Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2019 Earnings Presentation
40 slides from Charter Hall Retail Reit's earnings presentation, Feb 20, 2019
Slide 1: Charter Hall Retail REIT FY19 half year results
For personal use only 20 FEBRUARY 2019 Charter Hall Retail REIT FY19 half year results
Slide 2: Agenda
Agenda For personal use only 01 Highlights and Strategy 02 Financial Performance Greg Chubb Retail CEO and Executive Director 03 Operational Performance 04 Outlook Christine Kelly Head of Retail Finance and Deputy Fund Manager 05 Annexures FY19 half year results 1
Slide 3: Highlights and Strategy
Campbellfield Plaza, Vic For personal use only Highlights and Strategy FY18 Half Year Results
Slide 4: Key Achievements
Key Achievements For personal use only Half year ended 31 December 2018 2.1% NPI growth1 2.0% EPS growth per unit 1.9% Leasing spreads2 2.7% Supermarket MAT growth3 2.5% Majors MAT growth3 1.5% Total MAT growth1 Key metrics 1H 19 1H 18 Movement Operating earnings4 $62.8m $61.9m +1.5% Operating earni
Slide 5: REIT Strategy
REIT Strategy For personal use only The leading owner and manager of convenience based retail KEY DRIVERS Active asset Enhance Prudent capital management portfolio quality management Maintain strong tenant relationships Active portfolio curation Strong and flexible balance sheet Enhance the customer
Slide 6: Strategy Execution
Strategy Execution For personal use only Active asset Enhance Prudent capital management portfolio quality management - Stable occupancy at 98.1% - Portfolio cap rate tightened to 6.14% - Weighted average debt maturity of 5.3 years - Strengthened NPI growth 1 to 2.1% - Valuation increase of $15 mill
Slide 7: Financial Performance
Brickworks Marketplace, SA For personal use only Financial Performance FY18 Half Year Results
Slide 8: Operating Earnings and Distributions
Operating Earnings and Distributions For personal use only 1H 19 operating earnings and distribution growth per unit of 2% $m 1H 19 1H 18 in line with market guidance Net property income 73.4 80.1 Net income from property joint ventures 11.2 7.5 Total net income decreased 3.4%, predominantly due to:
Slide 9: Balance Sheet
Balance Sheet For personal use only Reduction in cash due to divestment proceeds in the prior period $m Dec 18 Jun 18 Cash 10 61 Total property portfolio decreased by $25 million over the Investment properties1 2,235 2,419 6 month period due to: Investment in property joint ventures2 387 246 - dives
Slide 10: Property Valuations
Property Valuations For personal use only Total ($m) Entire portfolio externally revalued1 30 June 2018 portfolio value 2,793 Portfolio capitalisation rate tightened marginally to 6.14% Net transactions (88) Valuation uplift driven by income growth Redevelopments and additions 48 Valuation uplift 15
Slide 11: Capital Management
Capital Management No debt maturing until FY22 For personal use only Refinanced $335 million of bank debt due to mature in FY21 New facilities with additional and existing banks maturing in FY23 and FY24 Significant cash and undrawn facilities available to fund transactions and capital investment Ex
Slide 12: Operational Performance
Highfields Village, Qld For personal use only Operational Performance FY18 Half Year Results
Slide 13: Portfolio Summary
Portfolio Summary Asset value by state 2 For personal use only Total MAT growth¹ of 1.5% driven by supermarkets (+2.2%) and SA NT ACT retail services (+3.6%) 4% 4% 1% NPI growth1 has improved 30bps to 2.1% VIC 13% Exposure to Victoria has increased 5% over the last eight months WALE remains stable f
Slide 14: Portfolio Tenant Composition
Portfolio Tenant Composition For personal use only Top 10 retail groups2 Major tenants Woolworths, Coles, Wesfarmers, and Aldi businesses represent 48% of rental income Woolworths 22.8% Coles is now the second largest retail group in the portfolio following the demerger from Wesfarmers Coles 15.7% F
Slide 15: Supermarkets
