Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2019 Earnings Presentation
39 slides from Charter Hall Retail Reit's earnings presentation, Aug 16, 2019
Slide 1: FY19 Annual Results
V10 Draft 07082019 16 August 2019 FY19 Annual Results Charter Hall Retail REIT 2019 Full Year Results
Slide 2: Agenda
1 Highlights and Strategy 2 Financial Performance 3 Operational Performance Agenda 4 Outlook 5 Annexures Greg Chubb Christine Kelly Retail CEO and Head of Retail Finance and Executive Director Deputy Fund Manager Charter Hall Retail REIT 2019 Full Year Results 2
Slide 3: Bateau Bay Square, NSW
Bateau Bay Square, NSW Campbellfield Plaza, Vic Charter Hall Retail REIT 2019 Full Year Results 3
Slide 4: Key Achievements
Highlights and Strategy Key Achievements Execution of strategy delivering growth Key metrics FY 18 FY 19 Movement Operating earnings5 $123.2m $128.0m 3.9% 2.0% EPS growth per unit 2.1% NPI Growth1 Operating earnings5 per unit 30.51 cents 31.12 cents 2.0% Distributions per unit 28.20 cents 28.76 cent
Slide 5: CQR Convenience Strategy
Highlights and Strategy CQR Convenience Strategy Providing a resilient and growing income stream for our investors The leading owner and manager of convenience based retail • Maintain strong tenant relationships • Active portfolio curation • Strong and flexible balance sheet • Enhance the customer e
Slide 6: Delivery of CQR Convenience Strategy
Highlights and Strategy Delivery of CQR Convenience Strategy Providing a resilient and growing income stream for our investors • Stable occupancy at 98.1% • Portfolio cap rate of 6.18% • Completed $165 million institutional placement and unit purchase plan • NPI growth1 of 2.1% • Acquired Gateway Pl
Slide 7: Bateau Bay Square, NSW
Bateau Bay Square, NSW Campbellfield Plaza, Vic Charter Hall Retail REIT 2019 Full Year Results 7
Slide 8: Operating Earnings and Distributions
Financial Performance Operating Earnings and Distributions $m FY 18 FY 19 • FY19 operating earnings and distribution growth per unit of 2.0% in line with market guidance Net property income 158.0 146.4 • Total net income impacted by: Net income from property joint ventures 14.9 23.5 1.2 – timing of
Slide 9: Balance Sheet
Financial Performance Balance Sheet $m Jun 18 Jun 19 • Reduction in cash due to divestment proceeds in the prior period Cash 61 5 • Total property portfolio value increased by $189 million over the Investment properties1 2,419 2,449 12 month period due to: 1.2 Investment in property joint ventures2
Slide 10: Property Valuations
Rockdale Plaza, NSW Financial Performance Property Valuations • Entire portfolio1 was externally revalued during the year with 83% revalued at both December 2018 and June 2019 • Portfolio cap rate expanded 3bps to 6.18% over FY19 • Impact of cap rate expansion offset by income growth resulting in a
Slide 11: Capital Management
Financial Performance Capital Management Debt maturity profile1 • Raised $165 million equity to fund the acquisition of Rockdale Plaza $300m • No debt maturing until FY22 $250m • Refinanced $445 million1 of bank debt $200m $150m • Established new facilities with additional and existing banks maturin
Slide 12: Bateau Bay Square, NSW
Bateau Bay Square, NSW Campbellfield Plaza, Vic Charter Hall Retail REIT 2019 Full Year Results 12
Slide 13: Portfolio Summary
Operational Performance Asset value by state Portfolio Summary SA NT ACT 4% 1% 4% • Total MAT growth1 of 2.8% driven by supermarkets (+3.7%), VIC 14% mini-majors (+2.0%), and retail services (+1.8%) NSW • NPI growth2 resilient at 2.1% 48% • Portfolio weighted to eastern seaboard at 80% WA 15% • Expo
Slide 14: Portfolio Tenant Composition
Operational Performance Portfolio Tenant Composition Top 10 tenant customer groups2 • Major tenants Woolworths, Coles, Wesfarmers, and Aldi businesses Woolworths Limited 21.4% represent 46% of rental income Coles Group 15.2% • Coles is now the second largest tenant customer in the portfolio followin
Slide 15: Supermarkets
