Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2016 Earnings Presentation
44 slides from Charter Hall Retail Reit's earnings presentation, Feb 18, 2016
Slide 1: FY16 Half Year Results
For personal use only 18 February 2016 Charter Hall Retail REIT FY16 Half Year Results
Slide 2: Agenda
Agenda For personal use only 1 FY16 Half Year Results 2 Operational Performance 3 Portfolio Investments 4 Financial Performance 5 Strategy and Outlook Scott Dundas Christine Kelly Philip Schretzmeyer Fund Manager Head of Retail Finance Group Treasurer Charter Hall Retail REIT | Half Year Results | 3
Slide 3: FY16 Half Year Results
FY16 Half Year Results For personal use only
Slide 4: Key Achievements
Key Achievements For personal use only Half Year Ended 31 December 2015 Operating earnings 15% increase NTA per unit up 4.2% of 15.18 cpu, growth of in portfolio value to $3.74 2.1% on pcp to $2.5 billion Weighted average debt Look through Same property NOI maturity of 6.7 years gearing 35.4% growth
Slide 5: Consistent Delivery on Strategy
Consistent Delivery on Strategy For personal use only Highlights Strategy Achievements Active management • Occupancy maintained at 98.4% • Same property NOI growth of 2.4% 1 • Specialty rent growth of 1.4% achieved from 61 renewals and 90 new leases • Specialty MAT growth of 3.5% reflecting continue
Slide 6: Half Year Results
Half Year Results For personal use only 31 December 2015 Key metrics 1H 16 1H 15 Movement Statutory profit $104.4m $84.3m +23.8% Operating earnings1 $58.9m $55.3m +6.5% Operating earnings1 per unit 15.18 cents 14.87 cents +2.1% Distributions per unit 14.00 cents 13.70 cents +2.2% Payout ratio2 92.2%
Slide 7: Operational Performance
Operational Performance For personal use only Active Management
Slide 8: Portfolio Summary
Portfolio Summary For personal use only Same Property Summary by Asset Type # GLA (‘000sqm) Occupancy1 NOI Growth Sub-regional shopping centres 20 287.4 98.8% 2.6% Neighbourhood shopping centres 39 224.6 97.5% 2.1% Freestanding supermarkets 17 56.1 100.0% 3.1% Total 76 568.1 98.4% 2.4% Portfolio and
Slide 9: Anchor Tenants
Anchor Tenants For personal use only • Wesfarmers and Woolworths businesses represent Top ten tenants by base rent 50% of base rent Woolworths − 39% from Supermarkets and Liquor 26.1% − 11% from Discount Department Stores Wesfarmers subsidiaries 24.1% • 41% of anchor tenants are paying turnover rent
Slide 10: Specialty Tenants
Specialty Tenants For personal use only Summary by State and Location MAT Growth1 Occupancy Cost1 MAT/sqm New South Wales & ACT 3.1% 10.8% $8,752 Queensland 7.4% 8.0% $9,333 Victoria 5.3% 12.3% $8,094 South Australia 0.6% 8.6% $7,598 Western Australia 0.1% 6.6% $10,687 Metropolitan 2.8% 11.0% $9,177
Slide 11: Portfolio Investments
Portfolio Investments For personal use only Enhancing the Portfolio Quality 11
Slide 12: Revaluations
Revaluations For personal use only • Property valuations increased by $59.5 million or 2.5% over the half year • Weighted average cap rates continued to firm at December, with half year compression of 26 basis points driving NTA growth for the REIT • Value uplift driven by cap rates with adopted val
Slide 13: Capital Transactions
Capital Transactions For personal use only Capital Recycling • Continues strategy of enhancing the REIT’s portfolio quality by recycling out of non-core properties into larger, higher growth potential properties • Average asset value has increased from $32.7 million at June 2015 to $37.6 million at
Slide 14: Redevelopments
Redevelopments For personal use only Current and Completed Projects Enhancing Portfolio Quality Project Project Stabilised Completion Description Status cost ($m) Yield1 Mackay, Qld. 5.5 8.6% Dec 15 Expansion of Coles supermarket and The expanded Coles store opened addition of on-grade parking Decem
Slide 15: Financial Performance
Financial Performance For personal use only Prudent Capital Management
Slide 16: Operating Earnings and Distributions
