Charter Hall Group Aktie

Ladies and gentlemen, thank you for standing by, and welcome to the Charter Hall Group 2026 Half Year Results Briefing. [Operator Instructions] 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 FY '26 Results. Joining me today are Sean McMahon, our Chief Investment Officer; and Anastasia Clarke, our Chief Financial Officer. Today, I will provide an overview of the highlights of a very active last 6 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 $0.505 per security, reflecting continued momentum across every segment of the business. This strong performance underpins today's upgrade to FY '26 guidance to $1.00 per security, representing 23% growth over FY '25.

Return on contributed equity continues our multiyear trend of generating above 20% returns, which has increased to 23.1% post-tax and over 28% pretax. FY '26 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 FUM increased from $84.3 billion to $92.2 billion on a pro forma basis, which includes additional FUM created post 31 December, while property FUM 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 $1 billion 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 3.5 decade history. On Slide 5, the Investment Management business secured $4.8 billion of gross equity inflows during the half. Inflows over the past 6 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 attract 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 6 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 U.S. REITs currently included in the U.S. 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/liquid asset class market volatility.

Turning to Slide 10. Property FUM increased from $66.8 billion to $73.6 billion on a post balance date 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 3 of our listed REITs, which has helped deliver meaningful earnings and NTA value growth for those REITs.

Property FUM has 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 FY '26.

Our property platform, as highlighted on Slide 11, comprises over 1,600 assets, spanning 11.5 million square meters of lettable area with 97% occupancy and a market-leading 7.5-year WALE, or weighted average lease expiry. Our integrated property management team secured more than $3.6 billion in net rent each year, a critical metric as rental income underpins everything we do. I&L or industrial and 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 meters is one of the largest site consolidations in Sydney CBD alongside our 7,500-meter 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 meters of lettable space in 2 adjoining premium-grade towers.

Turning to equity flows. During the half, Funds Management secured $4.8 billion of equity inflows, a record for a 6-month period across the history of the group. Inflows were broad-based, spanning all 3 wholesale pooled funds, CPOF, our office fund, CP 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 fund or equity flows for Charter Hall Direct, which in 6 months has exceeded all the flows generated in the whole of FY '25.

Slide 13 summarizes our industrial platform. We manage over 7.2 million square meters of lettable area, representing $27 billion of funds under management and importantly, close to a 20 million square meter 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 WALE, strong leasing renewals during -- 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 meter facility to ALDI 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 meters of lettable area. Leasing momentum was strong with 124,000 square meters 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 Long WALE 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 WALE convenience retail platform, and recent acquisitions of Bunnings portfolios such as the $290 million sale 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 submarket, including land availability, zoning, scale and capital, we do believe that Charter Hall has 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 sale and 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 WALE 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 sale and 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 6-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 who are not familiar with the terminology represents the Charter Hall on-balance sheet investment portfolio.

The $2.8 billion portfolio spans over 1,500 properties, 97% occupancy and an 8.2 year WALE 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%. Geographically, New South Wales or Sydney represents close to 40% of our exposure. Brisbane, predominantly Brisbane or Southeast 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 3 to 5 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. Developed 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 and logistics developments pre-leased, providing derisked 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, optimizing existing holdings and providing optionality to grow in the living sector.

The successful said planning approval of Gordon Shopping Center that potentially delivers a mixed-use multistage project of $1.6 billion in 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 WALE 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 at a material $6.5 billion. There are 3 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 meters of land, and we are focusing our efforts to maximize for our investor customers from the land we own.

Given the scale and diversity of our land holdings, there are multiple key data center sites existing in with this industrial land bank. There are a number of data center sites in focus in our land banks that are located within availability zones, and we're 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 Charter Hall Group's largest asset with a combined net lettable area of 110,000 square meters. The project is scheduled to complete in mid-'27 and is owned by various Charter Hall 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 Tier 1 tenant covenants.

Now turning to Slide 26. We continue to drive our industry leadership across all facets of ESG, demonstrated by recent GRESB global and regional awards with 18 of the group's funds in the top quartile and notably, 5 CHC funds were ranked in the top 10 global funds. Our listed entities achieved an A ranking under the GRESB 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 on-site solar and renewable electricity contracts.

I'll now hand over to Anastasia to discuss the financial result in more detail.

Thank you, Sean, and good morning to everyone on the call. The first half of FY '26 delivered strong operating earnings after tax of $238.8 million, representing an increase of 21.6% on the comparable prior period. Top line revenue growth was driven across all 3 segments, comprising property investment income, development investment income and funds management revenue. Growth in property investment income was underpinned by like-for-like funds income growth of 4% on our co-investments, together with a material contribution from the incremental deployment of $290 million net equity investment over the past 18 months.

This results in a full period contribution of the FY '25 investments and partial period contribution from the year-to-date investments to PI EBITDA, all on significantly higher equity PI yields. Development investment EBITDA has increased to $38.1 million, representing approximately 10% of the group's EBITDA, achieved through the successful completion of developments primarily sold down to funds. Funds Management EBITDA remains in line, which follows the usual historic pattern of strong equity inflows in the half, translating to fully annualized funds management fees in the following financial year post a period of deployment.

Underlying FUM growth through valuations and net acquisitions and progressive funding of the $4.8 billion platform committed development pipeline is supporting growth in base fee revenue and transaction fees, offset by higher operating costs. Pleasingly, the group is reporting a healthy statutory profit after tax for the first half of $272.8 million, reflecting the combination of operating earnings and positive property revaluations.

OEPS increased 21.6% to $0.505 per security, whilst DPS continues to grow consistently at 6%. This results in approximately half of the group's earnings being retained for reinvestment, primarily into higher-yielding property investments. As noted earlier, this reinvestment is meaningful in scale, underpins growth in property investment EBITDA and provides a pipeline of assets to create new funds.

Slide 29 provides further details on funds management earnings. Funds management base fees increased by 5.3% in the first half, driven by higher FUM arising from valuation uplifts and net acquisitions. Transaction fees are materially higher at $32 million, reflecting large transaction volumes with net acquisitions supported by high equity inflows across the platform, most notably within CCRF. Property services revenue was lower in the first half due to elevated leasing fees in the prior period.

Notwithstanding this, the group expects a sizable positive skew across all property services revenue in the second half of FY '26. Variable operating costs has increased in first half '26 to $73.5 million, reflecting employee and payroll tax accruals. Overall, this resulted in FM EBITDA of $142.3 million for the first half. Importantly, elevated net equity inflows lead to future deployment resulting in full contribution to funds management fee revenue in the following financial year.

Turning to the balance sheet and total returns on Slide 30. The group's balance sheet investment in the property investment and development investment portfolio has increased to over $2.8 billion. And pro forma adjusted for post balance date deployment, including investments such as the O'Connell precinct in Sydney, exceeds $3 billion. Positive revaluations and retained earnings during the half has driven an increase in NTA to $5.54. Gearing remains low at 7.7%. And subsequent to balance date, the group has added $400 million of new undrawn debt lines, together with existing cash providing investment capacity of $1 billion, positioning the group well to pursue investment growth opportunities.

Further refinancing across existing bank debt lines to extend tenor, combined with new bank lines results in a lower margin and line fee of 22 basis points in the second half. Total returns continue to grow with the group delivering an after-tax annualized return on contributed equity of 23%. Maintaining strong return metrics is fundamental to ensuring optimal deployment of both the group's capital and that of our partners. This continued focus on total return outcomes ultimately generates long-term earnings growth and sustainable value creation for our investors.

On Slide 31, similar to the group's balance sheet, we had a highly productive half year, which continues, raising $10 billion year-to-date of new debt and refinancing existing debt across our funds management platform, supported by favorable credit market conditions. We expect the pace of refinancing to further accelerate in the second half through to 30 June 2026. Credit appetite from our lending partners, including both domestic and international banks remains very strong. This is evidenced not only by the significant new and extended loan volumes completed year-to-date, but also in wider covenant headroom and lower credit margins, averaging savings of 27 basis points.

This debt financing activity has increased investment capacity to $7.8 billion, providing additional flexibility to deploy capital across a range of various real estate strategies and opportunities. Whilst the RBA cash rate and market floating rates remain higher than previously expected, we have progressively implemented hedging throughout the first half across funds, providing protection against earnings volatility in both FY '26 and FY '27.

Overall, the group has achieved a 10 basis points lower WACD across the funds management platform as at 31 December compared to 30 June 2025. Before handing back to David, in summary, the first half of FY '26 represents a strong earnings result. The combination of elevated equity inflows and balance sheet capacity positions the group well to deliver ongoing FUM growth and sustainable future earnings growth.

Thank you, Anastasia. Turning now to Slide 33 and our earnings guidance. I'm pleased to advise that due to strong performance within our investment and property services business, today, we are providing a further upgrade to earnings guidance for FY '26. Based on no material adverse change in current market conditions, FY '26 earnings guidance is for post-tax operating earnings per security of approximately $1.00 per security, which represents 23% growth over FY '25 earnings and an additional $0.05 above the AGM upgraded guidance provided of $0.95. This earnings guidance excludes any expectation for performance fees.

