Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2011 Earnings Presentation
52 slides from Charter Hall Retail Reit's earnings presentation, Feb 22, 2011
Slide 1: Charter Hall Retail REIT 2011 Half Year Results
Charter Hall Retail REIT For personal use only 2011 Half Year Results 22 February 2011
Slide 2: Important Notice
Important Notice For personal use only Charter Hall Retail Management Limited ABN 46 069 709 468; AFSL 246996 (“CHRML”) is the responsible entity of Charter Hall Retail REIT ARSN 093 143 965 (“CQR”). This presentation has been prepared for general information purposes only and is not an offer or
Slide 3: Contents
Contents For personal use only Steven Sewell 1 Half Year Results Chief Executive Officer Scott Dundas 2 Portfolio Investments Chief Investment Officer Steven Sewell 3 Operational Performance Chief Executive Officer Richard Di Lernia 4 Financial Performance Chief Financial Officer Steven Sewell 5 Str
Slide 4: Half Year Results
Charter Hall Retail REIT For personal use only 01 Half Year Results
Slide 5: Half Year Operating Results
Half Year Operating Results For personal use only Results Summary Earnings 6 months to Dec 10 $44.2m Operating earnings 14.52 cpu $36.7m Distribution 12.00 cpu Payout ratio 83% Balance sheet As at Dec 10 $1,075m Net tangible assets $3.51 pu Portfolio valuation $1,962m Capitalisation rate – core port
Slide 6: Highlights
Highlights For personal use only Completed four acquisitions, with over $200 million of property contracted Invest in high quality predominantly grocery anchored AUSTRALIA or settled during CY2010, one of which settled 31 January 2011 retail property in Australia Announced buy-back of units, to
Slide 7: Geographic Analysis
Geographic Analysis For personal use only Australia Europe New Zealand United States Total Net tangible assets (NTA, A$m) 824 66 72 113 1,075 NTA (cents per unit) 269 22 23 37 351 Proportion of total NTA 77% 6% 7% 10% 100% Australia continues to represent the majority of the REIT‟s portfolio at 77
Slide 8: Unit Price Performance
Unit Price Performance For personal use only 125.0 120.0 115.0 110.0 105.0 100.0 95.0 90.0 30 Jun 10 31 Jul 10 31 Aug 10 30 Sep 10 31 Oct 10 30 Nov 10 31 Dec 10 31 Jan 11 CQR S&P A-REIT 200 The REIT‟s unit price has outperformed the broader A-REIT index by 18.2% since announcing its strategy on 20
Slide 9: Portfolio Investments
Charter Hall Retail REIT For personal use only 02 Portfolio Investments
Slide 10: Revaluations
Revaluations Core portfolio For personal use only Total Total core Six months to Dec 2010 Sub-regional Neighbourhood Freestanding Household retail Europe Australia portfolio Number of properties 9 32 21 2 64 7 71 Percentage externally valued at Dec 20101 7% 25% - 3% 35% 24% 59% Adjusted Jun 2010 boo
Slide 11: Australian Acquisitions
Australian Acquisitions For personal use only Strategy Target assets that have strong capital and income growth potential and meet key investment hurdles: Sector: Neighbourhood, sub-regional & household retail (Current focus: neighbourhood and sub-regional) Asset value: $30 million - $100 millio
Slide 12: Australian Acquisition Case Study
Australian Acquisition Case Study For personal use only Manuka Terrace, ACT Neighbourhood shopping centre first constructed in 2000, anchored by Coles supermarket Acquired 31 March 2010 for $29.7 million at initial yield of 9.0% Independent valuation at 31 December 2010 of $33.8 million, solid
Slide 13: Non-core Asset Disposals
Non-core Asset Disposals For personal use only The REIT continues its stated strategy to reweight to Australia by realising equity from its United States and New Zealand portfolios On completion of contracted disposals, net proceeds of approximately $200 million1 are expected to be available for
Slide 14: Non-core Asset Disposals - Case Study
