Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2013 Earnings Presentation
41 slides from Charter Hall Retail Reit's earnings presentation, Feb 15, 2013
Slide 1: Charter Hall Retail REIT 2013 Half Year Results
For personal use only Charter Hall Retail REIT 2013 Half Year Results 1
Slide 2: Important Notice
For personal use only Important Notice 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 presentation has been prepared for g
Slide 3: Presenters and agenda
For personal use only Scott Dundas John Courtney Philip Schretzmeyer Fund Manager Head of Asset General Manager Management (Retail) Finance 1 Half Year Results 2 Portfolio Investments 3 Australian Operational Performance 4 Financial Performance 5 Strategy and Outlook 3
Slide 4: Half Year Results
For personal use only 01 Half Year Results
Slide 5: Financial results – six months ended December 2012
For personal use only Half Year Results Financial results – six months ended 31 December 2012 Earnings Statutory profit: $15.8m; 5.08 cpu Operating earnings1: $45.9m; 14.76 cpu Distribution: $44.4m; 13.30 cpu Payout ratio2: 90.1% Balance Sheet Net tangible assets: $1,106m or $3.31 pu Por
Slide 6: Highlights
For personal use only Highlights Growing Australian Acquired three sub-regional properties for $101 million at average initial yield of 9.6% business Construction underway on $97 million of redevelopment projects, with several major projects due to complete in 2013 Australian portfolio increas
Slide 7: Geographic Analysis
For personal use only Geographic Analysis “Predominant focus on Australia” 31 DECEMBER 2012 AUSTRALIA POLAND GERMANY OTHER1 TOTAL NTA (A$m) 1,022 42 10 32 1,106 NTA per unit ($) 3.05 0.13 0.03 0.10 3.31 Proportion of total NTA 92% 4% 1% 3% 100% Balance sheet gearing 30.6% 72.5% 89.1% 22.0% 38.7% Pro
Slide 8: Portfolio Investments
For personal use only 02 Portfolio Investments
Slide 9: Revaluations
For personal use only Revaluations AUSTRALIA SIX MONTHS TO DEC 2012 FREESTANDERS NEIGHBOURHOOD SUB-REGIONAL HOUSEHOLD OFFSHORE TOTAL RETAIL PORTFOLIO Number of properties 19 41 14 1 16 91 December 2012 valuation (A$m) 182.3 871.0 564.4 27.5 413.3 2,058.5 Prior book value1 (A$m) 182.4 872.8 562.4 27.
Slide 10: European Exit Strategy
For personal use only European Exit Strategy Poland Occupancy stable at 96.5%, same property NOI decline of 2.6% reflecting challenging leasing conditions Polish assets are being marketed for sale, potential purchaser currently in due diligence Targeting completion of sale by end of FY13 Germa
Slide 11: Australian Acquisitions
For personal use only Australian Acquisitions Disciplined investment strategy Strategy: Selectively acquire supermarket anchored shopping centres with strong capital and income growth potential Sector: Neighbourhood and sub-regional supermarket anchored Asset value: $20 million - $100 million
Slide 12: Portfolio Acquisition and Equity Raising
For personal use only Portfolio Acquisition and Equity Raising “Successful equity raising drives further growth for the REIT” In October 2012 the REIT contracted to acquire three sub-regional shopping centres in NSW Acquisition was funded from a fully underwritten institutional placement of $100
Slide 13: Australian Operational Performance
For personal use only 03 Australian Operational Performance
Slide 14: Australian Portfolio Summary
For personal use only Australian Portfolio Summary Grocery anchored portfolio continues to achieve earnings growth Sub-regional NOI growth reflecting strong anchor turnover and specialty rent growth Specialty rental rate growth of 3.7%: — 3.7% on 113 new leases — 3.7% on 52 renewals Carnes Hil
Slide 15: Australian Portfolio: Anchor tenants
For personal use only Australian Portfolio Anchor tenants Turnover rent and sales performance Portfolio composition 10% Comparable food & liquor sales growth Top 5 tenants by annual base rent 9% 8% Half year sales at Dec-12 = A$14.3bn Woolworths Woolworths Ltd, 28% 7% 6% Coles Wesfarmers, 25% (inclu
Slide 16: Australian Portfolio: Specialty tenants
For personal use only Australian Portfolio Specialty tenants SUMMARY BY % OF ABR OCCUPANCY SALES Specialty occupancy cost of 8.9% CATEGORY COST1 GROWTH1 Services 8% 11.8% 7.0% Average specialty gross rent $728/sqm Food catering 7% 11.3% 0.8% Sales productivity of approx $8,100/sqm Pharmacy 6% 7.
