Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2022 Earnings Presentation
43 slides from Charter Hall Retail Reit's earnings presentation, Feb 23, 2022
Slide 1: Charter Hall Retail REIT FY22 Half Year Results
FY22 Half Year Results Charter Hall Retail REIT 23rd February 2022 Charter Hall Retail REIT FY22 Half Year Results
Slide 2: Acknowledgement of Country
Acknowledgement of Country Charter Hall is proud to work with our customers and communities to invest in and create places on lands across Australia. We pay our respects to the traditional owners, their elders past and present, and value their care and custodianship of these lands. Coming Together,
Slide 3: Agenda
Agenda 1. Highlights and Strategy 2. Financial Performance 3. Operational Performance 4. Outlook and Guidance 5. Annexures Christine Kelly Ben Ellis Head of Retail Finance and Retail CEO and Deputy Fund Manager Executive Director Charter Charter Hall Hall Retail Retail REIT REIT FY22 FY22 Half Half
Slide 4: Highlights and Strategy
CharterHall Charter HallRetail RetailREIT REIT 1 Highlights and Strategy Pacific Square, NSW FY22 FY22 HalfYear 2022Half YearResults Results
Slide 5: Portfolio Highlights
Highlights and Strategy Portfolio Highlights The leading owner of property for convenience retailers Operating earnings per unit Distributions per unit Key metrics 1H FY21 1H FY22 Movement 14.22 cents 11.70 cents Operating earnings1 $75.2m $82.1m +9.2% 8.0% from 1H FY21 9.3% from 1H FY21 Operati
Slide 6: CQR Convenience Strategy
Highlights and Strategy CQR Convenience Strategy Providing a resilient and The leading owner growing income stream for our investors of property for convenience retailers KEY DRIVERS Enhance Active asset Prudent capital portfolio quality management management − Active portfolio curation − Maintain s
Slide 7: Partnering with leading convenience retailers
Highlights and Strategy The leading owner Core convenience of property for and everyday needs convenience retailers Enabling major partner Curating the portfolio to deliver a resilient and omnichannel servicing model Partnering growing income stream Store Last Click & Collect with leading convenienc
Slide 8: Delivering on Strategy
Highlights and Strategy Delivering on Strategy Off-market acquisition of Ampol Expected settlement Q3 FY22 portfolio Properties 20 Acquisition price $50.5m - Further expansion of Long WALE Convenience Retail with 49% stake in 20 high quality Ampol Cap rate 5.0% sites on an attractive 5.0% cap rate.
Slide 9: Financial Performance
Charter CharterHall HallRetail RetailREIT REIT 2 Pacific Square, NSW Financial Performance FY22 2022Half HalfYear YearResults Results
Slide 10: 1H FY22 Financial Impact from COVID-19
Financial Performance 1H FY22 Financial Impact from COVID-19 – COVID-19 support reduced over 1H FY22 as government restrictions eased and sales progressively improved COVID-19 support Uncollected $7.6m $0.7m – $7.6m or 5.0% of 1H FY22 rent was provided as COVID-19 tenant support comprising 5.0% 0.5%
Slide 11: Earnings and Distributions
Financial Performance Earnings $m 1H FY21 1H FY22 % change and Distributions Net property income 69.4 74.0 6.6% Net income from convenience retail property joint ventures 13.4 14.2 6.0% - Total net income growth increased 9.7% with improved trading, plus off-market acquisitions of Net income from lo
Slide 12: Balance Sheet
Financial Performance Balance Sheet $m Jun 21 Dec 21 Cash 19 17 Investment properties 2,314 2,543 - Total property portfolio value increased by $363m over the six-month period due to: Investments in property joint ventures1 940 1,077 - valuation movement of $312m, including Other assets2 68 82 capex
Slide 13: Property Valuations
Financial Performance Property Valuations $m Shopping centre / Convenience retail Long WALE convenience retail Total portfolio June 2021 portfolio value 2,877 770 3,647 - 100% of the portfolio was externally revalued at Acquisitions 51 – 51 31 December 2021 Capital investment 37 1 38 - Portfolio val
Slide 14: Capital Management
Financial Performance Capital Management Key metrics Jun 21 Dec 21 – Available liquidity of $287m1 Weighted average cost of debt2 2.7% 2.6%3 – 1H FY22 weighted average cost of debt was 2.6%2, 3 Weighted average debt maturity 4.1 years 4.1 years – No debt maturing until FY24 with recent refinancing r
Slide 15: Operational Performance
Charter CharterHall HallRetail RetailREIT REIT 3 Bass Hill Plaza, NSW Operational Performance FY22 2022Half HalfYear YearResults Results
Slide 16: Portfolio Summary
Operational Performance Portfolio Summary – Shopping centre occupancy improved from 98.3% to 98.4% Portfolio snapshot Jun 21 Dec 21 – Total MAT growth1,2 remains positive at 0.6% with 2 year growth of 7.8% Number of shopping centres 50 51 Number of Long WALE assets3 296 296 – Portfolio WALE is stabl
