Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2017 Earnings Presentation
41 slides from Charter Hall Retail Reit's earnings presentation, Feb 20, 2017
Slide 1: FY17 Half Year Results
For personal use only 20 February 2017 Charter Hall Retail REIT FY17 Half Year Results
Slide 2: Agenda
Agenda For personal use only 1 FY17 Half Year Results 2 Financial Performance 3 Operational Performance 4 Strategy and Outlook Scott Dundas Christine Kelly Fund Manager Head of Retail Finance and Deputy Fund Manager Charter Hall Retail REIT | Half Year Results | 31 December 2016 2
Slide 3: FY17 Half Year Results
FY17 Half Year Results For personal use only
Slide 4: Key Achievements
Key Achievements For personal use only Half Year Ended 31 December 2016 6.5% increase Same property NOI NTA per unit up 8.2% in portfolio value growth of 2.4% to $4.10 to $2.71 billion Total divestments of Total acquisitions of Balance sheet smaller non-core centres of $72 million gearing of 32.1% $
Slide 5: Consistent Delivery on Strategy
Consistent Delivery on Strategy Highlights For personal use only Strategy Achievements Active management • Stable occupancy at 98.0% • Same property NOI growth of 2.4% • Specialty rent growth of 1.2% achieved from 64 renewals and 31 new leases reflecting continued focus on specialty leasing • Majors
Slide 6: Half Year Results
Half Year Results For personal use only 31 December 2016 Key metrics 1H 17 1H 16 Movement Statutory profit $178.9m $104.4m +71.4% Operating earnings1 $61.7m $58.9m +4.8% Operating earnings1 per unit 15.21 cents 15.18 cents +0.2% Distributions per unit 14.10 cents 14.00 cents +0.7% Payout ratio2 92.7
Slide 7: Financial Performance
Financial Performance For personal use only Prudent Capital Management
Slide 8: Operating Earnings and Distributions
Operating Earnings and Distributions For personal use only • 1H 17 operating earnings in line with market guidance $m 1H 17 1H 16 • Sub-regional - same property NOI growth of 2.4% offset Net property income by the timing of the early sale of Caboolture and late acquisition of Arana Hills during the
Slide 9: Balance Sheet
Balance Sheet For personal use only • Properties under management increased due to: Dec 16 Jun 16 Development and capital expenditure totalling Wholly owned properties 2,324 2,170 $42 million Debt (832) (769) Acquisitions net of disposals of $26 million Revaluation uplift of $96 million JV pro
Slide 10: Debt Maturity Profile
Debt Maturity Profile For personal use only • Weighted average debt maturity of 6.0 years Debt Maturity Profile3 • Strong diversity of debt sources • Extended weighted average hedge maturity to 4.4 years 450 • Refinanced $100 million of FY19 maturities and increased 400 liquidity by a further $50 mi
Slide 11: Operational Performance
Operational Performance For personal use only Active Management & Enhancing the Portfolio Quality
Slide 12: Portfolio Summary
Portfolio Summary For personal use only Same Property Summary by Asset Type # Value ($m) GLA (‘000sqm) Occupancy1 NOI Growth Sub-regional shopping centres 20 221.6 288.0 98.2% 2.4% Neighbourhood shopping centres 36 1,210.3 214.0 97.3% 2.7% Freestanding supermarkets 16 1,282.6 49.8 100.0% 1.3% Total
Slide 13: 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 25.9% 11% from Discount Department Stores Wesfarmers 24.4% • 35% of anchor tenants are paying turnover rent Australian P
Slide 14: Specialty Tenants
Specialty Tenants For personal use only Summary MAT Occupancy by State and Location Growth1 Cost1 MAT/sqm Occupancy Cost and Specialty Sales New South Wales & ACT 1.4% 11.3% $8,959 10.00% $9,300 9.90% $9,200 Queensland 6.8% 7.1% $10,881 9.80% $9,100 9.70% Victoria 2.4% 12.1% $7,675 9.60% $9,000 9.50
Slide 15: Revaluations
Revaluations For personal use only • 100% of the stabilised portfolio was externally revalued • Property valuations increased by $96.8 million representing 3.7% growth over the whole portfolio • Weighted average cap rates continued to firm at December 2016, with half year compression of 31 basis poi
