Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2021 Earnings Presentation
43 slides from Charter Hall Retail Reit's earnings presentation, Aug 17, 2021
Slide 1: 2021 Full Year Results
2021 Full Year Results Charter Hall Retail REIT Change- Dans 17th August, 2021 Charter Hall Retail REIT 2021 Full Year Results
Slide 2: Acknowledgment of Country
Acknowledgment of Country Charter Hall is proud to work with our customers and communities to invest in, develop, and create property assets on land across Australia and New Zealand. We pay our respects to the traditional owners, their elders past and present and value their care and custodianship o
Slide 3: Agenda
Agenda 1. Highlights and Strategy 2. Financial Performance 3. Operational Performance 4. Outlook and Guidance 5. Annexures Greg Chubb Christine Kelly Retail CEO and Head of Retail Finance and Executive Director Deputy Fund Manager Charter Charter Hall Hall Retail Retail REIT REIT 2021 2021 Full Full
Slide 4: Highlights and Strategy
CharterHall Charter HallRetail RetailREIT REIT 1 Highlights and Strategy Bass Hill Plaza, NSW 2021Full 2021 FullYear YearResults Results Results
Slide 5: Portfolio Highlights
Strategy Portfolio Highlights The leading owner of property for convenience retailers Total MAT growth1 Supermarket MAT growth1 Key metrics FY20 FY21 Movement 5.4% 4.3% Operating earnings3 $142.7m $156.2m +9.5% from 3.9% at June 2020 from 5.2% at June 2020 Operating earnings per 30.56 cents 27.3
Slide 6: CQR Convenience Strategy
Strategy CQR Convenience Strategy Providing a resilient and The leading owner growing income stream for our investors of property for convenience retailers KEY DRIVERS Enhance Active asset Prudent capital portfolio quality management management − Active portfolio curation − Maintain strong tenant −
Slide 7: Partnering with leading convenience retailers
Strategy The leading owner Core convenience of property for and everyday needs convenience retailers Enabling major partner Curating the portfolio to deliver a resilient and omnichannel servicing model Partnering growing income stream Store Last Click & Collect with leading convenience refurbishment
Slide 8: Convenience Retail: Acquisition of Butler Central, WA
Strategy Convenience Retail Acquisition of Butler Central, WA Contracts exchanged June 2021 Expected settlement September 2021 Acquisition price $51.2m - Dominant, modern Convenience Centre in a growing catchment, complementing CQR’s Cap rate 6.0% existing portfolio GLA 9,000 sqm - Butler Central Sh
Slide 9: Financial Performance
CharterHall Charter HallRetail RetailREIT REIT 2 Financial Performance Lake Macquarie Square, NSW 2021Full 2021 FullYear YearResults Results Results
Slide 10: FY21 Financial Impact from COVID-19
Financial Performance FY21 Financial Impact from COVID-19 – Tenant support reduced over the period as government restrictions eased and sales progressively improved COVID-19 support Uncollected $6.7m $1.8m – $6.7m or 2.3% of FY21 rent was provided as COVID-19 tenant support comprising $5.4m 2.3% 0.6
Slide 11: Earnings and Distributions
Finance Performance Earnings $m FY20 FY21 and Distributions Net property income 146.4 141.4 Net income from convenience retail property joint ventures 27.4 27.1 - Total net income growth increased due to Long WALE convenience retail investments offset by Net income from long WALE convenience retail
Slide 12: Balance Sheet
Finance Performance Balance Sheet $m Jun 20 Jun 21 Cash 80 19 Investment properties 2,240 2,314 - Total property portfolio value increased by $395m over the 12 month period due to: Investments in property joint ventures1 666 940 - valuation movement of $188m Other assets2 124 68 - acquisitions excee
Slide 13: Property Valuations
Financial Performance Property Valuations $m Shopping centre / Convenience retail Long WALE convenience retail Total portfolio Valuation uplift highlights June 2020 portfolio value 2,813 439 3,252 portfolio resilience Net acquisitions / (disposals) (28) 235 207 Capital investment 57 1 58 - 100% of t
Slide 14: Capital Management
Financial Performance Capital Management Key metrics Jun 20 Jun 21 – Available investment capacity of $308m bank debt Weighted average cost of debt1 2.8% 2.7% – FY21 weighted average cost of debt was 2.7% Weighted average debt maturity 3.9 years 4.1 years – No debt maturing until FY24 with recent re
Slide 15: Operational Performance
