Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2018 Earnings Presentation
44 slides from Charter Hall Retail Reit's earnings presentation, Aug 16, 2018
Slide 1: Charter Hall Retail REIT FY18 annual results
For personal use only 16 AUGUST 2018 Charter Hall Retail REIT FY18 annual results
Slide 2: Agenda
Agenda For personal use only 01 Highlights and Strategy 02 Financial Performance Greg Chubb Retail CEO and Executive Director 03 Operational Performance 04 Outlook Christine Kelly Head of Retail Finance and Deputy Fund Manager 05 Annexures FY18 annual results 1
Slide 3: Highlights and Strategy
For personal use only Highlights and Strategy FY18 FY18 Half Yearresults annual Results 2
Slide 4: Key Achievements
Key Achievements For personal use only Year ended 30 June 2018 3.3% Majors MAT growth1 2.2% NTA growth per unit $309 Divestments of 15 lower million growth centres3 2.2% MAT growth2 1.8% NPI growth2 $274 Total acquisitions4 million Key metrics FY18 FY17 Movement Operating earnings5 $123.2m $123.3m 0
Slide 5: REIT Strategy
REIT Strategy For personal use only The leading owner and manager of convenience based retail KEY DRIVERS Active asset Enhance portfolio Prudent capital management quality management Maintain strong tenant relationships Active portfolio curation Strong and flexible balance sheet Enhance the customer
Slide 6: Strategy Execution
Strategy Execution For personal use only Active asset Enhance Prudent capital management portfolio quality management - Improved occupancy at 98.1% - Portfolio valued at $2.8 billion, a - Weighted average debt maturity4 1.0% increase over the period of 5.4 years - Strengthened NPI growth1 to 1.8% -
Slide 7: Financial Performance
For personal use only Financial Performance FY18 Half Year Results
Slide 8: Operating Earnings and Distributions
Operating Earnings and Distributions For personal use only $m FY18 FY17 FY18 operating earnings in line with market guidance Net property income 158.0 148.8 Total net income has increased 5.3%, driven by same property NPI Net income from joint ventures 14.9 15.4 growth of 1.8% and the impact of acqu
Slide 9: Balance Sheet
Balance Sheet For personal use only Property portfolio increased by $29 million over the $m Jun 18 Jun 17 12 month period due to: Cash 61 59 Investment properties 2,419 2,367 - Divestments exceeded acquisitions by $84 million Investment in joint ventures1 246 250 - Redevelopment and capital expendit
Slide 10: Valuations
Valuations For personal use only Total ($m) Whole of portfolio externally revalued over the period1 30 June 2017 portfolio value 2,764 Property values on a like for like basis increased by Net transactions (84) $49 million representing 1.8% growth Redevelopments and additions 64 Revaluation growth f
Slide 11: Capital Management
Capital Management Repaid and cancelled $50 million debt facility maturing in July 2018 For personal use only Introduced two new banks to the fund totalling $125 million of new debt with FY24 expiries. This was used to repay and cancel $125 million of the remaining $285 million existing bank debt fa
Slide 12: Capital Transactions Management
Capital Transactions Management Strategy of enhancing the REIT’s portfolio quality by recycling out of lower growth properties into higher growth properties For personal use only Requirement that all assets are the dominant convenience based shopping centre within their catchment Acquisitions GLA (s
Slide 13: Operational Performance
For personal use only Operational Performance FY18 Half Year Results
Slide 14: Portfolio Summary
Portfolio Summary Asset value by state For personal use only Total MAT growth¹ of 2.2% driven by major tenants (+2.7%) SA NT and retail services (+3.7%) ACT 4% 4% 1% Wesfarmers and Woolworths stores in turnover delivered VIC 3.3% MAT growth 10% NPI growth1 has improved 80bps to 1.8% NSW Average asse
Slide 15: Portfolio Tenant Composition
Portfolio Tenant Composition For personal use only Top 10 retail groups2 Major tenants Wesfarmers, Woolworths and Aldi businesses represent 48% of rental income Woolworths 24.3% With the recent Wanneroo opening, Aldi is now the Wesfarmers 22.2% fourth largest tenant Australian Pharmaceutical Industr
Slide 16: Supermarkets
Supermarkets For personal use only 76% of major tenant rental income generated by supermarkets Supermarkets Opening of the new Aldi store at Wanneroo increasing Aldi’s 53% in turnover1 2.8% MAT growth representation in the portfolio 18 supermarkets (26%) have been refurbished in the last 24 months S
