CHARTER HALL GROUP — Investor Presentation 2017

Feb 1, 2017

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Charter Hall Group Investor Development Showcase

2 February 2017

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Agenda

• 1 Welcome and Introduction

• 2 Development Activity

• 3 Office Development

• 4 Industrial Development

5 Q&A

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Andrew Simons

Andrew Borger

Head of Office Development National Manager - Industrial Services Projects/Development

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David Harrison Managing Director & Group CEO

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Development Activity

Overview

• Development opportunities undertaken to enhance both income yield and total returns for managed funds

• In-house development skills are a core competency

• Committed projects / development pipeline includes 45 office, industrial and retail projects

Development activity (completion value $m)	Committed projects	Development pipeline2	Total1
Office	747	1,273	2,020
Industrial	418	886	1,304
Retail3	178	277	455
Total	1,343	2,436	3,779

1. $1.9b included in FUM at 31 December 2016

2. Includes potential end value of DA approved schemes, future retail redevelopments and potential end value of industrial land banks 3. Reflects development spend only

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Group

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Development Projects

Overview

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2017 2018 2019 2020
333 George Street, 1PSQ, WSU, 900 Ann Street, Raine Square, Perth, GPO, Adelaide, SA 11BCR, Newstead, 130 Lonsdale Street,
Sydney, NSW Parramatta, NSW Brisbane, QLD WA QLD Melbourne, VIC
Secret Harbour, WA Mt Hutton Plaza, Wanneroo Central, WA Allenstown Square, Bass Hill Plaza, Carnes Hill Erindale Shopping
NSW QLD NSW Marketplace, NSW Centre, ACT
AHG Prestons, NSW Chullora Logistics M5/M7 Logistics Dandenong Dist’n Drystone Estate, ConnectWest, Darra, Wetherill Park Dist’n
Park, NSW Park, Prestons, NSW Centre, VIC Laverton, VIC QLD Centre, NSW
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Office Development Andrew Borger Head of Office Development Services

Office

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Historical Track Record

Delivering Prime Office Developments

Strong track record in creating and delivering high performing projects for tenant customers

Asset	Year	Market	Size	Tenant
Space 207	2004	Sydney North Shore	20,000	Hutchinson Telecom
Bushells	2004	Sydney CBD	12,000	Heritage Conversion – Dimension Data
151 Pirie Street	2005	Adelaide CBD	12,650	KPMG and Macquarie
Zone	2006	Olympic Park Sydney	42,500	Commonwealth Bank of Australia
Atrium	2007	Sydney CBD Fringe	16,800	American Express
275 George Street	2007	Brisbane	40,000	Telstra, QLD Gas (British Gas)
Northbank Plaza	2007	Brisbane CBD	26,700	Telstra and Queensland Government
Allianz Centre	2007	Sydney CBD	40,000	Allianz
40 Creek Street	2009	Brisbane	12,353	Fitness First Platinum, Santos, Apple, Macrossans, Xenith, QCoal, Exoma Energy, Cardno HRP
Alluvion	2010	Perth CBD	22,400	Clough Engineering and Multiple Tenants
130 Stirling	2010	Perth CBD Fringe	12,500	Commonwealth Government, Mann Judd
171 Collins	2013	Melbourne CBD	33,000	BHP, Evans and Partners, McGrath Nicoll
Workzone Perth	2013	Perth CBD	27,911	Leighton’s and Broad
100 Skyring	2014	Brisbane CBD Fringe	24,800	Bank of Queensland, Collection House, Konica Minolta
570 Bourke Street	2015	Melbourne CBD	50,700	Government, Wood & Grieve Engineers

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Office

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Historical Track Record

Delivering Prime Office Developments

Zone, Olympic	Park, Sydney
SQM	42,500
Tenant	Commonwealth Bank of Australia
Year	2006

275 George	Street, Brisbane
SQM	40,000
Tenant	Telstra, Queensland Gas (British Gas)
Year	2007

Awards Received a total of 3 awards:

• 2011 PCA Innovation and Excellence Award - Project Control Group, Best Office Fitout (Finalist)

• 2010 Urban Taskforce Development Excellence Award, Commercial Development (Finalist)

• 2010 Australian Institute of Building (Qld Chapter), Professional Excellence Award Commercial Construction $100M plus

Northbank Plaza, Brisbane

SQM	26,700
Tenant	Telstra, Queensland Government
Year	2007

171 Collins Street, Melbourne

SQM	33,000
Tenant	BHP, Evans and Partners. McGrath Nicole
Year	2013

Awards Received a total of 9 awards including:

• 2014 Asia Pacific Property Awards, Best Commercial High Rise Development - Australia (Winner)

• 2014 Asia Pacific Property Awards , Best Office Development – Australia (Winner)

• 2014 Urban Taskforce Development Excellence Awards, Commercial Development (Finalist)

570 Bourke, Melbourne	570 Bourke, Melbourne
SQM	50,700
Tenant	State Government, Wood & GrieveEngineers
Year	2015
Awards

• 2015 API Excellence in Property Awards – Commendation for Property Development (Vic) (Finalist)

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Office

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Office Development Objectives

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1PSQ, Parramatta, Sydney
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Grow Sustainable Pipeline

Grow development investment through building a national portfolio of projects, located in core markets to create high quality investments for our Platform.

