Dear Securityholder

This year, we saw economies across the globe come under pressure, as supply chain disruptions lingered and high inflation drove the Reserve Bank of Australia to increase cash rates at an historic pace, with 11 rate rises during the financial year.

As a result, many, if not most, across the country have felt the effects, with wide-reaching consequences impacting much of the property sector as well.

Throughout the Group’s history, we have highlighted the importance of our resilient and sustainable business model that can withstand the property cycle. It is times like these that put it to the test, and we are pleased to report that we have once again proven the strength of our underlying business, delivering strong results in new development completions and robust leasing activity.

This year, we delivered 93.3 cents per security (cps) in operating earnings, ahead of our guidance of no less than 90 cps, and paid to our securityholders a distribution per stapled security of 42.5 cps. Earnings decreased compared to last year, in large part due to fewer performance fee review events.

We continue to carefully manage our costs and make strategic investments – demonstrating our commitment to prudent capital management and active portfolio curation.

Our demonstrated resilience is a result of our approach to partnership, creating long-lasting relationships with our customers and our communities.

Our strengths have enabled us to hold the largest sector-diversified commercial property portfolio in Australia, with $71.9 billion in property FUM and a total of $87.4 billion in total FUM.

As we continue to weather the property cycle, we remain focused on capitalising on opportunities while managing risks. Importantly, we will continue to look after our people, our customers, and our communities, ensuring that we work together to achieve mutual success and enter the next growth phase poised to uncover new opportunities, together.

Investing in long-term outperformance

While this report measures our performance for the year to 30 June 2023, we see long-term performance as the true test of success. Over the past 10 years, we’ve delivered securityholders 15.1% post-tax growth in earnings per annum, and distribution growth of 7.7% per annum.

We know that ongoing outperformance is achieved in close partnership with our customers, and that our approach to partnership is a key differentiator for us. In recent years, we have invested heavily in building our collective capability to partner with our tenant customers more strategically, which has enabled us to better transform insights into actions and collaboration into mutual success.

We also recognise that central to our success is our people, and it is the responsibility of the Board and leadership team to ensure we foster a dynamic and rewarding workplace that attracts and retains top talent.

In order to do that, we’ve continued to invest in well-being and safety processes, and enabled our people to focus on high-value work and structured, experience-based learning opportunities. Further, our long-term focus on creating an inclusive workplace saw us awarded the Employer of Choice for Gender Equality by the Workplace Gender Equality Agency for the second time.

Demonstrable progress on environmental goals

Our approach to sustainability continues to be guided by the business fundamentals that we have relied on for more than three decades, with a focus on addressing current and emerging challenges for the environment and our communities.

From an environmental perspective, we continued to deliver measurable progress this year.

We have accelerated our commitment to Net Zero carbon in operations (Scope 1 and Scope 2) to 20251 from 2030.

This enormous achievement is a direct reflection of how we leverage our scale to deliver platform-wide efficiencies, as well as the actions of our people in creating better environmental outcomes.

Since 2017, we have achieved an absolute reduction of 61% in Scope 1 and Scope 2 emissions and remain on track to meet our Net Zero target of 20251 . It’s important to note that we have not achieved this alone. It is in large part a result of our strong track record of partnering with our tenant customers, as demonstrated by the 63MW of solar already installed across our portfolio.

We will pursue further opportunities to partner with our tenant customers and supply chain partners on emissions reductions initiatives, especially as we work toward our Scope 3 emissions reduction targets. We continue to advance the Sustainable Development Goals as part of our commitment to the United Nations Global Compact and embed its principles in our strategy and culture.

We remain focused on building resilience in our assets to support customers through resource efficiency, carbon emission reduction and the integration of physical and transitional risks and opportunities of a changing climate to ensure we deliver long-term value.

Meaningful action for an enduring impact

We continue to focus on how we help build community foundations that support prosperity in periods of growth and provide stability in times of upheaval.

In our efforts to achieve enduring impact, we have identified opportunities to deliver lasting change and maximise benefits for individuals and communities.

The focus on building long-lasting, meaningful partnerships with community organisations is not new to Charter Hall. However, reframing our thinking around how we approach these partnerships has enabled us to establish a more thoughtful framework to ensure we are well positioned to provide immediate support to the communities most impacted by natural disasters, whether that be in preparedness, relief or recovery.