Non-core Asset Disposals - Case Study For personal use only New Zealand Portfolio of 14 freestanding supermarkets Sept 2000 acquired Dec 2001 – Feb 2005 Additional five assets acquired 50% portfolio interest sold to joint venture Apr 2007 (JV) partner Grey Lynn, New Zealand Dec 2007 Sold 100% intere
Slide 15: Operational Performance
Charter Hall Retail REIT For personal use only 03 Operational Performance
Slide 16: Portfolio Summary
Portfolio Summary For personal use only Total core United Contracted New Total Dec 2010 Australia Europe Jun 2010 portfolio States1 disposals Zealand portfolio Portfolio summary Number of properties 64 7 71 8 42 17 138 136 Number of tenancies 1,168 421 1,589 143 466 25 2,223 2,165 Valuation (A$m) 1,
Slide 17: Australia
Australia For personal use only Strong same property NOI growth of 3.2% Occupancy stable at 98.9%1 Strong rental rate growth2 of 7.2%, comprising 5.4% on 35 new leases and 7.8% on 44 renewals Specialty retailers average occupancy cost of 7.8%3 Arrears over 60 days equal to 0.4% of annual b
Slide 18: Australia – Supermarket Anchors a Strength
Australia – Supermarket Anchors a Strength For personal use only 40.0% 37.3% 34.6% The REIT‟s dominant grocery anchors – 30.5% 30.0% Woolworths and Coles have demonstrated the % contribution to CQR annual base rent non-discretionary nature of their business 19.5% 16.9% 18.0% 20.0% throughout the g
Slide 19: Australia – Specialty Retailers
Australia – Specialty Retailers Anchors 58% For personal use only Summary by % of Occupancy Rolling annual category ABR cost sales growth1 Food retail 5.8% 5.5% 4.5% Food catering 5.5% 9.7% (0.2%) 5.1% n/a Regional Household retail 2.0% specialties 12.0% (1.4%) 12% Apparel 5.1% National Banks and fi
Slide 20: Australia – Redevelopments
Australia – Redevelopments „building‟ For personal use only Project Costs Project Forecast Potential projects value remaining Project details status completion Centre refurbishment and major tenant remix, including Coles and Caboolture, Qld $16.5m $15.4m Design FY12 Kmart Centre refurbishment and ex
Slide 21: Australia - Redevelopment Case Study
Australia - Redevelopment Case Study Gowrie Street Mall, Singleton, NSW For personal use only Existing centre (last refurbished in 2001) Dominant sub-regional shopping centre in the upper Woolworths and Big W, plus 24 specialties Hunter region of NSW, benefiting from a growing local (60% nationa
Slide 22: Europe
Europe Poland For personal use only Occupancy increased to 98.9%1 Same property NOI growth of 5.5%, driven by increase in base rent and increased cost recovery measures implemented by new property managers, DTZ Rent growth of 5.7%, from 12 leasing deals completed Polish debt facility refinan
Slide 23: Europe – Remixing Opportunities
Europe – Remixing Opportunities For personal use only Objective: Value enhancement of the existing portfolio Chemnitz (Germany) 10 year lease extension and reconfiguration of hypermarket to create a small supporting specialty mall of 2,000sqm Break up of large format store into four performing a
Slide 24: United States – Non-core Assets
United States – Non-core Assets For personal use only In December 2010, the REIT contracted to sell: Total of eight remaining assets to be sold over the short to medium term as market conditions permit ― Seven wholly owned United States assets The REIT forecast to have minimal equity exposure
Slide 25: Financial Performance
Charter Hall Retail REIT For personal use only 04 Financial Performance
Slide 26: Earnings
Earnings Dec 2010 Dec 2010 Dec 2010 Dec 2010 Dec 2009 For personal use only Statutory Unrealised Non-recurring Operating Operating Income Items Items Earnings Earnings A$m A$m A$m A$m A$m Net property income 79.3 0.5 - 79.8 77.9 Net income from investments in JV – held for sale - - - - 13.1 Property
