Charter Hall Group

Ladies and gentlemen, thank you for standing by and welcome to the Charter Hall Group 2026 half year resource briefing. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session, at which time if you wish to queue for a question, you will need to press star 11 on your telephone keypad and wait for your name to be announced. Please note that this conference is being recorded today, Thursday, the 19th, February 2026. I would now like to hand the conference over to your host today, Mr David Harrison, Managing Director and Group Chief Executive Officer. Thank you. Sir, please go ahead.

Good morning and welcome to Charter Hall Group's first half FY26 results. Joining me today are Sean McMahon, our Chief Investment Officer, and Anastasia Clark, our Chief Financial Officer. Today I will provide an overview of the highlights of the very active last six months. and then cover the usual funds under management, equity flows, valuations, operating environment and finish with our property investment balance sheet portfolio. Sean then will take you through development activity and our sustainability initiatives, followed by Anastasia with the financial highlights. We'll conclude with our outlook and Q&A. Turning to the group's highlights. Operating earnings for the half were 239 million, or 50.5 cents per security, reflecting continued momentum across every segment of the business. This strong performance underpins today's upgrade to FY26 guidance to 100 cents per security, representing 23% growth over FY25. Return on contributed equity continues our multi-year trend. of generating above 20% returns, which has increased to 23.1% post-tax and over 28% pre-tax. FY26 also marks the 15th anniversary of consistent dividend growth. Over that period, dividends have grown at 7.8% CAGR, well ahead of historic inflation in the REIT peer group. Group farm increased from 84.3 billion to 92.2 billion on a pro forma basis, which includes additional farm created post 31 December, while property farm rose from 66.8 billion to 73.6 billion. During the first half, we had a very active total transaction volume of 9.8 billion. Acquisitions and development activity more than offset divestments supported by positive net valuations, largely driven by rental growth as economic growth and increased tenant demand met with a severely reduced supply across all of the markets we operate in. Our balance sheet remains exceptionally strong with balance sheet gearing of just 7.7% and a billion dollars of dry powder providing for accretive acquisition capacity which contributes to the more than $7.8 billion of total platform deployment capacity. Importantly, we also recorded the strongest level of gross equity flows in our funds management business in our three and a half decade history. On slide five, the investment management business secured $4.8 billion of gross equity inflows during the half. Inflows over the past six months have accelerated materially exceeding the prior full 12-month period. We also are pleased to report average annual inflows over both the last 5- and 10-year period at close to $4 billion annually, highlighting our consistent capacity to track inflows through cycles. Total transactions were $9.8 billion, comprising $6.6 billion of acquisitions and $3.2 billion of divestments. acquisitions, development completions and valuation growth, as I said earlier, comfortably outweighed divestments. Turning to slide six and our strong earnings growth history. Operating EPS has tripled over the past decade, delivering a 12.6% CAGR, while distributions have grown at over 10% per annum. Around half of our post-tax earnings are reinvested back into the business. funding growth in property and development investments. This enables us to invest alongside capital partners, expand our funds management earnings and generate strong return for security holders, without the need to issue new public market equity to grow. This is a key competitive advantage we retain and we will continue to organically grow the business through the retention of earnings via our payout ratio policy. Given our Capital Light business model, this is a powerful and sustainable driver of organic earnings growth. Slide 7 highlights the long-term strength of our distribution profile. Over the past 16 years, Charter Hall has delivered consistent dividend growth higher than the growth rate of US REITs currently included in the US S&P 500 Dividend Aristocrats Index. Slide 9 provides a deeper look at our property funds management platform. Institutional investors contribute over 76% of total platform equity, while more than 82% of our property funds under management is across the unlisted wholesale and direct channels. Investor demand for unlisted property remains strong, reflecting the safe haven characteristics of Australian real estate, and the diversification benefits unlisted assets provide, amid a heightened listed-slash-liquid asset class market volatility. Turning to slide 10, property fund increase from $66.8 to $73.6 billion on a post-balance state acquisition-adjusted basis, driven by acquisitions, development completions, positive valuation movements and, of course, our previously announced challenger mandate, which was secured during the half. Growth was led by the Wholesale Unlisted platform. This reflects early signs of valuation recovery and the benefits of disciplined portfolio curation across all three of our listed REITs. which has helped deliver meaningful earnings and NTA value growth for those REITs. Property Farmers now surpassed the peak achieved in June 23 before the devaluation cycle the market experienced. With $7.8 billion of available investment capacity, we expect further growth through acquisitions, valuations and ongoing develop-to-hold strategies over the remainder of FY26. Our property platform, as highlighted on slide 11, comprises over 1,600 assets, spanning 11.5 million square metres of level area with 97% occupancy and a market leading seven and a half year while all weighted average lease expiry. Our integrated property management team secure more than 3.6 billion in net rent each year, a critical metric as rental income underpins everything we do. INL or industrial logistics is our largest sector exposure at 37% of the platform, whilst convenience retail continues to grow and now represents over 20% of the platform. Our office platform at over 26 billion is the largest in the country. We are seeing encouraging early signs of recovery and are actively planning increased development and deployment in high quality CBD asset locations whilst we're also repositioning opportunities such as the recent acquisition of 1 O'Connell Street and the adjoining assets in the core of Sydney CBD which on a combined site area basis of