This financial year, we continued to face challenges due to the COVID-19 pandemic. Despite some reprieve, much of the year saw disruptions for many businesses. While the pandemic itself is still far from over, I was impressed to see our people working
closely with our customers and communities to navigate the challenges and create positive outcomes.
Against this backdrop, I am delighted to report that Charter Hall achieved record growth, ending the year with $52.3 billion in funds under management (FUM), which now makes us the largest sector-diversified commercial property portfolio in Australia.
Throughout the year, we continued to partner with our customers across all our sectors to meet their evolving property needs.
Our focus on stability, growth and returns for our securityholders has also driven superior performance across our funds and continues to attract investor equity, with $5.3 billion of gross equity flows for the year.
Our current portfolio comprises 1,388 properties, with a lettable area of 9 million square metres and delivering almost $2.5 billion in net rental income per year.
We have always said that long-term performance is the true test of success. As we celebrate Charter Hall’s 30th anniversary, our current result is further evidence of our ability to consistently deliver superior returns to our securityholders, with a total shareholder return of 64.1% in FY21.
Looking to the future
Charter Hall has grown considerably over the course of three decades, both in size and complexity. We now partner with some of Australia’s biggest corporates, with many of our engagements having evolved into multi-level and cross-sector relationships, driven largely by the trust developed over the course of our partnerships.
Our future success relies on the continued strength of these relationships, as well as our ability to harness the talent within our business to continue delivering outstanding results for our customers, partners, and investors.
We recognise that the breadth and depth of our leadership team serves as the basis to take the Group to the next level. That’s why, this year, we made it a priority to reset our remuneration structure with retention plans in place for our leadership team. By investing in our people, we are ensuring our path forward as the business ramps up its growth plans.
In line with our philosophy of mutual success, Charter Hall’s plans also include building future success for our partners. We firmly believe that by investing in the value of place, we are creating better outcomes for the long term.
Meaningful action on climate change
Each year, we go further in our commitment to our ESG objectives. In the wake of updated projections released by the International Panel on Climate Change, delivering on our climate initiatives has never been more important. We continue to make significant progress each year and believe that by partnering with our tenants and investors, we can unlock further opportunities to drive meaningful change and secure a better future for all.
We have actively aligned our climate resilience roadmap to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) to ensure meaningful steps from Board level to meet our objectives.
Pleasingly, we have made significant progress towards our Pathway to Net Zero by 2030 target, even accelerating that timeline where possible. Our Industrial & Logistics portfolio has committed to achieving Net Zero Carbon in operations by 2022 for Scope 1 and Scope 2 related emissions and our Retail portfolio recently announced that it will achieve Net Zero Carbon in operations by 2025.
We have also begun proactively working with contractors and suppliers to reduce impacts across our supply chain and engaged with our tenant customers to find solutions to mitigate their energy-related emissions. Currently, 54% of the 41MW of our installed solar supplies directly to our tenants.
As businesses around the country continue to plan their return to office, supporting healthier workplace assets is as important as ever. We have worked with the International WELL Building Institute to baseline human health and wellness, with a focus on measuring and improving the indoor environment in our workplace assets for our tenants. This year, we became one of the first groups globally to achieve a WELL Portfolio Score across 900,000 square metres of real estate.
As a signatory to the United Nations Global Compact, we continue to engage to advance the Sustainable Development Goals and embed its principles in our strategy and culture. We were proud this year to be recognised in the 2020 PRI Leaders Group for our work in climate reporting.
Creating social value
Our commitment to social investment in communities is driven largely through Pledge 1%. Through this philanthropic movement, Charter Hall has been investing in more than 100 charitable organisations to support communities in need.
We donated $739,000 through our community partnerships, and, in a year where volunteering was impacted by COVID-19, our people spent 1,200 hours in the community. We also donated over 41,000 square metres in space, valued at over $1.8 million, for community use.
We are passionate about building better futures for vulnerable youth within the community. We have established partnerships with four state-based social enterprises targeting 1,200 meaningful employment opportunities by 2030. Again, this is about taking actions that tackle employment impacts linked to COVID-19.
For the first time, we used our supply chain to create social value, contracting with Two Good Co. to supply our Office portfolio with soap. In turn, this creates employment outcomes for survivors of domestic violence and supplies meals and care packages to women in shelters across Australia.
We now require all employees to complete training on modern slavery on an annual basis in line with our obligations under the Modern Slavery Act. Our Modern Slavery and Human Rights Working Group monitors our modern slavery and human rights risk across our business and supply chain.
We have also developed a Reconciliation Action Plan (RAP), which is under review by Reconciliation Australia.
Serving customers and securityholders
Despite ongoing uncertainty, Charter Hall continues to gain momentum. Record equity flows demonstrate that our customer-centric approach continues to receive investor support.
One of our roles as your Board is to ensure that the team remains focused on delivering against the Group’s strategy, whilst ensuring all stakeholders are fairly treated and the culture of “doing the right thing” permeates throughout the Group. Our repeat tenant metrics, retention rates and customer interviews clearly show the Group has demonstrated an equal focus on both our tenants and investors.
While our results demonstrate our performance focus, front and centre for us is our role as guardians of other people’s capital over the long term. That’s why our purpose, developed with input from investors, tenants and employees, is about achieving better futures and mutual success through bringing aspirations to life.
The Board continues to comprise a majority of independent directors, in line with best practice. All Directors actively engage in the business to ensure the continued execution of the Group strategy. Our Non-Executive Directors apply a diverse mix of skills and expertise to provide a strong overall contribution to the success of the Group. This includes our continued commitment to gender diversity, where we now have 30% female participation in senior executive positions and 55% across our workplace. This approach puts the Group in a strong position to pursue further growth.
As many of the world’s biggest economies start to open up again, the outlook for economic growth in Australia remains uncertain due to ongoing pandemic-related challenges. Global interest rates are generally expected to remain low with inflation and wages growth in Australia forecast to continue to lag targets.
Our leadership team remains focussed on fostering strong partnerships and growing our platform in a sustainable way, delivering resilience for the business and returns for securityholders and capital partners. We are confident that our diverse portfolio, sector-leading lease duration and high-quality tenant covenants will enable us to deliver mutual success and better outcomes for all.
In terms of opportunities, we have access to $6.7 billion in available investment capacity through existing cash balances and available lines in our funds and on our balance sheet. This capacity offers us resilience against any short-term volatility, and an ability to move quickly to capture opportunities, while also providing a meaningful avenue for growth.
30 years on from when Charter Hall began, we are very proud of where we are as a company and we continue to have ambitious goals for the future.
I would like to take this opportunity to thank tenants, investors and securityholders for your support, my fellow Directors and the Executive Committee for your dedication and our people for their passion and commitment in delivering this year’s record performance.