Slide 17: Specialty Tenants
Specialty Tenants Rental income by tenant type Specialty MAT by category For personal use only Mini-majors Non sales 10% General retail reporting 1 21% 20% Food & catering 36% Sales reporting Retail services specialties 12% 70% Homewares Apparel 1% 10% Jewellery 4% Leisure Mobile 7% phones 8% Specia
Slide 18: Tenant Customer Focus
Tenant Customer Focus Positive year on year increases in all areas of relationship satisfaction1 For personal use only 968 Tenant customers surveyed across 27 properties resulting in a How tenant customers view the Charter Hall retail team 91% response rate Tenant customers perceived Charter Hall re
Slide 19: Redevelopment Activity
Redevelopment Activity Redevelopment pipeline1 For personal use only FY18 FY19 FY20 FY21 Carnes Hill $65m Bateau Bay $15m Allenstown $30m Lake Macquarie $59m Wanneroo $11m Redevelopments continue to focus on enhancing convenience and essential services based on market demand FY18 annual results 18 1
Slide 20: Community and Sustainability
Community and Sustainability Community Sustainability For personal use only Two Good partnership across 27 centres donating 20,000 Enhanced waste streams and increased landfill diversion rates meals to regional shelters that supports women and children who have suffered from domestic violence LED, a
Slide 21: Outlook
For personal use only Outlook FY18 Half Year Results Bateau Bay Square, NSW Artist impression
Slide 22: Convenience Focused Portfolio
Convenience Focused Portfolio Convenience focused portfolio generating 130 million shopper visits annually For personal use only 39 Convenience assets 19 Convenience Plus assets - Single supermarket and complementary convenience specialty - Multiple supermarkets and or supermarket and a discount dep
Slide 23: Active Asset Management Case Study
Active Asset Management Case Study For personal use only Southgate Plaza Wanneroo Gateway Plaza SA WA VIC - Target downsized and backfilled - Replaced an IGA supermarket with - Coles, Aldi, Kmart with limited with a new Aldi supermarket a new and increased sized Aldi discretionary retail supermarket
Slide 24: FY18 Summary and Outlook
FY18 Summary and Outlook For personal use only Portfolio positioned for growth – Supermarkets sales continue to remain strong, underpinning customer visitation and financial performance – Actively manage the portfolio for convenience, curating the tenancy mix towards food and non-discretionary retai
Slide 25: Annexures
For personal use only Annexures FY18 Half Year Results
Slide 26: Annexures
Annexures For personal use only 01 Forecast earnings bridge Reconciliation of statutory profit to 02 operating earnings (FFO) and AFFO 08 Current redevelopments Reconciliation of statutory profit to operating 03 earnings 09 Lease expiry profile 04 NTA per unit reconciliation 10 Property valuations 0
Slide 27: Forecast earnings bridge
Annexure 1 Forecast earnings bridge For personal use only FY18 to FY19 earnings bridge 31.5 (0.2) 0.4 30.5 1.4 (1.0) 29.5 31.1 30.7 30.7 30.5 28.5 29.5 29.5 27.5 FY18 EPU Impact of FY18 and FY19 NPI growth Finance costs Other FY19 EPU divestments and acquisitions • Impact of FY18 and FY19 divestment
Slide 28: Reconciliation of statutory profit to Operating Earnings (FFO) and AFFO
Annexure 2 Reconciliation of statutory profit to Operating Earnings (FFO) and AFFO For personal use only FY18 ($m) FY18 (cpu) Statutory profit 146.4 36.2 Revaluation increment on investment properties (41.1) (10.2) Net loss on derivative financial instruments 3.7 0.9 Loss on disposal of investment p
Slide 29: Reconciliation of statutory profit to operating earnings
Annexure 3 Reconciliation of statutory profit to operating earnings Jun 2018 For personal use only Jun 2018 Unrealised & Jun 2018 (All values in $m) Statutory Profit Capital Items Operating Earnings Share of profits from investment in JV’s Net property income 22.0 0.9 22.9 Property valuation gains 4
Slide 30: NTA per unit reconciliation
Annexure 4 NTA per unit reconciliation For personal use only $0.07 $4.22 $0.03 ($0.01) $4.13 NTA at 30 Jun 2017 Operating earnings Derivative MtM Property revaluation NTA at 30 Jun 2018 (net of distributions) movement uplift FY18 annual results 29
Slide 31: Investment in joint ventures – balance sheet breakdown