Slide 16: Capital Transactions
Capital Transactions For personal use only Capital Recycling • Strategy of enhancing the REIT’s portfolio quality by recycling out of lower growth non-core smaller properties into larger, higher growth properties • Requirement that all assets are the dominant convenience based shopping centre within
Slide 17: Developments
Developments For personal use only Major Projects Redevelopment Pipeline - $345m FY17 FY18 FY19 FY20 FY21 Erindale I $35m 28 Albany I $9m 27 Dubbo I $8m 21 Sydney Street Markets (Stage 2) | $7m 21 Carnes Hill I $100m 19 Bateau Bay I $19m 16 Allenstown I $31m Wanneroo I $22m Lake Macquarie I $55.3m S
Slide 18: Sustainability and Community
Sustainability and Community For personal use only CQR has focused on sustainability and community elements across our business operations • Retail Green Star Performance rating for all centres commenced and are expected to be complete by June 2017 • All centres over 15,000sqm now have a NABERS rati
Slide 19: Strategy and Outlook
For personal use only Strategy and Outlook
Slide 20: REIT Strategy
REIT Strategy For personal use only The leading owner and manager of Australian supermarket anchored shopping centres, Goal providing a secure and growing income stream for our investors Active Enhance Prudent management portfolio quality capital management • Maintaining strong • Value enhancing • S
Slide 21: Retail Environment
Retail Environment For personal use only • ABS retail trade grew by 3.6% over the rolling year to Annual Sales Growth November 2016 which is below long term averages 10% Total Supermarkets Clothing & Department Stores • Australian retail sales was highly divergent across states with 8% depressed sal
Slide 22: FY17 Outlook
FY17 Outlook For personal use only • Consistent with strategy, sale proceeds from divestments will be allocated to optimise returns via acquisitions, development, buy back or return of capital • We reconfirm that, barring unforeseen events, the REIT’s FY17 guidance for operating earnings is expected
Slide 23: Questions
For personal use only Questions
Slide 24: Annexures
Annexures For personal use only 1 Detailed Earnings 25 2 Funds from Operations (FFO) 26 3 NTA & Cash flow Reconciliation 27 4 Debt & Interest Rate Management 28 5 Capital Expenditure & Developments 29 6 Lease Expiry Profiles 31 7 Property Valuations 32 8 Typical Lease Structures 36 9 Historical Perf
Slide 25: Detailed Earnings
Annexure 1 For personal use only Detailed Earnings Dec 2016 (All Values in $m) Dec 2016 Unrealised & Dec 2016 Dec 2015 Statutory Profit Capital Items Operating Earnings Operating Earnings Share of profits from investment in JV’s Net property income • Sub-regional 8.5 - 8.5 5.9 • Neighbourhood 3.1 0.
Slide 26: Funds from Operations (FFO)
Annexure 2 For personal use only Funds from Operations (FFO) 1H 17 ($m) 1H 17 (cpu) Statutory Profit 178.9 44.11 Revaluation increment on investment properties (97.1) (23.94) Revaluation decrement on investment properties attributable to acquisition costs 0.2 0.05 Gain on sale of investment properti
Slide 27: NTA per unit reconciliation
Annexure 3 For personal use only NTA per unit reconciliation +0.01 +0.24 $4.10 $3.79 +0.05 +0.01 NTA at Operating earnings Derivative MtM Property revaluation Other NTA at 30 Jun 2016 (net of distribution) movement uplift 31 Dec 2016 Operating earnings to operating cash flows reconciliation $61.7m (
Slide 28: Debt and Interest Rate Management
Annexure 4 For personal use only Debt and Interest Rate Management Debt maturities & covenants Post refinance initiatives Limit Drawn (All Values CQR Share) (A$m) (A$m) Rate Maturity Financial Covenants Covenant Actual LVR 55.0% 32.4% JV debt – CHRP11 117.5 91.7 Floating Jul-18 ICR 2.0x 3.1x LVR 60.