We continue to diversify our supply chain, creating opportunities for those affected by economic disadvantage, disability or social marginalisation to work with us.

This year, in line with our Pledge 1% commitment, our efforts resulted in more than $1.4 million in community investment, a 16% increase from FY22. Notably, FY23 saw a record level of volunteering hours by our people, which we are extremely proud of

We continued to ensure robust governance underpins our operations and that we uphold universal principles on human rights, labour, the environment and anti-corruption. Our annual Modern Slavery Statement was completed, outlining efforts to prevent occurrences of modern slavery in our supply chain, with our Human Rights and Modern Slavery Working Group actively reviewing and managing our efforts in relation to this across all our portfolios.

As part of our commitment to Indigenous reconciliation and the implementation of our Reconciliation Action Plan (RAP), we continue to actively work on building our relationships and capacity with First Nations businesses, as well as sharing factual and impartial information to support our people to be better informed on issues impacting First Nations Peoples.

Serving customers and securityholders

A core responsibility of the Board is providing clear governance and oversight to assist management in continuing to deliver against the Group’s strategy and entrench ethics in all actions. We will continue to serve you in this way.

Our Board is comprised of a majority of independent directors, in line with best practice. This composition provides us with the right mix of talent and skills with which to guide strategy and provide a strong overall contribution to the success of the Group.

I encourage all our securityholders to review the Directors Report on page 43 to understand more about the Board.

Looking forward

Many of the economic challenges of FY23 are expected to linger in FY24. We continue to focus on what is within our control, including our cost base and how we strategically invest and deploy capital, setting out priorities that will deliver long-term, sustainable growth for securityholders.

Charter Hall has been built with a focus on resilience, with a talented workforce, best-in-class partners and customers, and carefully curated portfolios. This will enable us to navigate uncertainty with confidence through this phase of the property cycle.

We will continue to focus on our strategy of using our combined expertise to access, deploy, manage and invest to create value and generate superior returns for securityholders.

On behalf of the Board, I would like to thank our tenant customers, investors and securityholders for your ongoing support. I extend gratitude to my fellow Directors and the leadership team for your dedication, and to all our people for their efforts, as together we continue to build a sustainable business we can be proud of.

David Clarke

Chair

Dear Securityholder

This year, we saw economies across the globe come under pressure, as supply chain disruptions lingered and high inflation drove the Reserve Bank of Australia to increase cash rates at an historic pace, with 11 rate rises during the financial year.

As a result, many, if not most, across the country have felt the effects, with wide-reaching consequences impacting much of the property sector as well.

Throughout the Group’s history, we have highlighted the importance of our resilient and sustainable business model that can withstand the property cycle. It is times like these that put it to the test, and we are pleased to report that we have once again proven the strength of our underlying business, delivering strong results in new development completions and robust leasing activity.

This year, we delivered 93.3 cents per security (cps) in operating earnings, ahead of our guidance of no less than 90 cps, and paid to our securityholders a distribution per stapled security of 42.5 cps. Earnings decreased compared to last year, in large part due to fewer performance fee review events.

We continue to carefully manage our costs and make strategic investments – demonstrating our commitment to prudent capital management and active portfolio curation. 

Our demonstrated resilience is a result of our approach to partnership, creating long-lasting relationships with our customers and our communities.

Our strengths have enabled us to hold the largest sector-diversified commercial property portfolio in Australia, with $71.9 billion in property FUM and a total of $87.4 billion in total FUM.

As we continue to weather the property cycle, we remain focused on capitalising on opportunities while managing risks. Importantly, we will continue to look after our people, our customers, and our communities, ensuring that we work together to achieve mutual success and enter the next growth phase poised to uncover new opportunities, together. 

Investing in long-term outperformance

While this report measures our performance for the year to 30 June 2023, we see long-term performance as the true test of success. Over the past 10 years, we’ve delivered securityholders 15.1% post-tax growth in earnings per annum, and distribution growth of 7.7% per annum.

We know that ongoing outperformance is achieved in close partnership with our customers, and that our approach to partnership is a key differentiator for us. In recent years, we have invested heavily in building our collective capability to partner with our tenant customers more strategically, which has enabled us to better transform insights into actions and collaboration into mutual success.

We also recognise that central to our success is our people, and it is the responsibility of the Board and leadership team to ensure we foster a dynamic and rewarding workplace that attracts and retains top talent.

