Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2020 Earnings Presentation
44 slides from Charter Hall Retail Reit's earnings presentation, Aug 13, 2020
Slide 1: Lansell Square Charter Hall Retail REIT
Lansell Square Charter Hall Retail REIT
Slide 2: Greg Chubb and Christine Kelly
Greg Chubb Christine Kelly Retail CEO Head of Retail Finance and Deputy Fund Manager Charter Hall Retail REIT
Slide 3: Rockdale Plaza, Sydney NSW
Rockdale Plaza, Sydney NSW Charter Hall Retail REIT Rockdale Plaza, Sydney NSW
Slide 4: Strategy: key metrics FY19 vs FY20
Strategy The leading owner and manager of property for convenience retailers Key metrics FY19 FY20 Movement Supermarket MAT growth1 Supermarkets in turnover2 Operating earnings4 $128.0m $142.7m +11.5% 5.2% from 4.0% at June 2019 61.0% from 56.0% at June 2019 Operating earnings per unit Distribut
Slide 5: Providing a resilient and growing income stream for our investors
Strategy Providing a resilient and growing income stream for our investors • Active portfolio curation • Maintain strong tenant relationships • Strong and flexible balance sheet • Partnering with major tenants to meet their • Enhance the customer experience • Sustainable gearing property needs • Opt
Slide 6: Curating the portfolio to deliver a resilient and growing income stream
Strategy Curating the portfolio to deliver a resilient and growing income stream Core convenience and everyday needs Enabling major partner omnichannel servicing model Expanding convenience focus Participating in the convenience Store refurbishments / formats supply chain Partnering with leading con
Slide 7: Partnering with leading convenience retailers
Strategy Partnering with leading convenience retailers FY15 / 16 FY17 / 18 FY 19 / 20+ 2 major tenants equals 52% of portfolio 3 major tenants equals 50% of portfolio 5 major tenants equals 53% of portfolio1 • 74 centres • 58 centres • 50 centres + 2 Long WALE Retail1 • 76 supermarkets • 70 supermar
Slide 8: Partnering with tenant customers: BP fuel and convenience portfolio
Strategy Providing a resilient and growing income stream for our investors through partnering with tenant customers • Fuel and convenience retail is a large and evolving sector with convenience sales1 (excluding fuel) of $8.8bn in 2019 with food sales growth of 6% pa • Consistent with CQR’s strategy
Slide 9: Prudent capital management
Strategy Prudent capital management Strong and flexible balance sheet Extending capital partnerships to access Differentiated gearing based enhanced through recent larger quality assets whilst preserving on resilience of income equity raise diversification 500 50% 3,500 450 3,000 400 40% 2,500 350 3
Slide 10: COVID-19 Impacts
COVID-19 Impacts Pacific Square, Sydney NSW Charter Hall Retail REIT Pacific Square, Sydney NSW
Slide 11: Convenience based retail remains resilient
COVID-19 Impacts Convenience based retail remains resilient 25.0% − All major tenants remained opened and traded positively demonstrating resilience and essential nature 15.0% − Specialty MAT decline reflects temporary store closures 5.0% − Speciality tenant trading has recovered post temporary stor
Slide 12: Convenience based retail remains resilient: tenant support
COVID-19 Impacts Convenience based retail remains resilient − $10.7m in COVID-19 tenant support provided in Q4 Support as % % of Gross % of FY20 − 70% of tenant support provided as rent free incentive of Annual Income Support Income − Tenant support reduced over the quarter as footfall and sales hav
Slide 13: Bateau Bay Square, NSW
Bateau Bay Square, NSW Charter Hall Retail REIT
Slide 14: Financial Performance
Financial Performance – Statutory profit of $44.2m decreased on pcp of $53.1m primarily due $m FY19 FY20 to the impact of negative valuation movements Net property income 146.4 146.4 – Total net income growth impacted by: Net income from convenience retail property joint ventures 23.5 27.4 – asset d
Slide 15: Balance Sheet
Financial Performance Balance Sheet – Total property portfolio value increased by $270m over the $m Jun 19 Jun 20 12 month period due to: Cash 5 80 – acquisitions exceeding divestments by $284m Investment properties 2,449 2,240 – portfolio value decline of $14m Investments in property joint ventures
Slide 16: Limited valuation movement highlights portfolio resilience
Financial Performance Limited valuation movement highlights portfolio resilience – 99%¹ of the portfolio was externally revalued over FY20 with 67%1 in the second half – Shopping centre portfolio six month valuation decline of 2.4%2 (or $70m) offset by 6.2%2 (or $26m) increase in Long WALE retail va