Slide 29: Capital Expenditure
Annexure 5 For personal use only Capital Expenditure Lease Total Maintenance ($m, CQR Share) Operational Incentives and Incentives Redevelopment 1H 17 4.1 1.0 5.1 37.2 FY16 6.2 5.0 11.2 60.1 FY15 6.1 3.8 9.9 51.3 Charter Hall Retail REIT | Half Year Results | 31 December 2016 29
Slide 30: Current and Completed Projects Enhancing Portfolio Quality
Annexure 5 For personal use only Current and Completed Projects Enhancing Portfolio Quality Project Project Stabilised Completion Description Status cost ($m) Yield1 Secret Harbour 58.9 7.5% May 17 New 4,050sqm Coles supermarket, new Construction commenced January 2016. Shopping 1,550sqm Aldi, new 1
Slide 31: Lease Expiry Profile
Annexure 6 For personal use only Lease Expiry Profile 80% 70% 64.4% Anchor tenant expiry 60% WALE 10.7 years 50% 40% 30% 20% 10.5% 10% 7.4% 8.2% 2.8% 2.9% 2.9% 0.0% 0.9% 0% Portfolio WALE of 7.0 years FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25+ 30% 25% 20% 19.7% Specialty tenant expiry 16.3% 16.4%
Slide 32: Property Valuations as at December 2016
Annexure 7 For personal use only Property Valuations as at 31 December 2016 Book Value State Property Location Asset Type Interest % ($m) Cap Rate ACT Dickson Woolworths Dickson Freestander 100% 18.9 5.75% Erindale Shopping Centre Wanniassa Neighbourhood 100% 37.0 6.75% Manuka Terrace Manuka Neighbo
Slide 33: Property Valuations as at December 2016
Annexure 7 For personal use only Property Valuations as at 31 December 2016 Book Value State Property Location Asset Type Interest % ($m) Cap Rate NSW Pemulwuy Marketplace Greystanes Neighbourhood 50% 16.0 5.75% Rosehill Woolworths Rosehill Freestander 100% 12.5 5.50% Rutherford Marketplace Rutherfo
Slide 34: Property Valuations as at December 2016
Annexure 7 For personal use only Property Valuations as at 31 December 2016 Book Value State Property Location Asset Type Interest % ($m) Cap Rate Moranbah Fair Moranbah Neighbourhood 100% 25.0 7.75% Springfield Fair Springfield Neighbourhood 100% 19.0 6.50% Sydney Street Markets1 Mackay Neighbourho
Slide 35: Property Valuations as at December 2016
Annexure 7 For personal use only Property Valuations as at 31 December 2016 Book Value State Property Location Asset Type Interest % ($m) Cap Rate WA Albany Plaza Albany Sub-regional 100% 62.0 6.75% Carnarvon Central Carnarvon Neighbourhood 100% 18.4 7.50% Esperance Boulevard Esperance Neighbourhood
Slide 36: Typical lease structures
Annexure 8 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 37: CQR Australian portfolio – historical performance
Annexure 9 For personal use only CQR Australian portfolio – historical performance Proven and consistent performance over time Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Number of properties 72 74 75 74 77 77 78 73 76 74 72 Occupancy 98.7% 98.6% 98.5% 98.2% 98.2% 98
Slide 38: Glossary
Annexure 10 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 39: Further Information
Further Information For personal use only Scott Dundas Christine Kelly Fund Manager Head of Retail Finance & Deputy Fund Manager Charter Hall Retail REIT Charter Hall Retail REIT T: +61 2 8651 9273 scott.dundas@charterhall.com.au T: +61 2 8651 9401 christine.kelly@charterhall.com.au Philip Cheetham
Slide 40: 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 41: Office addresses
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 5, St Georges Sq
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