Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2011 Earnings Presentation
54 slides from Charter Hall Retail Reit's earnings presentation, Aug 23, 2011
Slide 1: Charter Hall Retail REIT FY11 Annual Results
Charter Hall Retail REIT For personal use only FY11 Annual Results 23 August 2011
Slide 2: Important Notice
Important Notice For personal use only Charter Hall Retail Management Limited ABN 46 069 709 468; AFSL 246996 (“CHRML”) has issued this presentation in its capacity as the responsible entity of Charter Hall Retail REIT ARSN 093 143 965 (“CQR”). This presentation has been prepared for general inf
Slide 3: Contents
Contents For personal use only 1 Steven Sewell Annual Results Chief Executive Officer 2 Scott Dundas Portfolio Investments Chief Investment Officer 3 John Courtney Operational Performance Head of Asset Management (Retail) 4 Richard Di Lernia Financial Performance Chief Financial Officer 5 Steven Sew
Slide 4: Annual Results
Charter Hall Retail REIT For personal use only 01 Annual Results
Slide 5: Full Year Operating Results
Full Year Operating Results For personal use only Results Summary 12 months to Earnings June 2011 Statutory profit $62.9m $85.2m Operating earnings 27.96 cpu $75.4m Distribution 24.80 cpu Payout ratio 88.7% Balance sheet As at June 2011 $1,070m Net tangible assets (NTA) $3.54 pu Portfolio valuation
Slide 6: Highlights
Highlights For personal use only Acquired or contracted to acquire 15 properties valued at $571m1 at average initial yield of 8.5% since Charter Hall Group control in March 2010 Reweighting to Acquisitions funded using equity realised from US, NZ and other non-core assets Australia Portfolio N
Slide 7: Geographic Analysis
Geographic Analysis Australia Europe New Zealand United States Total For personal use only Net Tangible Assets (A$m) 919 78 7 66 1,070 NTA per unit ($) 3.04 0.26 0.02 0.22 3.54 Proportion of total Net Tangible Assets 86% 7% 1% 6% 100% Australia is the majority of the REIT’s portfolio - 86% of NTA
Slide 8: Unit Price Performance
Unit Price Performance For personal use only 130.0 125.0 120.0 115.0 110.0 105.0 100.0 95.0 90.0 85.0 80.0 CQR S&P A-REIT 200 The REIT’s unit price has outperformed the broader A-REIT index by 21.3% since 30 June 2010 Based on forecast FY12 EPU, the REIT trades at a P/E multiple of 10.4x1 The
Slide 9: Portfolio Investments
Charter Hall Retail REIT For personal use only 02 Portfolio Investments
Slide 10: Revaluations
Revaluations For personal use only Non-core Six months to June 2011 Australia Europe Total assets Number of properties 70 7 16 93 Percentage externally valued June 20111 26% - 3% 29% June 2011 valuation (A$m) 1,404.4 393.9 132.7 1,931.0 Prior book value2 (A$m) 1,402.5 391.5 125.9 1,919.9 Movement in
Slide 11: Australian Retail Yields
Australian Retail Yields For personal use only 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 10 Year Bond Rate Regional Sub-regional Neighbourhood Household retail CQR portfolio Retail yield spread over 10 year bond rate Sub-regional shopping
Slide 12: Australian Acquisitions
Australian Acquisitions For personal use only Strategy: Selectively acquire supermarket anchored shopping centres with strong capital and income growth potential Sector: Neighbourhood and sub-regional supermarket anchored Asset value: $20 million - $80 million per asset Financial metrics: Five
Slide 13: Acquisition Case Study: Woolworths Portfolio
Acquisition Case Study Woolworths Portfolio For personal use only $266 million high quality portfolio acquired in joint venture with Telstra Super Carnes Hill Marketplace, NSW Rutherford Marketplace, NSW High quality portfolio of eight shopping centres built by Woolworths Rutherford Marketplace (N
Slide 14: Non-core Asset Disposals
Non-core Asset Disposals For personal use only 15 New Zealand properties sold for NZ$85.3 million, remaining two expected to settle by the end of 2011 Sale of Desco Regency JV portfolio completed in May 2011 at a gross sale price of US$168.0 million Since July 2010 completed the sale of 11 low
Slide 15: Operational Performance
Charter Hall Retail REIT For personal use only 03 Operational Performance
Slide 16: Portfolio Summary
Portfolio Summary For personal use only Non-core December Australia Europe June 2011 assets 2010 Number of properties 70 7 16 93 138 Number of tenancies 1,483 422 235 2,140 2,223 Valuation (A$m) 1,404.4 393.9 132.7 1,931.0 1,962.3 Performance metrics Same property NOI growth 3.8% 2.5% 0.5% 3.1% 2.2%