Operating Earnings and Distributions For personal use only • 1H 16 operating earnings in line with market guidance and A$m 1H 16 1H 15 reflects growth of 2.1% on pcp Net property income • Sub-regional NOI increased following the completion of • Sub-regional 31.9 27.7 redevelopments at Lansell and Ca
Slide 17: Balance Sheet
Balance Sheet For personal use only • Properties under management increased due to: Dec 15 Jun 15 − Development, maintenance capex and lease Wholly owned properties 2,121 1,938 incentives totaling $34 million Debt (750) (658) − Acquisitions of $228 million − Revaluation uplift of $59 million JV prop
Slide 18: Case Study – Debt Restructure
Case Study – Debt Restructure For personal use only • Following the completion of the restructure of the REIT’s debt platform in December 20151 Syndicated Bank debt - July 2015 the focus has continued on diversifying and extending the $585m REIT’s debt profile USPP – A$252m • Bank debt expiry in Jan
Slide 19: Debt Maturity Profile
Debt Maturity Profile For personal use only • Debt maturity profile reflects defensive nature of the Debt Maturity Profile2 REIT’s portfolio which now has a weighted average debt maturity of 6.7 years 450 • No debt maturities until FY19 removes all short term 400 refinance risk for the REIT • Weight
Slide 20: Strategy and Outlook
For personal use only Strategy and Outlook
Slide 21: REIT Strategy
REIT Strategy For personal use only The pre-eminent owner and manager of Australian neighbourhood and sub-regional Goal supermarket anchored shopping centres that optimises returns for our investors Active Enhance Prudent management portfolio quality capital management • Maintaining strong • Value e
Slide 22: Retail Environment
Retail Environment For personal use only • Australian retail sales have been improving over the past 12 Retail Sales Growth1 months with NSW and Vic recording the highest level of 6.0% 1-yr Growth % 5-yr CAGR % 10-yr CAGR % 20-yr CAGR % sales growth • Continued falls in both the AUD and the househol
Slide 23: FY16 Outlook
FY16 Outlook For personal use only • We confirm that, barring unforeseen events, the REIT’s FY16 guidance for operating earnings remains unchanged between 30.25 cents and 30.75 cents per unit • Distribution payout ratio range is expected to be between 90% and 95% of operating earnings Sydney Street
Slide 24: Questions
For personal use only Questions
Slide 25: Appendix contents
Annexures For personal use only 1 Detailed Earnings 26 2 Funds from Operations (FFO) 27 3 NTA & Cash flow Reconciliation 28 4 Debt & Interest Rate Management 29 5 Capital Expenditure & Redevelopment Pipeline 30 6 Lease Expiry Profiles 32 7 Property Valuations 33 8 Industry & Market Overview 37 9 Typ
Slide 26: Detailed Earnings
Annexure 1 For personal use only Detailed Earnings Dec 2015 (All Values in A$m) Dec 2015 Unrealised & Dec 2015 Dec 2014 Share of profits from investment in JV’s Statutory Profit Capital Items Operating Earnings Operating Earnings Net property income • Sub-regional 5.9 - 5.9 4.2 • Neighbourhood 3.1 -
Slide 27: Funds from Operations (FFO)
Annexure 2 For personal use only Funds from Operations (FFO) 1H 16 ($m) 1H 16 (cpu) Statutory Profit 104.4 26.90 Net valuation gains on investment properties (60.0) (15.45) Write off of acquisition costs incurred on investment properties 7.2 1.85 Unrealised losses on derivatives 4.7 1.21 Net loss on
Slide 28: NTA per unit reconciliation
Annexure 3 For personal use only NTA per unit reconciliation +0.01 $3.74 +0.13 $3.59 (0.03) +0.04 NTA at Derivative MtM Acquisitions Property revaluation Operating earnings NTA at 30 Jun 2015 movement uplift (net of distribution) 31 Dec 2015 Operating earnings to operating cash flows reconciliation
Slide 29: Debt and Interest Rate Management
Annexure 4 For personal use only Debt and Interest Rate Management Debt maturities & covenants Post refinance initiatives Limit Drawn (All Values CQR Share) (A$m) (A$m) Rate Maturity Financial Covenants Covenant Actual LVR 55.0% 40.5% JV debt – CHRP1 117.5 109.3 Floating Jul-18 ICR 2.0x 3.5x LVR 60.