Slide 17: Debt maturities, hedging and gearing
Financial Performance – No debt maturing until FY22 with recent refinancings reducing FY22 maturities to Key metrics Jun 19 Jun 20 $155m and increasing weighted average debt maturity to 4.3 years Weighted average cost of debt1 3.0% 2.8% – FY20 weighted average cost of debt is 2.8% Weighted average d
Slide 18: BP Kingsway, Victoria
BP Kingsway, Victoria Charter Hall Retail REIT
Slide 19: Portfolio snapshot and BP portfolio acquisition
Operational performance Portfolio snapshot Jun 19 Jun 20 – Acquired interest in a convenience based retail portfolio of 225 assets leased to BP with a 19.4 year WALE Number of shopping centres 58 51 Number of Long WALE assets - 225 – Acquired interest in two high quality Sydney metro assets Value ($
Slide 20: Ongoing partnership with major tenants
Operational performance – Ongoing partnership with major tenants Woolworths, Coles, Wesfarmers, Aldi and BP has seen their proportion of portfolio rental income grow from 46% to 51% over Woolworths Group 18.0% the past 12 months – BP is now the third largest tenant customer at 9.6% of rental income
Slide 21: Supermarkets in turnover delivered 5.2% MAT growth
Operational performance Supermarkets in turnover² MAT growth3 – – Supermarkets in turnover delivered 5.2% MAT growth1 Aldi representation increased from nine to eleven stores 61.0% 5.2% – Completed five supermarket new leases and extensions Supermarket performance Jun 19 Jun 20 – Coles and Woolworth
Slide 22: Specialty performance impacted by temporary closures
Operational performance Specialty performance Jun 19 Jun 20 – Specialty MAT impacted by temporary closures due to COVID-19 MAT growth1 +0.7% (2.6%) – 345 specialty leases were completed in the period Sales productivity (per sqm) $9,672 $9,557 – Leasing spreads over the period were +0.9% Average gros
Slide 23: Environment Social and Community
Operational Performance Environment Social and Community – 8.5MW solar installations completed at 11 assets and a further 3.9MW of – Continued partnership with The Two Good Co as part of Two Good’s “In Good installations at 4 assets are nearing completion Hands”. Distributed 6,800 cookbooks to shopp
Slide 24: Positive increases in all areas of relationship satisfaction
Operational Performance Positive increases in all areas of relationship satisfaction – Continued to partner with Monash University on the annual tenant customer satisfaction survey engaging 1,175 tenant customers and achieving a 97% participation rate – Our people continued to be our greatest streng
Slide 25: Pacific Square, Sydney NSW
Pacific Square, Sydney NSW Charter Hall Retail REIT
Slide 26: Outlook: Resilience of portfolio focused on convenience retailers
Outlook Resilience of portfolio focused on convenience retailers - Supermarket and convenience retail sales will continue to be strong, driven by customers preference to shop closer to home and focus on everyday needs - Visitations normalised in most regions highlighting the essential need associate
Slide 27: Salamander Bay Square, NSW
Salamander Bay Square, NSW Charter Hall Retail REIT
Slide 28: Annexures contents
01 08 FY20 earnings bridge Property valuations 02 09 Reconciliation of statutory profit to operating earnings and AFFO State and category specialty MAT 03 10 NTA per unit reconciliation Shopping centre portfolio historical performance 04 11 Investment in property joint ventures and associates Acquis
Slide 29: FY20 earnings bridge (cpu)
Annexures FY20 earnings bridge (cpu) FY19 to FY20 earnings bridge (TRUE) 33.00 cpu 32.00 cpu 0.90 31.00 cpu (2.71) (1.13) 2.00 0.38 30.00 cpu (2.11) 29.00 cpu 28.00 cpu 31.12 31.1 27.00 cpu 30.2 30.2 30.56 29.3 29.3 26.00 cpu 28.5 28.45 25.00 cpu 24.00 cpu FY19 EPU NPI Divestments FY19 & 20 acquisit
Slide 30: Reconciliation of statutory profit to operating earnings and AFFO
Annexures Reconciliation of statutory profit to operating earnings and AFFO $m FY20 cpu 1H FY20 2H FY20 FY 20 Statutory profit 44.2 Operating earnings 15.88 14.68 30.56 Less: COVID-19 tenant support - (2.14) (2.14) Revaluation (increment) / decrement on investment properties1 56.2 Less: capital expe
Slide 31: NTA per unit reconciliation