approximately 6,800 square metres is one of the largest site consolidations in Sydney CBD alongside our 7,500 metre Chifley site, which as you're all aware, we're well progressed on developing a second Chifley tower, which on a combined basis will generate over 110,000 square metres of leadable space in two adjoining premium grade towers. Turning to equity flows. During the half, funds management secured 4.8 billion of equity inflows, a record for a six-month period across the history of the group. Inflows were broad-based, spanning all three wholesale pool funds, CPOF, our office fund, CPF, our industrial fund, and of course our recently launched CCRF or convenience retail fund. Partnerships have also been a strong contributor, including the challenger mandate I mentioned, and we have seen a notable uplift in equity flows for Charterhall Direct, which in six months has exceeded all the flows generated in the whole of FY25. Slide 13 summarises our industrial platform. We manage over 7.2 million square metres of level area, representing 27 billion of funds under management, and importantly, close to a 20 million square metre land bank across that portfolio, making this the largest third party industrial platform in Australia. The portfolio is modern, most of which has been developed by Charter Hall, attracting a high occupancy and is underpinned by Long Whales, strong leasing renewals achieved during the half and importantly we still believe the portfolio has got a 17% discount to market rents providing positive rental reversions over the course of coming years. Our development pipeline sits at $6.5 billion in industrial. This is underpinned by a significant land bank of over 223 hectares. And I also note our recent media announcement on a new 20-year lease on a 100,000 square metre facility to Audi at one of our largest states in Melbourne as an example of the ongoing pre-committed development activity we are completing within the industrial platform. Slide 14 outlines our office platform. Clearly Australia's largest at $26 billion with 2.1 million square metres of leadable area. Leasing momentum was strong with 124,000 square metres leased across 134 transactions during the half. Net effective rents outpaced face rent growth. and 93% of tenants were retained in their existing or expanded footprints. Occupancy remains high at 95% relative to peers and clearly relative to the market, well ahead of our broader aspirations for occupancy. And I also note that in a strongly improving net effective rental market, It's also helpful to have a bit of vacancy so you can capture those positive market rental growth reversions. I anticipate that you'll be hearing a lot more from us on various office activity as we move forward. We are positive on the outlook for our assets and also deployment as this market is clearly at least for quality CBD holdings in the early phase of what could turn out to be a sustained and attractive recovery for office landlords. Our convenience retail platform on slide 15 manages around $15 billion of assets or over $17 billion including our Longwell Bunnings assets. The sector represents a significant long-term opportunity given limited institutional ownership and the increasing difficulty of replicating well-located assets in inner and middle ring metropolitan markets. Last year's successful take private of HPI was just another example of us expanding our long while convenience retail platform. And recent acquisitions of Bunnings portfolios such as the $290 million leaseback acquisition we closed with Bunnings in the last half is further evidence of our conviction to grow into the convenience net lease retail sector with the market-leading tenants in each of those sectors. When we think about barriers to entry in this sub-market, including land availability, zoning, scale and capital, we do believe that Charter Hall is a durable competitive advantage in securing further growth for our investors. More importantly, it's also providing another string to our bow when we talk to our tenant customers around curating their existing lease portfolios, but also being able to fund some leaseback transactions if that suits these major retail customers. Slide 16 and social infrastructure. remains a core strategic focus. These assets provide essential services, exhibit low correlation to economic cycles and are among the lowest risk property sectors. With Australia's growing population, demand for these services will only increase and Charter Hall is well positioned to play a leading role across all aspects of social infrastructure from government leased essential service assets through to childcare. The portfolio is 100% occupied, supported by Long Wales, and predominantly triple and double net leases. Now just looking at our tenant relationships on slide 17. Our top 20 tenants contribute 53% of platform income. We manage over 5,300 leases, collecting more than $3.6 billion in net annual rent. Over 69% of tenants hold multiple leases, enabling deep long-term relationships across assets, locations, states and sectors. During the half, we were highly active with renewals, expansions and sound leaseback transactions virtually across every one of the sectors that we operate in. Long-term tenant partnerships remain a cornerstone of our broader strategy. Slide 18 and our transactions. As mentioned earlier, we completed close to $10 billion during the half, with net activity up strongly. Office and convenience retail were the largest contributors to acquisition growth during that six month period, whilst we continue to actively curate our industrial portfolio. Slide 20 provides an overview of our property investment portfolio, which Those of you not familiar with the terminology represents the charter or on balance sheet investment portfolio. The $2.8 billion portfolio spans over 1500 properties, 97% occupancy and an 8.2 year while and a 3.3% weighted average rent review. That is reflective of our co-investments predominantly in all of the funds and partnerships we manage. In addition to that, we also have curated property investments on balance sheet generally for warehousing to provide assets that will attract further external capital. Cap rates compressed by 10 basis points over the half with the weighted average discount rate now at 7%. New South Wales or Sydney represents close to 40% of our exposure. Brisbane, predominantly Brisbane or South East Queensland and Victoria, each around 20%. Our balance sheet exposure to office is deliberate. We believe these assets offer most attractive prospective IRRs, will attract external capital and provide income uplift potential across the platform over the next three to five years. With that, I'll now hand over to Sean to cover development activity and sustainability.