Providing Platform with Build to Core Opportunities featuring;

• New product

• Long WALE

• Enhanced Yield on Cost and Equity IRR

• Providing high quality accommodation solutions for tenant customers

Implementation

A. Origination

• Site selection

• Floor space optimisation

• Master planning/add value to existing portfolio

B. Conversion

• Approvals/ Project Brief

• Pre-leasing

• Construction Procurement

C. Delivery

• Build

• Full occupancy

• Transition to Asset Management

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Office

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Pillars of Strategic Growth Moving Forward

1. Add Value Existing Portfolio

2. Masterplan Strategic Acquisitions

3. Originate

• Master-plan

• Identify strategic adjoining land

• • Identify value add opportunities

• Identify medium to long term existing assets

• Add value identification

• Redevelopment potential

• • Site amalgamation opportunity

• Focus on:

• Off market acquisitions

• EOI/ RFP Processes

• Government owned sites

• Sites owned by not for profit sector + non core property

• • Pre-commit tenants

4. Growth Sectors

5. Partnering

6. Infrastructure/Transit Orientated Development

• Occupant partnering model

• • Long WALE creation • Accessing growing occupiers

• JV partnering providing;

• Access to capital

• • Planning approvals
• • Tenant commitments

• Infrastructure eg John Holland + non core property owners

• Target TOD Projects;

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• Sydney

• Melbourne

• Cross River Rail + Brisbane Metro

• Perth City Link

• Universities

• • State based organisations

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Office

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Project Examples

1. Add Value to Existing Portfolio

Raine Square, Perth

Realise the potential of 1.2 HA existing asset:

• Convenience Retail

• Entertainment

• Dining

• Major Specialty Anchors

• Health Club

• Conference

• Upgraded Office Lobbies

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Office

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Project Examples

2. Masterplan New Strategic Acquisitions

55 King Street, Melbourne

Overview No. levels total 27 Typ Tower NLA (sqm) 930 Typ Podium NLA (sqm) 1,460 Total Office NLA (sqm) 27,700 Retail Glar (sqm) 800 Carparks 42 Total GFA (sqm) 44,150

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Office

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Project Examples

3. Originate

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Wesley Place, 130 Lonsdale, Melbourne

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11BCR at Gasworks - 11 Breakfast Creek Road, Newstead, Brisbane

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Office

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Project Examples

4. Education Sector

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1PSQ, Western Sydney University, Parramatta – Completed
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Add Melbourne Uni
image from front page
Melbourne University - Open Market Tender
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Office

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Project Examples

5. Partnering

900 Ann Street, Brisbane

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Construction progress as at December 2016 Artist’s Impression
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Office

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Project Examples

6. Infrastructure/Transit Orientated Developments (TOD)

Sydney Metro

Melbourne Metro

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Cross River Rail Brisbane

Perth City Link

Source: Respective state government websites Note: Charter Hall is not developing infrastructure projects

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Office

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Completed Projects

333 George Street, Sydney

Overview
Date started	2014
Date completed	2016
On completion value ($AUD)	$325 million
Grade	A
Ownership	100% CPOF
Total NLA (sqm)	14,600
Office NLA (sqm)	12,500
Retail NLA (sqm)	2,100
Typical floor plate (sqm)	970
Major tenants	WeWork, Clyde & Co, AIMIA, NAB, HSBC, Woolworths
Architect	Grimshaw and Crone Partners
Builder	Watpac
Total car spaces	17
End of trip facilities	Fresh towel service, showers, change rooms, lockers and bike racks
Retail	NAB, HSBC and Woolworths and Regiment cafe

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Office

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Completed Projects

333 George Street, Stack Plan

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Office

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Completed Projects

1PSQ - 1 Parramatta Square, Western University Campus

Overview
Date started	2014
Date completed	2016
On completion value ($AUD)	$252.5 million
Grade	A
Ownership	50% - Charter Hall Direct Office Fund 50% - Charter Hall Prime Office Fund
Total NLA (sqm)	26,500
Typical floor plate (sqm)	1,400–2,200
Total car spaces	80
Major tenant	Western Sydney University
WALE	15 years
Occupancy	100%
Architect	Architectus
Builder	John Holland
End of trip facilities	Secure basement parking, bicycle racks, showers and lockers
Retail	Ground floor retail amenities

