Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2021 Earnings Presentation
42 slides from Charter Hall Retail Reit's earnings presentation, Feb 15, 2021
Slide 1: Half Year FY21 Results
For personal use only Half Year FY21 Results Charter Hall Retail REIT 15 February 2021 Half Year FY21 Results
Slide 2: Agenda
For personal use only Greg Chubb Retail CEO and Executive Director Agenda 1. Portfolio Highlights and Strategy 2. Financial Performance Christine Kelly Head of Retail 3. Operational Performance Finance and Deputy Fund Manager 4. Outlook 5. Annexures Left image: bp Bayside, VIC Charter Hall Charter H
Slide 3: Portfolio Highlights and Strategy
For personal use only Portfolio Highlights and Strategy Pacific Square, Sydney NSW Charter Hall Retail REIT Half Year FY21 Results
Slide 4: Strategy: The Leading Owner of Property for Convenience Retailers
Strategy The Leading Owner of Property for Convenience Retailers For personal use only Key metrics 1H FY20 1H FY21 Movement Supermarket MAT growth1 Supermarkets in turnover2 Operating earnings4 $70.2m $75.2m +7.1% 8.2% from 5.2% at June 2020 65% from 61% at June 2020 Operating earnings per unit
Slide 5: Providing a resilient and growing income stream for our investors
Strategy Providing a resilient and growing income stream for our investors For personal use only • Active portfolio curation • Maintain strong tenant relationships • Strong and flexible balance sheet • Partnering with major tenants to meet their • Enhance the customer experience • Sustainable gearin
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 For personal use only Core convenience and everyday needs Enabling major partner omnichannel servicing model Expanding convenience focus Participating in the convenience Store refurbishments / formats supply chain Partn
Slide 7: Partnering with leading convenience retailers
Strategy Partnering with leading convenience retailers For personal use only FY15 / 16 FY17 / 18 FY20 / 21 2 major tenants equals 52% of portfolio 3 major tenants equals 50% of portfolio 5 major tenants equals 54% of portfolio • 74 centres • 58 centres • 50 centres + 2 long WALE retail1 • 76 superma
Slide 8: Expansion of bp partnership
Strategy Expansion of bp partnership For personal use only bp portfolio details (at December 2020) - The bp partnership is consistent with CQR’s strategy of owning convenience based assets dominant within their relevant catchments and providing essential Property type Long WALE convenience retail go
Slide 9: Financial Performance
For personal use only Financial Performance Pacific Square, Sydney NSW Charter Hall Retail REIT Half Year FY21 Results 9
Slide 10: Financial Performance: COVID-19 tenant support and rent collections
Financial Performance For personal use only − Tenant support reduced over the period as government restrictions eased and sales progressively improved − $5.8m or 4% of 1H FY21 rent was provided as tenant support comprising $4.4m (76%) COVID-19 support Uncollected $5.8m $2.5m rent free incentives and
Slide 11: Finance Performance
Finance Performance For personal use only – Total net income growth increased due to long WALE convenience $m 1H FY20 2H FY20 1H FY21 retail investments offset by divestment of convenience retail assets Net property income 76.0 70.4 69.4 – Net finance costs and other expenses impacted by the timing
Slide 12: Financial Performance: balance sheet and NTA
Financial Performance For personal use only $m Jun 20 Dec 20 – Total property portfolio value increased by $252m over the six- month period due to: Cash 80 11 Investment properties 2,240 2,268 – valuation movement of $45m Investments in property joint ventures1 666 838 – acquisitions exceeding dives
Slide 13: Valuation uplift highlights portfolio resilience
Financial Performance Valuation uplift highlights portfolio resilience For personal use only – 59%¹ of the portfolio was externally revalued at 31 December 2020 with a valuation movement of 1.4% ($45m) – Shopping centre portfolio six-month valuation movement of 1.2%2 ($34m) including capital investm
Slide 14: Financial Performance: liquidity and debt maturity
Financial Performance For personal use only – Significant liquidity of $304m – 1H FY21 weighted average cost of debt is 2.8% – No debt maturing until FY22 with recent refinancing reducing FY22 maturities to $95m – Moody’s affirmed the Baa1 issuer rating and senior unsecured rating with a stable outl
Slide 15: Operational Performance
For personal use only Operational Performance Rockdale Plaza, Sydney NSW Charter Hall Retail REIT Half Year FY21 Results
Slide 16: Convenience based retail remains resilient
Operational Performance Convenience based retail remains resilient For personal use only Like for like sales performance − We continue to prioritise the safety and wellbeing of our tenant customers, Growth MAT MAT team and communities in which we operate Jun 20 1H FY21 v Dec 20 1H FY20 − As at 31 De
Slide 17: Portfolio snapshot
Operational Performance Portfolio snapshot Jun 20 Dec 20 Total MAT growth1,2 improved from 3.9% to 7.1% For personal use only – Number of shopping centres 51 50 – Shopping centre occupancy improved from 97.3% to 97.8% Number of Long WALE assets 225 296 – Portfolio WALE increased from 7.2 years to 7.
