Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 2020 Earnings Presentation
54 slides from Charter Hall Retail Reit's earnings presentation, Feb 20, 2020
Slide 1: Charter Hall Retail REIT 2020 Half Year Results and Equity Raising
For personal use only Charter Hall Retail REIT 2020 Half Year Results and Equity Raising 20 February 2020 Not for release to US wire services or distribution in the United States Charter Hall Retail REIT 2020 Half Year Results
Slide 2: Important Notice
Important Notice This presentation ("Presentation") has been prepared by and is the sole responsibility of Charter Hall Retail Management This presentation and the information contained in it is provided for information purposes only and is not an offer or invitation or Limited (ABN 46 069 709 468,
Slide 3: Agenda
For personal use only 1 Highlights and Strategy 2 Financial Performance 3 Operational Performance Agenda 4 Equity Raising 5 Outlook 6 Annexures Greg Chubb Christine Kelly Retail CEO and Head of Retail Finance and Executive Director Deputy Fund Manager Charter Hall Retail REIT 2020 Half Year Results
Slide 4: Highlights and Strategy
Highlights and Strategy For personal use only Campbellfield Plaza, Vic Charter Hall Retail REIT 2020 Half Year Results Pacific Square, NSW
Slide 5: Key Achievements
Highlights and Strategy Key Achievements Execution of strategy delivering growth For personal use only 4.1% Key metrics 1H 19 1H 20 Movement 2.2% NPI Growth1 Leasing spreads2 Operating earnings $62.8m $70.2m 11.8% Operating earnings per unit 15.61 cents 15.88 cents 1.7% 4.5% 3.6% Distributions per u
Slide 6: CQR Convenience Strategy
Highlights and Strategy CQR Convenience Strategy Providing a resilient and growing income stream for our investors For personal use only The leading owner and manager of convenience based retail Key Drivers Enhance portfolio Active asset Prudent capital quality management management • Active portfol
Slide 7: Delivery of CQR Convenience Strategy
Highlights and Strategy Delivery of CQR Convenience Strategy Providing a resilient and growing income stream for our investors For personal use only Enhance portfolio Active asset Prudent capital quality management management • Portfolio cap rate of 6.11% reflects stable • Stable occupancy at 98.1%
Slide 8: BP Long WALE Convenience Portfolio Acquisition
Highlights and Strategy BP Long WALE Convenience Portfolio Acquisition • CQR acquired 30% of a new Charter Hall managed partnership, alongside CLW1 and For personal use only CHC1, which acquired a 49% interest in the BP Portfolio. BP Australia Pty Ltd retains a 51% interest • High quality portfolio
Slide 9: Pacific Square Maroubra and Bass Hill Plaza Acquisition
Highlights and Strategy Pacific Square Maroubra and Bass Hill Plaza Acquisition For personal use only • CQR acquired 20% interest in Pacific Square Maroubra, NSW and Bass Hill Plaza, NSW with existing investor Mercer1 retaining 80% • Both centres are well established and strong trading Sydney metrop
Slide 10: Financial Performance
Financial Performance For personal use only Campbellfield Plaza, Vic Charter Hall Retail REIT 2020 Half Year Results Bateau Bay Square, NSW
Slide 11: Operating Earnings and Distributions
Financial Performance Operating Earnings and Distributions For personal use only • 1H 20 operating earnings and distribution growth per unit of 1.7% $m 1H 19 1H 20 in line with market guidance Net property income 73.4 76.0 • Total net income growth delivered by: Net income from property joint ventur
Slide 12: Balance Sheet
Financial Performance Balance Sheet For personal use only • Total property portfolio value increased by $247 million over the 6 $m Jun 19 Dec 19 month period due to: Cash 5 11 – acquisitions exceeding divestments by $217 million Investment properties1 2,449 2,370 – valuation movement totalling $30 m
Slide 13: Property Valuations
Financial Performance Property Valuations For personal use only • 53% portfolio1 was externally revalued at 31 December 2019 • Portfolio composition changes have led to portfolio cap rate compression • Like for like shopping centre portfolio cap rate remains stable $m Total 30 June 2019 portfolio va
Slide 14: Capital Management