Charter Charter Hall CharterHall 2021 Retail HallRetail Full REIT RetailREIT Year REIT Results 3 Rockdale Plaza, NSW Operational Performance 2021 2021Full FullYear YearResults Results
Slide 16: Portfolio Summary
Operational Performance Portfolio Summary – Shopping centre occupancy improved from 97.3% to 98.3% Portfolio snapshot Jun 20 Jun 21 – Total MAT growth1,2 improved from 3.9% to 5.4% Number of shopping centres 51 50 Number of Long WALE assets 225 296 – Portfolio WALE increased from 7.2 years to 7.5 ye
Slide 17: Portfolio Tenant Customer Composition
Operational Performance Portfolio Tenant Customer Top 10 tenant customer groups1 Composition Coles Group 2.8% 16.6% - Major tenants Coles, Woolworths2, bp, 2 Woolworths2 16.6% Wesfarmers3 and Aldi now represent 53.5% of portfolio income up from 51% bp 12.1% - Coles are now the largest portfolio tena
Slide 18: Supermarkets
Operational Performance Supermarkets – Supermarkets continued to demonstrate resilience with 4.3% MAT growth 2 year supermarket MAT growth – Completed 10 supermarket new leases and term extensions – 14 supermarkets or 20% of supermarkets in the portfolio refurbished over the 10.3% period Supermarket
Slide 19: Specialty Tenants
Operational Performance Specialty Tenants – Specialty MAT increase of 7.1% as at Specialty performance Jun 20 Jun 21 30 June 2021 reflects a strong recovery post MAT growth1 (2.6%) 7.1% lockdowns Sales productivity (per sqm) $9,557 $10,213 – Sales productivity increased to $10,213 per sqm Average gr
Slide 20: Asset Enhancement Projects
Operational Performance Asset Enhancement Projects Active portfolio curation $58m in capital investment across the portfolio and captured in valuation uplift Investing alongside our – 14 supermarkets or 20% of supermarkets in the portfolio completed full major tenants refurbishments of which three i
Slide 21: ESG Highlights
Operational Performance ESG Highlights Delivering on our ESG Framework 100% net zero 100% renewable 100% of major tenants carbon emissions energy by 2025 have set net zero or by 20251 renewable energy targets NAIDOC week, Albany Plaza, WA Environment Social Governance – 16.7 MW solar installations s
Slide 22: Tenant Customer Relationships
Operational Performance Tenant Customer Relationships - Continued to engage Monash University on the annual tenant customer satisfaction survey 1 receiving feedback from 1,085 Retail tenant customers achieving a 95% participation rate 2 - Our people continued to be our greatest strength with our res
Slide 23: Outlook and Guidance
Charter Charter Hall CharterHall Retail HallRetail REIT RetailREIT REIT 4 Outlook and Guidance Gateway Plaza Leopold, Vic 2021Full 2021 FullYear YearResults Results Results
Slide 24: Current Operational Impact from COVID-19
Outlook and Guidance Current Operational Impact from COVID-19 Convenience based retail remains resilient – We continue to prioritise the safety and wellbeing of our tenant customers, team and communities in which we operate – Total of 428 specialty stores are temporarily non-trading due to lockdown
Slide 25: Summary and Outlook
Outlook and Guidance Summary and Outlook Resilience of portfolio focused on convenience retailers – Strategy remains focused on non-discretionary convenience retailers – Focus on providing income resilience and growth through continuation of the acquisition and divestment strategy – Supermarket and
Slide 26: Annexures
Charter CharterHall HallRetail RetailREIT REIT 5 Bass Hill Plaza, NSW Annexures 2021 2021Full FullYear YearResults Results Results
Slide 27: Annexures
Annexures Annexures 01 07 FY21 earnings bridge (cpu) Lease expiry profile 02 08 Reconciliation of statutory profit to operating earnings and AFFO Property valuations 03 09 NTA per unit reconciliation Portfolio MAT by State and category 04 10 Investment in property joint ventures Shopping centre port
Slide 28: FY21 earnings bridge (cpu)
Annexures Annexure 1 FY21 earnings bridge (cpu) 0.1 1.0 3.2 (2.0) (5.7) (1.2) 30.6 27.3 (2.7) 23.4 FY20 EPU NPI Divestments Long WALE Finance and other Apr-20 equity FY21 EPU COVID-19 tenant Capital FY21 DPU convenience retail costs raise support expenditure – NPI on $224 million divestments over FY
Slide 29: Reconciliation of statutory profit to operating earnings and AFFO
Annexures Annexure 2 Reconciliation of statutory profit to operating earnings and AFFO $m FY21 cpu 1H FY21 2H FY21 FY21 Statutory profit 291.2 Operating earnings 13.17 14.13 27.30 Less: COVID-19 tenant support (1.02) (0.16) (1.18) Revaluation increment on investment properties1 (141.4) Less: capital
