Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2014 Earnings Presentation
40 slides from Charter Hall Retail Reit's earnings presentation, Feb 14, 2014
Slide 1: 2014 Half Year Results
Charter Hall Retail REIT For personal use only 2014 Half Year Results
Slide 2: Agenda
Charter Hall Retail REIT Agenda For personal use only Scott Dundas Philip Schretzmeyer Fund Manager Deputy Fund Manager 1 Half Year Results 2 Portfolio Investments 3 Australian Operational Performance 4 Financial Performance 5 Strategy and Outlook 1
Slide 3: Half Year Results
For personal use only Half Year Results
Slide 4: Financial results – half year ended December 2013
Charter Hall Retail REIT Half Year Results Financial results – half year ended 31 December 2013 For personal use only Key metrics 1H 14 1H 13 Movement Statutory profit $20.6m $15.8m +30.4% Statutory profit per unit 5.98 cents 5.08 cents +17.7% Operating earnings1 $51.1m $43.8m +16.7% Operating earni
Slide 5: Highlights
Charter Hall Retail REIT Highlights For personal use only Strategy Achievements Growing the Australian • Acquired three properties for $193.2 million at average initial yield of 7.7% business • Completed $77 million of redevelopments and commenced $59 million of new projects • 16% increase in value
Slide 6: Portfolio Investments
Portfolio Investments For personal use only
Slide 7: Revaluations
Charter Hall Retail REIT Revaluations Australian portfolio For personal use only Six months to Dec 2013 Freestanders Neighbourhood Sub-regional Total Number of properties 19 42 16 77 Dec 2013 valuation (A$m) 187.0 934.7 803.1 1,924.8 Prior book value1 (A$m) 184.4 922.2 795.2 1,901.8 Movement in book
Slide 8: Offshore Update
Charter Hall Retail REIT Offshore Update For personal use only Germany • Chemnitz redevelopment completed in October 2013 • Both properties subject to external valuation at December 2013 with combined A$20 million (14%) devaluation reflecting the continued deterioration of market conditions in the E
Slide 9: Disciplined Investment Strategy
Charter Hall Retail REIT Disciplined Investment Strategy For personal use only Urbis CQR Typical Average Average CQR’s Strategy Anchor Occupancy Occupancy Typical GLA Tenants Cost Cost • Neighbourhood and Woolworths 12.9% 8.6% sub-regional Neighbourhood < 10,000sqm supermarket anchored Coles Woolwor
Slide 10: Australian Acquisitions
Charter Hall Retail REIT Australian Acquisitions Completed acquisitions For personal use only Price $m Yield Settlement Secret Harbour, WA 33.2 7.8%1 Jul 2013 Southgate Plaza, SA 60.0 7.5% Oct 2013 Rosebud Plaza, Vic. 100.0 7.8% Nov 2013 Total 193.2 7.7% Secret Harbour, WA Southgate, SA 1. On the sh
Slide 11: Australian Acquisitions: Case Study – Rosebud Plaza Acquisition
Charter Hall Retail REIT Australian Acquisitions Case Study – Rosebud Plaza Acquisition For personal use only • Strong competitive advantage with no other sub-regional centre within the main trade area • Potential for CQR to add value through re-leasing opportunities and longer term redevelopment •
Slide 12: Australian Operational Performance
Australian Operational Performance For personal use only
Slide 13: Australian Portfolio Summary
Charter Hall Retail REIT Australian Portfolio Summary For personal use only Same Other key metrics Summary by GLA Property NOI Asset Type # (‘000sqm) Occupancy1 Growth2 • Specialty rent growth of 3.3%: Sub-regional – 7.5% on 29 new leases (44 non-comparable shopping 16 241.1 98.7% 3.8% leasing deals
Slide 14: Australian Portfolio: Anchor tenants
Charter Hall Retail REIT Australian Portfolio Anchor tenants For personal use only Turnover rent and sales performance Portfolio composition 10% Comparable food & liquor sales growth Top 5 tenants by annual base rent 9% 8% Woolworths Woolworths Ltd, 26.4% 7% 6% Wesfarmers, 26.2% Coles 5% 4% The Reje
