Charter Hall Group

Ladies and gentlemen, thank you for standing by and welcome to the Charter Hall Group 2026 four-year results 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, Friday the 21st, August 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 thank you for attending FY26 Results Call, which our group CFO, Anastasia Clark, will present with myself. Turning to the group's earnings on slide 4, FY26 has seen CHC deliver operating earnings of $488.1 million, translating to $103.2 per security, representing 26.8% growth over FY25. Today, we're also providing FY27 guidance of approximately $114 per security, representing a further 10.5% growth over FY26, which delivers... a three-year growth of 40% over FY24 to FY27, noting that the FY24 result of 81.4 cents was an inflection year, as I have called out several times. The Group's return on contributed equity increased to 26.4% post-tax, reflecting strong earnings growth, equity inflows and disciplined capital deployments. We continue our long-standing track record of distribution growth, increasing DPS by 6% to 50.7 cents per security and guiding for a further 6% growth in FY27. Group FUM increased $10 billion or 12% from $84.3 to $94.3 billion, whilst Property FUM increased nearly 14% from $66.8 to $76 billion. Net acquisitions, developments, and equity flows accelerated during the year as we have continued to curate our existing and new portfolios. Whilst Group Fund grew approximately 12%, operating earnings per security grew almost 27%, demonstrating the strength of our platform and earnings diversification. Our balance sheet remains well positioned with 14% gearing and approximately $1 billion of balance sheet investment capacity. and total group investment capacity of 6.4 billion across the platform. Turning to slide five and our strategic pillars. Our strategy remains unchanged. We continue to access capital from listed institutional and retail investors, deploy capital into attractive investment opportunities, generate day-to-day funds management, asset and property management, expand our development with and our uncommitted pipelines and invest alongside our capital partners. We continue to execute on this strategy of accessing, deploying, managing and investing capital on behalf of our investor customers, as we have for the last 15 years. On this slide, we talk to various milestones achieved over various time periods. Given my 22 years leading CHC, I tend to focus on the longer term. and it is pleasing to see that over the last decade we've closed close to $60 billion in acquisitions, completed $14 billion of developments and existing asset improvements, while securing $37 billion in gross equity inflows into our funds management business. I also note that our balance sheet property investment portfolio, or PI, has tripled in size over the last decade from $1.1 to $3.2 billion. PI forms the property investment segment of CHC and its growth without raising new equity for over 12 years shows the power of our self-funding business model. The PI portfolio's growth not only enhanced our PIE with DAR but it also supports the growth of our property funds management business and enhances our flexibility and optionality in opportunistically taking advantage of specific asset opportunities and dislocation events in markets. As shown in slide 6, we've delivered FY26 operating earnings of 103.2 cents and, as mentioned, provide guidance for 27 operating earnings for OEPS of 114 cents, continuing a long track record of earnings and distribution growth. Over the last decade, operating earnings growth has exceeded 12% per annum. Our FY26 earnings released today in our earnings guidance for FY27 excludes any performance fee revenue. This reflects strongly on the sustainability of growth in our core earnings drivers across both funds management and property investment portfolios. Group fund increased by $10 billion, as I mentioned, to $94.3 as outlined on slide 8. Our platform remains highly diversified by both capital sources and sector. Institutional wholesale investors account for nearly 80% of the group fund and 70% of property fund. We also have another 15% represented by our managed REITs whilst the remainder is in our direct business. FY26 marks the first year Charter Hall has exceeded 90 billion in group fund and we expect continued growth to drive Group Fund beyond $100 billion during FY27. Property Fund increased by 13.8%, as I mentioned, from $66.8 to $76 billion. Growth during the year was driven by $11.9 billion of acquisitions, $2.1 billion of positive valuation movements and $1 billion of net development capex. partially offset by 5.8 billion of divestments as we curate our portfolios continuously. The majority of property fund growth in 26 was acquisition driven and transaction led in addition to the valuation movements mentioned. This outcome reflects the breadth of our capital sources, product development capabilities and transaction origination platform. Divestment activity was elevated this year as we took advantage of market conditions to curate portfolios across all three listed REITs, CQR, CLW and CQE, in addition to actively managing our portfolios across the unlisted funds and partnerships. Turning to slide 10, the platform continues to manage the largest diversified property portfolio in Australia. We own and manage over 12 million square metres of leadable area, diversified across 1,620 individual properties FY26 has seen us grow the rent that we collect across that portfolio to over $4 billion. The institutional wholesale platform contributes 70% of the property platform and we're pleased to see many existing investors lift their allocations to property with us during the year. And also the onboarding of multiple new institutional clients allocating long-term capital within Australia from domestic investors and into Australia from our wide variety of offshore capital