Slide 27: Balance Sheet
Balance Sheet For personal use only New United Pro forma Australia Europe Dec 2010 June 2010 Zealand States Dec 20101 A$m A$m A$m A$m A$m A$m A$m Total assets (less cash) 1,262 72 386 164 1,884 1,723 1,945 Total debt (less cash) 384 - 296 48 728 567 746 Total liabilities (less cash) 438 - 320 51 809
Slide 28: Balance Sheet – Substantial Liquidity
Balance Sheet – Substantial Liquidity For personal use only A$m1 Cash and undrawn facilities at 31 December 2010 110 Net proceeds on disposal of Desco Regency JV 65 Net proceeds on disposal of seven wholly owned United States assets 55 Net proceeds on disposal of New Zealand Portfolio 71 Net proceed
Slide 29: Debt Maturity
Debt Maturity For personal use only Extended Multi-Currency Facility to September 2015, with Upcoming initiatives: reduction in margin ― Prepayment of A$CMBS in September 2011, Extension of Polish debt facility to July 2014, approval replacing with new CMBS or bank debt facility granted, subje
Slide 30: Capital Management Initiatives
Capital Management Initiatives For personal use only Derivatives Management Interest rate hedging: 2H FY11 debt fixed at 73%, providing FY11 weighted average interest rate 7.0%1 Australian interest rate hedging of $191 million at average hedge rate of 5.23% FX income hedging: € income hedging pa
Slide 31: Earnings Quality
Earnings Quality For personal use only FY11 operating earnings forecast at 27.0 – 28.0 cents per unit1, reflecting an earnings yield at NTA of approximately 8% Growth opportunities in FY12 include: ― Refinancing $265 million A$CMBS in September 2011, with expected margin reduction by at least 20
Slide 32: Strategy and Outlook
Charter Hall Retail REIT For personal use only 05 Strategy and Outlook
Slide 33: Strategy
Strategy For personal use only Continue to deliver on stated strategy to position the REIT as predominantly invested in Australia Reinforce leadership position of the REIT as pre-eminent owner of neighbourhood and sub-regional shopping centres in Australia Completion of contracted disposals to
Slide 34: FY11 Outlook
FY11 Outlook For personal use only Earnings and distributions On execution of strategy and barring unforeseen events: ― FY11 operating earnings forecast at 27.0 – 28.0 cents per unit ― Payout ratio increased to be in the range of between 85% and 95% of operating earnings The completion of contra
Slide 35: Questions
Charter Hall Retail REIT For personal use only Questions 35
Slide 36: Annexures
Annexures For personal use only 1 Glossary Slide 37 2 Detailed Earnings Slide 38 3 Balance Sheet Slide 39 – 40 4 Debt & Gearing Slides 41 – 42 5 Hedging Profile Slides 43 – 45 6 Capital Expenditure Schedule Slide 46 7 Portfolio Update Slides 47 – 50 36
Slide 37: Glossary
Annexure 1 Glossary For personal use only Core portfolio: 64 Australian and seven European properties not contracted for sale Contracted disposals: Desco Regency JV portfolio of 32 assets, seven wholly owned United States assets and three non-core Australian assets all contracted for sale Thre
Slide 38: Detailed Earnings
Annexure 2 Detailed Earnings For personal use only Dec 2010 Dec 2010 Dec 2010 Dec 2010 Dec 2009 Statutory Income Unrealised Items Non-recurring Items Operating Earnings Operating Earnings A$m A$m A$m A$m A$m Net property income 10.8 - - 10.8 14.2 Management fees (0.4) - - (0.4) (1.2) Finance costs (
Slide 39: NTA Bridge
Annexure 3 NTA Bridge For personal use only (12) 15 (2) (11) 369 3 (2) (9) 351 NTA at June 1H FY11 Provision for August Non-core Core portfolio Release of JV2 Foreign NTA at 2010 Earnings 1H FY11 2010 DRP portfolio revaluations NOI guarantee exchange rate December 2010 distribution revaluations prov
Slide 40: Detailed Regional Balance Sheet