FY '26 distribution per security guidance is for 6% growth over FY '25, continuing a 15-year history of annualized DPS growth. That now ends the prepared remarks, and I now invite your questions.

[Operator Instructions] Our first question comes from the line of Suraj Nebhani with Citi.

Great results, guys. A couple of quick questions from me. Firstly, on the CCRF fund, you called out $2.4 billion of gross equity. Can I just confirm how much of that -- how much of that has been filled in terms of transacted upon? And what capacity does that give you in the second half, please?

Thanks, Suraj. The -- well, the answer is that there's another $1 billion of acquisition capacity over and above what we announced or issued in the media today with another $360 million portfolio acquisition. The other part of that capacity is we're continuing to raise equity in CCRF. So I think that dry powder will accelerate over the next few months with further inflows.

And what typically happens with these open-ended funds is that particularly with the scale and diversity of the LPs that have supported that fund, I think we're going to see an acceleration in both domestic and offshore wholesale investor inflows into that fund. So whilst it might be $1 billion of dry powder now, I'm sort of expecting that to continue to grow even as we deploy further.

So I don't sort of really give guidance on how much I expect to acquire further in the second half, but it's fair to say with today's announcement of $360 million and various other acquisitions, I expect it will be a pretty strong contributor to further FUM growth in the second half.

And maybe just one question for you around your -- you obviously called out a very favorable backdrop and record inflows, yet we have seen 10-year rates move up pretty strongly and even the longer-term rates in the U.S. are up pretty strongly in the last, let's say, few months. Is that having any impact on the discussions you're having with capital partners with respect to property investments?

Well, I think it'd be naive to say that movement in bond yields doesn't have an impact. The only thing I'd say is before we even went into this almost historical view on multiple interest rate rises, there was already a pretty strong gap between bond yields and unlevered IRRs and levered IRRs that we can deliver to our capital, both in core value-add and opportunistic. So I think the demand still exists. I've said it before, even though there's been some corrections in stock markets around the world, the reality is that most of the capital we talk to are underweight, their strategic allocation to property.

A lot of our capital have experimented in various forms of alternatives, some of which have blown up completely, some of which have been highly disappointing in terms of the return you should be getting when you're going into sort of new sectors. So I think there's both absolute underweight pension capital. And I think we're also going to see further reallocation away from some of what I call the alternative experimental investments we've seen in the last few years back to really good quality core, particularly when in all core sectors, office, retail, industrial, you're buying existing buildings way below replacement cost.

And I'll call out things like office where we went through a period of quite elevated rising incentives and incentives are coming down. And so effective rental growth is outpacing face rental growth. So it will become a strong deliverer of good total returns. And as I've said before, because cap rates in office are virtually 150 bps above where they were pre-pandemic, whereas other sectors have more or less got cap rates back to pre-pandemic cap rates. The total return proposition for prime office is pretty strong.

So I think we'll continue to get good demand in convenience retail, logistics. And I think, as I've said on a couple of occasions, I think office might surprise everyone over the next 2 or 3 years. So overall, yes, I don't really see the latest sort of gyration in long-end bonds sort of material having an impact for all the reasons I just outlined.

And if I can just ask one last question from Anastasia, please. Around the costs in the funds management division, the $73 million, that seemed reasonably high compared to first half last year. Is there a skew Anastasia there to the first half this year or maybe expectations for the full year, please?

Thank you, Suraj. Not a particular notable skew to call out. I did say that it's variable costs, employee costs and payroll tax, and it's really associated with the outperformance we've achieved in the business. You've seen 2 earnings upgrades and associated with that outperformance, obviously subject to Board discretion, but there's an accrual there for further short-term incentive and the payroll tax that goes with that.

Our next question comes from the line of Solomon Zhang with UBS.

First question was just, I guess, in relation to the volatility in global capital markets that you referred to in your opening remarks and the result announcement. You've mentioned that, that's increased the institutional demand for Australian property. Just wondering if you've got any data points around this. Are you seeing an uptick in year-to-date inbound inquiry and appetite to deploy on the platform?

Look, as a broad statement and every pension fund or super fund is different. But what we're seeing is a reduction in allocations to international listed equities. The -- I'm not sure I'm necessarily seeing an absolute reduction in allocations to domestic equities. If you sort of think about the private markets and most pension funds have people running listed equities, fixed income and private markets. And within private markets, you've got property, infrastructure and private equity.

We are seeing globally a lower new investment into private equity because it's well understood that private equity has materially increased their investment holding periods, and therefore, the cash coming back to investors out of realizations from private equity has severely been reduced. So we think we will be a beneficiary of incremental dollars not going into PE and sort of coming into property. Infra has obviously sort of performed pretty well, but it's often very lumpy, the new deployment opportunities that exist.

So all of that sort of puts it into, I think -- property into a basket that will have demand. And then when you split the world into regions, I'm not sure we're seeing a lot of narrative around incremental CapEx going or investment into U.S. property from global investors who need to make a choice where they want to invest. We're certainly seeing a good acceleration in demand out of European pension funds wanting to sort of invest in Asia Pac.

And the backup in bond yields in Japan is actually helpful because most Asia Pac core capital really doesn't see core markets outside of Japan and Australia. Most of the other options are sort of seen as a little more volatile and higher risk. And with the backup in bond yields in Japan, there's some question marks around whether or not the 30-year yield spread play where there's not a lot of capital growth and/or potential negative capital growth.

Now a lot of people are starting to wonder whether there is going to be negative capital growth with the backup in Japanese bonds. So all of that sort of means we're getting accelerated demand for investment in Australia. And as the biggest player in the country across all the sectors, we're a natural port of call for this capital. And we just don't wait for them to walk into 1 Martin Place. I've got a team traveling the world regularly talking to capital. So I sort of feel that we're in a good position. Australia is generally in a good position.

And I think we're going to see, as I said earlier, both core value-add and opportunistic risk capital wanting to get deployed in Australia.

That's good color. And as a follow-up to that, would you have an estimate of where property allocations might sit versus their strategic asset allocation targets? I know we have good visibility into the Australian super fund data, but less into offshore.

I mean I think even the Australian super fund data is very different, whether it's a defined benefit fund and accumulation fund. But it's a broad cross-section, and this is all available on APRA. I'd say domestic super allocations to property could range anywhere between 6% and 13%. We've found global capital typically would have a higher allocation at the bottom end. And in some cases, I've seen allocations up to 17%, 18%.

But if you want it at a rough rule of thumb, I'd say 9% in domestic and 10% or 11% to 12% for international capital. And then depending on the particular partner, whether European -- whether it's a pension fund or a sovereign wealth fund, some of them are very opaque in their weighting. So it's difficult. But all I care about is do people have incremental appetite and everyone I talk to has got incremental appetite. So that hopefully gives you the color.

Maybe just a final question for Sean. Just on the $5.5 billion living and mixed-use pipeline. Can you just give us some math sort of how you've built up to that amount, i.e., maybe just how many lots rough area of value per square meter? And can you just confirm whether this is assuming -- you assume you hold 100% of the project equity at the end? Or do you assume that you bring in a capital partner for part of that stake?

Yes. Thank you. Look, that's the pipeline completion value on the assumption that we build out the strategic planning approvals we've delivered over the last year or so. So in terms of optimizing our existing assets, which is the real strategy, that's a big accomplishment, which leads to $5.5 billion. And that's more recently, a material addition was Gordon Shopping Center, where we just got a set amendment for a potential $1.6 billion mixed-use project.

So we now have the optionality to bring in new partners to strategically develop these assets out or we can optimize the existing assets as they are and trade them for a premium. I think the main thing is we have optionality now to grow in these sectors, which is a new thematic, if you like, in the living space. But I might add that over the last 5 or 6 years since we've owned Folkestone, we've built out about 6 in global residential subdivisions, which has been very successful.

So it's not a brand-new sector for us, but we're just optimizing the existing assets that gives us optionality to deliver future earnings in different spaces in the future. Do you want to add to that, David?

Yes, I'd just add, over 95% of the gross completion value is build to sell. So one of the reasons why pension capital likes build-to-sell is over the course of a sort of 3- or 4-year project, they know they're going to get their money out plus their profit because that's the nature of build-to-sell and there is absolutely no way we're funding any projects without majority external capital. So I think that answers your question.

I think the other thing I'd say is that we're probably -- when you think about this pipeline, we've added value to assets that we already own in the platform. We're not going out there buying overpriced Sydney land, which has been the case for a lot of people trying to do residential. We're actually cultivating and adding value to our existing owned assets or managed assets. So it's quite a different model. But depending on market cycles and obviously, us attracting external capital when we're ready to go, that's how these things will get developed out.

Our next question comes from the line of Simon Chan with Morgan Stanley.