Financial Performance Capital Management • No debt maturing until FY22 Key metrics Jun 19 Dec 19 For personal use only Weighted average cost of debt1 3.0% 2.7% • Established new $50 million of bank debt facilities with existing Weighted average debt maturity 5.0 years 4.4 years bank Weighted average
Slide 15: Operational Performance
Operational Performance For personal use only Campbellfield Plaza, Vic Charter Hall Retail REIT 2020 Half Year Results Pacific Square, NSW
Slide 16: Portfolio Summary
Operational Performance Portfolio Summary Portfolio value by state SA TAS ACT 0% • Acquired interest in a convenience based retail portfolio of 225 4% For personal use only 4% assets leased to BP with 20 year WALE VIC 13% • Acquired interest in two high quality Sydney metro assets NSW • Portfolio WA
Slide 17: Portfolio Tenant Composition
Operational Performance Portfolio Tenant Composition For personal use only • Major tenants Woolworths, Coles, Wesfarmers, Aldi and BP Top 10 tenant customer groups1 businesses represent 49% of rental income • BP is now the fourth largest tenant customer at 6.1% of rental Woolworths Group 19.0% incom
Slide 18: Supermarkets
Operational Performance Supermarkets Supermarkets in turnover2 MAT growth1 58% 4.5% For personal use only • Supermarkets in turnover delivered 4.5% MAT growth1 • Aldi representation increased from nine to eleven stores Supermarket performance Jun 19 Dec 19 • Completed three supermarket lease extensi
Slide 19: Specialty Tenants
Operational Performance Specialty Tenants For personal use only • 222 specialty leases were completed in the period Specialty performance Jun 19 Dec 19 MAT growth2 +0.7% +2.1% • Leasing spreads improved over the period to +4.1% Sales productivity (per sqm) $9,672 $9,817 • 99 new leases (+4.6% leasin
Slide 20: Sustainability
Singleton, NSW Operational Performance Sustainability For personal use only Environment • 6.7MW solar installations completed at nine assets with the solar roll-out program under PPA now increased to 27 assets • Solar roll-out program will deliver 35% of CQR’s energy needs • 8.3MWh batteries current
Slide 21: Equity Raising
Equity Raising For personal use only Bayside, VIC Mosman, NSW Campbellfield Plaza, Vic Charter Hall Retail REIT 2020 Half Year Results Secret Harbour Bayside, VIC Square, WA
Slide 22: Equity raising overview
Equity raising and acquisition Equity raising overview For personal use only • CQR has entered into an agreement to acquire a further 17.5%1 interest in a Charter Hall managed Partnership which owns a 49% interest in a national portfolio of 225 long WALE convenience retail properties leased to BP Au
Slide 23: Equity raising overview (continued)
Equity raising and acquisition Equity raising overview (continued) For personal use only • Fixed issue price of $4.81 per unit, representing a: – 4.8% discount to the last close price of $5.05 on 19 February 2020 Pricing – 3.5% discount to the 5 day VWAP of $4.98 on 19 February 2020 – 6.6% FY20 fore
Slide 24: Portfolio impact
Equity raising and acquisition Portfolio impact For personal use only Top 10 tenant customer groups1,3 (post acquisition) Portfolio snapshot Dec-19 Post-Acquisition1 Major tenants Woolworths, Coles, BP, Wesfarmers and Aldi businesses to represent in excess of 51% of rental income Portfolio value ($m
Slide 25: Indicative timetable
Equity raising and acquisition Indicative timetable For personal use only Event Date (2020) Record date for UPP 7:00pm, Wednesday, 19 February Trading halt and announcement of the transaction Thursday, 20 February Placement bookbuild Thursday, 20 February Trading of units recommences on the ASX Frid
Slide 26: Balance sheet – December 2019 with pro forma impact
Balance sheet – 31 December 2019 with pro forma impact of transactions For personal use only Pro forma as at 31-Dec-19 Pro forma as at 31-Dec-19 Post balance date Acquisition and $m Actual as at 31-Dec-19 (pre Acquisition and (post Acquisition and adjustments1 Placement Placement) Placement) Cash 11
Slide 27: Outlook
Outlook For personal use only Charter Hall Retail REIT 2020 Half Year Results Bateau Bay Square, NSW
Slide 28: Summary and outlook