In order to do that, we’ve continued to invest in well-being and safety processes, and enabled our people to focus on high-value work and structured, experience-based learning opportunities.

Further, our long-term focus on creating an inclusive workplace saw us awarded the Employer of Choice for Gender Equality by the Workplace Gender Equality Agency for the second time.

Demonstrable progress on environmental goals

Our approach to sustainability continues to be guided by the business fundamentals that we have relied on for more than three decades, with a focus on addressing current and emerging challenges for the environment and our communities.

From an environmental perspective, we continued to deliver measurable progress this year.

We have accelerated our commitment to Net Zero carbon in operations (Scope 1 and Scope 2) to 20251 from 2030.

This enormous achievement is a direct reflection of how we leverage our scale to deliver platform-wide efficiencies, as well as the actions of our people in creating better environmental outcomes.

Since 2017, we have achieved an absolute reduction of 61% in Scope 1 and Scope 2 emissions and remain on track to meet our Net Zero target of 20251 . It’s important to note that we have not achieved this alone. It is in large part a result of our strong track record of partnering with our tenant customers, as demonstrated by the 63MW of solar already installed across our portfolio.

We will pursue further opportunities to partner with our tenant customers and supply chain partners on emissions reductions initiatives, especially as we work toward our Scope 3 emissions reduction targets.

We continue to advance the Sustainable Development Goals as part of our commitment to the United Nations Global Compact and embed its principles in our strategy and culture.

We remain focused on building resilience in our assets to support customers through resource efficiency, carbon emission reduction and the integration of physical and transitional risks and opportunities of a changing climate to ensure we deliver long-term value. 

Meaningful action for an enduring impact

We continue to focus on how we help build community foundations that support prosperity in periods of growth and provide stability in times of upheaval.

In our efforts to achieve enduring impact, we have identified opportunities to deliver lasting change and maximise benefits for individuals and communities.

The focus on building long-lasting, meaningful partnerships with community organisations is not new to Charter Hall. However, reframing our thinking around how we approach these partnerships has enabled us to establish a more thoughtful framework to ensure we are well positioned to provide immediate support to the communities most impacted by natural disasters, whether that be in preparedness, relief or recovery.

We continue to diversify our supply chain, creating opportunities for those affected by economic disadvantage, disability or social marginalisation to work with us.

This year, in line with our Pledge 1% commitment, our efforts resulted in more than $1.4 million in community investment, a 16% increase from FY22. Notably, FY23 saw a record level of volunteering hours by our people, which we are extremely proud of.

We continued to ensure robust governance underpins our operations and that we uphold universal principles on human rights, labour, the environment and anti-corruption. Our annual Modern Slavery Statement was completed, outlining efforts to prevent occurrences of modern slavery in our supply chain, with our Human Rights and Modern Slavery Working Group actively reviewing and managing our efforts in relation to this across all our portfolios.

As part of our commitment to Indigenous reconciliation and the implementation of our Reconciliation Action Plan (RAP), we continue to actively work on building our relationships and capacity with First Nations businesses, as well as sharing factual and impartial information to support our people to be better informed on issues impacting First Nations Peoples.

Serving customers and securityholders

A core responsibility of the Board is providing clear governance and oversight to assist management in continuing to deliver against the Group’s strategy and entrench ethics in all actions. We will continue to serve you in this way.

Our Board is comprised of a majority of independent directors, in line with best practice. This composition provides us with the right mix of talent and skills with which to guide strategy and provide a strong overall contribution to the success of the Group.

I encourage all our securityholders to review the Directors Report on page 43 to understand more about the Board.

Looking forward

Many of the economic challenges of FY23 are expected to linger in FY24. We continue to focus on what is within our control, including our cost base and how we strategically invest and deploy capital, setting out priorities that will deliver long-term, sustainable growth for securityholders.

Charter Hall has been built with a focus on resilience, with a talented workforce, best-in-class partners and customers, and carefully curated portfolios. This will enable us to navigate uncertainty with confidence through this phase of the property cycle.

We will continue to focus on our strategy of using our combined expertise to access, deploy, manage and invest to create value and generate superior returns for securityholders.

On behalf of the Board, I would like to thank our tenant customers, investors and securityholders for your ongoing support. I extend gratitude to my fellow Directors and the leadership team for your dedication, and to all our people for their efforts, as together we continue to build a sustainable business we can be proud of.

David Clarke
Chair