David, you talked about pretty successful fundraising campaigns over the last 6 months. Just wondering if you think office market now has stabilized to a point where flow of equity could come rushing back into CPOF, because from memory, you're going to kick off a capital raise there, right? Have you got any insights for us?

Yes. No, we already recently raised $0.25 billion in CPOF. I think as I said before, Simon, when I look at like-for-like cap rates for prime office versus the other sectors, they've got the most cap rate compression just to mean revert back to pre-pandemic levels. I think all the hysteria around work from home is dissipating quickly. You only have to look at the occupancies, the vibrancy in both Sydney and Brisbane.

Obviously, Melbourne is going to have a slower recovery, but it also has got very little new supply, and we're starting to see double-digit, unbelievably double-digit net effective rental growth coming through in the Paris end of Melbourne, albeit off high incentive levels. But -- so yes, I think I've been saying for 12 months, I think you might find over a 5-year period, offices are sleeper in terms of inflows.

Do I think that's going to be the next 6 months, 12 months, 18 months? I don't know. I can say we're having a lot of constructive discussion with investors and the smart ones who realize you want to get in early in a recovery cycle, not at the later end of it to maximize your IRRs, having a really good look at jumping in now. If you look at our acquisition of 1 O'Connell Street, that's a pretty big statement about where we think really strong potential growth is going to come in the prime core of Sydney.

And all I can say is that we're looking to play that office recovery across core value-add and opportunistic. And I think there's a bit like I was saying about build to sell on our existing assets, it's pretty hard to go out there and buy a block of land and make things work. So quite often, as we've done with Chifley, we'll cultivate what we've already got. In Melbourne, about 8 years ago, we built another 26,000 meters on an existing 30,000-meter building, effectively didn't know me anything on the land, and I created 2,500 meter floor plates on the bottom 10 levels.

And so I think there's different ways that you can play that market. But yes, I think office will provide sort of outsized go-forward equity IRRs compared to other sectors. And there'll be some that are sort of smart enough to get in early, and then there will be others that wait for a couple of years of solid NTA growth before they sort of jump back in. So that's the sort of landscape we're looking at.

Fair enough. If I think about your guidance, originally, you were guiding to $0.90 for the year and now you're guiding to $1. Essentially, over the course of the last 6 months, David, you found an extra $50 million somewhere, right? That's not -- that's a sizable number. Like what has driven -- I know in your prepared remarks, you kept saying our business is better, but $50 million is a big number. Like did you just completely misread the market back in August? Or like where is the bulk of the $50 million coming from?

Well, first of all, if you think about $4.8 billion of inflows in 6 months, which is probably higher than any full year inflow we've ever had, even with my optimistic outlook, I didn't think we'd sort of raise that amount of capital. And obviously, there's some wins in there that we wouldn't have necessarily anticipated at the start, like the Challenger mandate. There's a few other things that are happening in the second half that we'll eventually announce.

We've also done, I think, a good job in further recycling equity we had, selling it down to capital partners and then redeploying into new investments that has helped drive the PI line. So look, I've said it before, Charter Hall has historically been able to deliver very, very strong and consistent multiyear earnings growth after a correction cycle. If -- you're an analyst, you have a look at the history of Charter Hall's earnings.

So we're in a positive momentum situation, but the last thing I'm never going to do is over guide based on, I might raise $4.8 billion of equity in 6 months. I'd prefer to guide where we have visibility. And if we can deliver upside through further deployment, particularly further equity flows, that's the way we've run the business for 21 years since it was listed.

The other thing I'd say is, and I've called this out before, there's a bow wave or delayed impact on revenue and hence, earnings from strong inflows. If we have $4.8 billion in the first half, you won't see an annualized impact on that until FY '27. So if we can have another strong inflow year in the second half, so we've got an even bigger record of inflows in FY '26. The bow wave effect means you're not going to see a full year annualized revenue and EBIT impact from that until '27.

So this is why we're pretty constructive about the future. And obviously, myself and the rest of the 600 team are out there raising more equity, continuing to do active leasing and grow the business. So hopefully, that gives you the answer that you wanted. Like if you're asking me why I didn't know we'd be at $1 when we guided $0.90, well, that's the answer.

Our next question comes from the line of James Druce with CLSA.

I just wanted to clarify something on [indiscernible] I mean you've done 11.5% return over 10 years. Since inception, it's probably better than that. Is that in performance fee territory for '27?

Mate, I don't give you 1-year forward guidance, let alone 2-year forward guidance on anything. So all I'd say is you'll recall, we generated performance fees out of Charter in FY '19 and FY '20. As you point out, there's another measurement period in '27, what I would say to you is we're going to need a decent level of cap rate compression to get that back to the high watermark because your IRR calculation on all performance fees always goes back to time 0 and has regard for previously paid performance fees. But -- so I wouldn't say it's out of the question, but I certainly wouldn't say it's in the money at the moment.

Okay. All right. And then just second question just on the $5.5 billion mixed-use opportunity. How do we think about the timing of getting further go to market for that? I mean it sounds like you've got all the pieces of the puzzle together, the strong demand in that sector.

You're talking about residential?

Yes.

It's all about market cycles. So some of those have got Stage 2 planning approval like 201 Elizabeth Street and would be ready to go. Similarly, at Westmead, Gordon needs to go through another stage before it's fully ready to go. They're all income-producing brownfields opportunities. So we're in no hurry. So what I call the planets aligning is, a, having vacant possession and planning approval; b, having external capital partners to fund it with us maybe doing a bit of a co-investment and more importantly, our team having conviction that's the right time to go.

Now if you think about build-to-sell, you're not going to start construction on any build-to-sell without a significant level of presales. So if I sort of think about all of that, you need the planets to align, including presales, so you can get nonrecourse project finance to -- like anything, you've got to match the equity funding with the debt funding and presales for you to start construction. So that's how we're going to prosecute those development opportunities.

Whilst residential, particularly luxury REITs such as 201 Elizabeth Street is strong. We think there will be very, very strong demand for something like Gordon. The reality is you've got to make all the planets aligned, including getting fixed price, construction contracts that makes sense. Fortunately, we're starting to see some deflation in construction pricing in industrial, where we've let a lot of building contracts well below what it would have been a year ago.

But it's still -- it's not easy, as you probably heard from some of the on-balance sheet resi developers. It's not easy to sort of lock down decent pricing on construction. So they're all work in progress. And as I said, for the time being, we're getting good passing yields on those assets in the various funds and partnerships that own them.

Our next question comes from the line of Adam Calvetti with Bank of America.

Just trying to reconcile, I mean, first half, you've done $6.6 billion in acquisitions, transaction revenues, $32 million. I mean last financial year, you did about half the transactions and the same transaction revenue. So I mean, is there some unrealized acquisition fees there? Are they going to fall into the second half? I mean, have you had to give away just the structuring of the different funds, some are having acquisition fees? What's really going on there?

Well, first of all, when CQR put its seed assets into the core retail fund and swapped part of them as an equity investment in that fund, we were not charging CQR divestment fee. So it's a good question. But what I'd guide is that not all of the transactions are generating fees if there's that sort of related party transaction.

The other thing is that there is a bit of a deferment on transaction revenue if something wasn't completely unconditional at 31 December, it will become a second half transaction fee. And of course, as you'd expect, it's hard to charge a client like Challenger gives you a mandate an acquisition fee when they already own the assets. So that's the reason why when you look at those transaction fee revenue numbers versus the volume, it looks a bit different than prior years.

Okay. That's pretty clear. I mean on the $1.9 billion of post [indiscernible] acquisitions, will those be generating any fees?

Yes.

In second half.

In the second half, yes.

Yes, correct. Okay. And then I mean, just thinking -- if you just double first half, you're probably going to see some growth in PI and FM. We're above 100. So what's going to be dragging it down?

This is my 21st year doing this, and you guys always do the same thing. You just double all the first half metrics to get to a full year number. It's not that simple. And there will be various items. But like it's hardly a first half, second half skew at 50.5 versus 49.5. So I wouldn't get too excited about why aren't you doubling everything to get to a higher number.

Okay. That's somewhat clear.

It's about as clear as I'm going to be. But look, what I would say, and I said it earlier, we have an expectation for the second half, which has sort of guided our recommendation to the Board who signed off on the guidance. If like the answer I gave to Chan earlier, if we pull off some miraculously great deals or inflows that drive our revenue and EBIT above our expectations, then we might beat that guidance.

But at this stage, we're pretty comfortable with that guidance. And as I said earlier, I think you guys should be thinking about the bow wave effect and what this sort of equity flow and FUM growth is going to do on an annualized basis into '27 and beyond.

Our next question comes from the line of Ben Brayshaw with Barrenjoey.

David, I just have a question on the operating expenses. Historically, there has been a skew to the second half. How are you and the team seeing the composition for this financial year?

Anastasia?

Yes. As I said earlier, we're not seeing a very significant skew. You should see it as fairly in line in terms of the expenses we've reported in the first half is indicative of second half.

Our next question comes from the line of Tom Bodor with Jarden.