Slide 18: Top tenant customer groups
Operational Performance For personal use only Top 10 tenant customer groups2 – Major tenants Woolworths, Coles, Wesfarmers1, Aldi and bp now represent 54% of portfolio income up from 51% Woolworths 16.6% – Coles are now equal largest portfolio tenant customer at 16.6% of rental Coles Group 16.6% inc
Slide 19: Supermarkets in turnover and MAT growth
Operational Performance Supermarkets in turnover1 MAT growth2 – Supermarkets continued to demonstrate resilience with 8.2% MAT growth 65% 8.2% For personal use only – Completed five supermarket new leases and extensions – IGA, Coles and Woolworths refurbished six stores over the period Supermarket p
Slide 20: Specialty performance
Operational Performance For personal use only − Specialty MAT decline of 1.5% as at 31 December 2020 reflects COVID-19 Specialty performance Jun 20 Dec 20 impacts from temporary store closures and ongoing trading restrictions for MAT growth1 (2.6%) (1.5%) Food Catering and Retail Services categories
Slide 21: Active portfolio curating
Operational Performance Active portfolio curating For personal use only − $30m in capital investment across projects, operations and leasing during the period and captured in valuation uplift GYG Arana Hills, QLD − Investing alongside our major tenants to deliver WALE extension, refurbished and expa
Slide 22: Solar installation progress
Operational Performance Solar installation progress A pathway to net zero emissions by 20301 For personal use only 25 100% 90% - Since the beginning of FY19 $11.4m has been invested in energy, water and % of emissions offset by onsite 20 80% waste management initiatives across: 70% 15 60% - LED ligh
Slide 23: Delivering on our Sustainability Framework
Operational Performance Delivering on our Sustainability Framework For personal use only – 14.4 MW solar installations commissioned, supporting pathway to net zero emissions by 2030 1 – 2.8 MW major tenants solar installations completed, partnering to address Scope 3 emissions – 4.6 Star weighted av
Slide 24: Outlook
For personal use only Outlook Pacific Square, Sydney NSW Charter Hall Retail REIT Half Year FY21 Results
Slide 25: Outlook
Outlook Resilience of portfolio focused on convenience retailers For personal use only - 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 es
Slide 26: Annexures
For personal use only Annexures Salamander Bay Square, NSW Charter Charter Hall Hall Retail Retail REIT REIT Half Half Year YearFY21 FY21 Results Results
Slide 27: Annexures contents
01 06 For personal use only Reconciliation of statutory profit to operating earnings and AFFO Lease expiry profile 02 07 NTA per unit reconciliation Property valuations 03 08 Investment in property joint ventures State and category specialty and mini-majors MAT 04 09 Debt maturities and covenants Sh
Slide 28: Reconciliation of statutory profit to operating earnings and AFFO
Annexures Reconciliation of statutory profit to operating earnings and AFFO For personal use only $m 1H FY21 cpu 1H FY20 1H FY21 Statutory profit 82.8 Operating earnings 15.88 13.17 Less: COVID-19 tenant support - (1.02) Revaluation increment on investment properties1 (15.4) Less: capital expenditur
Slide 29: NTA per unit reconciliation
Annexures NTA per unit reconciliation For personal use only $0.02 $0.11 $0.13 $0.02 $3.77 $3.75 Jun 20 NTA Operating earnings Valuation movements Distribution Other Dec 20 NTA 1 1. Includes accounting adjustments Charter Hall Retail REIT Half Year FY21 Results 29
Slide 30: Investment in property joint ventures 1H FY21
Annexures Investment in property joint ventures – income and balance sheet breakdown 1H FY21 and 31 December 2020 For personal use only Long WALE Convenience $m CQR RP1 RP2 RP6 Gateway Salamander bp Portfolio CDC convenience Total retail retail 1H FY21 income Ownership interest 100% 50% 49.9% 20% 50
Slide 31: Investment in property joint ventures 1H FY20