Slide 17: Australian Portfolio Summary
Australian Portfolio Summary For personal use only Strong income growth and solid occupancy Rental rate growth1 of 6.9% on 86 new leases and 7.5% on 93 renewals Average specialty gross rent $689/sqm and sales productivity of over $8,000/sqm - delivering low sustainable occupancy cost of 8.4%2
Slide 18: Australian Portfolio Historical Performance – Defensive and Stable
Australian Portfolio Historical Performance – Defensive and Stable For personal use only 100.0% 6.0% 99.0% 5.0% 98.0% 4.0% 97.0% 3.0% 96.0% 2.0% 95.0% 1.0% 94.0% 0.0% Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Occupancy (LHS) Same property NOI growth (RHS) The REIT’s high quali
Slide 19: Australian Portfolio Anchor Tenants
Australian Portfolio Anchor Tenants For personal use only 10% Woolworths and Coles businesses have 9% demonstrated resilience and continuing ability to Comparable food & liquor 8% Annual sales at Jun-11 = A$25.0bn 7% prosper, given non-discretionary nature of their sales growth 6% business 5% Th
Slide 20: Australian Retail Performance
Australian Retail Performance For personal use only Overall Australian retail sales have recently been below trend, predominantly the result of the higher interest rate environment and current global instability Food based retailing has experienced strong growth with relatively low volatility, r
Slide 21: Australian Portfolio Specialty Tenants
Australian Portfolio Specialty Tenants For personal use only Specialty sales growth of 0.9%, positive despite Summary by Occupancy Sales % of ABR challenging retail environment category cost1 growth1 Services 7.2% 12.9% 1.2% Average specialty occupancy cost remains lower than Food catering 6.5%
Slide 22: Board Approved Developments
Australian Portfolio Board Approved Developments For personal use only Five year Value Year one Forecast Project unlevered Status ($m) yield Scope of works completion IRR Coles supermarket major refurbishment, 10 year Manuka 1.2 9.0% 28.9% Works underway Dec-11 extension of lease and minor centre up
Slide 23: Redevelopment Pipeline
Australian Portfolio Redevelopment Pipeline For personal use only FY10 FY11 FY12 FY13 FY14 FY15 Erindale, $30.0m Mackay Centre, $15.0m Lake Macquarie, $12.5m Carnes Hill, $7.5m South Hedland, $35.0m Singleton, $55.6m Albany, $10.0m Allenstown, $16.3m Jerrabomberra, $2.2m Carnarvon, $1.0m Esperance,
Slide 24: Redevelopment Case Study: Allenstown Plaza
Australian Portfolio Redevelopment Case Study For personal use only Allenstown Plaza, Rockhampton, Qld Existing centre (last refurbished in 2005): Dominant neighbourhood shopping centre in South Woolworths supermarket plus 20 specialties Rockhampton, Allenstown sub market, with strong local demo
Slide 25: Offshore Portfolio: Europe
Offshore Portfolio Europe For personal use only Poland Occupancy steady at 98.6%1 Rental rate growth of 4.3% from 37 leasing deals completed (24 renewals at 5.7%, 13 new lease deals at -2.5%) Polish debt facility extended to July 2014, margin reduced Asset enhancement project underway with s
Slide 26: Offshore Portfolio: Non-core Assets
Offshore Portfolio Non-core Assets For personal use only United States Following lender and other consents, seven disposals expected to complete by October 2011 On completion of these disposals: ― Six assets remain in the United States (four in JV with Regency and two wholly owned) ― Minimal net
Slide 27: Financial Performance
Charter Hall Retail REIT For personal use only 04 Financial Performance
Slide 28: Earnings
Earnings Jun 2011 Jun 2011 Jun 2011 Jun 2011 Jun 2010 For personal use only Statutory Profit Unrealised Items Other Items Operating Earnings Operating Earnings A$m A$m A$m A$m A$m Net property income – Australia 90.7 0.5 - 91.2 79.5 Net property income – New Zealand 4.8 - - 4.8 6.2 Net property inco
Slide 29: Balance Sheet
Balance Sheet For personal use only New United June December June Australia Europe Zealand States 2011 2010 2010 A$m A$m A$m A$m A$m A$m A$m Total assets (less cash) 1,461 402 7 124 1,994 1,884 1,945 Total debt (less cash) 482 301 - 55 838 728 746 Total liabilities (less cash) 542 324 - 58 924 809 8
Slide 30: Debt Maturity Profile
Debt Maturity Profile For personal use only A$CMBS facility to be refinanced 12 months ahead of maturity1, with substantial reduction in margin Polish debt facility extended to July 2014 Australian debt facilities are 86% hedged in FY12, at an average hedge rate of 5.1% REIT’s debt maturity