I just was interested in your acquisition of 1 O'Connell post balance date. I noticed that's not in the development pipeline for office. I'd just be interested in your thoughts around that project, the potential to maybe take onboard the other 50% over time and what scheme you think makes sense for the site?

When you buy a site consolidation, that's cost a vendor a lot of money, and we're buying it well below what they accumulated for, I wouldn't necessarily think the highest and best use is bowling over 5 buildings and creating a 100,000 meter tower. So we like that because we effectively think that we've got optionality. The sum of the parts and the realizable value on each of those buildings once Charter Hall adds its active asset management, it may well be a much better outcome than doing a major development, whether it's a 100,000 meter single tower or 250,000 meter towers.

So we and our partners are just looking at that with lots of optionality. Clearly, we have a preemptive right over the other 50% when and if that fund decides to sell. Given what's happening with that series of funds, I'd be surprised if we -- they don't go down a path of looking to sell it. And if they do, well, we've got a preemptive right to look at it at sensible pricing. So because of all of that and because it's a Stage 1 DA, not a Stage 2 planning approval, I wouldn't see any potential development scheme, as I said, whether it's 1 tower or 2 towers sort of coming into our uncommitted development pipeline until we went down that path, if, in fact, we even go down that path.

So I think that's the best way to answer it. But there's no doubt we have a Stage 1 planning approval for 100,000 meter tower that virtually has to be worth $40,000 to $50,000 a meter. By the time it's built, it's $4 billion or $5 billion of built form. So that is the way I sort of look at it. But by the same token, if -- unless it beats an alternative strategy, which is our base case, we won't be doing 100,000 meters of development on that site.

Yes. That's very clear. And then maybe just a follow-on question just around the valuation cycle is clearly troughed, all the REITs have seen positive revals. But if you look in the sort of smaller and mid end of the sector, there's still some pretty significant discounts to NTA. Do you see that -- how do you see that evolving? And what opportunities do you see in the listed sector over the next few years?

Well, as you know, we've been running prop securities money for a long time, ebbs and flows. But if you're sort of roughly -- say we've got roughly $1 billion in our various prop securities funds invested in the REIT sector. I think there's some dogs out there, and I think there's some really cheap buying.

So as an investor in REITs on behalf of the balance sheet and our capital partners, I think there are some good buying. Just if you look at my 3 REITs, just because the market trades them at a discount to NTA, it doesn't mean that me or the rest of the direct buyers in the world don't think that NTA is real. You only have to look at how much money we've raised in our retail fund at NTA to show what the wholesale world thinks.

So we're just going through a normal listed cycle where the listed markets are punitive on good quality portfolios for macro reasons. It doesn't mean I think the listed pricing knows what it's doing. And if you look at the history of this group, when the listed market is not pricing things correctly, we've taken opportunities to take REITs private. So I don't see that being any different over the next 10 years, for the last 15 years. So -- but we're not going to jump into something we don't like.

And as I said before, the sort of planets have to align for that to work. But if listed markets keep mispricing things, well, yes, I think there's -- whether it's us or others, you're going to see a continuation of REIT take private. You've already got NSR on the block. We did HPI last year, a bit like virtually half of the listed infrastructure sector, it's all gone off the boil is because the wholesale capital is prepared to price the assets different to the listed market. So yes, I don't see it being much different, to be honest.

Our next question comes from the line of David Pobucky with Macquarie Group.

Just the first question on Chifley South, if I could, 60% committed. Just curious to know how you're thinking about the pace of the lease-up and any anecdotes on current interest levels that you can provide, please?

I'm in no hurry. All of our internal forecasts suggest to me we're going to be getting well into double-digit net effective rental growth in the core of Sydney CBD, and we're really the only new top of the hill premium quality tower. There is one other, which I call down in Tank Stream is nowhere near the sort of level of what Chifley South is. And to be honest, the achieved face and net effective rents sort of prove that.

So yes, we'll be patient about how we do deals in the rest of the tower. I think we'll probably get -- of the 20,000 still to lease, we'll probably get 10,000 done with sort of multi-floor tenants and the rest of it will be whole floor tenants who literally will have no other choice to go into a whole floor premium grade tower at the top of the hill.

So I think we're going to get a very good result on both the rents and the end value of that new tower. So yes, I'm very relaxed about being where we are with 60%, but it's fair to say I think it will be higher than that in June and then higher again in December. And I'm not too much in a hurry given the strong growth in rents.

Just a couple of quick ones for Anastasia. Just firstly, around tax expense. I think the rate was around 18% versus 23% in the PCP, just the driver of that and how you think about the tax rate going forward?

Yes. We've done some cross-staple capital reallocation, $400 million in the year prior and $200 million recently. And that certainly has particularly the prior one had a result in lowering our effective tax rate on CHL side of the staple by about 5 percentage points is our estimation for FY '26.

And just a second one around where your weighted average debt margin currently sits and how much that's come down by versus last year, please?

For the head stock main balance sheet, it's come down from 1.65 by 22 basis points. I don't necessarily think it will land there. We've got some further plans around refinancing, which actually translates right across the platform. We talked -- we -- the result today was $10 billion of refinancing, and we're accelerating that pace all throughout the second half.

And so across the platform, we reduced margins by 27 basis points, and we expect that to build as a number as we get through that refinancing program just because credit markets are very, very strong. And we're also wanting to lock in the higher covenant headroom that we're achieving across the platform.

[Operator Instructions] Our next question comes from the line of Richard Jones with JPMorgan.

Just interested in your high-level views. So obviously there were market discussion about AI and the potential impacts for office. So just interested in your views and the associated views of capital as to whether that may delay potential office investment.

Look, there's a lot of theories out there. And I think there's an unnecessary focus on white collar employment versus all sectors of the economy. We're seeing a massive acceleration in automation going into warehousing. So whether you want to call it technology or AI driven, like the reality is we're seeing an acceleration of what I've seen for 20 years in terms of blue-collar workers being in warehousing, being replaced with automation.

In terms of the office markets, our view is that if sort of processing type roles are going to be most at risk from AI, we think that's going to have an outsized impact on suburban office markets as opposed to sort of core CBD, which is virtually where most of our assets are. And look, right now, we're continuing to do lots of leasing with both whole floor and multi-floor tenants. And I'm not seeing any planned reduction in floor space when people are signing up on 10-year leases.

So I think that just reflects that the whole corporate world is not quite sure whether headcount is going to be materially impacted or whether there's going to be a reallocation of roles and/or whether AI is simply going to augment productivity rather than replace human labor. So that's sort of how we're playing it and have a very strong view that the very best modern office buildings in the best core markets will prosper.

Right now, who would have thought the net effective rental growth in Brisbane is higher than the Sydney CBD. But that's what's happening. It's tightening up very quickly up there. We're fortunately sort of be in high conviction on Brisbane in core CBD for a long time. So I don't have the answers. I don't think anyone's got the answers. But I think if you're going to shape your portfolio towards the very best locations and keep them as modern and as relevant as possible, you'll do better than a lot of other buildings.

Our team have constantly reminded me that virtually 90% of all vacancy in most markets, but particularly in Sydney, sits in about a dozen buildings. And will be no surprise. Most of them are sort of older buildings that haven't had capital invested in them and aren't necessarily in the sort of absolute core locations. So I think each market will be very bifurcated by the quality of the building and its location, and we'll continue to see sort of, if you like, centralization.

That's why I've never like North Sydney, we're seeing a centralization of relocation, tenants relocating into the city because the new metro basically has taken away the time advantage that used to exist for people to locate in North Sydney. We're also seeing a flight to modern quality. We've secured ING Bank to move from a pretty old boiler in 60 Margaret into a modern 1 Shelley Street building. So I think these are the sort of bifurcation trends we're seeing. And that's why you'll see us continue to have modern buildings in good locations that are going to attract the tenants. So -- and if anyone else can give you a better answer on the future impact of AI, please let me know.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to David for closing remarks.

Okay. Thanks once again for your time. And I'm sure we'll be meeting various people at investor meetings following the results. Thank you.

Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the Charter Hall Group 2025 Full Year Results Briefing. [Operator Instructions] Please note that this conference is being recorded today, Thursday, 21st August 2025.

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 the Charter Hall Group Full Year Results for Financial Year '25. Presenting with me today is Sean McMahon, our CIO; and Anastasia Clarke our, Chief Financial Officer.

Turning now to the group's earnings. Operating earnings for the full year was $385 million, which translates to a full year OEPS of $0.814 per security, growth of 7.3% over the prior year, and consistent with the growth trajectory accelerating with today's FY '26 guidance of $0.90 per security, which represents 10.6% growth over '25.

The group's return on contributed equity continues a multiyear 20% plus rate at 20.8% on a post-tax basis, further accelerating with today's FY '26 guidance. We've also continued 14 years of 6% DPS growth in FY '25, and have guided for a further 6% in FY '26. Group funds under management over the year rose from $80.9 billion to $84.3 billion, and property farm has risen from $65.5 billion to $66.8 billion at 30 June. Acquisitions and development activity more than offset divestments, with stable net valuation movements across the platform.