Operational Performance Supermarkets Supermarkets in turnover2 MAT growth1 • Supermarkets in turnover delivered 4.0% MAT growth1 56% 4.0% • Aldi representation increased from six to nine stores Supermarket performance Jun 18 Jun 19 • Completed eight supermarket new leases and extensions MAT growth1
Slide 16: Specialty Tenants
Operational Performance Specialty Tenants Specialty performance Jun 18 Jun 19 • 366 specialty leases were completed in the period MAT growth2 +1.4% +0.7% • Maintained positive leasing spread at +0.8% Sales productivity (per sqm) $9,536 $9,672 • 191 new leases (+2.4% leasing spread) Average gross ren
Slide 17: Acquisitions and divestments
Operational Performance Acquisitions and divestments • Recent acquisitions have further enhanced CQR’s portfolio quality • Since the beginning of FY18, CQR has disposed of 17 properties for a total of $387 million and during FY19, acquired three quality properties for a total of $275 million1 • Sinc
Slide 18: Sustainability
Operational Performance Sustainability Energy initiatives • Solar roll-out program across 14 sites well underway • Initial 6ha of solar panel installations1 will deliver a greener environment by generating 25% of the portfolio’s energy needs • Portfolio-wide LED lighting program nearing completion •
Slide 19: Tenant Customer Relationships
Bateau Bay Square, NSW Operational Performance Tenant Customer Relationships Positive increases in all areas of relationship satisfaction • Partnering annually with Monash University on Net Promoter Score survey and acting on customer feedback from FY18 • Engaged 1,060 tenant customers achieving a 9
Slide 20: Campbellfield Plaza, Vic
Secret Harbour Square, WA Campbellfield Plaza, Vic Charter Hall Retail REIT 2019 Full Year Results 20
Slide 21: Summary and outlook
Outlook Summary and outlook Resilience of portfolio focused on convenience retail • Supermarket sales continue to grow, underpinning customer visitation and financial performance • Focus on portfolio quality through continuation of the acquisition and divestment strategy • Strategy remains focused o
Slide 22: Bateau Bay Square, NSW
Bateau Bay Square, NSW Campbellfield Plaza, Vic Charter Hall Retail REIT 2019 Full Year Results 22
Slide 23: Annexures
Annexures 01 FY20 earnings bridge 07 Convenience focused portfolio 02 Reconciliation of statutory profit to operating earnings (FFO) and AFFO 08 Lease expiry profile 03 NTA per unit reconciliation 09 Property valuations 04 Investment in property joint ventures 10 Specialty sales performance 05 11 De
Slide 24: FY20 earnings bridge (cpu)
Annexure 1 FY20 earnings bridge (cpu) 1.2 (0.7) 31.6 – 31.7 cpu 0.4 (0.4) or 1.5%-2.0% growth per annum 0.1 31.7 31.7 31.7 31.1 FY19 EPU NPI NPI on divestments FY19 acquisitions Finance costs Other Forecast (incl. developments & JV's) (incl. equity raise) FY20 EPU The range in earnings guidance of 1
Slide 25: Reconciliation of statutory profit to operating earnings (FFO) and AFFO
Annexure 2 Reconciliation of statutory profit to operating earnings (FFO) and AFFO $m FY 19 cpu 1H FY19 2H FY19 FY 19 Statutory profit 53 Operating earnings (FFO) 15.61 15.51 31.12 Revaluation (increment) / decrement on investment properties1 3 Less: capital expenditure (1.23) (1.14) (2.37) Revaluat
Slide 26: NTA per unit reconciliation
Annexure 3 NTA per unit reconciliation $0.02 ($0.05) $4.22 $4.19 ($0.11) $4.08 Jun-18 NTA Operating earnings Acquisition Jun-19 NTA MtM on derivatives Jun-19 NTA (net of distribution) costs write-off (pre MtM movement) Charter Hall Retail REIT 2019 Full Year Results 26
Slide 27: Investment in property joint ventures – balance sheet breakdown
Annexure 4 Investment in property joint ventures – balance sheet breakdown $m FY 18 FY 19 Movement Investment properties 374 533 159 Borrowings (121) (141) (20) Net other (7) (9) (2) Investment in property joint ventures 246 383 137 Charter Hall Retail REIT 2019 Full Year Results 27
Slide 28: Debt maturities and covenants
Annexure 5 Debt maturities and covenants Limit Drawn ICR LVR Debt facility Rate Maturity ($m) ($m) Covenant Covenant JV debt – CHRP1 110 93 Floating Jun-22 2.0x 55.0% JV debt – CHRP2 50 49 Floating Nov-21 1.5x 60.0% $175m Jun-22 $150m Jul-22 Bank debt facilities 660 517 Floating $40m Nov-22 2.0x 50.
