Charter Hall Social Infrastructure Reit · ASX:CQE
Charter Hall Social Infrastructure Reit — H1 FY2020 Earnings Presentation
28 slides from Charter Hall Social Infrastructure Reit's earnings presentation, Feb 12, 2020
Slide 1: Charter Hall Social Infrastructure REIT 2020 Half Year Results
Charter Hall Social Infrastructure REIT 2020 Half Year Results 12 February 2020 Charter Hall Social Infrastructure REIT – 2020 Half Year Results CQE Centre, Camp Hill, QLD
Slide 2: Agenda
1. Highlights and Strategy 2. Financial Results and Capital Management 3. Operational Performance 4. Childcare Industry Overview Agenda 5. Outlook 6. Appendices Travis Butcher Scott Martin Fund Manager Head of Finance - Diversified Charter Hall Social Infrastructure REIT – 2020 Half Year Results
Slide 3: Highlights and Strategy
Highlights and Strategy CQE Centre, South Morang, VIC Charter Hall Social Infrastructure REIT – 2020 Half Year Results 3
Slide 4: Key Highlights
Highlights and Strategy Key Highlights Gross Assets NTA Per Unit Undrawn Debt Capacity2 $ 1.3bn ― 7.3% asset growth $ 3.05 ― $0.09 per unit or 3.0% increase $ 179.5m ― Increased facility by $103m2 in February 2020 ― $97.2m1 of acquisitions ― $21.3m increase in valuations ― Gearing of 24.9% ― 6.1% po
Slide 5: Our Strategy
Highlights and Strategy Our Strategy To provide investors with stable and secure income and capital growth ― Enhancing income sustainability and resilience by improving the quality of tenants and leases within a diversified portfolio ― Portfolio curation through acquisitions, developments and dispos
Slide 6: CQE Asset Preferences
Highlights and Strategy CQE Asset Preferences Childcare & Education ― Childcare remains CQE's primary focus ― Education services is Australia’s third largest export industry 1 CQE Preference ― Increased demand for high quality facilities across the expanding education sector Government ― Mandatory G
Slide 7: Financial Results and Capital Management
Financial Results and Capital Management CQE Centre, Baldivis, WA Charter Hall Social Infrastructure REIT – 2020 Half Year Results CQE Centre, Camberwell, VIC 7
Slide 8: Income Statement
Financial Results and Capital Management Income Statement ― Operating earnings of $25.5m, an increase of 20.3% on the previous corresponding period (pcp) ― Net property income increased by $2.6m or 8.8% on the pcp driven by ― $3.2m increase in lease income ($0.7m organic rental growth, $2.1m from ne
Slide 9: Balance Sheet
Financial Results and Capital Management Balance Sheet ― NTA of $3.05 representing a 3% increase from 30 June 2019 Balance Sheet as at 30 June 2019 ($m) 31 Dec 2019 ($m) ― Strong balance sheet with available capacity to participate in future opportunities Cash 8.9 4.6 ― Asset growth of 7.3% driven b
Slide 10: Capital Management – Debt & Hedging
Financial Results and Capital Management Capital Management – Debt & Hedging Debt & Hedging Summary as at 30 June 2019 31 Dec 2019 Debt Facilities Limit ($m) 397.0 397.0 ― Facilities increased to $500m1 in February 2020 providing undrawn capacity of $179.5m Debt Drawn Amount ($m) 273.5 320.5 to full
Slide 11: Operational Performance
Operational Performance CQE Centre, Killarney Heights, QLD Charter Hall Social Infrastructure REIT – 2020 Half Year Results 11
Slide 12: Portfolio Summary
Operational Performance Portfolio Summary June 2019 Dec 2019 Number of operating properties 391 391 ― Agreed 40 new 20 year leases with Goodstart on improved terms1 for both parties and 5 new 15 year leases with other tenants Number of tenants 34 30 ― WALE increased to 11.71 from 9.9 years Property
Slide 13: Portfolio Summary
Operational Performance Portfolio Summary Annual rent review profile by % of rent: FY20 – FY221 100% 90% ― New leases with fixed or minimum increases 80% ― Reliance on CPI based reviews reduced to 41% in FY21 70% ― 1 market review completed at 3%, 7 in negotiation and a further 2 remaining for FY20
Slide 14: Portfolio Summary — Acquisitions & Disposals