During recovery cycles, we typically see asset value growth first driven by rental growth, then amplified by cap rate compression. Typical in falling interest rate cycles. Our balance sheet remains in a strong position with 6% net gearing, which I know is based on tangible assets [indiscernible] property investment portfolio that is well diversified by sector, tenant [ WALEs/lease ] expiry spread, rent growth, diversification and tenant credit covenant quality, something becoming more topical with corporate delinquencies throughout some parts of the alternative property sectors.

We retained dry powder, both on balance sheet and $5.9 billion throughout the platform to take advantage of healthy vintage buying that exists, which will drive earnings growth across our three earnings segments. Growth in our wholesale investment management platform has been pleasing during the year. with the $1.3 billion in equity raise for our prime industrial fund [ CPOF ]. The [ CCRF ] $2.5 billion gross capacity launch announced in August, and our appointment to manage Challenger Life's $2.1 billion direct Australian property portfolio.

This year, we celebrated Charter Hall Group's 20-year history as a listed A-REIT. During this evolution, we have moved into the ASX 100, getting close to top 50 by market cap, being included in the important global property REIT index, [ Apronari ], grown our FUM from $1 billion at IPO in 2005 to $86 billion. But most pleasingly, we have driven earnings per share significantly from IPO to what is today's FY '26 guidance of $0.90 per security.

As one would expect, the EPS growth has driven growth in our market cap from $264 million at the 2005 IPO, to $10.5 billion today. Over this period, CHC shareholders have enjoyed a 15.2% per annum total shareholder return, almost 2x the TSR of the whole ASX 200 and more than 2.7x the TSR of the ASX 200 A-REIT index, of which CHC has been a long-term constituent. We're proud of this track record delivering the highest TSR in [indiscernible] index over the last 2 decades, while sitting within the top 10 TSRs within the whole ASX 200 across all industries within that cohort of the ASX 200 companies listed during that 20-year period.

Australia's population is growing at double that of the [ OECD ] average. Supply of new development in all of the sectors we operate in is below long-term averages, and new suppliers contracting as a percentage of existing supply in every sector. As demand continues to grow through economic expansion, this bodes well for strong rental growth for existing assets, particularly as many are independently valued well below their replacement cost.

FY '25 was clearly the inflection point. We're now seeing transaction levels rising, property cap rates stabilizing after a period of expansion, and market benchmarks returned in aggregate, returning to positive capital valuation increases. The investment management business secured $3.4 billion of gross equity inflows for the financial year, which is more than double the total gross equity raise for the 12 months in FY '24. Whilst in the first 6 weeks of FY '26, we have already secured gross inflows equal to the whole of '25.

Gross transactions for the year was $6 billion -- or $6.1 billion, with $2.9 billion in acquisitions and $3.2 billion in divestments. Acquisitions and development more than offset divestments, and moving forward into FY '26, we anticipate acquisitions to materially outpace residual divestments.

We've delivered strong EPS growth over the last 10 years, as I mentioned earlier. And we continue to drive consistent distribution growth, which have averaged 10.4% per annum over the last 10 years. We continue to retain approximately half of our annual post-tax operating earnings, which we reinvest into growth in property and development investments, providing us with capital to originate warehouse and [indiscernible] alongside our external capital partners, to drive total returns for CHC and its capital partners, which also drives growth in property funds management earnings. This self-funding growth model has avoided the need for us to raise new CHC equity for a decade.

Slide 10 provides an overview of the diversity of our equity sources. We totaled $84.3 billion in funds management, with 75% of equity sourced from the wholesale, or unlisted institutional sector, close to 15% from our 3 listed managed REITs, CLW, now virtually trading as its last date NTA. CQR and CQE, both of which are well on their way to a similar milestone, whilst 10% of property funds management sits within our Charter Hall Direct business. With over 20,000 retail and high net worth clients and the largest footprint of unlisted real estate funds from this segment of investors nationally.

Property Funds under management grew from $65.5 million to $66.8 billion during the year. Acquisitions and development more than offset divestments with valuations remaining stable. Since 30 June, our property farm has risen further by 5%, or approximately 5%, to $69.4 billion. The launch of CCRF provides a further $1.5 billion of capacity increase its initial scale of $1.3 billion, while subsequent closes for CCRF will likely grow equity inflows and hence further capacity to grow the convenience retail fund portfolio via judicious acquisitions. Our appointment to manage [ Challenger Lives $2.1 billion ] real estate portfolio is another important growth in our institutional investor roster, which now exceeds 125 institutional, or wholesale investors, in our unlisted wholesale property platform.

Slide 12 displays our property funds under management platform in more detail. As you can see, wholesale investors provide about 70% of the entire platform's equity. The investment management business manages over 1,600 properties with 98% occupancy, and a WALE of just under 8 years. We're Australia's largest manager in the office sector, largest third-party industrial asset manager, and now also the largest in the convenience retail sector with $16 billion in total. It's also noteworthy that our social infrastructure platform has grown to about $4 billion in size, or just under 6% of our total Fund.

Turning to equity flows within our funds management business on Slide 13. With asset values below replacement value -- sorry, independent valuations below replacement value severely constrained supply and a growing population, forecast returns are attractive across all of the sectors we operate within. We are seeing a reassessment by many of our clients of the risk reward available in many so-called alternative sectors, including private credit, meaning we have witnessed a growing appreciation of the attractive current vintage returns available in traditional well-managed core sectors in which we operate. We see an acceleration of this demand as interest rates fall, and the [ sobering ] returns and some alternatives bring capital back to property core sectors. This trend is evidenced by the $3.4 billion of gross equity inflow we attracted in the whole of FY '25, doubling FY '24, and then further equity flows in the first 6 weeks of FY '26 of circa $3.2 billion.

During FY '25, we secured 14 new wholesale institutional investors and have seen 41 existing wholesale investors invest further equity into the platform. We have raised over $11 billion in gross equity inflows in '23, '24, '25 and the 6 weeks of FY '26.

Slide 20 -- sorry, Slide 14 summarizes the current industrial platform, with 7.2 million square meters of [ lettable ] area and about $26 billion in FUM. Many [indiscernible] Australia's largest third-party managed industrial portfolio. Scale matters in most sectors, but particularly industrial, where major customers want to have multiple assets and multiple state relationships with their landlords. The platform is in excellent shape with a modern, highly occupied long WALE portfolio.

Leases renewed over the financial year recorded an average 21% increase in passing rents. Our development pipeline remains exceptionally strong at over $6.9 billion, with an accelerating land bank of planning, approved, sites that are yet to be committed. The recent $1.3 billion of equity flows into [indiscernible] is indicative of continued investor demand for I&L.

Slide 15 summarizes our office platform. We own and manage Australia's largest office portfolio at $24 billion, and a whopping 2 million square meters of [ lettable ] area. To give you some context, it's the whole of the Brisbane CBD. During the year, we had strong leasing momentum with 227,000 square meters of lease deals across just over 200 transactions. Effective rents outpaced face rents with the platform retaining 95% of its tenant customers in their existing or expanded footprints.

Our portfolio remains modern with high occupancy of 96% well ahead of market in many peers. Weighted average rent growth on leasing deals closed continues to be a healthy 3.6% per annum. Charter retained significant capital each year, and this provides opportunity for our balance sheet property investment portfolio to take advantage of market conditions and acquire assets for long-term ownership and future capital partnering with our funds and partners. The credit quality of [indiscernible] portfolio is second to none, with 36% leased to government and 1/3 of 50% approximately leased to high credit quality customers, ranging from all the major domestic and global banks, 5 or 6 industry super funds, and major corporates such as Amazon, BHP, Telstra, Suncorp, [ Amex ], Shell, Endeavor, and even our friends at [ Centuria ] sitting at the top of [ Chifley ].

Turning to Slide 16, we provide a snapshot of our convenience retail platform. This platform manages $12.4 billion in shopping centers and net lease retail assets, or $16 billion if you include our [ long WALE ] fundings portfolio. We are pleased to announce the launch of the Convenience Retail fund recently with $1.8 billion in equity commitments, which gives a $2.5 billion of asset capacity, of which $1.3 billion is already secured, and note that several investors are in advanced due diligence for further commitments this calendar year.

The convenience retail sector is an immense opportunity for Charter Hall. Whilst we are the largest owner, it is very fragmented. From shopping center ownership through the net lease assets such as servers, pubs, Bunnings and the like. We have recently secured another $290 million long WALE portfolio on [indiscernible] leaseback from Bunnings, which has grown our overall Bunnings portfolio to approximately $4 billion. We've accelerated growth in pubs by the successful non [ HPI ] Board recommended takeover at [ HBI ], which has delivered strong net uplift in value and rents for CQR and [indiscernible]. We continue to grow the convenience shopping center portfolio with recent acquisitions, including the triple supermarket-anchored [indiscernible] marketplace, shopping center, [ Waverley ] Gardens and [indiscernible] shopping centers in Melbourne, whilst we are well advanced on other acquisitions.

