Slide 1: CRF FY12 Annual Results
CRF FY12 Annual Results 28th August 2012
Slide 2: Introduction
I t d ti Introduction Steven Sewell
Slide 3: Agenda
Agenda 1. Business Overview Steven Sewell (Managing Director and CEO) 2. Financial Performance Marlon Teperson (Chief Financial Officer) 3. Strategy Review Steven Sewell 4 Property Results 4. Mark Wilson (Chief Operating Officer) 5. Outlook Steven Sewell 6. Q&A CRF FY12 Annual Results 3
Slide 4: Business Overview
B i Business O Overview i Steven Sewell
Slide 5: The Short History of CRF
The Short History of CRF • CRF was formed by aggregation in December 2011 – Stapled security comprising CER, CAWF and DHT – Approved by overwhelming majority of all stakeholders at meetings on 22 November 2011 and approved by the Court on 1 December 2011 – $3.4 billion of equity (Top 10 ASX-Listed R
Slide 6: Positive Events Since Aggregation December 2011
Positive Events Since Aggregation December 2011 Relative CRF Share Price and Daily Volume Daily Volume CRF S&P/ASX 100 Acc Index S&P/ASX 200 A-REIT Acc Index 125.0 300 Announcements of conditional settlement of Inclusion into S&P/ASX class actions and sale of 50% interests in three 100 Index, S&P/AS
Slide 7: Has Led to..."Normalisation" of Security Register
Has Led to...“Normalisation” of Security Register Approximate Register Breakdown 30 December 2011 31 July 2012 Non-traditional REIT Investors Institutions Other Non-traditional REIT Investors Institutions Other 6% 4% 15% 25% 79% 71% Non-traditional REIT investors comprises Former CNP Headstock Lende
Slide 8: Financial Performance
Fi Financial i lPPerformance f Marlon Teperson
Slide 9: FY12 Result Highlights
FY12 Result Highlights Net Statutory Loss Underlying Profit $123.2 $222 9 million $222.9 million Due to one off costs 7 months earnings and 1.5% associated with restructure higher than Supp PDS forecast Balance Sheet Gearing 26.3% NTA per security $2.21 Reduction from 34.6% as at Dec-11 Post convers
Slide 10: Financial Results
Financial Results Actual Supp PDS • $222.9m Statutory Loss includes Forecast 2 Segment Income Statement1 for period several non-recurring restructuring ended: 30 June 2012 30 Jun 2012 ($m) ($m) items: Direct Property Investment Income 191.5 190.6 – $203m fair value al e adj adjustment stment on CATS
Slide 11: Financial Position
Financial Position Segment Balance Sheet1 as at: 30 Jun 2012 • Substantially strengthened balance sheet Assets ($m) and liquidity position at 30 June 2012 Cash 182.4 Direct Property 3,804.3 – Balance Sheet Gearing down to 26.3% Managed Fund Investments 487.3 • Reduced from 34.6% as at 31 December In
Slide 12: Core Debt Facility Restructure
Core Debt Facility Restructure • Substantial deleveraging from asset sales provided the opportunity to restructure CRF’s core debt facility • Credit approved indicative terms received from core lenders, subject to: – Finalisation of documentation – Satisfaction of conditions precedent – Material adv
Slide 13: Revised Debt/Hedging Profile
Revised Debt/Hedging Profile CRF Debt & Hedging Maturity Profile as at 30 June 2012 $m Current Hedging (inc. fixed rate debt) Drawn Debt as at 30 June 2012 Proposed Restructure of Core facility 2,000 1,800 , 1,600 1,400 1,200 1,000 800 600 400 200 0 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16
Slide 14: Solid Capital Fundamentals
Solid Capital Fundamentals Strong capital position with inherent growth opportunities forecast to substantially lift return on equity New debt facilities Capital management Net assets of with all CY13 opportunities $3.3 billion maturities covered remain Underlying Over $500 Potential Class Actions I
Slide 15: Strategy Review
St t Strategy R Review i Steven Sewell
Slide 16: Vision and Ambition
Vision and Ambition To be a leading Australian shopping centre REIT Our core, • Australian shopping centres • Internally managed unique • National platform • Weighted towards non-discretionary retail position: • Fully vertically integrated • Sub-regional & convenience core Simple ambitions for our v
Slide 17: Strategy Review Outcomes
Strategy Review Outcomes Strategic Foundation Optimise imperatives (period to Aug-12) (Ongoing strategy) Capital Portfolio Operational Development Asset Ownership Refresh Management Management Excellence management team • Debt • Maximise • Unlock • Refine • Retaining Recapitalise restructure por
Slide 18: CRF – An "Asset Owner" Business
CRF – An “Asset Owner” Business FY12 PRO-FORMA EARNINGS PROFILE • CRF’s business model is simple: – Fully internally managed $3.8b Direct Property Investment $281m (Current cap rate 7.4%) – National Platform – Australian Retail Focus $485m Managed Fund Investment (FY12 distribution yield 5.0%) + $24
Slide 19: Capital Management
Capital Management What we’ve achieved to date... • Capital recycling initiatives to improve ROE – Sale of 50% interests in 3 regional assets to Perron Group for $690.4 million • Retention of property management rights – Two new investments at an average initial yield of 8.4% • Optimising portfolio
Slide 20: Development – Where We Are
Development – Where We Are • For the period December 2007 to June 2012, only $49 million in redevelopment/enhancement capital expenditure spent on portfolio – Inhibited ability to attract new format, new Australian retailer entrants – Sales productivity of Anchor tenants and Specialities marginally
Slide 21: Development – Where We Want to Be