Annexure 5 Investment in joint ventures – balance sheet breakdown For personal use only $m FY18 FY17 Movement Investment properties 374 381 (7) Borrowings (121) (139) 18 Net other (7) 8 (15) Investment in joint ventures 246 250 (4) FY18 annual results 30
Slide 32: Debt maturities and covenants
Annexure 6 Debt maturities and covenants For personal use only Limit Drawn ICR Post refinance initiatives ($m) ($m) Rate Maturity Covenants LVR Covenant Actual JV debt – CHRP1 110.0 73.6 Floating Jun-22 ICR 2.0x LVR 55.0% 27.0% JV debt – CHRP2 49.9 48.3 Floating Nov-21 ICR 1.5x LVR 60.0% 44.2% Syndi
Slide 33: Pro-forma gearing at June 2018
Annexure 7 Pro-forma gearing at June 2018 For personal use only 33.4% (2.1%) 1.4% 32.7% As at 30 Jun 2018 Disposal of 47.5% of Acquisition of 50% of Pro-forma gearing Salamander Bay into JV Leopold into JV at 30 Jun 2018 Look-through (1.9%) 36.1% 1.3% 35.5% As at 30 Jun 2018 Disposal of 47.5% of Acq
Slide 34: Current redevelopments
Annexure 8 Current redevelopments For personal use only Project Stabilised Forecast Project State cost1 yield2 completion Description Status Construction of a new 4,200sqm Coles Construction of the new Coles Lake Macquarie Fair NSW $59.4m 6.6% March 2019 and specialty stores to integrate Mount tenan
Slide 35: Lease expiry profile
Annexure 9 Lease expiry profile For personal use only Major tenant expiry profile (by income) 80% 71.9% 70% 10.7 Major tenant WALE 60% years 50% 40% 30% 20% 6.7% 10% 5.5% 5.5% 4.6% 1.9% 2.2% 1.7% 0% FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26+ 6.6 Portfolio WALE years Specialty tenant expiry profile (by
Slide 36: Property valuations as at June 2018
Annexure 10 Property valuations as at 30 June 2018 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 18.7 5.75% Erindale Shopping Centre Wanniassa 100.0% 38.8 6.50% Manuka Terrace Manuka 100.0% 60.7 5.75% ACT Total 118
Slide 37: Property valuations as at June 2018
Annexure 10 Property valuations as at 30 June 2018 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW (cont.) Tamworth Square Tamworth 100.0% 51.0 6.75% Tumut Coles Tumut 100.0% 10.8 5.75% West Ryde Marketplace West Ryde 50.0% 27.6 5.50% Young Woolworth
Slide 38: Property valuations as at June 2018
Annexure 10 Property valuations as at 30 June 2018 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate VIC Bairnsdale Coles Bairnsdale 100.0% 17.1 5.50% Kyneton Shopping Centre Kyneton 100.0% 19.5 5.75% Lansell Square Kangaroo Flat 100.0% 104.5 6.25% Moe Col
Slide 39: Specialty sales performance
Annexure 11 Specialty sales performance For personal use only Specialty sales by state MAT growth1 Specialty sales by category MAT growth1 New South Wales & ACT 1.7% Food and catering 0.8% Western Australia (0.9%) General retail 2.5% Victoria 1.4% Retail services 3.7% South Australia 1.7% Clothing a
Slide 40: Portfolio historical performance
Annexure 12 Portfolio historical performance For personal use only Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Number of properties 78 73 76 74 72 71 66 58 Occupancy 98.5% 98.4% 98.4% 98.0% 98.0% 98.0% 97.8% 98.1% Same property NPI growth 3.4% 2.4% 2.4% 2.2% 2.4% 1.0% 1.3% 1.8% Major ten
Slide 41: Glossary
Annexure 13 Glossary For personal use only FY18 Financial year 1 July 2017 to 30 June 2018 GLA Gross lettable area Gross rent Base rent and outgoings In Turnover Tenant is paying a percentage of sales in rent (turnover rent) MAT Moving annual turnover – calculated as a sum of rolling 12 month sales
Slide 42: Further information
Further information For personal use only Greg Chubb Christine Kelly Phillip Cheetham Retail CEO and Executive Director Head of Retail Finance and Head of Listed Investor Relations Deputy Fund Manager Charter Hall Retail REIT Charter Hall Retail REIT Charter Hall T: +61 2 8651 9355 T: +61 2 8651 940
Slide 43: Important notice
Important notice Charter Hall Retail Management Limited ABN 46 069 709 468; AFSL exclude all liability for any loss or damage suffered or incurred by any For personal use only 246996 (“CHRML”) has issued this presentation in its capacity as the person as a result of their reliance on the information
Slide 44: For personal use only
For personal use only Sydney Perth Level 20, No.1 Martin Place 225 St Georges Terrace Sydney, NSW, 2000 Perth, WA, 6000 T+ +61 2 8651 9000 T+ +61 8 9269 5900 Melbourne Adelaide Level 12, 570 Bourke Street, Level 2, 80 Pirie Street, Melbourne,Vic, 3000 Adelaide, SA, 5000 T: +61 3 9903 6100 T: +61 8 8
Charter Hall Retail REIT — FY2018 Earnings Presentation on 6ix