Slide 17: Australian Portfolio: Redevelopment projects
For personal use only Australian Portfolio Redevelopment projects “Pipeline of board approved redevelopment projects with solid forecast returns” PROJECT VALUE YEAR ONE FORECAST ($M) YIELD COMPLETION Construction underway Allenstown, Qld 16.9 9.0% Apr 13 Murwillumbah, NSW 3.3 9.9% May 13 Singleton,
Slide 18: Financial Performance
For personal use only 04 Financial Performance
Slide 19: Earnings and Distributions
For personal use only Earnings and Distributions A$M DEC 2012 DEC 2011 Operating earnings continues to benefit from Australian NOI growth and proactive capital Statutory profit/(loss) 15.8 (15.7) management Unrealised property valuation losses 24.2 14.3 Statutory profit primarily impacted by pro
Slide 20: Balance Sheet
For personal use only Balance Sheet AUSTRALIA POLAND GERMANY OTHER DEC 2012 JUN 2012 A$m A$m A$m A$m A$m A$m Total assets 1,592 240 110 41 1,983 1,888 Total debt (487) (174) (98) (9) (768) (763) Other liabilities (83) (24) (2) - (109) (112) Net assets 1,022 42 10 32 1,106 1,013 Units on issue (milli
Slide 21: Debt Maturity Profile
For personal use only Debt Maturity Profile No FY13 debt maturities Increased multi-currency facility limit by $50 million at no increase in the all in cost 1H 13 weighted average interest cost of 5.8%, decreased from 6.3% in FY12 Liquidity of $154 million – costs to complete Board approved
Slide 22: Strategy and Outlook
For personal use only 05 Strategy and Outlook
Slide 23: Australian Retail Sector
For personal use only Australian Retail Sector Supermarket anchored shopping centres Retail sales growth Occupancy cost by asset type — Growth in food sales continue to outpace other retail — Occupancy cost for CQR shopping centres compares spending, further reinforcing investment rationale favourab
Slide 24: Strategy
For personal use only Strategy Maintain and enhance the REIT’s Australian portfolio through focus on: — Non-discretionary retail spending — Enhancing property returns via vertically integrated Charter Hall management platform — Proactive equity and debt management Complete reweighting to Austral
Slide 25: FY13 Outlook
For personal use only FY13 Outlook Charter Hall Retail REIT is well positioned with the majority of its portfolio consisting of high quality resilient Australian neighbourhood and sub-regional shopping centres FY13 operating earnings barring unforeseen events is unchanged and forecast to be 29.5 –
Slide 26: Questions
For personal use only Questions
Slide 27: Annexures
For personal use only Annexures 1 Detailed Earnings Slide 28 2 NTA Reconciliation Slide 29 3 Debt & Covenants Slide 30-31 4 Hedging Profile Slide 32-33 5 Capital Expenditure & Development Pipeline Slide 34-35 6 Non-Core Offshore Portfolio Slide 36 7 Portfolio Detail Slide 37-39 8 Glossary Slide 40 2
Slide 28: Detailed Earnings
For personal use only Annexure 1 Detailed Earnings ALL VALUES IN A$M DEC 2012 DEC 2012 DEC 2012 DEC 2011 STATUTORY UNREALISED AND OPERATING OPERATING Share of profits from investment in JV’s PROFIT OTHER ITEMS EARNINGS EARNINGS Net property income 9.7 - 9.7 8.3 Property valuation gains 3.2 (3.2) - -
Slide 29: NTA Reconciliation
For personal use only Annexure 2 NTA Reconciliation +0.01 (0.02) $3.06 $3.05 AUSTRALIA NTA at 30 June 2012 Offshore disposals and Acquisition costs incurred NTA at 31 December 2012 reweighting to Australia (0.01) (0.05) $0.32 $0.26 OFFSHORE NTA at 30 June 2012 Offshore disposals and Unrealised prope
Slide 30: Debt Maturities
For personal use only Annexure 3 Debt Maturities 31 DECEMBER 2012 REGION LIMIT DRAWN DRAWN RATE MATURITY (ALL VALUES CQR SHARE) (NATURAL M’S) (NATURAL M’S) (A$M) Total FY13 - AUS JV debt – Nunawading AUS 13.8 13.8 13.8 Floating Nov-13 Total FY14 13.8 Poland EUR 127.4 127.4 161.9 Floating Jul-14 Germ
Slide 31: Covenants
For personal use only Annexure 3 Covenants 31 DECEMBER 2012 FINANCIAL (ALL VALUES CQR LIMIT DRAWN UNUSED MATURITY COVENANT ACTUAL COVENANTS SHARE) Australia A$m A$m A$m Security pool gearing 60.0% 39.5% Multi-Currency Facility 385.0 262.3 122.7 Oct-16 Security pool ICR 1.85x 2.54x Gearing1 65.0% 40.