Outlook Summary and outlook Resilience of portfolio focused on convenience retail For personal use only • Supermarket sales continue to grow, underpinning customer visitation and financial performance • Focus on portfolio quality through continuation of the acquisition and divestment strategy • Stra
Slide 29: Annexures
Annexures For personal use only Gateway Plaza, Vic Campbellfield Plaza, Vic Charter Hall Retail REIT 2020 Half Year Results Salamander Bay Square, NSW
Slide 30: Annexures contents
Annexures 01 08 For personal use only FY20 earnings bridge Property valuations 02 Reconciliation of statutory profit to operating earnings (FFO) and AFFO 09 Specialty sales performance 03 NTA per unit reconciliation 10 Shopping centre portfolio historical performance 04 Investment in property joint
Slide 31: FY20 earnings bridge (cpu)
Annexure 1 FY20 earnings bridge (cpu) For personal use only 1.1 (2.7) 0.4 (0.1) 2.0 31.80 31.53 31.8 or 31.1 2.3% growth per annum 29.54 FY19 EPU NPI Divestments FY19 & FY20 Acquisitions Finance Costs Divestments FY20 EPU (contracted & settled) (incl. equity raises) (forecast) The earnings guidance
Slide 32: Reconciliation of statutory profit to operating earnings (FFO) and AFFO
Annexure 2 Reconciliation of statutory profit to operating earnings (FFO) and AFFO For personal use only $m 1H 20 ($m) Statutory profit 66.7 Revaluations (net)1 (5.1) Net loss on derivative financial instruments 1.5 Divestment costs 2.5 Other 4.6 Operating earnings (FFO) 70.2 Less: capital expenditu
Slide 33: NTA per unit reconciliation
Annexure 3 NTA per unit reconciliation For personal use only $0.01 ($0.01) $0.01 $4.09 $4.08 Jun-19 NTA Operating earnings Valuation uplift Other 1 Dec-19 NTA (net of distribution) 1 Includes derivative movements and disposal costs Charter Hall Retail REIT 2020 Half Year Results 33
Slide 34: Investment in property joint ventures and associates
Annexure 4 Investment in property joint ventures and associates– balance sheet breakdown For personal use only $m Jun 19 Dec 19 Movement Shopping Centre investment properties 533 601 68 BP Portfolio investment properties nil 258 258 Borrowings (141) (290) (149) Net other (9) (8) 1 Investment in prop
Slide 35: Debt maturities and covenants
Annexure 5 Debt maturities and covenants For personal use only Debt facility (ownership interest) Limit Drawn Rate Maturity ($m) ($m) JV debt – CHRP1 110 96 Floating Jun-22 JV debt – CHRP2 55 50 Floating Aug-24 JV debt – CHRP6 21 20 Floating Dec-22 JV debt – BP Portfolio 135 124 Floating Dec-24 $50m
Slide 36: Convenience focused portfolio
Annexure 6 Convenience focused portfolio generating 150 million shopper visits annually For personal use only 22 Convenience assets Convenience Convenience • Single supermarket and complementary convenience specialty compared to Plus compared to neighbourhood1 sub-regional1 • Specialty productivity
Slide 37: Lease expiry profile as at December 2019
Annexure 7 Lease expiry profile as at 31 December 2019 For personal use only Major tenant expiry profile (by income) 11.1 years 100% 87.5% Major tenant WALE 80% 60% 6.9 years 40% Portfolio WALE 20% 0.8% 2.0% 2.4% 2.3% 3.6% 1.4% 0.0% 0% FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27+ 3.2 years Specialty and
Slide 38: Property valuations as at December 2019
Annexure 8 Property valuations as at 31 December 2019 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 19.7 6.00% Manuka Terrace Manuka 100.0% 58.7 6.00% ACT Total 78.4 NSW Bass Hill Plaza Bass Hill 20.0% 18.9 6.00% B
Slide 39: Property valuations as at December 2019
Annexure 8 Property valuations as at 31 December 2019 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW (cont.) Rutherford Marketplace Rutherford 50.0% 20.5 6.13% Salamander Bay Square Salamander Bay 50.5% 89.1 6.00% Singleton Square Singleton 100.0% 1
Slide 40: Property valuations as at December 2019
Annexure 8 Property valuations as at 31 December 2019 For personal use only State Property Location Ownership interest (%) Book Value ($m) Cap Rate VIC Campbellfield Plaza Campbellfield 100.0% 76.8 6.00% Gateway Plaza Leopold 50.0% 65.5 6.00% Lansell Square Kangaroo Flat 100.0% 95.0 6.75% Rosebud Pl
Slide 41: Specialty sales performance