Annexure 3 Detailed Regional Balance Sheet For personal use only Core portfolio Non-core portfolio Australian New US Wholly Desco Regency Australia Poland Germany Dec 2010 JV Zealand Owned JV JV Total assets (less cash) 1,243 35 255 132 72 101 165 36 2,039 Total debt (less cash) 385 16 190 106 - 48
Slide 41: Debt Maturities
Annexure 4 Debt Maturities For personal use only Facility Drawn Drawn 31 December 2010 Region Rate Maturity CQR share CQR share CQR share (Natural m’s) (Natural m’s) (A$m) Trowbridge Crossing US 3.8 3.8 3.7 Fixed Jul 11 Total FY12 3.7 Germany EUR 83.1 83.1 108.7 Floating Jul 12 Lindbergh Crossing1 U
Slide 42: Covenants
Annexure 4 Covenants For personal use only Facility Drawn Unused 31 December 2010 Maturity Financial Covenants Covenant Actual CQR share Facility Facility Australia A$m A$m A$m Security pool gearing 60.0% 35.0% Multi-Currency Facility 225.0 131.9 93.1 Sep 15 Security pool ICR 1.75x 3.84x Gearing1 70
Slide 43: Derivative Positions
Annexure 5 Derivative Positions For personal use only The table below provides an analysis of the REIT‟s mark to market derivative positions as included in Note 5 to the financial statements All figures in A$m Australia New Zealand Europe United States Total Interest rate hedges (1.6) - (3.8) - (5
Slide 44: Income Hedging & Cross Currency Swaps
Annexure 5 Income Hedging & Cross Currency Swaps For personal use only Income hedging 2H FY11 FY12 FY13 FY14 FY15 Avg. proportion income hedged1 USD 81% 82% 82% 76% 37% Avg. FX forward rate (0.76) USD 0.76 0.76 0.76 0.76 0.76 Avg. proportion income hedged EUR 8% 20% 16% 11% 3% Avg. FX forward rate (
Slide 45: Interest Rate Risk Management
Annexure 5 Interest Rate Risk Management For personal use only Australia 2H FY11 FY12 FY13 FY14 FY15 Avg. fixed debt 51.7% 76.6% 63.8% 15.4% - Weighted avg. fixed rate (includes margin) 8.40% 8.40% 8.38% 8.43% - United States 2H FY11 FY12 FY13 FY14 FY15 Avg. fixed debt 82.2% 73.6% 86.9% 86.9% 86.1%
Slide 46: Capital Expenditure Schedule
Annexure 6 Capital Expenditure Schedule For personal use only Entity (A$m, CQR Maintenance Lease incentives Total Maintenance & Development Share) Incentives Australia 1H FY11 1.8 0.6 2.4 2.4 FY10 2.5 0.8 3.3 11.5 FY09 1.7 0.7 2.4 23.8 New Zealand 1H FY11 - - - - FY10 0.1 - 0.1 0.2 FY09 0.4 - 0.4 5.
Slide 47: Australia – Geographic Diversification
Annexure 7 Australia – Geographic Diversification For personal use only QLD 10 Neighbourhood SC (53,443sqm) 2 Sub-regional SC (28,122sqm) 12 10 WA 2 Freestanders (6,281sqm) 3 NSW 6 Neighbourhood SC (42,927sqm) 11 Freestanders (31,915sqm) 11 Neighbourhood SC (63,519sqm) 2 Sub-regional SC (33,170sqm)
Slide 48: Australia – Anchor Tenant Lease Expiry
Annexure 7 Australia – Anchor Tenant Lease Expiry For personal use only % Base Rent Expiring 57.6% 40% 44 35% 30% 25% 20% 15% 12.3% 10% 11 6.0% 5.9% 5.5% 5.2% 1 3.5% 5% 5 9 1.6% 9 6 2.2% 0.2% 7 2 3 0% 2H FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20+ Anchor # - number of tenancies expiring Base
Slide 49: Australia – Specialty Tenant Lease Expiry
Annexure 7 Australia – Specialty Tenant Lease Expiry For personal use only % Base Rent Expiring 40% 35% 30% 25% 20% 17.6% 15.4% 15.5% 15% 13.6% 182 12.5% 133 144 11.8% 209 169 10% 85 7.2% 5% 51 3.9% 15 1.3% 1.2% 0% 5 8 2H FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20+ # - number of tenancies exp
Slide 50: Europe – Lease Expiry Profile
Annexure 7 Europe – Lease Expiry Profile For personal use only % Base Rent Expiring 40% 35% 30% 25% 20.1% 20.1% 20% 17.8% 16.4% 15% 8.8% 10% 7.3% 4.4% 5% 2.6% 1.8% 0.7% 0% 2H FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20+ Anchor Tenants Master Lease Specialty Poland – Anchor tenants do not inclu
Slide 51: 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 52: For personal use only
For personal use only charterhall.com.au/cqr
Charter Hall Retail REIT — H1 FY2011 Earnings Presentation on 6ix