Charter Hall Social Infrastructure Reit · ASX:CQE
Charter Hall Social Infrastructure Reit — FY2019 Earnings Presentation
32 slides from Charter Hall Social Infrastructure Reit's earnings presentation, Aug 7, 2019
Slide 1: 2019 Full Year Results
Charter Hall Education Trust 2019 Full Year Results 7 August 2019 CQE Centre, Charter Balwyn Hall North, Education VIC 2019 Full Year Results Trust
Slide 2: Agenda
1. Highlights and Strategy 2. Financial Results and Capital Management 3. Operational Performance Agenda 4. Childcare Industry Overview 5. Outlook 6. Appendices Nick Anagnostou Travis Butcher Head of Social General Manager Infrastructure Finance Charter Hall Education Trust 2019 Full Year Results 2
Slide 3: Highlights and Strategy
Highlights and Strategy Charter Hall Education Trust 2019 Full Year Results CQE Centre, Brighton East, VIC 3
Slide 4: Key Highlights
Highlights and Strategy Key Highlights Portfolio enhancement for Delivered 6% Successful capital raising and superior long term growth distribution growth stable balance sheet metrics Portfolio Management Asset Management Financial Performance $ 30.7m / 7.1% 9.92yrs / 100% $44.2m operating earnings
Slide 5: CQE's Performance
Highlights and Strategy CQE’s Performance Continuing to deliver stable income and capital growth Distribution growth CPU: FY15 – FY19 NTA growth $ per unit: FY15 – FY19 CAGR – 5.9% CAGR – 14.6% 18.0 +6% 3.5 +6% +7% +6% +11% 16.0 +5% +7% 3.0 +17% 14.0 2.5 +18% 12.0 +21% 10.0 2.0 CPU $ 8.0 1.5 6.0 1.0
Slide 6: Childcare Acquisition Activity & Pipeline
Highlights and Strategy Childcare Acquisition Activity & Pipeline CQE continues to resiliently grow portfolio quality and long term earnings Settled 19 Childcare assets during FY19 Geographical spread of FY19 acquisitions • 14 Development Sites Settled - End Value $85.2m NSW • Five Existing Centres
Slide 7: Our Strategy
Highlights and Strategy Our Strategy To provide investors with stable and secure income targeting resilient income and capital growth Broadening the mandate to include other Social Infrastructure property sub-sectors Asset characteristics that Improving covenant quality Providing additional options
Slide 8: Social Infrastructure Opportunities
Highlights and Strategy Social Infrastructure Opportunities Charter Hall transactional platform provides greater access to broader opportunities Childcare & Education • Childcare remains CQE's primary focus Education Services is Australia’s third largest export indusrty5 CQE Preference • • Increased
Slide 9: Brisbane City Council Bus Network Terminal
Highlights and Strategy Brisbane City Council Bus Network Terminal Acquisition of Social Infrastructure asset leased to Government on triple net lease and long WALE consistent with CQE’s strategy • Purchase price of $51.25 million (50% interest) - initial passing yield of 5.0% • Triple-net lease str
Slide 10: Financial Results and Capital Management
Financial Results and Capital Management Charter Hall Education Trust 2019 Full Year Results CQE Centre, Camberwell, VIC 10
Slide 11: Financial Results Summary and key financial metrics
Financial Results and Capital Management Financial Results Summary and key financial metrics • Operating earnings increase of $2.3m or 5.5% • EPU stable at 16.5 cpu impacted by asset divestments, equity raising and reduced income from development sites • DPU growth of 6.0% • Total assets of $1.19b (
Slide 12: Income Statement
Financial Results and Capital Management Income Statement • Operating earnings of $44.2m, an increase of 5.5% on the previous corresponding period (pcp) • Lease income has increased by $4.5m or 7.8% on the pcp — Increased income from property acquisitions ($3.1m), completed developments ($2.6m) and
Slide 13: Balance Sheet
Financial Results and Capital Management Balance Sheet • Strong balance sheet with available capacity to participate in future opportunities Balance Sheet for the Full Year Ended 30 June 2018 30 June 2019 • Successful completion of $120m institutional placement and $19.3m unit purchase plan at ($m)
Slide 14: Capital Management – Debt & Hedging
Financial Results and Capital Management Capital Management – Debt & Hedging As at 30 June 2018 30 June 2019 • Increased debt facilities by $50 million and increased/extended interest rate hedging positions resulting in lower cost of debt of 3.7% Debt Facilities Limit ($m) 347.0 397.0 Debt Drawn Amo
Slide 15: Operational Performance
Operational Performance Charter Hall Education Trust 2019 Full Year Results CQE Centre, Cheltenham, VIC 15
Slide 16: Property Portfolio — Asset Management
Operational Performance Property Portfolio — Asset Management Annual rent review profile by% of rent: FY20 – FY2215 100% • WALE increased to 9.9 years with 100% occupancy 90% • 10 market rent reviews achieved a 5.2% increase overall 80% 70% • Y-o-Y rental growth to 30 June 2019 of 2.3% 60% % • Rent
Slide 17: Childcare Property Portfolio - Valuations
Operational Performance Childcare Property Portfolio - Valuations Valuations No. Valued Value Movement Yield ($m) (%) (%) • 353 properties valued in FY19, 124 independent and 229 Directors’ valuations, resulting in a 4.0% increase on June 2018 carrying values NSW/ACT 76 205.9 2.6 5.9 VIC 63 235.0 4.