Slide 17: Portfolio Tenant Customer Composition
Operational Performance Portfolio Tenant Customer Top 10 tenant customer groups1 Composition Woolworths 16.1% - Major tenants Coles, Woolworths, bp, 2 Wesfarmers2, Aldi, Ampol and Endeavour Coles Group 15.9% represent 53.9% of portfolio income - Ampol becomes the 8th largest tenant BP 12.0% customer
Slide 18: Supermarkets
Operational Performance Supermarkets – Supermarkets continued to demonstrate resilience with 1.5% MAT growth1 2 year supermarket MAT growth1 – Over the two year COVID-19 period, $1.9m of turnover rent has been converted 10.9% to base rent for 19 supermarket leases – This represents a 9.4% increase i
Slide 19: Specialty Tenants
Operational Performance Specialty Tenants – Strong levels of leasing activity with 219 specialty leases completed in the period Specialty performance Jun 21 Dec 21 – Leasing spreads over the period were +1.8% MAT growth1 7.1% 2.3% – 65 new leases (+1.4% leasing spread) Sales productivity (per sqm) $
Slide 20: Asset Enhancement Projects
Operational Performance Asset Enhancement Projects Active portfolio curation Investing alongside our – Upgrading carparking and amenities alongside supermarket refurbishments major tenants investment securing extended lease terms and driving sales growth to deliver improved shopper amenity and – New
Slide 21: Active Portfolio Curation
Operational Performance Active Portfolio Curation Strategic capital investment delivering asset value growth Tenant remix Partnering with major tenants Complimentary residual land use Kmart, Dubbo Square, NSW Coles, Campbellfield Plaza, Vic Childcare centre, Secret Harbour Square, WA Converted Targe
Slide 22: Active asset management
Operational Performance Active asset management Centre GLA Tenant – Utilising Charter Hall’s strong tenant customer relationships to replace eight Target stores with 10 high quality tenants Dubbo Square, NSW 5,500m2 – Active inhouse asset management resulted in minimal down time and lost rent Rosebu
Slide 23: ESG Highlights
Operational Performance ESG Highlights Delivering on our ESG Framework 100% net zero 100% renewable 100% of major Ongoing support of our carbon emissions electricity by 2025 tenants have set net customers and by 20251 zero or renewable community impacted energy targets by COVID-19 Environment Social
Slide 24: Outlook and Guidance
Charter CharterHall HallRetail RetailREIT REIT 4 Bass Hill Plaza, NSW Outlook and Guidance FY22 2022Half HalfYear YearResults Results
Slide 25: Outlook and Guidance
Outlook and Guidance Outlook and Guidance – Strategy remains consistent and focused on non-discretionary convenience retailers, providing income growth and resilience – Portfolio curation and active asset management will continue to improve portfolio quality – Strong MAT growth, positive leasing spr
Slide 26: Annexures
Charter CharterHall HallRetail RetailREIT REIT 5 Butler Central, WA Annexures FY22 2022Half HalfYear YearResults Results
Slide 27: Annexures
Annexures Annexures 01 07 FY22 guidance (cpu) Lease expiry profile 02 08 Reconciliation of statutory profit to operating earnings and AFFO Property valuations 03 09 NTA per unit reconciliation Portfolio MAT by State and category 04 10 Investment in property joint ventures Shopping centre portfolio h
Slide 28: FY22 guidance (cpu)
Annexures Annexure 1 FY22 guidance (cpu) 0.4 (0.5) 0.5 (0.4) 1.1 (3.9) 28.4 27.3 24.5 FY21 Shopping centre Long WALE Acquisitions Finance Other FY22 Capital FY22 EPU net income convenience expenses expenses EPU expenditure DPU retail (including tenant support) – FY22 acquisition of Butler Central, W
Slide 29: Reconciliation of statutory profit to operating earnings and AFFO
Annexures Annexure 2 Reconciliation of statutory profit to operating earnings and AFFO $m 1H FY22 cpu 1H FY21 1H FY22 Operating earnings 13.17 14.22 Statutory profit 368.6 Less: COVID-19 tenant support (1.02) (1.20) Revaluation increment on investment properties1 (284.5) Less: capital expenditure (1
Slide 30: NTA per unit reconciliation
Annexures Annexure 3 NTA per unit reconciliation ($) 0.03 (0.12) (0.01) 0.49 0.14 4.54 4.01 1 Jun 21 NTA Operating earnings Valuation movements Derivative movements Distribution Other Dec 21 NTA 1. Includes accounting adjustments Charter Hall Retail REIT FY22 Half Year Results 30
Slide 31: Investment in property joint ventures
Annexures Annexure 4 Investment in property joint ventures – income and balance sheet breakdown 1H FY22 and 31 December 2021 Long WALE Convenience $m CQR RP1 RP2 RP6 Gateway Salamander bp Portfolio CDC convenience Total retail retail 1H FY22 income Ownership interest 100% 50% 49.9% 20% 50% 50.5% 23.