Slide 31: Capital Management Initiatives
Capital Management Initiatives For personal use only A$CMBS refinancing Early refinancing of A$CMBS facility in September 2011, 12 months ahead of maturity1 Funding commitment via placement of notes to Australian superannuation fund manager, UniSuper Key Terms: Facility limit: $250 million, Ma
Slide 32: Strategy and Outlook
Charter Hall Retail REIT For personal use only 05 Strategy and Outlook
Slide 33: Earnings Quality
Earnings Quality For personal use only Australian Portfolio ― Defensive and dependable asset base ― Forecast NOI growth underpinned by strong income resilience of supermarket anchors and predominantly non-discretionary specialty tenants Successful redeployment of offshore equity ― Australian acq
Slide 34: Retail Sector
Retail Sector Supermarket anchored shopping centres For personal use only Australian macroeconomic factors remain positive – high employment and GDP growth Consumer confidence soft overall but with limited impact on food and non-discretionary retail categories Online retail sales are growing b
Slide 35: Strategy
Strategy For personal use only REIT to be the pre-eminent owner of Australian supermarket anchored neighbourhood and sub-regional shopping centres Leverage off Charter Hall business platform to deliver: ― Higher income and capital growth prospects via integrated property, asset and development m
Slide 36: FY12 Outlook
FY12 Outlook For personal use only Charter Hall Retail REIT is well positioned with the majority of its portfolio invested in high quality resilient Australian neighbourhood and sub-regional shopping centres FY12 and subsequent years are expected to see earnings per unit growth, barring unforseen
Slide 37: Questions
Charter Hall Retail REIT For personal use only Questions
Slide 38: Annexures
Annexures For personal use only 1 Glossary Slide 39 2 Detailed Earnings Slide 40 3 Detailed Regional Balance Sheet Slide 41 4 Debt & Covenants Slides 42 – 43 5 Hedging Profile Slides 44 – 46 6 Capital Expenditure and Developments Slide 47 - 48 7 Portfolio Detail Slides 49 – 52 38
Slide 39: Annexure: Glossary
Annexure 1 Glossary For personal use only Non-core assets: The entire United States portfolio of 13 properties, the two remaining New Zealand properties and one Australian property sold in July 2011 Other A$ bank debt: $32 million bank debt facility (CQR share) secured by Home HQ Nunawading, Lak
Slide 40: Annexure: Detailed Earnings
Annexure 2 Detailed Earnings For personal use only Jun 2011 Jun 2011 Jun 2011 Jun 2011 Jun 2010 Statutory Profit Unrealised Items Other Items Operating Earnings Operating Earnings A$m A$m A$m A$m A$m Net property income 19.1 - - 19.1 24.2 Management fees (0.6) - - (0.6) (1.6) Finance costs (10.1) -
Slide 41: Annexure: Detailed Regional Balance Sheet
Annexure 3 Detailed Regional Balance Sheet For personal use only US Australian New Regency Australia Poland Germany Wholly Jun 2011 JV’s Zealand JV Owned Total assets (less cash) 1,286 175 267 135 7 83 41 1,994 Total debt (less cash) 414 68 192 109 - 24 31 838 Total liabilities (less cash) 471 71 21
Slide 42: Annexure: Debt Maturities
Annexure 4 Debt Maturities For personal use only Facility Drawn Drawn 30 June 2011 Region Rate Maturity CQR share CQR share CQR share (Natural m’s) (Natural m’s) (A$m) Total FY12 - - - Germany EUR 82.4 82.4 111.4 Floating Jul-12 Lindbergh Crossing1 US 3.6 3.6 3.3 Fixed Aug-12 Total FY13 114.7 AUS JV
Slide 43: Annexure: Covenants
Annexure 4 Covenants For personal use only Facility Drawn Unused 30 June 2011 Maturity Financial Covenants Covenant Actual CQR share Facility Facility Australia A$m A$m A$m Security pool gearing 60.0% 42.3% Multi-Currency Facility 265.0 192.1 72.9 Sep-15 Security pool ICR 1.75x 2.95x Gearing1 70.0%
Slide 44: Annexure: Derivative Positions
Annexure 5 Derivative Positions For personal use only The table below provides an analysis of the REIT’s mark to market derivative positions as included in Note 9 to the financial statements All figures in A$m Australia Europe United States Total Interest rate hedges (0.6) (3.7) - (4.3) Foreign in
Slide 45: Annexure: Income Hedging & Cross Currency Swaps
Annexure 5 Income Hedging & Cross Currency Swaps For personal use only Income hedging FY12 FY13 FY14 FY15 Avg. proportion income hedged1 USD 100% 100% 100% 78% Avg. FX forward rate (0.76) USD 0.76 0.76 0.76 0.76 Avg. proportion income hedged EUR 20% 14% 11% 3% Avg. FX forward rate (0.56) EUR 0.57 0.