Slide 18: CQE Development Pipeline
Operational Performance CQE Development Pipeline Development pipeline including cost to complete as at 30 June 2019 Oran Park NSW Key development & pipeline metrics Bayswater WA Corinda, QLD Black Forest SA As at 30 June 2019 Fulham SA Kensington WA Total Developments 3118 Bonshaw VIC Bardon, QLD To
Slide 19: Childcare Industry Overview
Childcare Industry Overview Charter Hall Education Trust 2019 Full Year Results CQE Centre, Northcote, VIC 19
Slide 20: Childcare Industry Overview
Childcare Industry Overview Childcare Industry Overview FY19 demand absorbed previous years’ supply Demand Supply • Net child demand growth for FY19 is calculated to have exceeded supply by ~105 • Stronger supply growth in the second half of FY19 lifted the annual growth rate for new centres19 (calc
Slide 21: Childcare Market Demand Drivers
Childcare Industry Overview Actual and forecast population 0-4 year olds: 2001 – 2003 (F) Childcare Market Demand Drivers 2.0 1.9 0-4 Child Population (Millions) CCS providing increased affordability 1.8 1.7 1.6 1.5 1.4 1.3 1.2 Population Growth 1.1 1.0 2001 2006 2011 2016 (F) 2021 (F) 2026 (F) 2031
Slide 22: Early Learning Real Estate - Demand and Supply
Childcare Industry Overview Early Learning Real Estate - Demand and Supply Demand exceeded Supply for FY19 • Child demand is calculated to have grown by 4.6% for FY19. This exceeded net • Taking into account fee increases, Childcare is now approximately 8.0% more affordable supply growth for FY19 by
Slide 23: Outlook
Outlook Charter Hall Education Trust 2019 Full Year Results CQE Centre, Wyndham Vale, VIC 23
Slide 24: Outlook
Outlook Childcare industry conditions • Major childcare indicators of affordability, female labour force participation, child participation and utilisation rates together with daily fees have strengthened • Increased demand absorbing previous years’ new supply • CCS funding has had a net positive ef
Slide 25: Appendices
Appendices Charter Hall Education Trust 2019 Full Year Results CQE Centre, Highett, VIC 25
Slide 26: Portfolio Overview
Appendices Portfolio Overview As at 30 June 19 No. Value ($m) % of Total Property Passing Yield (%) • WALE of 9.9 years Assets • Majority of leases are triple net leases - net effective rents NSW/ACT 78 218.1 19.8 5.8 QLD 124 328.2 29.8 6.3 • Typical lease term from commencement; 15 years plus two f
Slide 27: Profit & NTA Contributions
Appendices Profit & NTA Contributions Operating earnings: FY18 to FY19 60 • Improvement in FY19 operating earnings due to: — increased income from acquisitions ($3.1m) / completed developments ($2.6m) / organic 50 income growth of 2.3% ($1.3m increase) less impact of disposals ($2.5m) and lower site
Slide 28: Statutory Profit Reconciliation
Appendices Statutory Profit Reconciliation • Key reconciling items between operating earnings and statutory profit are: Statutory Profit Reconciliation 30 June 2018 ($m) 30 June 2019 ($m) — Yield compression and rental growth combine to contribute $36.6m in property Operating Earnings 41.9 44.2 reva
Slide 29: FY19 Portfolio Activity
Appendices FY19 Portfolio Activity Acquisitions And Disposals No. Of Properties Valuation ($m) Note Acquisitions - Childcare 19 118.735 5 existing centres and 14 development sites Brisbane City Council Bus Network Terminal – 50% Acquisitions – Other Social Infrastructure Assets 1 51.336 joint owners
Slide 30: Key Statistics
Appendices Key Statistics Financial & Capital Management Metrics FY15 FY16 FY17 FY18 FY19 NTA ($) 1.82 2.14 2.51 2.78 2.96 NTA Growth (%) 21.3 17.6 17.3 10.8 6.5 DPU (c) 12.8 13.4 14.2 15.1 16.0 DPU Growth (%) 6.7 4.7 6.0 6.3 6.0 Gearing (%) 29.5 26.6 27.7 29.1 23.1 Weighted Average Cost Of Debt (%)
Slide 31: Contact Information
Appendices Contact Information Nick Anagnostou Travis Butcher Lula Liossi Philip Cheetham Head of Social Infrastructure General Manager Finance Investor Relations Manager Head of Listed Investor Relations Charter Hall Charter Hall Charter Hall Charter Hall T: +61 3 9903 6179 T: +61 3 9903 6171 T: +6
Slide 32: 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
Charter Hall Social Infrastructure Reit — FY2019 Earnings Presentation on 6ix