partners. Slide 11 and equity flows. We secured a record 6.7 billion of equity inflows during FY26. The breadth of the inflows across multiple institutional clients from many different countries allocating to Australia is particularly encouraging. We also benefited from new Australian mandate wins and increased allocations to existing investments from existing clients and diversification across charitable funds as existing clients broaden their exposure to our multiple funds and partnerships. The majority of inflows originated from institutional wholesale investors reflecting growing conviction in the Australian commercial real estate market from a growing global retirement savings industry. We also saw Charter Hall Direct, our retail and SMSF and advisor investor network grow its platform where we've seen equity flows increase by nearly 60% compared to FY25. Momentum of equity flows is increasing in Direct and the pace at which new product launches are being oversubscribed early is pleasing to see. As outlined in our market update prior to results, We also have secured new partnership capital for the second 50% acquisition of the O'Connell Street precinct, one O'Connell and the surrounding properties. And we have also announced previously the $445 million acquisition of the Sonic Life Science asset on a 20-year triple net lease to a fantastic corporate customer. All of these latter... inflows and acquisitions will be recorded in FY27. Our office platform now manages close to $28 billion in total assets, the largest office portfolio in the country, which spans over 2.3 million square metres. With occupancy of 95%, compared with the national average of 83%, we continue to materially outperform broader market conditions, with notably low vacancies compared to market in all sub-markets, including what will surprise many, a 3.6% vacancy at the Paris end of Melbourne CBD. During the year, we closed on close to 300,000 square metres of leasing deals across 250 individual transactions. The average while of secured new leases on this releasing was 6.8 years. 92% of these leasing transactions involve tenant customers maintaining or expanding their office footprint. We are seeing improved office market fundamentals this year with growth in net effective rents outpacing investor expectations and combined with the ongoing limited supply or new supply due to the high economic cost of building new buildings, we expect to see pressure, upward pressure, on office rents in virtually every sub-market that we are represented. Like-to-like income growth across the entire portfolio, including new leases and existing rent reviews, was strong at 6.97%. I would like to highlight some important points on our office market position. As the largest office owner in Australia, with close to 300,000 square metres of office leasing deals across 250 individual leases, and with the aforementioned 92% of tenants even maintaining or expanding their space, we have high conviction on the positive trajectory of office fundamentals. Slide 13, and industrial logistics. Our INL platform manages close to 25 billion in assets across 6.7 million square metres of the Leadleville area, and about 20 million square metres of land. Our development pipeline is close to 7.1 billion in completion value. The portfolio is 99% occupied with a while of 8.7 years. Over the year, we closed over 600,000 square metres of leasing activity across 70 individual transactions. 90% of our leasing activity was with repeat tenant customers. At lease term expiry, we recorded very high tenant retention with over 90% of tenants renewing their leases with an average market rent review or leasing spread of 19% relative to prior passing rents. The portfolio remains materially under-rented, which is a far win well into the future, supporting future rental growth. While supply is increasing in some markets in specific locations, the sector remains constrained by ongoing planning constraints lack of available land, lack of available power and and encroachment of residential use into both Greenfield and Brownfield logistics regions. The biggest impediment to new supply is the cost of development. And whilst we've seen construction costs stabilise, the economic rent and in fact, the economic value of new developments still well exceeds the average investment value of our existing portfolio. The sector continues to benefit from multiple demand drivers requiring significant construction and new supply, and with the current market constraints to supply many locations, we do forecast attractive rent growth over the medium term. Slide 14, convenience retail. And as I say to Ben Ellis, the new lucky seat. Convenience retail platform now exceeds $18.3 billion in assets. with $6.9 billion invested in convenience shopping centres and $11.4 billion invested in net lease retail. The portfolio overall comprises over 2.5 million square metres of letterable area and in many cases double that in land area. And it is 99% occupied. We closed over 447 lease transactions during the year over a total of 90,000 square metres of letterable area. obviously in the shopping centres given that we've got no vacancy in net lease. Our shopping centres across the nation recorded high tenant retention and a healthy 4.1% average leasing spread with new leases recording leasing spreads of just under 5%. Our net lease retail portfolio is at 100% occupancy with strong exposure to annual rent increases linked to inflation which will further drive rental growth into FY27. with a large proportion of our net lease retail benefiting from a CPI print in September which will drive December quarter rent increases. The launch of the Charter Hall Convenience Retail Fund, or CCRF, represented a significant strategic milestone for the group. CCRF, which was $3.3 billion in size at reporting date, creates a significant opportunity for the group where Charter Hall already