Slide 30: NTA per unit reconciliation
Annexures Annexure 3 NTA per unit reconciliation ($) 0.02 0.25 (0.23) (0.06) 0.28 4.01 3.75 1 Jun 20 NTA Operating earnings Valuation movements Derivative movements Distribution Other Jun 21 NTA 1. Includes accounting adjustments Charter Hall Retail REIT 2021 Full Year Results 30
Slide 31: Investment in property joint ventures FY21
Annexures Annexure 4 Investment in property joint ventures – income and balance sheet breakdown FY21 and 30 June 2021 Long WALE Convenience $m CQR RP1 RP2 RP6 Gateway Salamander bp Portfolio CDC convenience Total retail retail FY21 income Ownership interest 100% 50% 49.9% 20% 50% 50.5% 23.6% 52% 40
Slide 32: Investment in property joint ventures FY20
Annexures Annexure 4 continued Investment in property joint ventures – income and balance sheet breakdown FY20 and 30 June 2020 Long WALE Convenience $m CQR RP1 RP2 RP6 Gateway Salamander bp Portfolio convenience Total retail retail FY20 income Ownership interest 100% 50% 49.9% 20% 50% 50.5% 23.3% 4
Slide 33: Debt maturities and covenants as at June 2021
Annexures Annexure 5 Debt maturities and covenants as at 30 June 2021 Limit Drawn ICR ICR LVR LVR Debt facility (ownership interest) Rate Maturity ($m) ($m) Covenant Actual Covenant Actual JV debt – CHRP1 95 81 Floating Jul-26 1.75x 5.3x 60.0% 34.9% JV debt – CHRP2 40 30 Floating Jul-24 1.75x 6.1x 6
Slide 34: Convenience focused portfolio
Annexures Annexure 6 Convenience focused portfolio 26 Convenience assets Convenience Convenience – Single supermarket and complementary convenience specialty compared to Plus compared to sub- neighbourhood1 regional1 – Specialty productivity across the convenience portfolio outperforms the Urbis nei
Slide 35: Lease expiry profile as at June 2021
Annexures Annexure 7 Lease expiry profile as at 30 June 2021 Major tenant expiry profile (by income) 80% 75.3% 11.4 years 60% Major tenant WALE 40% 7.5 years 20% 10.3% Portfolio WALE 4.1% 5.9% 0.7% 1.3% 0.7% 1.8% 0% 3.3 years FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29+ Specialty and mini-major tenant W
Slide 36: Property valuations as at June 2021
Annexures Annexure 8 Property valuations as at 30 June 2021 Ownership interest State Property Location Book Value ($m) Cap Rate (%) ACT Dickson Woolworths Dickson 100.0% 22.5 5.25% Manuka Terrace Manuka 100.0% 58.8 6.00% ACT Total 81.3 NSW Bass Hill Plaza Bass Hill 20.0% 24.0 5.75% Bateau Bay Square
Slide 37: Property valuations as at June 2021 (continued)
Annexures Annexure 8 continued Property valuations as at 30 June 2021 Ownership interest State Property Location Book Value ($m) Cap Rate (%) NSW continued Rutherford Marketplace Rutherford 50.0% 21.3 5.75% Salamander Bay Square Salamander Bay 50.5% 84.9 6.25% Singleton Square Singleton 100.0% 120.0
Slide 38: Property valuations as at June 2021 (continued)
Annexures Annexure 8 continued Property valuations as at 30 June 2021 Ownership interest State Property Location Book Value ($m) Cap Rate (%) Vic Campbellfield Plaza Campbellfield 100.0% 80.2 6.00% Gateway Plaza Leopold 50.0% 68.5 6.00% Lansell Square Kangaroo Flat 100.0% 94.3 7.00% Rosebud Plaza Ro
Slide 39: Portfolio MAT by state and category
Annexures Annexure 9 Portfolio MAT by state and category as at 30 June 2021 Specialty sales Proportion of MAT growth1 Sales by category MAT growth1 by state specialty sales NSW & ACT 57% 7.2% Supermarket 4.3% WA 12% 14.7% DDS 8.4% Vic 10% (2.5%) Majors MAT Total 5.0% SA 4% 11.7% Food and food cateri
Slide 40: Shopping centre portfolio historical performance
Annexures Annexure 10 Shopping centre portfolio historical performance Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Number of properties 74 72 71 66 58 58 58 55 51 50 50 Occupancy 98.0% 98.0% 98.0% 97.8% 98.1% 98.1% 98.1% 98.1% 97.3% 97.8% 98.3% 5 5 5 Same property NP
Slide 41: Glossary
Annexures Annexure 11 Glossary 1H FY21 JV 6 months from 1 July 2020 to 31 December 2020 Joint venture 2H FY21 MAT 6 months from 1 January 2021 to 30 June 2021 Moving annual turnover calculated as a sum of rolling 12 month sales GAV NPI Gross Asset Value Net property income GLA Occupancy cost Gross l
Slide 42: Further information
Additional information Further information 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 8651
Slide 43: Important Notice & Disclaimer
charterhall.com.au/cqr 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 Cha
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