Slide 32: Income Hedging
For personal use only Annexure 4 Income Hedging INCOME HEDGING 2H 13 FY14 FY15 Avg. proportion income hedged USD 100% 100% 50% Avg. FX forward rate (0.76) USD 0.76 0.76 0.76 Avg. proportion income hedged EUR 20% 13% 2% Avg. FX forward rate (0.55) EUR 0.55 0.54 0.54 Lake Macquarie Fair, NSW 32
Slide 33: Interest Rate Risk Management
For personal use only Annexure 4 Interest Rate Risk Management Australia (Total debt - A$573.4m) 2H 13 FY14 FY15 FY16 Average hedged debt 72% 72% 72% 59% Weighted average debt margin 1.9% 1.9% 1.9% 1.9% Weighted average hedge rate 4.9% 4.9% 4.7% 4.6% United States (Total debt - A$41.4m) 2H 13 FY14 F
Slide 34: Capital Expenditure
For personal use only Annexure 5 Capital Expenditure REGION (A$M, CQR SHARE) MAINTENANCE LEASE INCENTIVES TOTAL MAINTENANCE REDEVELOPMENT AND INCENTIVES Australia 1H 13 2.0 0.6 2.6 31.8 FY12 4.6 2.1 6.7 20.5 FY11 5.2 1.1 6.3 8.7 New Zealand 1H 13 - - - - FY12 - - - - FY11 0.1 - 0.1 - United States 1
Slide 35: Redevelopment projects pipeline
For personal use only Annexure 5 Redevelopment projects pipeline FY12 1H 13 2H 13 FY14 FY15 Wanniassa, $20.8m Mackay, $15.2m Caboolture, $13.1m Lansell Square, $30.6m Mount Hutton, $9.0m Carnarvon, $0.8m Carnes Hill, $4.7m South Hedland, $15.2m Rockhampton, $16.9m Mareeba, $1.2m Orange, $5.4m Murwil
Slide 36: United States and New Zealand
For personal use only Annexure 6 United States and New Zealand NEW ALL VALUES REPRESENT CQR SHARE WHOLLY OWNED – US REGENCY JV – US TOTAL US TOTAL ZEALAND Number of properties 3 4 7 2 9 CQR ownership 100% 75% n/a 50% n/a Book values (m’s) US$22.2 US$45.3 US$67.5 NZ$8.2 n/a Net equity (A$m) 13.4 11.9
Slide 37: Portfolio Summary
For personal use only Annexure 7 Portfolio Summary AUSTRALIA POLAND GERMANY OTHER DECEMBER 2012 JUNE 2012 Number of properties 75 5 2 9 91 91 Number of tenancies 1,536 347 93 115 2,091 2,108 Valuation (A$m) 1,645.2 232.6 109.3 71.4 2,058.5 1,977.5 Performance metrics Same property NOI growth1 3.0% (
Slide 38: Australia – Anchor Tenant Lease Expiry
For personal use only Annexure 7 Australia – Anchor Tenant Lease Expiry % Base Rent Expiring 66.6% 70% 60% 50% 40% 30% 20% 7.6% 8.3% 7.0% 10% 4.8% 3.6% 0.4% 0.2% 1.5% 0% 2H 13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+ Lake Macquarie Fair, NSW Excludes properties under redevelopment 38
Slide 39: Australia – Specialty Tenant Lease Expiry
For personal use only Annexure 7 Australia – Specialty Tenant Lease Expiry % Base Rent Expiring 30% 25% 20% 17.6% 16.5% 15.3% 15.1% 15% 12.0% 9.6% 10% 6.6% 4.8% 5% 2.5% 0% 2H 13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+ Lake Macquarie Fair, NSW Excludes properties under redevelopment 39
Slide 40: Glossary
For personal use only Annexure 8 Glossary 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 cost: Calculated as the
Slide 41: Further information
For personal use only Further information: Scott Dundas Fund Manager +61 2 8295 1009 scott.dundas@charterhall.com.au Philip Schretzmeyer General Manager Finance +61 2 8295 1023 philip.schretzmeyer@charterhall.com.au Nick Kelly Head of Investor Relations +61 2 8908 4028 nick.kelly@charterhall.com.au
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