this presentation, unless otherwise stated. Charter Hall Group is not responsible for providing updated information to any prospective investors. Any forecast or other forward looking statement contained in this presentation 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.

In making an investment decision, prospective investors must rely on their own examination of the Charter Hall Group, and any other information they consider relevant. All information is provided as indicative only.

This presentation is provided to each prospective investor on the condition that it is strictly confidential and is for the sole use of prospective investors and their advisers. It must not be provided to any other party without the written consent of Charter Hall Group which it may withhold in its absolute discretion.

None of Charter Hall Group, its officers, employees, advisers or securityholders (together, the Beneficiaries) guarantee or make any representation or warranty as to, or take responsibility for, the accuracy, reliability or completeness of the information contained in this presentation. Nothing contained in this presentation nor any other related information made available to prospective investors is, or shall be relied on, as a promise, representation, warranty or guarantee, whether as to the past, present or the future. To the extent permitted by law, the Beneficiaries disclaim all liability that may otherwise arise due to any information contained in this presentation being inaccurate, or due to information being omitted from this document, whether by way of negligence or otherwise. Neither the Beneficiaries nor any other person guarantees the performance of an investment with or managed by Charter Hall Group.

All information contained herein is current as at 31 October 2020 unless otherwise stated. All references to dollars ($) are to Australian dollars, unless otherwise stated.

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charterhall.com.au

Charter Hall Group 2020 Annual General Meeting