Development – Where We Want to Be • Base case, value adding initiatives totalling approximately $300 million over five years • Senior hires undertaken, more to come: – EGM, Development and Asset Strategy appointed, to commence in September 2012 – Senior development resources for Victoria and NSW • I
Slide 22: Asset Ownership Initiatives
Asset Ownership Initiatives Active capital recycling achievements: Divestments Owner Interest Price ($m) Prem/(Disc) to Dec-11 BV • Five CRF assets valued at $750 million Lansell CRF 100% 31.5 0.0% sold at average 3.4% premium to Perth City Central CRF 50% 28.5 0.0% December 2011 book value Galleria
Slide 23: Asset Ownership - Syndicates
Asset Ownership - Syndicates • Current syndicate structure under review, with the following considerations: – Seek to enhance yield for all investors – Identifying assets in under-capitalised structures, requiring development to unlock or preserve value – Current retail investor market challenging d
Slide 24: Executive Team Resourcing
Executive Team Resourcing Executive Team Steven Sewell Chief Executive Officer and Managing Director Property & Development Asset Ownership Operational Excellence Capital Management Mark Wilson Michael Benett Dimitri Kiriacoulacos Marlon Teperson Chief Investment Officer/ Joint General Counsel and C
Slide 25: Property Operations
P Property t Operations O ti Mark Wilson
Slide 26: Well Diversified Australian Managed Portfolio
Well Diversified Australian Managed Portfolio CRF Syndicate Total As at June 20121 Direct Portfolio Managed1 No. of Properties2 41 47 83 Regional Centres – 1 Sub Regional Centres – 4 GLA 1.1 0.7 1.5 C Convenience i C Centres t – 10 (million sq sq.m) m) Convenience Centres – 1 Other - 1 Sub Regional
Slide 27: Retail Environment
Retail Environment • Retail sales environment over FY12 mixed with some themes evolving: – Continued global uncertainty – Persisting consumer caution with higher than average household savings rate – Price deflation due to the high Australian dollar, competition in segments • Non-discretionary retai
Slide 28: Property Operations Overview
Property Operations Overview As at 30 June 2012 CRF Direct Total Managed Presence in every State No. of Properties 41 83 Comparable NOI Growth – Stabilised1 3.5% 3.2% NSW WA Occupancy Rate 99.5% 99.5% 27% 23% Debtors Ratio 0.6% 0.8% Annual Retail Sales Growth (SCCA)2 0.9% 0.9% NZ 1% SA/NT Specialty
Slide 29: Diversified Income Stream
Diversified Income Stream Total Managed Portfolio – Total Income by Category National • Supermarkets over Specialty Retailers half of major retailers 51% by income Independent Specialty • Specialties weighted Retailers 49% to food & non Majors discretionary retail 27% • Over 90% of specialty Special
Slide 30: Sales Category Analysis
Sales Category Analysis CRF Direct Total Managed MAT Change MAT Change Category MAT $m per SCCA Composition MAT $m per SCCA Composition Standards Standards Supermarkets 2,315.7 1.4% 37% 3,944.6 1.0% 43% Discount Department Stores 916.3 -1.0% 14% 1,175.0 -1.1% 13% Department Stores 186.9 -4.8% 3% 208
Slide 31: Maintenance/Renewal Leasing
Maintenance/Renewal Leasing CRF Total Lease Deal Composition by Category Specialty Rent Analysis FY12 Direct Managed General Retail Other Categories 6% Renewal Rent Growth 4 0% 4.0% 3 9% 3.9% 17% Number of Leasing Deals 479 721 Income Renewed ($m) $51.9m $69.8m Services including Occupancy Rate 99.5
Slide 32: Vacant/New Leases
Vacant/New Leases New Leases Composition by Category CRF Total Other Categories New Leases Analysis FY12 Services includingg Direct Managed 14% retail and financial and other services Rental Spread -2.2% -2.1% 26% Mobile Phones Number of Leasing Deals 126 188 9% General Retail 8% • Demand for space
Slide 33: Strategy Going Forward
Strategy Going Forward Property Operations Focus Retailers Suppliers Employees Community • Maximise portfolio • Tendering and usage • Retain quality staff • Centre rebranding leasing opportunities initiatives • Employee • Drive localised • Optimise p retail mix • Energy efficiency engagement marketi
Slide 34: Outlook
O tl k Outlook Steven Sewell
Slide 35: Outlook
Outlook CRF well positioned to enhance ROE: Capital Management Prudent and Conservative Leverage national fully functional team and superior portfolio Active Portfolio Management locations Redevelopment Potential Unlocking latent upside Direct ownership, joint venture platform expansion, actively Ow
Slide 36: FY13 EPS and DPS Outlook
FY13 EPS and DPS Outlook • CRF is forecasting, subject to unforeseen circumstances: – FY13 operating earnings guidance of between 15.3 to 15.6 cents per security – Distribution payout ratio in the range of 80% to 90% of operating earnings CRF FY12 Annual Results 36
Slide 37: Questions
Q ti Questions
Slide 38: Appendices
A Appendices di
Slide 39: Specialty Sales Growth by Category
Specialty Sales Growth by Category Total Managed Portfolio MAT Change Category per SCCA Standards Fashion -3.0% Food Catering 1.5% Food Retail -2.1% General Retail 0.0% Homewares 2.1% Jewellery 1.2% L i Leisure -11.5% 11 5% Mobile Phones 12.2% Services 5.0% Portfolio Total 0.5% CRF FY12 Annual Resul
Slide 40: Disclaimer
Disclaimer This document is a presentation of general background information about Centro Retail Australia’s activities current at the date of the presentation (28 August 2012). It is information in a summary form and does not purport to be complete. It is to be read in conjunction with the Centro R