Slide 32: Investment in property joint ventures
Annexures Annexure 4 continued Investment in property joint ventures – income and balance sheet breakdown 1H FY21 and 30 June 2021 Long WALE Convenience $m CQR RP1 RP2 RP6 Gateway Salamander bp Portfolio CDC convenience Total retail retail 1H FY21 income Ownership interest 100% 50% 49.9% 20% 50% 50.
Slide 33: Debt maturities and covenants
Annexures Annexure 5 Debt maturities and covenants as at 31 December 2021 Limit Drawn ICR ICR LVR LVR Debt facility (ownership interest) Rate Maturity ($m) ($m) Covenant Actual Covenant Actual JV debt – CHRP1 95 85 Floating Jul-26 1.75x 5.6x 60.0% 34.1% JV debt – CHRP2 40 32 Floating Jul-24 1.75x 6.
Slide 34: Convenience focused shopping centre portfolio
Annexures Annexure 6 Convenience focused shopping centre portfolio 27 Convenience assets Convenience Convenience – Single supermarket and complementary convenience specialty compared Plus compared to neighbourhood1 to sub-regional1 – Specialty productivity across the convenience portfolio outperform
Slide 35: Lease expiry profile
Annexures Annexure 7 Lease expiry profile as at 31 December 2021 Major tenant expiry profile (by income) 80% 71.6% 11.2 years 60% Major tenant WALE 40% 7.3 years 20% 10.2% Portfolio WALE 3.4% 6.6% 5.9% 0.0% 0.2% 0.3% 1.8% 0% 3.3 years FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30+ Specialty and mini-
Slide 36: Property valuations as at December 2021
Annexures Annexure 8 Property valuations as at 31 December 2021 State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 22.5 5.25% Manuka Terrace Manuka 100.0% 59.5 5.75% ACT Total 82.0 NSW Bass Hill Plaza Bass Hill 20.0% 26.0 5.25% Bateau Bay Sq
Slide 37: Property valuations as at December 2021
Annexures Annexure 8 continued Property valuations as at 31 December 2021 State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW continued Rutherford Marketplace Rutherford 50.0% 23.0 5.25% Salamander Bay Square Salamander Bay 50.5% 92.4 5.75% Singleton Square Singleton 100.0% 1
Slide 38: Property valuations as at December 2021
Annexures Annexure 8 continued Property valuations as at 31 December 2021 State Property Location Ownership interest (%) Book Value ($m) Cap Rate Vic Campbellfield Plaza Campbellfield 100.0% 96.0 5.25% Gateway Plaza Leopold 50.0% 81.7 5.25% Lansell Square Kangaroo Flat 100.0% 105.0 6.25% Rosebud Pla
Slide 39: Portfolio MAT by state and category
Annexures Annexure 9 Portfolio MAT by state and category as at 31 December 2021 Specialty sales Proportion of MAT growth1 Sales by category MAT growth1 by state specialty sales NSW & ACT 54% 0.3% Supermarket 1.5% WA 15% 8.3% DDS (5.0%) Vic 10% 3.6% Majors MAT Total 0.5% SA 3% 6.4% Food and food cate
Slide 40: Shopping centre portfolio historical performance
Annexures Annexure 10 Shopping centre portfolio historical performance Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Number of properties 71 66 58 58 58 55 51 50 50 51 Occupancy 98.0% 97.8% 98.1% 98.1% 98.1% 98.1% 97.3% 97.8% 98.3% 98.4% 5 5 5 5 Same property NPI growth1, 2 1
Slide 41: Glossary
Annexures Annexure 11 Glossary 1H FY21 JV 6 months from 1 July 2020 to 31 December 2020 Joint venture 1H FY22 MAT 6 months from 1 July 2021 to 31 December 2021 Moving annual turnover calculated as a sum of rolling 12 month sales WALE NPI Weighted Average Lease Expiry calculated based on income Net p
Slide 42: Further information
Additional information Further information Ben Ellis Christine Kelly Philip Cheetham Retail CEO and Head of Retail Finance Head of Listed Executive Director and Deputy Fund Manager Investor Relations Charter Hall Group Charter Hall Group Charter Hall Group +61 2 8651 9350 +61 2 8651 9401 +61 2 8651
Slide 43: Important Notice & Disclaimer
charterhall.com.au/cqr IMPORTANT NOTICE & DISCLAIMER This presentation ("Presentation") has been prepared by and is the sole responsibility of Charter Hall Retail Management Limited (ABN 46 069 709 468, Australian Financial Services Licence Number 246 996) (“CHRML”) as the responsible entity for Cha
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