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Office

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Planned Projects

Wesley Place, 130 Lonsdale Street, Melbourne

Overview
Start date	2017
Target completion	2019 - 2020 (forecast)
On completion forecast ($AUD)	$600 million
Grade	A
Ownership	100% CPOF
Total NLA (sqm)	60,000
Typical floor plate (sqm)	55,000
Total car spaces	1,523-1,976
Major tenant	TBA
Architect	COX Architecture
Builder	Construction tender
Total car spaces	Secure basement car parking
End of trip facilities	Secure bike parks and lockers Shower and change rooms
Retail	An integrated precinct of retail and commercial

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Office

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Planned Projects

Wesley Place, 130 Lonsdale Street, Melbourne

140 Lonsdale 19

Office

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Planned Projects

Raine Square Retail

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Office

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Office Development Pipeline

Overview

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Number
of projects
7+
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Total Value
$2.02 Billion
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Total Lettable Area
240,000+ sqm
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Office

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Development Pipeline

Overview

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2017 2018 2019 2020
333 George 1PSQ, WSU 900 Ann Street, Raine Square, GPO, 11BCR, 130 Lonsdale St,
Street, Sydney Parramatta Brisbane Perth Adelaide Newstead Melbourne
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Committed
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Secured
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Industrial Development

Andrew Simons National Manager – Industrial Projects/Development

Industrial

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Historical Track Record

Delivering Industrial Developments

Project	State	PC Financial Year	GLA	Completion Value ($m)	Current Value ($m)
15 Long St, Smithfield (Northline)	NSW	2014	16,516	$23.8	$30.2
2-30 Saintly Drive, Truganina	VIC	2014	46,910	$44.8	$55.5
61 Diesel Dr, Mackay (Blackwoods)	QLD	2014	13,843	$25.0	$29.5
92 Kurrajong Ave, Mt Druitt (Ancon/Spec)	NSW	2014	9,649	$12.1	$14.8
		TOTAL FY14	86,918	$105.7	$130.0
14 Worth St, Chullora (Aust Post)	NSW	2015	18,510	$19.7	$23.4
237 Sherbrooke Road, Willawong (Prixcar)	QLD	2015	4,587	$43.4	$58.1
Lot 57 Main Beach Rd, Pinkenba (Ceva)	QLD	2015	8,000	$18.4	$20.8
379 Sherbrooke Road, Willawong (Akzo)	QLD	2015	3,400	$8.9	$10.7
Rockhampton	QLD	2015	6,994	$12.9	$14.2
		TOTAL FY15	41,491	$103.3	$127.2
71 Foundation Rd, Laverton (Woolworths)	VIC	2016	24,895	$80.5	$92.3
Laverton Cold Store - Drystone	VIC	2016	6,771	$14.1	$19.0
2637 Ipswich Rd, Darra (Wildbreads)	QLD	2016	12,102	$33.2	$37.2
2637 Ipswich Rd, Darra (Cascade)	QLD	2016	5,801	$9.8	$11.8
2&3 Peachy Road, Yatala (Cope)	QLD	2016	9,550	$22.9	$24.0
7105 Hundred of Bagot, Darwin (Northline)	NT	2016	14,795	$27.0	$28.5
		TOTAL FY16	73,914	$187.5	$212.8
AHG Prestons	NSW	2017	17,234	$43.6	$50.0
Smithfield - Apollo/Axima	NSW	2017	17,071	$31.0	$31.0
Target - Drystone	VIC	2017	62,873	$79.4	$79.4
Rand - Drystone	VIC	2017	17,904	$21.0	$21.0
Parkwest - Abaris	VIC	2017	18,900	$14.3	$15.0
The Reject Shop - Drystone	VIC	2017	37,765	$44.7	$44.8
Dandenong South (Rondo)	VIC	2017	6,500	$9.5	$9.9
Completed to date in FY17		TOTAL FY17	178,247	$243.50	$251.10

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Industrial

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Industrial Development

WIP & Pipeline

175 hectares

Total Development Land

55 hectares Committed Developments

$420[1] million Completed Development End Value

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Committed [1]
(GLA)
Sydney
75,000sqm
Total
Melbourne 260,000sqm
145,000sqm
Brisbane
40,000sqm
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Land Bank
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Perth
10,000sqm
Melbourne
155,000sqm
Sydney
Total
255,000sqm
600,000sqm
Brisbane
180,000sqm
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• Currently under construction is 115,000sqm GLA

• Looking forward there is the potential for 600,000sqm of GLA with an end value of > $800m

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1. Committed/developed over the last 18 months

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Industrial Development Case Study

Chullora Logistics Park – 2 Hume Highway, Sydney

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Industrial

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Industrial Development Case Study Chullora Logistics Park – 2 Hume Highway, Sydney