Slide 29: Redevelopments focus on enhancing convenience and essential services
Annexure 6 Redevelopments focus on enhancing convenience and essential services based on market demand Project State Project cost1 Yield 2 Completion Date Description Replaced existing IGA with an Aldi supermarket, additional specialty retail Wanneroo Central WA $11.5m 6.7% Sep 2018 and on-grade car
Slide 30: Convenience focused portfolio generating 140 million shopper visits annually
Annexure 7 Convenience focused portfolio generating 140 million shopper visits annually 38 Convenience assets Convenience Convenience • Single supermarket and complementary convenience specialty compared to Plus compared to neighbourhood1 sub-regional1 • Specialty productivity across the convenience
Slide 31: Lease expiry profile
Annexure 8 Major tenant expiry profile (by income) Lease expiry profile 100% 77.9% 80% 10.4 years 60% Major tenant WALE 40% 20% 5.3% 4.5% 5.5% 2.6% 2.2% 2.0% 6.5 years 0.0% 0% FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27+ Portfolio WALE Specialty and mini-major tenant expiry profile (by income) 3.3 years
Slide 32: Property valuations as at 30 June 2019
Annexure 9 Property valuations as at 30 June 2019 State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 19.7 6.25% Erindale Shopping Centre Wanniassa 100.0% 38.6 6.50% Manuka Terrace Manuka 100.0% 58.5 6.00% ACT Total 116.8 NSW Bateau Bay Squar
Slide 33: Property valuations as at 30 June 2019
Annexure 9 Property valuations as at 30 June 2019 State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW (cont.) Rutherford Marketplace Rutherford 50.0% 19.9 6.13% Salamander Bay Square Salamander Bay 50.5% 88.1 6.00% Singleton Square Singleton 100.0% 119.7 6.58% Sunnyside Mall
Slide 34: Property valuations as at 30 June 2019
Annexure 9 Property valuations as at 30 June 2019 State Property Location Ownership interest (%) Book Value ($m) Cap Rate VIC Bairnsdale Coles Bairnsdale 100.0% 18.2 5.50% Campbellfield Plaza Campbellfield 100% 74.5 6.00% Gateway Plaza Leopold 50% 65.0 6.00% Kyneton Shopping Centre Kyneton 100.0% 20
Slide 35: Specialty sales performance
Annexure 10 Specialty sales performance Specialty sales Proportion of Specialty sales Proportion of MAT growth1 MAT growth1 by state specialty sales by category specialty sales NSW & ACT 57% 1.2% Food and food catering 36% 1.4% WA 12% (0.5%) General retail 21% (1.3%) VIC 11% 2.8% Retail services 13%
Slide 36: Portfolio historical performance
Annexure 11 Portfolio historical performance Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun 19 Number of properties 78 73 76 74 72 71 66 58 58 58 Occupancy 98.5% 98.4% 98.4% 98.0% 98.0% 98.0% 97.8% 98.1% 98.1% 98.1% Same property NPI growth1, 2 3.4% 2.4% 2.4% 2.2% 2.4% 1.0% 1.3%
Slide 37: Glossary
Annexure 12 Glossary 2019 Full Year / FY 19 MtM 12 months from 1 July 2018 to 30 June 2019 Mark-to-market GLA NPI Gross lettable area (in square metres) Net property income Gross rent Occupancy cost Base rent and outgoings Calculated as the annualised gross rent divided by annual sales In Turnover T
Slide 38: Further information
Further information Greg Chubb Christine Kelly Phillip Cheetham Retail CEO and Head of Retail Finance and Head of Listed Investor Executive Director Deputy Fund Manager Relations Charter Hall Retail REIT Charter Hall Retail REIT Charter Hall T: +61 2 8651 9355 T: +61 2 8651 9401 T: +61 2 8651 9214 g
Slide 39: Office locations
Sydney Head Office Melbourne Brisbane Perth Adelaide Level 20, No.1 Martin Place Level 14, 570 Bourke Street Level 22, Northbank Plaza Level 5, St Georges Square Level 2, 80 Pirie Street Sydney, NSW, 2000 Melbourne VIC 3000 69 Ann Street 225 St Georges Terrace Adelaide SA 5000 Brisbane QLD 4000 Pert
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