Slide 46: Annexure: Interest Rate Risk Management
Annexure 5 Interest Rate Risk Management For personal use only Australia (Total debt - A$491.7m) FY12 FY13 FY14 FY15 FY16 Avg. hedged debt 86% 83% 57% 34% 28% Weighted average debt margin 2.2% 1.9% 1.9% 1.9% 1.9% Weighted avg. hedge rate 5.1% 5.1% 5.0% 5.2% 5.4% United States (Total debt - A$57.3m)
Slide 47: Annexure: Capital Expenditure
Annexure 6 Capital Expenditure For personal use only Region (A$m, CQR Share) Maintenance Lease incentives Total Maintenance Development and Incentives Australia FY11 5.2 1.1 6.3 8.7 FY10 2.5 0.8 3.3 11.5 FY09 1.7 0.7 2.4 23.8 New Zealand FY11 0.1 - 0.1 - FY10 0.1 - 0.1 0.2 FY09 0.4 - 0.4 5.8 United
Slide 48: Annexure: Potential Redevelopment Pipeline
Annexure 6 Potential Redevelopment Pipeline For personal use only Value Forecast Project Status (CQR share, $m) Scope of works completion Centre refurbishment and expansion linking Albany Plaza (Coles, Albany 10 Feasibility FY13 Kmart) and Albany PS (Target) properties Centre expansion and refurbish
Slide 49: Annexure: Australia – Geographic Diversification
Annexure 7 Australia – Geographic Diversification For personal use only QLD 10 Neighbourhood SC (53,578sqm) 2 Sub-regional SC (28,150sqm) 12 10 WA 2 Freestanders (6,281sqm) 3 NSW 6 Neighbourhood SC (35,898sqm) 9 Freestanders (27,093sqm) 17 Neighbourhood SC (92,476sqm) 2 Sub-regional SC (33,170sqm) 3
Slide 50: Annexure: Australia – Anchor Tenant Lease Expiry
Annexure 7 Australia – Anchor Tenant Lease Expiry For personal use only % Base Rent Expiring 58.7% 40% 35% 30% 25% 20% 15% 10.8% 10% 9.0% 5.1% 5.4% 4.8% 5% 2.9% 1.0% 0.9% 1.4% 0% FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+ Base rent represents minimum rent for all properties, but excludes add
Slide 51: Annexure: Australia – Specialty Tenant Lease Expiry
Annexure 7 Australia – Specialty Tenant Lease Expiry For personal use only % Base Rent Expiring 40% 35% 30% 25% 20% 16.2% 16.2% 16.3% 15.2% 15% 13.6% 10.5% 10% 6.8% 5% 1.8% 2.1% 1.3% 0% FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+ Base rent represents minimum rent for all properties, but exclu
Slide 52: Annexure: Europe – Lease Expiry Profile
Annexure 7 Europe – Lease Expiry Profile For personal use only % Base Rent Expiring 40% 35% 30% 25% 22.5% 18.9% 20% 17.5% 18.2% 15% 9.3% 8.4% 10% 5% 2.6% 0.7% 1.5% 0.4% 0% FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+ Anchor Tenants Master Lease Specialty Poland – Anchor tenants do not include
Slide 53: Further information
For personal use only Further information Steven Sewell Chief Executive Officer +61 2 8295 1017 steven.sewell@charterhall.com.au Richard Di Lernia Chief Financial Officer +61 2 8295 1002 richard.dilernia@charterhall.com.au Kylie Ramsden Head of Listed Investor Relations +61 2 8295 1016 kylie.ramsden
Slide 54: For personal use only
For personal use only charterhall.com.au/cqr
Charter Hall Retail REIT — FY2011 Earnings Presentation on 6ix