Transcription of Finance News Network Interview with Charter Hall Group Limited (ASX:CHC) Global Head of Investor Relations, Richard StackerCarolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Charter Hall Group
(ASX:CHC) is Global Head of Investor Relations, Richard Stacker. Richard, welcome back.
Richard Stacker: Thank you.
Carolyn Herbert: Can you start by giving us a brief introduction to Charter Hall?
Richard Stacker: Charter Hall Group is a property investment and property funds management business. We earn revenue from investing alongside our partners and investors, in the funds that we manage on their behalf. We manage about $19 billion of funds and we earn revenue as I said, from those property investments, but also we earn fees from managing those property funds and assets, on their behalf. Our investors include big sovereign wealth funds both here and overseas, pension funds as well, insurance companies. We also have a very big book of high net worth self-managed superfund clients.
Carolyn Herbert: Now to your first half 2017 results, what were the highlights?
Richard Stacker: We’re very proud of our results today. Operating earnings per share were up 37.7 per cent on the prior calendar period. Our total return on our property investments was 16.4 per cent. And that total return includes, not only the property yield, but also the underlying growth and the asset values. We’ve also announced upgraded earnings in terms of guidance, which I’ll touch on at the end.
Carolyn Herbert: Taking a look at each business now. How did they contribute to the Group’s financial results, starting with property investment?
Richard Stacker: Charter Hall co-invests almost $1.3 billion of its balance sheet in its funds alongside its investors and partners. Over the last five years, those funds have returned on average for Charter Hall’s investment, 17.5% return. That compares to the MSCI IPD property index of 9.9 per cent. So we’re very pleased that we’ve outperformed the benchmark significantly. And that obviously has meant our underlying funds have performed very well, as well.
Carolyn Herbert: What about property funds management?
Richard Stacker: Funds under management grew to $19 billion over the last six months. This is off record transactions of $3.8 billion, which also includes $0.8 billion of underlying property valuation increases. We’ve also had a very good six months for equity inflow, $1.3 billion in equity inflows, a record in our unlisted retail business in terms of equity inflows. But also with the launch of the Long WALE REIT
(ASX:CLW), a significant amount raised from our listed investors as well.
Carolyn Herbert: What’s in the development pipeline?
Richard Stacker: We’ve got a very large development pipeline, as at the end of December, it’s almost $3.8 billion. We’ve just completed projects in Sydney, 333 George Street, right in the heart of the city here. But also at Parramatta, we’ve just finished the development on behalf of Western Sydney University, which they’ll lease on 15 years at Parramatta Square. We also have some major developments underway, with 130 Lonsdale Street in Melbourne, 900 Ann Street in Brisbane and also a development in Raine Square in Perth.
Our retail book is also fairly full. We’ve got Secret Harbour over in WA that we’re developing and also up in Mount Hutton and Lake Macquarie, a development underway there. Similarly in our industrial book, developments at Chullora are underway and also in Drystone Estate, down in Melbourne.
Carolyn Herbert: A key milestone for the Group was the float of the Long WALE REIT, towards the end of last year. Can you tell us a bit more about that?
Richard Stacker: The Long WALE REIT is the largest diversified real estate investment trust in the Australian market. We launched it last year after recycling a number of assets from existing funds, in our wholesale and also our unlisted retail business. Charter Hall has co-invested almost 20 per cent into that Long WALE REIT. And it really goes along the strategy of our business to have long leases to very good tenants, in very good locations.
Carolyn Herbert: Finally Richard. What’s your guidance for the second half?
Richard Stacker: Charter Hall announced today that it was upgrading guidance to 37.7 cents per share. This is actually 24 per cent up on a pre-tax basis from the previous year, and up on previous guidance of 17 to 18 per cent.
Carolyn Herbert: Richard Stacker, thanks for the update.
Richard Stacker: Thank you very much.
Ends