Slide 15: Australian Portfolio: Specialty tenants
Charter Hall Retail REIT Australian Portfolio Specialty tenants For personal use only % of Occupancy Sales Specialty occupancy cost of 9.2% Summary by Category ABR Cost1 Growth1 • Average specialty gross rent $770/sqm Services 8% 12.4% 0.5% • Sales productivity of $8,354/sqm Food catering 8% 12.4% 0
Slide 16: Major redevelopment projects
Charter Hall Retail REIT Australian Portfolio Major redevelopment projects For personal use only Project Value Yield Completion ($m) Completed Projects Singleton Square, NSW 61.7 8.3% Aug 13 South Hedland, WA 15.7 13.6% Oct 13 Total 77.4 9.4% Current Projects Orange, NSW 5.7 9.1% Apr 14 Caboolture,
Slide 17: Financial Performance
Financial Performance For personal use only
Slide 18: Operating Earnings and Distributions
Charter Hall Retail REIT Operating Earnings and Distributions For personal use only • Operating earnings per unit excluding Germany increased over the year: A$m Dec 13 Dec 12 – Australian property income up following acquisitions, Australian net property income 57.4 52.3 completion of redevelopments
Slide 19: Balance Sheet
Charter Hall Retail REIT Balance Sheet For personal use only Australian balance sheet Dec 13 Jun 13 • Equity raised during the year combined with offshore sales enabled the REIT to capitalise on Total assets 1,864 1,625 acquisition and redevelopment opportunities Total debt (590) (516) • Growth in a
Slide 20: Debt Maturity Profile
Charter Hall Retail REIT Debt Maturity Profile For personal use only Debt Maturity Profile at 31 December 2013 • $670 million of debt facilities repaid or refinanced in the FY14 period, taking advantage of stronger debt markets FY15 • Next debt maturity in December 2014 – German facility with assets
Slide 21: Strategy and Outlook
For personal use only Strategy and Outlook
Slide 22: Australian Retail Sector
Charter Hall Retail REIT Australian Retail Sector Supermarket anchored shopping centres For personal use only Retail sales growth • Consistent with the REIT’s investment rationale food based spending growth continues to outpace growth in discretionary spending • The REIT continues to be well positio
Slide 23: Strategy
Charter Hall Retail REIT Strategy For personal use only Maintain and enhance the REIT’s Australian portfolio through focus on: • Non-discretionary retail spending • Maximising property returns through active asset management, including: – Working with tenants to enhance the shopping experience for o
Slide 24: FY14 Outlook
Charter Hall Retail REIT FY14 Outlook For personal use only From 1 July 2013 the REIT’s German operations have not been included in the REIT’s operating earnings: Barring unforeseen events the REIT’s FY14 guidance for operating earnings excluding German operations is between 29.5 and 30.0 cents per
Slide 25: Questions
For personal use only Questions
Slide 26: Annexures
For personal use only Annexures
Slide 27: Annexures
Charter Hall Retail REIT Annexures For personal use only 1 Detailed Earnings Slide 27 2 Balance Sheet & NTA Reconciliation Slide 28-29 3 Australian Debt Maturities & Covenants Slide 30 4 Hedging Profile Slide 31 5 Capital Expenditure & Development Pipeline Slide 32-33 6 Portfolio Detail Slide 34-35
Slide 28: Detailed earnings
Charter Hall Retail REIT Annexure 1 Detailed earnings For personal use only (All Values In A$m) Dec 2013 Dec 2013 Dec 2013 Dec 2012 Statutory Unrealised And Operating Operating Share of profits from investment in JV’s Profit Other Items Earnings Earnings Net property income 7.5 (0.1) 7.4 9.7 Propert
Slide 29: Balance Sheet