• Former Fairfax printing and distribution facility 17km from the CBD, constructed mid 1990’s

• Charter Hall identified Chullora as a highly land constrained location ideal for metropolitan distribution

• Within the first 12 months secured two significant pre-leases totalling 65% of GLA

• Leveraging off retail relationships and benefitting from the contraction in inner-Sydney options for tenants

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Industrial

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Industrial Development Case Study

Chullora Logistics Park – 2 Hume Highway, Sydney

• Size: 10 hectare site

• Potential for 52,000sqm of GLA

• End value of $125m

• Lion Nathan is a 10,000sqm cold store on a 10 year lease

• Fastway Couriers is a 21,500sqm distribution facility on a 10 year lease

• Two further buildings with maximum of 12,000sqm and 8,500sqm

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Industrial Development Case Study

Drystone Industrial Estate – 441 Dohertys Road, Truganina, Melbourne

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Industrial

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Industrial Development Case Study

Drystone Industrial Estate – 441 Dohertys Road, Truganina, Melbourne

• 85ha estate

• Initial site purchased from receivers following commitment to The 25,000sqm Woolworths Meat Processing Facility

• Strategic acquisition of adjoining parcel from Goodman/ Linfox that unlocked sites full potential

• Within the first 12 months pre-leases totalling 145,000sqm were secured to Target, The Reject Shop, Rand, Laverton Cold Storage and Couriers Please

• The dominant estate within this market

Reject Shop, Truganina, Melbourne

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Target, Truganina, Melbourne

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Industrial Development Case Study

M5/M7 Logistics Park – 290 Kurrajong Road, Prestons, Sydney

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Industrial

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Industrial Development Case Study

M5/M7 Logistics Park – 290 Kurrajong Road, Prestons, Sydney

• Former market gardens with 5 different owners

• Becoming a strategic logistics location due to proximity to Moorebank Intermodal and Badgerys Creek Airport

• Secured a pre-lease for 15,000sqm prior to settlement

• The first stage 25,000sqm is due for completion in April 2017 and is now 100% committed

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Industrial

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Industrial Development Case Study

M5/M7 Logistics Park – 290 Kurrajong Road, Prestons, Sydney

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• Size: 15 hectare site

• Potential for 80,000sqm of GLA

• End value of $135m

• Bracknells Warehousing is a 15,000sqm facility secured on a 7 year lease

• BAM Wine Logistics is a 10,000sqm facility secured on a 7 year lease

• • Currently shortlisted on three major requirements of between 20,000sqm to 30,000sqm

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Industrial

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Industrial Development Case Study

Smithfield Industrial Estate – 17 Long Street, Smithfield, Sydney

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Industrial

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Industrial Development Case Study Smithfield Industrial Estate – 17 Long Street, Smithfield Sydney

• Land constrained in-fill site located in the heart of Smithfield’s Industrial area

• Purchased from power authority with Building 1, 17,000sqm pre-leased to Northline completed 2013

• Building 2, 17,000sqm undertaken as a speculative development in 2016, (100% pre-leased) prior to completion in December 2016, to Apollo Kitchens (11.5 year lease) and Axima Logistics (7 year lease)

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Axima Logistics – Smithfield Distribution Facility
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Questions

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Contact us

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David Harrison Managing Director & Group CEO

Charter Hall Group

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

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Phil Cheetham Head of Listed Investor Relations

Charter Hall Group

T: +61 2 8651 9214 philip.cheetham@charterhall.com.au

DISCLAIMER

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 “Group”). It is a presentation of general background information about the Group’s activities as at 30 June 2016 unless otherwise stated. It is a summary and does not purport to be complete. It is to be read in conjunction with the Charter Hall Financial Report filed with the Australian Securities Exchange on 22 August 2016. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. A reader should, before making any decisions in relation to their investment or potential investment in the Charter Hall Group, seek their own professional advice. This presentation is not an offer or invitation for subscription or purchase of securities or other financial products. Indications of, and guidance on, future earnings and financial position and performance are “forward-

looking statements”. Due care and attention has been used in the preparation of forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Group, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements.

All information here in is current as at 30 June 2016 unless otherwise stated, and all references to dollars ($) or A$ are Australian Dollars unless otherwise stated.

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Sydney Head Office Level 20, No.1 Martin Place Sydney, NSW, 2000

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T: +61 2 8651 9000

Melbourne

Level 12, 570 Bourke Street Melbourne VIC 3000

T: +61 3 9903 6100

Brisbane

Level 22, Northbank Plaza 69 Ann Street Brisbane QLD 4000 T: +61 7 3228 2000

Perth

Level 5, St Georges Square 225 St Georges Terrace Perth WA 6000

T: +61 8 9269 5900

Adelaide

Suite 604, 147 Pirie Street Adelaide SA 5000

T: +61 8 8417 5900

www.charterhall.com.au