Annexures Investment in property joint ventures – income and balance sheet breakdown 1H FY20 and 30 June 2020 For personal use only Long WALE Convenience $m CQR RP1 RP2 RP6 Gateway Salamander bp Portfolio convenience Total retail retail 1H FY20 income Ownership interest 100% 50% 49.9% 20% 50% 50.5%
Slide 32: Debt maturities and covenants
Annexures Debt maturities and covenants For personal use only Limit Drawn ICR ICR LVR LVR Debt facility (ownership interest) Rate Maturity ($m) ($m) Covenant Actual Covenant Actual JV debt – CHRP1 95 80 Floating Jun-22 2.0x 4.8x 55.0% 35.1% JV debt – CHRP2 40 31 Floating Jul-24 1.75x 4.7x 60.0% 28.6
Slide 33: Convenience focused portfolio
Annexures Convenience focused portfolio For personal use only 26 Convenience assets Convenience Convenience • Single supermarket and complementary convenience specialty compared to Plus compared to sub- neighbourhood1 regional1 • Specialty productivity across the convenience portfolio outperforms th
Slide 34: Lease expiry profile as at December 2020
Annexures Lease expiry profile as at 31 December 2020 For personal use only Major tenant expiry profile (by income) 80% 73.9% 11.6 years 60% Major tenant WALE 40% 7.7 years 20% 10.6% Portfolio WALE 3.9% 5.8% 0.4% 1.2% 1.3% 1.0% 1.8% 0% 3.2 years FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29+ Specialt
Slide 35: Property valuations as at December 2020
Annexures Property valuations as at 31 December 2020 For personal use only Ownership interest State Property Location Book Value ($m) Cap Rate (%) ACT Dickson Woolworths Dickson 100.0% 19.0 5.75% Manuka Terrace Manuka 100.0% 58.5 6.00% ACT Total 77.5 NSW Bass Hill Plaza Bass Hill 20.0% 22.8 6.00% Ba
Slide 36: Property valuations as at December 2020
Annexures Property valuations as at 31 December 2020 For personal use only Ownership interest State Property Location Book Value ($m) Cap Rate (%) NSW continued Rutherford Marketplace Rutherford 50.0% 20.8 6.13% Salamander Bay Square Salamander Bay 50.5% 83.3 6.25% Singleton Square Singleton 100.0%
Slide 37: Property valuations as at December 2020
Annexures Property valuations as at 31 December 2020 For personal use only Ownership interest State Property Location Book Value ($m) Cap Rate (%) VIC Campbellfield Plaza Campbellfield 100.0% 80.0 6.00% Gateway Plaza Leopold 50.0% 68.0 6.00% Lansell Square Kangaroo Flat 100.0% 93.5 7.00% Rosebud Pla
Slide 38: State and category specialty and mini-majors MAT
Annexures State and category specialty and mini-majors MAT as at 31 December 2020 For personal use only Specialty sales Proportion of Proportion of MAT growth1 Sales by category MAT growth1 by state specialty sales specialty sales NSW & ACT 56% (4.2%) Food and food catering 44% 0.8% WA 12% 9.4% Gene
Slide 39: Shopping centre portfolio historical performance
Annexures Shopping centre portfolio historical performance For personal use only Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Number of properties 76 74 72 71 66 58 58 58 55 51 50 Occupancy 98.4% 98.0% 98.0% 98.0% 97.8% 98.1% 98.1% 98.1% 98.1% 97.3% 97.8% 5 5 Same pro
Slide 40: Glossary
Annexures Glossary For personal use only 1H FY20 JV 6 months from 1 July 2019 to 31 December 2019 Joint venture 1H FY21 MAT 6 months from 1 July 2020 to 31 December 2020 Moving annual turnover calculated as a sum of rolling 12 month sales GAV NPI Gross Asset Value Net property income GLA Occupancy c
Slide 41: Additional Information
Additional Information For personal use only Greg Chubb Christine Kelly Philip Cheetham Retail CEO and Head of Retail Finance Head of Listed Executive Director and Deputy Fund Manager Investor Relations Charter Hall Group Charter Hall Group Charter Hall Group +61 2 8651 9355 +61 2 8651 9401 +61 2 86
Slide 42: Important Notice & Disclaimer
For personal use only 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 Char
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