Charter Hall Retail REIT Annexure 2 Balance Sheet For personal use only Australia Offshore Dec 2013 Jun 2013 Total assets 1,864 140 2,004 2,034 Total debt (590) (120) (710) (811) Other liabilities (71) (5) (76) (102) Net assets 1,203 15 1,218 1,121 Units on issue (millions) 363 338 NTA per unit ($)
Slide 30: NTA reconciliation
Charter Hall Retail REIT Annexure 2 NTA reconciliation For personal use only Australia +0.07 +0.01 $3.32 +0.01 +0.02 +0.12 $3.09 NTA at 30 June 2013 Settlement of Polish Other offshore sales Equity raise Valuation uplift Retained operating NTA at 31 Dec 2013 sale earnings Offshore $0.23 (0.12) (0.02
Slide 31: Australian Debt Maturities & Covenants
Charter Hall Retail REIT Annexure 3 Australian Debt Maturities & Covenants For personal use only 31 December 2013 Limit Drawn Rate Maturity Financial Covenants Covenant Actual (All Values CQR Share) (A$m) (A$m) A$CMBS 250.0 250.0 Floating Sep-15 n/a n/a n/a LVR 55.0% 39.6% AUS JV debt – CHRP1 82.0 8
Slide 32: Interest rate risk management
Charter Hall Retail REIT Annexure 4 Interest rate risk management For personal use only Australia 2H 14 FY15 FY16 FY17 Weighted average hedge book (A$m) 490 490 415 350 Weighted average debt margin1 1.6% 1.6% 1.6% 1.6% Weighted average hedge rate 2.9% 3.0% 3.2% 3.6% 1. Excludes line fee on undrawn d
Slide 33: Capital expenditure
Charter Hall Retail REIT Annexure 5 Capital expenditure For personal use only Total Maintenance and Region (A$m, CQR Share) Maintenance Lease Incentives Incentives Redevelopment Australia 1H 14 3.2 1.3 4.5 24.2 FY13 6.1 1.8 7.9 60.9 FY12 4.6 2.1 6.7 20.5 New Zealand 1H 14 - - - - FY13 0.1 - 0.1 - FY
Slide 34: Major redevelopment projects pipeline
Charter Hall Retail REIT Annexure 5 Major redevelopment projects pipeline For personal use only FY13 1H14 2H14 FY15 FY16 Carnes Hill, $10.0m Mount Hutton, $25.0m Secret Harbour, $29.0m South Hedland (stage 2), $23.0m Gladstone, $1.7m Mackay, $4.9m Caboolture, $15.9m Lansell Square, $37.8m Orange, $5
Slide 35: Australia – anchor tenant lease expiry
Charter Hall Retail REIT Annexure 6 Australia – anchor tenant lease expiry For personal use only 80% 71.8% 70% 60% 50% 40% 30% 20% 8.4% 5.9% 6.0% 10% 0.0% 3.0% 3.2% 0.2% 1.5% 0% 1H 14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22+ Excludes properties under redevelopment 34
Slide 36: Australia – specialty tenant lease expiry
Charter Hall Retail REIT Annexure 6 Australia – specialty tenant lease expiry For personal use only 30% 25% 20% 17.3% 17.4% 15.3% 15.8% 12.6% 15% 9.8% 10% 4.8% 3.6% 5% 3.4% 0% 1H 14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22+ Excludes properties under redevelopment 35
Slide 37: Glossary
Charter Hall Retail REIT Annexure 7 Glossary For personal use only • ABR: Annual base rent – base rent only, excludes outgoings and turnover rent • GLA: Gross lettable area • Gross rent: Base rent and outgoings • MAT: Moving annual turnover – calculated as a sum of rolling 12 month sales • Occupancy
Slide 38: Further information
Charter Hall Retail REIT Further information For personal use only Scott Dundas Fund Manager +61 2 8295 1009 scott.dundas@charterhall.com.au Philip Schretzmeyer Deputy Fund Manager +61 2 8295 1023 philip.schretzmeyer@charterhall.com.au Nick Kelly Head of Investor Relations +61 2 8908 4028 nick.kelly
Slide 39: Important Notice
Charter Hall Retail REIT Important Notice For personal use only Charter Hall Retail Management Limited ABN 46 069 709 468; AFSL 246996 (“CHRML”) has issued this presentation in its capacity as the responsible entity of Charter Hall Retail REIT ARSN 093 143 965 (“CQR” or “the REIT”). This presentatio
Slide 40: For personal use only
For personal use only
Charter Hall Retail REIT — H1 FY2014 Earnings Presentation on 6ix