Supermarkets For personal use only 74% of major tenant rental income generated by supermarkets Supermarkets in turnover delivered 2.7% MAT growth1 55% Supermarkets in turnover1 2.2% MAT growth 2 Acquisition of Campbellfield Plaza increases Aldi supermarkets representation across the portfolio to eig
Slide 16: Specialty Tenants
Specialty Tenants Rental income by tenant type Specialty MAT by category For personal use only General retail Mini-majors Non sales Food and food catering 20% 9% reporting 1 37% 20% Sales Retail services reporting 13% specialties 71% Homewares Apparel 1% 10% Jewellery Leisure Mobile 4% 8% phones 7%
Slide 17: Redevelopment progress
Redevelopment progress For personal use only Wanneroo Central Lake Macquarie Square WA NSW - $23 million expansion (CQR share $11.5 million) completed and - $60 million project to integrate Mount Hutton Plaza with opened September 2018 Lake Macquarie Fair - Replaced an existing IGA supermarket with
Slide 18: Acquisition of Campbellfield Plaza, Vic
Acquisition of Campbellfield Plaza, Vic Property details For personal use only Acquisition settled 31 January 2019 Location 14km north Melbourne CBD Consistent with CQR’s strategy of owning convenience based Ownership 100% assets dominant within their relevant catchments with strong income growth op
Slide 19: Sustainability
Sustainability Solar energy For personal use only 500 kW solar PV installed to date under an own and operate model 10,300 kW of solar PV generation will be delivered under a Power Purchase Agreement (PPA) model across 13 initial sites in 2019 Industry leading PPA providers1 build, own, operate and m
Slide 20: Outlook
Campbellfield Plaza, Vic For personal use only Outlook FY18 Half Year Results
Slide 21: Summary and Outlook
Summary and Outlook For personal use only Portfolio positioned for growth – Supermarkets sales continue to remain strong, underpinning customer visitation and financial performance – Actively manage the portfolio for convenience, curating the tenancy mix towards food and non -discretionary retail –
Slide 22: Annexures
Gateway Plaza, Vic For personal use only Annexures FY18 Half Year Results
Slide 23: Annexures contents
Annexures For personal use only Reconciliation of statutory profit to 01 operating earnings (FFO) and AFFO 07 Convenience focused portfolio 02 NTA per unit reconciliation 08 Lease expiry profile 03 Investment in joint ventures 09 Property valuations 04 Debt maturities and covenants 10 Specialty sale
Slide 24: Reconciliation of statutory profit to Operating Earnings (FFO) and AFFO
Annexure 1 Reconciliation of statutory profit to Operating Earnings (FFO) and AFFO For personal use only 1H 19 ($m) 1H 19 (cpu) Statutory profit 55.5 13.78 Revaluation increment on investment properties (9.8) (2.43) Net loss on derivative financial instruments 10.1 2.52 Loss on disposal of investmen
Slide 25: NTA per unit reconciliation
Annexure 2 For personal use only NTA per unit reconciliation ($0.04) $0.02 $0.02 $4.22 $4.22 NTA at 30 Jun 2018 Operating earnings Derivative MtM Property revaluation NTA at 31 Dec 2018 (net of distributions) movement uplift 1 1. Net of transaction costs FY19 half year results 24
Slide 26: Investment in property joint ventures – balance sheet breakdown
Annexure 3 Investment in property joint ventures – balance sheet breakdown For personal use only $m 1H 19 1H 18 Movement Investment properties 533 387 146 Borrowings (140) (137) (3) Net other (6) (4) (2) Investment in property joint ventures 387 246 140 FY19 half year results 25
Slide 27: Debt maturities and covenants
Annexure 4 Debt maturities and covenants For personal use only Limit Drawn ICR Post refinance initiatives ($m) ($m) Rate Maturity Covenants LVR Covenant Actual JV debt – CHRP1 110.0 91.6 Floating Jun-22 ICR 2.0x LVR 55.0% 34.1% JV debt – CHRP2 49.9 49.3 Floating Nov-21 ICR 1.5x LVR 60.0% 44.0% $175m
Slide 28: Capital transactions management
Annexure 5 Capital transactions management For personal use only Strategy of enhancing the REIT’s portfolio quality by recycling out of lower growth properties into higher growth properties Requirement that all assets are the dominant convenience based shopping centre within their catchment Acquisit