Annexure 9 Specialty sales performance For personal use only Specialty sales Proportion of Specialty sales Proportion of MAT growth1 MAT growth1 by state specialty sales by category specialty sales NSW & ACT 61% 1.7% Food and food catering 37% 2.1% WA 10% 4.8% General retail 22% 3.7% VIC 10% 1.2% Re
Slide 42: Shopping centre portfolio historical performance
Annexure 10 Shopping centre 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 Jun 19 Dec 19 Number of properties 78 73 76 74 72 71 66 58 58 58 55 Occupancy 98.5% 98.4% 98.4% 98.0% 98.0% 98.0% 97.8% 98.1% 98.1% 98.1% 98.1% Same prope
Slide 43: BP portfolio overview
Annexure 11 BP portfolio overview Geographically diversified portfolio of 225 properties with 87% 1 located in metropolitan locations For personal use only QLD 62 properties Metro 35 WA Commuter metro 10 44 properties Non-metro 17 Metro 34 Commuter metro 2 NT NSW Non-metro 8 QLD 77 properties 28% Me
Slide 44: Key risks, selling restrictions and underwriting agreement
Annexure 12 Key risks, selling restrictions and underwriting agreement associated with equity raise Investors should carefully consider the risks factors described below. Additional risk factors and uncertainties that are not known to the Responsible Entity, Charter Hall Retail Management Limited (C
Slide 45: Key risks: Rental Income
Annexure 12 Key risks, selling restrictions and underwriting agreement associated with equity raise Rental Income Distributions made by CQR are largely dependent on the rents received from tenants across the portfolio and expenses incurred during operations, which may be affected by a number of fact
Slide 46: Key risks: Property valuation risk
Annexure 12 Key risks, selling restrictions and underwriting agreement associated with equity raise Property valuation risk The value of each property held by CQR, and those it may hold in the future, may fluctuate due to a number of factors affecting both the property market generally or CQR's prop
Slide 47: Key risks: Interest rates and derivatives
Annexure 12 Key risks, selling restrictions and underwriting agreement associated with equity raise Interest rates To the extent that interest rates are not hedged, unfavourable movements in interest rates relating to existing debt facilities could lead to increased interest expense. This could impa
Slide 48: Key risks: Change of responsible entity
Annexure 12 Key risks, selling restrictions and underwriting agreement associated with equity raise Change of responsible entity For personal use only If the Responsible Entity is replaced as the responsible entity of CQR by an entity that is not a subsidiary of the Charter Hall Group, there is the
Slide 49: Key risks: Foreign investment risks
Annexure 12 Key risks, selling restrictions and underwriting agreement associated with equity raise Foreign investment risks For personal use only U.S. tax status CQR may be treated as a “passive foreign investment company,” for U.S. federal income tax purposes, in which case US Unit holders will be
Slide 50: Selling restrictions: Switzerland
Annexure 12 Key risks, selling restrictions and underwriting agreement associated with equity raise Switzerland For personal use only The Units may not be distributed in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility
Slide 51: Underwriting arrangement
Annexure 12 Key risks, selling restrictions and underwriting agreement associated with equity raise Underwriting arrangement J.P. Morgan Securities Australia Limited and UBS AG, Australia Branch will be acting as joint lead managers, bookrunners and underwriters to the Placement (Underwriters). The
Slide 52: Glossary
Annexure 13 Glossary For personal use only 2020 Half Year / 1H20 MAT 6 months from 1 July 2019 to 31 December 2019 Moving annual turnover calculated as a sum of rolling 12 month sales CY MtM 12 months to 31 December 2019 Mark-to-market GLA NPI Gross lettable area (in square metres) Net property inco
Slide 53: Further information
Further information For personal use only 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 940
Slide 54: For personal use only
For personal use only 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
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