has market leadership in both ownership and transaction origination with a further one and a half billion of growth capacity likely to be realised shortly. Two thirds of that is likely to be realised before December. The social infrastructure platform has $4.4 billion in funds under management with close to 100% occupancy and an 11.4 year while. We're pleased to announce the acquisition of the Sonic Brisbane 20-year triple net lease asset with CPI-linked rent reviews during the year and look forward to growing the social infrastructure platform further with selective government lease and high-quality corporate tenant customer covenants underpinning the resilience and security of income generated by these assets. Turning to slide 16, today our platform services more than 5,700 leases across a highly diversified tenant base. Our top 20 tenants account for approximately 52% of platform income providing excellent covenant quality and visibility of earnings. During 26, we transacted with 10 of our top 20 tenant customers demonstrating the depth of relationships across the platform and multiple leasing and acquisition transactions. one of the key differentiators for Charter Hall continues to be the breadth of relationships we maintain with major corporate, government and institutional occupiers. We also commission independent surveys of both tenant and investor customers and many of our fund and headstock chairs directly interview major customers to ensure the group is serving their needs appropriately. These relationships create a recurring pipeline of leasing, acquisition, divestment and sale and leaseback opportunities that are often difficult to access off market. Turning to the transaction slides, 17, which highlights 26, represented a record year for transaction activity, with 17 billion of property transaction activity across the platform, equivalent to approximately 2.8 times FY25 levels. Acquisitions totaled 11.7 billion, divestments 5.4, resulting in net transaction activity of 6.3. Importantly, activity was not concentrated within a single sector. We saw transaction activity elevated across office, industrial, convenience, retail and social infrastructure, reflecting a broad-based investor demand from our investor customers and the market generally. Turning now to our property investment portfolio, the portfolio increased from $2.7 to $3.2 billion during FY26. driven by both valuation increase, retained earnings driven reinvestment into growing the PI portfolio. Occupancy increased to 97.8% across the Hall Group platform while increased for 8.7 years and rent growth metrics remain strong across the portfolio. One of the features of the platform is that it is diversified by geography, tenant and sector whilst maintaining a strong focus on high quality assets and tenant governance. Slide 20 illustrates the diversification of the property investment and earnings segment across all sectors of the platform. No single asset contributes more than 6% of portfolio investments, and approximately 26% of portfolio income is derived from government-related tenants. The key investment theme continues to be income quality. The portfolio benefits from long lease duration, strong government and blue-chip tenant, exposure and built-in rental growth mechanisms. Turning to our development pipeline, the Group's development pipeline increased to approximately $20 billion, making it one of the largest institutional development pipelines in Australia. Development completions totaled approximately $1.4 billion during 26 while maintaining a substantial committed and future project pipeline. The ability to create next-generation institutional investment stock remains one of Charter Hall's competitive advantages. Slide 23 highlights our industrial development pipeline, which is now at $7 billion. It includes approximately 202 hectares of strategic land holdings nationally. We completed approximately $700 million of industrial developments during 26 and currently have $2.5 billion of committed developments underway. The scale of our industrial land vacuum is becoming increasingly valuable as planning constraints and infrastructure have all become more important barriers to entry. We've also recently taken advantage of DC demand by the sale of industrial land at material premiums to cost and book values to data centre buyers, which drives growth for our fund investors in both NTA, IRR and the capacity to recycle cash delivered at premiums to cost into other industrial and logistic developments. and acquisitions. Slide 24 on office development. The office pipeline's total sits at $7.8 million, with Chitley South continuing to be the centrepiece of the platform, which is on track for completion in mid-27. Pre-leasing has reached 70%. Leasing momentum remains encouraging, and we continue to target maximising rents and occupancy as the project nears completion. The successful completion and leasing of The 55,000 metre 360 Queen Street Brisbane project in the core of Brisbane CBD with virtually 95% plus pre-commitments of PC and the 100% 15-year government pre-leased asset for the new headquarters of the ATO in Barton, Canberra demonstrates continued customer demand for premium sustainable office assets. We're steadily working towards the commencement of our next project in Brisbane CBD at 60 Queen Street and the addition of the one O'Connell Street precinct in Sydney has added considerable optionality to our future Sydney core CBD pipeline. Turning to sustainability, 26 was a significant year for Charter Hall's sustainability strategy. Platform achieved net zero scope one and two emissions from 1 July 25 supported through renewable electricity procurement, onsite solar generation and approved offset programs. Installed solar capacity increased to 96 megawatts, while sustainable finance facilities increased 8.2 billion. I'll now hand to Anastasia to run through the financials.