Operational Performance Portfolio Summary — Acquisitions & Disposals ― Strategic preference for existing centres and turnkey assets for immediate fund Acquisitions Settled Contracted Total accretion Existing Centre Acquisitions 7 8 15 ― New acquisitions leased to quality tenants1 with strong lease c
Slide 15: Childcare Property Portfolio - Valuations
Operational Performance Childcare Property Portfolio - Valuations ― For FY20 and beyond, adoption of a 2-year independent re-valuation cycle Valuations No. Valued Value ($m) Yield (%) Mvmt (%) (previously 3 years) Freehold – Aust 296 869.6 5.9 2.6 ― 361 properties valued in HY20, resulting in a 2.8%
Slide 16: CQE Development Pipeline
Operational Performance CQE Development Pipeline 14 developments forecast to complete in CY20 Bonshaw VIC Key development & pipeline metrics Kensington WA Corinda QLD As at 31 Dec 2019 Middle Park QLD Wynbrook VIC Total Developments 301 Bayswater WA Fulham SA Average SEIFA Rating 7.3 Murrumbeena VIC
Slide 17: Childcare Industry Overview
Childcare Industry Overview CQE Centre, Williams Landing, VIC Charter Hall Social Infrastructure REIT – 2020 Half Year Results CQE Centre, Northcote, VIC 17
Slide 18: Childcare Market Demand
Childcare Industry Overview Childcare Market Demand Participation rate: June 2009 – June 20192 CCS providing increased usage and affordability 55.0% 50.0% ― New Child Care Subsidy (CCS) introduced in July 2018 is a positive for the industry through increased usage and overall affordability 45.0% ― L
Slide 19: Childcare Market Supply
Childcare Industry Overview Childcare Market Supply ― As at 31 December 2019, there are 7,8941 LDC centres in Australia which increased supply by 319 (4.2%) for CY19 ― Rolling annual growth since December 2015 in LDC centres has been 3.7%1 consistent with the growth in children using LDC centres of
Slide 20: Outlook
Outlook CQE Centre, Balwyn North, VIC Charter Hall Social Infrastructure REIT – 2020 Half Year Results 20
Slide 21: Outlook
Outlook Outlook ― 8 existing centre acquisitions comprising $45.9m are expected to settle in FY20 ― 14 developments are expected to be completed during 2020: ― 9 in 2nd half of FY20 ― 5 in 1st half of FY21 ― Attractive pipeline of childcare and social infrastructure opportunities Reaffirming previou
Slide 22: Appendices
Appendices CQE Centre, Gledswood Hills, NSW Charter Hall Social Infrastructure REIT – 2020 Half Year Results 22
Slide 23: Portfolio Overview
Appendices Portfolio Overview ― Majority of leases are triple net leases - net effective rents As at 31 Dec 19 No. Value ($m) % of Total Property Passing Yield (%) Assets ― Typical lease term from commencement; 15 years plus two five year options NSW/ACT 78 229.6 19.4 5.6 ― Most leases have a five y
Slide 24: Profit & NTA Contributions
Appendices Profit & NTA Contributions Operating earnings: HY19 to HY20 30 — Improvement in HY20 operating earnings due to: — $3.5m increase in net property income driven by 25 — $0.7m of organic rental growth; 20 — $3.0m increase in rent from net acquisitions/developments/disposals inclusive of the
Slide 25: Statutory Profit Reconciliation
Appendices Statutory Profit Reconciliation — Key reconciling items between operating earnings and statutory profit are: Statutory Profit Reconciliation 31 Dec 2018 ($m) 31 Dec 2019 ($m) — Yield compression and rental growth combine to contribute $21.3m in property Operating Earnings 21.2 25.5 revalu
Slide 26: Key Statistics
Appendices Key Statistics Financial & Capital Management Metrics FY15 FY16 FY17 FY18 FY19 HY20 NTA ($) 1.82 2.14 2.51 2.78 2.96 3.05 NTA Growth (%) 21.3 17.6 17.3 10.8 6.5 3.0 DPU (c) 12.8 13.4 14.2 15.1 16.0 8.35 DPU Growth (%) 6.7 4.7 6.0 6.3 6.0 4.41 Gearing (%) 29.5 26.6 27.7 29.1 22.5 24.9 Weig
Slide 27: Contact Information
Appendices Contact Information Travis Butcher Scott Martin Lula Liossi Philip Cheetham Fund Manager Head of Finance – Diversified Investor Relations Manager Head of Listed Investor Relations Charter Hall Charter Hall Charter Hall Charter Hall T: +61 3 9903 6171 T: +61 2 8651 9214 T: +61 3 9903 6157
Slide 28: 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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