The sector provides a higher initial income yield than other sectors, combined with attractive rental growth prospects, and given the constrained future supply with most major supermarket anchors at all-time lows of new store rollouts, we see natural population growth and constrained supply, providing really healthy returns going forward in this sector.

Convenience Retail within interim middle metro locations in our major cities is becoming incredibly difficult to replicate, given the dart of available land with acceptable zoning size and main road frontages required for a typical shopping center to succeed. The living, or build the cell, portfolio that we are cultivating and have secured significant planning approvals on several projects will further source convenience shopping center opportunities within these projects.

On Slide 17, as Australia's population continues to grow, the need for all types of essential services is only going to rise. Our social infra portfolio has been quietly growing in recent years and now totals approximately $4 billion in scale, which is just under 6% of our total FUM. We have 100% occupancy within our assets on long [ WALEs ], and the majority of our leases are triple or double net leases.

Our listed REIT CQE recently reported very strong uplift on its market rent reviews of over 10%, and we are pleased to see its strong [ rerate ] in the market over the last 12 months. joining CLW and CQR as top quartile TSR performance during 2025.

Slide 18 covers our cross-sector tenant relationships, the top 10 -- 20 tenants of our platform represent 55% of the total platform income. Today, we have over 4,500 tenants collecting over $3.3 billion in net rent per annum. We were very active during FY '25 across a range of customer-centric strategies with our tenants. We've been busy renewing leases, expanding leases, expanding our tenant relationships across sectors. And as always, we are in constant dialogue on sale and leaseback opportunities, which continue to bear fruit for Charter Hall Group.

With the increased national focus on productivity and improving company profitability we anticipate [ selling leaseback ] activity to accelerate as corporates drive their balance sheet harder to deliver growth for their shareholders. Maybe the same will happen with governments at all levels. Charter Hall has both the focus and capacity to be absolutely the provider of choice to our tenant customers and as a solution provider, not just a landlord. With our insights, cross sector scale and platform footprint, being able to enhance the productivity of our tenants through built form real estate strategies, we provide an attractive partnering opportunities for such customers, both existing and prospective. Partnering with our tenants on a long-term basis, a core pillar of our strategy.

I won't dwell on the Slide 19 in the transaction slide other than to say it was another busy year with $6.1 billion in transactions. As I've indicated earlier, I don't expect this level of activity slow down.

Slide 21, we provide a snapshot of our property investment portfolio. $2.7 billion portfolio retains exposure to over 1,500 properties with a high 97% occupancy, a WALE of 7.6 years, and a weighted average rent review of 3.2% on average locked into our leases. Cap rates remain broadly neutral over the year with the weighted average discount rate now sitting at a relatively high 7%.

We're very confident with our office platform and, in fact, have taken the opportunity to secure some high-quality, long WALE fantastic vintage acquisitions over the course of the last 12 months, which we are confident we will be able to then attract capital partners shortly. I'd also like to remind the audience that we use our balance sheet for both property investments, which may be a warehousing, or short-term investment until we bring in capital partners. We also use it for development investments to create DI earnings. But most importantly, the vast majority of our portfolio, over our 20 years as a listed group, has been there to co-invest alongside our fund investors and partnership investors, and in the REITs, and in the direct platform to show strong alignment so that we're not competing with our fund investors.

I'll now hand over to Sean to continue the presentation.

Thanks, David, and good morning to everyone on the call. Our development pipeline now totals $17 billion. Our development capability and track record has been a key strength of the group for over 30 years. Developed 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 capital to our funds, and partnerships that live on strategic objectives. Development completions totaled $0.9 billion in the last 12 months. And notwithstanding completions the pipeline continues to be restocked and is currently $17 billion, a $3.7 billion increase over the half. There are currently $5.3 billion in committed developments, with 79% of committed office developments pre-leased, and 94% of committed industrial and logistics developments pre-leased.

This financial year we have generated a $3.9 billion pipeline with living and mixed-use projects that have now obtained strategic planning approvals optimizing existing holdings, and providing optionality to grow in the living sector. Noting David's previous comments on Australia's strong forecast population growth, we expect that the creation of new investment stock and opportunities for our investment management platform will continue to feature prominently.

Turning to Slide 25. Over financial year '25, our industrial platform completed $879 million of developments with a WALE of 9 years. Two major new sites were acquired over the financial year, one in Brisbane, one in Melbourne. And the combined completion value of these sites is over $740 million to be completed over the next few years on a staged basis. We currently have $2.4 billion in industrial development projects committed and underway. Our total pipeline of future industrial investment-grade stock now sits at a material $6.9 billion.

Charter Hall is one of the largest industrial footprints in the nation, comprising over 20 million square meters of land, and we are focusing our efforts to maximize value for our investor customers from the land we own. Given the scale and diversity of our land holdings, there are multiple key data center sites existing within this industrial land bank. There are a number of data center sites in focus that are located within availability zones. 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 as powered land at a material premium to industrial land values will negotiate long-term ground leases with hyperscalers as we've done before, all alternatively develop powered data center shells on a selective basis.

The group has been active in the digital infrastructure space over the last 5 or so years and currently has $1.9 billion of FUM, primarily comprising of a portfolio of 37 [ Telstra ] data exchanges, and other data centers along the Eastern Seaboard. Notably, our digital infrastructure portfolio of assets are 100% land value to capital improved value. This is very different to new generational data center assets in the broader market that have a land value of 5% to 10% of capital improved value, which naturally have significantly more terminal risk, unlike our existing digital infrastructure assets.

Now turning to Slide 26. Today, we call out our largest iconic development underway, Chifley Square in Sydney alongside other major office projects at 360 Queen Street, Brisbane, and 15 Sydney avenue, Barton. The Chifley precinct, which includes the existing North Tower and the South Tower where construction is progressing well, will eventually hold a value of approximately $4 billion. The project is Sydney's premier office address, and will be Charter Hall Group's largest asset, with a combined [indiscernible] area of 110,000 square meters. This project scheduled to complete in mid- '27, and is owned by various Charter Hall managed wholesale investment vehicles who are participating in the investment with the objective of long-term retention of this iconic asset. As you can see, the group has been busy delivering new high-quality office developments across Australia, anchored by government and Tier 1 tenant covenants.

Turning to Slide 27. We continue to drive our industry leadership across all facets of ESG, demonstrated by recent GRESB Global and Regional awards, with 18 of the group's funds in the top quartile, and our listed entities achieving an 80 ranking under the GRESB public disclosure rating, and a AA MSCI rating. Pleasingly, we have now installed 86 megawatts of solar power across our platform. And this equates sufficient power for approximately 20,000 homes, and our green loans now exceed $8 billion. From [ July '25 ], our whole platform operates as NetZero through existing on-site solar and renewable electricity contracts.

I'll now hand over to Anastasia to discuss the financial results in more detail.

Thank you, Sean, and good morning. Before commencing on the actual results, I would like to update everyone to a statutory accounting change this period due to the group adopting the new accounting standard, [ AASB 18 ], which will mandatorily apply in Australia from 2027. The standard introduces a new statutory operating profit measure, and improves our statutory financial results disclosure by separating income from our co-investments, which are fund distributions from net fair value movements, which are primarily property revaluations.

Charter Hall's segment operating earnings in the group's earnings summary on Slide 29 is not at all impacted by adoption of the new accounting standard. With application of AASB 18, the fair value of our listed co-investments in CLW, CQR and CQE are now carried at their listed closing trading price at [indiscernible], compared to each fund's underlying NTA. Prior year results in both the annual report and our presentation have been restated accordingly. At 30 June, 2025, the overall statutory impact to the group is a lower reported NTA of $5.26, compared to what otherwise would have been $0.21 per security higher at $5.47, reflecting the trading prices discount to each fund's NTA back at 30 June 2025.

Operating earnings post-tax of $385 million reflects strong growth on the comparable prior period of $358.7 million, particularly given the headwind of reduced funds under management at commencement of the financial year driven by negative revaluations and asset divestments. We have been able to hold top line [ FM ] EBITDA earnings flat despite some revenue reduction, through expense savings from disciplined cost control measures taken in 2024. PI EBITDA contributed $292 million, growing 7.8%, and DI EBITDA grew 11.5% to just over $40 million.

Net finance cost has increased modestly to $114.6 million due to property investment deployment, increasing net debt, offset by a lower weighted average cost of debt resulting from RBA interest rate cuts. Tax expense has reduced by $6.4 million because of capital efficiency initiatives, including the cross staple capital reallocation of $400 million during the year, and the high proportion of the fully franked dividend of the distributions paid. Top line group EBITDA growth, coupled with net flat depreciation, finance and tax costs has contributed to the strong operating earnings growth in FY '25 of 7.3%.