Thank you, David, and good morning to everyone on the call. Starting with the financial results on slide 27. The group delivered another strong result in FY26, with operating earnings post-tax increasing 26.8% to $488.1 million, being 103.2 cents per security. Importantly, all three segments contributed to this growth. Property investment EBITDA increased 17% to $341.6 million. Development investment EBITDA increased to $61.5 million, up $20.9 million on the prior period. and funds management EBITDA increased 8% to $293.1 million. The group reported statutory earnings after tax of $427.9 million, an increase of 30%, while distributions increased 6% to $0.507 per security. Property investment earnings are underpinned by like-for-like income growth of 5.6% on our co-investments in funds. together with a material contribution from the incremental deployment of $450 million throughout FY26, plus the annualised income from the prior year's net equity investment of $196 million. In addition, we have continued to actively curate the portfolio, generating a positive yield spread and earnings accretion through capital allocations. Development investment earnings growth was driven by a 50% increase in development volume, reflecting both project completions and the subsequent realisation of profits from asset sales. I'll return to funds management segment when we move to the next slide. Net finance costs have increased on the balance sheet in line with higher drawn debt and higher undrawn debt capacity, underpinning our increased activity in property investments. Offsetting this is lower look-through interest expense from our co-investments in funds due to downweighting higher geared investments and reinvesting in lower geared investments compared to the prior period. Overall, net interest expense increased modestly by 2.3%. Tax expense is lower by 15% at $81.9 million from capital allocation efficiency implemented across the staple between CHP, the Trust, and CHL the company. Importantly, these benefits are durable and have permanently reduced the group's effective tax rate by approximately 5 percentage points. The group has maintained its long-term distribution growth policy of 6%, providing reliable income growth for security holders while retaining earnings to support future investment in earnings accretive opportunities. Turning to funds management earnings. Funds management base fee revenue grew 8% and transaction and performance fee revenue grew 40.3%, evidencing the typical pattern of strong equity inflows underpinning deployment and transaction fees in this financial result for FY26, ahead of the annualised benefit of base fees in the subsequent FY27 financial year. Property services revenue declined 2.9%, primarily reflecting elevated leasing activity in the prior year. Operating expenses increased by 6%, of which 3.1% is for the one-off FY26 STI outperformance. The remaining 2.9% growth in underlying operating expenses is a result of the annual wage increase and inflation in non-employee costs. Turning to the Charter Hall balance sheet. The PIDI investment portfolio grew to $3.3 billion, up from $2.8 billion over the course of FY26, led by net investment of $450 million into property investments throughout the year. NTA increased to $5.95 per security, led by retained earnings. Headstock investment capacity increased to $1 billion following the addition of new bank facilities and the successful debt capital markets issuance of Australian $250 million medium-term note seven-year bond at the end of the third quarter. Geary increased to 14.2%, reflecting the higher level of capital deployed into property and development investments throughout the year. Return on contributed equity increased to 26.4% post-tax, highlighting the strong returns delivered by the group during the year. Our focus remains on growing return on contributed equity through generating income and capital growth organically for the benefit of security holders. Turning to platform debt. Slide 30. Across the platform, we have continued to proactively source new loans and refinance existing debt to increase financial covenant headroom and lower credit margins for $22.6 billion of total debt facilities of $35.3 billion across 66 portfolios with debt in our funds management platform. These initiatives reduce credit margins on average by 20 basis points, helping offset the higher RBA cash rate and market floating rates, which we expect to moderate lower in calendar 2027. Credit market conditions remain highly supportive. with strong appetites from both domestic and international banks and debt capital market investors. Before handing back to David, in summary, the group delivered a strong earnings result for the year ended 30 June 2026. The combination of elevated equity inflows and investment capacity on the balance sheet and in our funds platform underpins organic fund growth and sustained future earnings growth. With that, I'll hand to David to discuss earnings guidance.