Slide 29: Current redevelopments
Annexure 6 Current redevelopments For personal use only Forecast Project State Project cost1 Yield2 completion Description Status Replaced existing IGA with an Aldi Wanneroo Central WA $11.5m 6.7% Sep 2018 supermarket, additional specialty retail Complete and on-grade car parking Coles opened Januar
Slide 30: Convenience focused portfolio
Annexure 7 Convenience focused portfolio generating 130 million shopper visits annually For personal use only 38 Convenience assets 20 Convenience Plus assets - Single supermarket and complementary convenience specialty - Multiple supermarkets and/or supermarket and a discount department store with
Slide 31: Lease expiry profile
Annexure 8 Lease expiry profile For personal use only Major tenant expiry profile (by income) 90% 79.5% 80% 10.6 Major tenant WALE 70% 60% years 50% 40% 30% 20% 5.2% 4.9% 5.6% 10% 0.0% 0.0% 3.2% 1.6% 0% FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26+ 6.5 Portfolio WALE years Specialty tenant expiry profile
Slide 32: Property valuations as at December 2018
Annexure 9 Property valuations as at 31 December 2018 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 18.8 5.75% Erindale Shopping Centre Wanniassa 100.0% 40.2 6.50% Manuka Terrace Manuka 100.0% 61.3 5.75% ACT total
Slide 33: Property valuations as at December 2018
Annexure 9 Property valuations as at 31 December 2018 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW (cont.) Tamworth Square Tamworth 100.0% 51.6 6.75% Tumut Coles Tumut 100.0% 11.1 5.75% West Ryde Marketplace West Ryde 50.0% 28.0 5.25% NSW total 1,
Slide 34: Property valuations as at December 2018
Annexure 9 Property valuations as at 31 December 2018 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate VIC Bairnsdale Coles Bairnsdale 100.0% 17.9 5.50% Gateway Plaza Leopold 50% 62.5 6.00% Kyneton Shopping Centre Kyneton 100.0% 20.8 5.75% Lansell Square
Slide 35: Specialty sales performance
Annexure 10 Specialty sales performance For personal use only Specialty sales Proportion of MAT growth1 Specialty sales Proportion of MAT growth1 by state specialty sales by category specialty sales NSW & ACT 56% 0.9% Food and food catering 37% 0.9% WA 11% 0.0% General retail 20% (1.0%) VIC 8% 0.9%
Slide 36: Portfolio historical performance
Annexure 11 Portfolio historical performance For personal use only Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Number of properties 78 73 76 74 72 71 66 58 58 Occupancy 98.5% 98.4% 98.4% 98.0% 98.0% 98.0% 97.8% 98.1% 98.1% Same property NPI growth 3.4% 2.4% 2.4% 2.2% 2.4% 1.0% 1.3
Slide 37: Glossary
Annexure 12 Glossary For personal use only 1H 19 Six months from 1 July 2018 to 31 December 2018 GLA Gross lettable area Gross rent Base rent and outgoings In Turnover Tenant is paying a percentage of sales in rent (turnover rent) MAT Moving annual turnover – calculated as a sum of rolling 12 month
Slide 38: Further information
Further information For personal use only Greg Chubb Christine Kelly Phillip Cheetham Retail CEO and Executive Director Head of Retail Finance and Head of Listed Investor Relations Deputy Fund Manager Charter Hall Retail REIT Charter Hall Retail REIT Charter Hall T: +61 2 8651 9355 T: +61 2 8651 940
Slide 39: Important notice
Important notice Charter Hall Retail Management Limited ABN 46 069 709 468; AFSL exclude all liability for any loss or damage suffered or incurred by any For personal use only 246996 (“CHRML”) has issued this presentation in its capacity as the person as a result of their reliance on the information
Slide 40: Office addresses
For personal use only Sydney Perth Level 20, No.1 Martin Place 225 St Georges Terrace Sydney, NSW, 2000 Perth, WA, 6000 T+ +61 2 8651 9000 T+ +61 8 9269 5900 Melbourne Adelaide Level 12, 570 Bourke Street, Level 2, 80 Pirie Street, Melbourne,Vic, 3000 Adelaide, SA, 5000 T: +61 3 9903 6100 T: +61 8 8
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