Annexures NTA per unit reconciliation $0.06 ($0.13) $4.08 ($0.05) ($0.19) ($0.02) $3.75 1 Jun 19 NTA Operating earnings Valuation Derivative Equity raise Other Jun 20 NTA (net of distribution) movements movements and DRP 1 Includes disposal costs and accounting adjustments Charter Hall Retail REIT 3
Slide 32: Investment in property joint ventures – balance sheet breakdown
Annexures Investment in property joint ventures – balance sheet breakdown $m Jun 19 Jun 20 Movement Convenience retail investment properties 533 572 39 Long WALE retail investment properties - 439 439 Borrowings (141) (368) (227) Net other (9) 23 32 Equity investment in property joint ventures 383 6
Slide 33: Debt maturities and covenants
Annexures Debt maturities and covenants Limit Drawn ICR ICR LVR LVR Debt facility (ownership interest) Rate Maturity ($m) ($m) Covenant Actual Covenant Actual JV debt – CHRP1 110 103 Floating Jun-22 2.0x 4.7x 55.0% 40.5% JV debt – CHRP2 55 44 Floating Jul-24 1.5x 4.1x 60.0% 40.7% JV debt – CHRP6 25
Slide 34: Convenience focused portfolio
Annexures Convenience focused portfolio Convenience Convenience 28 Convenience assets compared to Plus compared to sub- neighbourhood1 regional1 • Single supermarket and complementary convenience specialty Supermarket productivity Greater than 13% Greater than 12% • Specialty productivity across the
Slide 35: Lease expiry profile as at June 2020
Annexures Lease expiry profile as at 30 June 2020 100% 79.4% 11.5 years 80% Major tenant WALE 60% 40% 7.2 years 20% Portfolio WALE 5.1% 6.6% 1.4% 3.7% 1.1% 2.1% 0.6% 0% 3.0 years FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28+ Specialty and mini-major tenant WALE 25% 20.4% 20.3% 20% 14.7% 15% 13.4% 12.0% 1
Slide 36: Property valuations as at June 2020
Annexures Property valuations as at 30 June 2020 State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 18.7 6.00% Manuka Terrace Manuka 100.0% 58.5 6.00% ACT Total 77.2 NSW Bass Hill Plaza Bass Hill 20.0% 20.0 6.00% Bateau Bay Square Bateau Bay
Slide 37: Property valuations as at June 2020
Annexures Property valuations as at 30 June 2020 State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW (cont.) Rutherford Marketplace Rutherford 50.0% 20.6 6.13% Salamander Bay Square Salamander Bay 50.5% 82.6 6.25% Singleton Square Singleton 100.0% 119.4 6.63% Sunnyside Mall M
Slide 38: Property valuations as at June 2020
Annexures Property valuations as at 30 June 2020 State Property Location Ownership interest (%) Book Value ($m) Cap Rate VIC Campbellfield Plaza Campbellfield 100.0% 77.3 6.00% Gateway Plaza Leopold 50.0% 67.5 6.00% Lansell Square Kangaroo Flat 100.0% 95.0 6.75% Rosebud Plaza Rosebud 100.0% 123.1 5.
Slide 39: State and category specialty MAT as at June 2020
Annexures State and category specialty MAT as at 30 June 2020 Specialty sales Proportion of Specialty sales Proportion of MAT growth1 MAT growth1 by state specialty sales by category specialty sales NSW & ACT 58% (4.2%) Food and food catering 38% (1.5%) WA 11% (0.1%) General retail 21% 3.0% VIC 11%
Slide 40: Shopping centre portfolio historical performance
Annexures Shopping centre portfolio historical performance Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun 19 Dec 19 Jun 20 Number of properties 73 76 74 72 71 66 58 58 58 55 51 Occupancy 98.4% 98.4% 98.0% 98.0% 98.0% 97.8% 98.1% 98.1% 98.1% 98.1% 97.3% 5 Same property NPI growth1, 2 2.4
Slide 41: Acquisition of Coles Adelaide Distribution Centre
Annexures Acquisition of Coles Adelaide Distribution Centre - CQR acquired 52% interest in a purpose-built distribution facility leased to Coles in Portfolio details (as at June 2020) Adelaide’s prime industrial precinct of Edinburgh Park for $111.8 million Properties 1 - Coles has a remaining lease
Slide 42: Glossary
Annexures Glossary 1H FY20 MAT 6 months from 1 July 2019 to 31 December 2019 Moving annual turnover calculated as a sum of rolling 12 month sales 2H FY20 MtM 6 months from 1 January 2020 to 30 June 2020 Mark-to-Market GLA NPI Gross lettable area (in square metres) Net property income Gross rent Occu
Slide 43: Presentation authorised by the board
Presentation authorised by the board Charter Hall Retail REIT 43
Slide 44: Thank you / Important notice and disclaimer
Thank you IMPORTANT NOTICE & DISCLAIMER This presentation ("Presentation") has been prepared by and is the sole responsibility of Charter Hall Retail Management Limited (ABN 46 069 709 468, Australian Financial Services Licence Number 246 996) (“CHRML”) as the responsible entity for Charter Hall Ret
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