Thanks David and good morning to everyone on the call. Our development pipeline now totals $17.9 billion. Our development capability and track record has been a significant key strength of the group for over 30 years. Develop to own next-generational assets are highly accretive to long-term returns for our investor customers. Development activity continues to drive modern asset creation, providing property solutions for our tenant customers and enhancing returns whilst attracting new capital to our funds and partnerships to deliver on strategic objectives. Development completions totaled $1.3 billion in the last 12 months. Notwithstanding completions, the pipeline continues to be restocked and is currently $17.9 billion. There are currently 4.8 billion in committed developments, with 74% of committed office developments pre-leased and 94% of committed industrial logistics developments pre-leased, providing de-risked adjusted accretive returns for our funds. We have generated a $5.5 billion pipeline with living and mixed-use projects that have now obtained strategic planning approvals, optimising existing holdings and providing optionality to grow in the living sector. The successful SEP planning approval of Gordon Shopping Centre that potentially delivers a mixed-use multi-stage project of $1.6 billion end value was the material addition to the pipeline in the first half. Noting David's previous comments on Australia's strong forecast population growth, we expect that the creation of new developed investment stock and opportunities for investment management platform will continue to feature prominently. Now turning to slide 24. Over the first half, our industrial platform completed $515 million of developments for the whale of 10 years. We currently have $2.3 billion in industrial development projects committed and underway. Our total pipeline of future industrial investment grade stock now sits in the material $6.5 billion. There are three major projects driving the pipeline growth pre-committed by Australia's major supermarket retailers, Coles, Woolworths and Aldi, that have a combined completion value of $1.5 billion. that will deliver state of the art automated facilities to service their respective networks. There is also good momentum at our Western Sydney airport joint venture site where there are multiple major pre-commitments secured or at advanced stages. Charter Hall has one of the largest industrial footprints in the nation, comprising over 20 million square metres of land, and we are focusing our efforts to maximise for our investor customers from the land we own. Given the scale and diversity of our land holdings, there are multiple key data centre sites existing in with this industrial land bank. There are a number of data centre sites in focus in our land banks that are located within availability zones, and we are in the process of unlocking significant power supply and associated planning approvals over the next few years. Importantly, we retain optionality to sell this powered land at a material premium to industrial land values or negotiate long-term ground leases with hyperscalers as we have done before. Now turning to slide 25. The Chifley precinct, which includes the existing North Tower and the South Tower where construction is progressing well, will eventually have a precinct value of approximately $4 billion. The project is Sydney's premier office address and will be Charterhall Group's largest asset with a combined literal area of 110,000 square metres. The project is scheduled to complete in mid-27 and is owned by various Charterhall managed wholesale investment vehicles. Our wholesale clients are participating in the investment with the objective of long-term retention of this iconic asset. As you can see, the group has been very busy delivering new high-quality office developments across Australia, anchored by government and T1 tenant covenants. Now turning to slide 26. We continue to drive our industry leadership across all facets of ESG, demonstrated by recent GRESP global and regional awards, with 18 of the group's funds in the top quartile and notably five CHC funds were ranked in the top 10 global funds. Our listed entities achieved an A ranking under the GRESP public disclosure rating and the AA MSCI rating. Pleasingly, we have now installed 89.7 megawatts of solar power across our platform, and this equates to sufficient power for approximately 20,000 homes, and our green loans now exceed $8 billion. From July 25, our whole platform operates as net zero through existing onsite solar and renewable electricity contracts. I'll now hand over to Anastasia to discuss the financial result in more detail.