Slide 30: Capital Expenditure
Annexure 5 For personal use only Capital Expenditure Lease Total Maintenance (A$m, CQR Share) Maintenance Incentives and Incentives Redevelopment 1H 16 2.3 2.7 5.0 28.5 FY15 6.1 3.8 9.9 51.3 FY14 7.8 2.3 10.1 59.4 Charter Hall Retail REIT | Half Year Results | 31 December 2015 30
Slide 31: Major Projects Redevelopment Pipeline
Annexure 5 For personal use only Major Projects Redevelopment Pipeline FY15 FY16 FY17 FY18 FY19 Erindale | $24.1m 42 Carnes Hill | $29.2m 36 Wanneroo | $20.4m 36 Rosebud | $44.8m 27 Murwillumbah | $12.3m 25 Allenstown (Stage 2) | $27.4m 21 Albany Plaza | $8.6m 21 Lake Macquarie | $47.9m 18 Secret Ha
Slide 32: Lease Expiry Profile
Annexure 6 For personal use only Lease Expiry Profile 80% 70% Anchor tenant expiry 60% 59.4% WALE 10.3 years 50% 40% 30% 20% 8.7% 6.5% 9.1% 10% 5.2% 4.4% 4.7% 0.8% 1.2% 0% Portfolio WALE of 6.8 years 2H 16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24+ 30% 25% 20% Specialty tenant expiry 16.5% 18.0% 15.8%
Slide 33: Property Valuations as at December 2015
Annexure 7 For personal use only Property Valuations as at 31 December 2015 Book Value State Property Location Asset Type Interest % ($m) Cap Rate ACT Dickson Woolworths Dickson Freestander 100% 16.5 6.50% Erindale Shopping Centre Wanniassa Neighbourhood 100% 35.5 7.00% Manuka Terrace Manuka Neighbo
Slide 34: Property Valuations as at December 2015
Annexure 7 For personal use only Property Valuations as at 31 December 2015 Book Value State Property Location Asset Type Interest % ($m) Cap Rate NSW Pemulwuy Marketplace Greystanes Neighbourhood 50% 13.1 6.75% Rosehill Woolworths Rosehill Freestander 100% 11.5 6.00% Rutherford Marketplace Rutherfo
Slide 35: Property Valuations as at December 2015
Annexure 7 For personal use only Property Valuations as at 31 December 2015 Book Value State Property Location Asset Type Interest % ($m) Cap Rate Sydney Street Markets1 Mackay Neighbourhood 100% 45.3 n/a Tablelands Square Atherton Neighbourhood 100% 32.0 7.00% Qld Total 456.6 SA Brickworks Marketpl
Slide 36: Property Valuations as at December 2015
Annexure 7 For personal use only Property Valuations as at 31 December 2015 Book Value State Property Location Asset Type Interest % ($m) Cap Rate WA Albany Plaza Albany Sub-regional 100% 60.0 7.00% Carnarvon Central Carnarvon Neighbourhood 100% 18.1 7.75% Esperance Boulevard Esperance Neighbourhood
Slide 37: Industry and market overview - Australian retail market
Annexure 8 For personal use only Industry and market overview - Australian retail market Average GLA Type (excl freestanding supermarkets) Total centres Total GLA (sqm) (sqm) City Centre 110 946,827 8,608 Super Regional 24 2,418,546 100,773 Major Regional 47 2,892,986 61,553 Regional 55 2,071,411 37
Slide 38: Australian retail market – current owners
Annexure 8 For personal use only Industry and market overview - Australian retail market – current owners Total Total GLA Proportion GLA Proportion Neighborhood Total (‘000 of total Sub-regional Total (‘000 of total centres centres sqm) (by GLA) GLA <25,000sqm centres sqm) (by GLA) Private Investors
Slide 39: Typical lease structures
Annexure 9 For personal use only Typical lease structures Attributes vary across different leases however key characteristics of supermarket and specialty leases are outlined below: Supermarket tenant leases Specialty tenant leases Lease term 15 - 20 years with options Typically average 5 years Base
Slide 40: CQR Australian portfolio – historical performance
Annexure 10 For personal use only CQR Australian portfolio – historical performance Proven and consistent performance over time Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- 10 10 11 11 12 12 13 13 14 14 15 15 Number of properties 63 64 71 72 74 75 74 77 77 78 73 76 Occupancy 99.1% 98.
Slide 41: Glossary
Annexure 11 For personal use only Glossary • ABR: Annual base rent – base rent only, excludes outgoings and turnover rent • GLA: Gross lettable area • Gross rent: Base rent and outgoings • MAT: Moving annual turnover – calculated as a sum of rolling 12 month sales • Occupancy cost: Calculated as the
Slide 42: Further Information
Further Information For personal use only Scott Dundas Christine Kelly Fund Manager Head of Retail Finance Charter Hall Retail REIT Charter Hall Retail REIT T: +61 2 8651 9273 T: +61 2 8651 9401 scott.dundas@charterhall.com.au christine.kelly@charterhall.com.au Richard Stacker Head of Investor Relat
Slide 43: Important Notice
Important Notice 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 For personal use only ARSN 093 143 965 (“CQR” or “the REIT”). This presentation has been prepared for g
Slide 44: Office locations
Sydney Head Office Level 20, No.1 Martin Place, Sydney, NSW, 2000 T: +61 2 8651 9000 For personal use only Melbourne Level 18, 570 Bourke Street, Melbourne VIC 3000 T: +61 3 9903 6100 Brisbane Level 22, Northbank Plaza, 69 Ann Street, Brisbane QLD 4000 T: +61 7 3228 2000 Perth Level 11, St Georges S
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