FY '25 has seen the turning of the revaluation cycle with negative revaluations turning to a slight positive, resulting in Charter Hall reporting a statutory profit of $327.7 million, compared to the prior year statutory loss of $217 million. The group's operating earnings post tax grew 7.3% to $0.814 per security. Distributions grew 6% to $0.478 per security. And when you add franking credits, both from the ordinary dividends paid and the noncash special dividend, security holders earned a gross DBS yield of 8.2% for the year, despite the group maintaining a modest earnings payout ratio of 59%.

Turning now to funds management earnings on Slide 30. Investment management revenue has reduced this year due to lower FUM at the commencement of the year and [indiscernible] performance fees in FY '25 compared to FY '24. Property Services revenue has grown 15%, primarily due to increased leasing volumes and associated capital works, which drive leasing fees, and facilities management and project management fees, and an overall increase in property management base fees. The benefits of the cost discipline initiatives undertaken in FY '24 are fully realized in FY '25, delivering net savings of nearly $20 million, and a reduction on prior year net operating expenses of 13%. The lower FM revenue, offset by the operating expense savings have together delivered FM EBITDA of $271.5 million, in line with prior year.

Now for some remarks on the balance sheet and return metrics. The group's balance sheet has grown as a result of net deployment into property investment during the year, which was funded from retained earnings and a reduction in cash held. The additional property investment and lower cash has resulted in a modest increase in gearing to 6%. The group maintains a strong financial position, as reaffirmed by Moody's of the group's credit rating, [ BAA 1 ] stable outlook. Available liquidity of $700 million provides substantial headstock investment capacity for further deployment into property investments.

Return on contributed equity has increased to 20.8%, in line with operating earnings growth, and a continuing focus by Charter Hall to maintain a capital-light balance sheet. Growing returns is fundamental to ensuring the business deploys our own and our partners' capital optimally. The group's disciplined focus on return on capital outcomes ultimately generates long-term value for our investors.

Turning to the overall funds platform debt profile on Slide 32 to provide an update on liquidity and investment capacity across the funds. The group maintains $5.9 billion in cash and undrawn liquidity, which alongside committed equity is available for deployment into investment opportunities in each fund. The group has had a record year with our treasury team refinancing and sourcing new debt of over $13 billion of the $30 billion debt platform. This important activity continues to fund growth in the platform alongside equity capital deployment, but it's also been astutely focused on widening loan covenant headroom, extending loan maturity dates, and driving lower all-in margins and fees.

Our lending partners, including both domestic and international banks, continue to increase their credit appetite to lend to the Charter Hall platform, the strength of the group has driven increased credit volumes with margins tightening by approximately 15 to 20 basis points. The combination of lower margins, expiry of historic low rate hedges, active targeting of market conditions to add competitively low rate hedging, and RBA rate cuts have together resulted in containing the cost of debt to 4.5%. We expect our targeted activity and further RBA rate cuts to drive a lower [indiscernible] over time, becoming a tailwind to earnings growth in our funds. The group retains 8 investment-grade credit ratings with either Standard & Poor's, or Moody's, with platform average leverage stable at 36.9%, and all balance sheets continuing to be prudently managed.

In summary, the group has delivered a robust earnings result for FY '25, and is positioned well to continue its earnings growth trajectory across all business lines, whilst remaining focused on maintaining strong balance sheet and investment capacity.

I will now hand back to David to provide earnings guidance for the group.

Thank you, Anastasia. Turning now to Slide 34 and our outlook statement. I'm pleased to advise that due to strong performance within our investment and property service business. Today, we have announced strong EPS guidance growth, based on no material adverse change in current market conditions. FY '26 earnings guidance is for post-tax, operating earnings per security of approximately $0.90, which represents 10.6% growth over FY '25 earnings.

I'd also note that this earnings guidance is without any expectation for performance fee revenue. FY '26 distribution per security guidance is for 6% growth over '25, continuing a 14-year history of consistent 6% annualized EPS growth. That now ends the prepared remarks, and I invite any of your questions.

[Operator Instructions] Our first question comes from the line of David Pobucky with Macquarie Group.

Just the first one around the comments about the optionality to grow into the living sector. If you could please just expand on that a bit, and the opportunities that you're seeing in the space?

Well, I think for some time, we've been saying that we've got quite a large captive portfolio of potential residential projects we -- as we have done for years. We add to our development pipeline, uncommitted projects when planning approvals are secured. We have secured planning approvals for a few different projects. The various outcomes of those will either be, we introduce capital partners and do what are predominantly build to sell projects, some of the mixed use that might have shopping centers sitting below residential. The -- the other part of the strategy is to add value to assets that sit within the platform. And if those residential approvals provide an opportunity for us to bring in capital partners that are prepared to fund major residential projects, that's basically the way we're going to exploit it. But at all times, we're looking to add value to the assets that sit in the various funds.

We've also got a pretty strong conviction around lack of supply. It's no secret Australia is in a housing crisis with a shortage of supply. And quite often, one of the reasons we have a competitive advantage is we have income-producing brownfields land that doesn't need a [indiscernible] off while you're going through the planning process. So that's basically how we're going to prosecute it on various assets in the right markets nationally.

And just my second question around FY '26 guidance, not including performance fees. Just wanted to ask what's [ testing ] in the following year and what's improved any performance fee paying territory?

Well, we have, for years, provided a schedule of the dates that particular partnerships, or funds, have performance fee testing. So I'd just guide you to that.

Our next question comes from the line of Simon Chan with Morgan Stanley.

David, you just [ did ] the CCF fund quite successful. Can you talk to us about inflows and I guess, interest from offshore investors into -- not just Australia onto your platform, but how will we as a destination at the moment? And do you feel that interest from offshore is actually going to pick up and drive -- drive growth further over the next few years?

Thanks, Simon. Look, the convenience retail fund is no different to the other raisings that we've done over the last 12 months, we've completed a lot of inflow into our prime industrial funds, [ CPF ]. As a rough rule of thumb, 50% to 60% of those equity commitments are domestic. And obviously, sort of 40% to 50% are offshore. As I said on the call, we're finding both our existing customers and new investors both offshore and domestically are seeing the same thing we're seeing. Australia screens on a risk return basis, one of the best markets in the world to invest into good commercial core real estate. And I think that appetite is going to accelerate.

I think there's a -- what has happened in the last few years, the denominator effect has meant for most pension funds, sovereign funds. The listed equities portfolios have risen. Their real estate allocation has come down as a result of that denominator effect. We're also seeing quite a lot of our clients tell us that they're underweight office. And both universally, both domestic and offshore investors are telling us that they are massively underweight where they want to get to in convenience retail.

For 3 decades, most institutional investors have sort of invested at the large end of the mall space, call it, the discretionary retail space, and there's been an awakening over the last decade as to the outperformance of convenience retail versus the large malls. You only have to look at the [ Miski ] Index, where our convenience retail portfolios have doubled the TSR, or IRR, of the large mall funds in that Miski index. So I think we're going to see an acceleration.

We have some [indiscernible] positive attributes about convenience retail in this country compared to many other major markets. And I think that's going to continue to attract foreign capital. And as I said, I think there's a very large, if you like, movement of particularly domestic capital moving down the food chain from the sort of discretionary end to the, what I would call, safer nondiscretionary convenience retail space.

So yes, we're happy with the first close on CCRF. As we do with all of our wholesale funds, there will be progressive equity closes. So I think that will grow in scale, both in terms of total equity invested and when we introduced modest gearing up to 30% in that fund, I think it will continue to evolve and will become one of our larger funds.

David, in previous conversations, you've mentioned about also different product diversified fund. Is that on the back burner? Or is there no interest for that type of product at the [ moment ]?

No, I think there is interest. To be honest, I get knocked over in the rush if I had an unlisted wholesale version of CLW. Our concept of the diversified fund is obviously playing to our strengths. There'd be a lot of triple-net convenience retail. Clearly, we're the largest player in prime office and third-party industrial in the country. So yes, we've got the capacity to create that.

I think we chose to go with the convenience retail fund first, but a diversified wholesale offering, I think, is definitely on the cards and going to be attractive. And investors want choice. The [ Miski ] index has shrunk from 3 diversified funds to 2. And I think investors are wanting more choice in that Miski index, which is why we're sort of hopeful of CCRF getting included in it. And I think -- we've already done some diversified partnerships, DVP 1 and DVP 2. And I do think there's going to be demand for what I call a charter hall-style diversified wholesale fund, and that's something we'll continue to work on.

Potentially in [ FY '26 then ]?

That's like asking me about composition of guidance, Simon, you know better.

Yes, you have a -- Yes, all right. Good one. Just my final question for Anastasia. A fair bit of cost out obviously, you achieved is you've got a flag down at the half year, too. Is this the new base now for you to grow on for? Or will some of the -- or is that further cost down? Like how do we think about that [ FY '26 ]?

Yes, it is Simon. The '24 savings are fully reflected in the '25 figure. So it is a good base number for you to work from on a go forward. Now obviously, you've got to apply certain levels of inflation assumptions to the nonemployee costs, as well as wage growth to employees. And we're doing a little bit of modest investing in our front end of our business. But we've also been able to pass on inflation and wage increases through recoveries to our tenant customers. So we'd expect to continue on that basis.

Our next question comes from the line of Tom Bodor with UBS.

David, just was interested in the -- just touching on the equity flows again. Fantastic to see good progress across [ CRF ] this year. But I'm interested in when you think listed and direct business flows will pick up?

Look, in my career, it almost always happens that the direct flows accelerate as interest rates fall. If you look at the open-ended funds, we've got in the direct business, if you invest in those, some of them are providing 8% to 9% distribution yields that's attractive. The direct business has got a number of new fund offerings out in the marketplace, which we expect will attract capital.

And then the listed REIT space, I don't think it matters in any cycle. I don't think rates internalized, externalized, whatever you want to call, it can raise equity unless they're using that capital to drive earnings accretion for the investors. So as interest rates and the weighted average cost of debt keeps falling, we're seeing quite a wide spread between the yields you can buy on assets and the [ all-up ] cost of debt. And as the cost of capital for the REITs improves, I think the REIT sector generally will see equity raisings over the next 12, 18 months, but it's going to need to be for accretive acquisitions. Otherwise, there's not going to be support for them.

So -- and so I won't sort of comment on our own REITs, but I think as a general comment, I think the REIT sector will move back into a phase over the next 18 months where those [indiscernible] cost of capital that can use it and grow accretively through acquisitions, will get support from their investors.

Makes sense. And then just a follow-up on the wholesale fund space. We've seen some pretty well-publicized press around potential changes in management rights at fairly sharp fees. I'm just interested in whether you're seeing any pressure across your own platform in the context of those fees being proposed by other managers looking to take management rights from competitors?

The first comment I'd make is that if you've grown your funds and delivered outperformance for your investors, you're not going to be on the same fee pressure that you're on. If you're a bruise manager and you've not performed, or you've had a lack of high-quality governance. And then when you're out there trying to buy funds under management, the investors are going to be expecting you to accept lower fees because you haven't spent 20 years creating the portfolios in the first place.

So I don't think those of us that are in the space where we don't have reputation issues, or we have grown organically wholesale platforms and delivered for our investors have the same pressures that other, what I call, bruise managers may have. So there's a lot of talk in the market around this leading to fee pressure. I'd just like to look at it as -- there's haves and have nots and those that have delivered for their investors are going to be under less pressure. And we're certainly not interested in trying to buy business by doing it at cost recovery type fees.

So I think we've got a franchise that can attract capital at a reasonable level of fees and ultimately, all the beneficiaries of pension funds get tested on total performance, net of fees. So if you can perform and outperform your peers, then I think you're going to get equity support from investors.

Our next question comes from the line of Richard Jones with JPMorgan.

David, just in relation to [indiscernible] Obviously, you've had lots of equity committed so far. Just wondering if you have a rough guide as to how much [indiscernible] still being done and how big that equity inflow could be with the existing investors still doing the work there?

Look, it doesn't matter whether it's [ CCRF ], or CPF or CPOF. We've got prospective investors and existing investors doing [ DD ] all the time. In relation to [ CCRF ]. Obviously, we had a first close, not all of the interested investors could meet that timing. So as happened on every fund we've launched in the last 20 years, some people come in at second or third closes. And that's what's happening at the moment.

As I said earlier, I think both domestic and offshore investors are accelerating their interest. And then there's going to be some investors, as I also said earlier, to a way to liquidate investments they've got in other funds. Not ours, but other funds. And as they get that redemption capital, they'll be looking to put it into convenience retail funds because I think there's a big demand shift to get set in the convenience retail space.

As [ Ben Ellis ] outlined on CQR's results, operating metrics are as good as we've seen in decades in that part of the shopping center space. We obviously are very big believers in net lease retail being the biggest player in the country. So CCRF will have a sort of 80% target towards convenience shopping centers and up to 20% in net lease retail. And I think that's an attractive proposition. So I suspect I'll be sitting here in a year, answering the same question saying, yes, we've got ongoing people doing due diligence on the fund.

And in terms of the opportunities for deployment? You called out $2.5 billion as the current capacity at 30% gearing. How quickly can you put that to work?

Well, as we announced previously, via both CQR and CHC announcements, we picked up another three shopping centers recently, a $290 million Bunnings [indiscernible] leaseback portfolio. It would be very rare in Charter Hall first not to be doing due diligence on something every week of the 52 weeks a year. So I'm pretty confident of deploying judiciously.

We've got the largest transaction team across all sectors in the country, lots of opportunities. And I would say, let's say, unlike the larger end of the mall space, in the convenience retail space in shopping centers, it's a very fragmented market. There's a lot of syndicate and private ownership. If you look at -- we bought [ Galore ] off a private family office. [indiscernible] Gardens and [indiscernible] were off syndicators. And a lot of the syndicators have closed-end funds and they have to sell at the end of their 5-year period or 6-year period.

So we think the opportunities to grow in that universe are very strong. When I look at our $16 billion in convenience, retail nationally, I reckon where it's still less than 5% of the total universe of investable assets. So it's a big growth market. And yes, I expect that we'll be continuing to pick up assets from syndicators, private investors. And if you look at the history over the last 15 years, we've also done a lot of work on sale leaseback with major retailers. And I think we'll continue to buy off other institutions.

And -- so yes, so I think it's a multifaceted approach to sort of slacking assets. But -- as we've done in the evolution of all of our wholesale platform, just because we've got the capacity doesn't mean we're going to spend it stupidly. So we're pretty disciplined on what fits our criteria and the sort of pricing we're prepared to pay. So I don't think anything's really changed.

Just one more quick one. Just -- [ you got ] some details around what you might do around the living center pipeline. Just interested in potential timing of deployment. We've seen obviously a number of listed real estate companies talk a lot about their resi pipeline, but probably not progressive all that much. Just interested in [indiscernible] your pipeline is?

Richard, I'd prefer to just tell everyone when we've done it, and we've started construction and speculate when we're going to do it. So it's -- I think I articulated how we're looking at it. So I'm not really going to provide any guidance on volumes and completions. I prefer to be doing it in the [indiscernible] rather than sort of providing future guidance on volume of and timing of residential projects.

Our next question comes from the line of James Druce with CLSA.

I'll be quick because we're coming up on the hour. Just one for Anastasia. In your guidance, is the pre-tax EPS growth is going to be in line with the post-tax EPS? Or you're still getting more tax savings coming through?

Nothing to call out, James, on the taxation line itself. We're going to continuously try and focus on discipline to contain the growth in it so that we're getting a positive [ jaws ] effect across all of operating earnings and therefore, having EBITDA outgrow our cost base. But nothing to call out on tax there.

All right. And David, just on divestments this year. Is there anything to call out in terms of how we should be thinking about that line item compared to last year?

Well, I'll tell you what I tell all my investors. I think it's a great [indiscernible] to be buying assets. And I think it's equally bloody crazy to be selling assets. So we -- there potentially will be some divestments, but I don't think it will be anything like the volume we've seen in the last couple of years.

Our next question comes from the line of Suraj Nebhani with Citi.

Just a couple of quick ones. Firstly, David, on the living pipeline, is it possible to identify which sites have been included? I know [ Press ] has [indiscernible] side going in potentially. Is it possible to just provide a bit more clarity there? And what's to come, I guess?

Well, it's obviously public knowledge because we did a media release on the Stage 2 approval on 201 Elizabeth Street. It's also a public knowledge. We've got a planning approval on a large scale project in Brisbane, next to [indiscernible] station and walking distance to all the Olympic infrastructure that's going to be invested up there.

And there's a few other sites. We've got a planning approved project at [indiscernible], which is the sort of third stage of a 3-stage joint venture development that we've done for years with Western Sydney University. And there's a whole range of other things that are not in that number, that are not yet planning approved that we'll get planning improved progressively over the next 12 months. So that's the sort of color I can give you.

Okay. And maybe just one quick one for Anastasia. There's like a big skew in property investment earnings half-on-half. Can you just help explain that Anastasia?

We did have more divestment, if you like, in property investment in the first half, and we've actually today announced that we've exited our incubation debt strategy around private credit. So that was exited early. And then the deployment of PI over the period was actually much more weighted to December onwards, and that's why you're seeing that skew of PI earnings increasing in second half.

Okay. So for '26 , will you say second half is a reasonable kind of starting point?

It's very much opportunity led. So that's a better question for David.

Look, Suraj, as I've just said, I'm pretty high conviction on the cycle going forward. So we will be increasing our balance sheet deployment and driving PI earnings accordingly. And in virtually everything we've ever done eventually then brings in external capital [indiscernible] it gives us further capital to further invest. So yes, we'd be expecting that to accelerate.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Mr. David Harrison for closing remarks.

Okay. Well, first of all, thank you to all of our team here at Charter Hall. Always so much fun doing results, particularly when you've got 4 listed REITs. So thanks to the team. And obviously, we look forward to catching up face-to-face with investors over the next couple of weeks. So we will undoubtedly talk again then. Thank you.